Former HubSpot CRO on the Math Nobody Uses to Scale | Mark Roberge

20:55Mark Roberge:Okay. So good for you. You've got your huge book of business. You're, you've got two 50 K coming in every year just to maintain that. And so basically I'm going to pay you. What's, what do you get paid? Like, Is it 3 % on the renewal? So we can talk to him.

21:13Ryan Hanley:Maybe 40 % new, 20 % renewal.

21:17Mark Roberge:Okay. So I'm going to give you 20. You're making 250K. So you've got$5 million book of business. I'm paying you 20%. I'm paying you 20 % and you're just coasting. So here's how you, the problem is you're wasting that hunter skill. Because that's a gifted person that could be just doing more business for you and them. And so you could use a gated commission plan, which is this. I'm going to pay you, if your new sales in 2026 is under$200 ,000, I'm going to pay you 15 % on renewals. If your new sales in 2026 is between$200 ,000 and$500 ,000, I'm going to pay you 20 % on renewals. If your new sales is between$500 and$750 ,000, I'm going to pay you 25 % on renewals.

22:05Mark Roberge:And if your new sales is between 750 and over 750, I'm going to pay you 30 % renewals. I like that. I mean, pushback though. I mean, my first pushback would be, dude, what senior person is going to come there? It's like, I have to work forever now. I can't just do, the whole reason I got into insurance was to work my ass off for five years and then go buy a beach house. But this, Ryan's comp plan is shit. I have to work every year. so that's definitely a problem because you know burnout for i mean burnout for sales professionals

22:41Ryan Hanley:is a real thing yeah of course there's no doubt yeah but i will say there is a particularly a particular acuteness to burnout in insurance if you are nose to the ground grinding for five seven years like yeah there's insurance is a odd business dude yeah i can work on it with you

23:00Mark Roberge:though. I wanted to get a chance of working on that, but keep going on your, keep going. Yeah.

23:05Ryan Hanley:So what my, it's an odd business in that. And I fought this for a decade, a decade. I fought this idea that like there was actually something unique about the ecosystem. The fact that there's 50 States, every state is regulated independently. There's also federal regulation. There's all this, The data, like, I don't know if you've ever dug into the data issue in the insurance industry, but it is like, it will make smoke come out of your ears. It's really bad. So there's like this, there's like this frictional grind to the process as well. There's, there's no straight through processing, like none of that exists.

23:42Ryan Hanley:So my, so what I've seen a lot of founders turn to, and I'm really interested in your take, I love this gated idea. Yep. Yeah, it has issues. Like a phantom equity play as well. Cause I've seen, I've seen guys and gals try to use something like a phantom equity or some sort of ownership plan as a way to incentivize long-term growth as well.

24:05Mark Roberge:Love it. Yeah. There's multiple different ways to do this. So there's that play. And then, yeah, there's, you can, you're just trying to like, give them a reason to, you know, continue to grind and get out there. Okay. Now my only counter to my personal devil's advocate, which was like competition for talent, where it's like, I can go to one firm, work my ass out for five years and stay on a beach. I can go to Ryan's firm, work my ass for five years. And I still have to work to get the true pay. My counter to that though, is remember that I, yes, I did say that if your sales suck, your renewal commission drops from 20 to 15, But I also said that if your sales are good, your renewal commission goes from 20 to 30.

24:54Mark Roberge:So I believe that word will get around and there are, you tell me if I'm wrong, but like every sales industry has those frigging grinders. They just are addicted to the quota. They love to do this. It's their art. they want to wake up every morning from the age of 22 to 65 and freaking go find new people they're coming to your firm because they're getting paid so like that that would be my slight counter is like i think this plan will suss out the mediocre i want to do you know and really attract the the bigger performers i would say like the other thing that was like wound up in your comment was burnout.

25:36Mark Roberge:And that's in everything, dude. Like tech is a grind too. Like these were all grinds. And I had this innovation at HubSpot that while in the midst of a tech sales climate where the average tenure was 2.2 years, I was able to pull off 6.5. And the key to it was this. Because I would get these interviews from, I would interview like these top reps coming from other places. I'm like, why are you leaving? They were like, well, I'm just kind of like burnt out there. I like, I have the same OT, the same quota, the same territory. And yeah, guess what? We just did our annual planning. They cut my territory in half.

26:16Mark Roberge:They doubled my quota. I'm like, why are they doing this to their top talent? Like these people just leaving for these like absurd scaling strategies, like cut quota in half, double quota. Like that's the formula. And so I was like, okay, we're not doing that. And I'm like, these, and the other thing that was happening was I kept having top reps come to me and be like, I want to be a manager. And I'm like, why? They're like, oh, that's the only way you can grow in sales. And I'm like, dude, there's so many studies that show that the top reps make the worst managers. and like everybody, all the top reps become like, if they try it, they're like, dude, I hate this.

