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How To Make Your ARR 20% More Valuable To Investors | Keenan, CEO @ A Sales Growth Company

Topline1h 18m

Keenan, CEO of A Sales Growth Company, argues that not all revenue is created equal—revenue generated through heroic, reactive sales practices can be valued 15-20% lower by investors than revenue from systematic, predictable processes. He emphasizes that understanding the fundamental physics of selling and the actual business problems customers face matters far more than standardizing behaviors, and that most sales organizations suffer from broken systems rather than training deficiencies.

Summary

In this episode of Topline, Keenan discusses his research paper 'Not All Revenue Is Created Equal' and reveals that investors discount valuations by 15-20% (or reduce multiples from 6-8x to 1.5-2x EBITDA) when revenue comes from heroic, undisciplined sales environments versus systematic, predictable ones. He identifies four archetypes of sales organizations: heroic (focused on immediate revenue at any cost, with hidden discounting), peacock (beautiful infrastructure without connection), random (tools and investments without logic), and compounding (the ideal state, rarely achieved).

Keenan argues that the fundamental problem in sales is the lack of sophistication in organizational systems compared to finance, HR, or operations. He uses sports analogies extensively—particularly golf and football—to explain that success requires understanding the underlying 'physics' of selling, not just copying behaviors. He emphasizes that a system doesn't require everyone to do the same thing; rather, it requires understanding what outputs you're looking for and whether different approaches achieve those outputs.

The discussion covers several interconnected themes: the importance of understanding customer psychology and business problems before designing sales processes; the difference between structure (making everyone do things the same way) and systems (having connected, outcomes-focused processes); the challenge of implementing systematic approaches while operating under constant quarterly pressure; and why current training and enablement investments are failing (spend increased 7x since 2012 while quota attainment dropped from 60% to 16-23%).

Keenan also discusses how AI and new product releases don't create entirely new business problems to solve—they typically address root causes leading to existing problems like low win rates, long sales cycles, or high customer acquisition costs. He stresses that sales leadership requires understanding the organization's assignment, whether that means hiring differently, training people to understand specific customer environments, or adjusting methods based on actual outcomes rather than prescribed behaviors.

The episode concludes with discussion about why sales organizations remain trapped in heroic patterns despite knowing better: the pressure to deliver results immediately without time to build systems properly, combined with the tendency to replace leaders who can't fix broken organizations within 18-24 months. Keenan's new book, 'Gap Revenue Performance,' offers a framework for implementing systemic improvements while the plane is still in the sky.

About this episode

<div> Keenan, founder and CEO of A Sales Growth Company and the bestselling author of Gap Selling, joins Sam Jacobs, AJ Bruno, and Asad Zaman to make the case that two companies with identical revenue can be valued 3 to 4 times apart, depending entirely on how that revenue got made. Topics include the four sales org archetypes (heroic, random, peacock, and compounding), the valuation discount investors quietly apply to revenue produced by heroics, why quota attainment fell from 60% to 23% while enablement spend went up 7x, and the difference between a sales system and sales structure. Plus, what revenue leaders can learn from how Sequoia, Blackstone, and CAA actually run their people, why Keenan is done with the phrase go-to-market, and the story behind the one-name brand.</div> <div>  </div> <div> <p>Key Takeaways:</p> <p>- How you produce revenue changes what the market will pay for it: investors are buying your ability to repeat the number, not the number itself. Keenan puts a figure on it in his paper Not All Revenue Is Created Equal: "the discount could be as much as 15 to 20% discount on the valuation." Heroics hides the cost; nobody opens a CRM and sees "we closed a $2 million deal and nobody saw that that $2 million deal started at $2.6 million."<br /> - Systems are not structure. A system defines the outputs it wants and stays agnostic about how each rep gets there, which is what separates it from a script. "Making people do everything the same is structure," Keenan said. He runs it through golf: "I focus less on what your swing looks like, and I'm asking myself, are you able to hit a draw when you need to hit a draw?"<br /> - Sales teams over-invest in training the behavior (structure) and under-invest in understanding the buyer, which Keenan calls sales physics: "nobody buys anything unless their current state is untenable and intolerable." A good system helps the buyer realize that state, which will allow a deal to close.<br /> - The spending trend is going the wrong way, and Keenan closes the episode with the numbers: "In 2012, depending who you ask, 60% of reps made quota… now 23%… And the spend has gone up 7x… But win rates declined by 29%. Sales cycles extended by 37 days… What we're investing in isn't working." It persists because no CRO gets room to rebuild: "It's the boat's got a hole in it… You got to fix it. But by the way, you cannot dry dock the boat."</p> <p>And yes: AJ Bruno is buying the book for the first 20 listeners who reach out. Send AJ a direct message on LinkedIn or in the Pavilion Topline Slack and he will buy you a copy of Gap Revenue Performance.</p> </div> <div>  </div> <div> Connect with the Hosts & Guests:</div> <div>  </div> <div> Host: Sam Jacobs, CEO at Pavilion - https://www.linkedin.com/in/samfjacobs/</div> <div> Host: AJ Bruno, CEO at QuotaPath - https://www.linkedin.com/in/ajbruno3/</div> <div> Host: Asad Zaman, CEO at STA - https://www.linkedin.com/in/azaman1/</div> <div> Guest: Keenan, CEO & Founder at A Sales Growth Company - https://www.linkedin.com/in/jimkeenan/</div> <div>  </div> <div> Topline is more than a YouTube Channel:</div> <div>  </div> <div> Subscribe to Topline Newsletter: https://toplinemedia.substack.com/</div> <div> Tune into Topline Podcast, the #1 podcast for founders, operators, and investors in B2B tech: https://www.joinpavilion.com/topline-podcast</div> <div> Join the free Topline Slack channel to connect with 600+ revenue leaders to keep the conversation going beyond the podcast: https://www.joinpavilion.com/topline-slack</div> <div>  </div> <div> Chapters:</div> <div> 00:00 Introducing Keenan And Gap Selling</div> <div> 03:08 A Dollar Of Revenue Is Not A Dollar</div> <div> 03:46 The Four Sales Org Archetypes</div> <div> 06:59 The 15 To 20% Valuation Discount</div> <div> 08:58 The MEDDIC Definition Problem</div> <div> 12:47 The Left Tackle Analogy</div> <div> 18:24 Can Heroics Be Predictable?</div> <div> 23:10 Structure Is Not A System</div> <div> 28:32 What VC Firms Get Right</div> <div> 42:09 The Physics Of Selling</div> <div> 50:16 Awareness First, Then Pipeline</div> <div> 51:55 Tired Of The Word Go-To-Market</div> <div> 1:00:23 AI, Product Velocity And Enablement</div> <div> 1:04:26 Is Sales A Power Law?</div> <div> 1:12:09 The Story Behind One Name</div>

