When Hector Hernandez joined LaunchDarkly in 2017, they already had $1 million in revenue. Instead of focusing just on scaling, they were looking for a sales team to help them evolve past their PLG motion.
Since then, Hector has helped LaunchDarkly grow to over $60M in revenue and a $3B valuation.
3 years later, he repeated his success with Traceable AI—helping them reach a $60M series B.
On today's episode, Alex and Hector go behind the scenes to uncover:
Alex Kracov: I'd love to start today's conversation with your time at LaunchDarkly where you were an SVP of Sales and Success. Can you paint a little bit of a picture of what was LaunchDarkly like when you joined, and why did you decide to join the company?
Hector Hernandez: Yeah, sure. Man, it's always fun to kind of go back through memory lane a little bit. Before I was at LaunchDarkly, I was at a company. I was in an analytics company. I was at a point where I knew I wanted to kind of take over a team. I wasn't going to do it there because my boss was incredibly capable, and he was one of my mentors. By all means, me taking over the team would mean that my at that time boss would no longer be there. And I don't know if I would want to be at that company without my boss. So I started looking for different opportunities with his support. He was awesome about it at that time. Finding a mentor that can be so supportive about your career and ambitions really early on is a gift.
When I first talked to - at LaunchDarkly, when I first started that experience, I have kind of a funny story for you. After I had started talking with the CEO there, Edith, she asked me to come into the office. I was like, oh. The office was in downtown Oakland. I live in Oakland. So I was like, oh, I was super excited to go in. I went in. I think my meeting was like at 9:30, and I showed up at 9:15. A little bit early. When I got into the office, there was no front desk. So I went into the elevator. I came into the office. And as I walked into the office, everything is pitch dark, and this alarm starts going off. I was like, what is going on? It was a sketchy operation to say the least. And a minute later, someone else came up. They're like, hey, are you Hector? I was like, oh, yeah. Oh, okay. Then they turned off the alarm. It had just started. The day had just kind of started. It just shows what a small kind of - it was like a small family operation that really started. When I first got there, there were two people total on the sales team and really about two other people on the marketing team. And that's kind of where the journey started.
Alex Kracov: Do you remember what your early conversations were like with Edith? Was she just like go do sales? Was she doing a lot of founder-led sales, and you're like helping bridge the gap from founder-led to sales-led sales? What did really the partnership look like in the early days?
Hector Hernandez: Yeah, that's exactly what - we were trying to do both. At first, it was all founder-led. She was amazing about it. But she's like, look. I've exhausted my ability to grow this company alone. She did have a funny story. One time, she did a demo or something, and a customer asked her. Hey, how much is this? She gave him a number. I think it was like whatever, $20 a month. They're like, alright. Solved. Let's do it. Then later on, she's like wait. Hold on. Maybe I can ask for a little bit more. Over time, that's how she was doing some testing. One time, a large company called her up and said, hey, we saw a demo of your product. Now we want to release this. It was like a big number. Hey, we want to release this to a bunch of people. How much is that? She was like, oh. Then she dropped a nice, healthy, big number. Then they're like, okay. They went away. She was like, oh, no. Oh, my God. What happened? Like that. Then one day, they just called. They're like, alright. We're ready to move forward. And, so she was like, is that how these things work? I was like, no, that's not how these things normally work. There's a process. But she muscled and willed her way towards really getting a first set of really tremendous customers and really tremendous logos. But she was really looking to scale that out.
And so what we did is, we started by taking all of the great bits of what she had been doing, learning from them, and then trying to make them our own. How can we come across as subject matter experts or as really confident, capable people without the founder tag? That was a really hard thing to do. The original, the first few hires, were really tremendous people. The first three hires there are actually still at the company now seven, eight years later. So the quality of those first few people and their spirit, they're like let's just try anything, was really crucial to it. But that was the initial few days. The initial few months was like, how can we go from Edith and our co-founder run everything to handing that off to a new team?
Alex Kracov: And were you sort of like a player coach in the early days? Were you leading deals yourself and hopping in things, or were you really focused on team building and hiring? How did you sort of think about your priorities as, okay, Hector, you're in charge now of sales? Where did you go? Where did you start?
Hector Hernandez: Yeah, it was an interesting place because there was a lot of demand. There was a lot of pent-up demand. We're getting a lot of inbound. One of the co-founders came from Atlassian, and so they knew that self-serve motion really well. And so they had really tried to get that going. And though the self-serve motion wasn't allowing them to grow by as much as they wanted to, to really have a fast-growing company, it did provide very consistent pipeline already.
My role coming in was really to add more capacity to the team. There was a lot of coaching but I didn't - even early on, I didn't take any opportunities on my own. There are some places where you go where you do have to do that. But the dynamics at LD at that time were just, we needed to gain more capacity. So my focus was really on supporting the current team that was already there, and hiring more folks, and enabling more folks. It was also on adding additional functions that we didn't have. We really just had two sellers. That was the entire realm. We had another person that was doing marketing product stuff. So we brought him back into the sales organization. Then we started adding solution engineers. We started adding a sales operations team to really help us elevate some of these things.
Over time, as that continue to grow and as we started to see capacity being tapped out with the team, and we started growing the team and adding to it, then what we did is we started doing segmentation. We moved from someone was talking to IBM in the morning and some charity in Brazil in the afternoon to segmenting. Like, you should only have conversations with these types of customers. You should only have conversations with these types of customers, not only because the value proposition is different but because the overall motion, as you know very well now Alex, is very different. You go from I can potentially put down a credit card to, okay, here's my security team. I need you to help me get through this. I need you to put together a BVA so that I can get sponsorship from my EB on this. I need you to help go through procurement. I need you to help go through legal. So there's all those jumps. At first, one person managed two very different types of sales motion. Then over time, as we continue to mature, we started to have more and more specialization.
Alex Kracov: Was it hard selling to developers? I assume that was your main ICP, but let me know.
Hector Hernandez: Yeah.
Alex Kracov: Okay. So you're selling to developers. I feel like developers are notoriously like, I don't want to talk to sales. And so how did you deal with that dynamic at LaunchDarkly?
Hector Hernandez: Yeah, it's interesting. You're right. Everything you said is right, but there are different nuances to it. Early on, we were mostly selling to developers because we're early-stage company. We had this not really PLG but a very like they could try. They could have a trial beforehand. And so we went from that motion which was very much centered around the IC, around the individual. Then over time, we started selling to managers, and directors, and VPs, and C levels. That was a journey that we had to go through. But at first, we were working directly with developers.
The interesting part is, eventually, when they tried the tool on their own, they needed someone to help them. It's the old sales-assisted model, right? Even the ICs were like, okay, I really like what I have here. This is going to cost me more than I want to put on a credit card. I need you to help me fill out this security questionnaire. Or, I need you to talk to my procurement person because they want to know that you have SOC 2. So they would bring us in. But these were very qualified PQLs. This was before the time when all of these definitions and things really existed. And so a lot of it was assisting the customer through the process.
Now, very early on, what we also established - one of the other functions that we established is an SDR function. So when we first started with only two AES, they were really just managing inbound. There was a strong belief in the marketplace that you can't outbound to developers. That is, for the most part, true. But you can, if you see a lot of interest in your company, either through your website or maybe a cluster of people are starting a trial or something like that, you can outbound to the managers or the directors. That was the beginning of our journey up. Those people are highly responsive when they know about the company, when there is something that they need. And so we started just augmenting what we were doing. What that added to us is, we had access to higher level folks earlier making our deals larger. It also helped us become more of a driver of the sales motion than essentially in a sales-assisted mode, you're oftentimes siloed to a passenger. You can still do things to become more aggressive, but your place is definitely a little bit different.
Alex Kracov: It's super interesting how it seems like you're previously a developer advocate going in, helping the developers get more out of the tool and then taking that positive momentum to go find champions internally, go find other people, multi-thread the deal and try, I guess, get it into a broader, organizational-wide deployment and take it from an engineer messing around to, okay, this is actually like a product or CTO-level initiative.
Hector Hernandez: Yeah, there was a couple of - our customers were like, there was someone that just got the tool and loved it so much. It's something that was unique about that product that we all wish we could have everywhere, where there was just real love from the community really, really early on. And so there were many times when someone would come in, and they would make a purchase. I'm talking about literally $500 in ARR. Not MRR but in ARR. Then over time, you would look. You would track that account, and they would go from $500 to $5,000, to $15,000. Then they would really team with us. Then you would see like, whoa, okay. Instead of going through that trajectory, every six months, you're going up by $50k, $100k. Three years later, that account that started at $500 a month was paying us $800, $900k. It took years to get there, but it was the learning that was happening on both sides. And it was only made possible because that one really early on engineer or architect had such love and affinity for the solution.
