The Twenty Minute VCJeetu Mahtani, Sales Leader @Hubspot: How and When to Go International and Crush It | E1207
EVERY SPOKEN WORD
105 min read · 21,356 words- 0:00 – 0:54
Intro
- JMJeetu Mahtani
I do not like discounting. I do not like to lead with discounting. It is a disservice to the customer and to the company, and to you as a rep to lead with discounting. If your buyers don't value you as a advisor, I would question whether that buyer is a good fit customer, and whether they will do everything they need to do to succeed with your plan.
- HSHarry Stebbings
Ready to go? (upbeat music) G2, I am so excited for this. Listen, I just chatted to Brian at HubSpot obviously before this. He's said so many wonderful things. So thank you so much for joining me today.
- JMJeetu Mahtani
Oh, appreciate it, Harry, and uh, big thanks to Brian too. I'm a big fan of your show, so I'm excited to be here.
- HSHarry Stebbings
Well, that is very, very kind of you. But Brian told me that I had to start with some context,
- 0:54 – 3:21
The Journey to Becoming One of HubSpot's First
- HSHarry Stebbings
which was you first wanted to be in product, and he said that you didn't get the job. So talk to me about that moment-
- JMJeetu Mahtani
(laughs) .
- HSHarry Stebbings
... and how you came to HubSpot then as one of the very, very first.
- JMJeetu Mahtani
Oh wow, yeah, like, I joke that I was fired even before I started at HubSpot. So, uh, back in the day, uh, my business partner and I, uh, Peter Caputa, who was a former HubSpotter, who was pretty awesome, ran, uh, a business together. So Pete and I ran this, uh, event registration business that was a mix of, uh, Eventbrite and Facebook in those days. And you know, we made some good progress, but eventually we got to a point where we were like, "We need to sell the business and go get, uh, real jobs." So we drove to, uh, 1 Broadway in Cambridge. We walk into this office, Harry, it's probably 100 square feet. There are four people in the office, Brian in one corner, Dharmesh in the other corner, Mark Roberge, who was HubSpot's first VP of sales, you've had him on the show, and Patrick Fitzsimmons, the fourth person, the fourth corner. We walk in and we're like, "Brian, we're here to sell you our company." And you know, Brian goes like, you know, he just, like, rocks in his chair and he's like, "No, we don't need your company, but we'll give you jobs." So he looks at Peter and he's asking Peter, "What do you want to do?" Pete's like, "I wanna be in sales." So he looks at Mark and he tells Mark, "Mark, why don't you go write up, uh, Peter a sales contract?" And Mark's like, "We don't have sales contracts." And Brian's like, "Just download one and give him a sales contract since we're hiring Peter as a sales rep." And he looks at me and he's like, "Gita, what do you want to do?" And in those days, Harry, my background is in, uh, computer science. I was the product, the person who generated all the code with Peter in our start-up. So I was like, "Brian, I wanna be a product manager." And Brian goes again like this, and he's like, "Nope, I'm HubSpot's product manager, we don't have a job for you." So while Pete is writing his contract with Mark getting his sales role, I'm kinda, like, standing at the entryway of this 100 square feet office wondering, "What the heck do I do now?" You know, two years later, Brian and, uh, the recruitment team, uh, reached out and, uh, I ended up joining two years later as a sales rep.
- 3:21 – 13:03
How to Go International for Startups
- JMJeetu Mahtani
- HSHarry Stebbings
So clearly they liked you so much post-hiring you that they decided to send you far away as soon as possible, 'cause they put you in charge of international, G2 (laughs) . And you did such an amazing job. Brian was telling me all about what a killer you were for them, opening up eight offices around the world. Uh, y- first office in Dublin. Can you talk to me, what are your single biggest piece of advice when it comes to going international? I know it's broad, but I didn't wanna corner you.
- JMJeetu Mahtani
Yeah. I think the one that I would always keep in mind is, like, international is a huge opportunity for any company. If you look at the S&P 500, which is the 500 largest companies in the US by, uh, market cap, half of their revenue comes from outside the US. So I would be thinking about, like, international, like, this huge leg of growth, which I think any serious company that's gonna be multi-billion someday should be thinking seriously about. The other advice I would give you, and because we went through with this, is we were going to open Dublin in 2012, but we shelved the idea because our retention metrics were not great. Our, uh, gross retention was, like, low 70s. Essentially, the economics were not ready to make that big investment to open an international presence.
- HSHarry Stebbings
What is ready, G2, do you think?
- JMJeetu Mahtani
What I would say is I would look at, uh, something like LTV/CAC. Like, have you figured out how to acquire customers at reasonable CAC and then keep them around through great service, so you have great LTV to CAC? In 2012, our LTV to CAC was probably, you know, for every dollar we would put in, we would get $2 to $3 back. But we got it closer to 4, 5, 6 over time, and I think that was like, all right, we have great product market fit, not just with acquiring customers, but we can keep them around, and that's when we decided to pull the plug or, you know, go in and open Dublin in 2013.
- HSHarry Stebbings
G2, did CACs get worse or better over time? You know, if you think about the CACs of enterprise in year one of doing it versus the CACs of enterprise in year four of doing it, so s- remaining in that segment, is it the same? Is it less? Is it more?
- JMJeetu Mahtani
I would say it was higher in the earlier years and then plateaued or flattened after we got enough of brand recognition, but it actually did go up in the earlier years.
- HSHarry Stebbings
And so then we have, like, good enough CACs to LTVs and we're like, "You know what? We're ready to go international," what did HubSpot do really well to enable the international expansion to be a success?
- JMJeetu Mahtani
There were a couple of things we did that I think were really key to our success, uh. One is, when we opened Dublin...It was an expensive investment, and we were like, "All right, it's expensive, but it's a big bet for us." So when we opened the office, we actually sent a expat team of five people from the Cambridge office, and we hired five people in Dublin. It was like this one-to-one match, Harry. Like, it was crazy in those days, but we were like, "We're picking the right market, we're hiring with great quality, and we're gonna give them the right resources. So if it fails, it's not because we didn't do everything we could control, we did everything we could control." So that was one thing we did, is just simply, like, overinvest in the early days to get the right team on the ground with the right help.
- HSHarry Stebbings
What ARR were we at when we made the expansion into Dublin?
- JMJeetu Mahtani
Oh, it was tiny. It was tiny. It was like 3 million ARR when we opened Dublin.
