WEBVTT NOTE This file was generated by Descript 00:00:04.991 --> 00:00:05.451 Hi, folks. 00:00:05.451 --> 00:00:07.591 Welcome to the Science of Scaling podcast. 00:00:07.671 --> 00:00:09.451 I'm your host, Mark Roberge. 00:00:09.451 --> 00:00:14.119 In this podcast, we discuss the science of scaling by tapping the top 00:00:14.120 --> 00:00:17.880 executives on the go to market side in the most successful companies. 00:00:18.280 --> 00:00:22.529 Today we're joined by Matt Plank, the CRO of Rippling, a household name 00:00:22.529 --> 00:00:24.090 that you've probably all heard of. 00:00:24.670 --> 00:00:27.710 Matt spent their six years almost since the beginning when 00:00:27.710 --> 00:00:29.480 they only had five engineers. 00:00:29.760 --> 00:00:33.470 He met the co founder, Parker, at their last play, Zenefits. 00:00:33.890 --> 00:00:35.150 And they're going for it again. 00:00:36.025 --> 00:00:40.944 Today, we're specifically going to unpack the funnel and revenue 00:00:40.955 --> 00:00:46.285 math, a key piece to scientific scale that so many boards, so many 00:00:46.285 --> 00:00:49.304 executive teams, so many CROs miss. 00:00:49.955 --> 00:00:53.425 This was crucial to Matt's ability to scale them through. 00:00:53.820 --> 00:00:57.580 The last six years, and he's going to unpack it for us on this episode. 00:00:57.790 --> 00:00:58.620 Let's get right into it. 00:01:01.550 --> 00:01:02.340 Congrats. 00:01:02.430 --> 00:01:05.200 I mean, what an amazing run over there, Rip Lane. 00:01:05.200 --> 00:01:08.419 And can you just take a step back and tell us about the beginning? 00:01:08.550 --> 00:01:10.560 How big were they when you started? 00:01:10.569 --> 00:01:12.980 Like, how did you get introduced to them? 00:01:13.010 --> 00:01:13.859 Can you walk us through that? 00:01:14.115 --> 00:01:17.645 Yeah, I've known Parker for, I guess, about a decade now, but I worked with 00:01:17.645 --> 00:01:19.184 Parker actually early on at Zenefit. 00:01:19.195 --> 00:01:23.434 So I was the 25th employee at Zenefit, second account executive, went on a run 00:01:23.434 --> 00:01:28.494 there and for the, about four years, and then followed Parker over to Rippling. 00:01:28.535 --> 00:01:32.484 And when I joined Rippling, they were actually five employees in the basement 00:01:32.494 --> 00:01:35.524 of Parker's house over in the, uh, the mission here in San Francisco. 00:01:35.524 --> 00:01:40.149 So, uh, It was Parker, myself, a small group of engineers and as early as 00:01:40.149 --> 00:01:41.960 it gets in terms of the early days. 00:01:42.000 --> 00:01:42.890 That's amazing. 00:01:42.949 --> 00:01:47.399 So was the go to market strategy the same, you know, it was a similar 00:01:47.770 --> 00:01:51.130 sector value prop, similar buyer. 00:01:51.179 --> 00:01:54.799 And you all at Zenevitz, I mean, you all grew like crazy. 00:01:54.880 --> 00:01:57.110 Was it just a cut and paste on the go to market strategy? 00:01:57.230 --> 00:01:58.890 You know, one of the things that we were. 00:01:59.200 --> 00:02:02.750 Extremely committed to figuring out at Rippling from a, from a 00:02:02.750 --> 00:02:04.679 go to market channel was email. 00:02:04.800 --> 00:02:09.769 You know, when we started at Zenefits, email was, was not nearly as widely 00:02:09.769 --> 00:02:12.359 used as a, as a channel as it became. 00:02:12.370 --> 00:02:16.919 And I think, you know, at Zenefits, um, you know, Marketo and Parda and all these 00:02:16.920 --> 00:02:20.480 things were not, you know, outreach sales loft, like none of those things existed, 00:02:20.480 --> 00:02:23.240 I think Yesware was the first one we ever ended up using in the sales org. 00:02:23.550 --> 00:02:27.250 But marketing automation was kind of new at that time. 00:02:27.269 --> 00:02:30.810 And so we found a way to write, I think, you know, highly effective 00:02:30.810 --> 00:02:34.160 emails, but also like getting them delivered was not really a problem. 00:02:34.160 --> 00:02:35.940 I mean, it was easier to tweak the system. 00:02:36.290 --> 00:02:39.879 And then what happened was over the past 10 years, emails become 00:02:39.879 --> 00:02:44.110 just significantly harder, but of course, like any good growth channel, 00:02:44.110 --> 00:02:45.440 like everybody ends up using it. 00:02:45.440 --> 00:02:48.410 And then it becomes, I think marketing, you're constantly looking for new creative 00:02:48.410 --> 00:02:51.750 ways to do stuff because anything that you do that works, like everybody does 00:02:51.750 --> 00:02:52.870 it and then it doesn't work anymore. 00:02:53.339 --> 00:02:55.219 And so we were really effective at email. 00:02:55.230 --> 00:02:58.940 We built a massive, like what we would call an inbound sales org, meaning 00:02:58.940 --> 00:03:01.959 that, you know, it was, we were sending emails, but the demos were 00:03:01.959 --> 00:03:03.240 just getting put on a rep's calendar. 00:03:03.240 --> 00:03:04.579 So the reps felt like it was inbound. 00:03:04.980 --> 00:03:08.170 So when we started at Rippling, it was way harder, you know? 00:03:08.170 --> 00:03:12.310 And the first question was how do we get our emails delivered to people? 00:03:12.320 --> 00:03:15.340 And some of that is you write emails that they, that are good, right? 00:03:15.340 --> 00:03:18.320 So they don't think that this is immediately spam and I hate this email. 00:03:18.330 --> 00:03:19.120 It's not relevant to me. 00:03:19.120 --> 00:03:19.780 Why'd you send it? 00:03:19.940 --> 00:03:21.989 So you got to make sure you're targeting the right people and 00:03:21.989 --> 00:03:23.140 your message is compelling. 00:03:23.469 --> 00:03:28.209 But then there are a lot of technical ways that you need to deliver email. 00:03:28.220 --> 00:03:31.519 You can't just fire a million leads into, you know, Marketo and send away 00:03:31.519 --> 00:03:34.139 like your, your domain and everything will get flagged super quickly. 00:03:34.139 --> 00:03:36.059 And so it was a tough go. 00:03:36.179 --> 00:03:39.149 I don't think it was tougher than we thought it would be, but we were deeply 00:03:39.149 --> 00:03:40.669 committed to solving that problem. 00:03:40.669 --> 00:03:42.329 Like in the early days of Ripley. 00:03:43.089 --> 00:03:44.219 Hey folks, just Mark here. 00:03:44.219 --> 00:03:45.519 I stopped the tape with Matt. 00:03:46.250 --> 00:03:50.090 Yeah, you see this a lot with different demand gen channels. 00:03:50.110 --> 00:03:52.840 Let's take this in a very abstract way. 00:03:53.230 --> 00:03:55.399 A new marketing method gets invented. 00:03:56.199 --> 00:03:57.350 People are figuring it out. 00:03:57.950 --> 00:03:59.120 Word gets around. 00:03:59.649 --> 00:04:03.100 It has this beautiful moment where it's just performing. 00:04:03.790 --> 00:04:06.300 And then everybody does it and it gets saturated. 00:04:06.869 --> 00:04:09.500 Whether we're talking about cold calling when the phones were 00:04:09.500 --> 00:04:14.640 invented, direct mail whenever like the catalogs came out decades ago. 00:04:15.095 --> 00:04:21.005 Email marketing, when that came out, content marketing, paid ads, whatever. 00:04:21.315 --> 00:04:22.935 They've all had that cycle. 00:04:23.414 --> 00:04:27.664 And that's something that Matt's pointing out here is, very similar 00:04:27.664 --> 00:04:32.015 product, very similar value proposition, very similar buyer. 