Alex Kracov: It sounds like LaunchDarkly sort of nailed product-market fit pretty early on. But I'm curious, as you're moving - I always think product-market fit is like a moving target. You might have it in one segment for a developer. But then, as you're moving up market trying to sell bigger deals, I'm sure there's gaps in the product, or maybe people don't believe your value prop as much. What was that journey moving up market like for you at LaunchDarkly? How were you able to close bigger and bigger deals over time?
Hector Hernandez: It sounds like we got product-market fit pretty quickly. But keep in mind. Before I joined, I'm sure they were duking it out, right? I don't want to short sell all the work that the team had done for two and a half years or three years before I was there to really get to the point where it was. But you're right. The product-market fit there was really remarkable. It was pretty tremendous.
How do we actually start closing bigger and bigger deals? Well, it started with a couple of things that we did early on. Number one is the segmentation. Having different people focus on different things is obvious to a lot of people that are already at large scaled out companies, or they have gone through it. But in the early days, especially with technical founders, it's not that obvious. It's not like, oh, okay. Oh, I didn't realize I needed to segment. Where do I segment it? How do I treat these people? How do I complement? What's the plan? How do I measure success? So we were kind of going through all this.
We were fortunate enough to be able to up level most of the existing team because they were really sharp, great early hires. Then we started hiring into those specialized roles. We would hire someone that had experience managing, that was familiar with things that sales folks are familiar with. Once you go through large transactions, they were familiar with MEDDPICC. They understood what it was to build a champion and challenge a champion. So it was a combination of bringing the team up, as well as bringing in folks to augment that skill set. And when we brought in folks, we had a great culture where every new person, whatever skill they had, we magically were able to see it spread across the org. So like, oh, wow. I've never seen this business value assessment. But this person over here is using it. I'm going to go take that. And so that's something that, that was a way in which we were able to kind of grow.
It's a different - man, I'm going to sound so old. It was a different time because that company was all built out of Oakland. The office was there. Everybody went in. And if you needed help, you would just turn and be like, hey, can you help me? Or, you would hear something and say like, oh, I want to pick that up. Now the world is different. Like where I'm at Teleport, we're much more distributed very, very early on. And so we have to be intentional about how we do that in a very - you just have to be very intentional about it. Versus in the past, it just kind of happened.
Alex Kracov: I'm curious. Were there any memorable deals from your time at LaunchDarkly that sort of stand out, or any fun closing stories?
Hector Hernandez: One thing that I do remember doing that was fun was, one time, Edith invited me to go to some CTO connect thing. It was a conference, and we presented. The night before we were going to present, or she was going to present - I was there meeting a bunch of other leaders - we were asked. Hey, do you want to ring the bell? Do you want to hit the button at NASDAQ? They're like, we had a company. They pulled out. CTO people were going to do it. I remember going through that with her at the time and just really seeing it. It doesn't feel like this is, oh, because it wasn't our company. But just seeing and being there makes you so hungry to be like I got to get here on my own. I got to come do this. Because the feeling of just being able to do that is something that has forever stuck with me. I kind of feel this again. I got to do this one more time. I got to do this with my logo in the background.
Alex Kracov: Yeah, you do it. With Teleport soon enough, which we'll get too. I'm curious. When you're thinking about growing out a sales team and hiring sales folks who go sell into developers, is there a specific profile you look for because you're selling it to developers? Or, does it really not matter, and they just have those sales skills? Then the flip side of that question is, like, do you need to mold the training program in a different way because you are selling to a more technical audience? How do you think about that problem?
Hector Hernandez: Yeah, early on, this was definitely true where we would mostly hire people that had already sold to developers. It's interesting because they understood that with that persona at that time - also, I think developer sells has changed a lot in the last couple of years. But with that persona at that time, when really for the first time in the market, developers were a buying engine. They were a buying center. Before that, it wasn't really like before they were able to run credit cards and do their own trials and stuff like that. It wasn't how it worked. SaaS really allowed this. Before then, it was mostly IT teams that were able to buy stuff because everything had to be deployed and installed on prem. Now when things are just download this trial and get going, obviously, it really changed the dynamics, the power dynamics.
We mostly hired folks that had previously sold to developers because they understood developers want to see a lot of value up front. Especially, when it's a smaller deal, IC-driven, at that time, they don't necessarily so much care about the vision of where you're going to go as a company. They need some support on solving their particular problem. They really want to figure out like, I have X thing that I need to do. Help me get that thing done. So the initial sales team was really focused on what I would call or what the market calls product sells, which is like you're a real expert on the product. You know all the speeds and feeds. You collect the customer's problem, and you try to figure out how you can wedge your product into that set of problems. That was great and fun. It allowed us to grow quite a bit. But over time, we had to move from product sales to solution sales. That's a much bigger leap to take.
The kind of seller that we brought in when we needed to make that leap was different. We were able to enable and train some of the folks we had, for sure. But in general, we would start with folks - in the early days, we started with folks that had sold to developers. In the later stages, we started with folks that had sold complex solutions. We prefer that it was in the part of the infrastructure stack, but there was definitely more of an emphasis on sales regimen and sales skills and that experience versus necessarily the being able to talk to developer's piece.
Alex Kracov: You had mentioned at the beginning LaunchDarkly was sort of your first shot, I guess, really running a whole org. Right? That's what you wanted. I guess you're at Scuba Analytics before, and you didn't get that chance there for good reasons. And so this was sort of your first shot. I wonder how that was for you on a personal level? What was the hardest part about doing all this? How were you able to kind of figure it out and manage this new role? Because you've never done this job before.
Hector Hernandez: Yeah, I always tell people that having a really strong mentor is worth its weight in gold. Having people that you can go to to help ask those questions that you feel are like silly questions. You're like, oh, man. I don't want to ask someone, but I don't know how I should structure a comp plan for an SDR. What should I do here? Having that community of people that can help walk you through stuff is amazing. That's definitely something that I think is needed. Then also, eventually, realizing that none of this stuff is just born knowing the blocking and tackling operational stuff. Some people are great sellers because they're naturally great presenters, or they're very charismatic, or they have great relationships or a great network. But even those folks, once they go into leading a team or even managing a team, a lot of those dynamics are new. So trying to move past that impostor syndrome and just understanding it's more important that I recognize my gaps than to try to ignore them. Knowing that there's a gap, I can actually start working towards them. Not knowing that it's a gap, it's just going to continue to be a problem. So that was a big transition.
I think in the beginning - again, I will emphasize the importance of hiring - we had a really strong team that allowed me to maybe not be as concerned with the day to day. Like, how was that call? Did we say the right things? Did we make sure we didn't offend any? It was a team that was really able to handle the majority of the day-to-day tasks. We would need some direction, and we would review stuff. We would review calls, and we would go through best practices. But they were really, really capable and competent. That gave me the ability to go focus on how we were actually going to scale the team.
The last thing I'll mention on that is, everything is very - a lot of this is based on where the company is at the time and what it means. Again, it's an enviable position to come into a company and having the first thing you need to do is really scale. That's not always what happens. Oftentimes, you have to come in. And like as you mentioned, what you have to do is you need to figure out what is the product-market fit, what is the value, what is the competitive landscape. And so the things you would do would be slightly different. But when the product-market fit is really strong, and you already have some demand coming in, then you can just focus on the challenges of scaling. It doesn't make it any easier, but it allows you to focus a lot more.
Alex Kracov: At LaunchDarkly, you're also responsible for customer success, which I think was maybe a new area for you to be in charge of.
Hector Hernandez: It was.
Alex Kracov: How did you think about building up the CS motion and that department at LaunchDarkly? Was it just hire really good people and let them run it? What does the CS look like for a developer org? Because I imagine there's a lot of - developers are pretty self-sustaining. They can do things on their own. So what does that actually look like?
Hector Hernandez: Yeah, that was a growing experience. We definitely kind of stubbed our toes several times. There was a natural - like I mentioned earlier, there was the natural love for the brand and for the product which served us really well. It was also a fairly sticky product. Once it got implemented, it was kind of a pain to get rid of. So we were definitely working with the wind at our back. A lot of the CS focus on the early days was partially support and then partially how do we expand this? Like, where do we go next? If five people are using us, how can we get another five people to use us, another 10 people to use us?
