Paddle scaled with one motion: outbound. They were incredibly focused on one ICP, and ended up developing a three folded funnel.
Check out the definitive guide to revenue architecture here.
***
- (00:00) - Introduction
- (01:58) - Meet Harrison
- (06:28) - Figuring out how to sell
- (12:24) - How they scaled
- (15:11) - Changing the target customer profile
- (19:09) - Not running out of market
- (25:27) - RevOps - the secret sauce
- (32:01) - The three funnels
- (41:04) - The messy journey
Check out the definitive guide to revenue architecture here.
***
This episode is brought to you by Growblocks. Finding and fixing problems in your GTM shouldn't take weeks. It should happen instantly.
That's why Growblocks built the first RevOps platform that shows you your entire funnel, split by motions, segments and more - so you can find problems, the root-cause and identify solutions fast, all in the same platform.
***
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Creators & Guests
What is The Revenue Formula?
This podcast is about scaling tech startups.
Hosted by Toni Hohlbein & Mikkel Plaehn, together they look at the full funnel.
With a combined 20 years of experience in B2B SaaS and 3 exits, they discuss growing pains, challenges and opportunities they’ve faced. Whether you're working in RevOps, sales, operations, finance or marketing - if you care about revenue, you'll care about this podcast.
If there’s one thing they hate, it’s talk. We know, it’s a bit of an oxymoron. But execution and focus is the key - that’s why each episode is designed to give 1-2 very concrete takeaways.
[00:00:00] Toni: Hey everyone, this is Toni Hohlbein from Growblocks. You're listening to the Revenue Formula with Mikkel and Toni. In today's episode, we are chatting with Harrison Rose, who co founded Paddle. Harrison shares with us how they went from 0 to 100 million using cold email. Enjoy.
[00:00:19] Mikkel: Okay, so let's do it. We are recording
[00:00:25] Toni: anyway. No, I know. So Mikkel, are you, are you going to ask the question or
[00:00:27] Mikkel: what? You mean throw our bus under the question? Guest? The guest under the bus question? Should we try that again? Oh, wow. I've not had enough coffee today.
[00:00:36] Toni: So, but Harrison, what, I mean, we wanted to kind of record this, I feel like two or three or four months ago.
[00:00:42] So we've been eagerly waiting to talk to you. Why, you know, tell, tell everyone here why, why has it been taking so long?
[00:00:50] Harrison: I can't just blame my bad scheduling. My EA is a saint. It's not, it's not, it's not that. Um, yeah, I think we first chatted or introduced Just for Christmas, right?
[00:00:59] Uh, which is always a wild time for everyone. Closing Q4, ending the year, doing a new financial plan. I'm sure a lot of people can relate who are listening to this.
[00:01:08] It's the worst and busiest, most intense time of year. Um, but then shortly after that, yeah, I went on a long holiday, man. I highly recommend it to everyone. Uh, I took a, a month out, like mid Jan to kind of mid Feb. Um, my team had encouraged it, like, I co founded Paddle and ran that for a long time, and then kind of went pretty straight into, into Goodfit.
[00:01:30] So I'd always talked about taking a good month off somewhere along the line, so yeah, I took a month off in Bali. I successfully proposed to my girlfriend, which was
[00:01:37] good, and managed to avoid Doing too much work there. So she actually said yes. So this, this is a successful Yeah. exactly. Um, and, and now I'm back, uh, with my feet under the desk. Uh, a fiance. Uh, yeah. And ready? Ready to record, man.
[00:01:51] Mikkel: Wonderful. So kind of casually slipped that proposal into the story and the trip. That's kind
[00:01:58] Toni: of crazy. Yeah, yeah, yeah. Well, well planned. I mean, for everyone who hasn't guessed it yet, or maybe read it from the title of the episode, uh, Harrison Rose here, previously, , co founder of, Paddle, right. And kind of really managing the commercial side, currently co founder and CEO.
[00:02:13] Of good fit IO. We're going to talk about this a little bit more. you're an expert actually with Notion Capital. This is how you and I actually got introduced. And basically you, you started running Paddle out of. High school or something like that. We're probably going to get into this in just a second.
[00:02:27] And Paddle raised to date, uh, 300 million in cash. It's like roughly 300 employees, probably more by today. And like 3000 customers, probably also more by today, right? And, and I think you crossed the, the unicorn, uh, valuation, in your, series D basically, right? So before we go into all of this other stuff.
[00:02:46] Tell us this high school thing because everyone's like, wait, how old is this guy? And you know, give us a little bit of background there, maybe.
[00:02:54] Harrison: Yeah, so, uh, yeah, I started working with Christian, my co founder at Paddle whilst we were still in school, actually. We were probably 17, 17, 18 ish. Uh, feels like a long time ago now. I'm just about cleaning onto my hairline. Uh, it's okay, but it feels like a long time ago. Um,
[00:03:10] he actually was due to hire my that's true.
[00:03:14] Preaching to the choir. Let's start the it's a founder thing, guys. Like, it happens. Like, uh, Christians more along your lines than me. The What a start. The, um, but yeah, he actually was due to hire my best friend who I was at school with, a guy called Will Roberts. who actually ended up working for a guy who became our angel investor in the weirdest twist of events ever. He cold outreached him having watched him on TV one night and just started working for him and then fortunately I was introduced to Christian and I helped him run what was a kind of Early version of, of Paddle, um, running like soft deals on like software,
[00:03:52] um, but we got introduced, we worked together exclusively remotely before it was cool, uh, when we were 17, still at school, uh, and then eventually raised money the summer before we'd have usually gone to university, not the Christian plan to. Uh, and then decided to, to go with it from, from there. He actually, Krishan I think dropped out of high school and I, I stayed on, which I mention in most podcasts because it meant that I had more qualifications than at least one person in the business. So he even like adds that into his story of this now, because it's just something that I've got. Um, but that's kind of how it happened, really by chance.
