The Twenty Minute VC (20VC): Venture Capital | Startup Funding | The Pitch
20Sales: Scaling Hubspot from $3M to $1BN in ARR | How to Hire and Ramp Sales Teams | How to Scale Customer Success Successfully | How and When to Go International and Crush It with Jeetu Mahtani
Fri, 27 Sep 2024
Jeetu Mahtani was an early member of the HubSpot team. Under his leadership and the sales organization, the business grew its non-US revenue from $3M ARR to close to $1B ARR. After running the International business as the global MD and Sales leader, he then moved to lead the customer success org which expanded to managing 1,500 people in customer success. In Today's Episode with Jeetu Mahtani We Discuss: 1. How to Go International for Startups: What are Jeetu's biggest lessons from Hubspot on what startups can do to make their international expansion a success? What were the biggest mistakes Hubspot made in their international expansion? How should every team in each new location be structured? What should the ramp time and onboarding process look like or each new team and expansion? 2. Scaling Sales from $3M to $1BN in ARR: What did Hubspot do so well to successfully scale to $1BN in international ARR? What were the biggest mistakes Jeetu made in the expansion of Hubspot's sales teams? What are the first things to break in sales teams? How do you handle them? Why does Jeetu hate discounting? Why does Jeetu not like customer references? 3. Scaling Customer Success to 1,500 CS Reps: When should founders make their first customer success hires? What are the biggest mistakes people make in the scaling of CS teams? Why should customer success be incentivised in the same comp plans that sales teams have? How do the best CS teams work with sales and product teams most effectively? 4. Hiring the Best and Ramping Them: What does Jeetu's hiring process look like for all new sales reps? What are the must ask questions for Jeetu in all candidate interviews? How fast do you know when you have made a mistake with a new hire? What is the secret to effective onboarding? What are the biggest mistakes people make in onboarding? 20Sales: Scaling Hubspot from $3M to $1BN in ARR | How to Hire and Ramp Sales Teams | How to Scale Customer Success Successfully | How and When to Go International and Crush It with Jeetu Mahtani
This is 20 Sales with me, Harry Stebbings. Now, 20 Sales is the monthly show that dives into the world of sales, revealing the tips, tactics, and strategies of the best heads of sales. Today, we're joined by G2 Martani. Under his leadership, G2 grew the non-US HubSpot business from, check this out, $3 million in ARR to close to a billion in ARR.
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Listen, I just chatted to Brian at HubSpot, obviously before this. He said so many wonderful things. So thank you so much for joining me today.
Oh, I appreciate it, Harry. And a big thanks to Brian too. I'm a big fan of your show, so I'm excited to be here.
Brian told me that I had to start with some context, which was you first wanted to be in product and he said that you didn't get the job. So talk to me about that moment and how you came to HubSpot then as one of the very, very first. Oh, wow.
I joke that I was fired even before I started at HubSpot. Back in the day, my business partner and I, Peter Caputa, who was a former HubSpotter, ran a business together. So Pete and I ran this event registration business that was a mix of Eventbrite and Facebook in those days.
You know, we made some good progress, but eventually we got to a point where we were like, we need to sell the business and go get real jobs. So we drove to one Broadway in Cambridge. We walk into this office, Harry. It's probably 100 square feet. There are four people in the office, Brian in one corner, Dharmesh in the other.
In the other corner, Mark Roberge, who was HubSpot's first VP of sales, you've had him on the show, and Patrick Fitzsimmons. We walk in and we're like, Brian, we're here to sell you our company. And, you know, Brian goes like, you know, he just like rocks on his chair. He's like, no, we don't need your company, but we'll give you jobs.
So he looks at Peter and he's asking Peter, what do you want to do? Pete's like, I want to be in sales. So he looks at Mark and he tells Mark, Mark, why don't you go write up Peter's sales contract? And Mark's like, we don't have sales contracts. And Brian's like, just download one and give him a sales contract since we're hiring Peter as a sales rep.
And he looks at me and he's like, Cheeto, what do you want to do? And in those days, Harry, my background is in computer science. I was the product person who generated all the code with Peter in our startup. So I was like, Brian, I want to be a product manager. And Brian goes again like this. And he's like... No, I'm HubSpot's product manager. We don't have a job for you.
So while Pete is writing his contract with Mark getting his sales role, I'm kind of like standing at the entryway of this hundred square feet office wondering what the heck do I do now? You know, two years later, Brian and the recruitment team reached out and I ended up joining two years later as a sales rep.
So clearly they liked you so much post hiring you that they decided to send you far away as soon as possible because they put you in charge of international G2. And you did such an amazing job. Brian was telling me all about what a killer you were for them, opening up eight offices around the world. First office in Dublin. Can you talk to me?
What are your single biggest piece of advice when it comes to going international? I know it's broad, but I didn't want to corner you. Yeah.
I think the one that I would always keep in mind is like international is a huge opportunity for any company. If you look at the S&P 500, which is the 500 largest companies in the US by market cap, half of their revenue comes from outside the US.
So I would be thinking about international like this huge leg of growth, which I think any serious company that's going to be multi-billion someday should be thinking seriously about. The other advice I would give you, and because we went through this, is we were going to open Dublin in 2012. But we shelved the idea because our retention metrics were not great.
