HubSpot's Brad Coffey on the Impact of Ops - Part 1
Brad Coffey, HubSpot's Chief Strategy Officer, joined us for our Strategic BizOps Meetup on July 12th. In 10 years at HubSpot, Brad has been responsible for business operations, product, pricing, packaging, strategy, investments and acquisitions. We covered so much ground in the fireside chat, that we decided to break up the transcript into three parts. Here is Part 1 - The Impact of Ops. You can find the full transcript here. At the end of this post, you can also find the audio recording of the entire conversation with Brad.
Brad started as Director of Operations, and his first contribution was to set up Salesforce.com. From that launch pad, Brad was able to have a major impact on HubSpot's growth. Here is the transcript of Brad's comments on the Impact of Ops. I hope you enjoy :)
Alex: So we’re going to start at the beginning of Brad’s time at Hubspot. He has a ton of great stories. Let’s start with the first one, which is, how did you get started with Hubspot and how did you even hook in there in the first place?
Brad: Thank you. I thank you guys for having me here and everyone for coming, this is really great. So, I met Brian and Dharmesh sort of through the MIT alumni network. Their office was right across the street from school so I would go and hang out at Hubspot TV on Fridays. I’d just kind of crash and hang out and I fell in love with the company and what they were doing. I fell in love with their idea. Stuff that I would think about and do, in my free time, was stuff that they were thinking about and working on, which was a lot of fun around technology and social media at the time. So, I joined and I was working for free. I was like, you tell me and I will do anything. They had me work for Mike to create content. I must have written the worst whitepaper Hubspot has ever seen; it wasn’t even a whitepaper, it was about like the death of advertising, it was like a puke yellow background PowerPoint presentation. But thankfully, they were also implementing Salesforce for the first time. As naïve as I was, I assumed that you could set it up and that sales would use it exactly how you designed it and they would log every call and every email they did. Sure enough I got enough of them too, but that actually served sort of as the backbone of my career at Hubspot really, understanding exactly how the business worked by working on some of those core systems right from the beginning.
Alex: So, when you got in and you started doing that, did they decide to call you director of operations?
Brad: Well, first thing they needed to do was decide to pay me…
Alex: So did they decide to pay you? They must have.
Brad: I was like I was free, but we got there eventually…
Alex: When they did pay you, what was the role during that phase of your career when you were director of operations? How did it start? How did that evolve?
Brad: It started from the Salesforce foundation. The company was only 5 or 10 people at the time and I found that there was no one in that role. We had a couple of sales reps, a couple of people handling customers, and a couple of people doing marketing. There was comparably nobody who would figure out how to take a lead that was coming out of our website, get it to our sales person, close that deal, and have the lead become a customer and then measure how well that is all going. A big part of what I found both interesting and hopefully Hubspot found a little valuable was, understanding how those pieces work together. We became a very monthly oriented cadence; we had a 30 to 45-day sales cycle and so every month and it’s still true today, we would have to measure, how was every single sales rep doing, how are our customers doing, who is leaving, who is sticking around. Being one of the only people who knew how to poll that data, turns out to be really really valuable. When we were fundraising or having a board meeting and our founders, one is the technical founder, Dharmesh, and the other Brian was a sales rep, neither of them were ops people and so they dragged me into those conversations and say, “hey Brad, this is a great question, what is our productivity per rep”. And I’d say, I can figure that out for you, give me a sec. So, that’s really where it started. Understanding those pieces and then just trying to get better and better about it all the time. We were a very data-oriented company from the start, I kind of joke about assuming sales reps would log their emails and log their calls but they actually did, which turned out to be very, very valuable and so we could see which segments were performing the best, which reps were performing the best, we could understand why. There is this really interesting take with two of our very first sales reps. One rep was, Dan Tyre, he’s in Arizona now. My first experience with him was when I showed up at Hubspot and everyone’s sitting down, some engineers in a corner with headsets on, and Dan’s standing up at his desk, yelling into his phone. I was like, who is this guy and all I hear is, “you are going to love it… you are going to see so much growth…and if you don’t, I am going to eat my HubSpot t-shirt” I am like, wow, what did I walk into. And then there was this other rep, Heidi Carlson, who was next to him and what was really interesting they were both equally successful. If you think about how much business they closed every month, they are both equally successful, but if you looked at their funnels, it was actually completely different. So we tried to send them each 150 or 200 leads a month. What Dan would do is call every single one and with that infectious energy he’d convince every single one of them to do a demo, every single one of them! He would do what we called inbound marketing assessment and he ended up doing a ton of those, converting a huge percent to demos. As he worked through it, a lot of them weren’t great fits and he’d have a much tighter funnel and close, maybe 10 customers a month. Heidi was the opposite, she was very discerning, she would find the ones she wanted, go really deep with them, get them on the phone, and ends up doing probably a third to a half as many demos as Dan, but then close just as many customers. I just found that very fascinating, and part of me thought, these people are like, I shouldn’t care, one way or the other. The biggest difference was Heidi would work 35 hours a week and Dan would work 90; and I was like, oh, actually we need to have more people look like her and how can I actually make sure I incentivize Dan and people like him, to make sure their shapes of their funnels…...
I found that stuff fascinating, and it sparked a lot of my curiosity and energy into this space.
Alex: Yeah, that’s a great illustration of productivity. And, what was the method to the madness? Were you the best excel person on the planet? Did you do everything in Salesforce? What were your tools of the trade at that stage, and how far did Excel take you before you had to do other things?
Brad: It was pretty good, I think the best thing that we did was customize Salesforce in the backend to do SaaS subscription business. What we would do is, every single month, we would do this snapshot of all of our customers and that was really successful. I count how many snapshots I took, exactly how many customers I have how much they are spending at the beginning of the month and what they were spending at the end of the month. So suddenly I could do revenue retention numbers and customer retention, and stamp more and more stuff onto that. Once you had that view on the customer side, we could do pretty deep analysis throughout our entire Salesforce. I think what worked well for me was I knew enough of those pieces so that I could understand our unit economics, not just at a high level, like taking my total sales and marketing spend divided by the number of customers over the lifetime total value, but actually break it down into individual segments: how many leads I got, how many employees, how many sales reps that I’m sending those leads to, how much I was spending on both of those things compared to the actual dollar value they’re spending with us and the retention number. And I think just having that foundational model allowed me then to iterate off a bunch of stuff. I spent a lot of time kicking over rocks and being curious; it took a lot of iteration to get there. I remember the first day that we hired this guy, Ryan Beale, which you wouldn’t think was a problem except we had Corey Beale before that, and all of my excel models were based off VLOOKUPs by last name. Basically we had the choice of re-doing everything or firing him! It was a couple of late nights when I really wanted to go with Option B. Overtime we got there and it scaled just in time for me to hand it off to David McNeil, who is here somewhere. That really did work well and I can share other examples of the kind of data and analysis that came from that one core understanding of what our funnel looked like both on the sales side and how successful those customers were.
Listen to the full conversation with Brad here
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Alex is CEO and Founder of Rekener. Previously, he served as President and COO at ZeroTurnaround and as President of the Delta Division of BBN Technologies. At ZeroTurnaround, he grew high velocity inside sales by 6x in 3 years. At BBN, Alex co-founded RAMP and AVOKE, both recurring SaaS businesses based on BBN's world class speech recognition and natural language processing tech. Alex started his entrepreneurial career as founder and COO of NBX Corporation, which led the transformation of business telephone systems to Voice over IP. Alex’s companies have generated $500M in liquidity events and more than $1B in sales.
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