[00:04:24] Toni: But, but was it, so, you know, maybe going into the weeds here a little bit too much, but was it the idea to do like a fintech payment processing play was that you were just casually sitting around a high school, like in the schoolyard, it's like, you know, I think we should probably do this fintech game here.
[00:04:39] Yeah. Was that, was that how it landed?
[00:04:41] Harrison: Yeah, but you've asked that a lot more kindly than some people. People were just like, what a boring thing for like a 17, 18 year old to want to go and do. Um, but actually like, like most, I think, good ideas, it was recognized out of a need. We actually had quite a significant pivot. So Christian was like building some software in his, in his bedroom.
[00:05:02] Not very good software, but he was trying and he was realizing. That was really difficult, like once he built it, it was actually quite difficult to get it in the hands of people, to sell it globally, to distribute it, handle licensing, whatever. There was a set of challenges that he didn't anticipate facing and he felt he was spending a lot of time on those things rather than building this, this baby, his product that he loved. Um, so we came up with different ideas as to how we could solve that problem. The very first idea, which I don't think many people know about or we don't talk about a great deal these days, we probably did in the past, was like, our first idea was like a marketplace, more like the app stores that you know right now. Which kind of had some curation of all digital content as well as like ebooks, games, music, you name it. And then handled the checkout, the delivery, the management of all of the digital goods. So we were a marketplace to start with and then pivoted along the way. But yeah, that's kind of how we got there.
[00:05:52] It wasn't pure I want to sell international sales tax compliance for software and the like. But that is the path that we ended up going down eventually.
[00:06:02] Mikkel: Yeah. And then, um, I mean, once you had an idea of what to sell, it's, uh, it's the classic journey, I guess, of, uh, finding a fit in the market, finding product market fit and finding go to market fit. Right. And, um, we really want to get into the part of, you know, figuring out how to sell. Um, so once you kind of found out, Hey, you know, maybe also a good idea to give an overview of what Paddle does, by the way, but once you figured that out, how did you figure out how to sell it in the first place?
[00:06:28] Harrison: Yeah, uh, so Paddle today, uh, does payments and revenue infrastructure for software companies. So I think checkout, tax, recurring billing, all of this type of stuff. Anything you need to sell your product, basically, to your customers. Um, but yeah, our first idea was this consumer facing marketplace. Um, marketplaces solve a lot of the problem of selling software, like they handle the distribution, they handle the payments, you just get your commission or your money, it's like the software at the end of the process. Um, we were still going down that line for quite a long time, uh, probably a year, year and a half.
[00:07:00] Um, we used to joke that we would have made more sales on the marketplace, like going door to door, like we were just making no money. Um, but we really started innovating, sorry, on how we could get more. More content, more tools, more software on the marketplace itself. So I started to build out a bunch of SDKs and infrastructure that allowed people to get on the marketplace and actually start selling their software independently of the traditional app stores. And over time, folks saw more and more value in this kind of B2B infrastructure we were delivering than the actual customer facing marketplace itself. Like, they signed up to the marketplace, they got a checkout link on their product listing, it supported a bunch of currencies, payment methods, handled tax for them, and they just stick that same checkout link on their own website because it was the infrastructure that was valuable,
[00:07:45] not the eyeballs who were driving through the, through the consumer side itself. Um, so it took us a long time to accept that was happening, but then recognize that actually could be a much bigger business. It was difficult. Our initial angel investor A guy we owe a lot to, who believed in us, a guy called Mark Pearson, was big in like the consumer world. So telling him we were going like deep into B2B infrastructure was just like, it was hard, hard conversation to have.
[00:08:09] Um, but we got there in the end. Um, having doubled down on that as a problem set and what it is that we wanted to do. We faced a new set of problems, uh, and that was nobody knew who we were, nobody knew what we were doing. We were operating under a business model, this thing called the Merchant of Record, which nobody had really heard of, but actually enabled us to take on a lot of the burden of selling software for people. And we wanted some customers, right? But like, there was no interest, no funding that had got any press. Like, there was literally just no eyeballs on us whatsoever. So we had to get really, really good at identifying the customers that looked like the very best fit for us, and then outreaching to them. And so, we started with a cold outbound email approach, it was literally our only channel for the first five years running the business, growing at 300 percent year on year. During that time we had lots of awards for like fastest growing software company in the UK and all this other stuff many times. Um, which was awesome, but I think we had to get really, really good. Uh, using data to identify who was a good fit customer for us. Cause you had really strict criteria as to who we could and couldn't support. And then spotting those that are most likely to buy, cause we had a really limited amount of resource. Um, and then going outbound to those, to those folks, uh, and we got really good at it and that's what drove the growth in those early years, if that makes sense.
[00:09:29] Toni: but, but tell us a little bit more about that. Right. So, I mean, um, on the one inside identifying the right account, I think that makes sense. Right. And I think that also ties nicely into the good fit IO story that, you know, maybe it's adjacent to this year. Right. Um, but then also at the same time, you have this account now, um, did a year, did you, do you just send emails?