At first, we hired and we had a persona for we were hiring. We didn't nail it. Because we were really focused on the support piece of it, the technical capabilities, but we weren't so much focused on the growing piece. What you want out of your CS team is not someone that's only going to be providing technical support. You really want there to be a strong focus on how do we - if we're not expanding the account, are we at least expanding our influence within the account? At least, are we able to get higher into the accounts so that we're setting ourselves up for growing in the future or for at least - it's not wallet chair. It's at least mindshare for that organization. So we did go through an evolution early on to try and find the right kind of candidate that would fit our needs.
Now, even though it was a developer sell and a developer motion, again, as I mentioned a little bit earlier, our struggle was not to get developer love. Our struggle was to get visibility with managers and with the rest of leadership. Because we wanted to move away from being thought of as this little tool, this little kind of cute if statement that we put in somewhere and some people will use it. We wanted to move into helping people understand why this is actually critical to a lot of the major things that you're looking to do. And so we started playing with some messaging on the CS side to move away from being features-functionality centric to more use-case centric, trying to pitch or sell other use cases to other people within the company to try to really not only find more users but also up level our standing within the account. Yeah, we are that thing that you used to turn some of your infrastructure on and off. But we are also powering the digital transformation that your CEO was talking about at the last board meeting. CS was a way that we were able to have a lot of those conversations. Oftentimes, those conversations were had by our CEO. But CS was like the vehicle in which we were able to get access to some of the senior people that we needed.
Alex Kracov: I love to switch gears a little bit and talk about what you're up to now. So you're the CRO of Teleport, which is another developer software company. Can you talk about why you joined Teleport, and explain a little bit like what is Teleport?
Hector Hernandez: Sure. No worries. Well, I joined Teleport because I had a strong relationship with people that were already in the company. So I kind of knew a little bit about it. I got really excited by not only the trajectory of the company but the value proposition in the way that they were talking about where this market was headed. So what we do is, we really are the way in which people access all their infrastructure, really anything in their cloud or in their environment. Developers use Teleport in order to securely access everything that they have.
As they talked to me more about where they were heading and the things that they were doing, it was evident early on that though, right now, this was perceived or seen as a maybe single-purpose solution - all this is how your developer securely gets access to a Kubernetes environment or a Windows box - even though that's what it was and that's what the market understood, the long-term vision was very, very big. It was very broad. It would solve really complex business cases. It would also be able to consolidate what is a really confusing and really cluttered space. Right now, companies use a dozen tools to achieve what we're slowly chipping away and can achieve under a single solution. I thought that was really exciting.
Having the vision for a full platform so early on is one of the most - it's like one of those exciting moments as a sales leader, right? Because you're like not only can I see how we're going to get to the next milestone, but you can see how this is going to become a really big thing. As a seller or as a professional in sales or marketing or RevOps, all you want is a shot. That's all you want. Just give me a shot to be able to do that. And Teleport checked all those boxes.
Alex Kracov: And what was the company like when you joined? How many people were there, and what was the state of the go-to-market team?
Hector Hernandez: It was really interesting. It was a very successful company already. It's many, many times larger than LD when I joined there. What was interesting about it is that, again, at LD, I started and it was like we need to scale. Because we have a lot of capacity. Teleport, it was really similar. But the timing at Teleport was really interesting. I started in late February, early March of 2022, which is also when tanks started coming into Ukraine from Russia. The series of events that happened to the market really impacted what we could do.
Whereas at LD, the market for the most part stayed out of our way. It was 2016, 2017. It was a good market, and it was growing. But it wasn't like anything particularly - there were no major disturbances, or there were no major disturbances until COVID happened. Obviously, that was a pretty big one. But here, very early on, there were major macro shifts that impacted our ability to perform against the plans that we had. So it has, for me and for us, I'm sure it has for everyone, it required you to relearn or have a lot of agility. Okay. This is how we've done things for the last few years. This has gotten us here. Let's take all the best bits of that, and then let's figure out how to redo it because the world has shifted.
Alex Kracov: What's an example of something you may be changed or shifted in your process?
Hector Hernandez: Little things. I'll go with one that I think is pretty ubiquitous and that I think anyone that you talk to will be able to relate to. It's the fact that there was a point in time, there was a big chunk of time when money was readily accessible. When you were going out to sell, what that normally meant - because money was readily accessible - is that you could get approvals at some relatively low level. You get approvals for a healthy deal. Let's say 75k, 50k just to use a number. You can get approval on a pretty healthy deal from a manager or a director. And if they told you, yeah, I have this budget and I can spend it, they meant it. You went through your motion, and you were able to close that deal. You still had to work for it. You had to win it, and there was legal. There was still a lot of work that needed to be done, and it was hard. Closing new business in our industry is never easy. But the goal line never shifted. We have cash to spend on this, and they did spend it on that.
About 18 months ago, we saw a really, really quick shift, from yes, I have this money and I can spend it to yes, I had this money. But now I'm being told that there's a new process. And I don't know that new process. It's not only that they didn't have the money to spend any more. It's that they didn't even know what the process was to do it. And oftentimes, the process would end with like, oh, now our CFO needs to approve everything. So going one quarter, when you're working with like a mid-level manager or a director who has their budget, who's not really asking a lot of questions and closing it, shifting over to now the CFO needs to approve every single spend same 75k dollar deal. That is a dramatic shift in your ability to forecast.
It really changes all of your core metrics, because sales process and cell cycling are a core part of so many of the key metrics that we all use to measure, the health of ourselves, and that the industry uses to measure the health of our company. That small thing would add weeks, if not months, to the approval process. Then oftentimes, they would just say no. Yeah, we did have that budget. But you know what? We're cutting back on everything. We're now freezing all spend. It was the speed at which that shifted that most impacted us. It wasn't like gradually over time, we saw the level of approval and the amount of time it took slowly increased. It was like April to May. It was April, we're still going. We're still closing this. In May, it was like hold the phones. Everything is now paused.
Alex Kracov: Yeah. I mean, I think that is such a good start. Because I think it's something we've all been feeling in SaaS over the past couple of years. It puts so much more pressure. I imagine you had to change the whole way you even pitch the product in trying to build a business case and show the value to the CFO and the executive-level team, who probably barely even understood some of the implications of some of these infrastructure things. I can't imagine teaching a CFO about the developer side of things. That must be very challenging.
Hector Hernandez: Yeah, we would tell the team like just assume that the CFO has no idea what this is and doesn't care what it is. Why does it matter to them? Why does it matter to the business? What is the thing that is being held up? It's hard for a sales team or even a sales leader that has mostly sold or grown up through the desert era of SaaS to make that transition so quickly. The market was punishing reps for doing things that it had rewarded earlier. It went from rewarding speed and just cutting through things and just high transaction. It just really quickly punished people. People that had grown up thinking like, oh, I can make my number by doing these things all of a sudden woke up on there, and they had to go back and read up on the old school sales books, right? Hold on. All right. I need to be multi-threaded into this opportunity. I don't know who my EB is. I need to go figure out how to get in front of my EB.
There were some simple questions that we were starting to ask. I don't blame us for not necessarily asking these before because people were transacting. But something like, have you ever bought a solution like this before at your company? Because people jump around companies a lot. Our buyers jump around a lot. Have you ever bought a solution like this at your company? If they said no, well, it's like, oh, who has at your company? And can we get them involved? Can we get them to be our Sherpas to help us figure out what are the next steps that need to happen? And if the answer is yes, I bought something like this before, a very simple question was like, okay, when? And if it wasn't in the last quarter, it would be like, hey, are you sure that that's how your company still buys? Have there been any changes to your company that would indicate that this is shifting? That was true not only in the mid-market and SMB segment, but those shifts happen at the enterprise as well.
I have a lot of empathy for procurement folks because I've worked with so many in my career, and I know that they have a very important role that they play for organizations. I know that the last year or so, they got a little bit of power back. They're very happy to flex that a little bit. Because for a long time, the buying process got away from them. People were buying things on their own. People were coming to them saying like, hey, I downloaded this thing, and then I used a bunch of it. And now I owe them $20,000. Now I owe them $50,000. Can you please pay this? I'm like, what? What do you mean? You just started using this? Now they were able to bring things back in. They were able to establish their own procurement best practices, which maybe had gotten away from them. So the market has definitely corrected the power on the buying and procurement side.
