About This Episode

Whether you like it or not, your career is based on how good of a company you choose to work with.

You could be an unbelievable sales rep, but if the company you pick is bad, you’re just not going to have a great career there.

With so many options, and so many places to choose from, how do you even think about starting the decision making process of where to take the next step in your sales career?

Well, that’s what Sam Jacobs came on the latest episode of The Sales Engagement podcast to talk about. Sam is the Founder of Revenue Collective and host of The Sales Hacker podcast.

On this show, he talked about the two criteria you should focus on when choosing an employer: market size and the quality of leadership.

Here are our key takeaways from what he had to say.

It All Starts With Market Size

A very large market is really important when it comes to thinking about a company’s ability to succeed.

Why?

Well, for one, a very large market means that there’s a large potential for revenue growth.

But a large market size also means that your company has the opportunity to make mistakes and to iterate the product, positioning, or messaging, without the risk of contaminating the entire market.

So, how do you assess market size?

Assessing Market Size — Focus on TAM

You start with TAM: total addressable market.

And the size of the market should be based on revenue, not on the number of potential customers.

To calculate revenue, think about this simple equation: P x Q. That’s price times quantity.

Since you want to look at both price and the number of companies in your market, it’s okay if there’s only a thousand companies in your space, as long as you’re selling deals worth a million dollars a year.

However, most mid-market companies are pursuing an average order value of something in the $20-50,000 range. In these scenarios, you’d need to make sure there are a lot of companies in the market to make up for the smaller deal size.

And when you’re looking at investor decks or talking to the executive team, you need to be able to disaggregate the theoretical TAM from the realistic TAM.

A lot of the TAM slides in presentations that companies make are predicated on that company changing the way an entire industry operates. And sure, that’s what we’re all trying to do when we’re building companies and startups. But there’s a lower likelihood of that happening.

So, make sure you’re getting a realistic idea of market size.

Use a Layered Approach to Gather the Right Information

You want to start with understanding TAM. But you also need to dig down several more layers to get the full picture, just like you would in any good discovery call.

Serviceable market and product/market fit are some of those deeper layers you want to uncover.

So, be sure to ask questions around these items, too. Then look for proof and data points to validate what you’ve heard.

For example, if the company claims to have a strong product/market fit, one of the things you could look at is the relationship of CAC to LTV. Fundamentally, what drives a low CAC is when the product is so good that people are telling their friends about it.

Basically, you’re aiming to figure out: what is the product you’re trying to sell today, what is the actual type of people buying this product, how many people are there, and what is their satisfaction with that product.

This will give you a good idea of whether or not a company is on track to be successful.

The Second Most Important Factor — Quality of Leadership

In addition to market size, another important factor to consider is the quality of the executive team.

They should have a combination of motivation, drive, and confidence, coupled with a sense of humility and a deep understanding of the customer.

Humility is really important because it allows you to receive and respond to feedback from the field so that the product can evolve.

And an empathy for the customer base is also crucial. Look for someone that didn’t just start their company because they wanted to be a founder, but because they were a customer who had a problem that needed a solution.

Where Does Culture Fit In With All of This?

Typically you hear that culture is one of the most important elements in a business.

But Sam looks at it a bit differently.

His perspective is that great culture is a secondary effect of large market size, a great product/market fit, and a founder that really has deep insights into the customer.

It’s a chicken and egg debate. You could say that culture really comes first. But there’s a lot of successful companies out there that don’t have a great culture. And there’s a lot of companies out there with a great culture that aren’t very successful.

Being a great place to work isn’t necessarily a determinant of success.

When marketing is fighting with sales or product doesn’t like the marketing team, those department dynamics are a function of the way that the organization is designed and whether or not they have a product that is meeting the needs of the market.

So, if you have a great product/market fit, a great go to market strategy, a large enough market to sell to, and empathetic leaders, your company is probably going to be successful.

And that success will typically result in great work environment, a great culture, and happy people.

But the important part isn’t necessarily the culture — it’s the elements that result in a great culture.

So, as you’re looking for a company to work with, focus on their market size, their product/market fit, and their leadership team. Chances are, if a company is getting those fundamentals right, they will be successful…and so will you.

This post is based on a podcast interview with Sam Jacobs from Revenue Collective. To hear this episode, and many more like it, you can subscribe to The Sales Engagement Podcast.

If you don’t use iTunes, you can listen to every episode here.

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