Our gross retention was like low 70s. Essentially, the economics were not ready to make that big investment to open an international presence. What is ready, G2, do you think? What I would say is I would look at something like LTV2CAC. Have you figured out how to acquire customers at reasonable CAC and then keep them around through great service so you have great LTV2CAC?
In 2012, our LTV2CAC was probably for every dollar we would put in, we would get $2 to $3 back. But we got it closer to four, five, six over time. And I think that was like, all right, we have great product market fit, not just with acquiring customers, but we can keep them around. That's when we decided to pull the plug or go ahead and open Dublin in 2013.
G2, do CACs get worse or better over time? If you think about the CACs of enterprise in year one of doing it versus the CACs of enterprise in year four of doing it. So remaining in that segment, is it the same? Is it less? Is it more?
I would say it was higher in the earlier years and then plateaued or flattened after we got enough of brand recognition. But it actually did go up in the earlier years. Yeah.
And so then we have like good enough CACs to LTVs and we're like, you know what, we're ready to go international. What did HubSpot do really well to enable the international expansion to be a success?
There were a couple of things we did that I think were really key to our success. One is when we opened Dublin, it was an expensive investment. And we were like, all right, it's expensive, but it's a big bet for us. So when we opened the office, we actually sent an expat team of five people from the Cambridge office, and we hired five people in Dublin. It was like this one-to-one match, Harry.
It was crazy in those days, but we were like, We're picking the right market. We're hiring with great quality and we're going to give them the right resources. So if it fails, it's not because we didn't do everything we could control. We did everything we could control.
So that was one thing we did is just simply like over invest in the early days to get the right team on the ground with the right help.
What ARR were we at when we made the expansion into Dublin? Oh, it was tiny. It was tiny. It was like, 3 million ARR when we opened Dublin. Would you not advise an angel investment today that that is too early? I would say you have not nearly saturated your domestic core market. Absolutely double down there until you're at 20, 25, 30.
In our world, and I still think it's true, is maybe 10 years ago to do international, like, boy, it's a huge investment. I don't think it's that type of an investment today because you've got much more efficient go-to-market motions like PLG. freemium, and also with digital CS, like you can acquire global customers and be able to service them in a really efficient manner.
So with the different methods that we have today, PLG, digital CS, would you still advise companies to go international as early as you did?
I would as long as your core market has good economics. If your core market doesn't, then hold off like you're not ready to go and go into a completely different region. I would also add when you go international, you're going to get some signals, Harry, like the markets pull you in. It's not like, you know, you wake up one morning and you're like, all right, it's time to go international.
So, for example, in our case, in those days, we had signals with like partners in the UK who were doing great. We were getting inbound leads just not from the U.S., but from lots of English speaking Europe. So in some ways, almost like with the work we were doing in the U.S., it was resonating in other parts of the globe and the market was pulling us in.
So the market was pulling us in and what we ended up doing is like, all right, before we opened the office, I ended up hiring a bunch of young dads who would show up at 4 a.m. in Cambridge because they wanted to get home at 2 p.m. to be with their kids. And we were like, let's validate that demand. So we were selling early in the morning from Cambridge calling into the UK.
And we proved out that pieces that we can acquire and retain them before we actually ended up opening Dublin in 2013.
I mean, I love that in terms of validating the demand there with the time zones. Can I ask then, is time zones the only reason you do international expansion today? Given the technologies that we have to make cross-border selling and great product experience and great touch points with customers so easy, is time zone the only reason that you do international expansion today?
I think time zone is a big one. You do get leverage by hiring talent in different geographies at different price points. So remember LTV to CAC, like the other way you can influence that ratio is getting talent at a better price point in other countries. I would also say partners matter. I think partners want to see that you're committing to the market by having talent in their country.
Customers care about, like, if you're selling and servicing Germany, you can get by to a certain extent, but at a certain point, they want to actually see your brand in Germany.
Do you always have to send talent from the core home destination to indoctrinate the new talent in the new country?
I think it was a playbook that worked for us really, really well. The idea is like you bring this, what I would call a tiger team. The tiger team coming from Boston is going to be in Dublin, paired one-on-one or in a really nice ratio. They help hire on board, help these early teams succeed.
And over time, you figure out how to fire yourself and you leave that team and leave it to local leadership. The Tiger team tends to be there between six to 12 months. In my case, for example, there's this whole idea of you need to get a local leader. I was the local leader in Dublin. While I was in Dublin, I took one of the members of the Tiger team. His name was Sam Shulman.
And Sam moved to Sydney to open our Australia operation and be part of the landing team. So this playbook of sending an expat team, they open one office, they stay six to 12 months. They figure out that region. Then they get shipped to another office so they can go and open that region in that office.
Did you find rep ramp time? I know this is a very specific question. Did you find a rep ramp time varied by geography?
It did vary by geography. And what I would say is the countries that were similar to the U.S., UK, Netherlands, like the ramp time was comparable. In fact, the economics were actually even better for some of those countries in Europe.
What was that ramp time? How long was it before you expected people to start closing and start paying for themselves?
