BC Startup Sales Podcast – The Sales Hiring Formula with Mark Roberge (Hubspot)
We’ve got a special edition of our podcast this week with Mark Roberge joining us to talk about the launch of his new book titled The Sales Acceleration Formula: Using Data, Technology, and Inbound Selling To Go From $0 to $100 Million. We cover a specific component of his book called “The Sales Hiring Formula.” Mark has long been a supporter and advisor to the Bowery Capital portfolio and he is currently the Chief Revenue Officer of the Sales Division at Hubspot. He is one of the only sales leaders we know who has “gone the distance” starting as employee #4 and growing the sales organization to over 450 people, $100MM in ARR, and 10,000+ customers. His book is the distillation of all he’s learned over the past 7 years in the seat and is chock full of sales and marketing insights for any SaaS founder. Go on over to Amazon and grab a copy now!
We start the discussion on how Mark thought initially about sales hiring at Hubspot and how his quantitative background informed his thinking of developing a specific sales hiring formula. We then dive into the actual formula that Mark invented and Hubspot uses to this day and cover the specific traits that they care about when hiring sales people when anchored against his sales hiring formula. Once a SaaS founder has the sales hiring formula, Mark then runs through how to continually test and tweak it over time. Following, we cover some of Mark’s lessons on where to find sales people and how to optimize for getting the best candidates coming through your door. Things like forced referrals, passive emails, and building your own recruiting agency will all be new to most founders out there thinking about sales hiring. We close the discussion on what the best profile is for a first sales hire and what specific triggers need to be in place to first make that first sales hire. Give a listen below to the great discussion we had!
Please head on over to head on over to iTunes to give this episode a listen, and if you like what you hear, please leave us a review.
You can also read the entire transcript below.
MB: Episode 16 of the Bowery Capital Start-up Sales Podcast.
[Song playing in the background]
MB: Hey guys, welcome back to the studio. I am here today with Mark Roberge. He is the SVP of Global Sales and Services at HubSpot. You guys are probably familiar with the company. Mark’s got a new book coming out this week. It’s called “The Sales Acceleration Formula: Using Data, Technology, and Inbound Selling to go from $0 to $100 Million”. He is gonna talk to us today about the sales hiring formula, something very interesting to most of you young SaaS entrepreneurs. Welcome to the show, Mark.
MR: Thanks, Mike. Good to be here.
MB: Give is a little background on you kinda who you are, what is HubSpot and maybe anchor it in sort of where you were when you started and where you are today. I know you have had a 8 year+ career with the company and obviously seen a ton. So, maybe give the listeners some idea about that.
MR: Yeah. The background is the part that people chuckle about and get intrigued about actually because I have actually never really done sales before HubSpot, right? So, I started my career as a computer programmer. I am a mechanical engineer by training, kinda entered into the start-up scene pretty earlier in my career, I have a MBA from MIT. So, I have always had this sort of quant-science-technology lens through which I view the world and you will see a lot of it in the way that I kinda built the HubSpot sales team is really through that lens. So, I met the co-founders at MIT when we were students. I was trying to get my own start-up going as a founder and CEO and I was earning some side cash showing up at their office every Thursday, just three guys in a garage and the year went by. I personally couldn’t raise my Series A, their company was taken off and they were recruiting me to build the sales team. So, I came in one of the three guys in a garage and 7 years later, we had a couple hundred people on the sales team and we are approaching the IPO and lot of stuff happened in between, obviously.
MB: Cool! So, you have a new book coming out. It’s incredible for anyone that hasn’t read it. You should go at Amazon right now and pick it up. What gave you the idea to write it? Why write a book and sort of, who is it or ultimately geared for, who’s the audience?