00:04:32.634 --> 00:04:34.004 And yet, it's a different time. 00:04:34.415 --> 00:04:39.175 Generally speaking, the demand gen tactics that they used at Zenefits. 00:04:39.599 --> 00:04:43.580 Couldn't be replicated at Rippling and they had to evolve that. 00:04:44.359 --> 00:04:45.039 Let's hear from Matt 00:04:45.039 --> 00:04:45.539 how they did it. 00:04:46.950 --> 00:04:51.820 And I would say for the first 12 months, you know, so 2017 through like the end 00:04:51.820 --> 00:04:57.610 of 2018, we were constantly Iterating on how do we get email marketing to work? 00:04:57.650 --> 00:05:01.329 I mean, we went through so many iterations of how do you get it to work? 00:05:01.340 --> 00:05:04.009 Like one of the ways that you get email marketing to work that you 00:05:04.269 --> 00:05:05.729 wouldn't, wasn't natural to me. 00:05:05.729 --> 00:05:08.729 I had never done this before was buying high quality leads. 00:05:09.129 --> 00:05:11.229 And so we ended up buying leads and building the database. 00:05:11.229 --> 00:05:13.129 And if you buy crappy leads, then you're going to get a 00:05:13.130 --> 00:05:14.650 bunch of poor deliverability. 00:05:14.650 --> 00:05:17.039 And then like all of that stuff around email can actually 00:05:17.039 --> 00:05:18.520 really impact you long term. 00:05:18.880 --> 00:05:22.440 And so we were just banging away at the problem for months. 00:05:22.440 --> 00:05:22.489 Yes. 00:05:22.909 --> 00:05:25.830 We approached it from an engineering problem and like a systems problem 00:05:25.830 --> 00:05:29.400 and just a lot of creativity until I feel like we finally found something 00:05:29.679 --> 00:05:32.640 that worked and is honestly scaled all the way until really today. 00:05:32.700 --> 00:05:36.179 I don't get the connection between marketing and engineering. 00:05:36.179 --> 00:05:36.950 Like, can you unpack 00:05:36.950 --> 00:05:37.200 that? 00:05:37.819 --> 00:05:41.369 Really it rippling all the way through to our product, the way we 00:05:41.400 --> 00:05:44.450 think about our product, the way that we think about marketing, you 00:05:44.450 --> 00:05:49.960 know, the SDR function, you know, we look at everything that humans do. 00:05:49.960 --> 00:05:50.024 That's really cool. 00:05:50.584 --> 00:05:53.865 And we think to ourselves, like, how could we automate this, right? 00:05:53.865 --> 00:05:55.615 What is a scalable way that we could automate this? 00:05:55.635 --> 00:05:57.794 Because obviously anything humans do is limited. 00:05:57.814 --> 00:06:00.105 One of the things that we do really well is we look for people who 00:06:00.105 --> 00:06:01.894 are like changing jobs, right? 00:06:01.924 --> 00:06:04.265 You know, if you're changing job from one company to a new company, 00:06:04.265 --> 00:06:07.464 you're highly likely to be more open to looking at a new system. 00:06:07.934 --> 00:06:09.954 And so there are ways to do that manually. 00:06:09.985 --> 00:06:12.405 And then there are ways to do that that are engineering focused. 00:06:12.405 --> 00:06:15.044 Like, how do you go get the job changes from LinkedIn and all these 00:06:15.044 --> 00:06:16.355 different sources that do that? 00:06:16.569 --> 00:06:17.460 No, it's a cool design. 00:06:17.460 --> 00:06:18.990 It's um, I think it's 00:06:19.000 --> 00:06:21.199 better than most on the B2B. 00:06:21.729 --> 00:06:25.270 There's never a design that doesn't have its disadvantages. 00:06:25.350 --> 00:06:29.470 And I would guess that in that case, it's like, okay, the growth engineering 00:06:29.470 --> 00:06:34.289 team is a major contributor to demand gen, which ultimately is probably 00:06:34.289 --> 00:06:38.520 owned by the CMO, but the growth engineering team reports to the CTO. 00:06:39.560 --> 00:06:43.930 So how does that like work where it's like the CMO might have a tough month or 00:06:43.930 --> 00:06:48.145 a tough quarter and they're like, well, The growth engineering team didn't do 00:06:48.145 --> 00:06:50.114 their job and they don't report to me. 00:06:50.114 --> 00:06:51.294 So it's not my problem. 00:06:51.955 --> 00:06:52.374 Yeah. 00:06:52.405 --> 00:06:52.764 Yeah. 00:06:52.775 --> 00:06:53.874 It's a good question. 00:06:53.905 --> 00:06:56.955 And you're right that the, you know, I'll even throw you one more 00:06:56.965 --> 00:07:01.175 layer into that, which is, you know, the SDR function rolls up to me. 00:07:01.525 --> 00:07:05.825 And so the SDR function actually owns like the output of what we, what 00:07:05.825 --> 00:07:09.525 we call, you know, S1s and S2s, so scheduled demos and accepted demos. 00:07:10.085 --> 00:07:13.465 Uh, and so the SDR function owns the number from a quota perspective. 00:07:13.474 --> 00:07:16.614 The marketing org definitely owns the S2 number from like, uh, this 00:07:16.625 --> 00:07:18.104 is the metric that we deliver on. 00:07:18.254 --> 00:07:21.154 So we share that metric, uh, it's separate reporting structure. 00:07:21.155 --> 00:07:22.675 Then you have growth engineering. 00:07:23.155 --> 00:07:26.645 Uh, who obviously is, you know, if growth engineering doesn't do something 00:07:26.645 --> 00:07:29.885 or falls off for a week or a month or whatever, like for sure the S2 00:07:29.885 --> 00:07:31.084 plan is not going to get hit, right? 00:07:31.095 --> 00:07:32.965 Like there's a critical component of the team. 00:07:33.075 --> 00:07:35.994 And Matt, you got to back up for a second and define S2. 00:07:36.035 --> 00:07:39.964 I know it's, it's not a Rippling only, but it's like not as well known. 00:07:39.964 --> 00:07:40.934 So just back us up 00:07:40.934 --> 00:07:41.124 there. 00:07:41.354 --> 00:07:41.863 So for us. 00:07:41.863 --> 00:07:42.001 Okay. 00:07:42.001 --> 00:07:42.139 Thanks. 00:07:42.610 --> 00:07:44.950 The way I think about it is you've got a lead, right? 00:07:45.020 --> 00:07:49.430 You know, marketing's job is to serve leads at the end of the day, an MQL, 00:07:49.860 --> 00:07:53.010 marketing qualified lead to an SDR, right? 00:07:53.470 --> 00:07:58.060 And then the SDR needs to turn the marketing qualified lead for us. 00:07:58.080 --> 00:08:01.800 But we would define into an S1, which is a stage one opportunity, 00:08:01.800 --> 00:08:03.020 which is a scheduled demo. 00:08:03.080 --> 00:08:08.380 And then from there, a stage two, an S2 is an accepted opportunity. 00:08:08.625 --> 00:08:10.065 From the sales rep, right? 00:08:10.075 --> 00:08:15.375 So marketing gives the SDRs leads SDRs, then turn those leads into schedule 00:08:15.375 --> 00:08:17.015 demos at some conversion metric. 00:08:17.015 --> 00:08:18.164 That's very important to us. 00:08:18.724 --> 00:08:22.534 And then from there, the like S1 to S2 is the acceptance rate of the AE, right? 00:08:22.534 --> 00:08:27.955 And AE might do, you know, uh, whatever 30 demos a month that are on their calendar 00:08:27.955 --> 00:08:31.734 scheduled, and they might only accept like 75, 80 percent of them that they actually 00:08:31.734 --> 00:08:33.315 pull into their pipeline downstream. 00:08:33.645 --> 00:08:36.054 And at the end of the day, like S2s are what matters, right? 00:08:36.064 --> 00:08:37.054 Like leads matter. 