The ramp time is somewhere between six to nine months. Can be a little bumpy, but once you get to that six to nine month mark, you can start seeing like a fairly consistent trajectory as they ramp to greater productivity.
I'm so interested. I know we had the schedule, but sod it. I'm enjoying this too much. How large an ACV, average contract value or customer value, do you have to have to justify a sales rep?
If you are sort of like mid-market, like HubSpot, SweetSpot, which we would define as 25 to 500 employees, you need an ACV of somewhere between 10 to 12K ACV to make it work from a return on rep investment.
But when you were three millionaire and in Dublin in the early days, you were only serving SMBs in those days, correct?
Yep. It was largely up to 500 employees, like small and mid-market companies. I think what you're getting to is like the economics are hard when you are in that ACB, and that is true. But as we added more products... As retention got better, the reps could cross-sell and upsell other products, like rep PPR started to increase. So the economics worked over time.
But in the early days, yeah, like it was an investment. It was, you know, LTE to CAC or 1S to 4, 1S to 5. And over time, depending on the segment and geography, it became 1S to 7, 1S to 8.
When you look back with the benefits of hindsight, G2, what were some of the biggest mistakes that you did in the international expansion?
I would say as we expanded globally, Harry, you know, we use this framework that we would call operational complexity and the size of the market. You can almost think of like, all right, I pick a country and I say, is it easy or difficult to do business in? I would call it the operational complexity. Then I would say, okay, for that country, what is my TAM or addressable market?
So we graded every country on complexity versus TAM. And you can almost like look at a series of bubbles on the left, the US, big TAM, blue in color because it is low complexity. On the other end, you have something like China, big market, but red in color because of the complexity. And in between, you've got France, Germany, Spain, and all the other countries.
Our playbook really worked great in those countries that were closer to the U.S., Germany, France, Netherlands, Australia. But as we went to the right where the complexity increased, let's say Japan, one of the mistakes we or I made is that playbook of sending an expat team was not an option, Harry, because of the language in Japan. Like they obviously, you know, didn't speak Japanese.
So I was not able to send that expat leader to Japan like I was able to do in Dublin and Sydney. So I had to hire from day zero, day one, a local. It was hard to do that tiger team approach. And some of our early hires in Japan, they sounded like me. They sounded like the Westerners. And I fell into that pothole because I was hiring like I was hiring in the US or in the UK. And that was a mistake.
Because if you want to sell into Japan, you really need to love Japan. You really need to understand the business culture and the way business gets done over there. So I had a mistake with the hiring in the early days of Japan. The other one I would say is that operational complexity, Harry. Low complexity to high complexity. The color of the bubble tells you, is it red, high complex, blue, easy?
And the size of the bubble tells you how big the market is. If you think about your go-to market and you are going into one of those complex countries, like say Japan, for example, it's more on the right side, more complex. I will be thoughtful about your go-to market on being direct or going through partners and our reseller ecosystem. We tried to do both.
We had a direct team in Japan and also a reseller team. My learning from that experience is when you have a complex country and a product that needs help, HubSpot Pro or Enterprise does need implementation help. You are better off in those complex countries going through a partner ecosystem as opposed to going all in with the direct sales and CST.
So that was the other lesson we learned is match your go-to-market to your product complexity and your country complexity. Don't try and do like a one size fits all go-to-market in every country.
You got to think about the country dynamics, the country complexity, the help customers need when they need to implement your product, and then match that with the go-to-market that will service them the best way.
You mentioned there the CS element. I do want to dive into that later, but I do want to cover sales first, because you played such an important role in scaling from 3 million, where you mentioned that with the Dublin office, to either 600 million or a billion, one of the numbers.
So my question to you is, it looks like completely up and to the right when you look at HubSpot scaling of their sales revenues. What allowed HubSpot to scale sales so efficiently when you review what you did in the early days in probably that $3 to $30 million range?
I would say the inbound engine with like we were creating tons of content that was resulting in leads like that became a machine, Harry. It's still a machine. I really think when I think about moats that HubSpot has, it's like that inbound engine, its blog, its website. The blog still gets about 10 million visitors even today each month. All of HubSpot gets like, I think, 30 million.
The traffic and that inbound engine made it really easy to instrument demand going like this, hiring to service that demand going like this. So it became very much like running a calculation to figure out if demand is going like this, let's continue hiring to service that demand. And the ARR just kept going up and to the right.
The other one that I would say is what we would call like this predictable and scalable approach to growth. Like we got really good with hiring great sales reps, onboarding them, coaching them and making them productive. So that whole approach we took off like acquiring talent and making them productive was another reason why it worked so well.
I think the other one that I think many companies interestingly still don't think about today is a partner ecosystem. I still see so many SaaS companies not digging into how do I get like efficient growth, not just through my talent, but through a partner ecosystem. And HubSpot has about half of its revenue coming through the partner ecosystem. It's big.
It's a huge part of HubSpot being driven by these amazing partners.
Okay, so I have to dig in on some elements there. One on the SEO side, that's insane, 10 million of 30 million going to the blog itself. Question for you, for founders listening today, is that SEO heavy approach still applicable today in a much more challenging SEO environment?
