Episode #79 Blueprint for Scalable Revenue and Outcome Based Pricing with Jacco van der KooijJacco

On this episode of Revenue Reimagined, hosts Adam and Dale welcome the legendary Jacco van der Kooij—Founder and CEO of Winning by Design—for a game-changing conversation on building unstoppable revenue engines.

Jacco dives deep into his powerful Revenue Factory framework and shares how aligning growth, cost efficiency, and quality can supercharge your business. Discover why customer success should be your biggest revenue driver and how AI is flipping the sales game upside down. Plus, get an inside look at the future of outcome-based pricing and why most companies are still stuck in first gear.

🚀 Whether you’re in sales, marketing, RevOps, or SaaS leadership, this episode is packed with bold ideas and tactical strategies to help you scale smarter and faster.

Follow Jacco: https://www.linkedin.com/in/jaccovanderkooij/

PS - huge shout out to Sendoso for sponsoring our show.

We could not do this without you.

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🎁 Lastly, we have a gift for you!

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Take your free GTM Gap™ Self-Assessment to uncover reasons why and what to do about it.

https://revenuereimagined.typeform.com/gtmgap

Transcript

00:00 
This is the Revenue Reimagined podcast where we talk about what else all things revenue with the best senior leaders across sales, marketing, customer success, and RevOps so that you can scale your business by reimagining how you think about revenue. 

00:15 
I'm Adam Jay and I'm Dale Zielinski. As always, thanks for hanging with us. There's a million ways you can be spending your time and we're grateful that you're choosing to spend it with us. Be sure to check out our newsletter if you want the show notes, amazing giveaways, and the tactical advice on how to uncomplicate revenue. 

00:32 
Let's get to it. Welcome back to another episode of the Revenue Reimagined podcast. We have a super special guest with us today. We have the founder and CEO of Winning by Design, Jocko Vanderkoi, who is an internationally renowned business and thought leader on all things revenue growth and strategy. 

00:51 
We'll talk about... Oh stop it! You are! We'll talk about this revenue architecture book that I have back here. And someone told me, I don't know, an author of seven, seven other best-selling books on driving growth for SaaS companies, also a sales mentor across several VC firms where you help accelerate the development of sales teams across their portfolios. 

01:13 
We are huge lovers of Winning by Design, huge lovers of Spiced. We're super excited to talk to you today, man. Thanks for joining us. I think it's a pleasure and it is a treat as always. Thank you for letting me be part. 

01:25 
And for those of you at home or wherever you may be listening, welcome, welcome. It is the holiday season. All the best wishes for you all. Yes. Yes. All the revenue wishes in the world, right, Jocko? 

01:36 
Growth at the lowest cost, at the highest growth rate is my wish for you. Yes. I love it. I love it. So we were talking earlier and there's a term you coined called the revenue factory. I think this would be a great jumping off point for the podcast. 

01:51 
Talk a little bit about the revenue factory, what that means to you, Winning by Design, and potentially for people looking to generate a revenue factory. factory. Thank you for asking, Dale. So here's the thing is like, I am from a relatively small town. 

02:08 
And by the way, a small town as it measured in a few thousand, when we go up to the next city that had 18,000, we would call it we go to the city, we would go to the city, right? That was the big city thing. 

02:17 
That was the 18,000 people in those days. And so if you think about, you know, like my family and all relatively entrepreneurs having different kinds of businesses, if you would tell my family if they would run a three to $4 million operation, they would all think that they're running a factory. 

02:33 
Right. And so with that mindset, I looked at the way how what many of the companies have problems with these days, the challenges that they have. And I looked at that primarily because they were not looking at it from a factory perspective. 

02:46 
And then if you start looking at AI and the role it plays, it's very similar to the way robot plays in the 1960s. you start to analyze and you go like, oh, what does an agile software development do? 

02:57 
What does all these forms of manufacturing processes that they, whether it's for software or hardware, what they have implemented, you quickly start to realize that there's a lot of alignments. And again, I'll start off with a simple one and I'll give it back. 

03:12 
So first one is, or the first thing is to realize is that a factory has three things that they focus on. They need to produce a lot. That's the nature. Automation to produce a lot. They need to do it efficiently. 

