Lessons in Segmentation & Scaling with Hubspot Chief Customer Officer Yamini Rangan

Welcome everybody to this Founder Institute webinar. Thank you for joining. I know we got now over 400 people registered, people from all over the world, which is awesome. And today we've got a special treat for you. So for a lot of you that probably, if you're joining this webinar, you're either interested in marketing, you're interested in pulling leads in, conversion, all of that kind of stuff. And based off the logo that you see here, HubSpot has been one of the leaders in doing this for a very long time. Okay. We were just discussing that Dharmesh Shah, who's one of the founders of HubSpot, he coined the term, I think, inbound marketing, or— and it's just, they are one of the people that basically created what has become the inbound marketing industry for the last 12 years or so. So we have the Chief Customer Officer of HubSpot, Yamini Rangan. And she is going to give us a presentation going through some pretty important topics, okay? And these topics are always important, but for any marketer, but they're gonna be even more important in times like this when you really need to increase conversion rates and do things like that. And she's going to be talking about segmentation and scaling and the best practices for doing that. And believe me, there's no one better and no company better that's gonna have this expertise than Yamini and HubSpot. So Yamini, do you wanna— take a moment to introduce yourself?

Yeah, absolutely. Thanks so much, John, for that warm welcome. It is a pleasure to be connecting with all of you during this time. And just as a way of introduction, I've been at HubSpot now for the last quarter. I joined at the beginning of this year, and before that I spent about a decade between Workday and Dropbox, two cloud companies, both in go-to-market. And before that, I spent about a decade between Siebel, which was the original CRM company way back then, and SAP. So I have been in sales and go-to-market for the last 20 years and started my career before that as an engineer. So it's a pleasure to spend a lot of time with you all this afternoon or evening, wherever you are.

Yeah, we have— or morning. We have— I know there's a lot of people from Asia joining in too, but just, just really quick, those two companies, right? So you were an executive or VP in Dropbox and Workday. I mean, those were some companies that had exponential growth, right? Absolutely. And so what interested you in joining something like HubSpot?

Yeah, you know, I've been very lucky to have been in companies that have gone through this hypergrowth phase. And for me, HubSpot is super interesting. It's at the point where we can see the next decade of growth ahead for HubSpot. So it's really at a critical juncture Uh, the whole vision of how we got started was marketing, and then over the last few years we have really expanded beyond marketing to offering an entire growth suite for, uh, all companies of all sizes to be able to really attract the right customers, engage those customers, and delight those customers. We call it the flywheel, and the opportunity to bring these flywheel customer-facing teams together under this new umbrella of Chief Customer Officer and then being able to write the playbook, not just for HubSpot, but for a lot of our customers is super interesting. That's why I'm here and very grateful to be here.

And per— perfect segue, right? The playbook. So let me describe really quick how this event's going to work. So I'm going to hand it off in a moment and Yamini is going to go through a playbook of sorts. Of how to segment and so essentially trying to find the different customers that you have, focus on the ones that are the most valuable and segment them and use that as an engine to scale up your business. So she's going to go through a presentation. Now, at the end of her presentation, we're gonna have a long Q&A session, okay? So, and this is what I like to tell people with any online event, All right, the whole point of this online event is to answer your questions. All right, there's a lot of videos on YouTube and there's a lot of places you can just watch a video and learn. Like, you're here because we have a great leader in inbound marketing and just marketing in general here to answer your questions. So please, at any time, don't be shy during the presentation, even right now as I'm speaking, throw your questions into the chat. We have somebody on our team who's in there and they will be feeding the questions to us and we're gonna get to them when she's done with the presentation. So please don't be shy, take advantage of the opportunity. Opportunities to get some great feedback. Okay, so with that being said, I'm gonna hide my face here and I think we're ready to get started.