I still think it's something you have to do. 10 years or 15 years ago, it was easy with SEO because the formula was like, you got to create content. You got to create blogs. You got to think about your conversion paths. But I do think distribution is harder these days. Like you got to think about social. You got to think about, you know, your presence on LinkedIn.
Are your founders and execs creating content on LinkedIn? The philosophy is still the same, which is it's all about content. But I think the way you think about content, the way you distribute it has gotten really layered. There's just many more layers you need to think about when it comes to SEO and content. And where do you spread it to get your leads and customers?
I would say it's actually the same. It's just the format with which you can create it has exploded. And so it's like, and the biggest challenge I find with startup founders is actually they do 10 different types of channels. And it's like, no, if you build the most effective SMB sales channel on TikTok, you will have millions of fans and you can redirect that back to your landing page.
That's just the same as having a great HubSpot blog in the early days. It's a different format, but it still redirects the same way. And I think that's just the thing that's changed, which is there's just a lot more options in terms of format. On the partner program, I hear you, but I worry that a lot of founders will go, partner programs, that's our holy grail.
And they're often a lot harder than people think. They require a lot more investment. What stage should one think about partner programs? And what is required to do partner programs well?
I would say the stage you should start thinking about a partner program is when you have clarity on what role partners can play with your product. If you're a very transactional product, you're probably not going to get partners to like bundle services on top of HubSpot because the way they make money is through retainers and services they offer to their clients.
In the case of HubSpot, it worked really well because we needed partners to help customers create content, landing pages, do analytics. And the same thing has played out in all the other hubs that HubSpot has offered over the last many years. Think about it when you're clear that there is a need for other people to help your customers succeed.
And other people could be just not like service providers. It could be app partners. It could be ecosystem partners. So that's probably the stage that I would start thinking about partners.
What level of investment is required for a partner program to be successful?
I would say you do need someone to think about like partner acquisition and partner enablement. I also think founders should not make it super complicated because just like when you're selling to prospects by creating content, your content is going to get found by partners also, right? And that's what happened with HubSpot is all the content we were creating was getting found by partners, right?
And they would call in saying, hey, we found you through your content. And I actually want to offer services on top of HubSpot to my end customers. Peter Caputa, who I would consider as the founder of HubSpot's partner program, connected the dots. And he was like, we need someone to help our customers.
We have these hundreds of partners over there who are calling and saying, we would like to offer services on top of your product. We were like, all right, like, how do we enable these partners? How do we teach them what services they should offer? How do you price those services? How do you sell those services? So I would go back to you need someone to help you think about partner enablement.
Does every company not want someone to help their customers extra leverage? I like statements where you can prove or disprove them. When you have like...
sure you want to help my customers yeah great thanks g2 everyone would want that but it requires an insane investment up front to get it over the line it requires incredible education on partner integrations that onboarding how they talk about your product how they educate customers to your product and then the life cycle management of that i think it's so much more complex than just like hey when you need more help do you know what i mean but
By the way, I'd push back a little bit. I don't know if every company would need that help from partners because sometimes companies are building products that are purely PLG driven all the way from being acquired to renewing. It could be very SMB. Maybe Dropbox is an example. I don't think partners play a big role in that type of a product.
But when you do need services help and you don't need it to be just your team providing those services help, And you have to keep in mind, partners will just not say, yeah, we're just going to do what you want us to do. They're like, how do I make money? How do I like create more cash flow in my business? How do I make my business more attractive to outside investors?
So this is where like you need to think about like, well, what are the services partners can offer? You do make an interesting point, which is it is expensive. And I wouldn't say you have to always do this. But one of the things HubSpot did in the early days and to some later stages, too, is if you want to become a partner, you need to buy HubSpot. You need to learn the product.
You need to learn how to generate leads using HubSpot. So it's almost like you're being treated like a customer. You prove yourself out and at the right time, you can become a member of HubSpot's partner. Can I ask you what broke in the HubSpot scaling of sales teams? There are a couple that come to mind, Harry.
Like if I just maybe use international as an example, one of the things we saw like when we went to Germany is our English content. that we were creating, half of our leads coming in from Germany, prospects in Germany, were reading our English content.
That was actually really cool because we were able to get a fair amount of demand just from English content and even before we started localizing into German. So that helped us like, all right, we can get a sales team going, but we also knew we needed to invest in German content to fill the funnel with more leads that will get found by our German content and just not through our English content.
Where it did break is we underestimated that effort in Japan, because in Japan, only 1% of Japanese prospects were getting found by our English content. I think we overestimated the speed at which we could get that Japanese funnel going.
Were you tempted to pull Japan? The team wasn't working there. The content wasn't working there. If I was in leadership, I'd be saying, let's get the fuck out of here.
I'm not sure, Harry. I think, you know, if you are at HubSpot scale, two billion plus, you have to figure out Japan.
You did Japan when it was hard. When you look back, what did you not do? It could be in sales, could be just generally that you wish you had done.
There are a couple I'll give you. One is, interestingly, there are markets like Brazil, India, that are starting to get pretty attractive. But to succeed in those markets, you need to think about local talent, you need to think about currencies. And now we're starting to get more serious about those markets. We have a bunch of great activity happening in India.