03:25 
So cost needs to keep coming down. And the number three thing is, if you only pay attention to the first two, then the third one leads to a lack of quality. So they have to implement quality improvements to make sure that the first two don't become the primary focus. 

03:41 
So there you have your three goals. Growth, cost, quality. They map perfectly to a recurring revenue business, right? Like I want to create growth, revenue growth. I want to do it sustainably because growth at all costs no longer works. 

03:54 
And I need a form of like, like quality, which in our world is recurring revenue, GRR, NRR as metrics are fantastic for that. Yeah. It's funny you say growth at all costs doesn't work. And it's actually not funny, but we still Jaco to this day have founders who think that the answer to everything is go hire a bunch of people, more people multiplied by what you think the quota should be is going to equal more revenue. 

04:22 
And that's just going to solve all problems. And there's no focus on churn. There's no focus on either GRR, NRR. It's just go hire a ton of people. And why do you think people still have this mentality? 

04:39 
Because we've been talking about growth at all costs is over for, I feel like over a year now. Yeah. Primarily where it comes from Adam is the main thing here is that people are not educated on it. And so, you know, like, In our industry, you don't go to a class where you get to be taught about how to create a recurring revenue growth machine. 

05:01 
And as a result, you think you know, but what we find out that most people really don't know. They don't know that there's three areas of growth. Not one, three areas. Most people don't know the mathematics behind. 

05:11 
They know a kind like, oh, it's compounds, it's important. But they don't know about what compounds over time is versus compounding over frequency. Acquisition compounds over frequency, number of meetings, number of emails, whereas expansion compounds over time, number of years, number of months, and so on. 

05:29 
And so, they don't understand the difference between that. And as a result, the analogy that I often use is that over the past decade, we've been driving a motorcycle, but we've only pushed it into first gear. 

05:43 
And we go like, ah! Right, we are running that motorcycle. We have no idea there's a second and a third gear. Push down, people, like. Click twice down, you have a whole set of new gears. They're not familiar with that. 

05:57 
That combined with that most founders do not appreciate processes in go-to-market the same way they appreciate processes as part of what they're doing in their product. And so that mismatch leads to a lot of uneducated people running around on a motorcycle in first gear. 

06:18 
I love that analogy. Yeah, it's a really good analogy. And I think they're revving the RPMs and they're not getting, they're not going anywhere and they're wondering why. And I wanna twist this around a little bit, go back a little bit to the revenue factory. 

06:32 
And you were the first really consulting group training organization that I ever saw really focused on customer success. Like you had the bow tie model and everything was like top of funnel. Everything was like, we're gonna get people in, we're gonna do these conversion rates, but no one really cared about the backend of the funnel, actually having happy customers. 

06:51 
How do you create customer success to be revenue generators? Like my big thing when I talk to a lot of founders now that are implementing a CS organization is let's create a revenue generating customer success team. 

07:05 
And so on the backend of the bow tie, what are things companies can do today to become more of a revenue generator than a revenue sucking organization? So, and I think all of us are old enough that we can go back to our parents' time and know that we lived at a different age when we go back to our parents. 

07:26 
So like I'm the youngest of eight, so my parents all have already moved on to the next gig that they're doing up there. And if I go back and to the early days, right, we were running a French fry store and think of it more as that food stand, food truck that you see parked in front of a Home Depot. 

07:45 
That's kind of like what we have. And if you grow your business with this, like imagine. And using that as a base model, right, look, how do you run a factory, how do you run something like that? Well, you need to make more money than you spent, right? 

08:05 
And one would hope. And in those days, we got soft serve became a new thing. And then we had slush puppy became a new, we had all these new things. And you have to buy those machines, which you by the way, lease, right? 

08:17 
Okay, recurrent revenue. And then you have to, in order to do that, you have to make an investment. Oh, you you are having acquire something and you have to keep it coming. And then you come to the conclusion is where do my customers come from? 

08:31 
Right? Like, how much do you actually start to billboard? And you come very quickly on that end of the journey, you come to the conclusion is word of mouth, word of mouth. Now, this is where I'm going to go with this, this, this answer to your, to your questions. 

08:45 
What we are seeing today that most of the channels that we have historically been communicating with customers. are overwhelmed with noise. They become too noisy. If you go email, too noisy. Text messaging cannot do that. 