26:58Mark Roberge:It's like adult daycare. I've lost all my personal independence. I'm making less money because I used to just crush it on my own. Now I'm trying to crush it through eight people. So like, I'm, I'm putting these things together. I'm like, dude, there's gotta be a way to grow without becoming manager. So I created this promotion path, which is kind of what you're getting at Ryan with this pride, this equity share where the way I did it was like, you come in as a level one rep and you get like your, you know, 50K base, 50K commission. And you know, like you got to hit your, your, your quote is whatever, like 800 ,000.

27:32Mark Roberge:And then the way that you get to level two, if you get to level two, I'm going to increase your commission to 60K. So you're, you get a 10K OTE bump. I'm going to give you a thousand stock options. That's how it worked. Like we, it was very common, right? And they're like, Oh, sick. That's awesome. How do I get to level two? It's like, once you hit an$800 ,000 install base, and then you can put other stuff in there like, oh, your leading indicator attention needs to be this, right? So that's another way to like, have them as an LTV hunter, you know, and this is where you could, let's do the insurance example.

28:06Mark Roberge:Let's do it. So you come in at level one, you get your payment. And if you get to level two, I'm going to bump you to now 25 % renewals instead of 20. And the way you get to level two is you need an install base of, you know, a million bucks and your new sales average per trailing six months has to be like, whatever, 10 ,000. So that gets them hunting all the time. Once you hit that, some people do it in four months. Some people, it takes two years. You go to level two, you get the bump. Now you got to go for level three. Level three is to get It's a 3 million install base and your average monthly sales has to be 50 ,000.

28:45Mark Roberge:I apologize if my numbers insurance are off, right? But you guys get the point. And when you get to level three, we bump you another, your renewal rate goes up a little more and we give you a little equity. You get what I'm saying? And what happens, Ryan, is there's this game that they're playing that motivates them. Like this six-year journey, seven-year journey insurance is no longer just, it's like, oh shit, I'm level four. I'm trying to get to level five this year. And you could correlate with like skill certifications, certain trainings, mentor, you know, like it could become this whole like college experience.

29:18Mark Roberge:And maybe you've seen it. Like, I apologize if I'm like talking about stuff that was done 20 years ago.

29:24Ryan Hanley:No, I love this. I would say there are a few more sophisticated organizations that do have and run sales departments with. i'm not going to say anything like that but certainly more sophisticated and well thought out versions um but they're rare i think the unlock do they work

29:48Ryan Hanley:i'd give leadership in general in the insurance industry a c-minus so all right it's hard for me to say um yeah you know and and there's a common joke that you know, if you're even a B plus player and you come to the insurance industry, you feel like an A plus player. Like it just. Well, I want to work on that together too, but like, okay, I gotcha.

30:10Mark Roberge:Yeah.

30:11Ryan Hanley:There's a whole conversation there. It's a very odd space, but what I think an unlock that you have given my mind in this call is I love the idea of attaching, uh, variable stages of compensation to this leading indicator of retention. Yeah. Because especially, you know, it's not, a one-off business. It's not, we're not selling a t-shirt, even though you can have t-shirt renewal, I guess. But, you know, this is a very retention-heavy business. And, you know, things, now, there are absolutely indicators, particularly if you own a niche, you have a, you know, a specific industry you're going after, a specific product you sell.

30:50Ryan Hanley:It's not hard to figure out what the leading retention indicator is going to be on these fairly quickly.

30:56Mark Roberge:What was an example?

30:57Ryan Hanley:Like a simple one would be the number of policies you have. great industry average if you have one policy 36 retention two policies 72 three pretend 93

31:06Mark Roberge:perfect that's like very classic like platform sale when you get multiple modules it sticks it's great yep so that would be an easy one and um you know it's funny though and so here's what i'll put

31:19Ryan Hanley:in front of you uh my agency the reason that we so for one year we were the fastest growing small commercial agency outside of the top 200 in the entire industry. So think of top 200 agencies as like Marsha, McLennan, Brown and Brown. Some of them are publicly traded, et cetera. Then you have everyone underneath that. That's essentially the way the industry works. There's like top 200 mega agencies and then there's everyone else. And we were the fastest growing small commercial agency in the country for 2021 because I built, we were wholly inbound. So everything we did was based on YouTube and SEO.

31:52Ryan Hanley:We were driving north of 35 inbound leads a day for about 14. And, um, I built this like sales process that was all psychology based. It was basically Chris Voss's never split the difference, but rigged to insurance. Right. So at the end, the person had been, you know, psyop to the point where they couldn't say no. Now. And so this is my, this is where my question comes from our philosophy because on inbound my personal philosophy is sell the problem close the account later right so you round out later sell sell the problem at the point of sale so because with inbound right i mean you know this as well as anybody you worked at hubspot right when they have inbound is more like i have a problem and i have decided that you are the person that i want to solve my problem so what i taught my reps was sell that problem close solve that problem for them, take that concern off their brain, which is often one policy.

32:49Ryan Hanley:But the numbers don't lie. You need multiple policies if you want to retain. So we then would go back around and we had a process for going back around and trying to close out and round out the rest of the account. Same meeting or later? Yeah. So in general, what are your thoughts on that? And we we did flail quite a bit with compensating because of that model. Getting the reps to go back around and close out. Do you have account managers do it? There was a lot. Oh yeah, that's a great question.