- HSHarry Stebbings
Would you not advise a g- angel investment today that that is too early? I would say you have not nearly saturated your domestic core market. Absolutely double down there until you're at 20, 25, 30.
- JMJeetu Mahtani
In our world, and I still think it's true, is maybe 10 years ago to do international, like, boy, it's a huge investment.
- HSHarry Stebbings
Yeah.
- JMJeetu Mahtani
I don't think it's that type of an investment today because you've got much more efficient go-to-market motions like PLG, freemium, and also with digital CS. Like, you can acquire global customers and be able to service them in a really efficient manner.
- HSHarry Stebbings
So that's really interesting. So with the different methods that we have today, PLG, digital CS, would you still advise companies to go international as early as you did?
- JMJeetu Mahtani
I would, uh, as long as your core market has good economics. If your core market doesn't, then understandably hold off. Like, you're not ready to go and go into a completely different region. I would also add when you go international, like, you're gonna get some signals, Harry. Like, the market's pulling you in. It's not like, you know, you wake up one morning and you're like, "All right, it's time to go international." So for example, in our case, in those days, we had signals with, like, partners in the UK who were doing great. We were getting inbound leads, just not from the US, but from lots of English-speaking Europe. So in some ways, almost like with the work we were doing in the US, it was resonating in other parts of the globe and the market was pulling us in. So the market was pulling us in, and what we ended up doing is like, all right, before we open the office, I ended up hiring a bunch of young dads who would show up at 4:00 AM in Cambridge because they wanted to get home at 2:00 PM to be with their kids. And we were like, "Let's validate that demand." So we were selling early in the morning from Cambridge, calling into the UK, and we proved out that pieces that we can acquire and retain them before we actually ended up opening Dublin in 2013, but-
- HSHarry Stebbings
I mean, I love that in terms of validating the demand there wi- with the time zones. Can I ask then, is time zones the only reason you do international expansion today? Given the technologies that we have to make cross-border selling and great product experience and great touchpoints with customers so easy, is time zone the only reason that you do international expansion today?
- JMJeetu Mahtani
I think time zone is a big one. You do get leverage by hiring talent in different geographies at different price points. So remember LTV to CAC. Like, the other way you can influence that ratio is getting talent at a better price point in other countries. I would also say partners matter. I think partners wanna see that you're committing to the market by having talent in their country. Customers care about, like if you're selling and servicing Germany, like, you can get by to a certain extent, but at certain point they wanna actually see your brand in Germany.
- HSHarry Stebbings
Do you always have to send talent from the core home destination to indoctrinate the new talent in the new country?
- JMJeetu Mahtani
(laughs) I think it was a playbook that worked for us really, really well. The idea is like you bring this, uh, what I would call a tiger team. A tiger team coming from Boston is gonna be in Dublin, paired one-on-one or in a really nice ratio. They help hire, onboard, help these early teams succeed, and over time, you figure out how to fire yourself and you leave that team and leave it to local leadership. The tiger team tends to be there between six to 12 months.
- HSHarry Stebbings
Okay.
- JMJeetu Mahtani
Six to 12 months, and, uh, in my case, for example, like, there's this whole idea of, like, you need to get a local leader. I was the local leader in Dublin. While I was in Dublin, I took one of the members of the tiger team, his name is Sam Schulman, and Sam moved to Sydney to open our Australia operation and be, you know, part of the landing team. So this playbook of sending an expat team, they open one office, they stay six to 12 months, they figure out that region, then they get shipped to another office so they can go and open that region in that office.
- HSHarry Stebbings
Did you find rep ramp time... I know this is a very specific question. Did you find rep ramp time varied by geography?
- JMJeetu Mahtani
It did. It did vary by geography, and, uh, what I would say is the countries that were similar to the US, UK, uh, Netherlands, like the ramp time was comparable, comparable.
- HSHarry Stebbings
What-
- JMJeetu Mahtani
In fact, the economics were actually even better for some of those countries in Europe.
- HSHarry Stebbings
What was that ramp time? Like how long was it before you expected people to start closing and start paying for themselves?
- JMJeetu Mahtani
Depending on the segment, like the ramp time is somewhere between six to nine months, and you know, it's sort of like it's like this. Can be a little bumpy, but once you get to that six to nine month mark, you can start seeing, like, a fairly consistent trajectory as they ramp, uh, to greater productivity.... but yeah, it's been six to nine months.
- HSHarry Stebbings
How ... So, I'm so interested. I know we had this scheduled, but sod it, I'm enjoying this too much.
- 13:03 – 20:10
Scaling Sales from $3M to $1BN in ARR
- JMJeetu Mahtani
investment.
- HSHarry Stebbings
But when you were three millionaire, uh, and in Dublin in the early days, you were only serving SMBs in those days, correct?
- JMJeetu Mahtani
Yeah, yep. It was, uh, largely up to 500 employees, like small and, uh, mid-market companies. Uh, I would say, I think what you're getting to is like, the economics are hard when you are in that ACV, and that is true, but as we added more products, as retention got better, the reps could cross-sell and upsell other products, like rep PPR started to increase. So, the economics worked over time. But in the early days, yeah, like it was an investment. It was, you know, LTV to CAC of one is to four, one is to five. And over time, depending on the segment and geography, it became one is to seven, one is to eight.
- HSHarry Stebbings
When you look back with the benefits of hindsight, Jeetu, what were some of the biggest mistakes that you did in the international expansion?
