July 1, 2020

JD Sherman On Why Small Businesses Need Sales & Marketing Tech To Succeed — The ROI Online Podcast Ep. 12

JD Sherman On Why Small Businesses Need Sales & Marketing Tech To Succeed — The ROI Online Podcast Ep. 12

On this episode of the ROI Online Podcast, Steve chats with JD Sherman, president and COO of HubSpot, about how his time at HubSpot changed the way he saw marketing and sales.

JD Sherman started his career at IBM, where he sold to high-profile, big-budget businesses across the country. When he was hired at HubSpot, he found himself in unfamiliar territory. Small businesses have completely different priorities and thought processes when it comes to investing in technology like a CRM.

JD had to help potential customers understand the value they would receive and make good on it to keep them using HubSpot. He had to reframe the way the sales team saw their jobs: It didn't help to sell to whoever would pay, regardless of whether they were a good fit. They needed to sell to people who would succeed with the software.

It's something many of us in sales struggle with—letting a customer go because we know they wouldn't be happy in the long run. But by segmenting our audiences, we can create a loyal following, gather more positive reviews, and help our internal teams thrive because we know we're making a real difference.

Another core component of success JD uncovered during his time at HubSpot was the importance of building relationships with customers. Connections and relationships are what have made Chewy's and Warby Parker so popular, not just convenience. Relationships are timeless. Regardless of what happens with our economy, word of mouth will always be the best form of advertising.

One of JD's biggest sources of pride is that, during the 8 years he worked at HubSpot, the company never strayed from their mission of helping millions of organizations grow better. They never lost their focus. Not even for a second.

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{"version":"1.0.0","segments":[{"speaker":"JD Sherman ","startTime":3.0,"body":"We're in the middle of this really interesting experiment. It's not a perfect experiment, because in a perfect experiment, you would just isolate one variable and there's a lot of stuff going on. But everybody is being forced to figure out how to work online. I think a lot of people are figuring out that there is a real benefit to that, that, you know, the fear that, oh, if I don't send my sales reps around and have those face to face meetings, then the you know, my close rates aren't going to be as good or my, you know, the investment I'm making my Salesforce is not going to return. I think we're going to see that that's probably in a lot of cases, not the case. So there's going to be there's a little bit of a forced experiment.\n"},{"speaker":"Steve Brown ","startTime":46.0,"body":"Hi, everybody. Welcome to the ROI online podcast where we believe you, the courageous entrepreneurs of our day, are the invisible key rows of our economy. You not only improve our world with your ideas, your grit and your passion, but you make our world better. I'm Steve Brown, and this is a place where we have great conversations with winners just like you while we laugh and learn together. \n\nWelcome back, everybody to the ROI online podcast. And today, I'm really grateful and I'm proud to introduce you to JD Sherman. The now former soon to be former president and CEO of HubSpot JD Welcome to the ROI online podcast.\n"},{"speaker":"JD Sherman ","startTime":99.0,"body":"Thanks a lot. Steve.\n"},{"speaker":"Steve Brown ","startTime":100.0,"body":"You know, I've gotten to know you when I go to partner day or or the, the things that where we get to interact somewhat with the leadership and and there are some presentations of yours that I've really enjoyed and connected with you and and the thing is you bring this personality in and in way of engagement of explaining things plus it entertaining way and it was really connects and I've learned a lot from you. One of your presentations that you gave was the LTV to CAC, the you know the long term value in the cost of customer acquisition and that I've seen you do some others and you were your, your Mick Jagger or, or Aerosmith like coat that's got the HubSpot branding and and I've just really enjoyed you and I and then the fact that you endorsed or wrote a blurb for my book was huge. And so that's why I'm proud to have you and excited to have you on today.\n"},{"speaker":"JD Sherman ","startTime":161.0,"body":"Oh, thanks. I'm glad to be here. \n"},{"speaker":"Steve Brown ","startTime":163.0,"body":"You know this, the situation that we find ourselves in where many businesses have had to send their people home and try to figure out a way to stay relevant way to stay productive and to quickly pivot maybe on technology or concepts, and there's, there's this if they were ever dragging their feet, about considering marketing, automation, or video conferencing, or any of these other technologies that help us be more effective or efficient. Now, it's really on their mind. And so when the CFO is talking to someone and learning about these technologies, you can relate how they are maybe hesitant about investing in those. How do you think they're looking at it now? What do you think that they need to avoid? And how should they really like they have to sell it to the rest of the organization as as well.\n"},{"speaker":"JD Sherman ","startTime":227.0,"body":"Sure, sure. Well, one of the things that I talked about in one of my talks, which is had a teacher CFO inbound marketing, basically, I talked about how CFOs and CEOs like myself, I'm a former CFO, as well. We kind of have this hierarchy of needs and at the bottom of the pyramid is sort of business continuity is one of the things that's out there. And you always hate investing in business continuity, because it's sort of like an insurance policy, you know, you don't need it until it's the only thing you need. But that's a very valid way to look at this investment. That's sort of one thought the other one the second one is we're in the middle of this really interesting experiment. It's not a perfect experiment, because in a perfect experiment, you would just isolate one variable and there's a lot of stuff going on. But everybody is being forced to figure out how to work online. I think a lot of people are figuring out that there is a real benefit to that that you know, the fear that, oh, if I don't send my sales reps