So that would be one that I wish we started a little earlier is thinking about like countries and the entity strategy. The other one that I wish we started sooner is there was a point, Harry, that we were getting MRR from 150 countries. It was nuts. Like there was revenue coming from every country.
And it got really hard from an investment standpoint to prioritize like, hey, how do we like keep growing when we have MRR and demands from all these countries? So what we decided to do over time is like, we're going to take a portfolio strategy, which is like there are 150 countries, but which are the countries we want to be number one or number two, not number three, number one or number two.
So we call them like accelerated growth countries. And there were only seven countries that made up that accelerated growth. And then there was a second bucket that we called steady growth that would get like what we would call run rate investments. And then a third bucket that was like more like partner led efficient growth.
So we did that in a later stage where we were like, we can't keep operating like this. We only have finite budgets and we need to think of it as a portfolio where there is a small group of stocks and countries that we got to like win and be number one or number two.
So that happened over time. Which country did you think you'd be a success in? And it was way harder than you thought. And which were you like, that's going to be shit. And it was way better than you thought. Japan, it was really hard.
Germany was hard, but we knew what we had to do, which is what I mentioned earlier. It's like, if you're thinking about a non-English country, think about your demand even before you go and open an office. Like I would almost hire a marketer before you actually hire your first sales rep, maybe 18 to 24 months in advance. So they can get the award. That's interesting. Why would you do that?
And how would you structure that? The way I would think about it is like, why would you have sales reps showing up at an expensive office with no leads and purely cold calling? Like that's not the most efficient way to set up your team for success.
Is it AE's responsibility to acquire their own leads?
I would say in today's world, it's a mix of if you're investing in marketing, well, let's get an ROI on marketing. But we also have to appreciate that marketing can be responsible for like the full number. There's a percent of that number that needs to come from AE's own activities, working with BDRs through other non-marketing type.
Everyone says BDRs and SDRs is dead now. The cold outbound, the cold email, cold LinkedIn, whatever. So 2015, do you agree or do you think that's a glib statement?
I would not fully agree with it. I would partly agree with it, with it's not the most efficient go to market when you have pure cold calling with BDR. But when you get much more sophisticated, you think about your target market, you think about your target lists. You think about first party and third party signals that you can get today when buyers are researching solutions like yours.
So you're not doing a pure outbound, pure cold call. What we would call like almost like all bound. Harry. It's a mix of inbound and outbound whereby you're knocking on doors, but it's the right doors. When you speak with them, you know, they have some pain.
And this is where it comes back to like, how do you enable your BDRs and AEs to be able to have those type of conversations when they don't know your brand, but we know there is a pain that they're trying to solve.
In the early days, the founders need to create the playbook, the sales playbook.
I do strongly believe that founders need to play an active role in the creation or the co-creation of the sales playbook. And I would also encourage all founders early stages, I don't know, until you get to 100 or more customers, you need to be on every sales call. One is you're not filled with Dozens of sales reps. You have maybe in the early days, couple, maybe two, three sales reps.
And there's some magic in the early days when a prospect hears from a founder on why they built the product. What is the vision of the product? Prospects know like you are a no brand company. You're in the early days of speaking directly with the founder. So I think it helps. You know, winning those early days. The other is, I don't think founders get everything right on day one.
HubSpot didn't get everything right on day one. We made several tweaks, pivots over time. You do need to create that feedback loop. And founders, what better way than to be on a live call hearing about prospects and what challenges they're dealing with? So you can create that feedback loop back into the product development.
Speaking of creating feedback loops, I always think about momentum and building momentum in teams. To what extent would you advise early sales teams to focus on amazing, amazing marquee logos or just getting a load of customers in the door, high velocity, flooded with customers?
Which approach would you focus on? It's a good question, and I'm sure many or some will not agree with me. My school will be stop chasing elephants. If you are a mid-market company, you have a big addressable market. Sure, a large marquee logo is expressing interest. Engage with them, but don't count on them as your answer to hitting your target.
You want to still be prospecting into good fit companies who have a reasonable sales cycle. which will help you build a predictable pipeline to get to your target. I think the risk is with marquee logos is people just get attracted to the sexiness of a marquee logo.
And then you show up in the last day of the quarter only to realize the marquee logo sales or buying process and buying cycle doesn't match with your sales process. Don't go all into marquee logos. If you're a mid-market company, figure out how to diversify your pipeline.
I also find that actually people do it because they think it will lead to subsequent immense customer acquisition. And actually it has a much smaller impact than you think working with a large name company. People are generally like, well, it's only one or two of their divisions. Well, they've just got a new CEO who doesn't know what they're doing. Well, they just raised a big round of funding.
And so they're spending a load on tools. And so often people always reduce the importance of it anyway.
I always say like revenue and customer acquisition, customer delight solves most problems. Like you just got to figure out like how to create that momentum.
Do you think it's unfair to say sales reps are coin operated?
You do need to be money motivated if you want to be in sales or in any revenue producing team. The reality of the role. You also need to figure out like at the end of the day, the coins only keep coming and keep growing when your customers are succeeding.