09:03 
High penalty of failure factor. LinkedIn, folks within six to 12 months, LinkedIn is going to be too noisy as well. It's already noisy, but within six to 12 months, that is not going to work. Where do these customers come from? 

09:18 
These customers come from successful other customers who talk about you. And so more and more do we need to focus on letting our customers partake in becoming our marketing and sales organization. And that means that that right side of the funnel of the bow tie is essentially the key part of the bow tie. 

09:35 
Where did you come up with the bow tie framework in your head? Was it like, because you saw infinity signs. I used to work at Oracle. It was like infinity signs. Like what was part the bow tie in your head? 

09:46 
Yeah. Yeah. Actually there's an, you can, you can still find it. The original is still on YouTube. You can Google Jaco, Prezi, SaaS, and you're going to get, I created the Prezi. It was an, there's a predecessor to Canva. 

09:58 
I remember Prezi. Yeah. Prezi. Yeah. And so I created the Prezi and I wanted to create a circular motion because if you think that you see the bow tie, right, people say, oh, but it's, it's not a growth loop, but essentially the right side of the right side and the left side of the bow tie are meant to connect in a circle. 

10:17 
So if you see that and it connects a circle, then you got the thing. Anyway, regardless, the other way you can see it is you can see the three windows, but you know, like, but where did it come from? 

10:27 
I drew circles. I was drawing circles and I'm going like, okay, I had the circle of motion because I felt like a customer got stuck in the awareness mode and they circle through that. And then they go to the education mode and they circle through that. 

10:39 
And so I kept building these circles and they go like, Hey, there needs to be a whole new series of circles. But in that Prezi, you see me literally explain it. You almost can see it on the fly, how I came up to be that way. 

10:51 
Yeah. That's, and I think it was called something like, doesn't make sense how SaaS can make money. And I used Bright Cove and Jive as examples on how they were building, you know, how they were getting spending like $10 million on growth, while only acquiring like half a million dollars. 

11:07 
And I go like, this doesn't, this doesn't make sense, people like, like, at all, at all, right? I was hoping, I was hoping the bow tie had something to do with the French. I was hoping the bow tie had something to do with the French rise, but I guess not. 

11:23 
There is a concept originally by a gentleman because when I came up with it, I needed to verify if I was the first one or something like that. And so I verified. And then I found I was a guy in late, sorry, in the mid 1990s, who came up with a similar concept and used a bow tie actually for a bow tie format for it, but related it to the selling of tickets. 

11:47 
And then, you know, like luggage fees, upgrade fees, seed fees and everything. That was he used in the form of a funnel and a bow tie concept. So he, but I've been since trying to look for it and I've not been able to re re re find it. 

11:59 
By the way, that's where it's come from. But the key here is this. What the boat I tells us is there's three places of growth, not one. Right. Acquisition, growth from acquisition, growth from expansion. 

12:12 
And growth from expansion and growth from retention. Sorry, growth from retention, growth from acquisition and growth from expansion. And growth from retention, we often don't recognize as growth while it adheres to the same principles. 

12:25 
It has a high win rate. It has a very high ACV within range. And it has a short and known sales cycle. What amazes me and what I find fascinating is a lot of what you just said. But we talk about leveraging your customers, right? 

12:42 
We talk about leveraging folks who are happy with the product and using the product and having them sell for you and embracing that. And this is now being thrown around as this new term called go to network that everyone's coining is like this brand new thing and like use your customers and leverage your relationships. 

13:00 
And like you were very much ahead of the curve, if you will, where now this is super popular. Like I can tell you whether it's B2B SaaS, whether it's a car, whether it's an oven in my house, like I don't think I've ever bought anything without checking with people I know who actually use the product to make sure that they like it and love it. 

13:20 
It's why sites like TripAdvisor and Yelp and all these things exist, right? Because we want to talk to customers who have been there. Why do you think just now in going into 2025, this is finally becoming so popular of, oh, shit, let's leverage our customers. 

13:38 
Because the other side was too easy, too simple to think about. And it's not because people are ill willed or anything because, you know, like entire systems have been set up. A simple question. And then I'll give you where the next one. 