MR: Well, the company asked me to do it. So… but, to be honest, I just love, I am addicted to helping entrepreneurs. I get a lot, probably one or two a day of either heads of sales of young companies or CEOs that reach out to me and honestly, I spend my commute time, I have an hour of commute both ways talking to entrepreneurs, just helping them out and I just figure this was, for my own perspective, a great way to help in more scale. This kind of document that this is a blueprint for other folks. Selfishly, from the company’s standpoint, we have been entering in the sales software space over the last year, came up with a free CRM, came up with a free product called ‘sidekick’ and we are just trying to, in the same way, we rubbed our brand around thought leadership in the marketing arena last 7 years or so, we felt this was a good strategy to do it in the sales arena as well.
MB: Perfect! And the audience predominantly is sort of emerging business or B2B founders, I guess, right?
MR: I think they get a lot of out of it. I think it ranges, you know, I mean, we have had… I have had plenty of mid-market and enterprise hiring managers get a lot out of this as well in terms of methodologies. I think venture capital in terms of the advice they can give to their firms. A lot of even just presidents of small businesses that do sales as 10 or 20% in their job, get a lot out and certainly, the early stage tuck up and it’s a home run for.
MB: Got it. And maybe just as a quicker side, what was the worst part of writing a book, from an experience standpoint?
MR: Actually, lining up the publisher, to be honest. Like, there is definitely a couple that I chatted with and it’s just a lot of back and forth legal stuff.
MR: I know a lot of authors talk about the actual writing, but this book was unique for me because I don’t think there was a word on that… in that book that I hadn’t spoken on stage at least a 1000 times. So, it was literally me sitting down and just writing out what my speeches were. So, it came… the actual content came a little easier.
MB: Got it. So, maybe let’s transition to the meat of the conversation, you know, I wanted to talk specifically about essentially the first part of your book which you describe as the sort of sales hiring formula, maybe just… why does this matter and why is it so important and then sort of how you developed it? Give the listeners some idea of what you mean when you say sales hiring formula.
MR: Sure. I think, especially for this audience being tech entrepreneurs, I think this is the most important part of the book for them and I will tell a little story about it. I remember the first few months of HubSpot and we had figured out that we were in a position in out scale of the sales team. I was in a tough spot because I looked at, you know, I kinda had a vision on what a world class hiring, training and management execution would be within sales, but it would take a 150 of our work week which was just not possible. So, I knew, despite the fact that I was going to put in 80 to 90 hours a week, I had to cut corners somewhere and I decided that I was gonna be world class in hiring and I do my corner cutting in training and managing. And the theory there was if I can get the rockstars on the boat, even if the training and management’s mediocre, they will find a way to win, but if I do a mediocre job of hiring people, training them and managing would be an uphill battle and unfortunately, don’t… it’s everyone’s like “Oh, shake your heads. Yes.” But, you don’t see that a lot in the execution.
MR: You know, when a CEO or a founding sales, you know, the first sales leader comes in and there are looking at a day and on the calendar’s a big pitch to the deal that’s gonna make the quarter and sort of like a team discussion around forecasting and an interview.
MR: Like, which is that… when should they bring in their A game to.
MR: I don’t think they are as a… they are kinda passive and winging it around the interview and I really try to make a… try to really do a world class job around the hiring process.
MB: And so, did you have this kind of as an epiphany or were there experiences that led you to or was it kind of look out, you know, you obviously hadn’t hired anyone in at that point?
MB: So, you would recommend sort of from the outset think of a sales hiring formula before you even embark on this process of bringing people on, right?
MR: Yeah, absolutely. So, the first thing I did was in hindsight now like people ask me, “What do you look for in a rep?”, and that kinda stuff and they… so much of that answer is dependent on the context of your business.