Alex Kracov: I'd love to talk a little bit about - I think one thing unique about Teleport is there's an open-source element to it, right?
Hector Hernandez: Yes.
Alex Kracov: And so how does having an open-source element to your business impact your sales and customer success motion? How do you play with that open-source community?
Hector Hernandez: Oh, that is like an entire half-day conversation for us about how this becomes really unique. The one thing that open source does give you is it does give you a lot of, again, a community. It gives you a lot of love. It also gives you - for us, we're really in the security space. There's nothing better than being able to just go show people. Look, this isn't a black box. You can go see everything that's going on in there. You can audit it yourself. You can go through that entire process and be really rest assured that we built a really strong product. So it does give you a lot of credibility, and it does give you a lot of momentum.
Actually, right now, I haven't checked in the last few months, but I have been told that Teleport is the security product of the most GitHub stars out there. That's great. That shows wide adoption, wide love. It helps you understand that, wow, there is real pain that we're solving here if this is widely adopted. On the other side, there is an additional hurdle that you need to jump, which is making sure that the customer sees enough value in your enterprise solution or in your paid-for solution that they can't get just with open source. It's not only a sales or marketing problem, or it's not only up to the leaders there to solve. That is a company-wide process that you need to go through. Product and engineering are vital to that. Understanding why are people using this and what kind of people are using this.
If there's a bunch of smaller companies, there's a bunch of people using it for their network at home or for a side project, that's great. That's what it's there for. If you have a Fortune 500 using it and rolling it out to 20,000 users, then you're like, hold on. That was never really our intent. Our intent was never to have this be rolled out in this way. So why is that possible? What should we do? Are we comfortable with that? Maybe we are. Right? But how do we optimize this so that the customer gets value, so that the right targets are using that solution, and then the right folks are finding enough value in your enterprise product to continue that journey? It takes a lot of iteration.
Alex Kracov: Yeah, I imagine this to be very interesting to figure out. Okay. What are those product triggers between the open-source side, the enterprise side, that cause people to upgrade? I'm sure there's a ton of experimentation that goes into that. I think one huge benefit I see of open source is, you have this defined pool to fish from, from outbound sales perspective. Do you just outbound to all the people who are doing things on GitHub? Is that how the sales machine works? Do you let people come to you? How do you do that in a tasteful way? Because I'm sure if you're too sales-y to the community, they might revolt back to you. So I don't know. How do you think about that?
Hector Hernandez: We're pretty conservative. I think I like where your head is at. I'll have you talk to my engineering leadership about being able to do that. But we don't collect any data from our open-source community at all. It's really important for us to make sure especially with the kind of product that we have. We have no idea.
Alex Kracov: Yeah, I guess security, too.
Hector Hernandez: And so I could see how if we did have a product and we were collecting all the information about who the companies are, it would be like, hey, we know exactly who to go after. So we have to use different kinds of data. We use third-party in 10 data. We use different things to understand some of the organizations that may be leveraging it or, more importantly, that are in the market for a solution like it. So what we really do gain is a lot of developer love. We gain a lot of adoption. Our code base is probably stronger because of it without a doubt. There are a lot of really large companies that say the fact that you are open source made us feel comfortable moving forward. There are a lot of benefits.
On the go-to-market side, it can be a double edged-sword. You need to convince people that they need to move to the enterprise. Oftentimes, like with us, and I'm sure a lot of other companies out there, we actually don't know who's using it. But on the flip side of that, it's really nice to sometimes get on a call and say, hey, how did you hear about Teleport? They'll say something like, oh, we've been running Teleport for a year. Now we need some of the enterprise functionality. It's like, we love the product. It's great. You guys have done a great job. Now let's figure out how to scale this. That's just finding new. You never get that if you don't have that before. At best, you have freemium or maybe extended trials. But people don't really productionalize a 14-day trial for sure, or a freemium product. They do something that's open source.
Alex Kracov: I also love what you said earlier about the transparency in the code. I imagine that just is so important when you're selling a security product for people to go in there, pick it apart, and see actually what is behind the scenes, which is so different than any other SaaS product that's out there and I'm sure all your competitors as well. So that's a very interesting dynamic I never thought about.
Hector Hernandez: It is. We get some really interesting comments. I've been really fortunate in the companies that I've worked with that people really do love the platform. People will come to us at trade shows or something. They'll come up and they're like, "Hey, I just wanted to say thank you. You guys have built an amazing product. We use it all the time, and we think it's invaluable to us. I just wanted to shake your hand." Then you take credit as if you were the developer that was actually doing it. But you're like, no. God, man. Doesn't that pump you up? Don't you really want to turn around and be like, yeah, let's go figure out how we can get this in the hands of more people? Because it's actually providing value. It's something that is really at the core making a company more efficient and more secure.
And as salespeople, if you're not highly motivated by the product or by the solution that you're selling, it's hard to bring your whole heart into it. Because we - Alex, you know this. We've talked about it. We lose and fail way more than we win on a daily basis. Our emails, everything, we deal with losses all the time. Sometimes you deal with them for many days or many weeks in a row in a large enterprise sell. You can deal with it for a couple of quarters. You're just like losing and losing and losing. If you don't believe in what you have that it is actually better for society or for the market, or that there is someone out there that's really benefiting from what you're doing, it can be really hard to get through those dips in your cycles.
Alex Kracov: I'd love to end today's conversation talking a little bit about what it's like building a remote sales culture. I think you mentioned before Teleport is pretty remote, and it's very different than what you're doing at LD. So how do you think about building remote sales culture? Because I think sales, especially, seems like one of the hardest departments to do that in.
Hector Hernandez: Yeah, I will give you some of the things that I've noticed and I've seen. But I want to make it clear that I could probably learn how to do this better from other folks. I'll be keeping an eye on this channel. And whenever you have someone that has nailed this, I'll be listening in.
What I have learned is that no matter what our particular organization - I don't think this is particularly to Teleport. I think all sales or revenue organizations are like this - it is really important to connect every once in a while in person. Those become some of the most impactful sessions that we ever do. We only get together a couple of times a year. But every time, the feedback is like, I wish we did this more often. I learned so much. Or, this thing that people were trying to explain to me for six months, I finally got it. I finally got it because I was able to do that. So if you can leverage in person, it doesn't always have to be like everyone. It doesn't have to be hundreds of people. It's nice to do that because people can cross pollinate. But even if you're just able to get small clusters of people together, more often, it's very positive. You build community.
The real big struggle outside of enablement which, again, not something that I've totally nailed on how to properly enable people remotely. But outside of enablement, it's the culture piece that we really lose by not seeing each other. It's really simple for me to be here on this screen, and then just close it and then go off and do whatever with my day. It becomes like a transaction. This becomes very transactional. It's very different from shaking someone's hand, or breaking bread with them, or just being able to hear about how their life is going outside of you having to schedule time to talk about how is life going. That organic, those human elements are lost. When you're able to connect people, what happens is that this relationship goes from being transactional - like I'm doing this. I'm going to click this off. Now I'm not doing this. I'm going to do something else - to there actually being some connective tissue. I want to do this thing that you're asking me, not only because it's my job but because I know you and because I know that you need this for XYZ reason. I know that this is a really important part of your career. You're trying to grow your career. And if I'm able to help you with this, it'll move you forward. I want to be of service to you. That is something that gets lost if people don't have that personal connection.
And so, again, I don't have all the answers. I'm sure my team can tell you about all the ways in which we maybe haven't rolled things out perfectly. But one big learning that I have had is that, even if you're fully remote, finding opportunities to get people together is really, really important. I know it's not groundbreaking, but I have seen it with my own eyes. Be a huge difference maker.
Alex Kracov: Well, thank you so much for the time today, Hector.
Hector Hernandez: Of course.
Alex Kracov: If people want to follow up, ask questions, where is the best place for them to find you?
Hector Hernandez: I'm on LinkedIn. I will chat with most people that hit me up there. I'm also on X. I can send you over my information so people can link to on that. Those are probably the easiest mediums to get in touch with me.
Alex Kracov: Right on. Thank you.
After 3 years as Director of North American Sales at Scuba Analytics, Hector Hernandez joined LaunchDarkly as Senior VP of Sales and Customer Success in 2017.
