Unintended Consequences. Many years into my CEO journey, a former board member told me to think about the impact my words and actions had on the employees. She told me to imagine myself as T-Rex walking through the office. This wasn’t a metaphor I had ever heard before, but as she described the idea, it began to make sense. Her point was that the T-rex’s head would walk around and have everyone’s attention, but it was its tail that would inadvertently be knocking things over and causing a ruckus. When you are the CEO, everyone takes your opinions more seriously than they probably should, and it’s critical to consider the impact and repercussions of your words and actions.
Chris Cabrera founded Sales Performance Management (SPM) company Xactly in 2005. Since then, he has led the company from startup to IPO and now private equity, while amassing major customers like Salesforce, Louis Vuitton and Hyatt Hotels. Cabrera is a known expert on SPM, compensation, commissions, and employee motivation. Prior to founding Xactly, Cabrera was SVP of Operations at Callidus Software, where he acquired the first 100+ customers, grew annual revenues from zero to $100M run-rate, and a successful IPO. He authored Game The Plan and co-authored Xactly Sales Compensation for Dummies. He holds a B.S. and M.B.A. in business administration from the University of Southern California and Santa Clara University, respectively. He has received numerous awards including the USC Alumni Entrepreneur of the Year.
Thank you so much for joining us Chris! Can you tell us the story about what brought you to this specific career path?
Afew years out of college, I went on to work for a computer company called Silicon Graphics. It was a time when the internet was just getting started and I had a great, seven-plus year journey there. While at Silicon Graphics, I was accidentally paid $80,000 for a commission check that should have been $8,000. A few years later, I heard about a company that was creating software to address the compensation market. Having been in sales my whole career, and having been paid inaccurately, I was intrigued — so I went to work for them. I ran worldwide sales, marketing, and business development. We created an on-premise software solution that was the first of its kind and revolutionized the sales compensation world. In 2004 the world changed again and this time it was the cloud. I quickly became convinced that the cloud was the future. After unsuccessfully convincing my company to move to the cloud, I set out on my own to do it — creating Xactly.
Can you share one of the major challenges you encountered when first leading the company? What lessons did you learn from that?
Early on, as a first time CEO, I felt like I needed permission from my board for many things. I remember having meetings with board members and struggled with why they were not telling me what I should be doing. I will never forget the day that one of my board members took me to lunch and simply said, “You are the CEO, you need to tell us what you want to do.” That sage advice marked a very important moment for me. In an instant, I learned the importance of taking a stand and having a vision as the CEO. From that time on, I knew that as a founder of the company I had to use my passion and vision to convince others where we were going. Over the years my board certainly got more comfortable telling me what to do, but the relationship was forever changed thanks to that great feedback.
What are some of the factors that you believe led to your eventual success?
I have always considered myself a curious and coachable person. I have always sought out ways to improve my knowledge and/or skill set. This has proven to be the single most important factor in my success. Since founding Xactly in 2005 I have seen so many other founders start their companies and ultimately be removed from the helm as the company invariably outgrew them. It was always obvious to me that the skills required to take Xactly from zero to $20 million were different than the skills that I’d need to take the company from $20 million to $100 million. This mindset forced me to be in a constant state of reinvention. This was especially necessary at a time when technology and automation were changing rapidly. I am confident that the only reason I have survived against the odds was that willingness to change and learn new ways to lead the company. This idea of reinvention has become a rallying cry within the company for employees at all levels of the organization.
What are your “5 Things I Wish Someone Told Me Before I Became CEO”? Please share a story or an example for each.
1. Being a CEO is a lonely job. You may think that having a big office, on the top floor would be the best job at the company, and I’m not saying that it isn’t. However, the expression, “it’s lonely at the top” rings true. As the leader of a company, you don’t always have someone to talk to, and you can’t have the same kinds of conversations you once had with fellow employees. Many people can’t relate to the challenges of the day and worse yet may not be willing to be honest with you. Due to your position, you are no longer part of the casual chatter that happens among others in the company. It becomes imperative to have outside coaches and peers who can commiserate and advise you on the challenges you face.
2. Unintended Consequences. Many years into my CEO journey, a former board member told me to think about the impact my words and actions had on the employees. She told me to imagine myself as T-Rex walking through the office. This wasn’t a metaphor I had ever heard before, but as she described the idea, it began to make sense. Her point was that the T-rex’s head would walk around and have everyone’s attention, but it was its tail that would inadvertently be knocking things over and causing a ruckus. When you are the CEO, everyone takes your opinions more seriously than they probably should, and it’s critical to consider the impact and repercussions of your words and actions.