33:19Mark Roberge:Yeah. Let me, let me unpack that. By the way, when you went back around, was that like in a separate meeting or you try to do it in the meeting, same meeting to get the second policy and the third one?

33:27Ryan Hanley:Unless they, unless they just said, here, take all my stuff. It was a separate meeting. We would come back to a lot. Yeah, that's fine.

33:33Mark Roberge:That's cool. Okay. I think it's either I like it in general. And then you're asking an abstract question. So first off, let me just frame it. You're asking an abstract question of like, do you specialize or not? And the quick answer in that context is I don't think you do. I think they're full cycle. But I have actually, I'm faced with the strategic decision all the time in very different contexts from pharmaceuticals to trackers to software to whatever. And there's a two-part question to help you determine it. The first question is, what percent of the lifetime value of that account is captured in the first sale?

34:09Mark Roberge:Like the LTV potential. If like it's 90%, then you're going to specialize. Because this is around the toughest skill in all the whole go-to-market journey from marketing to customer service is just that hunting closing skill. I don't want to waste that on retention if I'm going to capture 95 % of the potential in the first sale. but in this case it's not one policy we can get four we're talking like on average maybe 25 to 40 percent of the potential is in the first sale so that's like second question is that's leaning toward full cycle but the second question is what's the skill set necessary to capture the other 70 percent because there's some places like like open ai like they just trip compute wires and like they just have to click buy more.

35:01Mark Roberge:Like I'm not going to waste a hunter on that. But like in this case, no, it's a skill. Like you got to get back in front of that, you know, husband or wife. You got to like probably even more difficult because they're pressing need was life insurance because they're about to have a baby. But now you got to get their home and auto too. You know what I mean? So it's like, that's tough because they're already like with someone else. So I think the answer is definitely full cycle. is keep people there because the reasons are like there's always pros and cons to specialization I think we batted away the the pro is you're you're you're taking that very hard to find hunting skill and making them hunt and close all day as opposed to waste them with minute skills but the the cons are I just spent like you know a month with Ryan talking about his family his kids his wife that's like a relationship and knowledge that is going to be super useful for me to go get the auto and home insurance and if i hand that off that's a that's headwinds right so so yeah yeah and so um but yeah to your point like i like that we call it the land and expand in software and i think it's the way to go.

36:18Mark Roberge:I think it's the way to go. And it just takes deep discovery on like what, you know, when you look at it from their lens, why would they want to, after they bought life insurance with you, is there a common path, like what they started with and then what you had up some to, or was it all over the place?

36:32Ryan Hanley:My business, because we sold commercial insurance exclusively, it was most people started with us for workers' compensation. And then we would expand from there. So we would get the workers' comp, we'd get it on the books. Cause it was also are very often time sensitive um and then from there we would dig into all the other stuff that they have right um and you know what i was trying to get the rep so for me uh because 90 plus percent of the leads in our business were inbound oh you know i didn't want them doing anything other than talk yeah just close it right we used we used like this we called it the one call closed process and video proposals to sell.

37:13Ryan Hanley:So we sold on video proposals. And I never wanted my reps to talk to a prospect more than once. It happened, but the goal was, and we actually got it. The highest mark we had was 63 % of 102 accounts were sold with a rep only talking to the prospect one time.

37:34Mark Roberge:That's insane. That's amazing. I mean, you crushed that first experience. But let's double click into the bundle because this is classic bundling. And I think when you look at it in a buyer centric, which I write a lot about in the book and stuff, it's like, how do you be buyer centric versus sales centric, which will help you build a better business and more durable business? when you look at this decision from a buyer-centric way, it's like, you just take the extreme options here, which is like, can I bundle everything with you guys, have all three policies, or why not have the best policy and here, here, with three different agencies?

38:08Mark Roberge:And what's the bundling advantage? And obviously, I'm curious what you say to that, and I have a follow-on to that, but I imagine there's just administrative shit, three different relationships. I imagine there's some discounting around bundling. Like talk me through what you guys were doing.

38:25Ryan Hanley:That's essentially, I mean, the good news was because people were coming to us and it wasn't based on ads. So we weren't - There was trust. Wedging in with an ad. Yeah. It was all content marketing. So I had people that had watched, and this is insane, 30 videos on YouTube before they'd call us. So like they were already closed, right? Amazing. is like guys we're not selling them anything yeah we're validating that their decision to buy from us right taking order totally we're doing yes and in the but what i found so so so based on this process i was able to get a new rep who would come in at a 30 to 40 percent close ratio and when we talked taught them the one called close process we would get them north of 80 so they were closing north of 80 % of our qualified leads.

39:18Ryan Hanley:And I wanted to bundle. So I wanted to, I mean, because I know the numbers. It's easier, it's less calls, it's less time, it's more money, it's higher retention. I know all the math. But what I found, and I was never able to get my head around this, was if someone called me for a workers' comp policy because they had a problem with their workers' comp, if I injected, hey, send me your liability and your property and your auto too, close ratio will go down approximately 10 points.