- JMJeetu Mahtani
I would say as we expanded, uh, globally, Harry, you know, we use this framework that we would call, uh, operational complexity and, uh, the size of the market. You can almost think of like, all right, I pick a country and I say, "Is it easy or difficult to do business in?" I would call that the operational complexity. And then I would say, "Okay, for that country, what is my TAM or addressable market?" So, we graded every country on complexity versus TAM, and you can almost like look at a series of bubbles. On the left, the US, big TAM, blue in color because it is low complexity. On the other end, you have something like China, big market, but red in color because of the complexity. And in between you've got France, Germany, Spain, and all the other countries. Our playbook really worked great in those countries that were closer to the US, like Germany, France, uh, Netherlands, Australia. But as we went to the right where the complexity increased, let's say Japan, one of the mistakes we or I made is that playbook of sending, uh, an expat team was not an option, Harry, because of the language in Japan. Like, they obviously, you know, didn't speak Japanese. So, I was not able to send that expat leader to Japan like I was able to do in Dublin and Sydney. So, I had to hire from day zero, day one, all local. It was hard to do that tiger team approach. And some of our early hires in Japan, they sounded like me, they sounded like the Westerners. They ate and behaved like the Westerners. And I fell into that pothole because I was hiring like I was hiring in the US or in the UK, and that was a mistake. Because if you wanna sell into Japan, you really need to love Japan, you really need to understand the business culture and the way business gets done over there. So, I had, you know, a mistake with the hiring in the early days of Japan. The other one I would say is, you know that operational complexity, Harry? Remember now? Like low complexity to high complexity. The color of the bubble tells you, you know, is it red, high complex, blue, easy? And the size of the bubble tells you how big the market is. If you think about your go-to market and you are going into one of those complex countries, like say Japan, for example, it's more on the right side, more complex, uh, well, be thoughtful about your go-to market on being direct or going through partners and a reseller ecosystem. We, we tried to do both. We had a direct team in Japan and also a reseller team. My learning from that experience is when you have a complex country and a product that needs help, like HubSpot Pro or Enterprise does need implementation help, you are better off in those complex countries going through a partner ecosystem as opposed to going all in with a direct sales and CS team. So, that was the other lesson we learned is, uh, match your go-to market to your product complexity and your country complexity. Uh, don't try and do like a one size fits all go-to market in every country. You gotta think about the country dynamics, the country complexity, the help customers need when they need to implement your product, and then match that with a go-to market that will service them the best.
- HSHarry Stebbings
You mentioned there the CS element. I, I, I do wanna dive into that later, but I, I do wanna cover sales first, 'cause you played such an important role in scaling from, you know, three million where you mentioned that with, you know, the Dublin office, to e- e- either 600 million or a billion, one of the numbers. We can go with either. Which o- which one works for you? 600 or a billion? (laughs) But go with-
- JMJeetu Mahtani
Let's go with something between 600 and one billion. (laughs)
- HSHarry Stebbings
Le- let's, le- let's, uh, let's call it an even 800. So, my question to you is, it looks like completely up and to the right when you look at HubSpot's scaling of their sales revenues.
- JMJeetu Mahtani
(laughs)
- HSHarry Stebbings
Um, what allowed HubSpot to scale sales so efficiently when you review what you did in the early days in probably that three to 30 million range?
- JMJeetu Mahtani
I would say the inbound, uh, engine with, like, we were creating tons of content that was resulting in leads, like that became a machine, Harry. It's still a machine. I really think when I think about moats that HubSpot has, it's like that inbound engine, its blog, its website. The blog still gets about 10 million visitors even today each month. All of HubSpot gets like, I think, 30 million approximately each month. Like, the traffic and the inbound engine made it really easy to instrument demand going like this, hiring to service that demand going like this. So it became very much like, you know, running, uh, a calculation to figure out like, if demand is going like this, let's continue hiring to service that demand. And the ARR just kept going up into the right. The other one that I would say is what we would call like this predictable and scalable approach to growth. Like, we got really good with hiring great sales reps, onboarding them, coaching them, and making them productive. So that whole approach we took of, like, acquiring talent and making them productive was another reason why it worked so well. I think the other one that I think many companies interestingly still don't think about today is a partner ecosystem. I still see so many SaaS companies not digging into, how do I get, like, efficient growth, not just through my talent, but through a partner ecosystem? And HubSpot has about half of its revenue coming through the partner ecosystem. It's big. It's a huge part of HubSpot being driven by these amazing partners.
- 20:10 – 22:02
Is an SEO-Heavy Approach Still Relevant in Today's Landscape?
- JMJeetu Mahtani
- HSHarry Stebbings
Okay. So I, I have to dig, I have to dig in on some elements there. One, on the SEO side, that's ins- insane, 10 million of 30 million going to the blog itself. Question for you. For founders listening today, is that SEO-heavy approach still applicable today in a much more challenging SEO environment?
- JMJeetu Mahtani
I still think it's something you have to do. Like, I don't think there's, like, a red herring that, you know, you have, like, (snaps fingers) I do this, and there's a non-SEO approach. I think, you know, 10 years or 15 years ago, it was easy with SEO because the formula was like, you gotta create content. You gotta create blogs. You gotta think about your conversion paths. But I do think distribution is hotter these days, like, you gotta think about social. You gotta think about, you know, your presence on LinkedIn. Are your founders and, uh, execs creating content on LinkedIn? So I think the philosophy is still the same, which is it's all about content, but I think the way you think about content, the way you distribute it has gotten really, uh, layered. There's just many more layers you need to think about when it comes to, like, SEO and content, and where do you spread it to get your leads and customers.
- HSHarry Stebbings
I would say it's actually the same. It's just the format with which you can create it has exploded. And so it's like... And the, the biggest challenge I find with startup founders is, is actually they do 10 different types of channels. And it's like, no, if you build the most effective SMB sales channel on TikTok, you will have millions of fans, and you can redirect that back to your landing page. That's just the same as having a great HubSpot blog in the early days. It's a different format, but it still redirects the same way. And I think that's just the thing that's changed, which is there's just a lot more options in terms of format. Can I ask you on the-
- JMJeetu Mahtani
I think you're right. I think you're right.
- HSHarry Stebbings
... on the par- on the partner program,
- 22:02 – 28:14
When & How to Implement Partner Programs for Startups
- HSHarry Stebbings
I hear you, but I worry that a lot of founders will go, "Partner programs, that's our holy grail," and that often a lot harder than people think. They require a lot more investment. What stage should one think about partner programs? And what is required to do partner programs well?
- JMJeetu Mahtani
I would say the stage you should start thinking about a partner program is when you have clarity on what role partners can play with your product. If you're a very transactional product, like, you're probably not going to get partners to, like, bundle services on top of HubSpot, because the way they make money is through retainers and services they offer to their clients. In the case of HubSpot, it worked really well because we needed partners to create... help customers create content, landing pages, do analytics, and the same thing has played out in all the other hubs that HubSpot has offered over the last many years. So I would say, think about it when you're clear that there's a need for other people to help your customers succeed, and other people could be... just not like service providers. It could be app partners. It could be ecosystem partners. So that's probably the stage that I would start thinking about partners.
