The Biggest Sales Lessons Scaling Brex to $400M ARR

Harry, I’m pumped to be here. Thank you for having me. Last time we did this was I think a month or so after I joined Brex in 2018. The world is quite different six years later as we sit here.

Man, what does that make me

I attribute a couple data points of luck to being in sales and in tech sales in the first place. So I graduated from University of Missouri in 2007 and wasn’t considering, like, know, but for my brother being in the Bay Area doing tech sales. As a graduate of the University of Missouri, that’s not even on your radar. And so got a job as an SDR at a company called EchoSign. So I sort of lucked into getting into tech sales in the first place because of my brother.

And then I lucked into joining a successful business like EchoSign that allowed me to progress my career. I didn’t know what I was looking for at the time. And, fortunately, I found Jason Lemkin, who’s a friend of both of ours that was leading this company and joined as an SDR when it was effectively being run out of a a garage, an actual garage in Palo Alto. The question around when did I sort of figure out that tech sales was for me, something like that. I would say that pretty quickly I was able to start differentiating myself from peers doing the same thing.

The feeling of being successful was addictive. It was pretty evident to me early on that I had found something that aligned well with my skill set that, you know, eventually evolved into a tech sales career.

I didn’t at the time appreciate how hard building a successful startup. And, you know, I took a handful of interviews when I first joined a company. And, you know, EchoSign gave me an offer. Maybe I had offers from other people. And I probably looked at, like, you know, the comp or something like that. And one of the things was how far is the commute to make my assessment on which firm to join. And, you know, the reality is the importance of picking the right company. It just really defines one’s career.

I attribute so much of my success to joining the right businesses. Now, like, I was able to perform within those businesses. And, you know, for context, we’re talking about EchoSign, Zenefits, and then Brex on the sales side. So much of my success was predicated on the success of those businesses. And I don’t know that I had an appreciation for one, how hard it is, and two, the importance of picking correctly.

Well, I think it depends on the stage. There are companies that are a 100 to 500 employees, let’s say. There’s a lot of signal around those companies. The trajectory with which they are hiring, the sort of like what I’ll describe as heat around fundraising that exists for those businesses, the revenue growth that those companies are experiencing. And so you can join a 100 person company as the 10th sales rep. You have a lot of sort of historical signal to go off of that you’re picking a company that is a rocket ship, to use the cliche.

We’ll have to come up with a better word. You know, earlier stage, it’s much more subjective, right? The things that I mentioned there around fundraising events, employee headcount growth, revenue growth, those are all things that are objective. The subjective side of things and what I think I was able to get right at Zenefits and Brex. So much of the success of a really early stage company is predicated on founder or founders and their ambitions and aptitude to building a big business. And I remember this was further in my career, but when I joined Zenefits, I think I was 29 years old.

And I was fortunate to have Jason again from EchoSign, who had moved on from Adobe. He was introducing me to a number of startups and I started to sort of pattern match around what I believed an exceptional founder looked like. By the time that I met Parker, Parker from Zenefits, Jason had signaled one that like, you know, Parker is incredible. They’re raising a very competitive round at Zenefits. This could be the one. Something like that. And I met Parker. He was in the best way possible, just different from everyone else.

And I knew it. And it didn’t matter what Parker was building. what what he was actually building was all in one HR. Doesn’t sound it is not sexy. I just wanted to join this guy’s company because he was going to build a billion business. We didn’t realize that outcome with Zenefits. He’s going to with Rippling. So, you know, solid intuition

I think any sales environment, there is going to be a lot of nuance that leads to huge discrepancy in performance. You know, there there are, of course, sales environments where selling the product is more challenging. There are sales environments where the sales cycle is significantly longer. There are sales cycles where the AEs are controlling more of their investment through outbound versus taking leads for marketing and inbound. But what happens seemingly universally, even at the best companies in the world, like Zenefits in 2014, is there are outlier performers that perform at something like 3x to the bottom performer.

And so you get a team of like 10 people. Even when you’re in an environment where the product is flying off the shelves, there is still this huge discrepancy of performance. And I love sales because it’s so objective compared to other areas of the business where you have a 10x, you know, performer, and and it’s hard to know that or certainly harder than it is in sales. And so that’s what comes to mind. Like, of course, you want to be in an environment where the business is doing well, but it doesn’t mean that the role becomes easier or, you know, your success is more guaranteed or anything like that because you still need to be the best.

If you want to get promoted faster than anybody else, if you want make more money than anybody else, you need to be number one. And it doesn’t matter if you are at a startup that is less successful or the hottest, fastest growing startup there is, those dynamics still exist.

The way I start is hire two individual contributor account executives. Those are sales reps. Always start with two. There are a bunch of reasons why. We won’t go on too much of a tangent here as to the reasoning. Once you have two successful individual contributors in seat, you probably to take a parallel path of hiring more individual contributors and hiring your first sales leader. Because once you have two successful folks in place, you’re sort of qualified to bring in a great sales leader. When I joined Zenefits, there were two successful sales reps.