Well, thank you. Thanks for that warm introduction. And, you know, it is a very interesting time for all of us to be spending the time here virtually. We've gone through a lot of disruption over the last month. We've gotten to adjust to a new reality, a new normal, find some semblance of order in whatever we are doing right now. But I will also say that this is a time of opportunity. Opportunity for innovation, opportunity for leadership, opportunity for everyone on this call to be thinking about a couple of things. Not just how are we going to get through this, we will, you know, we will get through all of this, but more importantly, how do we set up the foundation for coming out of this cycle to be even stronger? Even better and even faster. I think that's the opportunity that we have, and certainly at HubSpot, we're spending a lot of time thinking about how to really set ourselves up for success as we get out of this whole situation that we are facing globally. So, you know, very positive about that. Now, you know, John did a fantastic job of introducing me, so I'm not going to go through this, but My current role at HubSpot is really to unite all of the customer-facing functions. So it is bringing together marketing, sales, professional services, customer success, and operations. And I think about what impact our actions have on our customers, prospects, and partners on an everyday basis. This is really my passion. I've spent the last 25 years in tech, across multiple companies, thinking about go-to-market and really figuring out different plays in go-to-market. So I'm hoping that we can actually share some of those learnings. As I mentioned before, couple of decades, the first decade across Siebel and SAP, and that's when I was in frontline sales. I was in pre-sales, I was in product marketing and got the foundation of how to think about products, markets, and customers holistically. And then the last decade I've spent across Workday, Dropbox, and now recently joined HubSpot. And a lot of my thinking in the last decade has been about hypergrowth. How do we as go-to-market executives and as founders, as critical function leaders, think about scaling and think about the foundations that we can have within our organizations to be able to be successful? So, in terms of what I will cover today, just two very simple but really critical topics. The first one is how do we choose the right segment? I call this the how to play. There's a fantastic book that's written called Playing to Win, and it has a very simple way of thinking about scaling from a strategy standpoint. First one is how to play. That means how do you choose the segment that you wanna play in, The second is how to win. Once you have really focused on what segment that you are making the deliberate choice to be in, then how do you scale and win within those segments? And I hope to leave with clear answers to both of these questions for you, but also again, open to a lot of questions as we get through this. So 1 in 1,500, that's really the odds of a tech company getting to about $1 billion in annual revenue. Recurring revenue. So there are lots and lots of companies that get started. Very few companies actually get to a billion dollars of ARR, and the odds are really, really small. And then if you think about another statistic, which is 1 in 10 companies have the odds of surviving with just 20% annual growth. As a whole industry, we've gotten used to being in this hypergrowth environment, which is why this macro shock that we are facing right now is really uncomfortable for all of us. It is how do we continue to be in a hypergrowth environment? How do we continue to scale? Which is why segmentation and scaling are really, really important. With those kinds of odds, you really need to have a clear strategy and a set of strategic choices for you to be able to scale and get to the place where you can be one of those companies that get to a billion dollars of ARR. So how do you think about segmentation scaling? This is really the set of key strategic choices that you need to be making. And strategy to me is not just the choices of what you wanna do, it is also equally importantly, the set of choices of what you will not do. Every time we go through a strategy presentation internally, externally, and someone comes and presents, well, these are things that you wanna do, I ask the question of what are the things that you are not going to do? Are you as clear about your omissions as you are clear about the things that you will deliberately do? So as we go through this, I will kind of talk about both aspects. Where did we make a choice to be, but also where did we make a choice not to go across kind of my experiences? So with that, I wanna focus on 5 key areas, focus areas in terms of the how to win decisions, as well as where to play decisions. These are kind of the most important decisions, and I'll start with the first focus area, which is picking the right segment as you think about scaling. Now, I am assuming that you're all in a zone where you have found some product market fit. That you've gone through the process of figuring out what's your product, what's the market, and you have a fit. And then you are now at the point of thinking about what's the right segment. And anytime we talk about the segment, the categories become really, really confusing. You will hear the term, you know, SMB, mid-market, enterprise, corporate, like the terms are all over the place. But I will also say that after 2 decades of working in tech, No two companies have the exact same definition of what the segment is. One company might define SMB as less than 100 employees, another company might define it as less than 20 employees. One company might call enterprise as, you know, 5,000 employees and higher, another company might call it as 1,000 employees and higher. And honestly, there is no standard way or standard definition for how the segments are actually categorized in most of the companies. So you gotta bring it down to basics. And to me, the basics in terms of picking the segment actually comes to your buyer. Who is your buyer? Who is your customer? Who is your buyer? And what is their persona? And how do they make decisions? It really boils down to that. And there are, across all of the companies I've been part of, very clear differentiation between what SMB buyers do versus what enterprise enterprise buyers do. So if you take the priorities for small, medium businesses, it's always immediate, it's always time to value, it's always something that needs to happen now, in the next month, in the next quarter. Whereas if you take the priorities for enterprises and larger organizations, they tend to be over a certain period of time, really associated with the strategic goals they have. Most enterprises will have a 2-year, 3-year, 5-year strategic plan, and a lot of the decisions they make in terms of the technology will map to that longer time horizon and the strategic goals. In terms of the buyer's journey, you know, for small medium businesses, it's always unstructured. It's always a quick buying cycle, typically 2 to 90 days. In the case of HubSpot, you know, it is, it's very much in the 2 to 90 day cycle that we see versus enterprise where it is a defined process. You will have a process that every enterprise follows and it's clear buying stages that you'll have to like go through and understand what the process actually looks like. From the decision maker perspective as well, clear definitions and clear differentiation between both of these. Typically in small, medium businesses, you're dealing with the CEO, the sole proprietor, someone who's actually leading the organization. That person makes the decision 95% of the time. You may have one other person within the process, but in the case of enterprise, you have multiple stakeholders and requires a lot of consensus building, and it is very, very different. And finally, in terms of the message content, how can you actually attract these kinds of customers? You know, SMBs tend to go to, you know, forums to be able to like look at information, search information, and then make the decision versus enterprise. They actually have a longer process of consuming the message and really making sure that they have the decisions well made. So no matter how you are thinking of defining the segment, Go down to the basics, and the basics starts with understanding your consumer and customer and understanding each one of these 4 levers so that you can then call it whatever you want. So I definitely say start with kind of the buyers and how they think about going through the journey. Now, once you've actually understood the customers and how they like to buy, then you have to pick the definition of the segment. Again, it's not very easy and it's not very simple. The most common way in which you think about the segmentation is employee size. Pretty often you're gonna hear, "Oh yeah, we serve the mid-market customers and these are customers with 100 to 1,000 employees," for example. That's a typical way in which to think about segments. However, not all companies do it this way. There are companies that will define their segments as verticals. Maybe you're, you know, focused on the tech vertical or the healthcare vertical or the manufacturing vertical. So you could have a segmentation strategy that is based on vertical. There are companies that look at it as seat size. How big is the deployment? Because a 5-seat deployment could be easy, simple, and you could deploy in a certain way compared to a deployment which is much larger, and you may want to think about your segmentation that way. Now, I particularly like this MRR potential, which is monthly recurring revenue. That's the potential, and looking at the segment that way so that you can map the resources associated with this. And finally, revenue. Now, the question of how do you think about each of these, again, there is no one right answer or wrong answer. And when in doubt, look at data. Look at data and actually cut your consumer buying patterns, customer buying patterns across each of these dimensions and see which one is heavily correlated, where you can actually find similar patterns. In the case of, you know, HubSpot, we have a simple employee, say, the size-based, you know, segmentation, and that works because that's That's how our end customers who are small businesses, mid-market companies, and enterprises, they purchase HubSpot, and so that works for us. And so when in doubt, look at the data and then make a final categorization. So two things, you know, look at your customer buying patterns and then look at the data so that you can actually pick one of these segments. And then the most practical and important tip I can give you is that as you do this, the output of this should actually look like, here are the segments segments that we are actually going to drive in, and here are the segments that we are not going to drive in. So in the case of, you know, HubSpot, our sweet spot is really companies with 1 employee all the way to 2,000 employees. That actually means that's our target, that's the sweet spot, that's how we are going to market, and we actually leave everything else out of the picture. That is the most important thing in terms of picking where you want to play. That is the most important