00:08:37.585 --> 00:08:41.895 S ones matter, but really like accepted into the pipeline sales qualified 00:08:41.895 --> 00:08:45.825 opportunity, like that's the metric that everybody, you know, measures 00:08:45.825 --> 00:08:49.704 against in terms of pipeline building and we know how much revenue, how much 00:08:49.724 --> 00:08:52.055 pipeline we need to give to an account executive and all that kind of stuff. 00:08:52.175 --> 00:08:54.034 Yeah, this is great stuff, Matt. 00:08:54.034 --> 00:08:58.685 And as I've been speaking to you, you're way ahead of the game, I 00:08:58.695 --> 00:09:01.745 think relative to your peers on the ret, what I'd call the revenue map. 00:09:02.349 --> 00:09:04.280 Especially on the demand gen side. 00:09:04.810 --> 00:09:07.760 So let's take some time to unpack what you're talking about here. 00:09:07.760 --> 00:09:11.370 And let's start when, when it's the right time to start. 00:09:11.679 --> 00:09:14.180 Like, cause I can't imagine you walked in, there's five engineers. 00:09:14.420 --> 00:09:16.850 You're the first kind of like business hire, first sales hire. 00:09:17.285 --> 00:09:21.575 You weren't like maniacally measuring MQL to S one to S two. 00:09:21.575 --> 00:09:23.675 Like when, when do you move to that? 00:09:23.675 --> 00:09:23.735 Yeah. 00:09:24.225 --> 00:09:28.905 I think one of the most impressive charts or, or graphs if you will at rippling 00:09:29.355 --> 00:09:32.445 is, you know, there's this graph that, imagine there's two lines on a bar graph 00:09:32.445 --> 00:09:37.025 that are essentially like, how many S twos per rep do we do per month, right? 00:09:37.025 --> 00:09:39.905 And so if you're an SMB or mid-market or enterprise, like that's a, but 00:09:39.905 --> 00:09:42.485 it's essentially like how many, you know, sales accepted demos. 00:09:43.100 --> 00:09:43.900 Do you do for a month? 00:09:43.900 --> 00:09:47.500 And for the longest time, really six years running, like the way that we capacity 00:09:47.500 --> 00:09:53.349 build every year, some very core centric part of the capacity model is like, how 00:09:53.349 --> 00:09:54.880 many demos do we need to give a rep? 00:09:54.880 --> 00:09:57.709 And so let's just take a mid market rep, for example, right. 00:09:57.709 --> 00:10:00.410 Who has like, obviously a certain OTE, a certain quota. 00:10:00.920 --> 00:10:05.010 And over time, you know, when we were a smaller company, mid market reps 00:10:05.010 --> 00:10:11.270 would be doing literally like 35 S2s a month, like 35 accepted demos a month. 00:10:12.030 --> 00:10:14.460 Uh, which is insane to think about like where we've come. 00:10:14.460 --> 00:10:17.900 And so each of the last years over the past five years, that number 00:10:17.900 --> 00:10:19.630 has gone down, down, down, down. 00:10:19.640 --> 00:10:23.659 And the amount of revenue that a mid market rep closes has gone up, up, up, up. 00:10:23.660 --> 00:10:23.990 Right. 00:10:24.180 --> 00:10:26.730 And that obviously happens from like increasing your win rate 00:10:26.740 --> 00:10:28.200 and increasing like your ACV. 00:10:28.230 --> 00:10:29.854 Like those are really the two metrics that. 00:10:30.194 --> 00:10:32.995 If you increase those, then, you know, you don't want to raise 00:10:33.005 --> 00:10:34.255 someone's quota to infinity. 00:10:34.255 --> 00:10:37.444 Like at some point, quotas are high enough for the, for the 00:10:37.444 --> 00:10:38.775 unit economics to make sense. 00:10:38.785 --> 00:10:40.214 And what you actually want is like more reps. 00:10:40.214 --> 00:10:44.904 Like if you're doing 35 demos a month per rep, you're leaving 00:10:44.905 --> 00:10:45.925 meat on the bone, right? 00:10:45.925 --> 00:10:48.284 Like you can't be efficient in that world. 00:10:48.685 --> 00:10:51.025 And so, but when, when you're early and you're a startup and you don't 00:10:51.025 --> 00:10:53.754 have any, you know, you, you've got funding, but like, it's different. 00:10:54.089 --> 00:10:58.360 You are trying to give as many demos as you can to a rep and have them 00:10:58.360 --> 00:11:00.060 close as much as they possibly can. 00:11:00.590 --> 00:11:04.390 And even if, you know, like for example, if you have 35 00:11:04.390 --> 00:11:06.250 demos going to one rep, right. 00:11:06.550 --> 00:11:09.019 And let's say that they close, you know, 15 deals. 00:11:09.410 --> 00:11:13.610 If you were to create a second rep, so you take those same 35 00:11:13.610 --> 00:11:14.890 demos, you create a second rep. 00:11:14.890 --> 00:11:17.640 So now you're doing, you know, 17 and 18 demos each. 00:11:18.260 --> 00:11:21.540 Like you're going to close more than 15 demos as a total, right? 00:11:21.550 --> 00:11:23.080 Like the conversion is going to go up. 00:11:23.110 --> 00:11:26.589 Like they're obviously working, you know, they're able to like, uh, work, you know, 00:11:26.589 --> 00:11:29.229 follow through on a lead, work it harder, follow up more, all that kind of stuff. 00:11:29.710 --> 00:11:31.950 But it might not make sense for your business because like, you might not 00:11:31.960 --> 00:11:33.400 be able to afford two people, right? 00:11:33.400 --> 00:11:35.250 It depends on like, what's the revenue that they're producing. 00:11:36.680 --> 00:11:36.860 Hey 00:11:36.860 --> 00:11:37.870 folks, just Mark here. 00:11:37.900 --> 00:11:38.350 All right. 00:11:38.470 --> 00:11:41.670 This is step number two that Matt's outlining. 00:11:41.709 --> 00:11:45.680 And that is to get sales capacity to equal demand gen capacity. 00:11:45.845 --> 00:11:47.185 It's two sides of the formula. 00:11:47.295 --> 00:11:48.525 I have a salesperson. 00:11:48.675 --> 00:11:52.605 This is what I think they can produce with their 40 hours of work each week. 00:11:52.755 --> 00:11:56.145 But there's a second half of the formula, which is there's demand 00:11:56.155 --> 00:11:57.124 that I'm going to feed them. 00:11:57.284 --> 00:11:58.695 And he's walking us through that. 00:11:58.695 --> 00:12:01.445 Like right now, that demand represents 35 opportunities a month. 00:12:02.175 --> 00:12:04.865 And that rep is turning that into 10 deals. 00:12:05.085 --> 00:12:09.355 Obviously, if we add a second rep, those two reps will probably get 00:12:09.365 --> 00:12:11.615 more than 10 deals from those 35. 00:12:12.114 --> 00:12:15.864 Opportunities, but is it going to be large enough to still make the math work? 00:12:16.265 --> 00:12:21.225 The demand gen side has to equal the sales capacity side, and we can't 00:12:21.275 --> 00:12:26.675 increase the sales capacity side unless there's sufficient demand gen capacity. 00:12:27.374 --> 00:12:29.595 All right, let's unpack that even more and get back to Matt. 00:12:30.844 --> 00:12:35.574 And so when you're early, you tend to stuff like too many 00:12:35.665 --> 00:12:37.905 opportunities on a single person. 00:12:38.290 --> 00:12:42.940 At some point you realize like more reps make sense here. 00:12:43.190 --> 00:12:46.130 There are certainly other companies who are like, you know, add a bunch of 00:12:46.130 --> 00:12:50.030 reps in a spreadsheet, put a quota on top of them, there's my revenue plan. 00:12:50.475 --> 00:12:53.405 And yet they have no idea how they're going to get the demos or how 00:12:53.405 --> 00:12:54.335 they're going to increase the demos. 00:12:54.335 --> 00:12:56.635 They think that hiring reps equals getting more demos. 