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Marc Roberge
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Brian Kenny
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Marc Roberge
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Brian Kenny
Welcome to HBR on leadership case studies and conversations with the world's top business and management experts, hand selected to help you unlock the best in those around you. If you're a company founder, you're faced with a daunting list of questions. Which sales candidate is a startup's ideal first hire? What marketing channels are worth investing in? How aggressively should you align sales with customer success? Harvard Business School senior lecturer Marc Roberge argues that every aspect of being an early stage founder involves sales. But many founders lack an understanding of how to incorporate sales as they grow their ventures. In this episode, you'll learn how to hire for early sales roles, design compensation, and set up processes for a growing sales team. This episode originally aired on cold call in December 2023. Here it is.
Mark Roberge
Welcome to this bonus episode of Cold Call where we are going to tackle a topic that we just don't cover enough sales in the for profit world. It's the ultimate metric, the thing that supports every other part of the organization. It's an occupation that's not for the faint of heart. A survey by online career database Payscale revealed that sales was ranked as the second most stressful job just after firefighter. And in a totally meta move, Salesforce, the company that is installed meditation rooms in every office location. So today we've invited someone who knows a lot about sales to help us understand why. Why it's so important to get it right and why that's easier said than done. Today on Cold Call, we welcome Mark Roberge to discuss the case entrepreneurial sales and marketing vignettes. I'm your host Brian Kenny and you're listening to Cold Call on the HBR Podcast Network. Marc Roberge teaches about entrepreneurship at Harvard Business School and he previously served as the SVP of global sales services at HubSpot, where he scaled revenue from I'm gonna try and get these numbers right. 0 to 100 million. And grew his team to 450. Mark, welcome to the show.
Marc Roberge
That's a lot. Thank you so much.
Mark Roberge
That is a lot. Yeah. For our listeners out there, you know, we call the show Cold Call, but to be honest, I always send the questions out to our guests in advance so they have a chance to read up on them and think about what they're going to say. Because we don't want it to be a total cold call. But today we're breaking that mold. This is a real cold call. Mark, are you ready for this?
Marc Roberge
Hey, it's the sales episode.
Mark Roberge
Cold Calls episode.
Marc Roberge
Let's go.
Mark Roberge
That's right. And you wrote this case, so we're going to reference the themes in the case at kind of a high level. But really, I mean it when I say we don't talk about sales enough here. And it's such a critical, important function within any organization. So why don't we start? I want to ask you, how does sales rank in an entrepreneur's list of priorities? When somebody's thinking about starting a new enterprise, where does sales factor in?
Marc Roberge
It depends if they're experienced or not.
Mark Roberge
Yeah.
Marc Roberge
For the experienced entrepreneurs who've been out there, it is way up there. They come back and say, listen, this is just not about acquiring customers. This is about acquiring employees. This is about driving your team. This is about motivating. This is about selling people on a vision. So they're like, I'm always selling investors, raising money. Every aspect of my job is sales, and you need to know this stuff.
Mark Roberge
Yeah. It's funny, I had a conversation one time with one of our better known alum, a guy named Jim Cook, who started the Boston Beer Company, which is Sam Adams Beer.
Marc Roberge
He's come to my session.
Mark Roberge
Has he really?
Marc Roberge
When I was a student at mit, when I first met him and saw him, and then a couple of mine, he's been in the audience. I'm like, jim, thank you so much.
Mark Roberge
Well, I did ask him one time. I said, you know, because I was doing an interview with him, and I said, what's the one thing you didn't learn at HBS that you really wish you had learned? And he went off on sales for about 10 minutes because he's a firm believer in how important it is, and he didn't feel like he got enough education in it here. So maybe this is the start of something new, a new movement at Harvard Business School. What do you want entrepreneurs to know about sales?