thing of actually saying, hey, I don't want to play in any other segment, so that your product organization and the rest of organization is really clear on that priority. So, okay, you've picked the segment and you've looked at your buyer behavior and persona. What happens next? The next step is really to map the right sales motion to that particular segmentation that you have picked. So what do you mean by sales motions? There are a lot of different ways in which you can sell. So first we talked about the buyers. Now we're talking about how do we actually sell to them? And there are multiple ways in which you can do this. First one is product-led or, you know, self-serve, which is a lot of your end customers might be perfectly fine coming to your website, providing a credit card, purchasing all electronically, and that's completely fine. In the case of Dropbox, 90% of their revenue was self-serve revenue. The second is chat-based. There are organizations that will actually low— use a low-touch sales motion to be able to close your deals on sales based on chat. And this could just be helping your customer answer 1 or 2 questions so that you can drive a high velocity sales motion. Now, Atlassian actually uses this model. They spend a lot of time on helping their customers answer, you know, a few questions and then use that opportunity to close sales. Partner-led, Microsoft, you know, VMware, lots of companies actually use a huge partner channel to be able to drive the sales motion, and then sales rep driven. Of course, that's, you know, the most common. You hire account executives and you're able to service your customers. So what is the most important thing here? There are a couple of things. First of all, again, when you look at your customer buying behavior, certain customers, you know, maybe you're, you're serving a developer community. Well, developers are completely good with going online and purchasing online versus maybe you're selling to marketeers and they may need a little bit more handholding. So it really depends on who your end customer is and what their propensity is to use certain channels. So you gotta start with the data again there. That's important. The second most important thing when you're looking at this is avoiding sales conflict. What you really are looking at when you're trying to figure out what sales motions to use and which segments, is you don't want conflict. You don't want your partners and your direct sales team going to the same customer, trying to sell the same thing. And there is like conflict in terms of who is approaching who first and therefore who wins. You do not want to do that. So think about each of these sales motions driving incremental ARR. So if you figure out a segment, once you pick your segmentation strategy and you know certain, you know, part of the segment can buy electronically, Then actually set, you know, a non-conflicting segment for your sales reps to go after. Maybe the easiest one, the simplest one is the smallest number of employees and they buy through self-serve, or, you know, you can actually look at the land and expand motion where the land happens electronically and the expand happens through sales reps. So again, breaking it down into fundamentals, start with the buyer experience and how they think of the purchase process, and map the sales motion. And second, make sure that you're avoiding conflict as you set up multiple sales motion. And so practically speaking, one of the most important things to think about is handoff between these sales motion. So an example of this, maybe, maybe you have great viral adoption. So you start with viral adoption and you land within companies, you know, using a complete self-serve motion. And then at the point of expansion of those opportunities, Maybe you think about having a sales organization that then becomes very targeted in terms of their efforts, leading your customers through a full deployment. Now, this is not the only way to think about handoffs, but what you do need to think about is handoffs. How do you hand off from one sales motion to the next motion, avoiding as much conflict in the process as possible? So that's kind of the second area. The third focus area as you go through this is really Mapping the right resources to drive productivity. So a number of you are founders, chief executive officers, and key folks within companies. And how many times in your phase have you been asked the question, how many sales reps do you have? And how much are you growing your sales reps by? All of us in any go-to-market related function will get asked this question. How many reps do you have and how many are you going to hire? What is your growth plan? And everybody is focused on the number of sales reps that we hire, but equally, you know, importantly, a lot of us have gone through in our careers, the unfortunate case of letting go of salespeople, right? I mean, why does that happen? We all have gone through that process of hiring and then potentially letting go of people. And why does that really happen? You know, so there is a very fundamental kind of equation in sales, which is, Your annual recurring revenue is the number of AEs that you hire times the productivity of those reps. Pretty simple math. This is why everyone, investors, board members, friends, competitors, they all care about the number of AEs, because the common wisdom is that if you increase the number of AEs, your ARR is going to go up and you continue to grow. Well, there is a bottoms-up planning that supports this, which is, you know, you, Higher the number of AEs, there's some attrition associated with it, and then there's some ramp time associated with this, and give them the quota and they get the ARR. But I will say that there is an even more important equation that you really need to think about before you come to the conclusion of how many reps that you need to hire. And I call this as the most critical equation in terms of any go-to-market function, which is The annual recurring revenue is the number of opportunities that you can go after, times the win rate that you can get, times the average selling price. This is the most fundamental equation. Why is this important? Well, you know, let me actually walk you through what this math looks like. Let's say you are targeting a particular country and a particular segment within that particular country. Now, let's say that you have a total of 10,000 addressable accounts there. Now, of those 10,000 addressable accounts that you can go and sell your solution to, maybe only 5% of them will even want to buy the solution in a given year. So, there's an annual rate at which your prospects will want to actually consume your solution, So that's called the presentation rate. So not all 10,000 will want to buy in a given year. So you typically cannot do much about the presentation rate. Maybe, you know, there will be certain, you know, macro conditions or micro conditions that will actually increase, you know, the relevance of your product and solution that can increase your presentation rate. Now, win rate is really, really important. So of those, let's say you have a 20% win rate. Now, this is probably the most important. How competitive are you within, you know, the solutions that you're offering, and then how effective are you in positioning all of your solutions so that your win rate actually goes up? And then the average selling price, let's say in this case is $10,000, and all of this will actually lead to a million-dollar ARR, and you can continue to improve the win rate, increase the ASP, or increase the presentation rate to be able to continue to grow. Now, the reason this is more important is that If you understand the demand side, you know, of this, if you understand what your market is, how you can continue to improve your win rate and how you can continue to increase your ASP, then you understand how many reps you can hire. At this point, you can go back and say, okay, in order to drive $1 million and a certain ASP, I need X number of reps. So my very practical advice is start with understanding your demand and the win rate that you can get in a certain market, as well as the ASP, and then go and figure out how many reps. Don't do the other way around, because that's what leads us to this vicious cycle of hiring and then potentially letting go of reps. So there's another part to this, which is what about sales support? Now, I advise a number of early-stage CEOs and One of the questions that I get most often is that I've hired 10 people and they're continuing to grow, but I don't know how many salespeople, sales support people I need to actually hire. How should I be thinking about this? And my response to them is that you have to start with that first. It's like trying to build a house, you know, without an architect and, you know, adding rooms kind of wherever you feel like, but you don't have an architect. And then you finally get an architect and they come in and they're like, Why did you actually make this decision? Because it doesn't make complete sense, you know, the way you've built this, this house. And so it's the same concept. It is really important to think about sales support as effectiveness driving. And the way I relate this back is that think of the sales support investments you make as a huge lever in increasing the win rate that I just talked about. If you have the right sales strategy, if you have the right prospecting resources, If you have the right sales consultants or solution engineers, however you call them, the technical support people that help through this process, if you have all of those folks, then it increases the win rate and therefore actually enables you to go and hire more reps. So think about effectiveness first before trying to think about efficiencies. So then the follow-up question I typically get is like, what are typical ratios? Well, If you're an early-stage company, then you should, you know, think about having a sales operations expert as early as possible. Maybe you hire your first 2 reps and then you get your sales strategy person, because that person is going to be able to help you formulate the segmentation strategy, the sales motion, as well as all of the planning that is required in terms of building your sales organization. So think about that person early enough. Now, later stage, and I would define this as, you know, $50 million and above, you could absolutely scale this. You don't need, you know, sales operations. You probably need like a ratio of 1:15. Same thing with business development reps, which, you know, are prospecting reps, and they help with the early qualification and bringing the right people into the sales process. And think about in early stages actually investing more and in later stages scaling it to be much more efficient. Same thing with solution architects. These are the folks that are technical, help answer questions in terms of security, in terms of compliance, in terms of a lot of things that would help you improve your win rate and think about early-stage investments and later-stage efficiencies. This is really counter to what, you know, a lot of companies think about because they're thinking how to preserve cash and how to kind of be very efficient but actually this increases your win rate, you know, quite a bit. And that's certainly