39:50Mark Roberge:I totally agree with you. I think if we could run a scientific experiment, running those two sales motions side by side, what you landed on with the land and only focus on workers comp is absolutely the right decision of the first call. And my follow-up question that I wanted to dissect with you was thinking through now the intention, now that you've got them closed and you want to go to the bundle. Yeah. What was the biggest reason for lack of success?

40:21Ryan Hanley:No more acute pain.

40:25Mark Roberge:Would you be able to get them back on the meeting?

40:28Ryan Hanley:Yeah. It would just be ghosting. Remember, a lot of these are guys in a truck with three workers with them doing landscaping. Right. Cool.

40:38Mark Roberge:So I think like what I, that's what I figured. And that's when you have to like, this is gets down to like this really cool stuff about like sales process design is you have to like really isolate it down to this step and it's the psychological moment and strategize around that. So it's like, we got him on the land, signed contract payment. We got to get him to the bundle and the blockers getting back on the phone. And so like, what can we do there? So now what I'm trying to think is in that moment of the land what's the offer that is like they have to get back on the phone with me after this is done it's kind of i don't know what it is it's like hey i there's got to be something in there um it's like i could i i wonder if like what i this could get into like moral hazard, manipulative, slimy stuff, but like, did you ever try, Hey Ryan, um, hope you're doing well.

41:36Mark Roberge:I know it's been six weeks. Uh, there's a little issue on the policy. Could you, um, mind emailing me back with a good time to talk?

41:43Ryan Hanley:Um, I, I didn't ever try that, but I would say we tried a lot of stuff around it. Um, you know, we would, so the best success was table setting the round out without asking for the business. Sure. I like that. I like that. That's classic. You know, it's in there at the end.

42:04Mark Roberge:Yeah.

42:05Ryan Hanley:Understand what the portfolio actually looks like. Yeah. And then you just kind of say, Hey, and if everything goes smoothly, you know, I know you got liability and property. I'll come back to you in about a month and we can get that all squared away too. Right. Cause like I was a big assumptive seller. Um, I think it's the easiest psychological hack from a sales perspective. And so we would just kind of assume the sale a month later. And that worked. But it was definitely a challenge. We had to use, you know, we used all the kind of drip campaigns. Yeah, yeah, good. Or video outreach.

42:39Mark Roberge:I wanted to abstract because I know some people on insurance are like, oh, this is cool. I want to play with this. And I want to abstract this out for everyone else into some principles here. There's two things that happen there. And this has to do with platform sales and bundle sales where I have a company right now that's crushing, that's completely messing this up. They have a platform with five features and the reps are just like getting these customers on the call and being like rushing to tell them about all the features. and I know the close rate is one third of what it could be. And it's like, there's tons of data that shows that what you've done is correct in a bundle platform offering that that's your unique advantage.

43:19Mark Roberge:You have to do deep discovery to understand the module or two modules that are most applicable and spend 80 % of the call on that. And then it's like a, before they leave, oh, by the way, just want to make sure you're aware of this, this, and this. We're not going to talk about that now. Don't focus on that route. Just want to make sure you're aware of it. And then to your point, you're kind of qualifying some of the other stuff. So it's just this like, don't try to get through it all. Lean toward the, that's an abstract point. The other one that's coming out here too, Ryan, is aligning the sales.

43:50Mark Roberge:The point of a sales process is not to get your product out there and pitch your product is to help the buyer buy. And one of the fundamentals of any strong, I talk about this in the Science of Scaling book, one of the key foundations of every good sales process, designing a buyer journey. People have their pitch deck, objection handling, discovery guide, qualifying matrix. No one has a buyer journey. And that's the framework. And it's coming to life here and what Ryan's saying, where if you did a buyer insurity of a policy buyer, in the beginning, they're just trying to figure out what workers comp to get.

44:27Mark Roberge:And Ryan's crush that was his content marketing. Now they bought his working comp. Guess what's next? They need to understand the advantages of bundling and why like the cost savings. So his marketing is totally different when I was doing drip campaigns. Right. So just like some some abstract principles on this mini case we're teaching right now that like applies to no matter if you're selling software, pharmaceuticals or tractors.

44:48Ryan Hanley:Yes. And I completely agree. I so I tested. So I had built a sales script for them, literally tested every word in the script. and every word. And I'd have different reps working different versions and all this kind of stuff. You know what the ultimate, the biggest jump in close ratio was the very first question that we asked, which was quite simply, hey, Mark, thank you for choosing Rogue Risk. My name's Ryan Hanley. What's going on? How can I help? Beautiful. And then you shut up. Yes. Like teaching silence to salespeople, it's like a superpower and it's the hardest thing in the world to do.