When I joined Brex, there were two successful sales reps. The recruiting process of a sales leader is going to take time. You don’t want to entirely stall the business as you are taking the four to six months possibly to find the right sales leader. And so these parallel paths of continuing to hire, individual contributors and hiring your first sales leader are oftentimes what I recommend. Once you have a sales leader in place, you can then start to do some specialization like hire an SDR. I don’t like hiring SDRs prior to hiring a sales leader because they need a lot of hands on management.

You’re not full of shit. You’re absolutely correct. And good point on the sequencing here. So I I jumped right into when when you are ready to hire, but what are the signals that that you are actually ready to hire? You should have a handful of non friends and family revenue generating customers and a process that you believe is repeatable in terms of generating more of these customers. The reason that I say handful is because it’s it’s not the same for businesses that differ from one another.

If you’re in a very transactional transactional business like Brex was, Brex actually had tens of customers before bringing on their first sales rep. Now if you’re more of an upmarket enterprise like product, your ACV is six figures, you may actually only have two or three paying non friends and family, what I’ll describe as more enterprise like customers before you’re ready to bring on a salesperson. But look, if if you as the founder cannot close customers and generate revenue, people that sort of specialize in sales will definitely not be able to. is no one better qualified to acquire your first set of customers that you as the founder, regardless of sort of your professional training.

And so do not hire a salesperson before you have customers.

Profile, the things that I would solve for, and then one specific thing that I would not, and then we’ll get into sourcing. The the things that I would solve for, early stage startup experience. If you are hiring your first AE, first AEs number one and two, they need to have seen an early stage startup environment. Do not hire from an extreme example being Salesforce, but, gosh, even today, don’t hire from a rep who came from Rippling and joined Rippling when they were 500 employees. The experience that they’re going to have onboarding into that environment is radically different from what they will experience onboarding into your environment.

And so I would qualify this as something like one of the first, ideally, 10 AEs at a startup in the earlier the better. So early stage startup experience is, you know, top of sort of, like, profile things that I would solve for. Next on the list is they have to have a track record of success. Sales is objective. You wanna hire the best possible person that you can. If they’re coming out of an environment that had eight sales reps, you you really hope that they are one one or two.

And we’re to talk about how to solve for that in the the like, category of sourcing. So track record of performance, early stage startup experience. You want somebody who has seen similar deal sizes with similar company sizes specifically. So if you are a very transactional sale selling into companies less than 100 employees, you do not to hire somebody who is a field sales rep coming from deals where, you know, they closed a deal every six months and these deals were six figures. So you sort of want like the deal size, meaning the ACV, and the customer segment that they are selling into to be similar.

The last thing that I will mention that people over index on, where people over index is domain. And so if we are taking something like let’s just take EchoSign, which is electronic signature product. If Jason had solved for hiring people from either DocuSign, which was like the direct competitor, or from like a company that generates documents, like like, similar category. So they just like, you know, understood the space a little bit better and could talk the talk That would have been the wrong trade off because it’s already so hard to find an exceptional early stage track record of performance sales rep.

If you are sacrificing or making a trade off on somebody who is who is seen domain, you’re sort of definitionally trading off somewhere else. That is the wrong trade off to make. And not to make this about me, but I’ll now make it about me. Electronic signature, all in one, hr. Zenefits was a a health insurance broker that had HR software, and Brex was credit cards, fintech, bank account. These are radically different types of software. And I think that people who are effective just pick this stuff up pretty quickly.

Any Any follow ups before we move on to sourcing?

I think it’s the right question. And it’s surprisingly, the in like, number of these people is quite high. And And by the way, there’s one thing that you don’t necessarily need to solve for here, and that is you should you do not need to solve for the logo. Meaning, this person doesn’t have needed to be an early sales rep at a company that ultimately realized a multibillion dollar valuation. In fact, there’s logic to the inverse being true, where if they were a sales rep at a company that had a product that was harder to sell, if your product is easier to sell, they can sort of be freed.

They will be more effective at selling. That said, if we think about the number of early stage startups that hired up to 10 sales reps over the last five years. That’s a large number of startups and that’s a large number of people. When I joined Brex, the the recruiting ground for me was fertile. There were countless AEs that I could recruit recruit from my personal network that met this criteria. And so you’d be surprised at how how many folks there are. Now There are also a lot of folks who are less good, meaning they weren’t at the top of the leaderboard.

But if we just multiply the number of startups that have existed over the last three years times the top two or three sales reps, we’re in the thousands. There are thousands of these people that exist.

Here’s what I see most folks doing. What I see most folks doing. So Harry, you are an exceptional founder. You were number one at your class in your class at Stanford in computer science, and you maybe were like, you know, the the CTO at a at a great startup to prior to joining, but your background is not sales. Your personal network is not sales. It’s engineering. Recruiting your first set of engineers became easy for you. It was just like your your Stanford classmates that you were friends with, and it was folks that you worked with at Rippling prior to starting your company.