[00:09:47] Was it basically kind of the whole thing, just emails? Or did you have
[00:09:49] Harrison: Yeah, it was just email. The world was different back then. Like, you could get away with just I don't think we called anyone for, like, two years. Like, it was kind of wild. Uh, but go on, carry on, man. Sorry.
[00:09:58] Toni: No, no, it's, I mean, that is, was exactly my question, right? Kind of, was it really just kind of this, this outbound email stuff? And then, um, at some point you probably kind of realized, okay, you know, maybe you want to layer something else on top and layer something else on top and so forth. I mean. You guys at this point must have been, what, 20 years old?
[00:10:15] Or 21 or
[00:10:16] something, right?
[00:10:17] Harrison: Yeah,
[00:10:18] Toni: I mean, it's um, you know, you sent those emails out, you kind of got the initial meetings, and then, then you kind of closed them yourselves, I'm assuming, right? Kind of, that's basically how this thing worked, right? And in order to keep this growing 300 500 percent year over year, you need to kind of add a bunch more muscle, I'm sure, in order to get all of that volume through.
[00:10:38] Harrison: Yeah, there's a lot there, right? Like, we We had a bunch of different problems that we had to work out solutions to, we then had to think about how we're going to scale them and what kind of worked. I think the starting point is, and I think we probably did this by chance, we were selling to relatively, to start with small, we eventually focused in on just software, uh, by the way, which made things a little bit easier and more complex, I'll explain that in a second. And at the start, we were quite purposeful at selling to small, independent software developers and slowly made our way up the The chain, if you like, in terms of size of the company that we work with. And because we were outbound, as opposed to getting loads of organic inbound, which you have less control over the profile of the customer that you are targeting, we can be really, really purposeful as to who it is, what it is we are targeting, because we were so data driven in that approach as well. So in the early days, they were quite small, which meant that Back then, like, folks didn't want to be called, like, some of these people didn't have contact details on their website. Like, they were independent Mac, predominantly, software developers,
[00:11:34] who were, like, making huge amounts of money. Like, when we told our VCs about them, they were kind of shocked.
[00:11:38] I'm like, yeah, here's this one guy, like, he's making whatever. Half a million dollars, uh, every single month selling his software. He does a new major version every couple of years and his revenue spiked to x millions over a six month period before they trail back down to hundreds of thousands per month.
[00:11:55] They're like, this is just one dude, like, and this was before, like, recurring billing and SaaS were sexy, but like, these were the people we were targeting. So we were quite lucky that email was a channel. That they liked.
[00:12:06] Uh, and this I think is still a lesson of today. Like think about who it is you're targeting and think about how they actually want to receive your message and then use that as the channel.
[00:12:13] Don't decide what you're comfortable with or what you want to do. Think about how they want to hear from you, if
[00:12:18] that makes sense. And for us it was email for a long time, um, which was very helpful. Um,
[00:12:24] the, in terms of like how we scaled it, like I, having never done this before, this is my first company.
[00:12:31] Christian kinda had a couple before, but nothing really of any scale. Um, didn't really know about all the lessons of just like how to transition out a founder, let's say, or some like, grow a team around you. So I was involved in every single sale that we did for like five years, which is just not helpful, all the way through to like series B. Um, to some degree, right? Like, I was, didn't know it, but I became our first solutions engineer during that process. At one point I was our first SDR, then I outsourced the SDR, then I was our first accounting executive, then we hired some accounting executives. Then I, then we needed solutions in every deal, and I was the solutions in every deal before we hired a solutions engineer.
[00:13:04] And I say, I learned by doing that, and then scaled the team having learned what it is that I did. But yeah, that was a journey, and we probably could have grown a little bit faster had we been a little bit more purposeful in what we did there. Um, but genuinely, the thing that I think we did Best before I talk about the mistakes that we made and I think it's true of right now is that targeting the right Customer at the right time is the highest leverage thing you can do in go to market Like I think right now people massively over index on like experimenting with like messaging and before they've actually Ensure that that message was being delivered at the person that you want it to be delivered to. And this was a huge problem that we had to solve and it took us a long time to like, Paddle only sold to software companies, but software companies were the checkout. If you go and filter for software companies on LinkedIn, you get software development agencies, you get Huge numbers of companies that only sell offline, um, and like, making sure I wasn't running my emails or my ads at those people was really, really critical because it was literally just money down the drain.
[00:14:07] They literally just couldn't support, support the product, right? So I don't want to A, B test into that group, I'll run ads at that group. Um, and getting really, really innovative at spotting those people eventually led to things like Goodfit. Um, but that was a thing that we struggled with the most in the early days and I think still the problem that people have today. Um, the analogy that I give is like, if you're selling a house, you can optimise for your photos, like, of your property, you can optimise for the description of the listing, make sure the square footage is correct, but the person you want reading that listing, Needs to be in the market for a house.
[00:14:40] Otherwise, it doesn't really matter, right? So just make sure everything you're doing is going to the right people first and then you're always going to get better ROI, better return on ad spend, better conversion at every stage in the funnel because at least everyone you're directing it at can actually use your product.
[00:14:53] So that's what we really focused on and and it took us a long time to work out actually in the early days before we started making some some other mistakes.
[00:15:01] Mikkel: So you kind of mentioned you, you went from like the, the freelancer making, you know, half a million a month, which is just crazy. So
[00:15:09] Harrison: Some weren't making quite so much, to be clear.
[00:15:11] Mikkel: enough. But then moving to the, to software companies, right? Like maybe tell us a little bit about that. When did that happen and what, what challenges came about with it?
[00:15:20] Because I can imagine it's very different being able to email just one person who runs the company solo versus a company with, you know, potentially more people involved.