13:52 
goes. Okay, so please that because since we now know where we're going, I can tell you where a year to two years from now, we will be as well. So the I want you to think about the concept of how much dollars do I spend on acquisition versus expansion or retention, right? 

14:06 
And most companies will who says like, No, no, we have customer success, I go again, but having a customer success person by itself is not the solution. Most people look at customers success as saying, please don't lose the deal. 

14:18 
I just won. That's the mindset of customers, right? I then that is, and that is a short sighted approach to to sales. Obviously, the tool vendors early on, the known tool vendors really facilitated that conversation. 

14:30 
And we're never willing to take on the revenue, profit nature of it, right? We wrote a paper two or three years ago and asked one of the well known vendors there if they wanted to do it with us, they go like, No, we don't believe in that, right? 

14:44 
And it was a topic about growth as a profit center. Now, Thank you. I can tell you they are now talking about it all on their website. Now it's all like, like, yeah, we knew that was, had it there. Um, but the, but the topic here, you know, like, is that people misunderstand and they follow things blindly. 

15:02 
And I can give you a point where, where they're going to be wrong again and why they're going to be wrong and why we believe that, that, that, that is going to be the case and it now involves AI and the role that AI plays. 

15:15 
We today have a, have a perception that, you know, in the future, uh, you know, like we will not going to be that human beings will prefer, continue to prefer to buy from human beings. And I go like that is an, you know, like if I apply that to taxis or to hotels and say like, yeah, if I'm in a taxi, I would never have thought of an Uber. 

15:39 
And I've, if I'm in an, if I'm in a, in a hotel, I cannot see, right? Neither of those industries were disrupted from within the industry. Both of them were disrupted from outside the industry. So to the case here, and I'll give an example, folks, we better get ready because our customers want a different buying experience. 

15:58 
And we are not catering to that right now. And the way we're using AI today is not doing anything better. We're just doing what we previously were doing, but we're doing it at a lower cost, right? At higher volume. 

16:11 
Uh, and so like, so we're not doing anything different. We think that they're, we're just redesigning the taxi cap by installing an a credit card, remember that the taxi cap for the longest time wouldn't accept credit cards. 

16:24 
Finally, they installed a credit card machine. I can help pay with my Apple pay. Fantastic folks. That doesn't make the cap any different of an experience, right? And that is what we are currently surrendering to our customers with AI. 

16:38 
So let's, uh, let's double click on that a little bit, Jaco. So in your opinion, where do you think AI is going as it relates to the bow tie? So top of funnel. where does AI have its biggest impact in the next five years and what do you think that looks like? 

16:57 
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17:13 
Trust me, I led sales for a Sandoso competitor and I could tell you no one does gifting better than Sandoso. If you're looking for a proven way to win and retain more customers, visit Sandoso.com. Okay, fantastic question. 

17:30 
So I'm going to give you the answer, give you the solution to that answer and then you can apply that correctly, right? So I'm going to ask you at the back end now if you know that, how do you think it would change? 

17:39 
Now I'm going to use the story of my wife being stung by three wasps because she stepped on a wasp hive. And yes, her friend got stung ten times. Her friend got stung ten times. But my wife had an allergic reaction, and as she had that allergic reaction, including breathing constriction in her breathing, she had to see a doctor a few days later. 

18:01 
But of course, as many of us do, and her knowing particularly, she went in and did extensive research on what is a venom, how does it work, why breathing, and all that stuff. So we showed up at the doctor, general doctor, and the experience was very underwhelming, right? 

18:20 
Because, you know, like the doctor said, here's an happy pen and always have an happy pen, have a second one with you, and this and that, right? But didn't know actually what was going on. And so my wife was pinging her, but how about this and how about that? 

18:33 
And as we walk out, on one hand, we were disappointed, but on the other hand, you know, there's a waiting room with 20 other people who had something over the weekend. They too researched their topic, and they too know a lot about that topic. 

18:47 
That general practitioner can never know, can never spend the time on all that. What you'll see is that the knowledge gap has flipped. The knowledge gap previously favored us sellers. Now when I was selling in the 1990s, and you know, like Phillips flew me around the world in order to sell and pack two gear, I was an expert. 

19:10 
I flew to that location and I was an expert. I knew the people in the industry, I knew every competitor, I knew where the market was going, technology. And so the knowledge gap was very much in favor of me. 