00:12:56.765 --> 00:12:57.665 You know, that's not true. 00:12:57.665 --> 00:12:58.835 And in my experience, 00:12:59.075 --> 00:12:59.675 Oh, it's brilliant. 00:12:59.675 --> 00:13:01.954 I mean, like kudos to you for being a thought leader there. 00:13:01.955 --> 00:13:03.575 So there's so much to unpack there. 00:13:03.825 --> 00:13:05.365 How do I know even what's good? 00:13:05.425 --> 00:13:05.755 Yeah. 00:13:05.854 --> 00:13:07.015 How do I know what my. 00:13:07.255 --> 00:13:11.694 MQL to S1 ratio should be, and how many should be given and what's acceptable. 00:13:11.935 --> 00:13:12.314 Yeah. 00:13:13.045 --> 00:13:17.915 So, you know, this is actually really, really interesting because rippling in 00:13:17.915 --> 00:13:23.895 the past six to eight months has spun up go to market teams in new countries. 00:13:23.905 --> 00:13:26.375 So we launched a go to market team in Canada. 00:13:26.930 --> 00:13:28.750 Uh, you know, selling the companies headquartered in 00:13:28.750 --> 00:13:33.150 Canada, the UK, Australia, uh, Germany, and France are next. 00:13:33.500 --> 00:13:38.640 And so when we first started, even in a new market with five years of like 00:13:38.640 --> 00:13:42.980 all of this data, we're, we're kind of like, what, how many leads do we need? 00:13:42.990 --> 00:13:44.370 Like how many demos do they need? 00:13:44.370 --> 00:13:44.749 What are it? 00:13:44.749 --> 00:13:47.160 Cause you don't even know, you don't know the ACV, you don't know 00:13:47.160 --> 00:13:48.300 what the win rates are going to be. 00:13:48.310 --> 00:13:50.930 And so it's literally felt like I was going all the way 00:13:50.930 --> 00:13:52.160 back to the roots of Ripley. 00:13:52.484 --> 00:13:55.214 And I'll tell you like the number one most important place you have to 00:13:55.214 --> 00:14:01.375 start is, uh, like what does it cost to hire a rep and like what, therefore 00:14:01.375 --> 00:14:02.824 what does their quota need to be? 00:14:03.265 --> 00:14:07.265 And like my rule of thumb is you want to get a five X 00:14:07.265 --> 00:14:10.015 quota on someone's OTE, right? 00:14:10.015 --> 00:14:15.125 So if somebody is making, you know, 100, 000 a year, you want a 500, 000 quota. 00:14:15.134 --> 00:14:17.815 If they're making 200, 000 a year as an OTE, you want a million dollar quota. 00:14:17.825 --> 00:14:19.125 Now that's hard. 00:14:19.165 --> 00:14:23.575 And there's a lot of companies who don't sniff a five X return on OTE 00:14:23.585 --> 00:14:24.865 from a quota wallet perspective. 00:14:25.395 --> 00:14:28.504 And so I think in, in newer markets and certainly Rippling 00:14:28.504 --> 00:14:29.855 did not start at five X, right? 00:14:29.855 --> 00:14:31.805 When we were first on, it's probably three X, right? 00:14:31.805 --> 00:14:34.454 And you work your way from three X, three and a half, four, four and a half, five. 00:14:34.894 --> 00:14:38.704 And so in these new markets in particular, I think in a world today 00:14:38.704 --> 00:14:42.315 where efficiency is so much more important, uh, we aim for four X. 00:14:42.335 --> 00:14:45.785 And so when we launched in Canada and the UK and Australia, We're like, look, 00:14:45.795 --> 00:14:49.205 we know what we need to pay to get a high quality rep in these markets. 00:14:49.225 --> 00:14:50.525 Like that is what it is, right? 00:14:50.525 --> 00:14:52.985 That's not a, if you got, I'm for us, we're like pay top 00:14:52.985 --> 00:14:54.225 dollar, hire the best people. 00:14:54.704 --> 00:14:55.765 And so therefore it's set. 00:14:55.765 --> 00:14:59.215 If you want to say, look, 4X is the benchmark we need, then you at least 00:14:59.215 --> 00:15:02.615 land on a quota where, you know, like, Hey, the business works at this number. 00:15:02.625 --> 00:15:05.555 It'd be nice if it was 5X, but 4X, like we're good. 00:15:06.405 --> 00:15:07.065 Hey folks, just 00:15:07.065 --> 00:15:07.645 Mark here. 00:15:07.935 --> 00:15:11.485 Yeah, this is a good guidance from that. 00:15:11.625 --> 00:15:13.765 I might push it one more level. 00:15:13.785 --> 00:15:14.035 Okay. 00:15:14.035 --> 00:15:14.845 What he's saying is. 00:15:15.120 --> 00:15:17.900 When he said cost to acquire a rep, he's actually talking about 00:15:17.900 --> 00:15:18.870 how much you have to pay the rep. 00:15:19.550 --> 00:15:21.910 Okay, so you have to pay them like 150, 000 a year. 00:15:22.660 --> 00:15:25.000 And he wants their quota to be 5x. 00:15:25.419 --> 00:15:29.070 Okay, so if I pay my rep 150, 000 a year, he wants it to 00:15:29.070 --> 00:15:31.150 be 750, 000 a year in quota. 00:15:31.645 --> 00:15:33.885 And that's going to work out to be a good business. 00:15:35.185 --> 00:15:36.055 I think that's really good. 00:15:36.785 --> 00:15:40.695 I want, I want to push you all to think about it at a deeper level. 00:15:40.705 --> 00:15:46.804 Cause for example, what if you have one rep that's cold calling themselves 00:15:46.805 --> 00:15:52.345 and creating their own demand versus another rep that has this huge marketing 00:15:52.345 --> 00:15:56.565 team feeding them and a huge SDR team feeding them with appointments. 00:15:57.035 --> 00:15:59.645 Obviously the unit economics would be much better for the rep that's 00:15:59.655 --> 00:16:01.025 fulfilling their own demand. 00:16:01.435 --> 00:16:03.135 So it's a little more complicated than that. 00:16:03.135 --> 00:16:04.135 And what you have to do is. 00:16:04.584 --> 00:16:07.605 Take it a deeper level than what Matt's talking about and 00:16:07.605 --> 00:16:09.475 just add up all that cost. 00:16:09.715 --> 00:16:11.745 What is the quarterly spend on marketing? 00:16:11.835 --> 00:16:14.395 What is the quarterly spend on SDRs? 00:16:14.605 --> 00:16:18.145 What is the quarterly spend on our account executives? 00:16:18.594 --> 00:16:21.225 And that's the cost for a sale. 00:16:22.435 --> 00:16:26.045 And then you can do the same math to figure out what is the revenue 00:16:26.055 --> 00:16:27.995 and lifetime value from the sale. 00:16:28.795 --> 00:16:33.420 And now we can attach that back to Payback periods of 12 months or 00:16:33.420 --> 00:16:37.319 less, or LTV to CAC ratios of 3 to 1. 00:16:37.960 --> 00:16:39.439 You can Google those concepts. 00:16:39.500 --> 00:16:43.800 These are common unit economics, but the bottom line is, is you need to 00:16:43.800 --> 00:16:48.479 have some sort of projection on your sales and marketing spend and some 00:16:48.480 --> 00:16:52.860 sort of projection on your sales and marketing output and make sure that the 00:16:52.860 --> 00:16:57.740 assumptions going into that math make sense and spit out strong unit economics. 00:16:57.820 --> 00:16:59.090 That's kind of what Matt's saying. 00:16:59.639 --> 00:16:59.889 Okay. 00:16:59.889 --> 00:17:00.719 Let's get back to him. 00:17:02.220 --> 00:17:04.399 And then you work back from there, the funnel metrics. 00:17:04.399 --> 00:17:04.730 Okay. 00:17:04.730 --> 00:17:08.899 So if it's for, if this is the quota that I need, you know, um, you could 00:17:08.899 --> 00:17:11.849 start with making up ACVs and win rates, but to be honest, you don't 00:17:11.849 --> 00:17:12.569 know what those are going to be. 00:17:12.569 --> 00:17:13.749 You have no idea what those are going to be. 00:17:14.189 --> 00:17:16.760 And so I think another metric you can start with is like, what is 00:17:16.779 --> 00:17:19.879 the right amount of opportunity to give somebody or they have enough 00:17:19.879 --> 00:17:21.050 time to work the opportunity. 