- HSHarry Stebbings
What level of investment is required for a partner program to be successful?
- JMJeetu Mahtani
I would say you do need someone to think about, like, partner acquisition and partner enablement. And I also think founders should not make it super complicated, because just like when you're selling to prospects by creating content, your content is gonna (laughs) get found by partners also. Right? And that's what happened with HubSpot, is all the content we were creating was getting found by partners, and they would call in saying, "Hey, we found you through your content, and I actually want to offer services on top of HubSpot to my end customers." And Peter, Peter Caputa, who, uh, I would consider as the founder of HubSpot's partner program, connected the dots, and he was like, "All right. Like, we need someone to help our customers. We have these hundreds of partners over there who are calling in saying, 'We would like to offer services on top of your product.'" We were like, "All right. Like, how do we enable these partners? How do we teach them what services they should offer? How do you price those services? How do you sell those services?" So I would go back to, you need someone to help you think about partner enablement.
- HSHarry Stebbings
Does every company...... not want someone to help their customers extra leverage? I like statements where you can prove or disprove them. When you have, like, a, "Sure, you, you wanna help my customers? Yeah, great. (laughs) Thanks, G2," everyone would want that, but it requires an insane investment upfront to get it over the line, it requires incredible educational and partner integrations, that onboarding, how they talk about your product, how they educate customers to your product, and then the lifecycle management of that. I think it's so much more complex than just, like, "Hey when you need more help." Do you know what I mean?
- JMJeetu Mahtani
By the way, I'd push back a little bit. I don't know if every company would need that help from partners, because sometimes companies are building products that are purely, like, PLG-driven all the way from being acquired to renewing. It could be very SMB. Maybe Dropbox is an example. I don't think partners play a big role in, like, that type of a product. But when you do need services help, and you don't need it to be just your team providing those services help... And you have to keep in mind, partners will just not say, "Yeah, we're just gonna do what you want us to do." They are like, "How do I make money? How do I, like, create more cash flow in my business? How do I make my business more attractive to outside investors?" So this is where, like, you need to think about, like, "Well, what are the services partners can offer?" You do make an interesting point, which is, it is expensive, and I wouldn't say you have to always do this, but one of the things HubSpot did in the early days, and to some later stages too, is, if you wanna become a partner, you need to buy HubSpot. You need to learn the product. You need to learn how to generate leads using HubSpot. So it's almost like you're being treated like a customer. You prove yourself out, and at the right time, you can become a member of HubSpot's partner program.
- HSHarry Stebbings
Can I ask you, what broke in the HubSpot scaling of sales teams?
- JMJeetu Mahtani
What broke when scaling HubSpot sales team, bah, there are a couple that come to mind, Harry. Like, if I just maybe use international, uh, (sniffs) as an example, one of the things we saw, like, when we went to Germany is our English content that we were creating, half of our leads coming in from Germany, prospects in Germany, were reading our English content. That was actually really cool because we were able to get a fair amount of demand just from English content and even before we started localizing into German. So that helped us, like, all right, we can get a sales team going, but we also knew we needed to invest in German content to fill the funnel with more leads that will get found by our German content and just not through our English content. Where it did break is we underestimated that effort in Japan, because in Japan, only 1% of Japanese prospects were getting found by our English content.
- HSHarry Stebbings
(laughs) And-
- JMJeetu Mahtani
So we had to, like, I think we overestimated the speed at which we could get that Japanese funnel going, and it took us a while to get it going, and I believe it's in a great place today. The other one that I would say-
- HSHarry Stebbings
Were you- were you- were you tempted to pull Japan? The team wasn't working there. The content wasn't working there. If I was in leadership, I'd be saying, "Let's get the fuck outta here."
- JMJeetu Mahtani
I'm not sure, Harry. I think, you know, if you are at HubSpot's scale, two billion plus, sh- you know, I'm sure HubSpot's gonna work its way to multi-billion, you have
- 28:14 – 34:31
Reflections on Expansion: Missed Opportunities & Improvements
- JMJeetu Mahtani
to figure out Japan.
- HSHarry Stebbings
No, I, I totally agree with you in terms of... I mean, you just need more, more customers (laughs) and there comes a point where you just have to find literally physically more humans to adopt your product. Can I ask you, you did Japan when it was hard. When you look back, what did you not do, it could be in sales, could be just generally, that you wish you had done?
- JMJeetu Mahtani
There are a couple I'll give you. Uh, one is, interestingly, there are markets like, uh, Brazil, India, that are starting to get pretty attractive. But to succeed in those markets, you know, you need to think about, like, local talent, you need to think about currencies. And, you know, now we're starting to, like, get more serious about those markets. Like, you know, we have, uh, a bunch of, like, great activity happening in India. So that would be one that I wish we started a little earlier, is thinking about, like, countries and the entity strategy. The other one that, uh, I wish we started sooner is, there was a point, Harry, that we were getting MRR from 150 countries. It was nuts. Like, there was revenue coming from every country, and it got really hard from a investment standpoint to prioritize, like, "Hey, how do we, like, keep growing when we have MRR and demands from all these countries?" So it became, like, really, like, uh, watered down, so what we decided to do over time is, like, we're gonna take a portfolio strategy. Which is, like, there are 150 countries, but which are the countries we wanna be number one or number two? Not number three, number one or number two. So we called them, like, accelerated growth countries. And there were only seven countries that made up that accelerated growth. And then there was a second bucket that we called steady growth that would get, like, what we would call run rate investments, and then a third bucket that was, like, more like partner-led efficient growth. So we did that in a later stage where we were like, you know, "We can't keep operating like this. We only have finite budgets, and we need to think of it as a portfolio where there's a small group of stocks and countries that we gotta, like, win and be number one or number two." So that happened over time.
- HSHarry Stebbings
Which country did you think you'd be a success in and it was way harder than you thought, and which were you like, "Ugh, that's gonna be shit," and it was way better than you thought?
- JMJeetu Mahtani
Japan, in the early days, was tougher, but it's having good traction now. Really hard. It was really hard. Germany was hard, but...... you know, we knew what we had to do, which is what I mentioned earlier. It's like, if you're thinking about a non-English country, think about your demand even before you go and open an office. Like, I would almost hire a marketer before you actually hire your first sales rep, maybe 18 to 24 months in advance so they can get -
- HSHarry Stebbings
Wow. That, that's interesting.