19:23 
That created a need for my customer to trust what I was saying. Hence, branding super important, trusted resource, technology background, right? That's why in-person visits were super important. Will this person be here for me when I buy them? 

19:40 
That knowledge gap today for various reasons. in our industry has flipped industry-wide. Our customers that are buying SaaS products generally know more about their market, generally know more about their competitors, generally know more about your competitors. 

19:58 
And it is not uncommon that they know more about the product that they are buying from the seller than the seller knows about their own product. And believe me, I've now run this example a couple of times, and everybody's shaking their head like, yes, right? 

20:11 
The knowledge gap has flipped. What AI is doing for the seller, it is also doing for the buyer. And that knowledge gap flip changes the acquisition process. It will affect all throughout that acquisition the same way how when an Uber told me that I could see when the driver would be coming how far this way, and the same way how it changed the relationship between the volume of buyers and the volume of sellers, 

20:36 
and it created the marketplace, that changed with the new technology called mobile GPS and cloud. Now, AI is flipping the knowledge gap, and that means that it's changing the industry. I would argue the knowledge gap is already flipping, and AI has just accelerated it. 

20:58 
So it's like it was already there. Now they can get data much faster and more efficiently. So how do we, as sellers, close that knowledge? Like what should we be doing to close that to, like, because it's pendulums, right? 

21:13 
I think every market is like a pendulum, and they'll go, they'll swing one way and then swing the other way. How do we swing it the other way? I'll give you an example of it, you know, like, let's say I'm doing a, in this case, I'll use a practical example. 

21:25 
We were selling a $400,000-ish software, a services contract. And I had written the contract out, and it was a high profile name, you know, like, so I had written it myself, right, and explained it carefully. 

21:39 
And it was about like an eight to 10-page proposal, a written proposal, not like a deck, but a written proposal, right? Now, in this case, I had gone to the first discovery call meetings, adjusted that, all that stuff. 

21:51 
But it's a $400,000 proposal, so I'm in deep enterprise sales territory in this case, right? I'm not, it's not an SMB sales technique, which, oh, you show a few things, you demo a few things. So I'm running into the stakeholder meeting. 

22:03 
And the executive, you know, like, that runs into that, is asking me, hey, give me the document so I can review it with the team. And then we'll, we have a stakeholder meeting next week. Okay, now that executive uploaded the document into Google notebook, created a 25-minute podcast out of it, send it to the rest of the team to review it. 

22:27 
He calls me on Monday, says, we can cancel the meeting, we're good to go. I kid you not. Right? Why? Because Google notebook LM has a podcast, has an ability to query it, and all the answers that everybody was playing. 

22:44 
We have already answered the questions, right? This is a high-tech company. They know what they're up to, right? But as a result, we no longer, I kid you not, we no longer needed the stakeholder meeting and the deal closed within, I think, within 24 hours after he sent me the message. 

22:57 
Something really quick. Why? Because the information flow is different, right? Trust no longer comes just from me knowing my stuff. It comes from the brand, which is the reason why I think that moving forward, new brand names, although they made me more innovative, are not as trusted, right? 

23:17 
You want trusted brand names. You want people that, hey, you know, if we want to do consulting, we're going to go with winning by design because we know Jaco has been there for 12 years and he will be there for another 12 years, right? 

23:28 
We know we can trust that brand. I think that that is becoming the new trust factor in it. You're trusting brand. No longer just people because people change quickly these days. So what does that mean for the future of sales? 

23:42 
Because I agree with you. 100% and I think I agree with both of you Dale. I think that it's been easier than ever to get information for years. I think buyers are showing up more educated than ever. Oftentimes in the wrong way where they think they know what they want but they don't because they've you know read a Google article or like Dr. 

24:02 
Google as I call it in healthcare. But nonetheless buyers are definitely more educated than ever and they're coming to sales meetings that they likely don't want to have to check a box that the company says they have to have and it's like okay Jaco I did my research this is what I want this is the pricing I want to pay I know that this customer is getting this pricing so don't tell me you can't give it to me because I've done that myself. 