00:17:22.055 --> 00:17:24.855 Like at the end of the day, a funnel is very simply like how many 00:17:24.855 --> 00:17:26.335 opportunities, what's the win rate? 00:17:26.365 --> 00:17:27.255 What's the ACV? 00:17:27.265 --> 00:17:28.355 There's a quota, right? 00:17:28.685 --> 00:17:31.645 And so you take the bottom of the funnel, which is quota, and you 00:17:31.645 --> 00:17:35.504 take the top of the funnel, which is like the DS Tuesday can work. 00:17:35.955 --> 00:17:39.104 And then you kind of massage win rates and ACV to figure out like, how 00:17:39.105 --> 00:17:40.334 do you create a funnel that works? 00:17:40.334 --> 00:17:41.755 That's repeatable and so forth. 00:17:42.185 --> 00:17:42.985 I love how simple 00:17:42.985 --> 00:17:43.735 you made that. 00:17:44.490 --> 00:17:47.350 I want to actually push you one step further to actual numbers. 00:17:47.379 --> 00:17:50.110 Cause I want to like, pretend like you're advising someone that's starting 00:17:50.120 --> 00:17:53.050 a business like Ripple, that you would have a funnel shape like that. 00:17:53.050 --> 00:17:54.379 You don't have to give us the numbers, but just like. 00:17:54.789 --> 00:17:57.860 Hey Matt, you know, like I'm, I'm, I'm going to try to do what you 00:17:57.860 --> 00:17:59.259 did like in the last six years. 00:17:59.269 --> 00:18:00.840 Like, what should I do? 00:18:00.850 --> 00:18:01.909 Like, what, what are the numbers? 00:18:02.960 --> 00:18:03.320 Yeah. 00:18:03.429 --> 00:18:04.610 So I'll take an example. 00:18:04.610 --> 00:18:09.479 Let's say that you're, you're hiring like an SMB rep at, you know, 150, 00:18:09.479 --> 00:18:14.710 000 OT, you know, your quota really needs to be at least 600, 000 a year. 00:18:15.170 --> 00:18:17.190 Like for you to get 4x on the quota, right? 00:18:17.190 --> 00:18:22.410 So if your quota is 600, 000 a year, that's 50, 000 a month, right? 00:18:22.610 --> 00:18:26.250 Monthly quotas for as long as you possibly can forever if you can. 00:18:26.950 --> 00:18:27.670 Yes. 00:18:28.559 --> 00:18:29.259 Yes. 00:18:29.770 --> 00:18:32.580 Stay on monthly quotas as long as you can. 00:18:32.580 --> 00:18:32.949 Okay. 00:18:33.299 --> 00:18:37.980 Now that doesn't really Work if you're selling a million dollar deals, but 00:18:37.980 --> 00:18:42.460 if you're selling deals in the tens of thousands, yes, stay on monthly quotas. 00:18:42.460 --> 00:18:50.119 And here's why every single company closes most of their business in the last 10 00:18:50.119 --> 00:18:53.250 or 20 percent of their fiscal period. 00:18:54.119 --> 00:18:58.670 So if you make your fiscal period a quarter, you're going to have a slow 00:18:58.680 --> 00:19:02.480 first eight to 10 weeks of the quarter and a huge two weeks leading up to 00:19:02.480 --> 00:19:05.820 the end of the quarter, and you're going to do that four times a year. 00:19:06.875 --> 00:19:11.395 If you make your quotas monthly, you're going to have a slow two and a half to 00:19:11.395 --> 00:19:16.965 three weeks of every month and have a remarkable last week of the month, and 00:19:16.965 --> 00:19:18.155 you're going to do that 12 times a year. 00:19:18.805 --> 00:19:20.884 You want to do that 12 times a year. 00:19:21.385 --> 00:19:25.244 You want to lower the volatility by taking on more periods, so stick 00:19:25.265 --> 00:19:29.525 with monthly quotas as much as you can, even if your finance team and 00:19:29.525 --> 00:19:33.690 your board and your executive team Is marching to quarters, try to get 00:19:33.690 --> 00:19:35.370 the sales team to march to months. 00:19:35.760 --> 00:19:36.720 All right, let's get back to Matt. 00:19:37.910 --> 00:19:39.660 So 50, 000 is a monthly quota. 00:19:39.660 --> 00:19:43.560 If you get a 50, 000, then, you know, like all day long, that's great. 00:19:43.560 --> 00:19:43.880 Right. 00:19:44.570 --> 00:19:48.280 And so from there, let's say, okay, I have a 50, 000 monthly 00:19:48.280 --> 00:19:49.769 quota that I need to get to. 00:19:50.360 --> 00:19:53.140 Uh, it totally depends on your market, obviously, like ACVs, whatever. 00:19:53.140 --> 00:19:55.190 But let's just say, for example, um, that you're going to give 00:19:55.190 --> 00:19:57.780 a rep 30 S2s a month, right? 00:19:57.780 --> 00:19:59.580 So I give my rep 30 S2s a month. 00:20:01.270 --> 00:20:02.160 Let's take a step back. 00:20:02.160 --> 00:20:05.600 Let's say that our win rate or our ACV is 5, 000, right? 00:20:05.600 --> 00:20:07.110 So you have a 50, 000 a month quota. 00:20:07.140 --> 00:20:09.450 You have a 5, 000 average deal, right? 00:20:09.790 --> 00:20:11.220 Super transactional SMB. 00:20:11.570 --> 00:20:18.839 So if you're going to do 30 demos a month, you need to win like 33 percent of them 00:20:19.499 --> 00:20:22.449 to get you 10 wins for an average deal. 00:20:22.449 --> 00:20:24.710 Size of five K is going to get you to that 50 K number. 00:20:24.840 --> 00:20:26.149 So like, there's your funnel, right? 00:20:26.189 --> 00:20:27.060 150 K rep. 00:20:27.580 --> 00:20:29.200 Equals a 50 K quota per month. 00:20:29.780 --> 00:20:33.560 I need to get them 30 demos at a 30 percent win rate in a five K ACV. 00:20:33.580 --> 00:20:34.800 And my funnel math works. 00:20:35.409 --> 00:20:39.000 Now you might look at that and say, how am I going to give them 30 demos a month? 00:20:39.000 --> 00:20:39.330 Right? 00:20:39.330 --> 00:20:41.279 Like that's crazy amount of demos that I can give them. 00:20:41.279 --> 00:20:45.210 And that goes back to, um, if you can't get them 30 demos a month, 00:20:45.559 --> 00:20:49.250 then you better find a way to get win rates higher or ACV higher. 00:20:49.330 --> 00:20:50.689 And what a lot of people will do is they're like, I'm 00:20:50.689 --> 00:20:51.824 going to hire an SMB rep. 00:20:52.325 --> 00:20:54.195 I'm going to give them 10 demos a month, and then they're going 00:20:54.195 --> 00:20:56.535 to go give me 20 demos, right? 00:20:56.695 --> 00:20:59.535 On top of needing to like, win 30 percent of the deals and have the 00:20:59.535 --> 00:21:00.665 ACB and all that kind of stuff. 00:21:01.245 --> 00:21:04.784 And so you can really, I mean, every new segment we launch at Rippling, 00:21:04.784 --> 00:21:05.855 we honestly start the same way. 00:21:05.855 --> 00:21:07.454 We have probably 15 different. 00:21:07.780 --> 00:21:11.520 You know, go to market teams from direct SMB, you know, channel 00:21:11.520 --> 00:21:12.730 account and all this different stuff. 00:21:12.730 --> 00:21:15.520 And they all start from the same equation of what's the OT we have to 00:21:15.520 --> 00:21:17.410 pay, what's the quota we need to get to. 00:21:17.670 --> 00:21:18.169 I'm sorry. 00:21:18.170 --> 00:21:20.670 We're out in audio podcast world right now. 00:21:20.689 --> 00:21:21.830 Cause we need a blackboard. 00:21:22.579 --> 00:21:26.289 If you're in this spot that Rippling was in six years ago, rewind. 00:21:26.655 --> 00:21:29.635 About two minutes and start writing this stuff down. 00:21:29.665 --> 00:21:34.985 And that's a wonderful starting point for you to figure out how 00:21:34.985 --> 00:21:36.725 your go to market machines work. 00:21:36.795 --> 00:21:37.104 Okay. 00:21:37.104 --> 00:21:39.295 So thank you, Matt, for doing that. 00:21:39.365 --> 00:21:42.694 And now take us a year or two later. 