Palen Schwab, VP of Revenue Ops at Lacework, on Building a Data-Driven ICP that Fuels Revenue and Sales Pipeline

In this episode, our guest is Palen Schwab, VP of Revenue Ops at Lacework – a data-driven security platform for the cloud.

He joins Intricately CEO Michael Pollack and VP of Marketing Sarah E. Brown for a discussion on how marketers can work strategically with RevOps teams, the importance of data in a go-to-market strategy, and much more.

Full Transcript

Michael Pollack [00:00:09] Hi, everyone, and welcome to Selling In the Cloud, a podcast about the business of cloud sales and marketing, brought to you by Intricately, the authoritative source of digital product adoption, usage, and spend data for cloud sales and marketing teams. I'm Michael Pollack and I'm here with Sarah E. Brown. And we are your co-hosts.

Sarah E. Brown [00:00:39] Michael, welcome to the show.

Michael Pollack [00:00:40] Sarah, as usual, it's great to be here with you.

Sarah E. Brown [00:00:43] Likewise. In this episode, we're speaking with Palen Schwab, VP of Revenue Ops at Lacework. Palen, welcome to the show.

Palen Schwab [00:00:49] Thank you. Thanks for having me.

Sarah E. Brown [00:00:51] Can you give us a brief introduction on who you are and a background for how you got to be where you are today at Lacework? And maybe a bit about what your team is focused on.

Palen Schwab [00:00:59] Yeah, sure. So I'm a VP of Revenue Ops at Lacework. I've been here about 18 months. It's been a crazy journey so far. When I joined 18 months ago, we were about 70 employees. And in that short amount of time, we're now over seven hundred. So we've gone through explosive growth in the last 18 months, this wild ride, and we've learned a lot along the way. I've been in high tech cybersecurity my whole career. I started off on the marketing side of things and then moved into marketing ops, sales ops, business operations, worked with finance and ended up doing revenue ops, which is a nice place to be. And you can oversee everything that's happening at the company and can make sure that the left hand understands what the right hand is doing and making sure that you orchestrate everything to work in harmony. So it's been a great time. And right now my team and in the company is really focused on continuing the journey of scale, right. If I'm thinking about the initiatives, how do we build things that we can get more runway out of that can scale with our team, that we can automate and remove manual process, that we can maintain data fidelity, that we can keep people focused and prioritize when there's all this chaos and growth happening around you? That's really been the focus. And a lot of times, it's reducing complexity and keeping things stupid simple, and making sure you don't overcomplicate a ham sandwich at the end of the day, right. Focus is key, I think, for success overall.

Michael Pollack [00:02:23] I think that makes sense. I think there's a lot you said there that I think we'll cover over the course of this podcast. But maybe just for our audience who maybe isn't as familiar with Lacework – we know them, I can talk to the product – but I'd love for you just to maybe share what is Lacework, why is Lacework different than what's out there and kind of what's fueling the hypergrowth that's kind of setting the business up to be so different than some of the other businesses that are out there in the space?

Palen Schwab [00:02:45] Sure. I mean, I've worked in this industry for a while. I start off with hardware security and then moved into cloud security. And there's been some fundamental challenges that the markets had. First of all, there's no clear leader in the market. It's disjointed. And we have a really big, important problem to solve. I mean, protecting all these other companies with COVID happening, a lot of companies went through the digital transformation, to try to connect with their customers, which is kind of lighting up the SaaS market and software market because people need to connect with their customers virtually. So we've seen cyber attacks go up six hundred percent in the last year. There's no clear leader. The market's disjointed and there's some fundamental problems with the approach that traditional vendors have taken. So, you know, what we've done is we're taking a platform approach. We're solving things using automation (AI) instead of manual rule writing to find it, basically telling the system what to look for, to find it. We're using AI to gather intelligence and layer that into the game. I think the other thing at scale, right. I've worked for a lot of companies where you start throwing too much data at the system and the thing tips over or can't handle it. And we're building a very scalable architecture which makes us really attractive for fast growing companies and for larger environments. And I think the new approach, which is really resonating with the market and I hope that we become the leader over the next couple of years. We're also solving the problem with data, right? I mean, at the end of the day, security is a data issue. So if you have the best data and you're able to digest it more easily and reduce meantime, to know of what's going on in your environment, I think we were creating a safer environment in which we play and allows companies to spend their time on innovating, on working on their product rather than constantly being scared about the risks out there in the market.