[00:15:30] Harrison: Yep, yep. And I always think that's where things started to go wrong. So, they were still software companies, right? Like, they were engineers, founders, whatever, had a product. Often, over time, as the market shifted, they shifted that product to one that was seed based and recurring billing, like, they were software companies, albeit small independent ones. Um, just a market that doesn't get a lot of coverage, quite frankly, um, in the early days. And I think over the years, platform has become less relevant. At the time, they were like Mac software developers. Now, those Mac software developers have a product which is on iOS, on desktop, uh, on Android, and it's sold as a subscription. They're seen as a normal software company, but at the time they were quite distinct groups, but anyway, it doesn't matter. I think that you kind of preempted the issue that we had. So, we got really, really good at identifying these, these software companies, not using traditional filters, again, we can talk about it if you want, but we eventually used, like, NLP and machine learning before it was cool to actually find companies that describe themselves in the way The companies who were really good at winning described themselves, um, through a text based kind of machine learning and a model. And it spat out a probability as to whether those companies looked and felt like the same as the ones that we had been successful in targeting. And we started prioritizing those and then we had loads of data on them to like do this stuff really effectively. That was just working really, really well and became this engine behind our kind of like 300 percent year on year growth. And then we started to hit a problem, which was How many independent, like, Mac software developers are there, out there? And like, um, we didn't really know, to be honest with you. Um, and, well, the first mistake I made, kind of shifting from that go to market phase to the scale up phase, was a lack of balance between funding what it is that was working and very, very predictable. Um, uh, which was our outbound funnel. And experimenting with Broadening your ICP, broadening your addressable market, broadening your channels. Just experimentation full stop, quite frankly. And you could come up with 15 experiments we should have ran. And then just after the Series B, so this market took us quite a long way.
[00:17:36] We're in the millions and millions, probably, probably close to 10. I'm terrible at like dates and remembering what was
[00:17:41] happening when. To be honest with you, it's all just a bloody blur. Um, but like that took us pretty far, certainly to Series B. And then one year, it must have been, I don't know when it was, but one year, around the time I heard of VP Sales, because all of this stuff was working, we had an engine. We just realised, like, oh my god, like, there aren't many of these companies, we've had a lot of success selling to, that we can find anymore. Um, and at the time, SaaS had really emerged and was flying, and we really started to pivot our effort towards Not only on these independent Mac software developers and independent software developers over to your more traditional VC backed SaaS business. We had a bit of a head start because many of the companies that we had sold to had grown into that. They'd gone through this transition of being License based annually to seat based per year recurring billing. So, it dragged our product to be able to support them. But knowing how to, where they lived, like, how the value propositions needed to change, all of this type of stuff, really caught us short.
[00:18:39] And I think we had one of the worst years of growth ever, um, as we went through that change. Because we didn't fund that experimentation and exploration, I guess. Alongside what it is that was working. And that is a balance that I'd always encourage people to strike. Like, fund what's working. Like, you kind of have to in order to go out and raise another round.
[00:18:57] But, don't get caught short. Because maybe your addressable market isn't as big as you think. Know how big it is. This is a separate learning. Um, but you, you, you need to kind of continue to evolve and iterate along the way.
[00:19:09] Toni: So, so really, if I kind of sum this up a little bit, right, kind of, you found your first motion, and that has had an, had a predetermined S curve to it, right? Because eventually you're going to be running out of those, of those folks to kind of sell to. and then the next one that you lay it on top was basically by broadening your total addressable mark.
[00:19:27] Oh, kind of. The, the next batch, of a pool to go after really. and that then took you maybe from 10 to 20 or, you know, it's, it's hard probably kind of to say specifically where, did, did you, you know, do this again and again, actually, did you kind of, okay, now we went from individual software developers to SaaS businesses, and now we're going to, you know, something else.
[00:19:46] Was this how you kept the pool fresh, uh, by, by adding, by adding new, new areas that he could target?
[00:19:53] Harrison: to some degree, yes. One, we learned our lesson, right? Like, we were like, we need to know how many accounts are out there at all times that meet this kind of qualification criteria or acceptance criteria of someone we can sell to,
[00:20:05] which is why we continue to invest in Now, well, not kind of good for owns, but understanding, like, what is a software company by definition? How many is it that there are, that are out there? Where are they based? What's the concentration of them by city? Down to like, I can tell you how many software companies are out there in the US that have like, over 30 percent traffic outside of their home country. Like, I can tell you anything you want to know about that market,
[00:20:28] and like, you need that level of understanding on your addressable market in order to go to market effectively. But also not to get caught short and be like, Oh God, there's nobody else that looks like the people we like to sell to left. Um, so that was a really hard lesson learned and we continued to experiment and, not experiment, uh, to think about how we might strategically grow our addressable market or the type of customer we're selling to at all times. So, since that point, we've always sold into software. software companies and SaaS companies. Again, pricing models have also evolved quite a lot and continue to evolve. I think people just did like one time, then they just did like recurring, then they did per seat. Then there's like usage, but I think over time people are going to have a blend of all of those things.
[00:21:12] Toni: so this is super interesting, right. And it kind of ties a little bit back to what you said in the, in the, uh, the early beginning that it's more important, you know, who then, then the what basically, right. And, and many people, um, see this the other way around. Um, so number one, right.
[00:21:28] And, and the reason is that they think, okay, now we tried outbound email. Now, the next thing we need to lay on top is cold calls. Now, the next thing we need to lay on top is ads. Now, the next thing is, I don't know what, right? Kind of, I mean, you tell me. Um, but really in your case, it's like you, and you probably have varied this a little bit, but you stuck to your guns on how you actually reaching out.