MR: You know? And I… like I brought on some people early on that came from public companies inside sale teams that had 800 reps and they were literally the number one and two rep. It’s like I work so hard to recruit them in and I thought they changed the game for us and they were pretty good, but they didn’t rock it. And I sat back and thought about like, “You know what? They came from an environment with a huge brand and easy to understand value prop. The minute they said their name of the company they are from, everybody knew they were gonna pitched on”, versus HubSpot was the exact opposite of that, especially 7 years ago. It was like, “What’s HubSpot? Inbound Marketing Software, what’s Inbound Marketing Software?” So, every environment depend on who you are selling to, the complexity, will tear it to a different type of sales person, but the process to actually engineer your ideal hire is the same and that’s what I went through was I documented my theory of the ten criteria that I thought would correlate our environment. I was disciplined about defining what each one was, what a score of 1 or 3 or 5 or 7 or 10 would be and disciplined about scoring every candidate and every hire against that criteria. And even when you are 3, 4, 5 hires in, now you have got a foundation to work off of where two of those folks are just exceptional and a couple are mediocre, you can now go back and reflect and ask yourself, “What’s the common patterns here on the great folks, what doesn’t seem to matter, what’s common about the bad folks and what am I missing?” And you can iterate, iterate, iterate and get down to that formula.
MB: So, maybe that is a good way to segue in to what actually is the HubSpot sales hiring formula and how do you sort of think about it more from the process of engineering said formula? Maybe give the audience sort of your four specific components everybody talk about this much.
MR: Yeah. Sure. Yes, just as a specific example. So… and I think it’s highly applicable to this audience because I would say there are actually five traits that correlated really strongly too… for us and I think that will be applicable to a lot early stage companies. It was coachability, curiosity, prior success, intelligence and work ethic and it’s funny because coachability wasn’t even in my first set of theories. It was after a 5-10 hires where I started to step back and look at our top players and it was like, “Wow! Their coachability is really coming out here.” And sure enough, later on, it proved out to be relevant.
MB: Sure. And then once you have sort of that theory of who you think the ideal salesperson or what the characteristics or what do you sort of say next to most founders or what’s kind of the next step in that evolution?
MR: So, once you have established the theory then… and you have defined what these aspects are, you wanna have a good scoring mechanism. Back in the day, I used Excel. You can use a Google Document, get fancy if you want and just be disciplined about scoring folks. And then you have to cut a step out and think about how you are gonna evaluate folks against each of those criteria. So, are you gonna have multiple interviews, what questions are you gonna ask, you are gonna do role plays, is their homework between the interviews? All these strategies can be used to evaluate and you can make your interview process really efficient.
MB: So, you have a… you actually have a scoring system essentially?
MR: Yeah. I mean, we just pass around a Excel file with these criteria. There are actually ten in there, but these five are the most correlated and it had in their the definitions of what they were and score of 1 and it was weighted, right? So, these five would have a weight 8, 9 or 10 with the other ones being lower and then it would kinda spit out a scoring… we had a… you didn’t just hire off the score, but it was a directional thing, you know, 60s and 70s, they weren’t that good, 80s or 90s, they just talking about a good person. There was obviously plenty of note areas for specific observations and strengths and weaknesses and then you just kinda try to get a sense from what you are signing up for with every candidate. It was rare to find a candidate that you just flat out loved, right?
MR: You were just… you are like, “Okay, well, this guy is so strong here, here and here, but they just really didn’t bring it on their knowledge of our space.” And I am so surprised that they didn’t do more homework and is this a learning curve issue or was there a motivational issues, was he just busy that week, but you know what? There is so much strength elsewhere that I think we can get them over that, let’s take the chance, right?
MB: Got it.
MR: So, that was kind of the conversation that you are having with the…
MB: So, the scoring is directionally accurate, but obviously not the be all end all of these?
MR: Yeah, exactly.
MB: And then just quickly, who is actually interviewing besides you? Was it… because you obviously have any other sales people…
MR: In the beginning, it was really just me. I did bring Halligan, our CEO and he had a background in sales. So, he was there as a checkpoint for the early days. And then even like some of the first sales people I have brought on, they were pretty senior people that were brought on with the thinking like, “Hey, let’s just get this thing going then you will be a manager.” So, they were there as a data point too and plus, that was an opportunity for me to train them on the process because they would be doing their own hiring soon.