what I have been able to find in a lot of growing hyperscale companies and hypergrowth companies. So, fourth area of focus, you've got your segmentation, you've got your sales motion, you've got great resources that are now, you know, really helping you win. What else? What else should you be thinking about at that stage? Well, the most important thing you should be thinking about is your customers and always think about customers in their terms, never yours. And what do I, what do I actually mean by that? You know, a lot of companies and in our industry in general, we actually think about sales stages and we also think about customers as like, you know, how are, what's the acquisition, what is the engagement, what is the monetization strategy and how, how do we think about retention? Well, when you only think about this in terms of your own sales stages or customer journey stages from a company perspective, You really forget who you're doing all of this for, and it is customers. You really don't want, you know, for your customer success personnel to actually talk about retention, you know, to your customer. That's not the language that we should be using to our customers. So one of the key things, once you have laid all of these strategies in place, is to rethink your customer journey in terms of where your customers are in that journey. So how do you think about your customers? The way I think about it is that they are discovering, early stage, they're discovering. So are you doing everything possible to enable your customers to discover your solution? Then in a lot of cases within, you know, SaaS and other industries, we now have trials, everything has a trial. So our customers are trying our software. So what can we do to be able to help our customers try? And then they are committing, they're committing to a particular solution. What are the things that we need to do to enable that portion of the journey? And once they've done that, they're using. This is critical for especially a SaaS company. This is the most important thing, is to drive that engagement and drive that usage. And then finally, they're thinking about changing, and it could be change for the better for you because they are looking at upgrading or increasing the number of seats that they're buying from you, or in the worst case situation, they're actually looking to change somewhere else. So It is really important to not just think about the journey in terms of your terms, but it's really important to think about it in terms of the customer journey. And once you do that, the next step in the process, which is really important, is to bring together all of your customer-facing teams. So in the case of HubSpot, this would be our marketing organization, sales organization, customer success organization. All of these teams are thinking day in and day out about our customers and serving our customers. So bring them together and have a set of common customer-centric metrics, because what happens in organizations that don't think, you know, customer in and think company out is that you will end up measuring things that are in silos. You'll end up measuring things for marketing, which is separate than what you measure for sales, which is separate than what you're measuring for customer success. But if you have a customer-centric view of all of this, then your metrics reflect that. So you'll have a common set of metrics. Now, these are some examples of metrics that you should be looking at in a customer journey to see if you are bringing the right kinds of, you know, discovery traffic, if you're bringing the right kinds of trial traffic, and then getting the right level of commitment, usage patterns, and, and a change pattern. So these are kind of the most important ones. I also find a lot of times that sales has no visibility to retention metrics, right? And it is really important. Sales needs to have a holistic view of not just what they're bringing in as annual recurring revenue or ACV, annual contract value, but they should have a clear view of how we think about retention. We call it customer dollar retention at HubSpot. That's an important metric. It's one of the most critical metrics that we actually look at because it tells that have we done enough to retain those customers over a longer period of time. So that should be like focus area number 4. And then finally, I will end with this. This is one of the most common questions that every executive, every founder, everyone that's actually growing organizations has, which is, when should we go global? Now, this is certainly an appropriate question to be thinking about when do you expand to other countries, but again, I would say that you really, really need to be thoughtful in terms of making investments, because there are tons of investments to make your country maturity model successful. You just can't like go into, you know, 20 countries and expect all of those countries to be successful at any given time because of the investments that you'll need to make. So here is a two-part, you know, practical way to think about your country strategy. The first step in this process is how do you think about prioritizing which countries you wanna enter. And in order to do that, you know, there is a tried way, I've kind of used this framework in multiple companies to start with, you know, what is your total addressable market or opportunity sizing? So think about the segments that you said that you're going to be at and think about the country and look at, okay, in that particular country, in that particular segment that you're choosing, how many accounts are there and what is their ability to spend you know, based on your average selling price within that country. And that gives you a typical sense of what the total addressable opportunity actually looks like. So that's one. On the other side, you really need to pay attention to the ease of doing business and ease of entering a particular country. Now, things that you will have to factor in to get a score there are things like competitive environment. So before you enter into a country, are there local competitors that are entrenched or is it a green space for you to be able to go and, enter a particular market. Regulatory environment, how do you think about the regulations? Is that actually going to be favorable for the kind of solution product that you are introducing? How do you think about the market itself in terms of pricing power parity? So if you're entering a certain market, are you able to think about the purchase price there in relation to your price of the solution? So those are examples of what would be in an ease of entry score. Now again, you know, in my experience, these, you know, categories change slightly depending on the kind of company that you are, the solution that you offer, and actually the segment that you are in, but you really need to come up with what are those categories. So typically you'll have, you know, a dollar value of the market, and then you'll have a score of what the ease is of entering a particular market and doing business in that particular market. Once you have these two, then putting it into a 2x2 and then saying, I will prioritize the companies which have the highest opportunity and obviously the best kind of ease of entry into a market. So that's step one. Now, what is even more important in terms of your country strategy is really thinking about the investments you need to make. Very often I see startups as well as scale-ups go really quickly into multiple countries and it takes them a long time to get an investment out of a certain market, return on investment from a certain market. So the best way to think about this is think about the top of funnel investments that you'll need to make. Are there brand, you know, marketing investments? Are there marketing localization investments that you make? And then what are the mid-funnel investments? The mid-funnel investments could be, you know, very specific language skills of your sales professionals or or even pre-sales professionals, and it could be, you know, other things like localization that you need. And then the end of the funnel investments are things like data centers. Do you actually need to support, you know, data center in that particular region? That's going to be pretty expensive. And then what do you think about localization? And what do you think about contracts in a certain language? And what do you think about all of the requirements that that particular country is going to have? Think about what funnel requirements are for your particular product, and then once you have that, you have a pretty easy sense of looking at the cost benefits and return on investment. I always like a 3-year period. You know, some investments you're not going to get a return in year 1, but if you think the opportunity is big enough and you're willing to make a commitment over a 3-year period and you understand what the return on investment is actually going to be there for the 3-year period, then you've made the right choice. In most cases, you know, you should think about a very slow and steady kind of, you know, way to go into countries rather than going into countries like, you know, 20 in a given year. That doesn't really bode well. So hopefully that two-step approach gives you some clarity in terms of thinking about your country strategy. So I just want to recap, and I think we spoke about a number of focus areas. Starting with really focusing on your buyer and how they think about the experience to pick your right segment. And once you do that, you know, mapping the right sales motion is, you know, centered around ensuring that you have the right mapping, but also very little conflict between the sales motions. And then, you know, think about the way in which you grow the sales organization and think about what increases the win rate, because if you're focused on the win rate and you're focused on, your ASP, then you are able to grow much more in terms of the ARR. And the last couple of things I will say is that customer first, you know, it goes without saying that companies that are focused on the customer all the way through the journey and map their processes through the journey and bring together the teams associated with that are obviously going to scale much faster and be very thoughtful in terms of the investments in going global. So, uh, that's pretty much it. And I will say that, uh, HubSpot as an organization, we love entrepreneurs, we love startups, and we obviously, you know, are here to help you in your journey. And John mentioned this earlier, uh, we've been around as a business for a very long time. We coined the term inbound marketing, and we are here to help there. But more so, we have a whole growth suite of applications to help companies, you know, sell as well as delight their customers from the whole flywheel. And in terms of how we help startups, we have a ton of educational resources and a lot of training programs, but we also have integrations very specifically for startups. And we have, you know, great packages and pricing associated with startups and helping you scale. So there's certainly passion from both myself as well as our team in terms of helping entrepreneurs and startups in their journey for growth. With that, I will pass it back to John yourself.