[00:21:50] So I don't know, it's probably gonna, it probably was email for a long time still, and your agenda is kind of directed that way that you know how it worked. to new pools basically, right? So this is for everyone listening kind of is almost like a, Oh, wait a minute. So this world that we know that is sliced in this way, you can also slice it in the other way and also works kind of, that's, I think what's, you know, what's kind of at least happening for me listening to you, but just want to, want to reconfirm that that's, that that's how you guys thought about it.
[00:22:21] Harrison: Yeah, that's an interesting take, right? I think you just need to be really careful on what it is that you're Questioning to some degree, right? Like, the question for us wasn't, uh, at the time we ran out of accounts, how we could reach out to them more effectively, because we were already reaching out to them really effectively, we just realized there weren't enough of them. So the next question is, okay, how do we broaden the pool of the people that we're selling to? Like, what is the most appropriate market for us to go after next, right? And it was really obvious to us that was SaaS companies, because we'd already been dragged there by our existing customer base. It was a massive market that was growing very, very fast.
[00:22:56] Um, and one that we felt confident that we could go and sell to and get behind, not least because we kind of were a very similar company in our own right. So first of all, it was like, you can experiment with the who. And I'd always, always encourage everyone who's planning to go to market to start with, who the hell are we selling to at a company level? Like, what other companies we're targeting and what's true about them? Which. dictates their need for our product, right? So to give you a paddle example, given that we're using them, like, we learned that, uh, within that space, there's the SaaS space, not the desktop software space. Um, that people who really, really benefited from our, our, model and our platform were software companies that were product led. Uh, because we only supported people who had like a checkout on their website, anyone else didn't matter. But particularly those that, because they were product led, were getting a lot of like traffic to their site, but traffic that they weren't optimized for. Like the nature of product led growth companies is that you open yourself up to the whole world from day one, right?
[00:23:54] You don't have as much control over who's hitting your site at any given time. And huge numbers of these companies were getting traffic from China, europe, whatever, and didn't have the right payment methods, the right currencies, didn't know how to handle the tax, didn't know what fraud looked like in those regions.
[00:24:07] You get a load of, like, business from Brazil and you think you've made a fortune, actually that's all stolen credit cards, like, whatever. Like, we, we worked out this niche of companies, and then we ruthlessly prioritised going after that set of companies with problems that we knew they were facing, before we even spoke to them, right?
[00:24:23] Like, I can tell you every single company in the world that's based in the US that doesn't support Paypal or Euros, but it's getting X amount of traffic from, from Europe, right? Like I already know who they are, how many of them exist, and I already kind of know what message I'm gonna deliver them, right?
[00:24:37] Because I kind of have preempted what problem they're having. Whether they even know it themselves is also a different point. But like start with the, the who and the why. It's like who, who are we going after and what is true about them? Thereafter, you then need to experiment with, having identified them and validated that these are the people with the biggest pain that we can solve, how do we reach them? And that's a very different set of Explorations, experiments, etc. That you may or may not choose to optimize for based on performance, right? If I just emailed them all and it was going really well, maybe I should just email them all. Like, if I then started to layer in calls and it was more effective, maybe I should do that.
[00:25:13] But like, there's very different experiments, right? There's experiments around the, who we should be going after, and then how we reach them. And they're quite independent. Um, well. Intrinsically interlinked, but you know what I mean, they're a different set of experiments.
[00:25:27] Toni: so in the beginning you said you were the first SDR, then you were the first AE, then the first solution guy and so forth. and, and I know this because you and I kind of chatted previously, but you know, were you also the first RevOps in the company stitching some of that stuff together? Because these, these things that you're kind of pointing out that now led to Goodfit, right?
[00:25:44] Kind of, they, they seem very much a commercial nerdy project. That had to be done. And that probably wasn't done by an SDR leader or by the VP of sales. It probably was done by someone else. Maybe you can tell us that story.
[00:25:56] Harrison: Uh, I think I didn't know that I was doing that, to be fair. Like, we certainly approached everything from a very RevOps y data hat. And even now, having interviewed, like, some incredible VP of sales from all over the world, and some CROs from all over the world, some RevOps people from all over the world, I think actually the biggest jump between VP sales, um, and CROs is actually This, this skill set. It's their ability to look at a bunch of data, assess and analyze what's going wrong, and coordinate change to some degree. Like, it's a skill that I think everybody should try to develop, particularly as the world is becoming more and more data driven, not in the sense of The traditional word of like, you need to be data literate, but like programmatic outreach and stuff like this is becoming very, very common. And like, unless you're very comfortable with some of these concepts and how they work, like, you're going to struggle. But yeah, I didn't know it, but RevOps became a real core competency of the business, like, very, very quickly without us really knowing what it was or that it existed. I think I've said before in other podcasts that the RevOps team at Paddle was probably the secret source behind that 300 percent growth year on year for five years because of how we were interpreting and using all of this data to go to market, prioritise accounts, message very effectively. And a number of companies have spun out. of the RevOps team as a result of that, Goodfit being one of them. And so, but it was a really weird profile of folks that we hired in the team. Like, the guy who ran the RevOps team for me, who now is my co founder at Goodfit, I hired straight out of uni. Um, we I held like a hackathon a week into him joining the business and it used to have this function in the team called the lead development rep and all their job was was to manually research accounts and the market to inform a lot of the stuff that we were doing and he was like Harrison I've been here a week and everyone's really fucking miserable like they're not happy and he was like also I've kind of had a look at it and the success rate from LDR to SDR is really really low and I don't know whether it's worth the investment of 10 people in LDR roles in London, given that you justify it by saying it's a pathway into SDR, I don't agree with you.