MB: Sure. So, you have this formula, you are embarking on the processes and new sort of SaaS CEO about the hire your initial sales people, what happens next? I mean, what did you guys do as you continued to sort of hire? Is there kind of a way you stick to that? I mean, you talked a little bit about sort of some regressions that you ran and what you ultimately find. Maybe give the listeners some idea of, okay, now, you actually have to go out and use that formula to act?
MR: Yeah. I mean, you just you establish that first theory, you go, you hire a bunch a people and then you qualitatively assess them against and you are iterating that process every single time and hopefully, for some of these early-stage folks, you start to putting your foot on the gas and all of a sudden, you have got 10, 20, 30 reps. You actually have enough data to do a regression analysis and that’s what we did. Right? So, I had all that data collected, I had 30 hires on the floor and I grab one of the buddies of Ph. D statistician at MIT and he was salivating over the data, he was excited about it and we ran out a regression and we would do it every six months or every twelve months because the market is changing, the business was changing, we were changing our strategy and then sometimes alter the hiring profile. And then as we introduced a partner program and an enterprise group and a small business group, we had all turned it according to the context of those groups. So, that was really comforting for us. You know, when you are hiring your first 3-5 hires, those are the big hires, but also, when you are going in to a year and you are doing tens of millions of dollars and you are looking at an increase by a 100% and you are hiring 30 reps next year, you gotta get that right. And having this type of sophistication behind you is very comforting.
MB: And do you recommend, you know, once you have the data digging in and then really sort of, is it a directional move or do you just inherently… I am sure, at this point you trust the data, but early on, was it, you know, you are drawing insights on how you should be changing your sales hiring formula, but you are also probably learning things that you did right? I mean, do you sort of coach entrepreneurs now on, you know, listen to that data and actually act on it versus like are there any exceptions I guess?
MR: Yeah, there definitely are. I mean, because you are only… if you are only looking at 5 or 10 criteria, I mean, you can’t cover everything.
MR: So, like, people often ask me about cultural fit, we are like culture isn’t in here, we didn’t mention cultural fit, but intelligence work ethic right? I mean, like, these are the things that are directional toward cultural fit.
MR: But, there are people who probably knocked on the park here, but they were just completely cocky that we just didn’t have a good feel for. So, you are absolutely right. There are exceptions to the rule. These are directional things, but far, far better than the typical. “Yeah, they seem pretty convincing, let’s bring them on, you know?” This is a framework that allows you to have some signs around it and to get everyone to learn and even also, when suddenly you have 30-40 reps, now you have got 5 or 6 managers.
MR: And this is just a great way to scale that hiring discipline throughout the organization as opposed to “Yeah, go on, see if you like this guy.”
MB: Sure. Alright. So, you have the formula, you are gonna stick to it, how do you actually find the initial people that you were targeting from the sales hiring side?
MR: Yeah. I mean, if hiring is the most important thing to do in this whole process scale on sales, the aspect of hiring is sourcing candidates. That is the hardest part of it. The selection process is important, but this is just really hard and the problem here is every great sales person has multiple job offers at any second, right?
MR: Like, if you were somewhere else before, your boss is checking in with you every quarter like, “Hey, you still happy there? Do they screw you in the comp plan or by the way, I just jumped ship to this awesome new company, let me tell you about it. I’d love to bring you over here.” So, great sales people never have to put together a resume, never have to go an interview. So, sort of like an active recruiting process isn’t gonna work. First thing I do was I posted ads on Monster and Craigslist and I sifted through 200 resumes and phone screened 50 people and hired zero candidates.
MR: So, I kinda learned the hard way about hires and one person, I don’t remember who it was, gave me the awesome piece of advice was – think about building a recruiting agency within your company. Right?
