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“Veterans” are not the first thing that comes to mind when one thinks of Silicon Valley and tech. But there’s actually a growing community of veterans in tech here, and leadership is top of mind for them. Which makes sense when you think about what the military does: It’s all about putting the right foundation, the right process, the right people in place. That’s what a hyper-growth company needs, as LinkedIn CEO Jeff Weiner observes.

I interviewed Weiner at our recent Veterans in Technology Leadership event, which connected veterans in our network to portfolio CEOs. Weiner, who has had the chance to meet with some Delta Force teams, SEALs and senior military leaders, said, “If you ask the common person on the street if a grizzled vet is going to be compassionate, they’re going to be thinking about warfare, about the aggression of war. But I think that’s a huge misconception. I’ve been wildly impressed by the caliber and the integrity and the humanity of these people. That’s what makes great leaders.”

There’s a very clear distinction between managers and leaders. “Managers essentially tell people what to do, but leaders inspire them to do it.” Here are some more highlights from our conversation…

PL: Let’s start with your leadership philosophy.

JW: Inspiration lies at the heart of leadership. There are three ways for leaders to inspire: (1) Possess a clarity of vision. (2) Hold to the courage of your conviction. (3) Have the ability to effectively communicate both of the above. If you’re not forthcoming with information, you’re going to create a problem. It’s almost an inherent conflict, because your employees are not going to feel trusted.

PL: How does trust play into how you and your colleagues work together?

JW: When people say, “Just trust me,” you’ve never met them before, it’s not going to happen. It takes a long time to build up. It can be lost in milliseconds now, literally milliseconds. I’m not saying that figuratively.

Trust is the bedrock of everything that we do, quite literally. So, if we lose the trust of our members, we’re done. We’re completely done. An old friend once taught me that trust is consistency over time. It’s a simple formula for a complex thing.

PL: What changes did you go through as LinkedIn went from a small company to a large company?

JW: The first continuum is the difference between problem solving and coaching. If there’s a day-to-day problem, if you’re just diving in and just falling back to that instinct that got you to that place to begin with, you’re never going to scale. You will never, ever scale. If you’re really doing your job as a CEO, you’re going to leave your people with the tools to be able to coach their team and so forth.

The second continuum is tactical execution on the one end, and strategic thinking and proactive thinking on the other. By the time you’re at 300 people, you’d better accept that you’re going to have competition. If you are just reacting to them, it’s too late. Trust me, the competition is thinking strategically. You’ve got to be constantly thinking about what’s next, by looking out three to five years and working your way back in terms of what’s going to be necessary to get there.

PL: What was your personal journey as a leader?

JW: I think I made a very natural mistake that a lot of us make, which is to project my own worldview onto other people. That if I thought a certain way, why didn’t they think the same way? And if I did things a certain way, why didn’t they do things the same way?

What I failed to realize back then was that just because I enjoy that part of the business, or I may have a certain facility with that part of the business, doesn’t mean others need to. And I need to take the time and understand where they’re coming from. This is my first principle of management, which is managing compassionately. And that means putting yourself in someone else’s shoes and seeing the world through their lens, their perspective.

PL: What skills do you look for in team members?

JW: The holy grail is the “five-tool” player:

1. It starts with technology vision. Because technology drives essentially everything we do, you have to understand where it’s going and how it’s going to impact society.
2. The next tool is product sensibility. You need to be able to harness that vision and meet unmet needs in the marketplace.
3. The third is business acumen. If you don’t have a sustainable business model, it’s not going to go anywhere over time.
4. The fourth is leadership and the ability to evangelize.
5. The fifth and last is the most important tool, and it’s resourcefulness. It’s just getting shit done.

If you find people with more than one of these skills and they’re superlative, do everything you can to hire them. Anything close to four skills, superstars. Five skills and they’re people that change the world.

PL: Are we as a nation doing enough to create not just jobs, but the right jobs?

JW: This is one of the most significant issues of our time. Youth-based unemployment in the country is 2X that of general unemployment (6.7 percent), so roughly 13 percent. There are approximately 73 million unemployed youth between the ages of 15 and 24 on a global basis. We have to get this right and we’re not: I think we’re still training our youth for the jobs of a prior economy that no longer exists — not the jobs that are, or will be.

So, what can we do? We can start with vocational training and identifying where the jobs are. There are 3.8 million available jobs in the country and some people would say it’s even higher than that. That number has risen every year since 2008, despite the fact we have all this unemployment.

I’m not just talking about becoming a software engineer in the valley, because training and computer science degrees, that kind of stuff may take a little longer. Of the 4 million or so jobs out there, you’ve got a lot of jobs that are in retail, that are in real estate, or construction. But the people looking for work may not even know what jobs are available, and where they are.

It’s about identifying wherever they are in the country. And making sure we have the right resources to get them the right skills, and can make themselves available for the right jobs. I’d love for us to be investing more of our collective time and energy and resources in finding the way.

PL: What role will education need to play here?

JW: I think most people have familiarized themselves with the fact that our education system is highly antiquated. Very different skills are required for the knowledge economy. Our education system needs less rote learning and more critical reasoning, creative problem solving, and collaboration. Even when we were in primary school, individuality was the model we were taught. Taking tests as an individual, doing individual work, grading me individually.

How many of you are going to be successful by working individually? There’s something a little out of whack when we have a school system where every kid is being treated as an individual.