24:25 
What does this mean for the future of sales reps and sales as an industry? Yeah a few things people no longer buy on budget with SaaS and with the upcoming topic of outcome based pricing which is a whole topic separately and equally in interest probably more popular than AI I may add probably more disruptive than AI itself although they're both connected. 

24:52 
But with this you know like we're not based on budget and we're not buying on ROI. Why not? Everybody has budget to buy a SaaS service doesn't matter how big you are and everybody every SaaS service or subscription servers or whatever consumption service folks it is built from the get-go to have a 10x ROI so like and everybody else has also a 10x ROI so like what the heck are we doing this whole ROI thing is the only thing you're now selling against is priority. 

25:20 
Is this important right now? Now in order to learn to to pull on that threat of priority you need to know what the customer is going to. So what this means Adam for what the world is what it means to sellers is the following we're going to see two groups and the one group is the one the one third one third will be coming experts and will continue to be experts, they will use AI to enable that expertise, 

25:47 
and they will move forward. The other two thirds will not move forward. Of that other two thirds, the bottom one third can already almost discard it immediately. Their level of work and productivity is actually setting the entire group back. 

26:02 
That middle one third, some of them will make it to the top one third, and most of them will not. This is not like, this is not like, I don't want us, when you listen to this, you go like, oh my God, like this is like, what's, what's happening? 

26:17 
Right. Okay. I want to, before we go there, I want to, I need to finish this thought so that, because people will right now start freaking out, like Jaco says 70% of the sales team will be replaced by AI. 

26:28 
Yes. Something like that. Let me tell you why that is in context. If I go back 200 years ago and I'm digging a hole, I'm going to need like 2000 people to dig a hole for, for a castle that I'm willing to build. 

26:41 
Yeah. OK, today I use four excavators. Nobody that stands there with a shovel in their hand is going to strike against the arrival of the excavator because they go like, you know what, I really want to break my back manually shoveling this hole every year, right? 

26:59 
And so excavators replace human labor, right? And that was a very natural thing. You see this, for example, in farming. In farming, we have replaced human labor every evolution cycle, every new technology. 

27:13 
You're not going to strike up against that. You're just moving along with that. Now, people that previously were digging a hole are now doing something different. What we have, unlike any other trade in sales, we have a large volume of people who have not studied to sell. 

27:31 
They're not using a proven processes. They just show up every day and wing it. And we can all kind of joke around at it, but we all know it's true. One third of the group, just wing it, doesn't even enter anything in CRM. 

27:46 
Hence the reason why we're all focused that we need a CRM automation tool. No, you do not need a CRM automation tool. People simply would enter key concepts of the call into the day. Now, it gets more accurate with annotation tools. 

28:01 
I get that. But the fact that we needed tools in the first place was primarily due to the lack of skill set because people were simply showing up, doing the thing and getting back home. They didn't study for it. 

28:10 
They're not passionate about it. And many of them, when they get fired, they don't go back into a job in sales. That one third will be out. The middle one third have to fight and become experts. We don't need the hundreds of sellers that we have right now. 

28:27 
Like, it's ridiculous. Now, obviously, we have hosted those people and they will find a new job elsewhere in the next gig. And they will be extremely valuable in that role the same way how they were previously were valuable in SDRs, AEs, and CSM roles. 

28:41 
But let's not kid ourselves. None of these people studied for their job and did that the experts of that, of course, you know, like I have friends John Skaggs is like, these are world class sellers that I've learned from a lot, they made it, they embraced it, they studied it, they learned it, they lose the latest in technology, like, of course, they're going to continue to be successful in the job. 

29:03 
I think I almost want to have a separate conversation with you about outcome based pricing, because I think that is a super interesting topic. We won't be able to get to all the pieces about come based top pricing. 

29:17 
And I do think it's challenging because it's challenging in one way, because it's hard for people to digest it, buyers think they want it. But when you actually start generating outcomes, the amount of money that they spend back on outcome based pricing can be much higher than they get to a place of like, why am I paying you all this money? 

29:36 
It's like, well, look at the outcome that we drove for you. We say this all the time. like in our world, people ask us, well, how many hours are, for your monthly retainer, how many hours am I gonna get, right? 

29:47 
How many hours are we gonna get? And my response is a version of what you just said, Jocko. We don't trade time for money, we trade outcomes for money. If I could do it in one hour, you should be a shit ton happier because that's more hours than I'm spending to do other stuff for you than if it takes me 40 hours or 20 hours or whatever. 