Sarah E. Brown [00:04:32] So you've talked a bit about data for your customers. Love to hear on the revenue team, how you think about data and how are you incorporating data in your go-to-market strategy.

Palen Schwab [00:04:41] Again, a lot of the things that the company as a whole is focused on, that's called the core principles, we've really adopted on the revenue ops and sales ops and marking ops teams. We do take a data-focused approach and we also think of scale. Right? So at the end of the day for us, we have visibility into almost 10 million companies, right. We have a growing salesforce. Where do we focus our hundreds of salespeople to go prospect into when there's a world of ten million? And what we're doing is we've built, I think, a really strong account scoring model that really does a great job identifying our ideal customer profile. And the way that we're identifying our ideal customer profile is using a variety of thermographic and technographic data as well as growth signals. So with an ideal customer profile, the whole point is to define the companies in the accounts that have the best fit for your product, right. And for us, there's some technology requirements that requires that fit. We're a cloud security company, it's gonna be a hard sell to sell cloud security to someone not operating in the cloud, for instance, right. We have protections for people running in containerized environments. So it makes sense that we're looking for companies that are running containers. I mean, it's all really logical when you think about it. Yes, we might be looking at a hundred different data points to find signals of that one attribute of containers. But we keep things really simple. So that way the story of why we're going after that account is clear. I think I've done dozens of models and where things fall over as you create a really complex, beautiful model that you think is really fine tuned. The salespeople can't understand that. They can't rationalize why they're going after it and they fail to adhere to where telling them to focus ultimately it be\comes chaos again. So I think why we've had so much traction, growth is our ability to not only identify the ICP, but communicate it clearly and understand the rationale behind why it's important that you focus here instead of somewhere else. Not to mention the numbers are supporting it. So since we've added the model, we've thrown three hundred percent year over year, our average deal size and our ICP is two point seven times larger than those that we're winning organically outside of the ICP. They have a shorter sales cycle and larger lifetime value. So it's kind of these golden metrics that you hope when you put them all together, come out the other side and be realized right now. So it's really fun and great when that happens.

Michael Pollack [00:07:08] I love that story. And I think that story is kind of a commercial for Rev Ops done right. And for our audience, where we've got folks that are sales leaders, marketing leaders, rev ops leaders, there's always a lot of questions about the data and how you do it. And so I'd love for you to maybe talk about is somebody who has a lot of experience as a rebel leader at various businesses. Can you just talk a little bit about how you're doing rev ops differently at Lacework? Just whether the approach is different or the market's different or the date is different, or maybe it's all the same and it's just a combination of factors. But if you could comment a little bit there, I feel like that would have some resonance for our audience.

Palen Schwab [00:07:46] Sure. I think it starts with strong leadership, with a clear vision, clear principles. Right. The sales management organization here, I think we're hiring top notch sales management players here. But I think the other thing is their job is not to force compliance across the sales team. The real focus is training, enablement and looking at who's struggling and who's performing well and lifting the people up that aren't right because churn is a killer in sales. It kills their productivity models and all that stuff. And you really want to make every single person as successful as they can. And basically, at the end of the day, if you think of it like a game, right. It's a game that can be won, right. A productivity model can be won. You beat it by hiring the best talent, spending a ton of time training and enabling them so that that way they contribute to productivity faster and beat their targets. That approach, I think, is really served our team well. And it's not about beating people in compliance and checking a box. It's about how can make them a stronger salesperson. How can we take our great solution and help companies that are struggling with solving the security problem that they're experiencing. So I think that's one approach. I think our data-driven approach and our use of ICP, an account scoring one hundred percent, a differentiator. I think we've also fundamentally on my team have changed the way that maybe rev ops or sales ops is perceived. I don't think it works well when they're order takers in the organization. And what we've done is we've elevated our sales ops managers, marketing ops managers to be strategic partners. So they're not taking orders from someone who's two or three steps removed from the technology or the process or the reporting. They have a seat at the table and half the time they eliminate a lot of waste and distractions by just asking questions like why or what benefit would this give you if we delivered it? and I think because of that elevation to a strategic partner rather than an order taker, the overall experience on both sides is better. You're keeping some managers from flailing and looking in the wrong direction and creating paths that aren't helping to our ultimate goal. And you're making sales ops really feel like they can build something great and build the next gold standard. I think we also just traditionally threw out some concepts that a lot of companies, hey we've always built it this way, so we're going to continue to build it this way and just thought about well, are we solving the right problem? So one quick example of that might be Salesforce. We need sales to update Salesforce. To do that, they don't necessarily need to log in. So if the problem that you're trying to solve is we need the best data in Salesforce to drive our reporting and insights. The solution to that is not updating page layouts and working in Salesforce and trying to teach everyone to be a Salesforce expert. Another way of solving that is to create a interface with Salesforce using something like Troops or Scratchpad that aligns more with how sales wants to work and allows them to spend less time doing data entry and updating Salesforce and more time actually doing their selling activities.