I think compassion is the single most important thing you can teach a child, seriously. I don’t mean that in some spiritual, new-age way. I mean it, period. In a more global, interdependent, interconnected society, compassion should be taught. Just like reading, just like math.

It may sound a bit ungrateful, especially coming from someone who invests in these things, but many early SaaS companies in many ways have been successful in spite of themselves. SaaS customers have had their pick of great software products, all available from the cloud, and without the long, tortured installation efforts of previous generations of software. On the back of these frictionless software deals, SaaS companies have been growing like mad, and often without any formal sales effort. But if they haven’t already, these up-and-to-the-right companies are about to hit a wall. The reason is that early deployments and usage do not necessarily translate into sustainable revenue growth.

In order for SaaS businesses to really scale and reach their full potential as industry leaders, they need a real and robust sales effort. That’s right, you need to build a sales team.

It won’t be easy. I won’t pretend that it is. But scaling sales, while expensive and culturally challenging to implement, changes the size of the potential opportunity. The big opportunity for SaaS companies is to drive adoption across the whole organization, which requires a centralized effort to redesign corporate processes, facilitate training and manage customer success. This is especially the case with tools that work best when used by everyone at a company, like CRM, human resources or accounting

Freemium is only part of the story

Before we dive in, there’s one thing I have to set straight: Freemium is a fantastic starting point for SaaS, but freemium is not the same as building a sales organization. Freemium is a product and marketing strategy designed to generate a massive base of users, which can be approached for a future sale. Freemium is all about seeding the market and establishing a platform for building a winning offering. The best SaaS companies use their free product to iterate and improve their offering with data and feedback. But even with an effective freemium go-to-market strategy, SaaS companies still need to think about augmenting with a sales organization. Start with freemium, but don’t end there.

The evolving role of the CIO

The CIO’s role is evolving in that for most SaaS applications, the department will drive the purchase. This is different from past generations of software, where on-premise installations and routine software upgrades required the CIO to hand-hold every buying decision. In a sense, SaaS has liberated the CIO to focus on longer-term strategic business issues, rather than worry about the next Oracle or SAP upgrade.  The CIO will influence security, support and data protection policies, so understanding these up-front becomes a key part of the selling process.

The balance of influence between the departmental buyer and the CIO differs by application as well as by company—the more mission critical, secure, and integrated, the larger the CIO role. For infrastructure purchases, as an example, the CIO continues to be highly involved in the purchasing decision.

A framework for an effective SaaS sales organization

Designing a sales and marketing function targeted at the departmental buyer is key to creating long-term competitive advantage. I’ve seen many early SaaS companies reluctantly stumble into half-baked sales efforts, only to find a flattening in revenue and customer engagement.

To convince the skeptics, I’ve asked Dan Shapero at LinkedIn, one of the most successful SaaS companies of our time, to weigh in. Dan is the VP of Talent and Insights at LinkedIn and runs a 1,200-person sales organization. While most people think that LinkedIn sells itself with great product and no sales effort, nothing could be further from the truth. Here’s a framework that LinkedIn has developed to apply:  

Organize around the buyer. LinkedIn has multiple business lines that work with three different corporate functions: talent, marketing and sales. These departments typically make discrete decisions, with independent budgets, so LinkedIn has different teams that focus on partnering with each function.

Distinguish between new account acquisition and account success. Two of the most important lessons at LinkedIn have been (1) successful clients buy more over time and (2) the process and expertise required to acquire a new customer is very different from nurturing that customer. As a result, there are separate and distinct teams, sales processes and measures of success for managing new and existing customers.

Land, then expand. With SaaS, customers can purchase on a small scale before going all in. Rather than focusing on landing huge deals, Linkedin has been better served by acquiring many smaller scale deals at clients with huge long-term potential. Albeit smaller, success with the initial deployment often results in tremendous upside in the second, third, fourth year of a client’s tenure. Expanding in a SaaS/freemium model is particularly effective because you not only can demonstrate success, but you can also pinpoint and size future demand based on who is using the technology for free.

Leverage inside sales for the mid-market. The creation of a robust, inside sales organization to serve clients over the phone, from regional hubs around the world, is a critical part of LinkedIn’s successful SaaS franchise. Inside sales reps close their own business and manage their own territory. The SaaS model enables the client to be engaged, sold, provisioned and serviced in a highly scalable way, without the need for an in-person visit.

Monitor customer engagement. SaaS provides incredible transparency into how actively engaged customers are with the product. Understanding where usage is strong and weak across customers allows LinkedIn to improve customer experience by deploying training resources proactively, offering targeted advice on best practice, and improving the product roadmap. Most enterprise vendors are flying blind when it comes to understanding the success of their customers, while SaaS companies have a fundamental information advantage.

When you are in the throes of viral adoption, it is not immediately intuitive to many SaaS companies to build out a sales organization. Right now, those of you in all the rapid growth SaaS companies might still be thinking, “Not us, we’ll just keep booking those inbound leads.” You’ll keep thinking that until the inbound stops. The paradox of great SaaS companies is that the more successful a SaaS company is with early deployments, the more challenging it becomes for that organization to recognize and embrace building a formal sales organization to address the needs of the enterprise buyer. That’s why I want every SaaS company to consider the SaaS Manifesto a call to arms. We are at a point in the maturity of SaaS where mature sales are important.

Up next: The SaaS Manifesto: Part 3 – the requirements for enterprise-wide SaaS adoption and deployment 

Note: Part 2 of “The SaaS Manifesto” first ran in The Wall Street Journal‘s CIO Journal. You can read Part 1 here.