around, have those face to face meetings then the you know, my close rates aren't going to be as good or my, you know, the the investment I'm making my Salesforce is not gonna return. I think we're gonna see that that's probably in a lot of cases, not the case. So there's going to be there's a little bit of a forced experiment. And the third thing I would say, and it's a little bit, you know, not necessarily a CFO type observation, but what's really happening here is not I mean, there's there are the outliers of the situation, you know, that there are the companies and the technologies that are real big benefactors, beneficiaries of this, you know, the zooms, the, the remote learning platforms, etc. There are the people that are really, really getting hit by this, which are the restaurants and the travel and entertainment. In the middle, though, is just this big blob of business that is starting to have to realize getting sort of a kick in the pants that hey, yeah, the way that people live work, shop, and buy really is changing, and we've got to respond to it. And so I think what's going to happen is you're going to get like an acceleration of those trends that already existed.\n"},{"speaker":"Steve Brown ","startTime":357.0,"body":"Yes, you know, I see that these, when I came to partner day, or when I would show up at inbound, and I would watch the presentations as HubSpot rolled out upgrades in their technology as far as the CRM component or, or other aspects. And I would sit, for example, the CRM was, it's free. Here you have a industrial grade super, it's so easy to set up and use it. It's so user friendly. And as a salesperson, I've used so many of these CRMs and this one's just so intuitive and easy to customize. And I wondered why, why are they rolling it out for free? And it's, it was interesting to me because well, they've spent several years evaluating this and the market showing that there's going to be a high demand for that. So you're maneuvering to take advantage of that. So I'd come back and set my team up, to start to adopt it and implement it. Give us some insight on how how an organization like HubSpot evaluates those opportunities, and then aligns resources to roll it out. And what do you see is the future on just that CRM piece?\n"},{"speaker":"JD Sherman ","startTime":431.0,"body":"Yeah, I think that it was a very big decision for us to make that CRM free and adopt sort of freemium try before you buy model. And what we were the way we really thought about it was, you know, the way people want to buy today has just dramatically changed. You have to add value before you extract value and to get people to buy today. That means people want to try before they buy. That means people want to take the friction out of the experience with with a vendor, and we wanted to try to totally remove the friction out of adopting our CRM. And then hopefully, a lot of people will continue to use it and be super valuable to them as a free tool, but a bunch of folks will grow with us and we'll help them grow and they'll grow into some of our more advanced tools. And that, you know, and it goes back to a little bit of the you were mentioned about LTV to CAC, you know, we think that if you can introduce people to your product that way, it's both going to reduce the cost of acquiring those customers, because they're introducing themselves to the product and just the way that they want to do it, but also, since they've experienced the software, they kind of know what they're in for, and they'll stick around longer. And then the lifetime value of them when they become paying customers is going to be really good. So they're sort of like match your sales, marketing sales to the way people want to live work, shop, and buy and out of that will come a very healthy business model as well.\n"},{"speaker":"Steve Brown ","startTime":519.0,"body":"So how, how long did that conversation about the CRM go on behind the scenes? By the time they roll it out to the public, there's, there's a long cycle there. \n"},{"speaker":"JD Sherman ","startTime":531.0,"body":"Yeah. \n"},{"speaker":"Steve Brown ","startTime":532.0,"body":"And then, and then the future is, you've made that decision you really clear and committed On the justification for that, yeah, alignment? Yeah.\n"},{"speaker":"JD Sherman ","startTime":544.0,"body":"Well, we looked at the market when we were starting to do you as you know, we started with a basically a marketing application, and we extended it to marketing automation as well. So we kind of had the top in the middle of the funnel, we felt like we needed the bottom of the funnel felt we need that that that CRM. So we actually looked at the market very closely, we talked to a bunch of companies who were startups trying to build a CRM. And what we noticed was a few things. One, there were a lot of them. A lot of people trying to basically out Salesforce Salesforce. And they all had some pretty interesting technology and all this kind of stuff. But the second thing we noticed was none of them are really getting traction. And we were asking ourselves, why are they not getting traction? And what the what we concluded was it wasn't the technology it was the business model. You know, it's going to be very difficult to go to some but to go out in the marketplace and try to out Salesforce Salesforce who is a it's a great product you know, it's a it's a de facto CRM for a lot of businesses these days. We thought for our mid market, the problem was adoption. The problem was getting people to adopt a CRM, and the in the old playbook of a direct sales force trying to get people to engage and, and start using a CRM when maybe they didn't even understand the power of doing that, wasn't gonna, it wasn't gonna work for what we wanted to do. So we had to make a product that's really easy to adopt and easy to use, and then allow customers to adopt it on their own terms. By the way, there's a really nice little virtuous cycle there. Because for that to work, the product has to get really good. When the product gets really good, more and more people will adopt it and you can keep that flywheel spinning. And that's really what's happened with our our CRM, the, the biggest, probably side benefit for us of doing that was it really, really forced us to make that a very good product. Ironically, product has to be better in a freemium model where it costs less than it probably has to be if you're charging $1000 or $10,000 a month.