- JMJeetu Mahtani
... me a word.
- HSHarry Stebbings
Why would you do that and how would you structure that?
- JMJeetu Mahtani
The way I would think about it is, like, why would you have sales reps showing up at an expensive office with no leads and purely cold calling? Like, that's not the most efficient way to set up your team for success.
- HSHarry Stebbings
Is it AE's responsibility to acquire their own leads?
- JMJeetu Mahtani
I would say in today's world, it's a mix of, if you're investing in marketing, well, let's get an ROI on marketing. But we also have to appreciate that marketing can be responsible for, like, the full number. There's a percent of that number that needs to come from AEs own activities working with BDRs through other, uh, other non-marketing type, uh, effort.
- HSHarry Stebbings
Everyone says BDRs and SDRs is, is dead now. The cold outbound, the cold email, cold LinkedIn. Pff. So 2015. Do you agree or do you think that's a glib statement?
- JMJeetu Mahtani
I would not fully agree with it. I would partly agree with it, with it's not the most efficient go-to market when you have pure cold calling with BDRs. But when you get much more sophisticated, you think about your target market, you think about your target lists, you think about, uh, first-party and third-party signals that you can get today when buyers are researching solutions like yours. So, you're not doing a pure outbound, pure cold call. What we would call, like, almost, like, all-bound Harry. It's a mix of inbound and outbound whereby you're knocking on doors, but it's the right doors. When you speak with them, you know they have some pain, and this is where it comes back to, like, how do you enable your BDRs and AEs to be able to have those type of conversations when they don't know your brand, but we know there is a pain that they're trying to solve?
- HSHarry Stebbings
In the early days, do founders need to create the playbook, the sales playbook?
- JMJeetu Mahtani
I do strongly believe that founders need to play an active role in the creation or the co-creation of the sales playbook. And I would also encourage all founders early stages, I don't know, until you get to 100 or more customers, you need to be on every sales call. Of course, you know, we'll have to figure out, like, are they qualified prospects? But if they're qualified prospects, you wanna be on sales calls and I'd say for a few reasons, Harry. One is, you're not, like, filled with dozens of sales reps. You have maybe in the early days couple, maybe two, three sales reps. And, uh, there's some magic in the early days when a prospect hears from a founder on why they built the product, what is the vision of the product. And prospects know, like, you are a no-brand company, you're in the early days of speaking directly with the founder. So, I think it helps, you know, win in those early days. The other is, I don't think founders get everything right on day one. HubSpot didn't get everything right on day one. We made several tweaks, pivots over time. You do need to create that feedback loop, and founders, what better way than to be on a live call hearing about prospects and what challenges they're dealing with so you can create that feedback loop back into the, uh, product development.
- 34:31 – 37:04
Early Sales: Marquee Logos or High-Velocity Customers?
- JMJeetu Mahtani
- HSHarry Stebbings
Speaking of creating feedback loops, I always think about momentum and building momentum in teams. To what extent would you advise early sales teams to focus on amazing, amazing marquee logos or just getting a load of customers in the door, high velocity, flooded with customers? Which fo- approach would you focus on?
- JMJeetu Mahtani
It's a good question and, uh, I'm sure many, or some will not agree with me. My, uh, my, if you're in my school, my school will be, "Stop chasing elephants." So, if you are a mid-market company, you have a big addressable market, sure, a large marquee logo is expressing interest. Engage with them, but don't count on them as your answer to hitting your target. You want to still be prospecting into good fit companies who have reasonable sales cycle and which will help you build a predictable pipeline to get to your target. I think the risk is, with marquee logos, is people just get attracted to the sexiness of a marquee logo, and then you show up in the last day of the quarter only to realize the marquee logo sales or buying process and buying cycle doesn't match with your sales process. So, I would say, don't go all into marquee logos. If you're a mid-market company, figure out how to diversify your pipeline.
- HSHarry Stebbings
I totally agree. I also find that actually people do it because they think it will lead to subsequent immense customer acquisition, and actually it has a much smaller impact than you think working with a large name company. People are generally like, "Well, it's only one or two of their divisions. Well, they've just got a new CEO who doesn't know what they're doing. Well, they just raised a big round of funding and so they're spending a load on tools." And so often people always reduce the importance of it anyway.
- JMJeetu Mahtani
I always say, like, revenue and customer acquisition, customer delight solves most problems. Like, you just gotta figure out, like, how to create that momentum.
- HSHarry Stebbings
Do you think it's unfair to sa- to say sales reps are coin-operated?
- JMJeetu Mahtani
You do need to be money motivated if you wanna be in sales or in any revenue-producing team. And that's just the reality of the role. And you also need to figure out, like, at the end of the day, the coins only keep coming and keep growing when your customers are succeeding.If you are coin-operated and you're just acquiring customers for the sake of acquisition, and they don't stick around and you have a leaky font. That's not gonna work for you long term, Mr. or Ms.
- 37:04 – 38:02
Key Lessons for Designing Sales Compensation Plans
- JMJeetu Mahtani
Sales Rep.
- HSHarry Stebbings
Speaking of coin-operated, and those coins keep coming, any big lessons on sales comp plans for sales teams?
- JMJeetu Mahtani
Big lessons would be, at the end of the day, I would say a sales comp plan just drives behaviors, at the end of the day. Like, if you don't get the comp plan right, you're just going to end up with, like, potentially, uh, bad customers, bad behavior, bad culture. I would also add, when you think about sales comp plan, think about, like, what phase of growth you are in as a business. Like, if you're an early-stage founder, early-stage company, like, velocity matters. Like, you might have a sales comp plan that is a bit more indexed towards, like, just simply raw acquisition. But as you grow bigger, you're going to start, like, thinking about, like, retention, cross-selling, upselling. So think about, how does your comp plan also evolve as the company and its phase of growth, uh, also evolves?
- 38:02 – 44:20
Integrating CS into Upsell & Retention Incentives
- JMJeetu Mahtani
- HSHarry Stebbings
Should customer success not also share in the financial incentive structure-
- JMJeetu Mahtani
(laughs)
- HSHarry Stebbings
... of an upsell or a retention?