MR: So, if you kinda like let’s generalize recruiting resources per second, recruiters at a corporate environment tend to work a 9 to 5, be on a base salary, kind of… they are not gonna pound the phone and cold call candidates…
MR: … right, versus recruiters at an agency, these guys are hungry. Lot’s of times they’re were on a 100% commission, they make really good money, they work long hours and they pound the phone and they go out and network and find passive candidates. So, this person’s advice was building the recruiting agency in your company. Like, find former agency people, put them on a comp plan, make sure that they are cold sourcing and… so, that was a really good advice. And so, the things that I would do in there are things like… and I had to do this myself in the early goings. So, I found place like LinkedIn to be extraordinary useful, little real tactical tip here as I went… I would just do searches on LinkedIn and look for people in Boston because that’s where we are building the team, I would look… I would filter on titles worth account executive or inside sales person and then I just look for quality schools that aas a proxy to intelligence and then I would just send cold e-mails to people. I went through in with the in mail, I would just send an email, I thought I had a better chance I’d guessed the formula and the real tactical tip here is the subject I will always put their current company and their under-grad school and that would just, everyone would open that. You know what I mean?
MB: Why just…
MR: Like, if I… Well, where did you go on your grad, MB?
MR: Okay. So, if I sent you an email that said Columbia/Bowery Capital, you’d open that.
MR: You have to.
MR: You are like, “What is this?”
MR: And there was just a note that just said, “Hey MB, I am Mark. I run the sales team at HubSpot. We have way more leads that we can deal with here. We are scaling the sales people, the sales team. The people here who are successful have a background just like you. Let me know if any of your friends are in the market.”
MB: Got it.
MR: So, very passive, they don’t feel like they are cheating on you, on their company to take the call. I am not asking to hire them, but like a lot of people called me back or if I called the next day, they pick up the phone.
MR: So, you know, real tactical, but it tended in to work. Couple of other things in there was this thing called the forced referral. So, as we started to scale, you can put a, “Hey, we will pay you 2500 bucks if you recommend a friend”, and very few people recommend someone.
MR: So, what we will do is say, “Okay. You know MB, welcome to HubSpot. You have been here 3 months now. I am gonna go through… We are gonna meet tomorrow and talk about the people who you know who might be a good fit for our team, but tonight I am gonna go through your 575 connections on LinkedIn and look for people in Boston in sales and write down a list of 27 folks and we are gonna go through that list together.”
MR: And that is just is more work for the recruiter, but the yield from that is phenomenal and me, as a hiring manager, because you go, “Why didn’t I think of Betsy? You know she is phenomenal and you get the insight scoop, maybe they can even introduce you.” So, that one worked really well as well.
MB: And were your reps receptive to reaching out to those people?
MR: Oh, yeah, absolutely.
MR: And lots of times, we jot down some wasting bullets, some bad, bad situations. Yea they look good on paper terrible cultural fit, you know, like… So, they had the insights scoop and that was a great source for us.
MB: And then you would still give them the bonus if the person was hired?
MR: No, definitely not.
MR: No, they had to submit it. I was doing work for them.
MR: I don’t remember the details about it was just a meeting. So, if they brought the person in, we give them the bonus, but otherwise if we did the work, they didn’t.
MB: And maybe just to close on this part, what is so important about, you guys are in Boston and it’s a very particular area, you talked a little bit about sort of understanding the talent portal…
MB: … is that particularly important and sort of why?
MR: Hugely, I mean, you are normally hiring, especially these days, more in size where there is more geographic proximities, you get a real feel for the different inside sales environments at in on these different companies. Like, Google had a huge team there, but it was such a different environment from us, like, they just… they didn’t translate well for us.
MR: So, I didn’t even waste my time over there versus I got word of like serving companies, training programs were a great fit for us that I could call into. You got word like all this time you see that 2 or3 candidates from a company and you start interviewing and asking them and you find out that they changed their comp plan and everyone jumping ship. So, now, we can go after the top dogs in there.
MB: So, it’s just triangulation and figuring out…
MB: Like coffees ..
