08: Building A Sales Team With Mark Roberge
08: Building A Sales Team With Mark Roberge
Speaker 1: So the first question I was going to ask you is, how does a guy with a degree from MIT and engineering background ended up running sales at HubSpot?
Mark Roberge: Completely accidental, serendipitous. I mean, my journey leading up to MIT, was very much a passion for entrepreneurship. I started my career in the late nineties. And believe it or not, for most of you in the room, you were probably in elementary school or whatever. Entrepreneurship was not very well known as a career path for someone that went to a top, tier one, tier two, tier three school. I think it was kind of known as, like, your neighbor started a plumbing business. Or maybe when you were older and had experience, you might start a PR firm or something. And obviously, around that time, the whole late nineties was exploding and I just started following it. I was like, wow, this is amazing. And I jumped ship after two years at Accenture, and a couple of partners had started a mobile company down in New York, and I did that for a couple years. It was one of those 10 people, scaled to 200, raised a bunch of money, scaled back to 10 people after 2001. So it didn't lead to anything successful, but the learnings were amazing and the validation of this as my passion, I want to commit my professional career to it, was great for me.
Speaker 1: But did you have to figure out sales, or are you like, I'm an engineer and I have to figure out how I get pain, and how I talk to people, and how I ask.
Mark Roberge: Yeah, a little bit. I mean, at that time I wasn't doing a ton of selling. It was just, I want to do entrepreneurship. So that led to, I should do a good MBA, and I went to MIT, and I figured out through there that I need to find my place in the entrepreneur ecosystem. And I don't think I loved product enough to want to go in that direction. So it was really between sales and marketing. And I loved marketing because it was a little more conducive to what you learn out of MBA, with analytics and all that kind of stuff. I love sales because I loved the frontline, talking with people. And I knew it was going to be starting a family, and you can get paid a little more in sales. So that was the trade off. And then the HubSpot thing just kind of fell in my lap. I actually started my own company, raised a million bucks for it. And Dharmesh, our co- founder, is one of my investors and I just helped him one day a week as part of the deal. And then Brian came in. It was literally Dharmesh and I sitting in a room for three months, talking about what he wanted to do. He recruited Brian then, and Brian was just like," Just go, sell. If I have you for one day a week, just go sell." And that was really what caused me to go into it. And then a year later, I couldn't get my startup going, and they were about to explode, and they wanted me to come in and run sales. So that's how I ended up there. My dad was actually a sales coach, so he was pretty instrumental in the early days of the belly- to- belly stuff, to teach me how to navigate more of a consultative sell. I think, like most MBAs and most people who haven't been in sales, you perceive selling as like, the pitch master. Very convincing. Just like, there's this mystique. They hypnotize you and then you buy a product, and that's what selling is. And you can't predict it.
Speaker 1: There's a thing we used to study, like Sandler sales. And there's a story about, like, the vacuum guy comes to your house and just dumps a bunch of shit on your floor. And he's like, how are you going clean that up?
Mark Roberge: Dude, it's so funny. I actually did that in my teenage years. I sold for this company, Filter Queen. And it was literally a two hour pitch. It was the most awkward thing. So I guess I had a little sales experience before. So literally, I don't know why responding to an ad in a paper, and it was this patented thing, where it was an amazing vacuum cleaner, but it was$ 1000. I mean, it was amazing. You literally would drop all this stuff down. Where's your vacuum cleaner? And you take it out and you go over it 20 times. And then you put a little filter on the filter queen, and just go over it once and show them all the dust it's missing. Then you drop down this steel ball, and you'd suck it up with it, and just go through, and it wouldn't break it. So, yeah.
Speaker 1: And then you just walk out and they're like, wait, Mark!
Mark Roberge: You literally would. None of the sales would occur. You'd be like, I'm sorry, I just need to use your phone. I swear to God, this is what happened. I just need to use your phone. And you'd call them up, make sure you call them from where they could hear you. And you'd call the main office and you'd come up with some story about how this is the reason why they're not buying. And then you'd be like, oh really, you can do that? And you'd go back and, I just talked to my boss and they can give you... I mean, that was really cheesy selling.