Key Insights

  • Revenue from heroic sales environments is discounted 15-20% in valuation by investors, or valued at 1.5-2x EBITDA multiples versus 6-8x for systematic revenue, representing a substantial financial penalty for undisciplined growth.
  • Sales organizations operating in heroic mode typically hide significant discounting (often reaching 20% of deal value) in their pipeline, which doesn't surface in CRM systems or executive reporting.
  • A system in sales doesn't require everyone to perform tasks identically; rather, it requires a shared understanding of desired outputs and the ability to recognize whether different approaches achieve those outputs.
  • Most sales methodologies over-index on training and behavioral prescription (asking reps to follow specific scripts or processes) rather than focusing on whether reps are gathering the correct business intelligence needed to move deals forward.
  • The underlying physics of selling remains constant: buyers will not change their behavior unless their current state becomes intolerable and untenable, regardless of how a salesperson chooses to facilitate that realization.
  • Sales organizations are the least sophisticated, least elegant function within most enterprises—lacking the structural and systemic sophistication routinely accepted in finance, HR, and operations.
  • Between 2012 and present day, spending on sales training and enablement increased approximately 7x while quota attainment declined from roughly 60% to 16-23%, indicating fundamental misalignment between investment and outcomes.
  • Win rates have declined 29% and sales cycles have extended 37 days over recent years, suggesting the problem isn't unrealistic quotas but rather ineffective approaches to selling.
  • Understanding the specific customer environment, business acumen, and context is often more critical to sales success than mastery of a particular sales method or product knowledge.
  • CROs and sales leaders face structural pressure to show results within 18-24 months without the ability to dry-dock operations for systematic fixes, forcing them into perpetual heroic modes that prevent building durable systems.
  • Venture capital and similar organizations succeed with seemingly chaotic, individualistic approaches not because they lack systems, but because they have disciplined processes for gathering and synthesizing the right business intelligence despite using different methods.
  • Sales enablement and sales consulting firms often brand themselves as 'go-to-market' firms, but true go-to-market work involves strategic resource allocation and market positioning decisions—not just sales methodology and training.

Topics

Revenue quality and investor valuationSales organization archetypes (heroic, peacock, random, compounding)Systems vs. structure in sales operationsFundamental physics of sellingUnderstanding customer psychology and business problemsTraining and enablement ROI crisisSales leadership and organizational pressureProblem-centric selling methodologyAI and product releases impact on salesSales system implementation while maintaining operationsCulture and sales team compositionMeasurement and outcomes-based performance management

Transcript

In 2012, 60% of reps made quota. Now, 23% of people are making quota and the spend has gone up 7x. What we're investing in isn't working. Keenan is the best-selling author of Gap Selling and the CEO of a sales growth company. For over 25 years, he's been in the trenches, helping sellers win. But in today's episode, he shares common revenue team practices that can undercut an investor's trust in your entire company. So I did a paper on this and it's called not all revenue is created equal. And if your growth is coming from the discount could be as much as 15 to 20% discount on the valuation. So it's substantial. Of course, we explore how…

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