00:21:42.875 --> 00:21:43.054 All right. 00:21:43.054 --> 00:21:44.804 So you got this dialed in right now. 00:21:45.125 --> 00:21:46.754 Now you're running this beautiful machine. 00:21:47.334 --> 00:21:50.854 You have the sales capacity math on one side, which is your quotas 00:21:50.854 --> 00:21:52.885 and your cost of reps, et cetera. 00:21:53.205 --> 00:21:56.385 You have the demand gen math on the other side with your S1s, your 00:21:56.385 --> 00:21:58.585 S2s, your conversions, your ACBs. 00:21:59.235 --> 00:22:01.334 Now you're like, I don't know, you're two, three years later. 00:22:01.334 --> 00:22:03.245 You got dozens of salespeople. 00:22:03.925 --> 00:22:05.124 How does this play out? 00:22:05.425 --> 00:22:09.684 Like, how do you decide like if you should go lower on the opportunities? 00:22:09.794 --> 00:22:10.125 Yeah. 00:22:10.135 --> 00:22:12.715 How fast do you, how do you, how fast do you build the team? 00:22:13.095 --> 00:22:14.574 How fast do you build the demand gen funnel? 00:22:14.574 --> 00:22:15.485 How does it all play out? 00:22:15.774 --> 00:22:16.675 Yeah, it's a good question. 00:22:16.675 --> 00:22:18.544 So, um, let's first. 00:22:19.345 --> 00:22:23.475 Actually kind of go further up the funnel to, to kind of answer that question. 00:22:23.475 --> 00:22:27.675 So, you know, you, you started with this quota you need to get to and, 00:22:27.675 --> 00:22:31.395 and ACV that you have and win rates to get you to like 30 S2s, right? 00:22:31.395 --> 00:22:34.395 30 sales accepted opportunities that I'm working. 00:22:35.345 --> 00:22:35.654 So there you 00:22:35.654 --> 00:22:35.954 go. 00:22:37.044 --> 00:22:37.415 That's it. 00:22:38.380 --> 00:22:38.950 He's done it. 00:22:39.410 --> 00:22:40.760 That's the demand gen formula. 00:22:41.180 --> 00:22:48.239 And yet so many boards, executive teams, ops teams, CROs, the extent 00:22:48.239 --> 00:22:52.120 of their planning is I need to do 5 million in revenue this year. 00:22:52.229 --> 00:22:54.460 My reps do 500, 000 each. 00:22:54.640 --> 00:22:55.819 I need 10 reps. 00:22:56.280 --> 00:22:58.160 Now there's the other side. 00:22:58.905 --> 00:23:02.034 That Matt just walked us through beautifully, and 00:23:02.034 --> 00:23:03.514 that is the demand gen math. 00:23:03.885 --> 00:23:05.245 They both have to work. 00:23:05.605 --> 00:23:07.285 It's easier to add the reps. 00:23:07.854 --> 00:23:11.485 It's harder to predictably get the demand gen to work, and you have 00:23:11.494 --> 00:23:14.795 to be confident in that before you add the reps to achieve the growth. 00:23:15.194 --> 00:23:17.065 Thank you, Matt, for walking us through that. 00:23:17.784 --> 00:23:18.834 All right, let's get back to them. 00:23:20.145 --> 00:23:23.015 The reality is, how are you going to get 30 opportunities? 00:23:23.395 --> 00:23:23.794 Right. 00:23:24.305 --> 00:23:29.365 And in the earliest days, the answer is, could be, and was for us for 00:23:29.365 --> 00:23:31.004 a long time, like email marketing. 00:23:31.084 --> 00:23:33.485 I'm going to email people to get 30 opportunities. 00:23:33.985 --> 00:23:37.035 And um, you know, in the earliest days of a company. 00:23:37.420 --> 00:23:41.010 You're not constrained by your TAM, right? 00:23:41.010 --> 00:23:44.110 If you sell into like rippling, you know, companies under a thousand employees, 00:23:44.160 --> 00:23:47.050 uh, you know, under 2000 employees, but let's call it under a thousand. 00:23:47.300 --> 00:23:49.099 And in the early days, let's call it under like a hundred 00:23:49.120 --> 00:23:50.090 cause that's really what it was. 00:23:50.699 --> 00:23:55.389 And so there are just a, you know, in what feels like an infinite amount 00:23:55.410 --> 00:23:57.880 of under a hundred employee companies that you could sell to, right? 00:23:57.880 --> 00:23:59.160 So you're not TAM constrained. 00:23:59.690 --> 00:24:04.169 So in order for you to get 30 demos, like what is the constraint, right? 00:24:04.200 --> 00:24:04.989 And they constrain. 00:24:05.425 --> 00:24:09.745 Is how many, you know, accounts or contacts, let's call it, are 00:24:09.745 --> 00:24:12.544 you going to email and what's your conversion rate, right? 00:24:12.544 --> 00:24:17.685 If you have a 1 percent conversion rate, so you email a hundred people 00:24:18.095 --> 00:24:23.234 and you get one demo, then you need to email 3000 people to get 30 demos. 00:24:23.584 --> 00:24:23.974 Right. 00:24:24.315 --> 00:24:27.075 And like emailing 3000 people is like, that's too many people. 00:24:27.675 --> 00:24:28.044 Right. 00:24:28.074 --> 00:24:29.084 And so on one hand. 00:24:29.500 --> 00:24:30.700 I mean, it's not too many people. 00:24:30.700 --> 00:24:32.240 And what people do is they're like, Oh, great. 00:24:32.240 --> 00:24:33.570 I send 3000 emails. 00:24:33.730 --> 00:24:35.070 I get a 1 percent conversion. 00:24:35.260 --> 00:24:36.140 I get my 30 demos. 00:24:36.140 --> 00:24:39.960 Let me just go drop in 3000 emails into Marketo or Pardot or Outreach, whatever. 00:24:40.210 --> 00:24:41.010 You do that for two weeks. 00:24:41.010 --> 00:24:41.859 And then they're like, wait a minute. 00:24:41.889 --> 00:24:42.730 My domain shut down. 00:24:42.730 --> 00:24:44.590 I can't, can't send emails anymore. 00:24:44.590 --> 00:24:44.910 Right. 00:24:45.390 --> 00:24:50.479 And so in the early days, the constraint is actually, uh, like. 00:24:51.219 --> 00:24:54.310 Like, how many emails can you send and, and you know, you, you, 00:24:54.310 --> 00:24:55.330 and what's your conversion rate? 00:24:55.330 --> 00:24:59.769 So getting that conversion rate from 1% to 2% to 3%, 4%, 5%, whatever. 00:24:59.979 --> 00:25:01.779 That's like the most important thing that you can do. 00:25:01.810 --> 00:25:04.120 That's the way that we measure the SDR r work today. 00:25:04.560 --> 00:25:08.009 Because when you're early and you're sending emails and you, you can 00:25:08.009 --> 00:25:11.460 send a essentially infinity emails and get all the demos that you need 00:25:11.670 --> 00:25:15.179 at some point, you know, rippling is six years into the journey. 00:25:15.620 --> 00:25:19.640 Uh, you know, 13, 000 customers, like at some point you become TAM constrained. 00:25:19.650 --> 00:25:22.180 You can't send infinity emails anymore. 00:25:22.480 --> 00:25:27.080 Like you, you have a TAM, you, you've got a number of demos you need to set 00:25:27.240 --> 00:25:31.459 and you do the math and you're kind of like, Oh, like my, my yield, I need 00:25:31.460 --> 00:25:33.520 to get on an account is much higher. 00:25:33.820 --> 00:25:34.049 Right. 00:25:34.049 --> 00:25:36.210 And so then you think about, okay, well, how do I get. 00:25:36.610 --> 00:25:38.650 A higher yield from my activity. 00:25:38.650 --> 00:25:41.410 And like, it's not just clickety click sending emails through, you 00:25:41.410 --> 00:25:43.320 know, some automated API, right? 00:25:43.320 --> 00:25:46.170 Like you're never going to get a good enough yield to make your business 00:25:46.170 --> 00:25:47.690 work long term by doing that. 00:25:48.390 --> 00:25:52.860 And so we could go, you know, that's really the, how you, how you, uh, 00:25:53.819 --> 00:25:56.630 you know, why and how you create like an outbound function, right? 