MR: Yeah. And you know like, “Yeah, who has a 150 reps, this is what they make, this is how they are trained, this is what an AE is there versus an inside sales rep.” Like, you just learn all these intricacies and you start to see… you can’t pull a lot from one area, but you start to get a feel for what’s going on with all these companies that’s really, really important.
MB: Got it. Alright. So, you have the formula, you know what to do with it, you have now found some of these potential candidates, what are some of the things you wanna ask or how do you think about that actual interview now that you have got somebody in the room?
MR: Yeah. So, here’s my interview. I walk up to a rep or a candidate in the hallway and just introduce myself. The interview starts then obviously. You always hear this in sales like if they are comfortable and just like I am asking them the questions of like pulling teeth, it’s not going very well versus if they are asking me questions and if they clearly have done research about me and it’s a genuine sincerity of questions coming from them and they are asking good follow-up questions, that’s a really good start and then it’s growing more on the curiosity framework, right?
MR: Then I just start off with some easy ones – why are you interested, where do you want to be in your career in 5 or 10 years, forget about HubSpot and that gives me a sense of just whether they are leadership candidate down the road or they are just a pure salesperson, do they want to be more entrepreneurial. It just helps me to assess their fit a little bit and warm them up. Then I dive into prior success. I will say, “Okay, great! MB, you are over at Oracle, you are an account executive, how many account executives are there?” “There are 175.” “Great! Where did you rank?” “I was 5.” “Wow! That’s impressive! Based on what?” “On bookings.” “Okay. And is that last quarter or last year?” “Last year.” “And your recommendations will validate that?” “Of course.” So, that gives me a good sense of prior success. Prior success doesn’t have to be in sales either. I have an Olympic gold medallist from the ’96 women’s hockey team on the team.
MR: A guy who was a professional comic before that made all the way to Comedy Central with his own special.
MR: You know, these are all just people who…
MB: … want to be successful?
MR: Yeah, wherever they put their head to, they excel in that and that’s what I am looking for. Then again, into my favorite part which is a role playing coaching exercise. So, let’s say, okay, MB. I am gonna play Mark, the VP of Marketing at a security software company. You be MB, the HubSpot sales rep. I requested the demo last night on the website to lead on your desk. Go. And they will role play. If they start off in just like talk for 5 minutes and throw up and show up… show up and throw up as we call it with the…
MB: That’s not good.
MR: You know, just like, “Wow! That was boring and not a good start to the…” versus if they are asking questions about why or request the demo on what’s going on in the business and it’s good follow-up questions, that’s fantastic.
MR: And then during that role play…
MB: And even if they don’t, they are obviously not gonna know your product like you. So, you are just trying to subside the broad…
MB: Got it.
MR: Exactly. And obviously, like by the time they have got me at this point like, in some ways, the interview is the part… is the start of training. So, why not just do it and expose them some of that information. So, you hope that they will absorb some of that and that’s part of the intelligence fact in their learning curve that’s why they have learned it.
MB: Got it.
MR: And I ask them questions around, “Hey, how does SEO work?” Right? And just see how much they have learned about some of these elements and drill, drill, drill. Then I stop the interview and say, “Okay, MB, how did you do?” Let them self assess. If they are like, “I was awesome”, it’s not a good sign versus if they are very like, “Hey, this is what I did. Well, I thought this could have been better.”
MB: Improvement is…
MR: So, how would you improve that, you know? That’s good. And then I coach them for a while and if… and for 5 minutes time, one thing they well, one thing they could have improved on and if they are taking notes, that’s great; if they are glassy eyed, that’s not a good thing. And then I have them redo the role play, right? So, that’s really quickly a big part of my interview and you can see we had coachability, curiosity, prior success, intelligence; work ethic, we mostly hit in the recommendations.