[00:28:02] This guy had also been here like a week, by the way. I was just like, wow, this is intense. Um, uh, and then he joined this hackathon. He was like, and he won. He was like, yeah, I found a way to just programmatically gather all the data that you wanted on these companies because then nobody has to manually do it anymore. And I was like, you're going to come with me. Uh, and he, he just became a bit of my right hand in the business and, and grew through and eventually ran the, the RevOps function. Um, but yeah, uh, we over engineered and over invested in RevOps. We came up with mad stuff. I once explained to some investors, like, the model that we use to distribute inbound accounts to folks fairly.
[00:28:38] And they were like, you could have just round robined it. And we built all of this mad logic to try and make it as fair as possible. And we just really enjoyed this stuff, I think.
[00:28:46] Toni: So a lot of those story nuggets on Mikkel and I are laughing about this because it's so close to, you know, what we used to do at Falcon Social, Falcon IO kind of. You know, we didn't quite get to, I don't know where, you know, a hundred million plus, I think, you know, 50, 60 kind of we tapped out there, but, um, basically I was that, we call them business development reps, kind of, I was the manual researcher, I just wasn't.
[00:29:10] As smart as that guy, because I just opted out of that role and did something else instead. But I was like, I was, I started my journey like this. Actually, we had like a big team doing some of the research. And then we just recorded another episode today, which probably is not going to be at the same time being aired, but basically kind of talking about how our CEO Ulrich, um, just crazy over invested in revenue operations.
[00:29:34] And to your point back then. We didn't know that it was revenue operations, you know, you didn't have that word yet, uh, but for some reason we ended up 10 million ARR ish. So we're guessing, and we probably had eight full time headcounts doing revenue operations or revenue operations, you know, related tasks.
[00:29:52] And we did the same stuff, you know, at some point I was then sitting in the boardroom, uh, showing off with some of the things we did. And then, you know, these investors are like, you know what, um, Toni, I think you should talk to this, this, this, this, and this company of mine, because I think they could really, they could really use your help with these problems.
[00:30:10] and it's, it's, you know, you guys took it to another level. Don't get me wrong. I don't want to say it's the same thing, but, uh, really cool to see that some of the nerdiness. Uh, around how to build the engine, right? Kind of has a similar success story actually in Paddle, and in Falcon.
[00:30:25] Harrison: a a and your, your story is exactly how good fit was created. To be fair, like I, I vividly remember standing in front of investors trying to raise money for Paddle and then being so intrigued by this data set that we gathered and how, how it was being updated and where it was coming from, and what it was capable of, and how it was informing our go to market and people were as. interested in this, as they were, Paddle itself, which was actually quite frustrating at times, but when you, when you went into a room with like, portfolio companies they'd ask to speak to, like we'd done webinars and stuff, and like, people were like, Alex, my now co founder, I'll give you like, I don't know, 50k to come replicate this for our company.
[00:31:01] And he's like, been in the company for like a couple of years, straight out of university, not on the highest seller in the world. It's like, it's difficult to not encourage that guy to go and pursue that opportunity, right? So that's kind of how, how Goodfit started. And today, there's been a queue of people lining up to, Hear what we did and then how it replicated in their business at good Fit, which has driven the growth so far.
[00:31:21] Like it's all organic referral and, and inbound. Um, e even now, um, off the, off the back of what, what was, what was happening before. So yeah. Very, very familiar story.
[00:31:31] Toni: Hey, hope you're enjoying the episode so far. Just a quick word. This show is hosted by Growblocks and it simply wouldn't exist without it. And also without Groblocks, Companies such as Superside Brandwatch, Leapwork and more wouldn't be able to see their entire funnel in one place.
[00:31:50] They use it to easily find problems in their go to market, test solutions with what if scenarios and ensure that they're on track to hit their growth goals. That's it. Back to the episode.
[00:32:01] Mikkel: So speaking of inbound, that's another kind of motion that also does a lot of email. it's kind of how I at least got to know Paddle, uh, what I want to say four or five years ago or something like that, through a lot of the You know, thought leadership content and so on. And, you know, it sounds like outbound has been the motion for quite some time.
[00:32:20] When did you start looking at then developing another motion, for example, marketing?
[00:32:26] Harrison: Yep, yeah, that's a great question. So not soon enough is the honest answer. So linked to that, those issues that we had having had our initial success running out to a really narrow set of customers, when we're thinking about experimentation, so much change is happening in the business. Um, we, yeah, we're about five years in. Um, and we hired our first marketing leader, a guy called Octav. Love him still. Um, he, he was awesome. But it was at that time that we'd also raised our Series B member and had committed to growing even faster and then also kind of realized that we didn't have the right market. Like it was a really tumultuous time within the business.
[00:33:01] Um, we went from I think like 20 people to 120 people in 8 months, whilst also realising that the market that we were selling wasn't big enough, like it was crazy. But his first job was like employer branding, like we hired him at marketing to be like, we need to hire 100 people, nobody knows who we are, like focus on that. Um, which was interesting, so as much as it took us 5 years to hire marketing, even in the first year that they were there, they focused on employer branding rather than marketing itself, which was pretty silly. eventually And we can talk about some of the mistakes we made and how we realized it, but we, we realized that the grown up thing to do was to really align sales and marketing, uh, around a common set of accounts and contacts to go and target, right? And you end up, and again, we can talk about the messy journey to get there if we think it's going to be helpful for folks, but the end state that I encourage people to aim for when they have the, the teams to resource it is like three kind of funnels which are being driven by quite different things.