In 2020, Hector joined Traceable AI — an API security company — as CRO.
Two years later, Hector started his current role as CRO of Teleport — an identity and access management platform.
When Hector Hernandez joined LaunchDarkly in 2017, they already had $1 million in revenue. Instead of focusing just on scaling, they were looking for a sales team to help them evolve past their PLG motion.
Since then, Hector has helped LaunchDarkly grow to over $60M in revenue and a $3B valuation.
3 years later, he repeated his success with Traceable AI—helping them reach a $60M series B.
On today's episode, Alex and Hector go behind the scenes to uncover:
Alex Kracov: I'd love to start today's conversation with your time at LaunchDarkly where you were an SVP of Sales and Success. Can you paint a little bit of a picture of what was LaunchDarkly like when you joined, and why did you decide to join the company?
Hector Hernandez: Yeah, sure. Man, it's always fun to kind of go back through memory lane a little bit. Before I was at LaunchDarkly, I was at a company. I was in an analytics company. I was at a point where I knew I wanted to kind of take over a team. I wasn't going to do it there because my boss was incredibly capable, and he was one of my mentors. By all means, me taking over the team would mean that my at that time boss would no longer be there. And I don't know if I would want to be at that company without my boss. So I started looking for different opportunities with his support. He was awesome about it at that time. Finding a mentor that can be so supportive about your career and ambitions really early on is a gift.
When I first talked to - at LaunchDarkly, when I first started that experience, I have kind of a funny story for you. After I had started talking with the CEO there, Edith, she asked me to come into the office. I was like, oh. The office was in downtown Oakland. I live in Oakland. So I was like, oh, I was super excited to go in. I went in. I think my meeting was like at 9:30, and I showed up at 9:15. A little bit early. When I got into the office, there was no front desk. So I went into the elevator. I came into the office. And as I walked into the office, everything is pitch dark, and this alarm starts going off. I was like, what is going on? It was a sketchy operation to say the least. And a minute later, someone else came up. They're like, hey, are you Hector? I was like, oh, yeah. Oh, okay. Then they turned off the alarm. It had just started. The day had just kind of started. It just shows what a small kind of - it was like a small family operation that really started. When I first got there, there were two people total on the sales team and really about two other people on the marketing team. And that's kind of where the journey started.
Alex Kracov: Do you remember what your early conversations were like with Edith? Was she just like go do sales? Was she doing a lot of founder-led sales, and you're like helping bridge the gap from founder-led to sales-led sales? What did really the partnership look like in the early days?
Hector Hernandez: Yeah, that's exactly what - we were trying to do both. At first, it was all founder-led. She was amazing about it. But she's like, look. I've exhausted my ability to grow this company alone. She did have a funny story. One time, she did a demo or something, and a customer asked her. Hey, how much is this? She gave him a number. I think it was like whatever, $20 a month. They're like, alright. Solved. Let's do it. Then later on, she's like wait. Hold on. Maybe I can ask for a little bit more. Over time, that's how she was doing some testing. One time, a large company called her up and said, hey, we saw a demo of your product. Now we want to release this. It was like a big number. Hey, we want to release this to a bunch of people. How much is that? She was like, oh. Then she dropped a nice, healthy, big number. Then they're like, okay. They went away. She was like, oh, no. Oh, my God. What happened? Like that. Then one day, they just called. They're like, alright. We're ready to move forward. And, so she was like, is that how these things work? I was like, no, that's not how these things normally work. There's a process. But she muscled and willed her way towards really getting a first set of really tremendous customers and really tremendous logos. But she was really looking to scale that out.
And so what we did is, we started by taking all of the great bits of what she had been doing, learning from them, and then trying to make them our own. How can we come across as subject matter experts or as really confident, capable people without the founder tag? That was a really hard thing to do. The original, the first few hires, were really tremendous people. The first three hires there are actually still at the company now seven, eight years later. So the quality of those first few people and their spirit, they're like let's just try anything, was really crucial to it. But that was the initial few days. The initial few months was like, how can we go from Edith and our co-founder run everything to handing that off to a new team?
Alex Kracov: And were you sort of like a player coach in the early days? Were you leading deals yourself and hopping in things, or were you really focused on team building and hiring? How did you sort of think about your priorities as, okay, Hector, you're in charge now of sales? Where did you go? Where did you start?
Hector Hernandez: Yeah, it was an interesting place because there was a lot of demand. There was a lot of pent-up demand. We're getting a lot of inbound. One of the co-founders came from Atlassian, and so they knew that self-serve motion really well. And so they had really tried to get that going. And though the self-serve motion wasn't allowing them to grow by as much as they wanted to, to really have a fast-growing company, it did provide very consistent pipeline already.
My role coming in was really to add more capacity to the team. There was a lot of coaching but I didn't - even early on, I didn't take any opportunities on my own. There are some places where you go where you do have to do that. But the dynamics at LD at that time were just, we needed to gain more capacity. So my focus was really on supporting the current team that was already there, and hiring more folks, and enabling more folks. It was also on adding additional functions that we didn't have. We really just had two sellers. That was the entire realm. We had another person that was doing marketing product stuff. So we brought him back into the sales organization. Then we started adding solution engineers. We started adding a sales operations team to really help us elevate some of these things.
Over time, as that continue to grow and as we started to see capacity being tapped out with the team, and we started growing the team and adding to it, then what we did is we started doing segmentation. We moved from someone was talking to IBM in the morning and some charity in Brazil in the afternoon to segmenting. Like, you should only have conversations with these types of customers. You should only have conversations with these types of customers, not only because the value proposition is different but because the overall motion, as you know very well now Alex, is very different. You go from I can potentially put down a credit card to, okay, here's my security team. I need you to help me get through this. I need you to put together a BVA so that I can get sponsorship from my EB on this. I need you to help go through procurement. I need you to help go through legal. So there's all those jumps. At first, one person managed two very different types of sales motion. Then over time, as we continue to mature, we started to have more and more specialization.
Alex Kracov: Was it hard selling to developers? I assume that was your main ICP, but let me know.
Hector Hernandez: Yeah.
Alex Kracov: Okay. So you're selling to developers. I feel like developers are notoriously like, I don't want to talk to sales. And so how did you deal with that dynamic at LaunchDarkly?
Hector Hernandez: Yeah, it's interesting. You're right. Everything you said is right, but there are different nuances to it. Early on, we were mostly selling to developers because we're early-stage company. We had this not really PLG but a very like they could try. They could have a trial beforehand. And so we went from that motion which was very much centered around the IC, around the individual. Then over time, we started selling to managers, and directors, and VPs, and C levels. That was a journey that we had to go through. But at first, we were working directly with developers.
The interesting part is, eventually, when they tried the tool on their own, they needed someone to help them. It's the old sales-assisted model, right? Even the ICs were like, okay, I really like what I have here. This is going to cost me more than I want to put on a credit card. I need you to help me fill out this security questionnaire. Or, I need you to talk to my procurement person because they want to know that you have SOC 2. So they would bring us in. But these were very qualified PQLs. This was before the time when all of these definitions and things really existed. And so a lot of it was assisting the customer through the process.
Now, very early on, what we also established - one of the other functions that we established is an SDR function. So when we first started with only two AES, they were really just managing inbound. There was a strong belief in the marketplace that you can't outbound to developers. That is, for the most part, true. But you can, if you see a lot of interest in your company, either through your website or maybe a cluster of people are starting a trial or something like that, you can outbound to the managers or the directors. That was the beginning of our journey up. Those people are highly responsive when they know about the company, when there is something that they need. And so we started just augmenting what we were doing. What that added to us is, we had access to higher level folks earlier making our deals larger. It also helped us become more of a driver of the sales motion than essentially in a sales-assisted mode, you're oftentimes siloed to a passenger. You can still do things to become more aggressive, but your place is definitely a little bit different.
Alex Kracov: It's super interesting how it seems like you're previously a developer advocate going in, helping the developers get more out of the tool and then taking that positive momentum to go find champions internally, go find other people, multi-thread the deal and try, I guess, get it into a broader, organizational-wide deployment and take it from an engineer messing around to, okay, this is actually like a product or CTO-level initiative.