- JMJeetu Mahtani
I believe they should. If you have the sales team that is getting rewarded for acquiring customers, and you have the CS team that's only being recognized for, like, driving usage, but not getting any recognition in the expansion of the customer, over time, you're gonna get CS reps who are like, "Well, I was the one who helped the customer get the next product or expand into the platform." So, I do think when you think about comp plans, you wanna be clear about, like, what role do you want your CS team to play? If your CS team is a pure account management team, maybe there isn't something on the recognition, like sales. But if your CS team is a revenue-producing team, which is, I believe, every CS team should be a revenue-producing team, you wanna structure their comp plan in the form of some kind of a basic variable.
- HSHarry Stebbings
When you say, "A revenue-producing team," you mean they are responsible for the upsell and the retention, correct?
- JMJeetu Mahtani
That is correct. Now, some teams will generate what we would call, uh, SQLs, and the sales team would close it. Other places, CS reps would actually close it.
- HSHarry Stebbings
If incentives drive behaviors, which I think we both agree they do, and you incentivize me, a CS rep, with, you know, economics on upsell. "G2, my dear customer, my dear customer! I think you could do with our CRM. I know you've got another CRM, but you could do with ours. It's much better for your needs, I promise you." It may not be better for their needs, but the economic incentive alignment is, to me, not to the benefit of the customer in all cases. There will sometimes be misalignments. How do you prevent misalignments between provider and customer when the economic alignment is between the CS and the upsell?
- JMJeetu Mahtani
The way you would do that is having a- a incentive structure that measures on whether the customer's successful. If they buy a second or third product, are they actually using the product and getting usage out of it? And if they don't, then you know that it was oversold, or the CS rep did not do a great job of positioning the right product to the customer.
- HSHarry Stebbings
Do you see now, CFOs bundling spend, moving towards much fewer providers than we used to?
- JMJeetu Mahtani
I do see a- a wave of consolidation. Customers are looking to simplify their tech stack, and I just think, uh, you know, there was some research done by HubSpot not too long ago where SMBs had a tech stack of about 250 apps. It was nuts. It was crazy. And we're seeing a wave of consolidation, or at least while I was at HubSpot, is like, "How do I simplify? How do I connect the dots?" Because companies and CFOs naturally are like, "Well, we need our investment to lead to efficient growth. It needs to be more durable and sustainable growth." And you can't do it when you have 10 different solutions disconnected, cobbled together. So they're like, "Well, how do we bring it all together so we can create alignment between our go-to-market teams, so we can find out, like, the work marketing did, did it result in, uh, an ROI on that marketing investment? The customer sales acquired, did they get the right usage and expansion?" So, I do think having, like, a unified tech stack makes a difference.
- HSHarry Stebbings
I think brand marketing is largely BS. I know that's unfair of me, so I'm probably gonna get pushback on that. How would you push back on that? 'Cause I just see it, and I'm like, "Turn it off for a month and see how revenue goes." And everyone does that, and then their revenue was not impacted. And they're like, "But it could be in years' time." I'm like, "Okay."
- JMJeetu Mahtani
Yeah, yeah.
- HSHarry Stebbings
Am I wrong to be rude about brand marketing?
- JMJeetu Mahtani
I think you're partly right and partly wrong, Harry. (laughs) I would say-
- HSHarry Stebbings
You're very- you're very charming, GT. You can tell me I'm wrong. I- I- I sometimes provoke for- for a reaction.
- JMJeetu Mahtani
Yeah, yeah, yeah, no. I- I get where you're coming from, and, uh, I would say in the early days, I would be like, "Yeah, Harry's right." Like, "Forget spending on brand. Like, put more content out there, and prospects will find the content. It's a lot more predictable. We can attribute it better." But I think with brand marketing, it gets harder with attribution on what that investment is actually resulting in. But I think it does make a difference, depending on where you are as a company and what geographies you are going into, what segments you're trying to break into. Because I do think, like, if you're an enterprised, large company CIO looking into a solution, I just don't think you're always gonna find...... the product through content, you're going to probably pay attention to the presence of that brand in different places. I'll give you a simple example. Do you watch Wimbledon? Do you watch tennis?
- HSHarry Stebbings
Of course I watch tennis. I'm a Brit. Yeah, I love Wimbledon.
- JMJeetu Mahtani
Perfect. Excellent. So I'm a, I'm a tennis buff too, and the women's semifinal, one of the players had a HubSpot logo on her sleeve. I think that's brand. That's brand marketing. I don't know how much was paid over there, but I got so many pings, like, "Wow," like, you know, "You guys are all over the place at Wimbledon." I mean, it makes a difference. Like, I think it helps, like, create awareness. And you could still get there, but it will take you so much more effort.
- HSHarry Stebbings
So it's so funny. When I said that, I was thinking the one example that I disagree with, actually, is I don't know if you've seen, but Expensify sponsor some form of race car. I don't know if it's F1 or whatever race car it is. And basically, for two hours, you see the driver and then Expensify, like, on their helmet. And I'm like, "That is great brand marketing." Two hours flat of just in your face Expensify. Or same with HubSpot in this respect with the tennis player who's got it on their arm. What are the biggest ways that startups mess up CS?
- JMJeetu Mahtani
By not investing in CS. (laughs) By getting a team going on an acquisition, but not thinking about retention.
- 44:20 – 45:48
Right Timing To Invest in CS
- JMJeetu Mahtani
- HSHarry Stebbings
When, when is the right time to invest in CS?
- JMJeetu Mahtani
Just like founders are gonna play a role in selling, I do think founders play a role in the really early days with, like, CS-type activities.
- HSHarry Stebbings
Yeah.
- JMJeetu Mahtani
Like, they need to learn, like, what it's gonna take for a customer to see results and stick around for, for a long haul. In terms of, like, the actual hiring of your first, second CS, Harry, I would think about, like, it in two ways. One is, like, how many customers do you have right now? And think about, you know, like, to provide engagement to those customers, like, do you need a CS rep or not? The other is, like, at what speed are you acquiring customers? Because if you see, you know, customer count getting to a certain point, you should start planning in advance that you do need a CS rep. What I will add that I think is changing now quite dramatically is, like, you don't need CS-type human engagements all the time. You can do that through self-service. You can do that through digital-scaled motions, whether it's a chatbot, it could be an academy, it could be help content. So do a lot of that. I would probably, as founder, you know, like, try and get your first CS rep so you can get the structure and the processing right. But then don't keep investing in CS reps until you get a foundation of, like, self-help and knowledge and content in place.
