Mark Roberge, former HubSpot CRO, argues that product-market fit isn't about hitting revenue targets but about retention. He proposes measuring it with a leading indicator: P% of customers perform Event E within Time T. Slack's 70% of users sending 2,000 messages monthly and HubSpot's 80% using five or more features are examples of this framework.
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1, 2, 3, 4.
Sales, marketing, and RevOps. It's sink or swim out there, and yesterday's strategies and tactics won't help you today. This is Revenue Today, and I'm your host, Jared Robin. Join me as we interview revenue leaders in our community to learn what steps we could take right now to help you scale yourself and your company. Revenue Today is sponsored by RevGenius, and we're on a mission to bring in Inspiration and creativity to all revenue professionals in the world. Want to shout out our sponsor Demandbase. Demandbase is smarter GTM for B2B brands. They help marketing and sales teams spot the juiciest opportunities earlier and progress them faster by injecting account intelligence into every step of the buyer journey and orchestrating every action. For more information about Demandbase, visit demandbase.com.
Next, we have Mark Roberge. Mark Roberge is the managing director at Stage 2 Capital, the first venture capital firm backed by 250+ GTM leaders. He is also a senior lecturer at the Harvard Business School. Prior to those roles, Mark served as chief revenue officer at HubSpot, where he scaled annualized revenue from $0 to $100 million and expanded his team from 1 to 140 people. Oh, to 1 to 450 employees. Mark was ranked number 19 in Forbes' top 30 social sellers in the world. Great job, Mark. Mark received his MBA from MIT Sloan School of Management and a BA in mechanical engineering from Lehigh University. He has been featured in the Wall Street Journal, Forbes magazine, Boston Globe, TechCrunch, Harvard Business Review, and other major publications for his entrepreneurial ventures. Mark is the author of the bestselling book, The Sales Acceleration Formula: Using Data technology and inbound selling to go from $0 to $100 million. Mark, we are so excited to have you here today. Um, this is speaking on established growth and when and how fast. So Mark, please take it away.
All right. Thank you, Anna. You can hear me okay?
Yes.
Okay. Thanks, Anna. Hey everyone. Glad to be here. Such an exciting topic, product market fit, how fast to scale, et cetera. You know, where'd all this come from? You know, part of it is, you know, back in the days of HubSpot, we messed a lot of the stuff up, and so I wanna— I'm partially inspired by that. The other piece is, after the HubSpot IPO around 8 years ago, I kind of rested for a while and went to Harvard Business School to build the sales curriculum, as Anna mentioned, but I was actually fortunately pulled into a lot of early-stage ventures, largely by the venture capitalists that backed HubSpot, like Sequoia and General Catalyst and Matrix and those firms to help their newer investments. And I saw dozens and dozens of data points, possibly even hundreds if you count the students I was helping, et cetera, and remarkable consistency on where they got stuck. And it really came down to the topic here of confusion on when to scale and how fast. If you've seen the data, I think the failure rate for Series A-backed companies is around 75 to 80%, and I think it should be more like 50 to 60%. And it's really by basic decisions on these 2 questions. So what I'm hoping to do is share the framework that I've developed to help organizations around this. All right, so this is the key question. Now, folks, if you have comments on when you think you should scale. That's what we want to tackle here. Just imagine you're kind of sitting at a board meeting and, you know, okay, you've been at it for 6 months now, you have an MVP, you've got 5 beta customers. Should we start scaling now? Should we start adding salespeople? Should we start committing to a revenue line? And I find there's tremendous confusion on when that is. Like a lot of times, yeah, we've got 4 beta customers and the product's working, so let's start adding salespeople. And for the most part, I do find it to be extremely premature. And so smarter answers I hear when, when we kind of talk about this is like product-market fit, which is one of the main themes for today. I think that's a good answer. And that wasn't the answer like 20 years ago. This is thanks to the work of like Lean Startup and Eric Ries and Steve Blank, great work that they did in like 2004, 2005. It's like we used to like sell before we had a product. We used to sell vaporware, was the concept in like the late '90s, and it was terrible. It led to terrible products and terrible usage. And this whole concept of building product with someone, with our customers, just changed the world of entrepreneurship. Now the problem is If we ask folks what is product-market fit, you'll get like 10 different answers, and