MB: That’s amazing. So, then alright, so, you have the formula, you found where to sort of recruit the sort of first or early sales people, you know what to ask in the interview, what in your experience, and you go in to pretty serious detail around this and you have obviously written on inbound and other places about it, but sort of, what in your experiences sort of the best kind of first hire in to a company? You have obviously coached a ton of start-ups, been there yourself, how do you… maybe kinda give the listeners the four types of people that you think about hiring and why some are better than others?
MR: Yeah. So, I teach a bunch of classes at Harvard and MIT, Babson, BU and all these places and I do this case. So, here’s four hires you can take. The first person we will call the SVP of sales and they are the head of sales, 500 person sales team at the big behemoth Fortune 1000 company that you are looking to disrupt. Got it?
MR: Hire Number 2 is their number one sales person, right? So, 500 reps and he is their top sales person. 26-years-old, super hungry, making ton of dough really aggressive. Number 3 is a kind of a, I call him the entrepreneur. So, they just started a company and they have failed. So, they are in the market. Before that, they were at Oracle and so, they have had some sales. So, they had some sales experience in training, but they are entrepreneur, CEO, they are coming out of a failed start-up. And Number 4 is the sales manager and they are not in your industry, they are in a mid-market company, not in the industry, great rep that just got promoted to sales manager, okay? So, those are the kinda like four general options. Now, most young companies I see strive to hire Candidate Number 1. They are like, “Oh, let’s go get this big guy and bring him in and like they are the company…”
MR: And the problem there is that person probably hasn’t sold in decades. Like, literally, like closed business and made calls and their first question when they get to the office is, “Where is my assistant?” Right? So, they just don’t know how to roll up their sleeves. The only exception to that is if you sell into like a very small market. Like, if you are basically just going after the top five cable companies in the world, well, get in some with that kinda roledex that’s huge, but that’s kind of an exception. The Number 1 sales rep, the problem there is that guy showed up at the big company and he did great, but the blueprint was already established.
MR: He showed up and like, “Okay, do we use Webex, here’s the pitch deck, here’s the sales methodology, I just have to follow this.”
MB: Yeah, you got none of that, right?
MR: Yeah. Word like an animal, he’s gonna show up at the same questions and he doesn’t how to build that process and neither do you, especially if you are a product founder.
MR: Right? So, that’s the problem with Number 2. I love Number 4, the sales manager. She is a great hire there. I think people get caught up with domain experience because it’s like easy to interview for, but in my experience, some of our top people at HubSpot came from insurance and yellow pages and… right? And I have had a lot of hires that were from our domain, but they were average and then they are average in our company too, right? So, keep the average people for your competitors and shoot for top dogs. So, the sales manager, even though she is not from the domain, I like her a lot and the fact that she was a great rep as huge and she just got promoted to sales manager. So, she has some experience in building the blueprint, has some experience in hiring, but also has recently been a seller and I can challenge her to grow into management and grow in to a VP. I think she is a great fit. The entrepreneur is my favorite here and the reason is she does have a sales background, but the one thing that she brings that no one else does is that innovation in vision, right? It’s like the most valuable insight that you are getting in your first few sales calls is not the first customers in revenue, but the sort of the market research from the frontline, you know?
MR: And the entrepreneur has the probably the best opportunity to be able to go out and just explore these potential customers what’s going on and come back to as opposed to all the other candidates. So, just come back and say, it’s not working…
MR: The product is not working, the message is not working. The entrepreneur will say, “Listen, our pitch is a little off and our product has some gaps, but this is where the opportunity is. I have had 10 calls this week and this is what everybody is thinking about the problem.”
MB: So, it’s the sort of curiosity component…
MB: … of the sales hiring formula?
MB: This is excellent. So, we wanted to close with two quick questions that generally come from most early stage SaaS founders. I guess, with this lens of sales hiring, finding the actual sales people, interviewing them and then sort of the best person to bring in the entrepreneur, how do you as a young CEO really think about… what is the trigger point when you want to bring on a first hire?