- 45:48 – 53:04
Responding to Delayed Deals & Missed Quarterly Goals
- JMJeetu Mahtani
- HSHarry Stebbings
Two elements I have to discuss before we do a quick-fire. Number one is, I often sit on boards and, you know, teams say to me, "Ah, you know what? That big customer, they slipped to next quarter, and that's why we missed our, our quarterly goal." And I'm always like, "What's the right way to respond to that, G2?"
- JMJeetu Mahtani
Why don't we role-play, Harry? You wanna be-
- HSHarry Stebbings
Okay. ............................
- JMJeetu Mahtani
...... your manager or the other way around?
- HSHarry Stebbings
Yeah, sure, sure. So, like, G2, I'm, I'm, I'm sorry. Like, honestly, I thought they were gonna land and, um, they just, uh, they didn't, and so, um, that moved into next quarter. Really sorry.
- JMJeetu Mahtani
Oh, that's too bad, Harry. Uh, were you, uh, counting on that deal to hit your quarterly target?
- HSHarry Stebbings
Yeah. Yeah, I was.
- JMJeetu Mahtani
Okay. Well, sorry to hear they got pushed out to, uh, the next quarter. What deal stage did you have it sitting in?
- HSHarry Stebbings
Honestly, I was actually just waiting for their approvals. Uh, they took it back to the group, uh, the founding team, and I was waiting for them to confirm it.
- JMJeetu Mahtani
Okay. Okay. Well, let's just pause for a moment, Harry. Uh, walk me through, you know, your sales qualification that led you to putting this deal in almost, like, closeable for the quarter.
- HSHarry Stebbings
Yeah, I met them and they, they said that they were enough of a champion to get it done on their own, and they said that they had budget. Um, we went through the use cases. It all seemed pretty good, and, you know, honestly, it was a really good fit with, with our core market. Um, and then suddenly, they just went a little bit more quiet, and then he said, "Listen, you know, I need to speak to the team and see where we're at," and it's really stalled from that.
- JMJeetu Mahtani
What did you uncover in the sales, uh, process that, uh, got you to determine urgency? Or they really needed the solution versus something that would be nice to have long-term?
- HSHarry Stebbings
That's a hard one.
- JMJeetu Mahtani
(laughs)
- HSHarry Stebbings
(laughs) I don't, I don't... I think that's the thing that's missing from so many sales processes, and that's the art of the great salesperson, which is how do you create synthetic urgency? 'Cause I- like, if we're honest, very few people need HubSpot this month or they're gonna die, you know? They can have it next month.
- JMJeetu Mahtani
Yeah.
- HSHarry Stebbings
(laughs) But I, I, I love HubSpot, but it's not like, "Oh my God, the world will end." You know? CrowdStrike could happen, uh, to maybe too soon. Uh, but like, you know-
- JMJeetu Mahtani
Yeah.
- HSHarry Stebbings
.... there's no catastrophe.
- JMJeetu Mahtani
Yeah, there isn't. Uh, but I would just say that, you know, what you're talking about is urgency, right? And I think many leaders will maybe disagree with me, but I don't think you can create urgency. Like, you can't create fake urgency. And if you have urgency to hit your number, that's not the urgency your prospect has. So this is where I would be as a sales manager, is like, "Well, in your sales process, Harry, got pushed to next quarter, and you said they have a need for it. Well, tell me, what was the need?" "I needed more leads." "Okay, why do you need more leads?" "Well, we need to hit our sales targets." "Why do you need to hit your sales targets?"... well, because we committed to the board 30% growth and hitting our sales targets helps us get to 30% growth. Okay, great, Harry. What would happen if you don't hit your sales target?
- HSHarry Stebbings
They take me outside and shoot me. (laughs)
- JMJeetu Mahtani
That or they would put you on a performance improvement plan.
- HSHarry Stebbings
(laughs)
- JMJeetu Mahtani
Right? Like what would happen if you're on a performance improvement plan, Harry? So this is where, like, I think, you know, when you're speaking to a customer, I just think sales reps just shy away from asking the tough questions. Why can't you ask personal goals? Why can't you ask about, "What would life look like, Mr. Customer, if you did not have the solution?" Because I think this is where, like, a lot of sales rep just sit on the surface that I call level one. You gotta get to level two, level three, and of course you don't dive right into level three. Like you build rapport, you're an advisor, you're trusted as a sales rep, and you gotta be in a situation where it's not like, again, talking of tennis, one player against the other player. It's a doubles match. You and your team are together. You're a prospect and you are together. And if you're together, you should be comfortable challenging each other because you want each other to win at the end of the day.
- HSHarry Stebbings
Do you ever do discounting? One way to get people to move faster is say, "Hey, you know what, G2?" I... And you can be honest. "G2, I need to hit my plan. You know what it's like. Um, listen, I'll give you 25% off if you sign in the next week."
- JMJeetu Mahtani
Yeah, I hate that. I hate that. And I do not like discounting. I do not like to lead with discounting. And it is a disservice to the customer and to the company and to you as a rep to lead with discounting. There is a place for discounting, but it should not be so prominent in your sales process unless you've gotten to a point where clearly there's a need, uh, they need to solve that need, but they have a gap in their budget and you structure the discount to help them get maybe the first year, but the discount goes away in the second year. And maybe other sales leaders believe in discounting, but I am very opposed to discounting.
- HSHarry Stebbings
Great. I like opinions. Fantastic. Good. Uh, customer testimonials. G2, really help me if you could, you know, do a customer testimonial for us. You're at HubSpot, G2. Getting on our website would mean a lot. Is it okay to ask them what are the biggest lessons for startups and how to get tu- customer testimonials and do them right?
- JMJeetu Mahtani
I probably lost you over here for a bit, Harry. Were you role-playing or were you, uh...
- HSHarry Stebbings
Well, yeah, I was. I was saying, hey, is it okay to ask for customer testimonials and if so, how's the, the right way to do them in a sales process?
- 53:04 – 1:00:46
Quick-Fire Round
- JMJeetu Mahtani
with your platform.
- HSHarry Stebbings
Listen, G2, I can talk to you all day. So I do wanna move into a quick fire round. So I say a short statement, you give me your immediate thoughts. Does that sound okay?
- JMJeetu Mahtani
How short? Like 30 seconds?
- HSHarry Stebbings
30 to 60 seconds.