Hector Hernandez: Yeah, there was a couple of - our customers were like, there was someone that just got the tool and loved it so much. It's something that was unique about that product that we all wish we could have everywhere, where there was just real love from the community really, really early on. And so there were many times when someone would come in, and they would make a purchase. I'm talking about literally $500 in ARR. Not MRR but in ARR. Then over time, you would look. You would track that account, and they would go from $500 to $5,000, to $15,000. Then they would really team with us. Then you would see like, whoa, okay. Instead of going through that trajectory, every six months, you're going up by $50k, $100k. Three years later, that account that started at $500 a month was paying us $800, $900k. It took years to get there, but it was the learning that was happening on both sides. And it was only made possible because that one really early on engineer or architect had such love and affinity for the solution.
Alex Kracov: It sounds like LaunchDarkly sort of nailed product-market fit pretty early on. But I'm curious, as you're moving - I always think product-market fit is like a moving target. You might have it in one segment for a developer. But then, as you're moving up market trying to sell bigger deals, I'm sure there's gaps in the product, or maybe people don't believe your value prop as much. What was that journey moving up market like for you at LaunchDarkly? How were you able to close bigger and bigger deals over time?
Hector Hernandez: It sounds like we got product-market fit pretty quickly. But keep in mind. Before I joined, I'm sure they were duking it out, right? I don't want to short sell all the work that the team had done for two and a half years or three years before I was there to really get to the point where it was. But you're right. The product-market fit there was really remarkable. It was pretty tremendous.
How do we actually start closing bigger and bigger deals? Well, it started with a couple of things that we did early on. Number one is the segmentation. Having different people focus on different things is obvious to a lot of people that are already at large scaled out companies, or they have gone through it. But in the early days, especially with technical founders, it's not that obvious. It's not like, oh, okay. Oh, I didn't realize I needed to segment. Where do I segment it? How do I treat these people? How do I complement? What's the plan? How do I measure success? So we were kind of going through all this.
We were fortunate enough to be able to up level most of the existing team because they were really sharp, great early hires. Then we started hiring into those specialized roles. We would hire someone that had experience managing, that was familiar with things that sales folks are familiar with. Once you go through large transactions, they were familiar with MEDDPICC. They understood what it was to build a champion and challenge a champion. So it was a combination of bringing the team up, as well as bringing in folks to augment that skill set. And when we brought in folks, we had a great culture where every new person, whatever skill they had, we magically were able to see it spread across the org. So like, oh, wow. I've never seen this business value assessment. But this person over here is using it. I'm going to go take that. And so that's something that, that was a way in which we were able to kind of grow.
It's a different - man, I'm going to sound so old. It was a different time because that company was all built out of Oakland. The office was there. Everybody went in. And if you needed help, you would just turn and be like, hey, can you help me? Or, you would hear something and say like, oh, I want to pick that up. Now the world is different. Like where I'm at Teleport, we're much more distributed very, very early on. And so we have to be intentional about how we do that in a very - you just have to be very intentional about it. Versus in the past, it just kind of happened.
Alex Kracov: I'm curious. Were there any memorable deals from your time at LaunchDarkly that sort of stand out, or any fun closing stories?
Hector Hernandez: One thing that I do remember doing that was fun was, one time, Edith invited me to go to some CTO connect thing. It was a conference, and we presented. The night before we were going to present, or she was going to present - I was there meeting a bunch of other leaders - we were asked. Hey, do you want to ring the bell? Do you want to hit the button at NASDAQ? They're like, we had a company. They pulled out. CTO people were going to do it. I remember going through that with her at the time and just really seeing it. It doesn't feel like this is, oh, because it wasn't our company. But just seeing and being there makes you so hungry to be like I got to get here on my own. I got to come do this. Because the feeling of just being able to do that is something that has forever stuck with me. I kind of feel this again. I got to do this one more time. I got to do this with my logo in the background.
Alex Kracov: Yeah, you do it. With Teleport soon enough, which we'll get too. I'm curious. When you're thinking about growing out a sales team and hiring sales folks who go sell into developers, is there a specific profile you look for because you're selling it to developers? Or, does it really not matter, and they just have those sales skills? Then the flip side of that question is, like, do you need to mold the training program in a different way because you are selling to a more technical audience? How do you think about that problem?
Hector Hernandez: Yeah, early on, this was definitely true where we would mostly hire people that had already sold to developers. It's interesting because they understood that with that persona at that time - also, I think developer sells has changed a lot in the last couple of years. But with that persona at that time, when really for the first time in the market, developers were a buying engine. They were a buying center. Before that, it wasn't really like before they were able to run credit cards and do their own trials and stuff like that. It wasn't how it worked. SaaS really allowed this. Before then, it was mostly IT teams that were able to buy stuff because everything had to be deployed and installed on prem. Now when things are just download this trial and get going, obviously, it really changed the dynamics, the power dynamics.
We mostly hired folks that had previously sold to developers because they understood developers want to see a lot of value up front. Especially, when it's a smaller deal, IC-driven, at that time, they don't necessarily so much care about the vision of where you're going to go as a company. They need some support on solving their particular problem. They really want to figure out like, I have X thing that I need to do. Help me get that thing done. So the initial sales team was really focused on what I would call or what the market calls product sells, which is like you're a real expert on the product. You know all the speeds and feeds. You collect the customer's problem, and you try to figure out how you can wedge your product into that set of problems. That was great and fun. It allowed us to grow quite a bit. But over time, we had to move from product sales to solution sales. That's a much bigger leap to take.
The kind of seller that we brought in when we needed to make that leap was different. We were able to enable and train some of the folks we had, for sure. But in general, we would start with folks - in the early days, we started with folks that had sold to developers. In the later stages, we started with folks that had sold complex solutions. We prefer that it was in the part of the infrastructure stack, but there was definitely more of an emphasis on sales regimen and sales skills and that experience versus necessarily the being able to talk to developer's piece.
Alex Kracov: You had mentioned at the beginning LaunchDarkly was sort of your first shot, I guess, really running a whole org. Right? That's what you wanted. I guess you're at Scuba Analytics before, and you didn't get that chance there for good reasons. And so this was sort of your first shot. I wonder how that was for you on a personal level? What was the hardest part about doing all this? How were you able to kind of figure it out and manage this new role? Because you've never done this job before.
Hector Hernandez: Yeah, I always tell people that having a really strong mentor is worth its weight in gold. Having people that you can go to to help ask those questions that you feel are like silly questions. You're like, oh, man. I don't want to ask someone, but I don't know how I should structure a comp plan for an SDR. What should I do here? Having that community of people that can help walk you through stuff is amazing. That's definitely something that I think is needed. Then also, eventually, realizing that none of this stuff is just born knowing the blocking and tackling operational stuff. Some people are great sellers because they're naturally great presenters, or they're very charismatic, or they have great relationships or a great network. But even those folks, once they go into leading a team or even managing a team, a lot of those dynamics are new. So trying to move past that impostor syndrome and just understanding it's more important that I recognize my gaps than to try to ignore them. Knowing that there's a gap, I can actually start working towards them. Not knowing that it's a gap, it's just going to continue to be a problem. So that was a big transition.
I think in the beginning - again, I will emphasize the importance of hiring - we had a really strong team that allowed me to maybe not be as concerned with the day to day. Like, how was that call? Did we say the right things? Did we make sure we didn't offend any? It was a team that was really able to handle the majority of the day-to-day tasks. We would need some direction, and we would review stuff. We would review calls, and we would go through best practices. But they were really, really capable and competent. That gave me the ability to go focus on how we were actually going to scale the team.
The last thing I'll mention on that is, everything is very - a lot of this is based on where the company is at the time and what it means. Again, it's an enviable position to come into a company and having the first thing you need to do is really scale. That's not always what happens. Oftentimes, you have to come in. And like as you mentioned, what you have to do is you need to figure out what is the product-market fit, what is the value, what is the competitive landscape. And so the things you would do would be slightly different. But when the product-market fit is really strong, and you already have some demand coming in, then you can just focus on the challenges of scaling. It doesn't make it any easier, but it allows you to focus a lot more.
Alex Kracov: At LaunchDarkly, you're also responsible for customer success, which I think was maybe a new area for you to be in charge of.
Hector Hernandez: It was.
Alex Kracov: How did you think about building up the CS motion and that department at LaunchDarkly? Was it just hire really good people and let them run it? What does the CS look like for a developer org? Because I imagine there's a lot of - developers are pretty self-sustaining. They can do things on their own. So what does that actually look like?