Sarah E. Brown [00:10:51] You have a background in the marketing world, and I'd love to dig into what advice you have for marketers to work in a more strategic way with their rev ops teams, but also to think more like rev ops people in their marketing work.

Palen Schwab [00:11:01] Well, I think this is another thing. I think because of how we've organized our rev ops team, I own sales operations and marketing operations as well, which means that we're tied hip to hip with demand generation, which means that we're all using the same definitions. We're all recording through the same lens and looking at the same piece of paper. So that alleviates a ton of conflict that a lot of times arises in organizations where my numbers are different than your numbers. Everyone's numbers are the same because we're building it and we're supporting the whole team, but also means it's alignment on ICP. I think it's a pretty common thing that if you ask 10 people an organization, their definition of their ICP is going to be 10 different results. We don't have that, which I think is really rare and great and allows us to get alignment, which means when we're telling sales to focus on your tier one, tier two and tier three ICP accounts, marketing is using the fields that we use to tag who has accounts in the system to build their campaign lists and their campaign reports, and they're doing the same thing. They're tiering their spend on these accounts the same way that we tier them for the sales team. And you start getting the synergy across the different departments. We're all spending effectively and efficiently. And we're really at the end of the day, it's gambling. It's Vegas. We're placing bets with the best probability of winning. It doesn't mean we're not going to win outside the ICP, if anything. That's great. Let's learn why and strengthen our model. But over time, we will win more by placing bets where the data is telling us.

Michael Pollack [00:12:31] You know, just unpacking that comment there about the ICP in particular and the fact that you made a comment it's like Vegas or you perhaps in that sense it's almost like card counting in that you feel pretty good around, hey, we're using every strategy we can to minimize the risk of losing and maximize the risk of winning; the ICP being the trick to powering that. As somebody who's been at this for a number of years now, is how you build an ICP changed? I mean, obviously the data that's available is different, but do you now think about it differently than you did earlier in your career? And do you see today when you think about the success, you're having at Lacework and then you think about where you may take this to next? Is it that the way the ICP is being built is different or just the underlying data is more available? Or how would you characterize kind of the change that you've seen in your time working with that?

Palen Schwab [00:13:23] Yeah, so, I mean, I've built them wrong dozens of ways. There's a couple of things that have changed from my first model to what we're using now. So I started off with an AI model where we were looking at more like every data point and it would churn out a store that would tell us to focus there. But unless you wrote the algorithm that the AI was following, no one can interpret it. No one can really rationalize why it happened. So people lost faith in it and it kind of got abandoned. So we moved to more of a logical model, something that's digestible and simple to align the team, because you need team alignment in order for it to work. The other thing is we moved from a forced distribution model to a natural distribution model, meaning that we're not just saying, well, the accounts of the highest 10 percent of the store are going to be A, and the top twenty percent are going to B. Really, the attributes that they hold dictate how many accounts are in the ICP. And that's fundamentally different because it can't be fake. It means that every store has meaning – and that's really big and important because people don't like it when you draw arbitrary lines. And there's really no significance between the two; where, in our model we know the difference with tier one and tier two ICP is that one is running a competitive product and the other one isn't. So without thinking about it, they know what their track is going to be when they're reaching out and engaging, and that also because they know what attributes a company holds just by the tier or grade that they have, they know what messages to align to. You're not going to bring up a message that's not relevant for a company if you're not seeing that attribute or signal, right. So you have a more personalized message being told that resonates more. You're not wasting your time with companies that don't have any data, that they even have a fit here. And it also means that you're not going into an account with a single message. If you're a tier one ICP account in our model, you have eight messages to choose from, which fundamentally changes your conversation, because now what you're trying to figure out is where do the priorities lie across these different eight messages I can play. And then it becomes more consultative and you can talk about what problems are you trying to solve rather than just be a problem. So it's so funny. It started off with the data and ICP generation, goes all the way down to how you hold relationships and how you provide value to the company from front line sales to marketing messaging.