Marc Roberge
That's kind of where we start off in teaching is we get these amazing Ferrari minds in the class, and we're like, what is sales? They just think it's this really provocative presentation, and they have this picture of what these Salespeople are. And we have to take them through this journey of like, no, that's not what it's about. If you read all of the rigorous research on great salespersonship, it's really about understanding your buyer. I say, you want to get good at this. Here's the exercise you're going to do this weekend. You have a networking event, you have something going on where there's a bunch of strangers. You walk into a room, walk up to someone that you don't know, and see how long you can ask them questions before they get annoyed. If you can do that for like 20 minutes, you are well on your way in sales. And I joke with them, I'm like, I can do that pretty well. I can literally go to a wedding and walk up to a complete stranger. All I told them was my name. Yeah, we talked for 30 minutes. I asked them questions. At some point they were like, wow, no one's asked me that before. And I know at that moment I've rewired their brain a little bit through that provocative question. That's really the essence of sales. If you go look at anything that's rigorous and you talk to the folks who've been out there and done that, this is all about developing trust to earn the right to ask open ended questions so you can understand what the person across the table cares most about. What's keeping them up at night, what are the opportunities they're excited about, and decide whether you can help them. That's sales.
Mark Roberge
Yeah. I mean, the case that we are talking about today focuses on three different vignettes. One of the challenges that seems common across these vignettes is that the founders are thinking about what kind of a person do I bring in? Because I think entrepreneurs have a vision for what they're creating, whether or not that they're able to convince other people in the way that you just described about how important that vision is and why it should matter to a potential client. That requires a certain kind of person to be able to spark that conversation. Can you talk a little bit about what founders should be looking for in their first salesperson?
Marc Roberge
Yeah. So there's multiple layers to this conversation because there's like the first piece, which is like, let's just demystify what selling is. This is not about provocative presentations. And so the case is really talking. We get into the head of a founder, you've built a product, you have a couple beta customers. Now we have to professionalize a sales team that is a whole new set of riddles starting with what you're saying, Brian, which is, who do we hire first?
Mark Roberge
Yeah.
Marc Roberge
What a mistake so many founders make. And unfortunately, their most mentored voice is usually their angel investors or their VC investors. And that guidance isn't good either.
Mark Roberge
Yeah.
Marc Roberge
Because what they say is, oh, go find one of the top reps@salesforce.com, let's give them equity. And bringing them on. Terrible first hire. Because when they joined Salesforce, they went through two months of rigorous training on proven methodologies with the pitch decks and the objection handling. And they were handed a quota and they were handed a list of accounts and a bunch of leads, and they were just like, just follow the playbook.
Mark Roberge
Yeah.
Marc Roberge
You're two founders with a product and your engineers. You have no playbook. And furthermore, the most important outcome of that first sales hire on those first hours or days of work is not the customers, it's the learning. This is your first hire that's going to talk to your market 30 to 40 times a week.
Mark Roberge
Yeah.
Marc Roberge
So fine, we bring in whatever four or five customers that month. We bring to you 120 conversations and learnings. This first hire needs to be a combination of a product manager and a salesperson. They need to have the sales skills to be able to go talk to strangers, do the dials run a closing sequence? But they also need to know, looking back on a week of 30 conversations, see the patterns and communicate those effectively to the engineers so we can iterate on the product.
Mark Roberge
So I'm putting myself in the founder's shoes now. How much attention do you have to pay to sort of build up that trust in that individual that you're bringing in?
Marc Roberge
Well, I think that's part of the interview process is are you going to be fine with this person representing you out there? I mean, that's what sales does. That's my favorite part of sales interview is you gotta role play. I've never seen a sales hiring context where you're not gonna role play and you're gonna role play multiple times. Brian, let's do a role play. You're gonna sell my product. Let's go. And I'm gonna give you feedback because this is interview one, and if I like you, we're gonna do interview two in two days. We're gonna do this again. And I want to see you get better. And by the way, here's a bunch of literature about our product. Go read it and get better. So by the time I'm done with the interview, I should be very comfortable that you're gonna go out there and represent me.
Mark Roberge
Yeah. What would you tell the potential salesperson who's listening to this conversation about what they need to do and what they need to bring to the table?
Marc Roberge
They just need to do their research. Like, some of the best hires I've had during the HubSpot days, you mentioned the team size and of course, you have turnover. So there's a lot of hiring that.