Okay? But now it’s time to hire salespeople. You aren’t close with salespeople. This is not your personal network. What most or many folks do is they they leverage something like an external recruiter. And, you know, they have a recruiter send them candidates that they look at their resumes and then they interview them and they spend a bunch of time on interviews with potential sales candidates. And the reality is that these people that you were talking about, Harry, how many of these people do exist? Most of them do not go through a third party recruiter.

They want to go somewhere where their reputation precedes them a little bit. And so sourcing by leveraging your personal network is just of the utmost importance. Now, there are a few flavors that this can take shape. The first is you might have been, you know, successful technical lead at a prior company. Like, go go potentially recruit from the sales team there where you may know some of the sales folks. So that’s your personal network. Taking Brex as an example, our first couple sales folks before I had joined that came from our our CFO at the time.

His name was Michael Tannenbaum. He recruited them from SoFi. So you can leverage the networks of some of the folks on your team as well that are bringing in your potential early sales reps. You can leverage your investors. So, Harry, you’re an investor. You may know some exceptional AEs that you can help place at some of your companies, certainly refer to potential founders. But this leveraging of your personal network, I I would not stray from that. And to take it one step further, at Brex, we did not use recruiters, internal or external, to source candidates for the sales organization ever.

I hired the first, let’s call it, five folks from my personal network after the first two sales reps came from personal networks of people that were already within the company. After I hired those five people, they had personal networks. I’ll be specific. hired a guy, Brandon Boyle, who just crushed it at Brex. He brought it. He came from Gusto. He brought in the number one rep from Gusto as soon as he joined. And so you’re you’re just constantly leveraging the the networks of the existing team, of your investors, and of the successful folks that you hire.

And the probability of success is just so much higher for a number of reasons.

There are always sacrifices. I don’t know there is such thing as the perfect candidate. There are a few things that with these early hires that I would not sacrifice on. I referenced a few of them. There’s another one that Jason loves to talk about, and that’s would you buy from this person? So I think what you need to do as a founder is you need you need to sort of decide what what are the areas that I’m open to sacrificing and what are the areas that I’m not.

And then solve for the areas that you are not open to sacrificing. Do you Do case studies? Do you test it literally? Meaning, do you have the candidate do a case study?

Oh, I think I think the prior company is a really interesting one because I think what’s hard about sell me my company, meaning sell me 20 VC. Right? You’re a 20 VC expert and I’m not. So, like, you know how to pitch this product better than anyone in the world. And they’re almost like destined for failure, but they should be exceptional at pitching their existing product. And so if they can pitch you, you know, yes, I would buy your existing product from this person, that should be an easy exercise for the rep to go through.

I like that, Harry.

You know, I think for the for the early ones, I I think you probably just have a conversation around just like, what are your comp expectations? You’re You’re probably going in with an idea of what you believe is market rate for the hire that you are making. Let’s just say like, you know, at maturity, you think this sales rep is to be able to close something like a million dollars in ARR. We’re a mid market sale and we can we can afford to pay somebody in this role.

Let’s call it 200K. You know, we’re early stage, sorry to give a bit more equity. We think ballpark is to be like 160k total comp. That’s like, you know, where we think it is. Harry, you’re the candidate. You know, what are your comp expectations? Well, Sam, today I’m at $1.80. My company is a little bit bigger. I would, you know, I I would take a little bit of a hit there. And, you know, you go in at at one and you give them a bit more of the equity of the company.

But I think it’s not one size fits all. You don’t have an idea based off of how much revenue you think a sales rep can generate at maturity. AE range 100 to $2.50 is like the total comp for a sales rep. So wide range there based on a number of factors.

Yeah, this is why the startup experience is so important. Hopefully the rep comes in understanding a little bit of what they need to be successful in an environment where there isn’t a lot of structure and there is a lot of ambiguity. You know, You as a founder can be confident. Here’s your computer starting day one. I’m to teach you as much as I know about what has been effective for selling here. but, you know, what what ideas do you bring to the table for us to generate and close more revenue?

Hopefully, setting them up for success by giving them access to any information that they need. And then, you know, the the sort of like next iteration of this area is how do we then measure performance and success of this new hire? You know, ultimately, it’s going to be around generate revenue, their ability to generate revenue. I think during, you know, reps, you probably do want to have agreed upon objective measurements of success. Going be different for every company, but you to be transparent about here are the things that are important over the first thirty days.

Here are the sort of like milestones that we would like you to achieve in your first thirty days. Many of them are be objective. Some of them are be subjective and just, you know, are you’re as a founder watching them sell. Is this person picking this up quickly or not? It’s slightly subjective. And then as we mature, there are three things that I look for in terms of measuring the success of a sales hire. This is true for the first hire and this is true for the 10th hire, the 100th hire.