- JMJeetu Mahtani
Okay.
- HSHarry Stebbings
But don't worry. N- n- No one's gonna count the clock.
- JMJeetu Mahtani
(laughs)
- HSHarry Stebbings
Uh, what do you believe that most around you disbelieve?
- JMJeetu Mahtani
I believe sales experience is over-rated.
- HSHarry Stebbings
Ooh.
- JMJeetu Mahtani
I think when you are a highly tenured rep, I think some people believe that it should be weighted the most when hiring a sales rep. I don't think that is true. I think there are other characteristics that I would weigh over sales experience.
- HSHarry Stebbings
I totally agree. I also always think of actually Jason Lampkin who's like, "You'll never get a truly great second sales leader, like second time sales leader, to do it again. They know how fricking hard it is." G2 is not gonna be like, "Yeah. Gonna go and do another OneMillionaire for our company and go through that shit again." (laughs) So I totally agree with you. Tell me, how were the first walls in the Dublin office built? I got told I had to ask that one.
- JMJeetu Mahtani
The walls, like the actual physical walls?
- HSHarry Stebbings
Yeah.
- JMJeetu Mahtani
(laughs) They were built, uh... Well, I told you that it was, like, we brought five expats, we hired five in Dublin. We were sitting in an office that had a little wall kind of, like, in the center, Harry. And culture is really important to me and I was like, "We need to make sure everyone's learning from each other. It's an open layout." So I called Ken Papa, our, uh, facilities guy, who's, I think, still our facilities leader, and he was like, "What do you want me to do?" I was like, "Can you bring the wall down?" So he sent someone with a drill and the guy's, like, drilling the wall and I have a picture of all of us with yellow hats on calls while this person behind us is, like, drilling on walls. So that's maybe, I think, why you were asked to bring up that question. (laughs)
- HSHarry Stebbings
I love that. Tell me, what's the most contrarian or unorthodox advice for founders listening?
- JMJeetu Mahtani
Founders often are math and science driven.They, they weigh data heavily in their decision-making. So if I was a founder, I would not see it as someone else's responsibility to be selling or hoping your product is gonna find revenue on its own when it's just not. You need to get on calls with a sales rep or on your own. Make that call, send that email, and believe that customers or prospects will love talking to founders, and founders will be great at selling.
- HSHarry Stebbings
What have you changed your mind on in the last 12 months?
- JMJeetu Mahtani
You know, I had some doubts, Harry, on the AI thing and whether AI can truly, uh, replace a large part of, uh, selling. And from what I'm seeing in the last six to 12 months, oh boy, I think that a large part of selling is gonna get automated with the AI-type, uh, bots or AI-type, uh, engines. And I don't think it's gonna completely replace salespeople, but it's gonna raise the bar. So you as a salespeople need to be even better with the way you're advising your prospects.
- HSHarry Stebbings
(laughs) Which duties or responsibilities will get automated first, do you think?
- JMJeetu Mahtani
I think some form of, like, discovery, where you would spend, like, two hours of discovery. Part of that discovery can actually happen through some form of AI engine, where customers are going to be able to, like, almost, like, self-discover, you know, what's their challenges, and also almost, like, get pointed to, like, "This is the direction you need to go with this solution." But this is where I mentioned the doctor-patient relationship, like, you will have a direction but you still need someone on the other end to help you dig further to make sure you're making the right choice.
- HSHarry Stebbings
What sales tactic has died a death, do you think?
- JMJeetu Mahtani
(laughs) There's so many. I would say besides, uh, discounting that we talked about, uh, earlier, is, uh, no one gives a crap about your product or its features. Like, stop talking about your product and its features when you connect with a prospect. Spend your time understanding the customer, understanding the buyer, what matters to them, their industry, what are they trying to get to. And you will get to your product, but I just think too many sales reps out there still spend way too much time just, like, spitting a lot of their product and their features out very early in the sales process.
- HSHarry Stebbings
Is that the fault of founders for not teaching them a more efficient sales playbook of customer discovery and qualification?
- JMJeetu Mahtani
It's partly the founders, and I think this is where, like, founders have it in them. It's just they don't know what they don't know, and this is where, like, if I'm a founder, I mean, there are great resources to go and learn, like, you know, how do you run, like, a reasonable sales process? Like, it's not rocket science. I think the challenge founders will have is just simply, like, how will prospects react when we ask them all these questions? They're just, like, hesitant to ask these deeper, harder questions, and, uh, I think they do need to work with, whether it's their board or mentors, and help them get some confidence that they can do this.
- HSHarry Stebbings
I agree, and I actually find that actually, you know, the best customers or the truest customers quite like to be asked. They like to tell you about their business, personally. It's like in- it's like investors, you know? At the end of the day, at the end of a sp- fundraising meeting with founders or with, you know, LPs for me, you know, I'll always say, "Do you have any questions?" The best always go, "Yeah. I'd like to understand your business." You know, for founders, they go, "Who are your investors? What's your incentive structure? What's your carry structure?" And I'm like, "Huh, that's smart."
- JMJeetu Mahtani
Yeah, yeah, and, you know, at the end of the day, like, it's probably overused, but customers wanna work with salespeople that they like. What they wanna do is like you because you care. You wanna learn about them and their business, and you wanna help them succeed. That's what matters at the end of the day in sales.
- HSHarry Stebbings
Final one for you, 'cause I could talk all day, is what one company sales strategy have you been most impressed by recently?
- JMJeetu Mahtani
It's not a perfect example, Harry, but I do think with the way, you know, digital and AI are going, I think Amazon's a great example, like, of how selling is gonna evolve. Like, for example, I had a problem with a product the other day. I went to my account. I was like, "I have a problem with this product." Like, they gave me a list of resources based on my problem, and very next action was, like, "Did it solve your problem? No? All right, we're launching a chatbot so you can speak with a human." Uh, had a chat with an AI chatbot. It got me pretty far but it didn't give me the actual answer. They're like, "All right, hold tight. We're calling you." So someone called me, and I spoke with a human on the phone. So I just think that customer experience, which is, like, digital-led, human-in-the-loop, sales rep in the loop, is where the world is, uh, going, and I think AI is just gonna make it possible and actually accelerate that customer experience.
- HSHarry Stebbings
Jeetu, listen, I've loved doing this. It was very off-script, as you-
Episode duration: 1:00:46
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