If you are coin operated and you're just acquiring customers for the sake of acquisition and they don't stick around and you have a leaky fund, that's not going to work for you long term, Mr. or Ms.
Salesman. Speaking of coin operated and those coins keep coming, any big lessons on sales comp plans for sales teams?
Big lessons would be at the end of the day, I would say a sales comp plan just drives behaviors at the end of the day. If you don't get the comp plan right, you're just going to end up with bad customers, bad behavior, bad culture. I would also add, when you think about sales comp plan, think about what phase of growth you are in as a business.
If you're an early stage founder, early stage company, velocity matters. You might have a sales comp plan that is a bit more indexed towards simply raw acquisition. But as you grow bigger, you're going to start thinking about retention, cross-selling, upselling. So think about how does your comp plan also evolve as the company and its phase of growth also evolves.
Should customer success not also share in the financial incentive structure? of an upsell or a retention?
I believe they should. If you have the sales team that is getting rewarded for acquiring customers, and you have the CS team that's only being recognized for driving usage but not getting any recognition in the expansion of the customer, over time, you're going to get CS reps who are like, well, I was the one who helped the customer get the next product or expand into the platform.
So I do think when you think about comp plans, you want to be clear about what role do you want your CS team to play? If your CS team is a pure account management team, maybe there isn't something on the recognition like sales.
But if your CS team is a revenue producing team, which is I believe every CS team should be a revenue producing team, you want to structure their comp plan in the form of some kind of a basic variable.
When you say a revenue-producing team, you mean they are responsible for the upsell and the retention, correct?
That is correct. Now, some teams will generate what we would call SQLs, and the sales team would close it.
If incentives drive behaviors, which I think we both agree they do, and you incentivize me, a CS rep, with economics on upsell, G2, my dear customer, my dear customer, I think you could do with RCRM. I know you've got another CRM, but you could do with ours. It's much better for your needs, I promise you.
It may not be better for their needs, but the economic incentive alignment is to me, not to the benefit of the customer. In all cases, there will sometimes be misalignments. How do you prevent misalignments between provider and customer when the economic alignment is between the CS and the upsell?
The way you would do that is having an incentive structure that measures on whether the customer is successful. If they buy a second or third product, are they actually using the product and getting usage out of it? And if they don't, then you know that it was oversold or the CS rep did not do a great job of positioning the right product to the customer.
Do you see now CFOs' bundling spend increasing? moving towards much fewer providers than we used to.
Do you see that? I do see a wave of consolidation. Customers are looking to simplify their tech stack. And I just think, you know, there was some research done by HubSpot not too long ago where SMBs had a tech stack of about 250 apps. It was nuts. And we're seeing a wave of consolidation, or at least while I was at HubSpot, is like, how do I simplify? How do I connect the dots?
Because companies and CFOs naturally are like, well, we need our investment to lead to efficient growth. It needs to be more durable and sustainable growth. And you can't do it when you have 10 different solutions disconnected, cobbled together.
So they're like, well, how do we bring it all together so we can create alignment between our go-to-market teams so we can find out, like, the work marketing did, did it result in an ROI on that marketing investment? The customer sales acquired, did they get the right usage and expansion? So I do think having like a unified tech stack makes a difference.
I think brand marketing is largely BS. I know that's unfair of me. So I'm probably going to get pushed back on that. How would you push back on that? Because I just see it and I'm like, turn it off for a month and see how revenue goes. And everyone does that. And then the revenue was not impacted. And they're like, but it could be in years time. Am I wrong to be rude about brand marketing?
I think you're partly right and partly wrong, Harry.
Very charming, GT. You can tell me I'm wrong. I sometimes provoke for a reaction.
Yeah, yeah, yeah. No, I get where you're coming from. And I would say in the early days, I would be like, yeah, Harry's right. Forget spending on brand. Put more content out there and prospects will find the content. It's a lot more predictable. We can attribute it better. But I think with brand marketing, it gets harder with attribution on what that investment is actually resulting in.
But I think it does make a difference depending on where you are as a company and what geographies you are going into, what segments you're trying to break into. Because I do think like if you're an enterprise, large company CIO looking to a solution, I I just don't think you're always going to find the product through content.
You're going to probably pay attention to the presence of that brand in different places. I'll give you a simple example. Do you watch Wimbledon? Do you watch tennis? Of course I watch tennis. I'm a Brit. Yeah, I love Wimbledon. Perfect. Excellent. So I'm a tennis buff too. And the women's semifinal, one of the players had a HubSpot logo on her sleeve. That's brand marketing.
I don't know how much was paid over there. But I got so many pings like, wow, like, you know, you guys are all over the place at Wimbledon. I mean, it makes a difference. Like, I think it helps like create awareness there.
And you could still get there, but it will take you so much more effort. So it's so funny. When I said that, I was thinking the one example that I disagree with, actually, is I don't know if you've seen, but Expensify sponsor some form of race car. I don't know if it's F1 or whatever race car it is. And basically, for two hours, you see the driver and then Expensify on their helmet.
And I'm like, that is great brand marketing. two hours flat of just in your face, Expensify, or same with HubSpot in this respect with the tennis player who's got it on their arm. What are the biggest ways that startups mess up CS?