30:02 
So I love this idea. I don't think people know what to do with outcome-based pricing or even how to structure it. Okay, so, Jocko, just for a taste before we start on that, outcome-based pricing. If you think of a continuum on the left, we call it the monetization strategy. 

30:21 
If on the left of the monetization strategy, we pick upfront perpetual payment, we call it ownership. You buy something to own. In the middle, it's subscription. And on the right, you think of that continuum as in consumption. 

30:34 
As you move from the left to the right, every metric in data changes. For example, sales cycles on ownership-based long. Sales cycle on consumption low, short. Win rate, high. Why? On the left, high on the continuum of ownership. 

30:54 
Why? Because buyers qualifies themselves if they are looking to spend $5 million paid upfront. If you see win rate on the right, you can go all the way to freemium. Infinite, meaning very bad. Conversion rates from freemium to paid, very bad. 

31:09 
And so what you would say is like, well, if we lower the price and we make it outcome-based, the win rate should go up. It has proven that it doesn't go up. Why? Because the amount of unqualified buyers that are jumping in because they want to start cheap actually brings the win rate far down. 

31:26 
So win rate, if you look at it from an ownership model, one in three, win rate in a subscription model, one in five, win rate in a consumption model, one in 10, and it can go all the way down to one in 20. 

31:38 
If you go further down, you can go to one in 100. world, what an ad they call insertion orders, where everything needs to constantly be renewed. So in that world, on the right, another unique difference is subscription is recurring. 

31:53 
And what do I mean with recurring? The time frame that the new order comes in and the size of the new order is in context of very predetermined time frame and a very well-known order, 90 to 1.1 time range of the previous order. 

32:10 
What we see with consumption, it is a reoccurring revenue stream. Not reoccurring, reoccurring. Time frame, not known, could come in a month, could come in two months, could come in a day, could come in 20 days. 

32:24 
And the volume that it would come back in, we don't know, it could come back in in a million, it could come back in $10,000. So the nature of that is very different, right? So when you say, Adam, I feel very insecure about what it is. 

32:37 
That is what you're responding to, right? You go like, okay, we're going from recurring to reoccurring. I don't have a secure timeframe and I don't have a secure dollar figure. So I feel like, you know, like that's where that nature comes from. 

32:49 
Now, how we're going to solve for that, and it is being solved in the past, is we're going to see that the industry will move to pre-buys. It will say, oh, you have to pre-buy 50,000 leads, or you have to pre-buy 50,000 or 5,000 discovery calls, or you have to pre-buy half a million dollar in revenue that I'm generating. 

33:10 
But you pre-commit to that, and that pre-commit needs to be taken over 12 months. Now, why that is needed for the seller is because it has upfront costs it needs to absorb, right? And so historically, the challenge is as follows. 

33:26 
If I buy $5 million worth of Cisco routers, I, the buyer, have to amortize the cost over five years and write that off. If I now take on that risk, right, I have to commit to AWS, an annual commit. I have to commit to my, whatever, AI provider, a certain amount of volume. 

33:47 
I'm taken on all that risk. I need to amortize that too. And so I'm going to amortize that by based on the volume that you're committing to me, right? And then, you know, obviously on my end, I'm going to calculate what the risk factor is, what the chance of renewal is, and so on and so forth, and I can then come up with something meaningful. 

34:04 
That's where consumption-based pricing comes in or outcome-based pricing comes in. Now, we call it PPX because it's price per impact, price per action, price per outcome, price per click. And so we go like, okay, I forget all these PP. 

34:19 
We just make it PPX, right? Price per something. I, we could do a whole nother show on this and likely need to. Thank you for breaking that down. I, I, I'm a fan. I think that. that it will be where the industry goes. 

34:37 
I'm excited to see when and how. But for today, we are just about out of time. And before we wrap, we would like to keep a tradition going and do some rapid fire with you of your game. Yeah, let's, here's what I, before we do that. 

34:52 
Here's where I wanna point out to your audience. What you'll see in the way I reason is based on scientific frameworks. It's creating a line with a continuum. It's creating, that is revenue architecture. 