45:28Ryan Hanley:And I would literally say to them, shut up, like in a nice way. But like, no one cares that we have 50 carriers. No one cares that you've been in the business for 17 years. Like nobody cares. Exactly. Guys standing outside of a job site and he needs a worker's comp policy to get fucking paid. Like just shut up and listen to him. He'll literally tell you. And this is my question. For having run so many sales teams and work with so many founders, right? I get a lot of questions, you know, because of my past about like, what do you do when you have a process that works and you have a talented salesperson who seemingly wants to make the process their own and you know they're not maximizing because of it, right?

46:13Ryan Hanley:I get that tension between, do I just go hardcore? Like you're not doing it, you're out. Or is it, do I coach them? Like how do we coach up that talented but underperforming salesperson? Like what's the best way to maximize their performance?

46:30Mark Roberge:That was a beautiful question. In my first book, I elaborated on a statistical study I did where after hiring 200 salespeople,

46:45Mark Roberge:had quantified all the interview assessments and scored everyone on a one to ten on eight different attributes and then over time was able to correlate that to success. It took me two years to figure this one out, but it became the number one attribute that I interviewed for and it's rare for me to find a sales context where it isn't a top three if not number one. Coachability. So the answer to your question, dude, is like, there are some hiring attributes that you have to be super precise on because if you hire them and they have the negative of it, it takes a psychology degree to unwind it. And you just got to like suss those out.

47:30Mark Roberge:A classic one is like people that are new to sales. Like some people have call reluctance. You know, they get anxiety and that does take kind of, it's something in your wiring of a childhood. You have to go to a psychologist to like fix it versus like product knowledge learning. Like, okay, we can get there. You know what I mean? But, but coachability, the biggest answer to your question, Ryan, is make sure that's a huge part of your interview. And like, I just, I, I just say, Hey, listen, Hey Ryan, love your resume. Love the 15 minute screen. I'm going to have you come in the office. I think you're great.

48:01Mark Roberge:Part of the interview that we're going to do is I'm going to send you our training manual. and we're gonna do a role play. I'm gonna send you a LinkedIn profile as well for a prospect and we're gonna do a role play and just be prepared for that. And so we'll do the role play in the interview and then there's a bunch of things I'm testing in there, but after the role play, I'm like, okay, Ryan, great job. Like, how do you think you did? I'm letting him self-assess because their ability to self-assess is a attribute of their coachability. Like low coachability people think they did great. High coachability people are very analytical about their self-assessments.

48:35Mark Roberge:And then I coach them and I say, hey, here's in every interview, I give one piece of positive feedback on the role play and one piece of negative because I don't want them to think that they're bombing and they have an anxiety attack. So the positive thing was great rapport. The negative thing was you could have had deeper discovery on the problem set. And I coach them and I watch how they pay attention. And then I either repeat it in the moment or I'll say, listen, I'm putting you through to round two. We're going to do another role play as part of that interview. and I'm getting a real good view on coachability.

49:06Mark Roberge:Now that's the biggest thing because it's really hard to take an uncoachable person and make them coachable. If I do, if someone sneaks through and like, you know, there's so much to this dude, but like, first off, like there's instilling a coaching culture in your organization. So many people on the hamster wheel and they're reactive and they're on calls and they never get to it. first day of every month is coaching setup day as manager as director of all my managers i'm like all right we're going through each rep's diagnosis coaching plan and how we're going to measure how we did with that coaching and involvement and we're looking at data everyone to get and the managers with the rep working on that like hey ryan like let's look at your data after all this and like your reflections what do you want to work on this month like urgency development great how should we do it?

49:59Mark Roberge:Great. I'm going to jump into three calls. Let's book those three calls right now for the month. So my whole coaching booked in the month. So that's like proactively driving a coaching culture. And the final wrinkle to your question, Ryan, is that God forbid someone's like, dude, thanks for the coaching, but I'm good. I have my process. Then you just need a culture where it's like performance plans are factual. First day of the job, welcome to the company. Here's the CEO. Here's the commission plan. Here's the product. Here's the way you get fired. is if you are missed your quota two quarters in a row, if you're below 80%, you're on a performance plan.

50:33Mark Roberge:And if in that next quarter, you're not above 90%, you're fired. No hard feelings is how it works. So then the system's there to catch it. And if I got a non-coacher, then it's like, okay, dude, you do your thing. And that person watches me sitting with Julie, sitting with Bob, sitting with whatever. 90 % of the time, they come back crawling on me a week later with their tail between their legs. So there's a couple of nuggets for you.

51:01Ryan Hanley:Yeah, no, I love how establishing how we break up at the beginning. That was a big unlock for me in my hiring process, because you'd have people when you outlined because when you outlined, OK, here's all the best case scenarios, blah, blah, blah. And everyone loves that, right? You triggers on how much you do and you got your scaled retention numbers that we talked about. That's all great. Oh, there's an equity plan if you hit stage three. when I implemented the, and here's what happens if you don't hit your numbers, you'd get people who self-select out at that point because they know they can't coast, right?

51:38Ryan Hanley:Like just having that in there will get people to self-select out. That was a, I mean, I completely agree with that part. That's a, I know a lot of people don't do that. And it was a huge unlock because the coasters will go, oh wait, they're actually going to track my progress. and like I'm going to have like real hurdles if I don't hit my numbers. Like I don't want to work here. I want to go - Keep them at the competition.