Speaker 1: I just got approval from my boss. Or 20% off.
Mark Roberge: Right. And that's not... What I quickly learned was, the way I break it down as simply as possible is, it's about quickly building trust with a complete stranger, whether it's over the phone and in person, so that you earn the right to figure out what their biggest nightmares are today. What are the biggest problems they're working on? What are the biggest opportunities that they're chasing? And then ask yourself, do I solve that well? And if I solve that well, tell the story about your solution in a way that connects with that. And if you don't solve it well, either they're focused on the wrong problem and you're going to educate them on that, or they are, and it's just like, refer them to you one of your friends. That's really the simplest way I can talk about crosstalk
Speaker 1: I want to talk about how that works in the early days when it's kind of like, so when you were in HubSpot, the team was what? There couldn't have been more than five people.
Mark Roberge: 3 people. Yeah, exactly.
Speaker 1: Is you, Volpe, Dharmesh, and Brian, basically?
Mark Roberge: Yep.
Speaker 1: So that sales pitch is great, but at the same time, wasn't it still the wild west when it came to startup sales in the early days. Like, products always breaking, you don't know who your good customers are. Like, how do you take that stuff and apply it to, almost where we're at, the early stages, which is, like, it's not easy to instrument everything. There isn't always a process.
Mark Roberge: Yeah. So I think anytime you have these types of questions, it's interesting to dive into, what happened for us, our contacts, what we learned from it. And then see if we can extract it out, either to you folks, or just a general startup. So for us, we're talking about'07,'06. We're talking about crushing the content marketing so there's tons of people coming to us. We're talking about SEO is just coming out of it's early stages of being adopted by the media companies and becoming mainstream. So there was just a lot of obsession over Google. And that was ranking high in Google, no one knew how to do it. So that was really the hook that we had, was we had a lot of folks come into us. In the very earliest stages, from zero to 30 customers, it's all on referral based and network based. You guys know a ton of people, you don't need to cold call or even deal with really cold leads at that stage. You should be working with the folks that you know are your buddies.
Speaker 1: Is that always good, though? I feel like it could be easy to get 20 people to sign up, but that's not always a good indicator of your future customers. And are these people going to be willing to pay? If you can go door to door and say-
Mark Roberge: I think you got to get them to pay or have some sort of commitment there. Like, you lean on the relationships to get the warm foot in the door and you skip that part of the selling process that I talked about, with that building the trust, because they already trust you and then you can really pick their brain, and you don't want to sell something that's not going to be valuable to them. You want to make sure they have skin in the game. In fact, it'd be nice if you can get moved over to someone that's not your buddy, that might be more of the buyer. But at least it gets you in the door. And then after that, again, the hot thing then was, how do I rank in Google? And the conversation was just all about that website strategy. Nothing to do with the software. And I don't know if that was right or wrong, but I remember when our second sales person came in, Dan Tyre, and he was like, all right, this is awesome. How he goes, yeah, Roberge has been pitching this stuff for six months. It's been going great. Tyre was our top rep at Groove, our last company, Roberge, just teach Tyre how to do this. And Tyre's like," Okay, great. What are we using? Are we using WebEx? Are we using go to GoToMeeting? Where's the pitch deck?" And I was like, for what? And he's like," Well, aren't you, well, how do you demo the product?" I was like, demo the product? Like, do you want me to show them the product? Or do you want me to close business? Because those are not one in the same. You know? And they were laughing about that.
Speaker 1: I have screenshots, maybe.
Mark Roberge: I don't even want to show them, because that's going to hurt the sale. You know what I mean?
Speaker 1: crosstalk over there shaking his head.