The first is performance. Super objective. Sales, you know, it’s it’s how much revenue is this person generating? Where do they stag rank on the leaderboard? The next two require no skill and are more subjective. The first is effort. Is this person working hard, setting the bar for what hard work looks like? And then the third one is attitude. Is this person reflecting positively on their peers? Are they coming into the office motivated with a smile on their face, positive about the environment? You know, how do they, handle change, those sorts of things.

And if number one doesn’t exist, meaning if the performance isn’t there, you sort of default to, okay, what is the effort and the attitude like? And if either are lacking, this is either like a zero time or one time conversation with the person around performance.

I grew up in a world where people were in the office five days a week. And, yes, it was easy to tell who was working hard and who wasn’t. You know, especially in sales, one, there’s the like, when are they getting in and when are they leaving? And then there’s also the, gosh, this person, I hear them on the phone all the time. And you can just sort of like see and hear the activity levels, especially in sales. You know, some folks today are remote and that is a new challenge.

I think, Harry, though, if you make the right hires, there are metrics that you should start seeing improve almost immediately, regardless of how long the sales cycles are. Some of those metrics will be things like the number of opportunities that we are working. Harry started two weeks ago. Harry, he immediately started pounding the phones. He came up with this like, really creative outbound campaign. And we’re like, I’m joining calls with Harry with Square. We’ve got a demo with Square today, the CFO that Harry broke into the account.

And now I’m the founder CEO. This is an important call that I’m joining. Like, high five to Harry for breaking into this account. Square’s now in the pipeline. This was a real call. And so even if your your cycle times are long, there are sort of obvious metrics that should be improving. A sort of easy one is around opportunities and pipeline that that you are tracking.

It’s funny, the the number that was coming to mind for me, it almost doesn’t matter how long the cycle is with these early hires in particular. I think thirty days. And And And here you’re you’re probably closer to right with your week. You know, many folks say a quarter, many folks say ninety days. That that seems way too long for me.

You only get one chance to make a first impression. It generally doesn’t get better, which I think sort of piggybacks off of your comment, Harry. And if you’re having performance expectation conversations really early on, I think that is a a bit of a red flag.

Your mother has very high expectations because you’re crushing I think my biggest hiring mistakes were pretending that concerns that I had in the interview and hiring process didn’t really exist. In sales in particular, you know, it it is performance based, but it’s also like the the team dynamic is so important. Like this concept of building a winning culture and having people that are positive influences on their peers. You cannot have folks that sort of sit around and complain about the product or complain about marketing or whatever the like, complaint of the day is because it rubs off on their peers.

And before you know it, you have just like an unhappy sales floor where one person is negatively impacting the broader team. And I have probably rehired or hired people where, you know, this concern had been flagged. Where it’s like, you know, they hit Quota, but there there is some serious baggage that comes along with this person. It’s like, oh, they hit quota. We need to hire 10 people. Come on, Like, join. And And so, you know, that’s one example. But I think it’s it’s pretending things that were concerns in the interview process didn’t really exist because, like, either they were coming from this place or be sort of blinded, And then those things oftentimes come to manifest and bite me.

You know, I did some consulting between Zenefits and Brex, and I talk with founders as part of my prior role at Founders Fund regularly. And the conversation almost universally goes something like this. Harry, we’re sitting here in late March. Let’s just pretend the quarter ended, and we missed our revenue target. And when I ask why did we miss our revenue target, almost universally, the answer is something like we had a couple big deals that had those big deals just closed, we would have hit our plan.

And, you know, unfortunately, they pushed and we missed. But like, you know, I’m sort of diagnosing our problem with we we didn’t close company A and company B that were in the pipeline. And the reality is that I would say for four out of five startups, maybe more, they are effectively diagnosing the problem or the bottleneck to growing faster ads is conversion rates. And for almost all startups, the bottleneck to growing faster is actually around demand Gen, opportunity creation. And if you think about just sort of a simple version of this, if everything else remains constant and you are able to 2x the number of opportunities that you are creating, you have effectively just doubled your sales.

And doing the same thing on conversion rates is much more difficult to do. Meaning, you know, 2xing conversion rates is far more difficult than focusing on generating more demand or focusing on opportunity creation.

What I find is the environment that exists for most tech startups is what I would describe as a lead lead-poor environment, where you look at the calendars of the salespeople. Harry, you just hired two salespeople. We’re you know, we’re we’re this phase of the company where it’s now you and two other salespeople, and I pull up the calendars of your two salespeople, and they are spending an average of one hour a day customer facing. This is whether it be, you know, new demos that they are taking or existing pipeline where they’re following up with customer, and they are clinging on to any possible opportunity that exists in the pipeline.