Mark Roberge
I had to do.
Marc Roberge
They brought a binder to the interview. Like, literally a binder. Like, this is who I am and this is what I know about HubSpot. They are just overly prepared. Like, one of my favorite steps in the interview is like, I walk up to you in the waiting room. Hey, Brian, how you doing? I'm Mark. Are you like, oh, hi. Hi, Mark, how are you? Or are you like, hey, of course. How are you, Mark? How was the flag football game this weekend?
Mark Roberge
Did you do your research? So you go off book, you got to really know who you're talking to.
Marc Roberge
Exactly. You got to be ready.
Mark Roberge
We did talk about your time at HubSpot, and I just want to delve a little bit into some of the things that you learned as you scaled this, really from the ground up. So you were first person to be in the sales function at HubSpot. It's now a very large, successful organization. How did you even think about scaling that? And this leads a little bit to your podcast. You're a fellow podcaster, you host a show called Science of Scaling, and I want to understand some of the things that you're trying to convey in the podcast.
Marc Roberge
The Science of Scaling. I actually don't think about it that much as being rooted in HubSpot, but it definitely fell into this trap. And this was more rooted in my post HubSpot days. I had a five year journey between leaving HubSpot and I was teaching here. Hadn't quite started State2Capital, my venture capital firm, yet. I was fortunate. The phone rang a lot and it was to help startups with their sales team. Great. That's my passion. I love that. And I was very careful not to, like, take on too many. So I basically chose one startup a quarter to spend a day, a week with. And they were all about the same stage. Like, we have a product, it works. We need to now professionalize sales. So I would go in and I would help them build their sales team, design the comp plan, et cetera. I did it with like 15 companies. Asana went public. Drift sold for a billion. Couple are worth a billion. Bunch went out of business. Bunch went Flat. So it was just a remarkable time in my career to look back and be like, why did some go like this up? And why did some crash and burn? And those reflections came back to two critical strategic questions and how they handled them. When are we ready to scale sales, scale revenue, and how fast? And as I look back in those journeys, I was like, wow, are we operating at a kindergarten level on those questions? It's literally like some board members sitting there and like, oh, yeah, I was an early investor in Snowflake. In year one, they did a million. Year two, they did four. Year three, they did 15. Year four, they did 30. So that's your number without any analysis of what this company does, what this company is capable of. And so that's really what my work, the Science of Scaling, is about. It's a framework that boards and senior leadership teams, founders can use to calculate using their data. When are you ready to scale revenue? And how fast are you capable of. Asana is the number one AI work management platform. It's where work connects to goals so your entire organization can move forward faster. Asana is where AI is seamlessly intertwined with every project, team and goal. Try for free today@asana.com that's asana.com.
Mark Roberge
What are some of the indicators that founders should look for? Like, how do they know when they're ready?
Marc Roberge
I ask, you know, audiences that, and everyone says, product market fit, which is a great answer. Then I ask, what is product market fit? You get a hundred different answers. That was a movement for us to, like, be better entrepreneurs, but now you even read the Wikipedia page for product market fit. Half of it's about feelings. How do you make a strategic decision off of a feeling? You just know it when you have it. So this is about truly quantifying product market fit for your business. A lot of people, when they do quantify it, they're like, oh, it's when you're at a million in revenue. I could not disagree more. I can sell ICE to Eskimos. It doesn't mean ICE has product market fit for Eskimo. That just means you can sell. That just means you have market message fit. Product market fit means it delivers on the value that you're promising. For me, the metric is customer attention and satisfaction. Now, unfortunately, that's a lagging indicator that could take a year for like, say, a subscription revenue business to surface. So I have codified the leading indicator of retention as a critical measure of product market fit. When you acquire a customer, what is it in the first month that they would do achieve whatever that if they do that, they will be with you forever, really satisfied, love your product and if they don't, they're going to hate your product and leave. So there's documented examples of this Slack. It was like if they send 2,000 messages in the first month for HubSpot is we had a 25 feature platform. If they use five or more in the first month and every month, the retention and success and happiness was extraordinary. That's the first step is really studying your lead indicator of retention and setting your first North Star metric. Not on getting to a million in revenue, but getting 80% of your customers to achieve that event.
