Discover more from Kyle Poyar’s Growth Unhinged
Your guide to the first PLG sales hire
How to scale your team to accelerate growth
👋 Hi, I’m Kyle from OpenView and welcome to my newsletter, Growth Unhinged. Every other week I take a closer look at what drives a SaaS company’s growth. Expect deep dive takes on product-led growth, pricing, benchmarks, and much more.
Who should be the first go-to-market (GTM) hire at an early startup?
This isn’t a new question, to be sure. But the right answer keeps changing given the rise of product-led growth, an ever-shifting fundraising environment, and the recent enthusiasm for product-led sales (PLS).
Unfortunately, “it depends” isn’t an answer that anyone wants to hear. 🤦♂️
Many PLG founders immediately jump to hiring a head of growth—someone who can develop a data-driven view into the customer journey and then come up with theses around the top priorities to get better.
The reality is that a head of growth tends to be most effective at scaling a PLG company with product-market fit rather than building one from zero to one. And let’s be honest: growth talent is extremely scarce and it’s almost impossible to find a great one without real traction and data.
For an early PLG business, I could make the case for two potential first hires: GTM lead (sales background) or growth marketer (marketing background).
GTM lead (sales) - A Jack/Jill of all trades working with customers across sales, customer success, and support. They become the customer advocate for the product org and are looking for ways to “replace themselves” by putting what they learn into videos, FAQs, guides, and etc. Ideally they have 4-10 years of experience in different roles, starting as an individual contributor.
Growth marketer (marketing) - PLG companies need to find scalable ways of reaching users, ideally through referrals, viral loops, and organic discovery. Without enough users, it’s impossible to collect consistent product data or run meaningful experiments. This person has a strong grasp of the product as well as the target user, and can use that knowledge to generate an initial pipeline of prospective users.
So, what does the data say?
I turned to OpenView’s 2022 Product Benchmarks report, which includes data from 450+ software companies (PLG and non-PLG), to find out.
The data shows that software companies still pick Sales as their first GTM hire most of the time (51%), although nearly one-in-three (31%) hire Marketing first. The remainder go with growth or another function (ex: support, customer success).
I wanted to go deeper and so I split up the data for PLG and non-PLG companies. Here’s what the data looks like for companies who lead with a freemium product experience, a free trial product experience, or a contact sales (sales-led) experience.
The findings are fascinating:
Growth marketing wins out for freemium companies (49%), which require attracting a significant volume of new users at a low cost and tend to see relatively low free-to-paid conversion.
Marketing and sales are tied for companies with a free trial offering (41% and 41%), indicating that free-trial companies are torn between prioritizing acquisition versus conversion/revenue objectives.
Meanwhile, sales is overwhelmingly the norm for companies that require prospects to contact sales – no surprise there.
What does a first Sales hire look like at a PLG company?
I was curious to learn more about what the day-to-day of the first GTM (Sales) role looks like for an early stage PLG company. To help teach me I turned to Dave Barron, global director of sales at HubSpot.
Dave joined HubSpot eight years ago as the early GTM hire for HubSpot Sales Hub, the company’s first-ever PLG product. His team scaled Sales Hub’s revenue from <$1M to $25M annual recurring revenue (ARR) in only two and a half years – mind-blowingly fast for any software company.
Dave has since replicated the success of Sales Hub as a GTM and Product Leader for HubSpot Service Hub (grew it from nothing to $35M+ ARR) and Operations Hub (the fastest growing product line in HubSpot history according to Dave).
Read on for insights into Dave’s role during the early years of HubSpot Sales, how HubSpot built out the sales-assist team over time, and what advice Dave has for up-and-coming PLG startups.
The early years at HubSpot Sales
Back in 2015, HubSpot was mostly known for marketing automation. Product-led growth hadn’t taken off just yet.
HubSpot wanted to launch its CRM product and go freemium, but knew it was risky. The company decided to spin up a new business called HubSpot Sales. This team had about 20 people when Dave joined and was treated as its own startup inside of a startup. It had a separate P&L and it wasn’t a foregone conclusion whether HubSpot Sales was going to work.
The profile when Dave joined was “AE-ish” - although in reality there was no product for him to sell. All the team had was HubSpot’s Sidekick offering, which was a mere $10 per month and was fully self-serve. (Side note: Brian Balfour was the VP of growth at the time. He has since founded Reforge, the professional education company extremely popular among growth practitioners.)