35:05 
I am, you know, I've been told too often, sales is just something you do, you can do or you cannot do. And revenue growth is just something you, you know, your product is dependent on product. And I go like, nah, I don't think of it that way. 

35:17 
There's plenty of successful products that fails. And there's plenty of really bad products that succeed. So there is a difference. And that difference is in the go-to-market nature. And I believe when I look at the go-to-market, similar to way how products can be engineered, And I think that's what I wanna point out to you. 

35:30 
And I think that's what I wanna point out to you. And I think that's what I wanna point out to you. And I think that's what I wanna point out to you. And I think that's what I wanna point out to you. 

35:31 
product go-to-market can be engineered designs and architected. Will it be a guarantee of success? Absolutely not. But we can double quadruple success rates of companies by creating that. And that's what the book Revenue Architecture is about, right? 

35:43 
That's the mindset. It's like, hey, and that's why there are frameworks and the things that I'm drawing from. Thank you very much. Yeah. That's where I'm drawing from. I'm going like, look, like as an engineer, I can engineer this. 

35:54 
And yeah, and some people believe in it and others do not. And they go, yeah, then either way, you know, it's fine. But you're right. And I love the mindset. The days of, oh, sales is, you know, just show up and figure it out. 

36:09 
And it's not a science is wrong. Like, is there a human nature? Absolutely. People buy from people they like, make no mistake about it. But the most successful sales organizations that organizations that we've worked with are certainly the ones that put some science behind their sales process. 

36:25 
Okay, I like to refine that. But you're not wrong. When people buy product, they buy from people they like. When people need a product to save their lives, lives, they buy from people they respect. Oh, I love that is not equal. 

36:45 
Like, I love that. I will use that moving forward. All right. Here we go. Jocko, early bird or night owl? Early bird. You were the youngest of eight children. What other profession that you would have taken from the other seven siblings that you had, which was which was the one that you would you would have gone with if it was if you weren't you? 

37:08 
Oh, easy enough. I used to be a carpenter. So we're all tradesmen painting, carpeting, roof laying electricians. I'm a carpenter. Nice. What is the first app you check when you wake up? LinkedIn. But it's getting way too noisy. 

37:26 
So you're gonna find a new one pretty soon. So no, for me, why LinkedIn works because I I look up for mentions. So I quickly see if what, you know, like, like over the past days, I get, you know, on that topic of consumption-based pricing, the article is going nuts, right? 

37:43 
And so I, every morning I go like, I wait, what did it, I wonder what it did last night. I love it. Awesome. One tech gadget you can't live without. iPhone is easy enough. But if I say, I have my van, my SpaceX enabled drive around California van that I work from almost every day. 

38:06 
I've heard about, I have heard about this van. I find it very, very intriguing. What, Jaco, what's your favorite guilty pleasure snack? Oh, dude, like, say it with me people, say it with me. Red Bull, one a day, two on a hard day, one on an easy day. 

38:26 
It gives you wings, right? Oh, it does like those of you know me. Yes, it does. Absolutely gives me Last one last one as we wrap this up dream vacation destination. This is tough because you've been everywhere, but I mean vacation destination it has okay. 

38:39 
Let me describe to you This is actually a way of thinking about life. You can think about vacations or you can think about experience I'll give you my dream experience blue sky Mid-80s for europe that is high high 20 degrees celsius mid 80 degrees fahrenheit wind slightly blown breeze through Doors are open the the like slightly the the moving the curtains right like You walk outside you hear birds and you see a lot of green food is delicious and and and people are people who serve you don't serve you because You pay them to but they serve you because they believe that's where they are the happiest in doing so like you're part of a culture where Where that is a mutual and then you feed them after they served you you sit together and you have dinner like that's for me Bali, 

39:29 
indonesia pretty much right what I just described but um, that's kind of like light the life But other than that here in california is pretty freaking awesome as well I love it. I love it. Jocko. Thank you so much for joining us It was a pleasure having you on the show folks can go to winning by design Dot com I believe is that correct? 

39:47 
Yep And of course you can find jocko and all of us on linkedin jocko. Thanks for joining us, man Thank you for having me. It was a pleasure. It was a treat. Thank you dale. Thank you. Adam Fantastic holiday period. 

40:00 
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