Hector Hernandez: Yeah, that was a growing experience. We definitely kind of stubbed our toes several times. There was a natural - like I mentioned earlier, there was the natural love for the brand and for the product which served us really well. It was also a fairly sticky product. Once it got implemented, it was kind of a pain to get rid of. So we were definitely working with the wind at our back. A lot of the CS focus on the early days was partially support and then partially how do we expand this? Like, where do we go next? If five people are using us, how can we get another five people to use us, another 10 people to use us?
At first, we hired and we had a persona for we were hiring. We didn't nail it. Because we were really focused on the support piece of it, the technical capabilities, but we weren't so much focused on the growing piece. What you want out of your CS team is not someone that's only going to be providing technical support. You really want there to be a strong focus on how do we - if we're not expanding the account, are we at least expanding our influence within the account? At least, are we able to get higher into the accounts so that we're setting ourselves up for growing in the future or for at least - it's not wallet chair. It's at least mindshare for that organization. So we did go through an evolution early on to try and find the right kind of candidate that would fit our needs.
Now, even though it was a developer sell and a developer motion, again, as I mentioned a little bit earlier, our struggle was not to get developer love. Our struggle was to get visibility with managers and with the rest of leadership. Because we wanted to move away from being thought of as this little tool, this little kind of cute if statement that we put in somewhere and some people will use it. We wanted to move into helping people understand why this is actually critical to a lot of the major things that you're looking to do. And so we started playing with some messaging on the CS side to move away from being features-functionality centric to more use-case centric, trying to pitch or sell other use cases to other people within the company to try to really not only find more users but also up level our standing within the account. Yeah, we are that thing that you used to turn some of your infrastructure on and off. But we are also powering the digital transformation that your CEO was talking about at the last board meeting. CS was a way that we were able to have a lot of those conversations. Oftentimes, those conversations were had by our CEO. But CS was like the vehicle in which we were able to get access to some of the senior people that we needed.
Alex Kracov: I love to switch gears a little bit and talk about what you're up to now. So you're the CRO of Teleport, which is another developer software company. Can you talk about why you joined Teleport, and explain a little bit like what is Teleport?
Hector Hernandez: Sure. No worries. Well, I joined Teleport because I had a strong relationship with people that were already in the company. So I kind of knew a little bit about it. I got really excited by not only the trajectory of the company but the value proposition in the way that they were talking about where this market was headed. So what we do is, we really are the way in which people access all their infrastructure, really anything in their cloud or in their environment. Developers use Teleport in order to securely access everything that they have.
As they talked to me more about where they were heading and the things that they were doing, it was evident early on that though, right now, this was perceived or seen as a maybe single-purpose solution - all this is how your developer securely gets access to a Kubernetes environment or a Windows box - even though that's what it was and that's what the market understood, the long-term vision was very, very big. It was very broad. It would solve really complex business cases. It would also be able to consolidate what is a really confusing and really cluttered space. Right now, companies use a dozen tools to achieve what we're slowly chipping away and can achieve under a single solution. I thought that was really exciting.
Having the vision for a full platform so early on is one of the most - it's like one of those exciting moments as a sales leader, right? Because you're like not only can I see how we're going to get to the next milestone, but you can see how this is going to become a really big thing. As a seller or as a professional in sales or marketing or RevOps, all you want is a shot. That's all you want. Just give me a shot to be able to do that. And Teleport checked all those boxes.
Alex Kracov: And what was the company like when you joined? How many people were there, and what was the state of the go-to-market team?
Hector Hernandez: It was really interesting. It was a very successful company already. It's many, many times larger than LD when I joined there. What was interesting about it is that, again, at LD, I started and it was like we need to scale. Because we have a lot of capacity. Teleport, it was really similar. But the timing at Teleport was really interesting. I started in late February, early March of 2022, which is also when tanks started coming into Ukraine from Russia. The series of events that happened to the market really impacted what we could do.
Whereas at LD, the market for the most part stayed out of our way. It was 2016, 2017. It was a good market, and it was growing. But it wasn't like anything particularly - there were no major disturbances, or there were no major disturbances until COVID happened. Obviously, that was a pretty big one. But here, very early on, there were major macro shifts that impacted our ability to perform against the plans that we had. So it has, for me and for us, I'm sure it has for everyone, it required you to relearn or have a lot of agility. Okay. This is how we've done things for the last few years. This has gotten us here. Let's take all the best bits of that, and then let's figure out how to redo it because the world has shifted.
Alex Kracov: What's an example of something you may be changed or shifted in your process?
Hector Hernandez: Little things. I'll go with one that I think is pretty ubiquitous and that I think anyone that you talk to will be able to relate to. It's the fact that there was a point in time, there was a big chunk of time when money was readily accessible. When you were going out to sell, what that normally meant - because money was readily accessible - is that you could get approvals at some relatively low level. You get approvals for a healthy deal. Let's say 75k, 50k just to use a number. You can get approval on a pretty healthy deal from a manager or a director. And if they told you, yeah, I have this budget and I can spend it, they meant it. You went through your motion, and you were able to close that deal. You still had to work for it. You had to win it, and there was legal. There was still a lot of work that needed to be done, and it was hard. Closing new business in our industry is never easy. But the goal line never shifted. We have cash to spend on this, and they did spend it on that.
About 18 months ago, we saw a really, really quick shift, from yes, I have this money and I can spend it to yes, I had this money. But now I'm being told that there's a new process. And I don't know that new process. It's not only that they didn't have the money to spend any more. It's that they didn't even know what the process was to do it. And oftentimes, the process would end with like, oh, now our CFO needs to approve everything. So going one quarter, when you're working with like a mid-level manager or a director who has their budget, who's not really asking a lot of questions and closing it, shifting over to now the CFO needs to approve every single spend same 75k dollar deal. That is a dramatic shift in your ability to forecast.
It really changes all of your core metrics, because sales process and cell cycling are a core part of so many of the key metrics that we all use to measure, the health of ourselves, and that the industry uses to measure the health of our company. That small thing would add weeks, if not months, to the approval process. Then oftentimes, they would just say no. Yeah, we did have that budget. But you know what? We're cutting back on everything. We're now freezing all spend. It was the speed at which that shifted that most impacted us. It wasn't like gradually over time, we saw the level of approval and the amount of time it took slowly increased. It was like April to May. It was April, we're still going. We're still closing this. In May, it was like hold the phones. Everything is now paused.
Alex Kracov: Yeah. I mean, I think that is such a good start. Because I think it's something we've all been feeling in SaaS over the past couple of years. It puts so much more pressure. I imagine you had to change the whole way you even pitch the product in trying to build a business case and show the value to the CFO and the executive-level team, who probably barely even understood some of the implications of some of these infrastructure things. I can't imagine teaching a CFO about the developer side of things. That must be very challenging.
Hector Hernandez: Yeah, we would tell the team like just assume that the CFO has no idea what this is and doesn't care what it is. Why does it matter to them? Why does it matter to the business? What is the thing that is being held up? It's hard for a sales team or even a sales leader that has mostly sold or grown up through the desert era of SaaS to make that transition so quickly. The market was punishing reps for doing things that it had rewarded earlier. It went from rewarding speed and just cutting through things and just high transaction. It just really quickly punished people. People that had grown up thinking like, oh, I can make my number by doing these things all of a sudden woke up on there, and they had to go back and read up on the old school sales books, right? Hold on. All right. I need to be multi-threaded into this opportunity. I don't know who my EB is. I need to go figure out how to get in front of my EB.
There were some simple questions that we were starting to ask. I don't blame us for not necessarily asking these before because people were transacting. But something like, have you ever bought a solution like this before at your company? Because people jump around companies a lot. Our buyers jump around a lot. Have you ever bought a solution like this at your company? If they said no, well, it's like, oh, who has at your company? And can we get them involved? Can we get them to be our Sherpas to help us figure out what are the next steps that need to happen? And if the answer is yes, I bought something like this before, a very simple question was like, okay, when? And if it wasn't in the last quarter, it would be like, hey, are you sure that that's how your company still buys? Have there been any changes to your company that would indicate that this is shifting? That was true not only in the mid-market and SMB segment, but those shifts happen at the enterprise as well.