\n"},{"speaker":"Steve Brown ","startTime":670.0,"body":"I love that that that CRM. So the epiphany for me was, why are we doing all this marketing automation? We're we're doing it to generate a contact record. And that CRM now is taking it the rest of the way. You think about a business process. All right, we set up a website, people can fill out a form and they're going to give you their contact information then what do you do with them now? And how do you make turn that little, that asset into a relationship? Then that's where the real gold is and to me that was a brilliance of the free CRM, because the more contacts you're generating, like that flywheel, the more relationships a business could adopt. And what amazes me, the businesses that There's the 98% of the businesses in the American economy have 20 or less employees. And most of them don't have a CRM. \n"},{"speaker":"JD Sherman ","startTime":729.0,"body":"That's right. \n"},{"speaker":"Steve Brown ","startTime":730.0,"body":"And they're just winging it.\n"},{"speaker":"JD Sherman ","startTime":732.0,"body":"Yeah, they're basically and well, we saw a lot of that ourselves. Like when we started to go down this path. In addition to looking at the market, we obviously looked at what our own customers wanted. And it wasn't hard to tell, like we had, like, if you looked at our, you know, our user suggestion input it was can you build a CRM, but most of most of our customers and we had, you know, we still have a very, very large bit of smaller customers. But most of our customers were exporting the data into a spreadsheet. That to us was a sign that they're really losing their letting, as you sort of talked about, they're letting some of the value of creating that engagement leak out so what we what you really are doing when your map matching your marketing automation and your top of the funnel-type tools to the CRM is you're matching your system of engagement with a system of record and that's a really powerful combination.\n"},{"speaker":"Steve Brown ","startTime":787.0,"body":"So we're, you know, we're thinking about the business leaders and owners why they are justify implementing this because when you set up a CRM, you're, you're triggering off a whole set of business changes inside a business. Who's going to get that record? Who's going to manage that record? Who's accountable? What's the outcome and how do we show revenue for it? And we'd been a HubSpot Platinum partner for a while and and when I saw the CRM come out, I'd had this conversation with several clients, but when you know they would come up to you and you're doing all this great work. But I just don't think it's helping anything yeah we're we're getting these form fields, but it was amazing. We were dropping these leads on their desk, but they were just moving them out of their way. And the brilliance of that CRM and that and bringing that into the product mix was: actually we probably should have started with the CRM conversation first.\n"},{"speaker":"JD Sherman ","startTime":849.0,"body":"Yeah. It's funny. I had a conversation one time with a customer—a great guy. He had a Taekwondo, basically, empire. Honestly, in the UK had like seven or eight Taekwondo places, and he was using HubSpot marketing. He was blogging using social media and everything. And he was absolutely killing it. I mean, he was getting all sorts of growth in his contacts and everything. And then he called the cancel. And I said, well, this is very interesting, because my hypothesis was, if you're adding contacts, HubSpot's working, we're creating value for you and it should be a good thing. So I just called him up. And he was very generous with his time and I asked him how to use and everything. And I said, well, you're getting all these leads. What are you doing with these leads? And he said, What do you mean? I said, I mean, are you calling them? Are you giving them calls to action? are you engaging with them? And he's like, no, I don't really have time for that. I'm like, okay, well then see, that's the part that's missing. And if I bring that back to the sort of CFO lens, you know, it's so that attribution is so important. When we think about the investment, we want to tie it all the way to revenue. If you do that, with inbound marketing, and match it with a great connection to your CRM and your sales program, you can really nail that attribution and it's, you know, just makes it easier to understand the return on investment of your of your marketing dollars.\n"},{"speaker":"Steve Brown ","startTime":940.0,"body":"So that conversation that you had with him, if I backed up and I had several of those, and I let me evaluate where I'm responsible in the failure of \"getting it.\" Right? And what I realized, I'm very sales oriented. So I just assumed these organizations were too. And when I ran into HubSpot, one of the things that really impressed me about HubSpot was they're super they have their act together as far as the sales process. You got a great sales team. You got a great sales process. Marc Greco was one that I, when I first met, met him and watched him sell, I was just, he was my hero. I loved how he did that sales process. But the thing that was missing with my clients: they didn't have that mindset. And that was a big lightbulb for me, is that the process that we integrate, that needs to be a big mandatory component or this investment, so to speak, is not at some point, they're going to go, why am I paying for this? I'm not seeing the needle move.\n"},{"speaker":"JD Sherman ","startTime":1008.0,"body":"Yeah, we actually call it smarketing as you might know that sales and marketing basically have to be the same thing. And when Mark Greco gets a qualified lead through our inbound marketing, he has to realize that he does, because he's an expert, that he's just extending that, that process, he's still we're still in a helping versus selling mode, we're trying to understand what the customer needs and, and it needs to be a seamless thing. It can't be just like a handed down the, the, the, you know, the factory floor, you have to think about when you're when you're building these your sales and marketing processes. Those seams in the process are what really kill you if you're trying to take friction out of your process and so you have to get really good at that. And as we've extended into more of a product driven sale, we've stopped calling this smarketing call, it's sparketing to get the product piece in there. And that for the first time ever a couple of years ago, we gave the product team effectively, a quota. He said you guys have to when you're building these premium products, you have to think about creating opportunities for customers and for our sales team to engage with customers and getting them to buy.