Dave’s goal was to talk to as many users as possible. He saw it as “early-stage product discovery” rather than traditional sales. When someone signed up, Dave would reach out to understand how they perceived the product and its value proposition, as well as what suggestions they had to make it even more valuable.
He attributes part of his success to having a product management background at the beginning of his career before he shifted to sales. This allowed Dave to have credibility with HubSpot’s product team and have a hand in improving the product.
“When you make an ask to product, is this going to be something reasonable or not? Is it a back-end problem or front-end? I would walk over to our dev team’s desk with a suggestion, they’d mock it up in Invision, and then I’d be able to pitch the idea on my next call with a customer.”
This “early-stage product discovery” process took a full nine to 12 months and ultimately led to HubSpot’s $50 per month product. Dave has since gotten the timeline down to five to six months. According to him, the length of time is less important than the quality of conversations with customers.
“It’s less about the volume of users I’ve talked to and more about consistency. When I get on the phone with someone, I should know what they’re going to say and I can repeat that back to the business. This person needs to be your persona and they need to be the voice of the customer internally.”
Scaling the product-led sales motion
As time went on, the biggest thing that changed at HubSpot was segmentation, said Dave. HubSpot needed to define who were their best prospective customers and focus maniacally on winning over more of those best-fit customers.
“We looked at our install base of paying customers. One cohort of paying customers retained at 90% and another cohort retained at 64%. The key insight for us was to focus on customers with 6+ employees.”
Armed with this information, HubSpot Sales decided they were ready to scale. They ramped up hiring for the GTM team and these team members did both sales and service. An AE would sell a customer and then immediately schedule an onboarding call, Dave told me. While any user could purchase in-app, HubSpot’s GTM team focused only on prospects with six to 25 employees.
As the GTM team grew, they later introduced an “inbound” team, which would chat with free product users. While this role is now better known as a sales-assist SDR, HubSpot calls it an “Inbound Success Coach.”
“The inbound team’s responsibility is to generate pipeline for the sales team. They’re also focused on driving activation among free users. They do that by popping up in-chat with users to help people see value in the product. They’ll also set up phone calls with users and will ask sales-oriented questions on those calls.”
Quota and compensation
Dave doesn’t believe in traditional quotas for these product-led sales roles, especially not early on in the role. He advises startups to give new hires a full four to six months to understand the product, the persona, and the value proposition before handing them a quota.
After that he prefers a “units of work” quota instead of an “monthly recurring revenue” quota. For HubSpot’s Inbound success coach role, for example, a chat conversation may represent 1 “unit of work” while a phone call might be worth 2.
“As soon as you go to an individual quota, the incentives change immediately. When we gave sales people a quota, we did two times the revenue in a month. Give people time and then go to a quota to drive productivity and performance against the most important KPI. The KPIs in this role has to align with the strategic KPIs of the business and where they fit in the org. ”
Advice for other startups
Dave recommends that companies look for a true Jack or Jill of all trades for their first PLG sales hire. When he joined HubSpot, he had done enterprise software sales and had been a product manager building web apps so he knew both how the business worked and how he could contribute.
He urges folks to look for someone who’s extremely self-motivated. This person needs to be willing to step in and figure it out with limited or no guidance. But you won’t find this type of GTM talent if you only ask traditional sales-oriented questions during the interview process.
“You need people who have a history of doing things in a non-traditional way; you need someone who’s intrinsically motivated and naturally curious. Don’t ask the traditional sales questions like ‘what’s your quota attainment’ or ‘what’s your pipelining process?’”
Make sure to set this person up for success. Two keys for Dave as you hire for this role are:
A clearly defined six to eight month goal. Should they focus on new sales, building out a process, expanding existing accounts, something else? “It’s easy to hire someone and just say ‘good luck,’” says Dave. “But in the early days, define a specific problem that needs to be solved and put this person on it. Then, over time, that person’s role expands to meet business needs.”
A boss who commits to this person’s growth. Your new hire will need a guiding light at the company, Dave explains. The most common failure mode is when the person managing either disappears or doesn’t dedicate time to them.
Hire marketing to generate data and users. If you’re going all-in on freemium, you usually want to start with marketing.
Hire sales to get a closer feedback loop between customers & the product.
Look for a Jack or Jill of all trades who’s intrinsically motivated and naturally curious.
Give your PLG sales hire time to learn, then shift to a quota structure to accelerate velocity.
Set your PLG sales hire up for success with a clearly defined six-month goal and a committed hiring manager.