And they’re salespeople, so they’re sort of waiting for more opportunities to come in because, you know, their focus is on closing the deals. And we don’t have anybody in marketing, and I’m a founder, I’ve got all this other stuff going on. You know, if I’m spending one hour a day customer facing as a salesperson, I’m clinging on to the limited number of deals that I do have. That creates an environment where I am incentivized almost to Harry to tell you as the founder, you know, this deal actually has a good chance of closing, even though it doesn’t.

Because I’ve to tell you, I have some form of pipeline. I can’t tell you we’re to close nothing this month. But if I had more opportunities, if my calendar was more full of demos, we would be closing more revenue. And I just believe that demand masks a lot of other potential problems, almost all startups. The bottleneck to growing faster is demand. We are we are constrained by the number of opportunities that we are creating. We are misdiagnosing this as a conversion rate problem, and our resources and our focus are being mapped to where we are misdiagnosing the bottleneck, which is the middle of the funnel.

We have more salespeople than we do people focused on opportunity creation. Our focus is on the deals that are in the middle of the funnel. with all of this resourcing and attention should be on generating new demand because we that that is the bottleneck to growing faster.

It’s interesting. The thing that really differentiated Brex in the early days was the underwriting model, where we used the cash balance to issue credit versus a personal guarantee from a founder based off of their personal credit, which is the way that all of the credit card companies did before Brex. We actually weren’t the first to do that. Divi who was a competitor at Brex, they started before Brex and they used the same underwriting model. But Divi sort of approached the market as we are going to be a corporate card for any type of business.

And Brex launched as the first corporate card for startups. So we were really explicit in our branding around what we were, we were a corporate card and who we were for. We were the first corporate card for startups. And because of that, we gained really meaningful market share in this vertical of technology, the segment of startups because of the branding association and the focus that we had, we took the innovators dilemma approach, which was we went after a small segment of the market, very differentiated product, gained huge market share and expanded from there.

And so, you know, at least in that example, it was really effective.

Well, certainly in the early days, and I would argue as companies progress as well, you you know, if you only have two AEs, those AEs have to be responsible for generating some of their own demand. That often takes form of outbound, but they can come up with clever ways to generate demand outside of the outbound. But salespeople should absolutely be responsible for controlling their own destiny in a way, generating their own demand that often manifests through outbound. I think this is true on day one. This should be true on day 1,000.

I’ll tell you a quick story about Brex where I think, you know, it really illustrates the importance of this point. When we were a relatively mature startup, so let’s call it 50 to revenue of annualized revenue, One of the things that we noticed was that the AEs were sourcing far more of their own revenue than their SDR counterparts. Even though they were full cycle, they were also closing this revenue. So you have an SDR who is spending 100% of their time on outbound and an AE who is spending, let’s call it 50% of their time on the on outbound And the AE is sourcing more closed revenue.

It shouldn’t be that way, Harry. Right? But it was. And the reason behind that is because AEs had their opportunities converted at higher rates, and the opportunities that they were generating generated more revenue. And it’s because AEs had this intuition around what a quality opportunity looked like, which companies would spend more on their card, and so they were sourcing higher quality, higher revenue generating opportunities than their SDR counterparts were. Now, of course, we took this information, we made a bunch of changes. We sort of took away the ability of SDRs to decide which accounts to go after.

We said these are the accounts that you should go after. These are the people you should reach out to in these accounts because we know conversion rates by persona. We also changed the model by which SDRs were compensated. They were originally compensated on opportunity creation. We moved it to revenue. Eventually, SDRs began sourcing more revenue than their AE counterparts. Now the AE counterparts, they didn’t change. They were still sourcing the same amount of revenue, but SDRs caught up. And we get none of these insights, We drive none of these changes if we don’t have AEs sourcing their own revenue. such that’s just one example of why I think it’s important.

But ultimately, I think that, you know, it’s a missed opportunity to not have AEs. Like, if we think about ROI on AE time, number one is closing revenue. There’s no higher ROI than an AE spending their time closing deals. Number two, sourcing additional revenue. And so if they aren’t spending 100 of their time, let’s call it 45 hours a week closing deals, whatever that excess time is going towards, it is less ROI positive than sourcing their own deals. So I think they should be doing so.

It’s the right question. I love outbound. I love sales outbound. What What you’re describing, Harry, is a form of outbound that I think is not effective. Let’s approach it like this. What I see most sale early sales reps, SDR teams, startups. What I see most folks doing is they purchase, you know, CRM, they purchase ZoomInfo to get contact information. They purchase Outreach to have email sequencing, and then they write like a, you know, version of the copy that pitches their product a little bit. And then they drop the universe into seven email sequence, outbound, cold email.

And Harry, these are going like, we’re we’re we’re a 10 person startup. Nobody knows who we are. Harry, you are 22 year old SDR that just started at our 10 person startup. Nobody knows who you are. So you’re sending an email to, let’s use your example, the the VP of HR at Brex, 22 year old SDR, 10 person startup, it’s the 12th email that they have received today trying to pitch them on a payroll or whatever product they’re pitching them on, and it goes right into the trash.