\n"},{"speaker":"Steve Brown ","startTime":1080.0,"body":"What I'm—one of the other challenges that we have people come super oriented around their website.\n"},{"speaker":"JD Sherman ","startTime":1088.0,"body":" Yeah. \n"},{"speaker":"Steve Brown ","startTime":1089.0,"body":"And they're not realizing that this is a business process, not just this nice fun little marketing thing we can do on the side. That's kind of mandatory. We need a website, but we're really building out an asset that's going to drive revenue. It's going to drive the value of the business later when you want to sell it, you'll have all this data and see the system that lead comes here goes out this end. And I think that I've watched HubSpot mature in some way and in assembling those pieces. Did you come from a real sales-oriented background? I mean, coming in as a CFO, and then this like sales might be something that you didn't want to really dabble in or what?\n"},{"speaker":"JD Sherman ","startTime":1135.0,"body":"I have never I've—my father was a salesman for 30 years for IBM and I spent my first 15 years of my career at IBM. In finance, though. And you know, I've had a lot of experience, though with selling to very large enterprises. So, when I came to HubSpot, and took over and took over on the sales and marketing organizations, I really had never done this kind of thing, and particularly for small businesses. And I had to learn really quickly that, you know, it's a different thing when you're selling to small business than when you're selling to enterprises, and mostly to a client base that you had for 50 years. It's a very different thing.\n"},{"speaker":"Steve Brown ","startTime":1181.0,"body":"When the CFOs that are these business leaders or the business owners entrepreneurs there, they wear a \"CFO Hat,\" they wear a \"Product Hat,\" they wear a \"Management Hat,\" they wear an \"HR Hat.\" What would you say to someone like alright, we're going to get this HubSpot technology or equivalent? \n"},{"speaker":"JD Sherman ","startTime":1202.0,"body":"Yeah, yeah. \n"},{"speaker":"Steve Brown ","startTime":1203.0,"body":"How do you sell it to your organization that you're leading because it's intimidating, it's software. It's a business process too.\n"},{"speaker":"JD Sherman ","startTime":1210.0,"body":"It is in the, you know, the thing that I always talk about, when you think about, if you're trying to sell it to a business-oriented, entrepreneurial minded person, you know, we have this mindset of return on investment: ROI. And we can kind of get, we can wrap our head around it when we're building a factory or something like that because the way accounting works is when you're building a factory, you capitalize all the expenses that go on your balance sheet. And then when the factory starts churning out widgets, that's when you start to recognize the cost, but there's like a big upfront investment that we're all comfortable with. And then at night, we can go home and sleep in our factories churning out these widgets. Well, a website done right or inbound marketing done right is exactly the same thing. Only you don't get to count account for it that way, you don't get to capitalize it, but what you're basically doing is you're making an investment, in a website to drive your business, you're making an investment in creating your own content assets and assets are really key word here. And there's an upfront cost to that, but what happens when you get it right is the widgets start coming out, even as you go home and sleep because you've made that upfront investment. So that's the story that I think really resonates when I talk to businesses about making this investment.\n"},{"speaker":"Steve Brown ","startTime":1287.0,"body":"So you come from a different background. You didn't—you weren't in marketing automation technology when you began to work with HubSpot. When did the light bulb go off for you as far as this online asset stuff, right? You're excited? You get to work for a great company. \n"},{"speaker":"JD Sherman ","startTime":1307.0,"body":"Yeah. \n"},{"speaker":"Steve Brown ","startTime":1307.0,"body":"But there was some time and all of a sudden, it really clicked with you talk to us.\n"},{"speaker":"JD Sherman ","startTime":1314.0,"body":"I think what it really clicked with me was unlike so when Brian and Dharmesh, the founders, started this company, it was really about two things. And when they explained it to me, it almost immediately clicked. I'm like, yeah, there's a big opportunity here. The first thing was that people are still marketing and selling, very traditional way. Even though the way people live work, shop, and bought, it just fundamentally changed. Everybody moved on, you couldn't interrupt people anymore, fundamentally, couldn't interrupt people anymore. So that was sort of realization number one. They say, yeah, now I look back 10 years later, it's like quite obvious back then it was a little bit of a realization. The second realization was though, you need technology to pull this playbook off, particularly at scale. And of course, you know, if you think about what marketing automation is, its technology it's automation technology to help humans do a better job of what they're really good at, in some sense. And that applies. I mean, I've put in automation systems effectively across all sorts of, you know, business processes, and this is one to me, it was like if we can apply that same sort of if we can bring technology to bear for marketing and sales, boy, there's a real opportunity. And if we can democratize that technology so that you don't have to be an IBM or a general electric or a general motors to afford this and have a big, you know it department, you really have something. Because what, what online marketing with the internet what you know the modern consumer does is it sort of gives the guess, a small business an opportunity to compete with the big guys.