00:25:56.630 --> 00:26:00.380 Cause the outbound, you know, SDR outbound, or some people might do 00:26:00.380 --> 00:26:04.340 this in sales, I'm a firm believer in separation of duties, uh, I 00:26:04.340 --> 00:26:06.419 believe very strongly that SDRs. 00:26:07.055 --> 00:26:11.605 Uh, doing SDR stuff all day long are just going to like massively outperform 00:26:11.605 --> 00:26:14.845 a sales and account executive who's, who's trying to do that as well. 00:26:15.625 --> 00:26:19.365 Um, and so you build SDR and SDR org so that they can do all of the other 00:26:19.365 --> 00:26:23.294 things, which are of course, email and phone calls and LinkedIn and all 00:26:23.294 --> 00:26:26.284 of the other creativity that you've seen pop up in the past five years. 00:26:26.284 --> 00:26:30.045 I think there's a lot of people doing really cool stuff in the, in the SDR space 00:26:30.045 --> 00:26:32.665 or just general kind of outbound account based marketing, all that good stuff. 00:26:33.235 --> 00:26:36.345 Um, And that you just kind of have to shift your whole entire world to 00:26:36.345 --> 00:26:39.415 like, you are constrained by TAM and you can't just email everybody in the 00:26:39.415 --> 00:26:42.445 world, you know, every other month, like there are real constraints there. 00:26:46.215 --> 00:26:50.104 Talking Too Loud, hosted by Chris Savage, is brought to you by the 00:26:50.104 --> 00:26:54.764 HubSpot Podcast Network, the audio destination for business professionals. 00:26:55.654 --> 00:26:59.535 On this podcast, we're talking about Chris Savage, Wistia's CEO and loudest 00:26:59.535 --> 00:27:04.745 talker, takes you inside the minds of entrepreneurs as they share the hilarious, 00:27:04.865 --> 00:27:09.465 informative, and most challenging aspects of building more human brands. 00:27:10.294 --> 00:27:13.764 You can hear episodes like building a reusable notebook empire with 00:27:13.764 --> 00:27:18.995 entrepreneur Joe LeMay or the AI video revolution with Wistia's own 00:27:19.014 --> 00:27:20.815 head of production, Chris Levine. 00:27:21.405 --> 00:27:24.445 Listen to Talking Too Loud, wherever you get your podcasts. 00:27:28.845 --> 00:27:33.375 That's a key moment is like, you've, you've done something that few startups 00:27:33.395 --> 00:27:37.725 do when you actually crack the nut on one dimension, Jim, you've figured 00:27:37.725 --> 00:27:43.994 out you and you grew at some point to what you're saying here, you saturate 00:27:45.135 --> 00:27:46.364 and you have to add a new one in. 00:27:46.535 --> 00:27:48.025 And in your case, it was email. 00:27:48.135 --> 00:27:50.825 And then you added in SDRs kind of cold calling. 00:27:50.965 --> 00:27:51.314 We did. 00:27:51.335 --> 00:27:53.284 We actually, unfortunately, we like. 00:27:53.570 --> 00:27:56.290 Missed the SDR step for a way too long. 00:27:57.139 --> 00:27:59.590 I mean, yeah, they waited too long, but at least they caught it. 00:28:00.040 --> 00:28:03.630 That's a really important learning from a planning standpoint. 00:28:03.870 --> 00:28:08.140 Once you start getting to rippling stage, you break out of that zero to one moment. 00:28:08.160 --> 00:28:11.689 You're getting 5, million in revenue. 00:28:12.569 --> 00:28:16.130 Planning has to start in August of the prior year. 00:28:16.500 --> 00:28:22.305 And you need to know what your current Demand gen channels can deliver. 00:28:23.105 --> 00:28:24.195 They will saturate. 00:28:24.685 --> 00:28:28.655 You will hit a TAM total addressable market saturation 00:28:29.075 --> 00:28:30.295 on that demand gen channel. 00:28:30.605 --> 00:28:36.045 And if you wake up in Q2 of that year and realizing it, you're cooked on that year. 00:28:36.424 --> 00:28:38.025 You can't just be like, Oh, cool. 00:28:38.115 --> 00:28:39.655 Let's start cold calling now. 00:28:40.175 --> 00:28:42.365 And that's going to be productive next month. 00:28:42.965 --> 00:28:46.275 It's not even going to be productive next quarter or in this year. 00:28:47.055 --> 00:28:50.904 You need to have started testing these alternative demand gen channels. 00:28:51.220 --> 00:28:56.350 In this case, cold calling or selling through partners or selling ABM, 00:28:57.560 --> 00:29:02.159 hopefully like a year before you need them so that when you come into the 00:29:02.159 --> 00:29:07.030 annual planning process and you need to grow by 20 million, and you realize 00:29:07.030 --> 00:29:11.389 that your email marketing program that you built is only going to get you 15. 00:29:12.119 --> 00:29:15.470 You have the math on your little cold calling experiment and can 00:29:15.470 --> 00:29:17.360 expand it out to get the other five. 00:29:18.130 --> 00:29:21.060 You need to test those alternative demand gen channels. 00:29:21.075 --> 00:29:24.094 All right, let's get back to Matt. 00:29:24.125 --> 00:29:30.475 Did you, so tactically speaking, do you still take the, do you take 00:29:30.475 --> 00:29:33.885 the inbound, the email marketing leads that you had forever? 00:29:34.294 --> 00:29:37.124 Do you send them directly to the account executive or do you send them 00:29:37.124 --> 00:29:39.374 to an SDR that only deals with those? 00:29:39.665 --> 00:29:41.935 And then do you have a separate set of SDRs that does that? 00:29:42.245 --> 00:29:46.405 The account based selling and the cold calling, like how is that architected? 00:29:46.465 --> 00:29:47.784 Yeah, really, really good question. 00:29:47.784 --> 00:29:48.835 So, uh, yeah, that's right. 00:29:48.835 --> 00:29:53.574 So there's basically three different, you know, um, kind of SDR semi functions 00:29:53.574 --> 00:29:55.465 or, or, uh, sub segments, if you will. 00:29:55.715 --> 00:29:56.845 The first one is inbound. 00:29:56.855 --> 00:29:58.675 So they're dealing with form, form fills. 00:29:59.045 --> 00:30:02.825 Form fills are of course, like organic review sites, paid advertising, like 00:30:02.825 --> 00:30:06.335 anyone that clicks on a form fill falls into this bucket and there's a 00:30:06.345 --> 00:30:09.005 big team of SDRs that just do inbound. 00:30:09.255 --> 00:30:11.465 But for example, we used to not even call those people. 00:30:11.475 --> 00:30:13.865 We would send them an email, we'd send them like a three or four 00:30:13.865 --> 00:30:15.435 touch automated email sequence. 00:30:15.975 --> 00:30:17.665 And we would book a ton of demos doing that. 00:30:17.665 --> 00:30:19.375 But what do you know, when we started calling them, it was like 00:30:19.375 --> 00:30:20.765 we booked a lot more demos, right? 00:30:21.235 --> 00:30:23.975 Um, and so there's the inbound team that we send a call. 00:30:23.975 --> 00:30:26.225 We call them, I think within five, 10 minutes is the SLA. 00:30:26.235 --> 00:30:27.595 We schedule a lot of demos that way. 00:30:27.595 --> 00:30:27.635 Okay. 00:30:28.085 --> 00:30:32.745 Um, then we have our, uh, what we call kind of mechanized outreach. 00:30:33.175 --> 00:30:37.945 And so that team is essentially, uh, like, you know, higher volume 00:30:37.945 --> 00:30:42.795 kind of email distribution where we also follow up with like engaged 00:30:42.815 --> 00:30:45.085 people, but it's not pure outbound. 