Most startups are doing outbound wrong. I think the way that startups should be approaching this, first is on who you are targeting and then how you target them. So who you are targeting Think about the universe in terms of concentric circles. You want start with the sort of like closest concentric circle to your business. So Harry, we’re still this 10 person startup. Okay. You, Harry, in you’re the founder. You have a personal network that is a bunch of other founders. So we’re to start going after companies that are in your personal network.

We’ve also raised a seed round from a number of different investors. We’re to leverage the networks of our investors. We’ve got 10 employees. Our engineer, they were at three companies before they joined, our company. They’ve got a bunch of connections that they can reach out to at other early stage startups. Let’s leverage their personal networks. Okay. Now we’re starting to acquire some customers. Some of these customers are really happy. How can we leverage these customers to generate additional customers? Hey, Harry. You’re VP of HR at this company.

Do you know anybody else who could leverage our product to realize some of the same value that you are realizing? Because, you know, the HR community is sort of tight knit. So I just think the way that we are doing Outbound or who we are targeting is wrong. Think about the world in terms of concentric circles and closeness to the business. At Brex, we started with personal networks. We moved to investor networks. We moved to YC companies, We moved to former YC companies. We then put billboards up all over San Francisco and we targeted companies that were headquartered in downtown San Francisco that would walked past our billboards.

These concentric circles just keep getting further and further out until you get to the point where you have such a brand that you can email the VP of HR, You are no longer a no nobody company. You are Rippling. And VPs of HR at 250 person tech companies, they know Rippling, And the probability of getting a response to that email is just significantly higher. But you don’t get there on day one. It’s a process. So that’s on who you are targeting. Now, the way that you target them.

I think, you know, you really want have contrarian, you know, really demand gen efforts, but specifically contrarian outbound efforts. I’ve talked about a champagne campaign that I did at Brex where we sent founders a bottle of champagne early on and you know, congratulated them on a recent fundraise. That’s differentiated. It received a ton of responses. You just want come up with something that is different from what everybody else is doing that stands out. It oftentimes can come in the form of some physical delivery, a handwritten note.

You just want be different.

I think the approach to acquiring customers and how much you can spend on that, it needs to be influenced by your ACVs. And to your point, Harry

Well, I I think there’s, you know, within different businesses, you you have different segments of customers and you can approach acquiring one customer very differently than a significantly larger customer that generates more revenue. But what you can’t do is scale that down. And so I used this example of we sent bottles of champagne. It was 40 a bottle. You know, it’s expensive. Like, after delivery, maybe we’re we’re upwards of $60. You can’t spend that, you know, on customers that generate $100 a month in revenue for your business.

And so if you think about the world or your company in terms of multiple businesses based off of the segments, you just target customers differently depending on how much revenue they’re to be able to generate. It’s It’s certainly not one size fits

What I’m seeing is the tools today are making the category of outbound or the function of SDR or AE more effective. They’re streamlining a lot of manual process the same way that something like, you know, Outreach did a number of years ago. Harry, when I joined, EchoSign is an SDR. Marketo existed, but I was manually sending all of these emails one at a time. I, like, copy it paste and then I’d, like, put in somebody’s name, and then I’d hit send. But it was a very manual process.

Along comes Outreach, and I’m able to send like a hundred at a time. That allowed me to, you know, be far more efficient as an SDR, but it didn’t get rid of the function of SDR. In fact, like, maybe there are more SDRs in a world where outreach exists than there were before. And, you know, I think we’re continuing down this path of automated, you know, now we can personalize emails. The AI is to write me an email that knows things about Harry that I wouldn’t even be able to find out if I spent a bunch of time researching it.

So, you know, the AI is going write me copy as well. I think what, at least today, AI does not accomplish that humans still do is this this aspect of being creative. You know, the the AI isn’t going to tell you, here is your contrarian or unconventional outbound sales campaign that is different from what everybody else is doing, and that’s generally gonna come from a human. And, you know, there is a process that I go through to determine these things if it’s helpful.

Okay. For each different channel, I I love to do just a whiteboard session. You know, Outbound is one example. So let’s take the outbound example, but this applies to to so much more. And then I’ll give specific examples of outputs that this process has produced. So with Outbound, we want be different. At a 10 person startup, Harry, you’re the founder, you’re to be in this meeting. The two sales reps are going be in this meeting. And then maybe we have like somebody in growth. That person’s gonna be in this meeting.

So we’ve got four people in this meeting. We are going to do it’s at o’clock on Monday evening meeting. It’s the end of the day. We’re gonna do a whiteboard session. This meeting can go until midnight. There’s no end in sight because it’s the last meeting of the day. Okay, everybody come in with your top three ideas on what you you suggest we do that is different from what everybody else is doing in outbound. Okay? We go around the room. Sam, who are what are your top three ideas?