Mark Roberge: This is years before the inaudible regime came in. So that was kind of interesting. And honestly, software salespeople over rely on the demo. And when you actually can get something all the way to a close, without even showing the product, that just shows you that you're super focused on the vision value prop in their particular problems. And it worked out. I mean, again, our situation was, we closed everything on the sun. We closed plumbers, we closed Intuit. We just felt like this mission applied to everyone. We got to 1000 companies super fast, paying us, reasonable,$ 100 a month. Not like freemium. Thousands of customers and churn was off the hook, but it was a big enough volume that we could take a step back and say, okay, where's the sweet spot? And then triple down on that.
Speaker 1: When was the moment that you realized, holy shit, we're onto something. This is going to be a real big company. Was it a certain number of customers or just kind of being in the weeds every day?
Mark Roberge: Probably last week, I would say.
Speaker 1: Last week, yeah?
Mark Roberge: I don't know.
Speaker 1: When was the last earnings call?
Mark Roberge: On some degree... Yeah. I mean, honestly, I don't know if there was a time like that. I mean, honestly, to some degree, it sounds funny, but standing up in front of the New York Stock Exchange, ringing the bell is possibly an answer. You know? Because it's crazy, the whole ride. I mean, you guys are going through it now. Like, even when you want to get to a hundred customers, you get to a thousand, churns off the hook. Crazy. You don't know if you'll be able to come back from that. Every year, we hit a problem, whether it was sales person morale or product stability, all these things can sink the company. And Dharmesh and especially Brian had a leadership approach, which was, I think, right, and something I learned from them. Which was, as entrepreneurs, even when we were$ 20 million,$ 50 million,$ 70 million in revenue, when a huge problem happened, like sales morale, product stability, customer success, they made a bold decision, so extreme, that it would literally sink the company if it didn't work. But they recognized that that's what it took.
Speaker 1: Go into one of those. Like, give a tactical, whether it's just churn thing or morale. Or like, how do you guys-
Mark Roberge: Yeah. Like, churn. Let's take churn. That was an early one. We were crushing it. We were bringing in customers like crazy. Like I said, 100 to 1000 customers within six months. But churn blew up. And at the time, we probably had 15-20 reps. And we were selling this thing for$ 200 a month, whatever. They were like, we're doing all annual contracts, annual paid upfront. So we went from having to pitch this really kind of risky product that people didn't know if it worked for$ 200 a month, to having a charge$ 3000 a year upfront. From, like, landscapers, which is a big deal. And then we completely changed the compensation structure to reward every rep that had great churn, even if they were selling not a lot of software. And seriously penalized every rep who was selling tons of software, but a high churn. I mean, you could completely kill the customer flow. You could have a mass exodus of all your salespeople, arguably some of your better ones. But none of that happened. crosstalk.
Speaker 1: So just more tactically, on the sales side. So the traditional model was, if you're a sales rep, you just do everything you can to close this deal. Once a deal is over, the money's in the bank, I'm good. I don't need you to do anything else.
Mark Roberge: Yeah. And I've published some of this stuff, if you want to see it, in Harvard Business Review. But just the journey of a sales comp plan, as you grow. The first one needs to be very hunter- oriented. You just have no customers, we need customers. So it's like, you close a$ 500 a month deal, we'll pay you$ 1000.$ 2 on the dollar and you keep the commission as long as that company is there for four months. After four months, it's yours. But if they churn before four months, we're taking the whole money back. Perfect hunting plan. 100 to 1000 customers in six months. But the churn rate on the customers was month one, zero; month two, zero; month three, zero; month four, zero; month five, huge. Right? So reps work their comp plan.
Speaker 1: Yeah.
Mark Roberge: So fine. It was great. And then we just switch it to a very retention- oriented plan.
Speaker 1: But you could game it that way, though. Because you're like, oh, I'm going to schmooze you until month three and then I'm out.
Mark Roberge: Exactly inaudible Right?
Speaker 1: Mark, how is everything?