Mark Roberge
It takes a lot of customers, I would imagine a big sample size to really zero in on that. That's probably a moving target. You don't get it right the first time necessarily.
Marc Roberge
Yes or no. I mean it's circumstantial. We've got two ends of the spectrum where you have say freemium product led growth businesses like a Dropbox or an Asana or an Atlassian or something like that where it's like ye, yeah. You snap your finger, you have a thousand users. That's cool. That's very easy to assess that. And they don't even have to be paying, they just have to be using the product. Then you got, let's say you were starting a workday type product which is an HR suite to manage all your benefits. That's a big implementation. I've had investments where they sell to customers and they're over a million dollars in revenue. And in that case you still have to study it. But in that case it's almost like a multidimensional metric for the single customer because they're so valuable. But in most cases, yeah, you're selling something for 10 or $20,000 a year, you're bringing on three or five customers a month. You do that for three months. The Greens and reds are lighting up. It's pretty cool. You don't really need that many customers.
Mark Roberge
Yeah. Another common issue that seemed to play across the vignettes case was compensation for salespeople. I'm wondering what some of the issues are that founders run into when they're trying to figure out how to put together a compensation package for a new salesperson.
Marc Roberge
The sales comp plan might be one of the most powerful tools in a CEO or founder's tool chest that they don't even use. Yeah, we'll kind of unravel this in two dimensions. One is like you're a little Further along, you got dozens of people, you maybe have a sales team moving along and you're the founder CEO and you're like, I want my team to focus on this. May they go into a new market, sell a new product, sell it in a healthy way around retention. Whatever it is I'm trying to drive, can I do that through the sales comp plan? That's what we have to ask ourselves because most founders hire a sales leader and delegate the comp plan design to the sales leader. And most sales leaders use the comp plan from their last company. Terrible. This is something that needs to shift, especially in the early stages, to be aligned with the needs of the business. Now let's go back, Brian, to what we were talking about of your first North Star metric should not be a million in revenue. It should be getting 80% of your customers to do that. Leading indicator of retention in Slack's case, send 2,000 team messages. This is a beautiful startup sales comp plan that very few people use. Ryan, welcome to the team. You're in sales. Here's how your comp plan works. You get whatever thousand dollars every time you sign up a customer. I'm going to pay you half when the customer signs the contract. I'm going to pay you the other half when they hit that lead indicator of attention. So if you were selling it Slack, like pay you half, they signed the contract. I pay you the other half when they sent their 2000 team message.
Mark Roberge
Yeah.
Marc Roberge
And you know what happens if Slack had a free trial at that moment, the salesperson would get them to send their 2000 team message before they even sign up as a customer. How comforting is that? As a founder, that's a case in point. Coming right into this context of a very startup orientation is like you should use the sales comp plan to drive your strategy as founder CEO.
Mark Roberge
Let's go back into the salesperson's shoes though, because in that scenario you need to be pretty confident that this product is going to catch that customer's attention to the extent that they'll take that leading indicator that they'll meet that 2000 message on Slack. So how do you even begin to assess that if you're a salesperson going into the situation?
Marc Roberge
I guess if I had to say the quick answer, I would pay close attention to the consistency of customer value they're creating. And to drill right into your question, Brian, of like, you know, as a seller, you better be confident that's going to happen. If that's half of your comp. Yeah, it's More than just that, do you want to be out there hacking something that you don't believe in?
Mark Roberge
Yeah.
Marc Roberge
That's your reputation. I think especially for sales, they have to believe in it and they need to know that if they're going to convince someone to buy this thing, it's going to work and it's going to deliver on the value they promised.
Mark Roberge
Yeah. Now you mentioned the fact that you now have your own venture company. You're probably looking at a lot of product and business ideas. I'm wondering if, if you know, within the first 30 minutes when you sit down with a founder like this just isn't going to work. There's no way you're going to be able to build the sales funnel that you need to succeed in this.