By not investing in CS, by getting a team going on an acquisition, but not thinking about retention. When is the right time to invest in CS? Just like founders are going to play a role in selling, I do think founders play a role in the really early days with CS-type activities. They need to learn what it's going to take for a customer to see results and stick around for a long haul.
In terms of like the actual hiring of your first, second CS, I will think about like it in two ways. One is like, how many customers do you have right now? And think about, you know, like to provide engagement to those customers. Like, do you need a CS rep or not? The other is like, at what speed are you acquiring customers?
Because if you see, you know, customer count getting to a certain point, you should start planning in advance that you do need a CS rep. What I will add that I think is changing now quite dramatically is like you don't need CS type human engagements all the time. You can do that through self-service.
You can do that through digital scaled emotions, whether it's a chatbot, it could be an academy, it could be help content. So do a lot of that. I would probably as founder say, Try and get your first CS rep so you can get the structure and the processing right, but then don't keep investing in CS reps until you get a foundation of self-help and knowledge and content in play.
Two elements I have to discuss before we do a quick fire. Number one is I often sit on boards and teams say to me, you know what, that big customer, they slipped to next quarter and that's why we missed our quarterly goal. And I'm always like, what's the right way to respond to that, G2? Why don't we role play, Harry? Okay. Sales rep and I'm your manager or the other way around? Sure. Sure.
So like G2, I'm sorry. Like, honestly, I thought they were going to land and they just, they didn't. And so they moved into next quarter. Really sorry.
Oh, that's too bad, Harry. Were you counting on that deal to hit your quarterly target? Yeah, yeah, I was. Okay, well, sorry to hear they got pushed out to the next quarter. What deal stage did you have it sitting in?
Honestly, I was actually just waiting for their approvals. They took it back to the group, the founding team, and I was waiting for them to confirm it.
Well, let's just pause for a moment, Harry. Walk me through your sales qualification that led you to putting this deal in almost like closable for the quarter.
Yeah, I met them and they said that they were enough of a champion to get it done on their own. And they said that they had budget. We went through the use cases. It all seemed pretty good. And honestly, it was a really good fit with our core market. And then suddenly they just went a little bit more quiet and a little bit more quiet.
And then he said, listen, I need to speak to the team and see where we're at. And it's really stalled from that.
What did you uncover in the sales process that got you to... determine urgency or they really needed the solution versus something that would be nice to have longer?
That's a hard one. I think that's the thing that's missing from so many sales processes. And that's the art of the great salesperson, which is how do you create synthetic urgency? Because if we're honest, very few people need HubSpot this month or they're going to die. They can have it next month. I love HubSpot, but it's not like, oh my God, the world will end.
Crowd strike could happen to maybe too soon. But you know, there's no catastrophe.
Yeah, there isn't. I think many leaders will maybe disagree with me, but I don't think you can create urgency. Like you can't create fake urgency. And if you have urgency to hit your number, that's not the urgency your prospect has, right? So this is where I would be as a sales manager is like, well, in your sales process, Harry, got pushed to next quarter and you said they have a need for it.
Well, tell me what was the need? I needed more leads. Okay. Why do you need more leads? Well, we need to hit our sales targets. Why do you need to hit your sales targets? Well, because we committed to the board, 30% growth and hitting our sales targets helps us get to 30% growth. Okay, great, Harry. What would happen if you don't hit your sales target? They take me outside and shoot me.
Or they would put you on a performance improvement plan, right? Like what would happen if you're on a performance improvement plan, Harry? When you're speaking to a customer, I just think sales reps just shy away from asking the tough questions. Why can't you ask personal goals? Why can't you ask about what would life look like? Mr. Customer, if you did not have the solution.
Because I think this is where a lot of sales reps just sit on the surface that I call level one. You got to get to level two, level three. And of course, you don't dive right into level three. You build rapport, you're an advisor, you're trusted as a sales rep. And you got to be in a situation where it's not like a game talking tennis, one player against the other player. It's a doubles match.
You and your team are together. You're a prospect and you are together. And if you're together, you should be comfortable challenging each other because you want each other to win at the end of the day.
Do you ever do discounting? One way to get people to move faster is say, hey, you know what, G2? And you can be honest. G2, I need to hit my plan. You know what it's like. Let's not give you 25% off if you sign in the next week.
Yeah, I hate that. I hate that. And I do not like discounting. I do not like to lead with discounting. And it is a disservice to the customer and to the company and to you as a rep to lead with discounting. There is a place for discounting, but it should not be so prominent in your sales process unless you have gotten to a point where clearly there's a need.
They need to solve that need, but they have a gap in their budget and you structure the discount to help them get maybe the first year, but the discount goes away in the second year. Maybe other sales leaders believe in discounting, but I am very opposed to discounting.
Great. I like opinions. Fantastic. Good. Customer testimonials. G2, really help me if you could do a customer testimonial for us. You're at HubSpot, G2. Getting on our website would mean a lot. Is it okay to ask them what are the biggest lessons for startups and how to get customer testimonials and do them right?
I don't believe in it. And I just think you are mixing too many variables when your focus should be on What does the customer really need? What is their pain? Connect their pain to a solution. Why are you diluting your value as a sales rep by throwing in testimonials and discounting? And again, you can get to a discount down the road if you do need it to close a gap in budget.