Okay. Harry, what are your top three ideas? We go to each person. Everybody comes with three, like, contrarian or different ideas on how to do outbound. We discuss them all. We select the ones that we think are the best, and we go out and try them. And you do this with outbound. You do this with events. I remember the first time we sponsored SaaStr at Rex. We have late night whiteboard session. We get everybody that we think is, you know, contributing to this meeting in a room.

Everybody come up with three ideas. What are the things you want do differently? We don’t just show up to SaaStr with a $100,000 booth and some pins to give away to people. We show up. we had task rabbits outside of the event in Brex t shirts handing out breakfast burritos to every single person that walked in the venue. So the first experience that they have at SaaStr is they get a Brex Burrito on when they walk in. bucks a person. Not expensive. They walk in, You know, our booth, we have a magician that is using like, you know, Brex cards to do tricks.

We’re giving away 25 gift cards. He’s incorporating the Brex pitch into his magic tricks. Everybody is around our booth for these $25 gift cards. We had all the billboards that were around the SaaStr conference. We bought them and for So on the walk from the hotel to the conference, you’re seeing Brex billboards. When you check into your hotel, your key is a Brex credit card. When the hotel gives you your key, it’s a break. You use your key like four times a day to go in and out of your room and you’re using a Brex credit card.

How do you do that? You do a partnership with the Four Seasons? Like You pay for the sponsorship. And we, you know, we actually brought this idea to SaaStr and SaaStr was like, that’s free money for us. We didn’t even have this sponsorship before. Yes. We we we have these room blocks. We can tell the hotel, like, use these key cards. We ordered the key cards.

And none of this stuff and and, again, you do this with every channel. I’ll give you one more example because I think, you know, Harry, you seem to like the outputs of some of this stuff. But the way you get there is late night whiteboard session. We’re sponsoring SaaStr. Everybody come with your top three ideas of things that we can do to stand out at the conference. We’re doing Outbound. Everybody come with your top three ideas of things that we can do differently than everybody else for Outbound.

I’ll give you one more. Hate advertising. Actually, there’s two outfits. Everybody just pays LinkedIn and Google and Twitter and they pay them a bunch of money to service. some ads. Okay. Brex, we went offline. So everybody’s doing online advertising. We put billboards all over San Francisco. We did offline, very contrarian. We had a concentrated target market geographically. My favorite one though, that was super effective. What Rippling has done, they have a campaign right now where Instead of paying LinkedIn money to surface ads on LinkedIn, when new employees onboard to their customers, they onboard through Rippling.

And at the end of their onboarding, you know, it’s W-4, I-9, payroll, all that stuff, benefits. At the end of the onboarding process, they do an NPS survey. How would you rate your experience with Rippling? The folks that say 9 or 10, they send them an email, and it says, if you post on LinkedIn about your onboarding experience with Rippling, we will give you 25 or $50 Visa gift card. Just hashtag Rippling, hashtag sponsored, something like that. And so you have thousands of posts on LinkedIn that are sort of organic, where a new hire at a company is saying, just joined company x, onboarded through Rippling, awesome onboarding experience, you know, hashtag Rippling, hashtag sponsored.

In all of these posts, they get tons of engagement because you see when somebody joins a new a new company, everybody likes it. It’s like, you know, I joined this new company. It’s an announcement. Everybody likes it. Congratulations on joining the new company. And they’re paying $50 each time somebody does one of these with hundreds of likes in some instances because they join a new company. How much more effective is that $50 than paying LinkedIn $50 to service an ad that says rippling all in one HR and IT?

Okay, So so the most successful campaign, and we’ll I’ll be Brex specific, the most successful campaign campaign we did at Brex was the billboards. I think it’s the type of thing where our mind share within our target buyer went from zero. When Brex launched in 2018, when I joined Brex, we didn’t have a website. I went to the website and it said coming soon. We had no PR. We didn’t announce any of our funding rounds. We were in stealth. So So was almost impossible for our target market to know who Brex was.

So, you know, market mind share of Brex was like near zero. And when we launched, we did a bunch of things, including announcing the fundraising that we had done historically. Of course, we launched a marketing site, but the very day that we launched ga’d the product, we put billboards up all over San Francisco. I think the campaign cost something like $300,000 over three months. We were everywhere. That just made everything easier for us. You know, we talked about outbounding. I can’t tell you the number of responses to our outbound emails that were, I see your billboards everywhere.

And they probably don’t respond to the email in the first place if they don’t see our billboards everywhere. So one, customer acquisition became so much easier because of the brand awareness from that campaign. But Harry was bigger than that. Like, in fundraising became easier because of that. We sort of became famous because of this billboard campaign where were all over San Francisco. And so for, you know, $300,000, it was really effective.

Ooh. Okay. Rex is a corporate card, a credit card. And if you think about, you know, American Express was our biggest competitor when we first launched. We were mostly taking market share from American Express. Folks had used their business or corporate card. And American Express is really famous for airport lounges. You know, they’ve got these like Centurion lounges at a bunch of airports. And around the same time, Capital One was launching these like Capital One cafes. And we decided at a very early stage, we were less than hundred 100 employees.