Marc Roberge
I don't know if after an hour I can say I'm definitely investing, I definitely want to do this with someone, but you can definitely disqualify it because a lot of the disqualifications are more like this market's not big enough for a venture investment. There's no defensible moat, there's too much competition. I would say that probably is the big thing right now on the sales side is the competition. I mean, we're just seeing a lot of AI right now and it's boring. I happen to think that we're in this big 20 year tech disruption that hasn't happened since 1997 with the advent of cloud. We're just in the B2B software world where we move from client server to cloud. Now we're moving from cloud to AI. But what's happening right now is everybody's using the AI to fuel the old workflow without realizing that this workflow is about to change. Everyone's like, oh yeah, you're going to make your salesperson more productive. You're going to allow them to be able to do research faster and build a cold call list faster. It's like, yeah, but we don't need salespeople anymore. That's where we're at.
Mark Roberge
But how do you get the passion we just talked about? A salesperson really needs to believe in a product and needs to be out there pushing that customer to get to that 2000th Slack message. How does AI do that?
Marc Roberge
What are we doing in sales? We're training someone who went to college, studied something else. We're training them to ask open ended questions, to understand what's in the head of the buyer, and to decide if I can help them to tailor the description of my product. That resonates best with the individual. Today's AI could do that better than most humans. Hey, I don't mean to the economic effects of this scary and it's going to take a while, but I've seen examples of this where the person on the other side had no idea they were speaking to AI and the AI performed better than 80% of salespeople.
Mark Roberge
Wow, that's amazing. Mark. This has been a great conversation, as I suspected it would be, with a fellow podcaster. Tell us a little bit about the science of scaling.
Marc Roberge
It's co produced with HubSpot and their startup sales product line. I try to go out and find the first sellers, the first sales leaders at these great businesses. So I had Alisa from OpenAI who talked about a remarkable first year of selling at OpenAI, had the first seller at Figma that just sold for 20 billion. The first seller at Asana, the sales leader, Atlassian Brian Halligan, the founding CEO of HubSpot, came on. So I try to take these folks who've seen the whole journey, but we go back to the early days and try to unpack what they did to hopefully create some education for this new generation of founders.
Mark Roberge
It sounds great. Mark, thank you for joining me on Cold Call.
Marc Roberge
Thanks Brian. Been a pleasure.
Brian Kenny
That was Harvard Business School Senior Lecturer Marc Roberge in conversation with Brian Kenny on Cold Call. We'll be back next Wednesday with another handpicked conversation about leadership from the Harvard Business Review. If you found this episode helpful, share it with your friends and colleagues and follow our show on Apple Podcasts, Spotify or wherever you you get your podcasts. While you're there, be sure to leave us a review. And when you're ready for more podcasts, articles, case studies, books and videos with the world's top business and management experts, you'll find it all@hbr.org this episode was produced by Ann Sani and me, Hannah Bates. Ian Fox is our editor. Music by Coma Media. Special thanks to Maureen Hoch, Erica Truxler, Ramsey Kaboz, Nicole Smith, Ann Bartholomew and you, our listener. See you next week.
Podcast Summary: HBR On Leadership – "Why Founders Need to Focus More on Sales and Marketing"
Episode Details:
In this insightful episode of HBR On Leadership, host Brian Kenny engages in a profound conversation with Marc Roberge, a Harvard Business School senior lecturer and former SVP of Global Sales Services at HubSpot. The discussion delves into the often-overlooked critical role of sales and marketing in the journey of early-stage founders. Roberge emphasizes that sales is not merely about customer acquisition but encompasses a broader skill set essential for organizational success.
Brian Kenny opens the dialogue by highlighting common dilemmas faced by founders, such as hiring the right sales candidate and aligning sales with customer success. Roberge responds by asserting that for experienced entrepreneurs, sales sits "way up there" on the list of priorities. He elaborates that sales involves not just acquiring customers but also attracting employees, driving the team, and selling a compelling vision to various stakeholders.