MR: Yeah. So, if you make the right call with this entrepreneur, it’s probably pretty early. You know, I just something that you can start having conversations around. I probably do it like in the midst of the early product development cycles and just have that person just go out there and just talking to a lot of connections, just explaining we are building something and we’d like to get your feedback and you’d be surprised how many companies are willing to take… you up on that because they don’t wanna miss out on the next big thing.
MR: They see this is an opportunity to get a competitive edge and by having the entrepreneur out there having those discussions, the product team’s gonna build the better product because they are that close to the market.
MB: So, you would advocate that first hire extremely early on in a company’s life?
MR: Yes, if they can afford on. Depend on the seed round you do, listen if you are bootstrapping and you probably can afford, you have to do some of that as a CEO.
MR: But, I would do it relatively early just to get those discussions going. Now, scale is a different question… response, but I would have that conversa-… have that hire pretty early.
MB: And then maybe… so, maybe then move to the scale, right?
MB: So, the other large question that comes up is I am a SaaS founder, I have hired my first entrepreneur salesperson, they are doing well, they are closing, you know, we are closing in on the kind of 100K and MRR number that everyone sort of thinks about, when is the right time to really amp up and pour gas on the fire and use this sales hiring formula rigorously to move forward? You often times hear qualitatively that it’s at the series A stage and once you have millions of dollars in the bank, that’s the sort of right time when you have proven product market fit, but in your experiences, that is that right? Is there any other kind of way to think about it as a young SaaS founder?
MR: Yeah. There… It is around the product market fit stage and it should be done more slowly than most companies do. I think folks move to the first, the scale stage too soon and they scale too fast when they hit there. I see it most of the time. So, the way I think about product market fit is really around the customer success, right? So, I am looking for an extreme amount of customer success first. So, I don’t want to pour the gas on it and people think, “Oh, well, people are buying and we are getting money.” No, well, our 80% of those folks succeeding, are you upgrading them?
MR: Why do the people canceling? Like, that’s what I want to obsess on first and once I am comfortable with that and know that, that market’s of decent size, now, I wanna start scaling up and the first thing I do when it starts scaling up is I need to check the economics next. So, it’s like, “Okay, we built a product, there is a segment in the market here that we have run dozens of customers against and they are successful. Let’s try hiring sales people. Great! Let’s bring on two or three and now, let’s check the economics.” Those guys are gonna make, they will call 200 new leads a month, they will setup 50 qualified appointments, they will run 20 demos that close 5 customers, I need to see how that adds up to. Is that add up to a 1000 MRR, 3000 MRR, 5000 MRR because if that adds up to a 1000 MRR, I am not ready. And that’s what companies are offering 5 [Inaudible 00:33:29] a day. They pour it on like, “Shoot! We got a triple revenue. We need 20 reps.” And 20 reps are doing a 1000 MRR making a 100,000 in a year and it’s a mess, right?
MR: So, the next thing I am looking for is that, that sort of fun old formula making sure that if these guys are spitting out 4000 MRR and I am paying a 100,000 and this is my churn, if we scale that up to 20 reps, what kinda business is that?
MR: And if that looks good, great! Let’s hire the next wave.
MB: But if…
MR: And the next wave is, you know, it’s like now it’s like, “Well, do I have enough lead flow.”
MR: That’s another huge mistake they make is, “Hey, you know, three reps are doing awesome.” But, when you look under the covers, 70% of their deals are coming in from referrals from the CEO.
MR: So, it’s like, “Hey, where is the domain strategy?” So, there’s so many potholes you have to be aware of and I see so many folks find some little win and then hire 20 reps and it’s a complete mess and the death of the company. So, you got to be careful.
MB: Yup, makes sense. Mark’s book is on shelf now. Go to Amazon and get it. “The Sales Acceleration Formula: Using Data, Technology, and Inbound Selling to go from $0 to $100 Million”. Thanks for coming in, Mark. I appreciate it.
MR: Thanks, MB.
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