00:30:45.085 --> 00:30:46.935 It's like, it's, it's a little bit of a hybrid. 00:30:47.475 --> 00:30:49.935 And then our third bucket is like pure outbound. 00:30:49.935 --> 00:30:52.545 And those are, you know, account based SDRs. 00:30:52.815 --> 00:30:56.495 They're given a set of accounts, they, they kind of run it, run their outbound 00:30:56.495 --> 00:30:57.915 playbook against those accounts. 00:30:58.470 --> 00:31:01.160 And then any lead that comes in through any funnel, like if it's a 00:31:01.160 --> 00:31:02.530 named account, it goes to that team. 00:31:02.530 --> 00:31:05.980 So we've got pure inbound, pure outbound, and then we have a hybrid. 00:31:06.390 --> 00:31:08.950 But really all of our demos today, you know, 100 percent 00:31:08.950 --> 00:31:11.550 of our demos today are 99. 00:31:11.550 --> 00:31:13.570 9 are from the SDR org. 00:31:13.640 --> 00:31:17.810 Our account executives and SMB mid market do not do any prospecting. 00:31:17.890 --> 00:31:19.730 Um, you know, we fill the calendar up. 00:31:20.155 --> 00:31:23.935 Uh, with those folks and their job is purely closing in our upmarket 00:31:23.945 --> 00:31:25.455 team and our kind of enterprise team. 00:31:25.715 --> 00:31:28.575 Uh, there are some folks who are just doing inbound as well. 00:31:28.805 --> 00:31:30.905 And then there's some folks who are now starting to sprinkle in 00:31:30.915 --> 00:31:34.055 outbound and they're partnered with SDRs to kind of go after a named, 00:31:34.385 --> 00:31:35.605 you know, name set of accounts. 00:31:35.645 --> 00:31:38.875 But that, that evolution is shifting pretty dramatically. 00:31:39.210 --> 00:31:42.240 You know, through the next 18 months, as we think about today, Ripley is still 00:31:42.240 --> 00:31:44.000 around Robin based inbound company. 00:31:44.000 --> 00:31:47.560 Like we don't even have territories, you know, no geos, no industries. 00:31:47.600 --> 00:31:50.090 Uh, we round Robin across, you know, 200 plus reps. 00:31:50.090 --> 00:31:51.880 So that's kind of wild. 00:31:51.930 --> 00:31:54.350 Um, we probably should have done that a while ago as well. 00:31:55.060 --> 00:31:56.430 This is complicated. 00:31:56.490 --> 00:31:57.420 I'm feeling for Matt. 00:31:57.430 --> 00:32:00.140 I can sense that he's living through this right now. 00:32:00.640 --> 00:32:02.140 And let me pull a couple of things out of here. 00:32:02.160 --> 00:32:07.740 First off, He's transitioning from round robin to something more territory 00:32:07.740 --> 00:32:13.110 oriented, extraordinarily common as you get into like the mid tens of millions. 00:32:13.680 --> 00:32:16.900 And what's happened there is your brand has grown. 00:32:17.990 --> 00:32:22.950 And the difference between a cold outbound and a warm inbound 00:32:23.370 --> 00:32:25.250 is starting to feel similar. 00:32:25.830 --> 00:32:26.860 They know who you are. 00:32:27.880 --> 00:32:33.510 And so you're better off just putting people into territories and whether 00:32:33.510 --> 00:32:36.630 there's inbound stuff coming in, or there's cool calls that are happening. 00:32:37.395 --> 00:32:41.215 They're going to go and hit their quota and that's really common 00:32:41.215 --> 00:32:44.725 in the mid market and it's even more common in the enterprise. 00:32:45.495 --> 00:32:49.825 And so I feel like Matt is hitting that transition period right now where he's 00:32:49.825 --> 00:32:57.805 moving from what's needed, what was needed as a multi channel scaling organization 00:32:58.445 --> 00:33:02.695 to a, what feels more like a single organization that's in territories. 00:33:03.165 --> 00:33:06.975 And those salespeople are making their territory number through 00:33:06.975 --> 00:33:08.895 a variety of demand gen methods. 00:33:09.530 --> 00:33:13.555 The other thing I kind of predicted Is there probably going to have to get their 00:33:13.555 --> 00:33:19.085 account executives to do some demand gen themselves to have some accountability 00:33:19.315 --> 00:33:24.025 that's not fully reliant on SDRs or email, and it's not running things 00:33:24.025 --> 00:33:26.335 through outreach or like 50 calls a day. 00:33:26.345 --> 00:33:27.415 It's more strategic. 00:33:27.865 --> 00:33:30.585 It might be calling on the closed lost opportunities. 00:33:31.615 --> 00:33:35.814 It might be doing some high personalization outreach, but I feel 00:33:36.195 --> 00:33:38.715 like that's commonly needed at this time. 00:33:39.020 --> 00:33:41.340 Date to get to the next level. 00:33:41.740 --> 00:33:43.120 All right, let's finish things up with Matt. 00:33:44.230 --> 00:33:49.450 So at some point we'll, we'll try to, you know, um, create never like zip codes. 00:33:49.450 --> 00:33:52.740 I don't think you need to go like zip code territories these days. 00:33:52.740 --> 00:33:55.040 I think it's a, it's a different world post COVID. 00:33:55.490 --> 00:33:59.140 Um, but some alignment, you know, today you've, you could have, um, a 00:33:59.140 --> 00:34:02.110 rep in California taking a demo from someone who lives in New York, like 00:34:02.110 --> 00:34:03.240 that doesn't make a ton of sense. 00:34:03.620 --> 00:34:07.300 And so just trying to slot in almost like time zones or regions is probably, 00:34:07.660 --> 00:34:13.400 uh, you get some yield increase by just like aligning leads to reps and like, you 00:34:13.400 --> 00:34:15.030 know, a time zone would be a good start. 00:34:15.030 --> 00:34:15.250 Haha. 00:34:15.785 --> 00:34:17.015 This is amazing, Matt. 00:34:17.025 --> 00:34:21.915 Thank you so much for laying out the demand gen vision from like five 00:34:21.915 --> 00:34:26.825 engineers in a room all the way up to this crazy math that so few people 00:34:26.825 --> 00:34:31.385 do, but it's so critical to getting the predictable scale on the growing 00:34:31.385 --> 00:34:33.025 market side that we're all looking for. 00:34:33.425 --> 00:34:36.305 So, much appreciate you coming on and dropping some 00:34:36.315 --> 00:34:37.475 knowledge for us today, Matt. 00:34:37.595 --> 00:34:38.515 Yeah, you bet, Mark. 00:34:38.565 --> 00:34:42.275 I had a great time and I appreciate you having me on and all the good questions. 00:34:42.285 --> 00:34:42.945 I appreciate the chat. 00:34:51.145 --> 00:34:53.975 Today's episode is written and produced by Matthew Brown. 00:34:54.365 --> 00:34:57.055 Our show is edited by Pizza Shark Productions. 00:34:57.435 --> 00:35:00.805 Big thanks to HubSpot for Startups and to the HubSpot Podcast 00:35:00.845 --> 00:35:02.525 Network for keeping the audio on. 00:35:02.770 --> 00:35:04.420 Hey, also we're a new show. 00:35:04.490 --> 00:35:07.720 So if you like what you hear, or if you hate what you hear, leave 00:35:07.720 --> 00:35:10.280 us a rating and review over on your favorite podcast player. 00:35:10.290 --> 00:35:11.330 I love the feedback. 00:35:11.600 --> 00:35:13.250 Also check out stage two capital. 00:35:13.420 --> 00:35:19.220 We're the first VC firm running back by over 500 CROs, CMOs, CCOs. 00:35:19.700 --> 00:35:21.860 So if you're an entrepreneur looking to scale your business, 00:35:21.870 --> 00:35:23.360 check out stage two dot capital. 00:35:23.760 --> 00:35:25.020 All right, that's it for today. 00:35:25.220 --> 00:35:26.000 I'm Mark Roberge. 00:35:26.010 --> 00:35:26.630 See you next week.