Mark Roberge: And so you could sign a four month contract. Four month contract? Never heard of a four month contract. No, it's a four month contract. That's what we do here. You know? Reps will do anything for the plan. We're changing the game. And so that's just the first phase. There's multiple phases on that. And it really is, that's one of the under appreciated tool for the CEO, even. Even outside of the sales, is the comp plan. Once you start scaling a sales team, is they typically delegate it to the VP of sales, who implements it from his or her last company. Totally wrong move. It's all about, what stage you were at, what behaviors are you trying to drive, what, strategically, is happening? Even outside of sales and the broader company. And how can I work that into my comp plan? Super powerful lever.
Speaker 1: inaudible has given this talk a couple of times, I think is kind of related. Which is about, we're all about being customer driven, but the only way to really have a customer driven company is to align the incentives of every team to promote customer success. So if you say, okay, get me 100, 000 visitors to our website this month. It's easy to game that number and figure out how to do it. But if none of those people turn into happy customers then that's not the right alignment.
Mark Roberge: Exactly. I think there's certainly this undocumented field that's cropping up of across the board metrics- driven management. So much more of the operations can be boiled down to key metrics that we don't appreciate. I think even like, you talk on the product side or on product success, and the power of weekly active users, the power of an NPS that's taken every single month, and solving for that. The power of taking a small engineering team and assign them to a true adoption number on a particular feature. And on the sales side, how we use metrics to drive the ideal hire, how we align sales and marketing. Probably part of this data explosion, there's this whole new philosophy around data- driven management that hasn't quite been codified yet, but it's in there.
Speaker 1: Yeah. Or especially applying it to, probably, 20, 30 years ago, you wouldn't try to instrument the sales process with data. You would just do things.
Mark Roberge: No. Exactly. You just hire a 42 long ex- athlete, give them a territory and a pitch book, and tell them to go.
Speaker 1: And play some golf.
Mark Roberge: And that was sales strategy. And it's amazing how many companies still do that. But given all the movements of insight, and freemium, and easier data collection, there's so much more of a science to it.
Speaker 1: How'd you guys keep hiring good people? You had a small team and it's easy enough to find 10, 15, 20 people that you want to work with. But now, you have to grow a sales organization of hundreds of reps. How do you keep that bar so high?
Mark Roberge: Yeah.
Speaker 1: It gets hard. You're going to hire bad people.
Mark Roberge: Yeah. Pretty early on, I realized that, especially in sales, and I think this happens in a lot of situations, like in engineering, for sure. Maybe not at marketing, in marketing at HubSpot, or maybe not in customer success, because there's a nice brand there. But there wasn't a lot of success in hiring active candidates that were inbound, especially early days. Like, when I first had opened up a bunch of reqs, I posted job ads on Monster and LinkedIn, all those places. I think I got 100 resumes within a week or two. I think I did 30 phone screens, maybe 15 interviews, and hired zero people. And I realized through that process, especially for sales, that great salespeople don't ever have to interview. Like, KK, Kim Walsh is calling him every quarter. I mean, like, are they still in business? Because you always can come back here. And that's what the life of a good salesperson is, is they're getting calls from their ex boss all the time. Like, hey, I've gone off to this company. Or, you're always invited back. So you never have to dust up, put your resume together. You never have to go out and apply a job. You always have those opportunities. So that set up a light bulb for me in recruiting, is, we need a passive recruitment strategy. We need to get at those passive candidates. And there was a really good recruiter. I forget where he was from. But he said, corporate recruiters, and Keith's the only one here as a good recruiter. So he won't take offense to this. But corporate recruiters, and I hate to generalize, but this is the reputation out there.
Speaker 1: I'm not one, so fire away.
Mark Roberge: Yeah, exactly
Speaker 1: Say what you need.
Mark Roberge: You know, you hire them and they don't make the most money. They're on a complete salary and they don't go after passive candidates. The first thing they do is hire an agency to source for you. They essentially push resumes around, put people between the interview rooms, and gather feedback. Agency recruiters, they're really aggressive. They make a lot of money. Sometimes they're half base, half commission.