I have a lot of empathy for procurement folks because I've worked with so many in my career, and I know that they have a very important role that they play for organizations. I know that the last year or so, they got a little bit of power back. They're very happy to flex that a little bit. Because for a long time, the buying process got away from them. People were buying things on their own. People were coming to them saying like, hey, I downloaded this thing, and then I used a bunch of it. And now I owe them $20,000. Now I owe them $50,000. Can you please pay this? I'm like, what? What do you mean? You just started using this? Now they were able to bring things back in. They were able to establish their own procurement best practices, which maybe had gotten away from them. So the market has definitely corrected the power on the buying and procurement side.
Alex Kracov: I'd love to talk a little bit about - I think one thing unique about Teleport is there's an open-source element to it, right?
Hector Hernandez: Yes.
Alex Kracov: And so how does having an open-source element to your business impact your sales and customer success motion? How do you play with that open-source community?
Hector Hernandez: Oh, that is like an entire half-day conversation for us about how this becomes really unique. The one thing that open source does give you is it does give you a lot of, again, a community. It gives you a lot of love. It also gives you - for us, we're really in the security space. There's nothing better than being able to just go show people. Look, this isn't a black box. You can go see everything that's going on in there. You can audit it yourself. You can go through that entire process and be really rest assured that we built a really strong product. So it does give you a lot of credibility, and it does give you a lot of momentum.
Actually, right now, I haven't checked in the last few months, but I have been told that Teleport is the security product of the most GitHub stars out there. That's great. That shows wide adoption, wide love. It helps you understand that, wow, there is real pain that we're solving here if this is widely adopted. On the other side, there is an additional hurdle that you need to jump, which is making sure that the customer sees enough value in your enterprise solution or in your paid-for solution that they can't get just with open source. It's not only a sales or marketing problem, or it's not only up to the leaders there to solve. That is a company-wide process that you need to go through. Product and engineering are vital to that. Understanding why are people using this and what kind of people are using this.
If there's a bunch of smaller companies, there's a bunch of people using it for their network at home or for a side project, that's great. That's what it's there for. If you have a Fortune 500 using it and rolling it out to 20,000 users, then you're like, hold on. That was never really our intent. Our intent was never to have this be rolled out in this way. So why is that possible? What should we do? Are we comfortable with that? Maybe we are. Right? But how do we optimize this so that the customer gets value, so that the right targets are using that solution, and then the right folks are finding enough value in your enterprise product to continue that journey? It takes a lot of iteration.
Alex Kracov: Yeah, I imagine this to be very interesting to figure out. Okay. What are those product triggers between the open-source side, the enterprise side, that cause people to upgrade? I'm sure there's a ton of experimentation that goes into that. I think one huge benefit I see of open source is, you have this defined pool to fish from, from outbound sales perspective. Do you just outbound to all the people who are doing things on GitHub? Is that how the sales machine works? Do you let people come to you? How do you do that in a tasteful way? Because I'm sure if you're too sales-y to the community, they might revolt back to you. So I don't know. How do you think about that?
Hector Hernandez: We're pretty conservative. I think I like where your head is at. I'll have you talk to my engineering leadership about being able to do that. But we don't collect any data from our open-source community at all. It's really important for us to make sure especially with the kind of product that we have. We have no idea.
Alex Kracov: Yeah, I guess security, too.
Hector Hernandez: And so I could see how if we did have a product and we were collecting all the information about who the companies are, it would be like, hey, we know exactly who to go after. So we have to use different kinds of data. We use third-party in 10 data. We use different things to understand some of the organizations that may be leveraging it or, more importantly, that are in the market for a solution like it. So what we really do gain is a lot of developer love. We gain a lot of adoption. Our code base is probably stronger because of it without a doubt. There are a lot of really large companies that say the fact that you are open source made us feel comfortable moving forward. There are a lot of benefits.
On the go-to-market side, it can be a double edged-sword. You need to convince people that they need to move to the enterprise. Oftentimes, like with us, and I'm sure a lot of other companies out there, we actually don't know who's using it. But on the flip side of that, it's really nice to sometimes get on a call and say, hey, how did you hear about Teleport? They'll say something like, oh, we've been running Teleport for a year. Now we need some of the enterprise functionality. It's like, we love the product. It's great. You guys have done a great job. Now let's figure out how to scale this. That's just finding new. You never get that if you don't have that before. At best, you have freemium or maybe extended trials. But people don't really productionalize a 14-day trial for sure, or a freemium product. They do something that's open source.
Alex Kracov: I also love what you said earlier about the transparency in the code. I imagine that just is so important when you're selling a security product for people to go in there, pick it apart, and see actually what is behind the scenes, which is so different than any other SaaS product that's out there and I'm sure all your competitors as well. So that's a very interesting dynamic I never thought about.
Hector Hernandez: It is. We get some really interesting comments. I've been really fortunate in the companies that I've worked with that people really do love the platform. People will come to us at trade shows or something. They'll come up and they're like, "Hey, I just wanted to say thank you. You guys have built an amazing product. We use it all the time, and we think it's invaluable to us. I just wanted to shake your hand." Then you take credit as if you were the developer that was actually doing it. But you're like, no. God, man. Doesn't that pump you up? Don't you really want to turn around and be like, yeah, let's go figure out how we can get this in the hands of more people? Because it's actually providing value. It's something that is really at the core making a company more efficient and more secure.
And as salespeople, if you're not highly motivated by the product or by the solution that you're selling, it's hard to bring your whole heart into it. Because we - Alex, you know this. We've talked about it. We lose and fail way more than we win on a daily basis. Our emails, everything, we deal with losses all the time. Sometimes you deal with them for many days or many weeks in a row in a large enterprise sell. You can deal with it for a couple of quarters. You're just like losing and losing and losing. If you don't believe in what you have that it is actually better for society or for the market, or that there is someone out there that's really benefiting from what you're doing, it can be really hard to get through those dips in your cycles.
Alex Kracov: I'd love to end today's conversation talking a little bit about what it's like building a remote sales culture. I think you mentioned before Teleport is pretty remote, and it's very different than what you're doing at LD. So how do you think about building remote sales culture? Because I think sales, especially, seems like one of the hardest departments to do that in.
Hector Hernandez: Yeah, I will give you some of the things that I've noticed and I've seen. But I want to make it clear that I could probably learn how to do this better from other folks. I'll be keeping an eye on this channel. And whenever you have someone that has nailed this, I'll be listening in.
What I have learned is that no matter what our particular organization - I don't think this is particularly to Teleport. I think all sales or revenue organizations are like this - it is really important to connect every once in a while in person. Those become some of the most impactful sessions that we ever do. We only get together a couple of times a year. But every time, the feedback is like, I wish we did this more often. I learned so much. Or, this thing that people were trying to explain to me for six months, I finally got it. I finally got it because I was able to do that. So if you can leverage in person, it doesn't always have to be like everyone. It doesn't have to be hundreds of people. It's nice to do that because people can cross pollinate. But even if you're just able to get small clusters of people together, more often, it's very positive. You build community.
The real big struggle outside of enablement which, again, not something that I've totally nailed on how to properly enable people remotely. But outside of enablement, it's the culture piece that we really lose by not seeing each other. It's really simple for me to be here on this screen, and then just close it and then go off and do whatever with my day. It becomes like a transaction. This becomes very transactional. It's very different from shaking someone's hand, or breaking bread with them, or just being able to hear about how their life is going outside of you having to schedule time to talk about how is life going. That organic, those human elements are lost. When you're able to connect people, what happens is that this relationship goes from being transactional - like I'm doing this. I'm going to click this off. Now I'm not doing this. I'm going to do something else - to there actually being some connective tissue. I want to do this thing that you're asking me, not only because it's my job but because I know you and because I know that you need this for XYZ reason. I know that this is a really important part of your career. You're trying to grow your career. And if I'm able to help you with this, it'll move you forward. I want to be of service to you. That is something that gets lost if people don't have that personal connection.
And so, again, I don't have all the answers. I'm sure my team can tell you about all the ways in which we maybe haven't rolled things out perfectly. But one big learning that I have had is that, even if you're fully remote, finding opportunities to get people together is really, really important. I know it's not groundbreaking, but I have seen it with my own eyes. Be a huge difference maker.
Alex Kracov: Well, thank you so much for the time today, Hector.
Hector Hernandez: Of course.
Alex Kracov: If people want to follow up, ask questions, where is the best place for them to find you?
Hector Hernandez: I'm on LinkedIn. I will chat with most people that hit me up there. I'm also on X. I can send you over my information so people can link to on that. Those are probably the easiest mediums to get in touch with me.
Alex Kracov: Right on. Thank you.
