Michele and Colleen chat with Josh Ho, Founder of ReferralRock, about doing enterprise sales as indie founders.
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Michele Hansen 0:36
Hey, everyone, welcome back to software social, Colleen and I have a friend joining us today. We have Josh whoa here with us. Josh is founder of Referral Rock, which is referral software. They've been around since 2015. Also in the north, a million air club and have 16 employees. And Josh is also co host of the podcast searching for SAS, which actually kind of a similar concept to our show with a sort of an experienced entrepreneur and then somebody who's transitioning from consulting. So welcome, Josh.
Josh Ho 1:20
Hey, thanks for having me. Yeah, we're been a longtime listener and obviously have known you too for a while and are definitely our podcast that Nate and I have or was totally inspired by you guys. So it is extremely similar. But we've sort of diverged and done different things since then. But the concept was,
Michele Hansen 1:39
so we're so excited to have you here. So about Gosh, what was this like a month or so ago when we were chatting with Twitter on everyone about like, what, what should we even talk about on this show? And what do you find interesting. And something that came up was people were interested to hear more about some of the challenges and struggles and operations of running a larger business. And so we're gonna kind of dive into one of those areas today, which is something that I spend a lot of my time on actually more time than I do customer research, which is sales. And we're specifically going to talk about enterprise sales, since I feel like that can be kind of this like, I don't know, sort of like a scary topic for people to think about. And so we thought it'd be kind of interesting to sort of talk about how you do sales, how we do them. And then Coleen can kind of ask us questions about it. That sounds good. So too, so I guess I'll kick us off calm? Or do you? Do you have a question you want to start with? No, go ahead. Um, so can you just like, give us a sense, like, in a, like, like, how does an enterprise deal for you usually starts? Like, are you guys doing cold outreach at all?
Josh Ho 3:08
No, we don't do any cold outreach. And maybe it'd be helpful. How do you define enterprise sales? Because I want to make sure we're talking about the same thing as well. Are you talking like, like, sighs of customer size of kind of deal or, because like, we do all kinds of sales, and I would segment a certain area that I consider more enterprise than our some of our other types of sales as a SaaS business that has, like, the two three plan. Normal thing on the pricing page plus the
Michele Hansen 3:38
Yeah, I guess I define it and skipping to define it, because people define it really different ways. For me, it's when there's a custom contract involved, which usually means it's at least $10,000 a year, but usually a lot more. I know, you know, if you're talking, you know, venture back startup, like enterprise deal is like, you know, minimum 50 100 $200,000. We're not usually in that range. Most of our what I what I term an enterprise agreement, which is, you know, when you're dealing with, you know, five different departments on the customer side, they're a huge company, you're doing extended contract negotiation, like there's, you know, it's not just somebody goes to the website, clicks it and buys it, and then they use it. Right, there's more involved on our side. And usually those are in that 10 to 50,000 range for us for annual revenue.
Josh Ho 4:42
Okay, yeah, yeah. So when I classified that so it is that ask us where it's outside normal rails have the quick, you know, click to buy.
Michele Hansen 4:51
Yeah, like not self service. Basically, there's something special that has to go on
Josh Ho 5:00
Sure. So yeah, to answer your first question we, we don't do outbound. So we do all inbound, we have a strong SEO footprint. So we a lot of inbound requests that fall into two camps, we usually take them if you these are, quote unquote, are like lead magnets, you can either sign up for an account, or you can request a demo, at this point in our lifecycle. We are we attract people onto our site. And then essentially, there's like a 5050 split, we kind of, we have a philosophy on it now, which is saying, like, let a buyer by how they want to buy. Because you typically see product lead growth, like everyone funneling people to, you know, trials or to sign up. But we try to clearly say you have two paths. Because once someone determines that they do want to talk to someone, you know, it can easily get into the enterprise space, or it might just be like you were saying, a person that requires more of a relationship based sale, where they are talking to their internal champions they need to convince, they still need to go through procurement and all of those things. So for today, we can mostly talk about once they get into that demo track for us. And what happens is they can for us, some of those customers can fit into a standard offering. So like our, it might be an $800, or the $1,200 a month type of thing, usually paid annually. And on the first level, we sort of try to standard out bits of it, where it's like, and we can probably get into more detail of this. So is it our contract? Or is it their contract? That's like usually the first type of thing. And usually, if it's a scoped plan, we try to keep them. And in a regular price plan that isn't like, Hey, I have, you know, I have a million people I want to add to your form versus the 50,000, or the 100,000 kind of ones that are
Michele Hansen 7:00
a little interesting. So you actually you will start out at the point of using their contract because like, I mean, yeah. Okay, okay. I'm gonna start like, I mean, yeah, sort of count the number of times we have relented and use the customers contract with an extensive, you know, Addendum and scope of work on our side. Yeah.