[00:33:57] And then you've got different and sometimes similar activities, right? Like you're always going to have an organic inbound funnel, I guess it's called different things, like dark funnel, whatever, which is like driven by your brand, by your content, by your SEO, all of these types of activities, right? This is great. And you have a marketing influence funnel, which is The aligned set of accounts and contacts that your sales and marketing team are running at and again The reason why so many people fail to do that is data It's just like if you actually have the set of accounts that are the people with lots of international traffic from Europe in the US That sales are going after and then you list list literally list the same names of the accounts and give them to marketing better Yeah You can even get to a point where you have mapped every single contact that sales are targeting in that Um, across those accounts, you can run ads at those same contacts from the same companies as sales are targeting, right?
[00:34:46] Like that is possible. Um, and this is your marketing influence funnel, right? It's the, the collective effort. You, ideally you want that to be the majority of your results. Uh, and then you, you still also have a, I guess a sales source funnel, which is the folks closed sales, uh, folks closed by sales. That marketing didn't get to touch.
[00:35:04] That's gonna happen occasionally, right? Um. This is where we got to. The funnels form really differently, like, and you should also be aware of that. Inbound maybe has high volume. Maybe you disqualify loads of them at an early stage so you have less control over who's coming. Maybe conversion rate's really high from like SQL to close, but ACV is low. On your influence, it should be like your high value, right customers, proper po Profile to some degree and the sales source funnel in theory should perform worse than your marketing influence funnel because you're spending extra dollars on
[00:35:33] the marketing influence funnel. And if it's not like, this is interesting, like the velocity needs to improve to warrant the added expense. Um, if the marketing dollars and touch points, like this is where we got to, but there was a long journey and a long set of realizations to, to get there. Again, how we're actually coordinating it today, I'm not sure. I've stepped back from full time a little while ago now, but this is kind of the state that I kind of got us to and stepped back from.
[00:35:59] Toni: I mean, to a degree and maybe I'm just mixing up things here now, which happened to me previously and we then didn't air the whole thing. Um, isn't this what people would call, Account based marketing or account based sales based kind of in the middle there?
[00:36:15] Harrison: Yeah, yeah. You're marketing influence followers on the CountBase funnel.
[00:36:17] Like, uh, 100%.
[00:36:19] Toni: And the, and the, the play there is, and I, I totally agree with you by the way, kind of getting these account lists, right? I think this is where basically everyone fails, uh, and then it's a spray and pray and, and so forth. Uh, but getting the account list right with intelligence, which, you know, uh, again, Goodfit maybe kind of can help you with.
[00:36:36] Um, and then basically the, the way you then work on this is. is how maybe you just talk about this a little bit because it's what I think is so annoying about this whole ABM topic is they say ABM and then they leave it. It's like, well, but, but what's this in a, how did you actually go? Did you go door to door to those accounts or kind of, you know, what did you do?
[00:36:55] Right. Um, and I would love to hear, you know, that now that you have this perfect account list, um, that is shared by sales and marketing, you're both targeting these things. Everyone can imagine what sales has been doing. What did marketing do with those, uh, with those accounts?
[00:37:10] Harrison: hmm. Predominantly, all the stuff you'd expect, like, there's not, um, but Paddle's Marketing's gone a bit more wild in recent years. We can talk about some of the cool stuff they've done since. Uh, one of the last hires that I directly made before I stepped out from full time was the CMO Andrew, I've known him for a really long time. Uh, he was a founder in the Notion portfolio, who Notion did our, uh, Series B in 2017. And I worked quite hard to get him to join the business, so he's done some pretty cool stuff since then. Um, but like, nothing you'd expect, right? Like, email was still a core part of how we're getting in front
[00:37:41] of these guys. Ads were being run at them across various different channels. We tried LinkedIn ads, we tried to do call matching to get in front of them on Facebook. Like, we tried lots of different places to run ads. Uh, those ads pointed to different things. Content, landing pages, you name it. Like, nothing that we were doing was Completely, like, out there.
[00:38:03] Like, if you're listening to podcasts expecting to hear something that you've never heard before, that's never been tried, like, that's going to happen quite rarely. You just
[00:38:08] need to execute upon that thing quite well, unfortunately. Um, the, it's, it's true,
[00:38:15] but it, it's not a direct mail, events, like, you have to go and try this, try this stuff. And again, it's like, Striking the balance between funding the things which you've seen data on and are working, and creating room to experiment from that, like, benchmark. Here's benchmark final performance, right? Like, what are the different things we could do to influence that? And, like, are those dollars worth the change? Um, it's kind of the starting point for a lot of experimentation. But, um, yeah, I don't think anything particularly innovative or crazy. The thing that we didn't do, though, uh, which I think Andrew is quite, Intense about, or brilliant at, quite frankly, and I think probably some of the stuff that you've seen more recently from Paddle, given that it started happening. We didn't invest in brand and some of those, like, hard to attribute activities very quickly. Like, I'm a huge data nerd. Like, I'm like, yeah, yeah, I know you want to send a fake rocket into space, Andrew, but like, what impact is it going to have on my ability to close customers faster? And like, how do I measure it?