52:00Mark Roberge:What a great way to build your culture.

52:03Ryan Hanley:Yeah. The other thing we did, which I think I've talked about very briefly on the show, but I'm interested in how you would do this in tech as well. I created monthly profitability scorecards for every sales rep. So one of the things I realized was that I felt a disconnect between our reps and their contribution to the overall growth of the company. And on both sides, right? If they're not doing their job, the negative impact. And on the top side, their positive impact. We created these little PDFs and every month we'd send one out to every. And it would be basically their salary, their benefits, their commission split on new and renewal.

52:44Ryan Hanley:so the total cost to the company versus how much actual top line revenue they were bringing in. We gave them this net profitability score and then pulled it out month over month. I'll tell you, our high performers saw that and it was like we put Elon Musk level rocket fuel up their ass. They just took off because they were like, wait, I'm contributing five grand, 10 grand, like they saw their profitability number go up. And like those accumulators, those, those people that are driven just by progress, they want to see that up into the right. They like, couldn't freaking handle it. Cause now they, they had like, it was almost like there was like this sense of pride of like, look how much profit I put back.

53:28Ryan Hanley:It was really cool. Um, yeah, that came from a mentor of mine, but that was a huge unlock for us as well.

53:34Mark Roberge:I think it's brilliant. And I'll abstract it for everyone on here, which is like, it's totally incorrect in the way we all measure our sales people, which is just like you put it up on the board. How many new sales did you generate this quarter? That's a part of the story. What you're saying, Ryan, is like the end picture in your business profitability, which is pretty much everyone, but like they're like for a high blitz scaling business. Like it's, it's, it really like the way we talk about is in unit economics contribution. Right. And like, which is a big part of like the LTV, getting back to that.

54:08Mark Roberge:How much you sold in a quarter gives zero visibility into the lifetime value of what your customers. And that needs to be more of the end game, which is what you're getting at. So like where I see it translated into other business, like, yeah, fine. Measure the quarterly revenue, new revenue from these reps, but also measure their LIR of their install base. Measure the LTV, the retention of their install base, right? Like, so, so I think that that's the key point there is like the microscope we put on and measure classically measuring sales teams is like incomplete.

54:46Ryan Hanley:I want to pivot away from this sales thought experiment as we kind of come into the close of our conversation. you went from private to public to academic to investor and have seen this incredibly broad swath and an incredible number of companies. What are some of the biggest differences in mindset? And they can either be positive or negative between those different places, right? Because I know most people tend to sit in one of those buckets, right? They just live in private or they get into public they just live in public and like what can they be learning from each other or

55:27Mark Roberge:you know very free form but wow man yeah there's a lot in there thank you that's a cool question because like you're right there's not a lot of people that sit deeply in all those places i guess i'll try to give like the general and i i hope i don't offend people through this but i'm just going to try to generalize the average of those that are sitting in each of those private It's a hustle. You work your ass off. There's really amazing people. It's a little more athletes than specialists. You don't see as much of like, I did this one little job for 25 years and I'm the expert. It's a little bit of like, my job could change next month and I love that.

56:08Mark Roberge:Big upside.

56:10Ryan Hanley:Can I just clarify something? You called that athletes versus specialists. I've never heard that type of person referred to as an athlete before. Is there something there?

56:19Mark Roberge:Yeah, for sure. We talk about that a lot in broad spectrums. It's like, think of your first salesperson at a startup with five engineers, what they have to do and compare that to the hundredth salesperson hire into a 10 ,000 person company. Like their, their job is like, they have the, the Midwest territory for the SMBs with a coach in the bitch, you know, pitch deck, like the first rep at the, they have nothing. I mean, it's like, that's an athlete. I mean, they're doing everything from like setting meetings, building scripts, like setting up the CRM, like doing the first demo, like talking to the engineers on what to build.

57:01Mark Roberge:That's an athlete versus the hundredth hire who's like, dude, you're going to run the San Francisco healthcare territory for us in mid market. That's a specialist. Right. And you could translate that into R &D, finance, whatever. So, yeah, that's what you have in there. I like that stuff. Personally, that's where I'm most attracted to. Once you approach public and go public, very, very polished, very buttoned up. The politics comes in quite a bit. A little less risky. People who want to hit doubles consistently through their career rather than like massive home runs, which is fine. I mean, I'm not offending anyone.

57:39Mark Roberge:It's just like this is what you start to see. A little more nine to five. um uh just a lot of like more about like it's a lot about setting up systems and people movement stuff as opposed to like writing code and selling deals you know because you're just so far from it you're setting up the strategy and also like in the beginning i would say 10 strategy 90 execution once you get to public it's 90 strategy 10 execution because these like when you're when you're like six people, you're like, okay, like I have an idea. Good. Let's try it. Two days later, we've tried it and we know the answer. When you're in like running a 7 ,000 person company, you're like, I have an idea.