All right. Yeah, I'm here. That was, that was great. And we've got some, some good questions in the chat. So please, if you do have questions, we definitely have, and I'm going to put us on the big screen here. I'm going to put you on the big screen. Definitely a lot of good questions coming into the chat. Let me just start really quick with, and this is the big thing that I pull out of it. I work with a lot of startups and the concept of thinking, it's a combined thing. Thinking in the terms of how your customer's thinking. Then in combination with that, also thinking and how they're thinking at every given time in the sales process. Because most startups will just be like, here's my customer, here's what they want. But actually, Yes, you get them in that first stage, but then their interpretation of that is going to change over time, right? So is there any, is there any like, you know, feedback or tips you have on how somebody can start to think in the terms of how their customer's thinking?

Yeah, I mean, look, there are practical things that you can do, you know, and then there are holistic things that you can do. And I do agree with you, John, that there are two things, right? Like, you know, thinking holistically versus thinking in just like initial stages. People will kind of, you know, just go into how am I going to sell or how am I going to market, right? I think practically, I, you know, will just say like every one of you as executives should be spending time with your customers, right? You know, if I look at how much time am I spending with customers, you know, even having very tactical things like follow your customer home, right? Like if they're using your product, Go and sit down with them and just like look at how specifically are they using, you know, the product. And that gives you a much better sense of looking at the entire customer journey than looking at just statistics and data and so on. So start with that and, you know, have a customer-centric approach in almost everything you do. At HubSpot, we call it solve for the customer, you know, SFTC. This is like ingrained in our onboarding. Every single person who's coming into the organization solves for the customer. So building it into your culture and building it into your way of thinking so that whether you are a product designer, a UX designer, or a product marketeer, or someone in customer success, it's everyone's job to actually be thinking about what it means for the customer. And then, you know, go through the kind of exercise that I just said. In a couple of the organizations I've led exercises where, We literally map the entire customer journey and journey through the digital side, but also the interaction with our employees. So what is the actual—