We decided that we were going to open a restaurant and lounge. And so we opened in South Park in San Francisco. We opened a Brex Lounge on top of South Park Cafe, which was a restaurant. And Harry, running a restaurant is hard. It’s also expensive. It is distracting. And, you know, in hindsight, that was a big mistake. We should have focused on building a credit card company, using our dollars to acquire things like customers, and not, you know, remodeling a 100 year old, restaurant that was in dire need of a remodel.

How much did it cost?

There’s two costs. There’s the hard costs. Hundreds of thousands, if not low millions of dollars, you know, when all was said and done in terms of remodeling the restaurant, the rent, the just everything that goes into it. But Harry, it’s it’s the opportunity cost that was so much higher. It is hard to run a restaurant. It takes resources from whoever we put in charge of running the restaurant. They have to hire people. They have to manage those people. That was the biggest mistake that we made at Brex

Yeah. That was a shit idea. idea. That a world class shit

If you were in if you were in some of the exec meetings where we discussed it, you might have been like, this is to be great, but it wasn’t.

You know, here’s here’s maybe the glasses half full way of thinking about this. is something like not 100% of your really creative or crazy ideas are going to land. And I think it’s better to have tried than not tried at all. Something like that. You know, so maybe even like celebrate the failures in a way.

I love it.

Yes, with qualifications, you know, early stage startup, if I can describe the environment that I prefer to be in, it’s something like we are perceived as the premium product both because of the quality of our product, but also the price point with which we sell the better product. And I have the ability to discount that product to accelerate deal cycles. So much of sales is psychology. And if you’re a buyer, the feeling of getting a good deal drives behavior. You know, there’s a saying, Harry, time kills all deals, especially in the early days.

If providing a discount does things like accelerates deal cycles, prevents people from looking at competitors, and allows you to move on to another opportunity, I do like leveraging it in certain instances. I think where people make mistakes, and salespeople in particular make mistakes, is like, just defaulting to discounting. This is something that happens very late in a deal, and it happens with a very clear trade off, which is driving urgency to close.

There are two. We talked about one, this spraying and praying of emails, at an early stage, I think is something of the past. The second thing that comes to mind is people are going to start meeting their customers in person again. You know, pre-2020 a lot of customer interactions happened in person. And then 2020 hit, people went remote. And I think, you know, we have not returned to an environment where we are meeting our customers in person, we’re meeting our prospects in person. And I think that today, if you’re doing that, it’s a real competitive advantage.

But I think forward looking, this idea that we never are going to meet our customers in person, we’re just to return to the norm here. We measured conversion rates at Brex. When we met a customer in person, we had 3x the the likelihood of closing that deal than if we didn’t. And so like the days of working from home, doing Zooms only to meet with customers, not meeting customers developing personal relationships those days, I I think are going to be a thing of the past, if not already.

sales teams?

If you are a mature business and you’ve gone remote, that’s tough to put that back in the bottle. Genie’s out. I think if you are starting a business today, I am very biased towards building in person, both the, you know, the entire company, but also the sales organization.

I totally agree with you. I I fund in person companies. Let’s finish with what would you most like

My experience with many salespeople today and you know, we’ve talked a little bit about this remote environment that I think has had influence. but I think today’s salespeople have gotten a little bit lazy. And I think they and we, because I consider myself, you know, part of this community, couple things have happened. One, we have become overly dependent on marketing, SDR, anybody to source our own leads. We are We are consumers of demand, and if we’re not well fed, then you can’t expect us to close revenue.

So that’s, I think, one like, trend that I believe needs to change. And the second one, it is around effort and especially with remote companies. And I think that this is true with sales and it’s likely true beyond sales where, you know, Harry, when I joined Brex in 2018 and we did this podcast, startups were really fucking hard. And my first day at Brex, I had a meeting that was at 8AM, and I had a meeting that was our exec our weekly exec team meeting, and it started at 8PM and didn’t end until midnight.

And I walked home from the office after midnight and I was in meetings from 8AM until midnight. Same thing was true at Zenefits. And look, I was an executive employee there, but all of the people at the company were working that hard, and it required it. And I think today, many salespeople in a remote environment are waiting for leads to be placed on their calendar and working something like a 30-hour hour work week. And it just doesn’t really work, especially for early stage startups. Like, if if you want to separate and be successful, it just requires a lot of hard work and and no entitlement around, know, getting leads placed to warm spoon fed leads on our calendar.

I think it’s really insightful and smart. And there are so many of these things that just apply beyond we what we’re what we’re describing right here, but, like, the little things can go a long way.

Harry, I I appreciate the invite so much. I’ve had a blast as I always do, and let’s hang out in person. I’ll be in London early June and I expect to see you and and spend some time together then.