Michael Pollack [00:15:48] On that topic, when you talk about your experience building these... it's interesting. Here in the Valley, I feel like every five years, maybe every 10 years, a whole new business model comes along with something about predicting your leads. Right? If you look at kind of a first wave of these companies, maybe the Everstring, the Lattice [Engines], they said, hey, we're going to look at your past customers and that'll tell us who your next customers could be. I'd be curious to ask your opinion as somebody who's living this, do you believe ICP design can be sold as a service? Is it something that is always innate to the business, right? Your core competency is what you're able to do at Lacework, is really precise to Lacework. Do you have an opinion around somebody is going to crack this and build ICP as a service or it'll never work as a service because it's too personalized? What's your thought there?

Palen Schwab [00:16:39] It's a good question. I mean, there's a couple of things. So first of all, our ICP changes based on our product roadmap and how we can serve its customers, because, again, ICP is the customers that have the best fit for our product. Our product is constantly evolving and changing and the market's changing as well with it. So we do we reevaluate quite a bit and refine the model and keeps on getting tighter and tighter. I think you also have to be really conscious of not creating a self-fulfilling prophecy. You're winning more ICP accounts because you're focused on more ICP accounts. And I think that can be a problem, too, because you're much too focused. So we use our account scoring for a lot of marketing and strategic outreach and sales outreach, expensive resources going after where they have the best probability. But at the same time, anything that's inbound, we score it, but we make sure we follow up and we're listening to the voice of the customer because that's important, because if you start blocking what the market saying, you're never really going to grow and find out where the next opportunity, right? It's really a great thing, especially if your branding is working, and your messaging is working, for the market to self-correct you and say, wow, it's funny, we're getting a lot of inbound interest from this other market. Maybe we should look there and see why. And if you learn why, go, wow, there's actually a huge case here. We didn't think about the markets correcting us. And now we have a new message, a new attribute that can make our model even stronger and winning a whole othrt area and expand our ICP and our total addressable market in ways that we didn't think of because the ICP in the past has to grow, especially if your scale and company. So if you're not open minded and you're kind of looking at only the ICP being very strict, it might have short term gains, but long term negative effects.

Sarah E. Brown [00:18:26] Palen, for potential customers of Lacework listening to this podcast of whom there will probably be many, what would you like to tell them? What something you wish they knew?

Palen Schwab [00:18:34] Honestly, there's so much FUD (fear, uncertainty and doubt) in the industry, again, where it's a disjointed market and it's a very competitive environment. I think if you have a security problem, just talk to us. I think our approach is fundamentally different. We have a new approach to solving a problem that exists, and I don't know about you, but I evaluate a lot of tools on the sales and marketing side of things, and having a better mousetrap or having another tool is a competitive advantage. And you might think of security as, well, I'm locking down and protecting data, but that's not necessarily true. Having good security actually smooths out your sales cycle? It removes roadblocks to sales. So if you're a company that's moving up market and you have compliance regulations that are getting in the way of you landing that next customer, moving into the enterprise or going internationally, a way of combating those challenges that you're going to face is by investing in security early, and especially in a platform that can service you not today, but also tomorrow, grow with your organization and also use a platform that uses AI, so that way you're not spending resources manually doing things, writing rules, responding to noise alerts. It's about agility. I think we get that because we are that. We're trying to be our own best customers. So, yeah, I think it's reach out and engage. At the end of the day, they have to make a decision for themselves and we're listening to the customer to try to become the leader. So we want to talk to as many people as possible.

Sarah E. Brown [00:20:06] Fantastic. And for people who are listening, who'd like to learn more about you and your work, where should we direct them to?

Palen Schwab [00:20:11] Oh, I'd go to Lacework dot com. You can sign up for a trial or a demo. Team's happy to help out. So, yeah, there's a ton of content out there. I'm sure you'll find this pretty easy.

Sarah E. Brown [00:20:20] Palen, thank you, that was awesome.

Palen Schwab [00:20:21] Thanks, everyone.

Sarah E. Brown [00:20:22] That's it for us. This episode may be over, but we can continue the conversation on Twitter with the hashtag #SellingInTheCloud. On Twitter, I'm @SEBMarketing.

Michael Pollack [00:20:30] And I'm @MRPollack.

Sarah E. Brown [00:20:32] Thank you to everyone for joining us for this episode of Selling in the Cloud, brought to you by Intricately, the authoritative source of digital product adoption, usage, and spend data for cloud sales and marketing teams. If you like the show, head on over to iTunes, or wherever you listen to podcasts, and please give us a review. We appreciate it. Until next time.