Marc Roberge [04:02]: "This is just not about acquiring customers. This is about acquiring employees. This is about driving your team. This is about motivating. This is about selling people on a vision. So they're like, I'm always selling investors, raising money. Every aspect of my job is sales, and you need to know this stuff."
Roberge underscores that every facet of a founder’s role intertwines with sales, making it a fundamental competency for fostering growth and unity within the organization.
Kenny and Roberge delve into the nuances of hiring the first salesperson for a startup. Roberge cautions against the common mistake of hiring top sales representatives from established companies like Salesforce. He argues that such hires may not align with the unique needs of a nascent venture lacking a structured playbook.
Marc Roberge [07:59]: "This first hire needs to be a combination of a product manager and a salesperson. They need to have the sales skills to be able to go talk to strangers, do the dials, run a closing sequence, but they also need to know, looking back on a week of 30 conversations, see the patterns and communicate those effectively to the engineers so we can iterate on the product."
Roberge emphasizes the importance of the first sales hire in conducting numerous customer interactions to glean insights that inform product development. This dual role ensures that the sales function contributes significantly to refining the product-market fit.
A pivotal part of the discussion centers on crafting compensation packages that align with the startup's strategic goals. Roberge highlights that the sales compensation plan is a powerful yet underutilized tool for founders to steer their sales strategy.
Marc Roberge [15:39]: "The sales comp plan might be one of the most powerful tools in a CEO or founder's tool chest that they don't even use."
He advocates for compensation structures that incentivize behaviors aligned with achieving key business milestones rather than merely focusing on immediate revenue targets. For instance, tying a portion of the salesperson’s compensation to customer retention metrics ensures a long-term commitment to customer satisfaction.
Roberge shares his experiences from scaling HubSpot’s sales team from zero to 450 members, providing valuable lessons on managing growth. He discusses the challenges of maintaining consistency and effectiveness as the sales team expands, stressing the need for scalable processes and adaptable leadership.
Marc Roberge [10:14]: "When are we ready to scale sales, scale revenue, and how fast? And as I look back in those journeys, I was like, wow, are we operating at a kindergarten level on those questions."
Roberge introduces the concept of the "Science of Scaling," a framework designed to help boards and leadership teams make data-driven decisions about scaling their sales efforts. This approach emphasizes the importance of understanding market readiness and internal capabilities before ramping up sales operations.
A significant portion of the conversation explores the impact of Artificial Intelligence on the sales landscape. Roberge expresses a nuanced perspective, acknowledging that while AI can enhance certain aspects of sales, it cannot fully replace the human element essential for building genuine trust and relationships.
Marc Roberge [18:05]: "Today's AI could do that better than most humans. Hey, I don't mean to the economic effects of this scary and it's going to take a while, but I've seen examples of this where the person on the other side had no idea they were speaking to AI and the AI performed better than 80% of salespeople."
He warns that relying solely on AI may compromise the authenticity and relational aspects that are critical in sales, advocating for a balanced integration of technology and human skills.
Roberge discusses his podcast, "The Science of Scaling," which is co-produced with HubSpot and focuses on the intricacies of building and scaling sales teams in startups. By featuring first sales leaders from successful companies like OpenAI, Figma, and Asana, the podcast aims to uncover actionable strategies and lessons learned from real-world experiences.
Marc Roberge [20:22]: "I try to take these folks who've seen the whole journey, but we go back to the early days and try to unpack what they did to hopefully create some education for this new generation of founders."
This initiative underscores Roberge’s commitment to educating founders on effective sales strategies, fostering a new generation of entrepreneurs equipped with the knowledge to navigate the complexities of scaling their sales operations.
The episode concludes with Roberge and Kenny reflecting on the critical insights discussed. Roberge reinforces the notion that sales is an integral skill set for founders, pivotal not just for revenue generation but for steering the organization’s vision and growth. The conversation serves as a comprehensive guide for entrepreneurs aiming to prioritize and master sales and marketing to propel their ventures toward sustained success.
Notable Quotes:
This episode of HBR On Leadership offers invaluable perspectives for founders and leaders, emphasizing that mastering sales and marketing is not an optional skill but a fundamental necessity for driving and sustaining business success.