\n"},{"speaker":"Steve Brown ","startTime":1411.0,"body":"I want to pause here just for a moment and talk to you about a program that we have just released called the ROI QuickStart Academy for authors. Every day I talked to business owners just like you who struggle with quickly getting their fundamentals in place. We want to create a great foundation and we want to grow our business, but the things that are in our way are lack of knowledge about the specifics we should put in place. What kind of technology? What kind of messaging? And what kind of campaigns? And that problem exists for authors as well. And we just gel so good with authors because, well, I'm an author, and I understand everything that you struggle with—you have a great idea you have a great book, but what do you want to do? You want to get your book in front of more people, you want to make it easy for them to find you, learn how they can schedule a time to talk with you, hire you for a conference, or maybe sign up for the services that your book promotes. So what is the QuickStart Academy for authors? Imagine working with a small group of like minded authors, and the experts from the ROI QuickStart team. It's a great way to get your messaging clear to be confident with the technology in your marketing automation, and how to run a strategic campaign to get you more of what you want from the investment of your book. To learn more about Start Academy for authors, you can visit ROIonline.com or click in the link in the show notes below. And now, back to this episode. \n\nI think of folks that are wanting to do a startup or they're, they're pitching a potential investment into their company. And I wonder how, how many investors are asking, well, talk to me a little more about your sales process and your, your technology. How are you going to implement this business development process with technology and take advantage of the trends? Do you see that conversation happening? As much as you would like, or do you think that's like a real potential advantage for someone pitching if they can really clearly communicate that?\n"},{"speaker":"JD Sherman ","startTime":1551.0,"body":"That's really, really interesting. If I think about the consumer world, the direct to consumer businesses, that is their entire pitch. You know, you think about the Casper mattresses or the Peloton's or the whatever. That is their entire pitches like, yeah, I have I sell a mattress, but the way I sell it and engage is the magic here, you know, it's the Netflix. It's all that kind of stuff. What's interesting is you're starting to see some of that those lessons come into the B2B world as well. And you know, as Brian always says, it's how you sell these days is why you win. It's not any more that you know, your product has to be 10x better. It's that whole customer experience has to be 10x better. So, what I'm hearing and seeing, and even in some of the really remarkable startups in the Boston area is, we're going to change the way we're going to change we're going to disrupt the customer experience rather than the product itself. And boy that's resonating with with the VCs these days for sure.\n"},{"speaker":"Steve Brown ","startTime":1618.0,"body":"I heard this quote the other day. Someone said, our value is our process, not our product. And the beauty to me of marketing automation and sales automation and strategic campaigns and clear messaging, I think are the four fundamentals you have to have, do is but the beauty of those things compliment expedite. They're like force multipliers on a process in pretty much any process. What's like one of the most unusual processes where you've seen someone adopt that similarly and have great results that you wouldn't have expected?\n"},{"speaker":"JD Sherman ","startTime":1657.0,"body":"Yeah, well, I mean, you just take the one that I'm most familiar with, because Brian just won't stop talking about because he's a big dog guy is this company, Chewy.\n"},{"speaker":"Steve Brown ","startTime":1667.0,"body":"What's the name of the company?,\n"},{"speaker":"JD Sherman ","startTime":1668.0,"body":"Chewy. They have basically—they're dominating the basically the dog food and dog goods market, just because of their customer experience, the way they basically build a relationship with your pet. And you're like, oh, wow, that's very interesting. And the extent you can, you can extend that idea into any business. It just makes a ton of sense. So, you know, they're just these these examples where, you know, literally a commodity that they sell, but they transform the way people shop for that commodity and boy, it's a huge hit. Warby Parker's another one, all of these kind of direct-to-consumer companies. And so now you know, we start to see some of our customers extent taking those ideas and we're trying to do the same, taking those ideas to the B2B world. Another super interesting company in the B2B world that we have gone to school on and we have one of their we have their president on our board is Atlassian, which is a an enterprise software company. I think they have a market capitalization of 35 billion or something like that, a couple billion dollars in revenue. They don't have a single salesperson. In their mind software is something that is bought not sold. And they run that playbook. And so it's really about their their buying experience as much as their software\n"},{"speaker":"Steve Brown ","startTime":1756.0,"body":"Buying, bought and sold. That's you know, when we think about going from interruption-based marketing to inbound based, that's, that's going from to bought from sold. From, hey, you need this, let me let me just tell you whatever you need here to convince you to do this to make my quota, to your safe, evaluate this at your speed. What else would you like to know? And then when you're ready, let me know. And then we'll talk about just the last few steps of how your situation looks here with us. You know, I see a lot of companies also going to more of a teaching mode instead of selling whatever their product is, I'll just teach you how to do this.\n\nYeah. Yeah.\n"},{"speaker":"JD Sherman ","startTime":1808.0,"body":"Like I think I think about your Mark Greco example. When you listen to good sales call by a guy like Mark Greco, If it's a 30 minute call, the first 20 minutes are Mark asking his prospect about his business and talking about it. And you know, the call has gone well, when the first question comes back the other way. And then Mark feels he has the license to bring up HubSpot. Until then, not so much, right? You don't want to have that conversation. You want to figure out if they're what problem we're trying to solve here and all this kind of stuff. And some of our really good salespeople I've heard say, you know, really enjoy the conversation. I don't think that it I don't think it makes sense to go forward. It's not necessarily a fit here. And so yeah, the you have to be careful about the incentives you have and how hard you're pushing your sales teams and everything like that, but it really is a process no matter, you know, you can you can slot there's a continuum of it's a totally touchless process versus it's very heavily involves humans. But no matter where you are in that continuum, you need to be thinking about the adding value before you extract value.