Every phone call, every visit to the website, right?

Exactly. And that's basically what I would say. And then once you have all of that, then you will get like a holistic picture, not a disjointed picture.

Right. And definitely you guys have it down. You guys have like a black belt in it. right? And a lot of, a lot of the startups on the line here, you know, just trying to get them looking at it in that mindset. I agree, doing it from the beginning, right? Putting yourself in the customer mindset, then you can understand, okay, they received this email, they did this, then what? Now their concerns may be different, or where is it going to go from there? So let's see here. I'm going to start getting to, to some of the questions. Caroline and Kenyetta both are asking, you know, if a company's pre-revenue, should we also be thinking about hiring a sales rep rapidly in priority, right? So trying to go into actually starting their business, building their business with this mentality. I have an answer to this question, but I'd love to hear yours.

No, go for it, John. I'd love to hear your answer.

Okay. Well, my answer is that sales is the basis for everything. Right? It's basically what you were saying. Most, most founders, maybe you don't consider yourself a salesperson, but when you're a team of 1 or 2, you're a sales force of 1 or 2, right? So you're— it's like you said, it's the customer-focused thinking every single step of the way. So I 100% agree with you. A lot of companies are not going to be able to hire salespeople first, but that just means that they need to be the salespeople.

People, right?

And then they do that, they understand what the actual problems are in, in correlation with actually building the business and the product. And then once they have, you know, they've achieved that initial growth and they sort of have the luxury of starting to hire other people to do it so that they can grow faster.

Absolutely, absolutely. I, I completely agree with you. I think if you are, you know, pre-revenue, you are the salesperson. So all of the thinking that we just talked about apply to yourself and figure out What are you, you know, what is your approach? Because you are the salesperson in that case.

Yeah, for sure. So, you know, again, this is something that I see a lot. I mean, any feedback on how people can really just start to break down that customer journey? I mean, as they're starting to work with customers one-to-one, I mean, are you seeing them just literally plotting it out on a a Google Doc or a Word doc or whatever, like every single thing that they say? I mean, how much detail should they really be getting into when they start to plot that out?

Yeah, I mean, here's what I would say. There's like two different approaches. The first one is literally, you know, go step by step and think about, okay, here's where the customer enters and this is exactly the, you know, the first set of pages that they see online. And then here are the interactions. This is when BDR, business development representation, you know, representative gets involved versus here's the AE and here's the handoff. And you know, what I would say is take the first couple of deals, right? And just trace back all of your customer journey. So that's one way and one approach. The other thing—

And by the way, sorry to interrupt, but even if they don't pay you in the very early stages, right? Cause you just need to understand that process, right?

That's exactly right. Like, I mean, this is about, So, you know, as early as you can get this customer-centric thinking, you know, the better. And literally there's nothing better than like retracing the steps of your first target customer, your pilot customer, and seeing how they actually went through the process and what worked, what didn't. Now, you know, I always say like one is a data point, three is a trend. So, you know, if you do this for like your first few, and by the time you begin to see the same set of patterns that's coming, then you exactly know what's happening. The other thing I would say is that a lot of times, you know, you need to be thinking outside in and you should be thinking, okay, you know what? I want to be the Apple of my world, right? Like Apple retail store didn't come out from actually going and tracing how their customers were buying. They basically said, here is how we are going to disrupt. We talk about that as disruptors, you know, customer experience disruptors don't think about just retracing, they say, fundamentally, how do I improve this? And that's another way of thinking. And there you use design thinking to be able to say, you know what, I am going to redefine this for my solution. It's not going to be the same process. While I understand this process, I'm going to use design thinking to come up with a disruptive way in which I can actually build it. And that's how the freemium model came in. That's how the virality in a lot of software came in. That's how self-serve came in because people just decided what We're not going to send a rep where it doesn't make sense. And I definitely ask you to think of both of those.