Speaker 1: That was good. People that are listen won't know what just happened, but that was good.
Mark Roberge: I was just posing for the camera. So half base, half commission, and they make a lot more money, and they pound on the phone. These are the folks you guys get called on every day. And pinged in LinkedIn. And so this person told me, build an agency recruitment function within your company. And I was fortunate to find a couple recruiters over the years. Like Leslie Mitchell. I think she was 28 when I found her. And she was about to leave the agency world to start her own agency. I was like, great, do it in HubSpot. Whatever you had for a vision for your salary, for your strategy, let's talk about that and let's go build this agency within HubSpot. So that was the key, was going after those passive folks. The last tip I'll give there, that's usually pretty popular, is this the concept of the forest referral. Where every company will go out and post, hey,$ 2, 500 if you refer a friend, we hire them, et cetera. But it wasn't until we'd say, okay, Dave, I want to meet with you tomorrow for 20 minutes, to go through your network. We're connected on LinkedIn. Tonight, I'm going to spend half an hour on all 275 of your connections, and go through and search for people who are in Boston, that went to good schools, that have two to three years of sales experience. And we're going to go through that list of 25 people. And you're going to tell me if they're good or not, and how well you know them, and if you can introduce them. And you'd be amazed in that meeting. It's like five people on the list are like, oh, why didn't I think of her? She's awesome. Of course I can introduce you. So once you wait a couple months and let that new employee marinade in your culture a little bit, you'd be amazed how that force referral works to get a great talent.
Speaker 1: So you're just applying the sales mentality to the recruiting process.
Mark Roberge: Exactly. You really are. So many of, in the way you run through metrics, your sourcing, you run them through the funnel. So many of the sales philosophies apply to a good recruiting.
Speaker 1: All right. So maybe let's spend the last 10 minutes talking about this part, which is, you grow HubSpot and then you end up taking on HubSpot Sales. What's the official name?
Mark Roberge: Yeah, HubSpot Sales.
Speaker 1: HubSpot Sales. Okay.
Mark Roberge: Yeah, started as Sidekick. Now it's HubSpot Sales.
Speaker 1: All right. Why'd you want to spin off a new company inside of HubSpot versus just keep hanging out.
Mark Roberge: I'm an entrepreneur. And also, it's what Halligan wanted me to do. He wanted to bet really hard on that space, and send a signal to the company and the market, to go in that direction. And I think he wanted someone to bring the domain expertise, but also a modern view on it. So it was really exciting. I got to team up with C Todd, Christopher O'Donnell, to learn a ton about the product strategy, which was great. And I got to recruit Brian Balfour to run our marketing side. And gosh, I mean, just, you measure an experience like that on how much you learn. And my learning, given the days and the months I went through, was off the charts. To learn about both the product side as well as the growth marketing side. crosstalk.
Speaker 1: What did you learn that was different? Because you go from selling something that's$2, 500 a month to free.
Mark Roberge: Yeah, sure.
Speaker 1: And that's completely different.
Mark Roberge: It's just an appreciation around this go to market strategy. And I think, again, this is an area that's just starting to be codified a bit. Of when we started HubSpot, I think we regret not taking a swing at more of a freemium approach in the early days. Part of it was due to our lack of understanding. Part of it was due to just the consumer wasn't as Uber- ized as they are today. If that's the right word. And this model hadn't really been hashed out.
Speaker 1: Well it's actually, it's the exact opposite of the sales process you initially described, which is you never see the product you buy and then use it.
Mark Roberge: Exactly.
Speaker 1: Whereas this model is, go ahead.
Mark Roberge: Right.
Speaker 1: Test the product, then call me if you need something.