\n"},{"speaker":"Steve Brown ","startTime":1878.0,"body":"The—HubSpot's been remote selling for ever, and I think there's a lot of organizations that are going are we able to—will we be able to actually do a sales call on via zoom or something? What was the thing that surprised you about how how HubSpot was totally comfortable with that. It's normal, right? It's not shocking to you but to many companies coming up now out of this situation, that's like a scary thing their figuring out—I—we have to do this.\n"},{"speaker":"JD Sherman ","startTime":1908.0,"body":"Yeah. Well, you know, for HubSpot necessity was the mother of invention because our product cost $250 a month at the start and you couldn't send people around the country trying to sell your software. You know, the the key—what's interesting about when you sell a product like that, the hard part is reach. The hard part is actually not the sales engagement. The hard part is the reach and getting lots of—finding the customers who, where the demand is. And the secret there is really inbound marketing. The Secret there is helping not selling. The secret is creating great content assets that people come to you. And then it's not a it's not a pushy conversation on the phone. It's a, you know, a helpful conversation. Now, you know, I have to be honest, like, there are some things that are never going to be sold that way like when you buy a Boeing airliner, you're probably gonna have to go and bring all your, you know, engineers and all this kind of stuff and bring your flowcharts and things like that, but, you know, for software, modern software, certainly and services as well, that's the way the world is going. And that's sort of where we started our conversation. You know, the company there, the tools are becoming more and more powerful and available to enable that kind of thing.\n"},{"speaker":"Steve Brown ","startTime":1988.0,"body":"So the CFO is needing to be more, also CTO-ish, and CMO-ish, right? That—you're seeing a merging of these roles. And the comfortable considering considering I need to think of this revenue generating roles that are coming in here instead of an expense. But same with sales. That—they're not only conducting sales, but they can be creating content at same time. How do you get a CM-,CMO, CFO, CTO together on the same page because they're usually segmented or when you call them pillared? \n"},{"speaker":"JD Sherman ","startTime":2028.0,"body":"Yeah, yeah, they're in silos. Yeah. So when I first joined my prior company, which is Akamai technologies is the CFO within a couple of weeks. The CMO comes in my office and he says, \"hey, I have an opportunity that is short lived. So I need your approval really fast on this. We want to put Akamai technologies on the green monster at Fenway Park.\" I'm like, \"Really? Like, that sounds really cool because I would love my company's name on the green monster at Fenway Park, but, like, how much does it cost? How do we know it's working? Like how do we know we're going to get customers that way?\" And he says, \"well, it's a you have to make a $3 million commitment or something like that.\" I'm like, \"Really? This seems like a lot like like how many customers are going to get from that?\" And he got frustrated in my office and said, \"You just don't get it. You just don't understand how marketing works.\" Like Yeah, I guess you're right, if that's, I don't. But what the way to help a CFO understand marketing works, is try to put some attribution around what you're doing. Like we get as a you know, as a finance person operation person, we get that you have to invest in a brand and there's brand equity and everything like that, but most of marketing is about demand generation. And you know, you can you can dashboard that. You can figure out the value what you know, obviously you can figure out that cost per of a lead, and then you can figure out what percentage of those leads convert, and then you can figure out what percentage of those become actual customers, and then the types of those customers you get, which ones of them are long lasting customers with very high LTVs and which ones of them are not. And so, my observation at least what the marketers that I've interacted with, they're much more analytical. Like they know their way around a spreadsheet and, and Looker and other tools, much more than the marketer that I thought of back when I was at IBM and sort of met when I showed up at Akamai.\n"},{"speaker":"Steve Brown ","startTime":2148.0,"body":"Seems like it'd be stressful observe Mark Greco selling and you listen for 36 minutes or whatever, and he's just asking questions. How do you—and you're like, we're investing in this time and he's not selling. There's, there's this point of going well, how do you get an ROI on this? \n"},{"speaker":"JD Sherman ","startTime":2169.0,"body":"Yeah.\n"},{"speaker":"Steve Brown ","startTime":2169.0,"body":"Give value and create a relationship. How do you answer that question?\n"},{"speaker":"JD Sherman ","startTime":2175.0,"body":"Well, I mean, at the end of the day, you know, the rubber meets the road and you can you you measure what you can measure: does Mark make his quota or not? And then you can then you got to figure it out and move sort of you move backwards up the up the funnel or up the pipeline and see where—what's breaking down and what's working and what's not working. But I would tell ya, you know, we're having a lot of this conversation around sort of the the ROI and everything. The big mistake that I've seen a lot of companies make is they over-obsess on that and you sort of ignore what the customer is telling you. \n"},{"speaker":"Steve Brown ","startTime":2212.0,"body":"There you go. \n"},{"speaker":"JD Sherman ","startTime":2213.0,"body":"And what you're going to find there is you may have short-term results that backfire any long term that's—the LTV lifetime value is a real important measure that. Like, in my early days at HubSpot, we were signing up a lot of customers that were not going to be successful at HubSpot, and we had to look at the incentives of our sales team and say, \"what's happening here?