For sure. So Fazi asks, you know, as a startup, so let's say that you're starting to go through that customer journey, right? You're starting to really try to put yourself in the eyes of the customer. Like, what are the signs that maybe what you're doing is not going to work, right? Maybe you need to pivot or something like that. I mean, where I'm sure you've probably seen that in some of your clients or the businesses that you've been in and how maybe you can how can you react to that kind of stuff?

Yeah, I mean, look, we are living in a business where, you know, times where it's like our business is mostly a monthly business. Like we need to be making decisions on a monthly basis. And then when we go through macro shocks like this, we are looking at our business on a daily basis. And so, you know, what I would say is that understand what are the right leading indicators for your business, because at the end of the day, whether you are a revenue company or you're at the stage where your revenue is growing or even pre-revenue, you know what the success metric is. If you're a pre-revenue company, the number of customers that you're signing up is your kind of indicator, right? But if you are a revenue company, what are your leading indicators? How do you think about the leading indicators in terms of how many leads are you getting into marketing? How many of those leads are converting into a sale? Early stage opportunities? How many demos are your first two reps doing, you know, in order to drive it? And is that efficiency getting better in that process? And what does that close rate actually look like? So think about your entire funnel and those are the key metrics. And actually, I will also say that this customer dollar retention, like how long, and maybe if you haven't been in business for a very long time, but you still need to look at engagement and usage patterns of your customers. So I'd say to all of you to think about what are the leading indicators of the business and look at it on a weekly basis and definitely on a monthly basis. And when you see those leading indicators, you understand the leading indicators and things are not going well, then pivot. And again, go back to kind of, you know, do I have product market fit? You know, yes, great. Am I selling to the right segment? Yes, great. Do I have the right sales motion? Yes, great. Do I have the right resources? So go back to kind of the same process of identifying what is your strategy and that's how you pivot. And plenty of times we have pivoted, right? And looking at the business on a monthly basis, you get enough signals in a given month to say, you know what, this model is not working. Now I need to move to install-based sales or the install-based sales is not working, I need to move to net new, or this region is not working, so I need to invest my resources in some other place. And so absolutely look at like leading indicators of your business and have a great pulse on that business.

And it's usually at the very beginning of that, that customer journey, right? If the people in the beginning, if the message isn't resonating, then all the other kind of, you know, dominoes are, are not going to be as relevant and you really need no matter how big of a company you are, right? You've built all these systems and this is happening a lot right now, obviously, right? A lot of companies have built systems solving a customer problem, thinking in the terms of their customers that is no longer relevant.

Yeah, exactly. I mean, that, you know, if your message doesn't resonate or there aren't enough people that have the problem that you're trying to solve, then that's exactly where to focus on, right? Like, you know, you have to start there. But if the message resonates, but you are not bringing in the right kind of customer, then you've got to go back to segmentation. But you're absolutely right. Like, it has to start at the beginning.

Yeah, always. And then step by step by step, right?

Yeah.

Have you seen any situations where maybe, I don't know, like, let's say, and this is a question that I'm curious of too, you know, if somebody's getting a lot of volume or at the top of the funnel, right? Where do you— would you still go step by step there, or would you maybe start at the end? Is there any situation where you wouldn't go beginning to end?

Um, you know, you would typically go beginning to end, and— but I will tell you, here is where I've kind of like reversed it, you know. And this does take a while, right? So it might, it might be a company that has been in existence for maybe 3 years, right? And has seen a lifecycle of a customer. The place to look backwards is that when your retention is not good, and you know, when your retention is not good, either in a segment or a country, then it means that you're selling to the wrong kind of customer. So you could be selling and your revenue and your annual recurring revenue could be growing, but your retention is so poor. We call it the leaky bucket problem. Well, if you have a leaky bucket and everything that you're filling at the top, you're kind of like losing through churn at the bottom, it'll take you a couple of years to figure out. But if you see that, then you got to reverse engineer. That's when you start at the back end and say, okay, who are we not retaining? Which segment are we not retaining? Which country are we not retaining? And why are we not retaining? And therefore, how do we go backwards and fix, you know, who sales is selling to. Maybe there is a, you know, customer fit issue that we're not dealing with early on. So that's probably the situation I've kind of had to go backwards.

Exactly. And sort of the further you are or the closer you are to the beginning, the more fundamental it really is to the business, the more strategic it is versus tactical, which, you know, as you go down the funnel. So, I, so somebody had a question here. Was it Maureen? You know, obviously you have a lot of experience with hiring salespeople and using salespeople. And I love, 100% agree, like, don't, you know, with salespeople, I would keep going until it breaks, you know what I mean? And then you can hire more. But, you know, do you have any opinions on commission-based sales or anything like that in terms of not only performance but retention of talent?