Mark Roberge: Exactly. So it's all about low time and effort to value. Stuff that you guys focus on a lot. And in the marketing vision, it was challenging because there is no low time and effort to inbound marketing. Just that's the nature of the vision, is it takes many months to extract value. So it was really difficult to come up with that. Further, it's really difficult to start here, 200, 300 a month, and go backwards, once you have thousands of customers. So we learned from that and got to start from the ground up on all these lessons with HubSpot Sales, built Sidekick, hundreds of thousands of weekly active users. And how do you build a sales team around that? So I wrote an interesting article about how, even the industry, so many natural connotations around sales management contradict and hurt the freemium process. So let me give you an example. Most sales compensation plans reward sales reps more for the first dollar in revenue from a new customer than for upgrade revenue. Because it just makes sense. It's really hard to open up a door and get someone to start spending money with you than it is to say, you're already spending money with us, just spend more.
Speaker 1: What does that mean? They get a bigger percentage of the initial, like, you might get 50% versus 20%?
Mark Roberge: Exactly. And then it's less, that's a common standard in sales. And it makes sense, given where things come from. That puts salespeople at odds with a freemium model because the whole point of a freemium model is to reduce friction so that folks can get engaged with the product, gain trust with it, prove value, and then expand. And so what you find is, as a product and marketing side, you implement this beautiful low friction engagement process, and you've got reps calling in. The customer's like, I just want to start with a basic product and two seats. And the rep is like, no, you need to start on enterprise with 100 seats. Because that's how their compensation is designed. And there's a whole bunch of standards like that. So that's an example of what I did was, when we put our first four reps into the HubSpot sales arena. First off, I chose folks who weren't looking for, I want to make 200% of my compensation. I chose folks who were like, I really just want to be part of something new and fresh, and figure it out. That was really important. And then once we hit our stride and went into the next year, Halligan was like, all right, this is great. Hire 20 reps. Let's go. And we sat with finance and figured out what the revenue stream would look like if we hired 200 reps and went. I was like, guys, here's the deal. I'll take the revenue goals. Fine. I'll take the expense. Fine. I don't want to hire the 20 reps. Give me a second. What I want to do is tell our four guys that the plan is to hire 20 reps, but I want to give you guys the opportunity to spread this demand amongst yourself and raise your productivity, get really creative, use technology, use your smarts, and try to be three times more efficient, as opposed to hiring these 20 folks. Now, every quarter we'll look at it, and if you fail, I'm going to have to make the hires. Just means less demand for you guys. And I also comped them less for the opening sale and more for the follow on sale. And, and one of our reps who's a real aggressive guy. He was like," Hey, Mark. Well, that means if I get someone on the phone and they want to buy 50 seats, I'm just going to sell them two this month and 48 next month." I was like, fantastic. Because that's exactly what I want. I don't want to take the churn risk of 50 seats. That might be a bad fit. And no one's going to upgrade 48 seats if it doesn't work. So there's a whole bunch of new-
Speaker 1: Well, it changes the whole philosophy.
Mark Roberge: It does.
Speaker 1: Sales becomes the coach and the marketing or whatever, sales expert, to help drive that adoption.
Mark Roberge: Exactly. All right. Let's last one I wanted to get to before we do Q and A. So we're at Drift. Learning is a big theme for our culture. What's what's the last book that you read that you'd share with us? I'm actually in the process of listening to Influence at Work by Robert Cialdini, which is exciting because I have an email in my inbox from him. I'm going to have lunch with him next week out in Austin. So it just happened to, have you guys read that one? Really good stuff. He's one of those academics, he's down in Arizona State, that has done tremendous research in the world of sales. Mostly in persuasion. Has some really good lessons that come from it. And I just noticed that he was key noting right after I'm key noting a speech. And I reached out to him, and I think we're going to have lunch next week. So it should be fun.
Speaker 1: What are you going to talk to them about?
Mark Roberge: I'm actually going to talk to him a lot about the move to academia, and explore that a little bit. But I'll also probably try to hit him up to come speak at INDBOUND this year, and do a blog article, and see if he's interested in that as well.
Speaker 1: Nice. Cool. Thanks for doing this. Appreciate it.
Mark Roberge: No worries. Yeah, thanks for having me.
Speaker 1: All right.