\" Like we're pushing them to sign up customers, that's what they're getting paid for. We actually change that incentive to be they have to be successful customers. If they're not successful, then you're not going to get promoted your your, your, your quota is, is going to get raised, it's etc. We had to, you know, we had to fundamentally get the incentives aligned with having successful customers. Particularly in this day and age where customers have a loud voice—louder than your own marketing, you definitely have to have that model. So at the end of the day, you know, you have to be careful not to over-index on just the, you know, how do I do this month then? Should I be pushing harder? Should I be forced, should I be pushing on deals created in my Salesforce? Because it looked like the number of deals that this team was creating. were too low. You just have to be a little careful about that.\n"},{"speaker":"Steve Brown ","startTime":2286.0,"body":"Yeah, that's now we're talking about the not only the CMO, CTO, CFO, now I got to be like a sales-oriented as, as well. And that's intimidating to most people because they, yeah, they've got this anti-sales view. \n"},{"speaker":"JD Sherman ","startTime":2303.0,"body":"Yeah. \n"},{"speaker":"Steve Brown ","startTime":2303.0,"body":"But I think you hit it when you said you got to be thinking from your customer's point of view and, and how you're connecting with them. And it's about creating this human connection and relationship. So where, where are things going in the future? Or, you know, we know you don't have the crystal ball and all but there's something that some data you guys have been studying. Where do you see things are going it's for the companies that are listening to this podcast, what can they be preparing for?\n"},{"speaker":"JD Sherman ","startTime":2336.0,"body":"Hmm, well, you know, to come to bring it back to sort of where we are in the current day. I think we've all identified some of the trends with how the world is changing for people in the way they live work, shop, and buy I think what we've what we have going on right now is going to be an accelerant for that. I don't think I think you we're teaching people—we're teaching consumers that they can get a lot more done online, and are going to expect to be able to get a lot more done online. They're not gonna want to, you know, go in person to visit places they're going to be, they're working, they're probably gonna be working from home. So, you know, they're just gonna that's going to happen more and more. We're seeing businesses who primarily relied on offline sources for leads, like trade shows and, and, you know, traditional advertising realizing very quickly that they're behind the eight ball. And while they've always had on their minds at the yeah, we got to develop a better digital presence. Now it's do or die. So I think what you're seeing here is, that we're gonna we're having an accelerant of the trends that we've all known are out there.\n"},{"speaker":"Steve Brown ","startTime":2408.0,"body":"What are you most proud of being in HubSpot these past eight years that you've been here?\n"},{"speaker":"JD Sherman ","startTime":2413.0,"body":"Eight years, yeah. I am most proud of how true we've stayed to our, our mission. Our mission, as you probably know, is to help millions of organizations grow better. And all along the way, it's so tempting to veer from that mission for short-term results. It was so tempting to try to sell our product just focus on bigger customers and take it up market. It was so tempting to raise prices and have contracts terms that are more, you know, onerous to sort of boost short-term results. You know, and we've just avoided that as a company. My favorite story about HubSpot is when I first joined HubSpot, I I just come from Akamai, and we grew to a billion dollar—when I started talking, my real small company grew to a billion dollars by the end of the decade. It was awesome. So, I said in one of my first company meetings, I said, \"Guys, we're only $20 million revenue. But I think we can be a billion dollar company by the end of the decade.\" And I'm like, who's with me? And the organization was sort of like, yeah, they clapped and everything, but they're kind of like, who are we helping if we do that? Like, how does that help anybody? You know, what's, what's our mission? And it was a real eye-opener for me. And I think that I think we've done a great job over the last eight years of staying true to that mission. And by the way, the results follow. I'm also super proud of HubSpot and the results and our performance. But the way we did it, we grew better. That's the thing I'm proud of.\n"},{"speaker":"Steve Brown ","startTime":2509.0,"body":"And I'm really thankful for is really awesome. Didn't expect it. But when this situation settled in and HubSpot reached out and said, \"Hey, we know you partners are going to be struggling. And so we would like to forward you your commission's for a couple of quarters\" And it's like, wow, that was that was huge. Where? Where was the thinking on that? Was that your idea? Where did, where did that come from? I'd love to be in.\n"},{"speaker":"JD Sherman ","startTime":2540.0,"body":"Yeah, I think it was we you know, when it started to look bad we said what are—where are the places that we have to take care of our customers and partners? And our hope, still, our hope is that this is a short term phenomenon. Our belief is that our partners are really strong. And if we can get them, help them get through this short-term phenomenon, they're going to be like a coiled spring. And in fact, we've used this coiled spring analogy a lot at HubSpot. Like we're in really good shape. Thankfully, we have a billion dollars in the bank. We have a really great recurring revenue, business and all this kind of stuff. And so in this crisis, we want to like set ourselves up so that our partners up and our customers up as a coiled spring so that when the world starts to return to normal, and it will, we don't know when, but it will definitely start to return to normal. We're going to be a coiled spring, our partners are going to be a coiled spring and our customers are going to be coiled spring, and we can recover really fast and in a really healthy way.\n"},{"speaker":"Steve Brown ","startTime":2603.0,"body":"There, that decision was what is our you were thinking in our shoes, not yours? That's an experience. That's, that's a relationship that's connecting. That was like, you bought me some time. I mean, you really helped our agency.