58:25Mark Roberge:Let's try it. It takes you 18 months to try it because you're like mobile. You know what I mean? So, so that's where, and that's why McKinsey and BCG make a lot of money because the strategy is so important. Okay. So you get into academia. I mean, again, Like it's just a lot slower paced. I mean, and rightly so. Like the people who are like tenure tracked, dude, like you're going to take any question that we asked today, like the optimal way to like specialize your reps. That's a five year research study for a professor to make tenure. you're spending five years researching every single angle of that to come up with new law which is like you know for me i'm like i just can't i don't i have adhd like career ad i can't do that there are some people but it's important because that's where breakthroughs in medicine and economics and all this stuff came from was that rigor so that i mean this is really important today where it's like, you know, like we didn't talk much about this, but like, I think there's a ton of energy being put into building and driving the new AI technology and next to zero energy and understanding the implications.

59:45Mark Roberge:And I think academia can play a massive role in that because of just the way they're set up. Right. So, so like that, that's what it's like there. It's all about truth. It's very abstract. It helps you. A lot of operators think they know the truth, but it's only the truth in their context, whether it's tech or insurance or SM or us versus Asia, you know, North America versus Asia in academia, you know, truth abstract because you have to look at it from every, you know, get what I'm saying? Like when I talk about like, this is how sales works. Here's a first principle of sales. I have pressure tested that in North America, Africa, and Asia.

1:00:21Mark Roberge:I have pressure tested that in a 10 billion dollar business and a 10,$10 business. and I have pressure tested that in healthcare and tech. And that's where academia shines. And then the last part is, before you ask the following, is VC, pattern recognition.

1:00:45Mark Roberge:Dude, we look at 500 companies for every investment we make.

1:00:53Mark Roberge:So it's about founder picking. it's about validating that it's a big enough market and I would say one of the big surprises is there's two things

1:01:05Mark Roberge:just because we have money to invest and you're looking for money that's not a fit you have to remember that like the MIT endowment's my main anchor they look at a thousand VCs they pick 30 to do business with they pick those 30 to fill a hole like they need consumer B2B life sciences they need growth, they need pre-seed. So when I walk in and say I'm a B2B software investor at the seed stage, and you come to me with a life sciences business at the growth phase, you might have a sick business. I can't do that deal. Right? So it's like, so just you have to, there's a qualification there. And I think the other thing, yeah, and there's like fun math associated with it.

1:01:49Um, and I would also say there's like a little bit of a capitalization fit.

1:01:57Mark Roberge:Like I said at the beginning, like there's a lot of people that show up with a great idea, but I'm like, don't raise venture capital.

1:02:02Ryan Hanley:Yeah.

1:02:03Mark Roberge:Cause there's certain ideas that should be bootstrapped. There's certain ideas that should be private equity. And that's kind of a surprise too.

1:02:12Ryan Hanley:That was one of the biggest things that I had to learn the hard way, um, in my career. So I was telling you, I scaled my business and I ended up selling it. Coming out of COVID, a whole bunch of stuff happening. Just over 24 months, we spin the business and sell it, which is great. Except I sold it to the wrong people. And I didn't, if you've never been through selling a business like that before, and I didn't have anyone in my corner who had enough experience to kind of tell me, look, like, these guys are saying the right things, but structurally what they're going to want out of your company just doesn't align with, you know, going back to incentives, what they were trying to do.

1:03:05Ryan Hanley:And it was friction, you know, from three months in until I hit my first exit trigger, it was just friction, friction, friction. How, you know, when this was a huge eye opener to me because in my mind, like I was selling my business to these people who were going to inject it with all this capital. And I was rolling equity into the into this, you know, P back company. And and, you know, we're going to the moon and then come to find the reality hits of, you know, P economics and their obligations to their LPs and all this kind of stuff. And it becomes this this major issue. how what are just some reverse vetting metrics i'm a founder i'm an entrepreneur i'm going out i either need money or i've i've built this business for seven years and now i'm looking to actually you know maybe be acquired or merge with someone like i know this is a very deep question.

1:04:05Ryan Hanley:I get it. Probably do hours and hours. Yeah. But what are just some of those, the things commonly missed that lead to friction post sale? What are some of those little pieces that people commonly miss? Yeah.

1:04:20Mark Roberge:I mean, we can talk about the exit path for a moment. And like, obviously if like, this is just a transaction with nothing after you don't have to think too much about it. If like you're selling this thing for 500 mil and you're getting it cash on the day it closes, then you're, you don't have to think too much about it other than like, yeah, you want to take care of employees. You want to take care of customers. So like you want to know a little bit there, but personally it's not as much. Um, but people get burned a lot here because they just think that like, okay, I've been growing this business 20 % for the last 10 years.

1:04:49Mark Roberge:Like as long as I keep growing it for 20 % for the next three, I'm going to hit each of my exit triggers, but they don't realize that like, they're no longer solely in charge. like this gets embedded into the system so like you gotta first off just appreciate that and then like dig into those questions like what are we doing here like once this deal closes are you leaving us alone here in albany and let us do our thing like how are we what is the integration path can we just run or do i now have a boss am i is my sales team gone and my i'm selling through this team how do these products work together what's the fact like so many of those questions need to be walked through if you're being dependent on exit triggers to diligence your personal situation.