half of the answers are associated with like a certain revenue line or customer line, and I couldn't disagree more with that. Like, we have product-market fit when we hit $500,000 in revenue or when we get 20 customers. I think all that really means is market message fit. That just means you can sell. It doesn't mean your product executes on the promise that you have, right? And so that's the first thing I wanna kind of challenge us on is like, fine, you're gonna wait till product market fit to scale. But don't base product market fit on a customer line or a revenue line. If I had to pick a number, it would be retention, like especially in the world that I think a lot of you are in. You're in software, you're in SaaS, you're in subscription. We're in the middle of the subscription economy. And when someone uses your product and then chooses to rebuy it, to renew or buy more from you if you're not in a subscription business, I don't know if any metric out there, I'd say, you know, I would say like that's product market fit. Now the problem is we don't have time to wait for the renewal rate to surface. Like oftentimes this renewal rate is gonna take like a year. We don't have a year. So we should think about the lagging indicator— the, sorry, the leading indicator to retention, because retention is a lagging indicator. And I don't think enough of us have thought about that. I think that's the most important metric in like the place we're talking about here at this conference, in that zero-to-one, is What is it that happens in the first month of a customer's lifecycle that if you see that happen, they're going to renew a year from now, and if we don't, they're going to cancel? What is that for your business? Now unfortunately, I don't think it's— there's a universal answer to that. I don't think it's always like setup rate or weekly active users or lead lift or whatever. I think it's highly dependent. On your business, but I will give you this framework and talk a little bit about some examples on how to think about defining it for yourself. So a format that I like to do is if P% of customers do E event in T time. So now we're talking about 3 variables that we have to work on: P, E, and T. And so like, you know, a couple examples, you know, if we talk about like Slack, you know, 70% of customers send 2,000 team messages every month. I like that. Does Slack have product market fit? Well, 75% of customers send 2,000 team messages every month. Yes. Does Slack have product market fit? Well, yeah, they hit $500,000 in revenue. Terrible. Like, imagine if the founder of Slack, you know, first year of the business was like, our first goal is to get to $1 million in revenue, versus our first goal is to get 70% of our customers to send over 2,000 team messages every month. That's very different execution. That's very different outcome. And I would much rather be involved in or invest in a business Where the latter happened, and the former just means they can sell. Doesn't mean we're selling something that works. And so you see there are examples of Dropbox back up your device every hour or every day. HubSpot, 80% of your customers use five or more features in the platform. Right? So so if you to kind of break these down, the E event is the most important. Like P percentage, I don't know. like 60, 70, 80%. The time that you're evaluating, every month is what most people do. If you have a quick time to value like Dropbox that's recurring, you can do a daily one. And if you have a really long one like an enterprise sales, like the early days of Workday where you're selling like these huge HR systems, it might take a quarter or more, which is just challenging for that type of play, but it's just the reality. But for the most part, it's every 30 days. The e-event is where like a lot of that innovative creativity comes in the early pieces of entrepreneurship is what is your event? Now it needs to be objective, like it can't be the customer success manager thinks they're good, that's not like, that's not objective. It needs to be instrumentable, it's something like I would recommend that you do this, I know public companies that do this, that still measure this, so like you, it needs to be something that's codifiable and you can programmatically capture it over time and ideally it's aligned with your unique value prop as a business. Because this is gonna align the entire organization. That's really powerful when you do that.
Whoa, another great episode of Revenue Today. For show notes, links, and mentions, visit revenue today dot live. For all my friends in the Rev Genius community, thank you. It's been awesome to spend this time with you. Please DM me any feedback and ideas in our Slack channel or on LinkedIn. If you're not in Rev Genius, join us at revgenius.com. It's free and it only takes like 2 seconds and you'll be joining a group A group of 27,000 revenue professionals strong. We've got it all. Looking forward to seeing you there. Catch you on the flip side. Yeah.