\n"},{"speaker":"JD Sherman ","startTime":2622.0,"body":"Yeah. Well, it's been the funny thing about the agency. This is the most remarkable solution/partner/agency/channel, whatever program I've ever seen, for a bunch of reasons. One is and I think the core reason is, like, a lot of the partners have been around as long as HubSpot. Almost and like, joined up with us when it was not clear that HubSpot was actually going to survive. That takes a lot of buy-in, right? You know, when I joined in 2012, we were starting to build the partner community. And, you know, we could—I who knew who knew what was gonna happen, with HubSpot. Everybody bought in on the mission, right? The second interesting thing is how much the partners care about each other. You know, most of the time, it's like a channel, this channel conflict and all this, and we come across that as you know, every every now and then, but the partner is trying to help each other. And I think it's because we have this, we all have this core mission in mind. We want to help millions of organizations grow better, and we try to move everything out of the way that doesn't get us going on that mission.\n"},{"speaker":"Steve Brown ","startTime":2682.0,"body":"So the culture code, it's a big deal. The academy and the education, you think about agency partners like us, that, people don't come to us all ready to go. \n"},{"speaker":"JD Sherman ","startTime":2696.0,"body":"Mm hmm. \n"},{"speaker":"Steve Brown ","startTime":2696.0,"body":"We have to train them. We have to get them acclimated and moved into the modern world of marketing. That has to honor clear messaging and technology and campaigns and how you tie all that to a business process and think like a business. And so I think those, those things really helped me be a successful agency just from the investments you guys have made in your team, and your culture and the products, your your educational products. Those are huge, you—that's, that's just been a big part of our success to have that resource.\n"},{"speaker":"JD Sherman ","startTime":2736.0,"body":"That's great. I mean, it's another big part. If you're going to help millions of people grow better. You can't just provide the software, right? You have to provide the platform, we I well, we like to use alliteration, so we have to provide a platform, a philosophy and people to help. Right? And the partners are really big part of the people. They're becoming a bigger part of the platform too. More and more partners are starting to help our customers with technology and the integration of lots and lots of the pieces of software that they're using to run their business. But, you know, partners are real extension of that people piece of it. Those three things have to come together if you're really going to help millions of organizations grow better.\n"},{"speaker":"Steve Brown ","startTime":2780.0,"body":"JD, I really appreciate your time. It's your it's valuable for the folks that listened and yeah.\n\nWhat if someone wanted to connect with you or or stay in touch as you move on? \n"},{"speaker":"JD Sherman ","startTime":2796.0,"body":"Yeah. \n"},{"speaker":"Steve Brown ","startTime":2797.0,"body":"Where Where do they find you?\n"},{"speaker":"JD Sherman ","startTime":2799.0,"body":"Well, I'll be around at HubSpot for the rest of the year. I'm going to stick around till July 1 as the official President and COO and make sure we have a great transition to my team basically reporting directly to Brian our CEO. And then I'm gonna stick around for the rest of the year as an advisor so you can still get a hold of me through the normal channels at HubSpot, at least till the end of the year. \n"},{"speaker":"Steve Brown ","startTime":2823.0,"body":"Good. What's what's one question that you wish people would ask you that they never do?\n"},{"speaker":"JD Sherman ","startTime":2829.0,"body":"A question and I wish people would ask me that they never do. That's a great question. That's a great question. You probably like if you're trying to figure out how, like the secret of our success, you know, you should be asking about how did you scale your culture, from 20 from 200 people to 3000 or 4000 people wherever we are right now. That really is, if I if I had to boil it down to one thing that's worked for HubSpot, and one thing that I've seen work for other companies, it's really the culture because that's the platform for everything else you're going to you're going to do in the company. So you know, and this is another one for the way CFOs think about is, when you're investing in culture, like where's the return on that? So hard to measure, but it's just so fundamentally important. And it has to be in the DNA can't be in, it can't just be in your leadership because you know, a company like HubSpot, we're growing so fast that if you look at our 3700 employees right now, half of them, literally half of them have been at HubSpot less than 18 months. And yet, I think you might agree with me that if you talk to anybody at HubSpot, you still get the sense of the HubSpot culture. Whether they've been there six months, or six years. There's just some magic around that. And I wish I knew exactly the playbook for it. I think it's transparency. I think it's articulating and writing it down what you're trying to accomplish. I think it's demonstrating it as leaders, but that's the one, like if you really wanted to dive into like the sort of how we built HubSpot, that's what it would be.\n"},{"speaker":"Steve Brown ","startTime":2930.0,"body":"That's awesome.\n\nJD, I had another question, but I think you've done you killed it. So now, I appreciate you very much and Yeah, thanks for being on the ROI, online podcast. \n"},{"speaker":"JD Sherman ","startTime":2944.0,"body":"My pleasure. Good luck with the book and everything and we'll talk to you soon. All right.\n"},{"speaker":"Steve Brown ","startTime":2947.0,"body":"Thanks for listening to another fun episode of the ROI online podcast. For more, be sure to check out the show notes of this episode. And feel free to connect with me on LinkedIn where we can chat, and I can help direct you to the resources you're searching for. To learn more about how you can grow your business better, be sure to pick up your copy of my book, The Golden Toilet, at surprise thegoldentoilet.com. I'm Steve Brown, and we'll see you next week on another fun episode of the ROI online podcast. \n\n"}]}