1:05:36Mark Roberge:And like this, that same narrative can carry to through like a fundraise. Like, dude, like, okay, cool. Like, okay, I want to invest 30 million at a 500 million evaluation. Okay, great. Like, like, like, is there, is there any, like, um, is there any, uh, preference stack on that? Like, is it clean, blah, blah, blah. You're taking a board seat, people. Dude, that's like not the whole conversation. Like once the deal's done, what is the plan for next year revenue wise? How many salespeople do we need to hire? Like, I want to make sure we have that discussion to make sure philosophically we're in sync so that we don't have that boardroom eruption.

1:06:14Mark Roberge:Cause I would say like boardroom eruption is a top five killer in these like growth journeys. Yeah.

1:06:24Ryan Hanley:I, the experience for me was, and I think part of it is I'm probably a little too trusting as a human in general. Um, and what I found very interesting was they bought me because we were lean, mean selling machine. We just sold. We were fucking good at it. And I thought when they bought us that, why wouldn't you just want to keep pulling that lever? We had a cash machine, right? It's the insurance industry. We had figured out how to sell with a CAC that was like near zero. It was literally like just my time. So like, we're talking like near zero CAC. I mean, we were crushing. and what I found very interesting is all of a sudden I started getting calls about the professional nature of my tech stack and the human resources guidebook and hasn't been properly delivered to the employees and you know all of a sudden I got a$8 ,000 enterprise IT cost associated to my budget line because if I wanted to call tech support to help them with my with my Mac.

1:07:33Ryan Hanley:You know what I mean? Like it was, I started looking at that going, I, wow, like I'm 42 years old and I feel like a, like a baby. I feel like I'm 18 again, learning these lessons, like right on the nose. And I just couldn't wrap my head around a 17 person board meeting in which I was told my CRM wasn't professional enough. I was like, I don't even understand what that means. I'm also hardcore ADHD, Irish Catholic, like, you know, so I'm struggling just to deal with these people who I don't think have the brain capacity to keep up with what I'm doing to begin with. And now they're telling me that I need to go from, from, you know,$15 a month user seat CRM to Salesforce, which is$275 a user seat.

1:08:23Ryan Hanley:And I got to eat that, that cost on my balance sheet. I don't know. Can I just go back? Like you bought me to make money. Can I just go back to doing that thing? Like, yeah, that's all. I had no idea what founder life would look like post sale. Right. And it is my, one of the biggest mistakes I've ever made in business is not spending more time on like, what is my day to day look like when this, when I put my signature on that piece of paper. And I say that only because we've hit this point and it's just a cautionary tale of founders. Like that is such like having someone else who's buying you describe what they think your world looks like.

1:09:04Ryan Hanley:That is like question number one. Now I'm helping a couple other businesses raise money and I'm like, guys, what is your what do they think? Not what do you think your life is going to look like? What do they think your life is going to look like? I didn't ask that question. And I, you know, it was it was brutal.

1:09:21Mark Roberge:I think that's the abstract takeaway for everyone here on that point is like during an investment or an acquisition, 90 % of that work is done to like transact that thing. And you have to do way more work like 50-50 on post-transaction, post-investment, post-transaction life. That needs to be done. And it's key because like most people go through these things one, two or three times in their life. This isn't like a sales call that you just like skim your knees for the first 10 and then you eventually get it. So, yeah, that's a great takeaway. All right.

1:10:03Ryan Hanley:I mean, I want to ask you about AI, but we don't have a lot of time left and it's such a big question. Yeah.

1:10:10Mark Roberge:um i almost just want to table it yeah you have to i think you do yeah it's a huge bubble it's a huge bubble lean as an oh a huge bubble right now yeah like just like it's gonna define the whole world you have to start playing with it it's gonna slow you down at first you have to be patient become an ai enabled leader seller whatever um i think like a lot of what you read about right now is like morepets.com and webvan than it is Google. Just go into the chat GPD and ask, do first movers usually win or do fast followers? Just ask them that and read all the studies and then you'll find out.

1:10:56Ryan Hanley:With that little treasure hunt in mind, Mark, this has been an incredible conversation. I appreciate the hell out of you, man. I mean, I could pepper you with questions and have this back and forth for hours, dude. I love the way you think about the business. the book is the science of scaling i you know i'm just going to advocate that we can't go off gut anymore there are gut decisions we have to make but to do this right based you know you need math you need to work in the numbers and have a real plan i love the way that you've outlined this um besides going to amazon picking up the book where's the best place

1:11:30Mark Roberge:to go deeper into your world yeah linkedin i'm very active and thank you for the plug ryan and just want to remind everyone that I'm donating a hundred percent of the proceeds to mental health. So if this, I hope that the reason you bought is for the scaling curiosity, but just know you're doing good as well.

1:11:45Ryan Hanley:I appreciate you, man. Wish you nothing but the best. Thanks for coming on the show. We're out of here. Peace.