But don't play games is the way I think about it. If your buyers don't value you as an advisor and value the solution you're recommending through a fairly exhaustive sales process, then I would question whether that buyer is a good fit customer and whether they will do everything they need to do to succeed with your platform.
As I said, strong opinions are great. So always love that. Listen, GT, I could talk to you all day. So I do want to move into a quickfire round. So I say a short statement. You give me your immediate thoughts. Does that sound okay? What do you believe that most around you disbelieve?
I believe sales experience is overrated. When you are a highly tenured rep, I think some people believe that. It should be weighted the most when hiring a sales rep. I don't think that is true. There are other characteristics that I would weigh over sales experience.
I totally agree. I also always think of actually Jason Lampkin, who's like, you'll never get a truly great second sales leader, like second time sales leader to do it again. They know how freaking hard it is. G2 is not going to be like, yeah. Going to go and do another one million ARR company and go through that shit again. So I totally agree with you.
Tell me, how were the first walls in the Dublin office built?
Well, I told you that it was like we brought five expats. We hired five in Dublin. We were sitting in an office that had a little wall kind of like in the center, Harry. And culture is really important to me. And I was like, we need to make sure everyone's learning from each other. It's an open layout. So I called Ken Papa, our facilities guy. And he was like, what do you want me to do?
I was like, can you bring the wall down? So he sent someone with a drill and the guy's like drilling the wall. And I have a picture of all of us with yellow hats on calls while this person behind us is like drilling on walls. So that's maybe I think why you were asked to bring up that question.
Tell me, what's the most contrarian or unorthodox advice for founders listening?
Founders often are math and science driven. They weigh data heavily in their decision making. So if I was a founder, I would not see it as someone else's responsibility to be selling or hoping your product is going to find revenue on its own when it's just not. You need to get on calls with a sales rep or on your own.
Make that call, send that email and believe that customers or prospects will love talking to founders and founders will be great at selling.
What have you changed your mind on in the last 12 months?
You know, I had some doubts, Harry, on the AI thing and whether AI can truly replace a large part of selling. And from what I'm seeing in the last six to 12 months, oh boy, I think that a large part of selling is going to get automated with the AI type bots or AI type engines. And I don't think it's going to completely replace salespeople, but it's going to raise the bar.
So you as a salespeople need to be even better with the way you're advising your prospects.
Which duties or responsibilities will get automated first do you think?
I think some form of discovery where you would spend two hours of discovery, part of that discovery can actually happen through some form of AI engine where customers are going to be able to almost self-discover their challenges and also almost get pointed to, this is the direction you need to go with this solution.
But you will have a direction, but you still need someone at the other end to help you dig further to make sure you're making the right choice. What sales tactic has died a death, do you think? There are so many. I would say besides the discounting that we talked about earlier is no one gives a crap about your product or its features.
Like stop talking about your product and its features when you connect with the prospect. Spend your time understanding the customer, understanding the buyer, what matters to them, their industry, what are they trying to get to, and you will get to your product.
But too many sales reps out there still spend way too much time just like spitting a lot of their product and their features out very early in the sales process.
Is that the fault of founders for not teaching them a more efficient sales playbook of customer discovery and qualification?
It's partly the founders. And I think this is where like founders have it in them. They don't know what they don't know. And this is where like, if I'm a founder, I mean, there are great resources to go and learn. Like, you know, how do you run like a reasonable sales process? Like it's not rocket science.
I think the challenge founders will have is just simply like, how will prospects react when we ask them all these questions? They're just like hesitant to ask these deeper, harder questions. I think they do need to work with whether it's their board or mentors and help them get some confidence that they can do this. At the end of the day, customers want to work with salespeople that they like.
What they want to do is like you because you care. You want to learn about them and their business, and you want to help them succeed. That's what matters at the end of the day in sales.
Final one for you, because I could talk all day, is what one company sales strategy have you been most impressed by recently?
It's not a perfect example, Harry, but I do think with the way digital and AI are going, I think Amazon's a great example of how selling is going to evolve. Like, for example, I had a problem with a product the other day. I went to my account. I was like, I have a problem with this product. Like, they gave me a list of resources based on my problem.
Very next action was like, did it solve your problem? No. All right. We're launching a chatbot so you can speak with a human. had a chat with an AI chatbot. It got me pretty far, but it didn't give me the actual answer. They're like, all right, hold tight. We're calling you. So someone called me and I spoke with the human on the phone.
I just think that customer experience, which is like almost like digital led human in the loop, sales rep in the loop is where the world is going. And I think AI is just going to make it possible and actually accelerate that customer experience.
G2, listen, I've loved doing this. It was very off script as you saw, but you've been fantastic. So thank you so much for being such a great guest. My pleasure, Harry.
Love the conversation. And I appreciated the back and forth we went and hopefully no one's too upset with me.
I so love doing these vertical shows. So many incredible lessons to unpack there. If you want to watch the full episode, you can find it on YouTube by searching for 20VC. That's 20VC. But before we leave you today, my sales enablement platform is a waste of money. Ever thought that? You're not alone.
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