[00:39:14] Because it's going to cost me lots of money. Like, you want to do a documentary on like, an acquisition? Awesome. Like, how do I know this was worth it? And like, I sometimes struggle to make that like, Kierkegaardian leap of just like, this is going to help. Um, to, to, uh, detriment. Like, um. I learned a lot about the impact of brand on every stage, I think it impacts every stage of the funnel, right, inbound through to conversion every single stage through to ACV, like all of those variables that make up sales velocity influences positively in some way, but it's really, really hard to, to attribute by probably underestimated how important it was. Um, we're breaking into new markets, like the US, um, and we handle people's money, right? Like, we kind of need to be seen and known to be trusted. And again, that's really, really hard to, like, see on a, an attribution or, like, funnel. Like, it's really, really hard, and we would, we'd have benefited from doing that earlier. Um, but, it's a challenge. I, I think there's a startup in doing a better job of attribution of some of this stuff, or, like, even visualizing it so people know, like, the The dollar impact, the impact a dollar has on like the sales velocity. Like I think that could be shown better. I'm good, two's enough, but like someone could go do that. Um, but I think it led us to not investing in that, uh, quickly enough at all. Yeah,
[00:40:39] Mikkel: you kind of, I think maybe we can end with just going a bit backwards here. Yep. With a last question, because you kind of said you ended up with these three funnels. And there was a messy journey to kind of get there. Let, let, maybe tell us a little bit about what were some of the challenges and struggles you faced along to get to that point in time.
[00:40:56] I think that will be interesting as well, because it can be difficult when you have one successful motion to start adding another.
[00:41:04] Harrison: Yep, yep, absolutely. So we've been growing. We've done this great job of mapping like every single software company in the world that we could sell to. We knew all this information about them, right? And then we hired marketing and we're like, okay, we want to grow faster. Employer brand's pretty good. Like we want you to go drive some leads. Go. Uh, and then we're like, just, just go do your thing. Like I've never managed a marketing team before. I've had some demand generation people. I'm like, yeah, just, just run with it. And then they did their thing, started running some ads or whatever, even just bidding on like brand terms, stuff that we hadn't done before. Um, and then if people started coming through the top of the funnel, uh, and, uh, I was like, well, I already know this company. Like they are in the CRM, like we know everything about them. And I don't know, Joe blocks contacted them. Four months ago, I'm like, you haven't really given me anything here. We already knew this person existed. Uh, and like there was a lot of argument around that, like is this a marketing lead? Is it sales? Like we already know about this person. We haven't, we've chosen not to outreach them recently because we don't think they're a good fit and they've come inbound now. Like, are you doing your job? Is this the right type of account that we want? And there was a lot of argument over that for a long time. And it's really obvious, like, even now that I've said it, that it was just like, Oh, we already know the accounts that we want you to drive to the website. Please go and focus on them and get sales to do the same.
[00:42:26] I don't know how it took us so long to be like, just, just go and work on these ones, guys. Like, as well as the Organic Inbound Funnel, like, it took us just so long to stop the arguments between the teams and recognize that they're there to help each other and actually do an account based funnel. And saw some amazing stats from it, like, again, these aren't super up to date, given it was quite a long time since I was close to it, but we saw things like Accounts are twice as likely to reply to a cold email if they'd seen a certain number of ad impressions first or clicked on one of the ads, for example. And when you present that to your team, they're like, oh, I see, like, I get it. These guys are here to help us and make everything convert better and faster, etc. So it took us a long time to reach that point. But just more broadly, like Marketing coming into a quite salesy organisation that's like five, six years in the tooth is just really difficult because like culturally like there's so many things that are embedded there and it's like you introduce change into any system um and change curves a while people will reject the change and they say they don't need it then there's a level of acceptance and adoption like that that just took a really long time and it wasn't just the demand generation activities you guys are interested in focused on even things like product marketing like Was so hard to get recognized and valued within the business having it never existed for like years It was kind of sales just kind of half did it all the time And just little things like that were a huge problem to be honest with you.
[00:43:57] Mikkel: Okay, I think that's about the time.
[00:44:01] Toni: Yeah Harrison, I mean, this was really really fucking interesting..
[00:44:05] So thank you so much for spending some time. Just a quick recap, right? We talked about how this whole thing actually started, you basically fresh out of high school, uh, your co founder dropping out of high school, then really, you know, outbounding with cold email.
[00:44:18] so then, then everyone knows, oh, wow, this is a long time ago, uh, outbounding cold email to individual software developers, uh, as far as I understand, then, you know, hitting the wall, realizing, oh, wait a minute, that's not going to scale. We're running out of market here. Then jumping into the next pool, which in this case was SaaS, all of this fueled by essentially.
[00:44:39] Great account selection, which kind of was also built around revenue operation, which also now is a good fit IO, but you're kind of spearheading there. And then ultimately layering marketing on top, which actually kind of then resulted in, you know, not a second funnel, but what I think is really interesting, a third funnel, right?
[00:44:56] Kind of, yes, you have the overall sales stuff. You have the overall marketing stuff, and then you have the pieces in between, right? And the pieces in between, that really works out because you had the accounts already. So you could tell them, guys and ladies, go after this account set. And when they're, when they drop, we can see that they move through the funnel faster because they've seen ads, because they've been aware to this event, yada, yada, yada, right?
[00:45:21] Really, really cool stuff. Harrison, thank you so much for spending time with us here today. I think you've enlightened everyone. Thanks a bunch.
[00:45:28] Harrison: Thanks for having me really really enjoyed it.
[00:45:30] Toni: Wonderful. Have a good one. Bye bye. Bye.
[00:45:32] Harrison: Bye. See ya.