Yeah, I mean, look, I think sales is a very, very unique breed. And to me, you know, hiring and figuring out the profile of the salesperson that you need to get is really, really important. And whether it's your first hire or the 10th hire, getting the profile of, you know, if you want a hunter, you want someone to go be able to like really figure out your first set of customers, that's the profile. And that's kind of what, you know, they need to have done in their past. So So figuring out the competencies, figuring out the profile is really important. And I think, you know, to your point, do I have opinions on commissions? Absolutely. I think sales, you know, commissions is one of the most powerful kind of, you know, behavioral tools that you have, you know, whatever behavior that you need, you have it. So, but it's so powerful that you want to be very clear in setting the right strategies. What behaviors do you expect out of your sales team? And how are you actually going to measure those behaviors? I mean, I've used sales compensation for discount management. I've used sales compensation for cash collection. I've used sales compensation for almost any behavior that you need. And so think about, and mostly it is commission-based. I think a lot of folks will tell you the industry goes after like a 50/50 base and commissions or a 60/40 commissions, that's kind of standard in terms of the industry for a pure sales role. Now you will have in certain cases, more complex sales roles that do multiple things and then those vary, but that is powerful. Having 40% of someone's overall target earnings be part of commissions, you have to think about what do you want to incent? What are the right behaviors and how do you make sure that, those behaviors line up with the strategy of the company and use those in a very, very systematic and thoughtful manner.

Right. Yeah. The best salespeople that I've ever met, as you've said, they're a different breed. They thrive on that. It's not even like, you know, that's not a bad thing for them. They're like, oh, perfect. Right? Like, I have a very clear target. Like, I'm good to go. I'll talk to you in a month. Right? Like, So there are, I know we're running a little bit low on time here. There's been a lot of questions, obviously, about how the shift that's going on in the role right now is going to impact a couple different places, right? So why don't we start, as we've said, at the beginning of the funnel, right? And any thoughts that you have, so who was it here? I'm just trying to find his name. Anyway, Paul, okay, top of the funnel, like just right now with, with where we are right now, any, any insights on— and this is just how things may or may not have changed in a couple of weeks— on building that top of the funnel, then maybe we can kind of go segment by segment.

Yeah, look, I think the way we are thinking about, you know, the macro environment and kind of what we are going through right now is that, you know, first of all, we have to deal with our customers with empathy. That's like table stakes. I mean, you know, this is not the time for an aggressive marketing campaign or a sales call. You have to approach with empathy and you have to approach— one of the first things that we've been messaging to our organization is that first concern is going to be health, wellness, and safety of everybody around. Including our customers and prospects, that's number one. The second part of it is that, you know, the immediate concern in the last 3 or 4 weeks has been cash flow. You know, a lot of startups, a lot of scale-ups, a lot of our customers are going to be thinking about how are they going to keep everybody in their jobs and how are they going to pay for everything. So cash flow is important. So to the extent that you can actually think about your own cash flow, but more importantly, you know, are there ways in which you can help your our customers, prospects, and partners with their cash flow. So we have actually rolled out a certain number of flexibility approaches so that we can help our customers get through this cash flow issue. Now that's like table stakes. Beyond that, a lot of the world is now thinking about going digital or they're forced to actually do it really, really quickly. If they were thinking but they were not prepared, this is the time to actually think about how do you accelerate it. So, you know, how do you get to digital marketing? How do you make sure that content is driving a lot of your leads, not events and, you know, physical conferences and things like that, which, you know, who knows when that's going to come back? So how do you get to, you know, be a leader in your space with content, with digital marketing? And then a lot of customers are also thinking about how do you become an inside sales organization? How do you actually make sure that you're transitioning your sales from field sales to be able to do the right demos, the right conversations with the customers, so we do that. So I take about, you know, as you're thinking about your businesses, think about all of those stages for your customers and think about how can, you know, how are they making the transitions to marketing? How are they making the transitions to sales and therefore target your messaging based on those changes? Those are kind of the bigger shifts that are happening and that's That's certainly how we are thinking about our customer base.

For sure. Yeah, at the beginning, the terms have changed, right? So you may have put in all this time to figure out some terms that maybe resonated with some customers or that people were sharing, and now the whole world has totally changed.

Yeah, absolutely.

It's really, again, I mean, something like this, when in times like this of disruption, it's just a matter of like, it's changing. So the people that start to figure out what those terms are becoming or how they can shift their product to fit with the new needs of the market are, right, in the beginning to create the core and then to move kind of through the funnel, I think, are the ones that are going to come out on the other side of this and really take advantage of whatever this new world looks like.

Yeah, there has never been a more critical time for innovation and leadership. You know, that's the way I would say it. And each of you should be thinking on a daily basis of what is it going to take for you to, you know, reach to your customers and, you know, support them in this particular time. And, you know, companies that are customer-centric, companies that are innovators, companies that are, that continue to want to be disruptors are going to get through this, you know, well, and it takes leadership out of every one of you. You know, that's what I would ask you to do.

Yeah, 100%. And I think in boom times, it's a better opportunity for people to advertise and do all these things to maybe shove products down people's throats that don't necessarily fix their problems. But right now, every consumer, probably everyone on this call, you're very focused, right, on whatever your profession, your family, whatever it is. Consumers are going to be the same way. They're going to block out all the stuff. So if you're not, if you're not focused as well, then I then you're gonna have a hard time.

Absolutely.

All right, well, that was great. Thank you everybody for joining. So here's what's gonna happen now, okay? We are going to send everybody a video of this presentation. So I know that's been a very common question because there's been a lot of great content. So you will get a video. And yeah, thank you everybody for joining, especially Janine. Honestly, that was, That was great. I learned some stuff too. I've been recently using a bigger than normal notepad. This is actually one of your drawing notepads because I've been taking so many notes on some of this stuff.

So thank you so much for having me, and I wish everybody just great health, well-being, and balance in your life.

All right, thank you.

Thanks a lot.