3. Preferred shares are not preferred. I hold degrees in business and entrepreneurship and yet, I don’t remember any classes about raising money and negotiating term sheets. I admit it’s possible that I was not paying attention, but the point is I had no idea of the hurdles I would have to overcome when I first decided to be a CEO. One specific hard lesson was the very first term sheet I received. The VC had written in a 10x preference on the A-round. I was so excited that I had even received a term-sheet that I was willing to accept their request. Thankfully, my corporate counsel was wise enough to throw a bucket of cold water on me and explain what I was giving away. I often wonder how bad things would have been had I accepted the first term-sheet!
4. All VC’s Money is Green. In the early days of founding Xactly, I thought that the value of the VC came in the form of a check. Therefore, I thought, the smartest investment strategy was to angle for the highest valuation possible and choose the VC based on that. Beyond valuation, there are a whole range of other factors to consider when choosing investment partners and chemistry is extremely important. Over time, I’ve learned that VC relationships are like marriages, you’re in it for the long haul — and sometimes you have a positive lasting relationship, and sometimes you find that your partner can’t step up. Building the foundation for a strong, lasting relationship is much more than the check. I did make a couple mistakes along the way and had some VCs who could not step up when the company needed them to, but by in large I got very lucky and picked some incredible VCs without whom we could not have been successful.
5. The Leaky Bucket. Being one of the first SaaS/Cloud software companies, there was a lot we didn’t understand. We had come from the on-premise world where customers paid a huge up-front payment and then a modest annual maintenance fee. The switch to SaaS meant monthly subscriptions (generally paid annually). We didn’t understand that every year the customer had to renew their subscriptions with us. We quickly realized that as fast as we were adding water to the bucket (new sales), water was leaking out of the bottom (customer non-renewals). We had to rethink everything — and fast. We had to focus on customer satisfaction and thinking of customers for life. As we formed our core values it was imperative that our primary focus was on our customers. From our inception in 2005 to today our employees are always thinking about how they can enhance the experience of our customers and do their best to ensure that they are successful.
What advice would you give to your colleagues to help them to thrive and not “burn out”?
It’s common for people to try to maximize income over the span of their careers. This is a major way to burn out because you’re always chasing the next job that comes with more money, and it’s not fulfilling. Going to work and enjoying what you do is about more than earning a paycheck. Often, people think that they need to know everything in their roles to be successful. I think it is more important to adopt an attitude of being a learn-it-all instead. I have found that being coachable and open to reinventing yourself constantly brings immense rewards, both professionally and personally.
None of us are able to achieve success without some help along the way. Is there a particular person who you are grateful for who helped get you to where you are? Can you share a story?
I’m grateful for the support of my wife, Marla throughout my career. I truly believe in the adage, “Behind every successful man is a strong woman.” Countless times when I have been unable to see something, she has brought clarity. In fact, I credit my wife with the company’s name. The idea for Xactly happened in the parking lot of a Chili’s restaurant. I had tried what felt like a million names and countless website domains, but nothing was sticking. Not having a name was holding me and my co-founder back. My wife, who was in the car with me, asked, “What is it that this new company is going to do?”
I replied: “Pay exactly the right amount at the exact right time.” And she said, “Why don’t you call it Exactly?” We’d landed on it — though the name wasn’t available with the ‘E’ so we dropped it in favor of leading with the ‘X’. Since that time, the company’s capabilities have grown far beyond compensation but the name still rings true today and that moment made it all real to move forward.
What are some of the goals you still have and are working to accomplish, both personally and professionally?
Professionally, I’m going to keep building the company to the point where we reach $1 billion+ in revenue. That has been a goal of mine since our inception and it would be an amazing career accomplishment.
Personally, I want to continue to be open to learning new things and maintaining my entrepreneurial drive. I enjoy mentoring and advising companies of all sizes and encouraging others to take risks and to unleash their individual potential.
What do you hope to leave as your lasting legacy?
The importance of giving back. Some of the best lessons I learned about giving back came from my father, in terms of the way that he treated his employees. That has been foundational for me and the way that I approach building the company and it has also informed our company values: C.A.R.E. (Customer Focus, Accountability, Respect, and Excellence). These values, in conjunction with our XactlyOne Foundation, ensure that we give back to the communities where we work and play. I want people to remember the power behind giving back. I hope those memories stick with them and inspire them to continue to give back — in the workplace and in their communities.
You are a person of great influence. If you could start a movement that would enhance people’s lives in some way, what would it be? You never know what your idea can trigger!
Get over the glorification of busy — People seem to relish in how hard they work and how busy they are. Often people mistakenly work their lives away thinking that they are winning and they regret that they didn’t take more time to just be enjoying a minute or two outside, with friends, being quiet or just relaxing. As I get older I realize the power of quiet reflection. Some of my best business decisions happen at our family ranch just sitting and staring at the nature and listening to the birds.
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