Josh Ho 7:27
Right. Yeah, we try to keep them on rails of our stuff as much as possible, right, like whether, like first level one is just click checks to our checkbox, the checkbox that says I, your terms of service, on our website, level two is our standard contract. And then level three is like, they might have some alterations, our standard contract to which we already know, in scope, like, these are the things we're willing to bend on. So it's almost you have to build in or you know, what stuff you're going to be like, yeah, we'll give you that one type of things. And then yeah, level, I think I was on level three, level four is, okay, bear contract, but it is, like you, that has only happened a handful of times over the course of our of our existence, we and we fight like a lot, try to keep it in our other stuff, just to make it faster, because we don't have a large team, we don't have a I don't want to waste, you know, half of their contract on lawyers to try to get this out or get myself into into trouble agreeing to something that I clearly don't know. And I might have to use a lawyer just
Michele Hansen 8:42
it sounds like our sales, and like purchasing process is like really, really similar. Right? Because like, we are also entirely SEO based, we don't do any outreach. Everything is in its entirely inbound. And then yeah, that first level is, you know, can they can they click to accept the terms on the website and use an off the shelf plan and you know, pay with a credit card, like, great. And then you kind of go to the next level of okay, maybe they need the contract, but they don't need any modifications, but are okay, they need a contract, but then they do need not modifications. And then yeah, getting sort of more complex as you go. Which I feel I don't know how common that is, like, I feel like it's maybe sort of a I mean, it's definitely a very, like company, one style approach where we're trying to make the process as efficient as possible. And where our goal is not, you know, maximizing the revenue from every customer but it's like, how can we you know, get people to something that works for them. That doesn't take up too much time and resources on our end so that we can you know, get more customers it's very much sort of playing a volume game, rather than one where you're, you're trying to maximize revenue per customer.
Josh Ho 9:56
Yeah, I agree with that. It's just I even though we are You know, what it was for 16 people or so or more than 15 At this point, it's mostly because it's a diversity of skill sets versus necessarily like, Hey, I've got like all these people working for me, it's, it's because we have like a customer success area, we have people dedicated to content marketing we have, we do have salespeople. And we do have, you know, developers and product managers and QA, things like that. So there is it's more of, for us that size of companies stuff is more about like, clearly dividing roles and actually having some specialists because I can't, in the early days, I was doing it all and then way our business scaled was through, okay, I need to add add people to this. We aren't as as I would say, like I know your API based types of things, but there's, and there's probably an immediacy to the value someone can get with using your service. For us, it takes more onboarding, it takes people to set up a campaign set up a referral program, set up their rewards, all of those pieces require a lot more hand holding. And some people come in thinking, Oh, I'm just gonna click this and start and it's like, well, Oh, you want to set a reward, oh, the reward, your good rewards actually, like resonate well with your customers. So it may not be $5 off or a, you know, or like a discount or something like that. But it might be like a mug, it might be swag. So it's like helping people kind of understand how to use it. So there's like a longer track in there. That requires more people to be involved. So we've tried to keep it as tight as possible back to like, the contract and everything, knowing we're building a SAS and building it for the long haul. I'd say right now, it's everything about like, how can we scale it? How do we make it less complicated to then as we do add customers, we don't necessarily have to add staff in addition to it. So we've been pretty diligent on forcing forcing functions into our contract. Oh, that's great. You want to throw money at us? But you know what? That's not what we do. We don't do custom damn sure you get there's no custom def. Oh, we had this we can add on. Yep, exactly. So it's like we push back hard. And I'd rather continue to build a product. This from Shopify as approach to if you've ever heard, there's a great podcast they did a while back that I listened to, like, they only recently got socked to, like only, like, within the past year or two. And I was like, blown away by everything that especially from an enterprise standpoint, because they, but their philosophy was like, okay, great, we're just gonna keep building the better product and to make it so that the internal champions like we're the only option for them. So it's like, they could jump through hurdles over SOC to over contracts over things like that, because they just made a strong feel like you know, what, we're making a, almost a philosophical decision that we're not going to jump through your hoops, you're going to jump through ours. And we will sacrifice the dollars that could come in, and that's okay. And it took them I don't know, however many years before, they actually got, like, soku compliance, and it was like, they only did that last year. And, like, I'm considering that, but I don't really want to at all, like that just seems like a big waste of time or a big like, headache. And I'm like, well, could we pull that off to where our stuff is so good, or is so much aligned that the Intel champion is going to battle? Lawyers inside battle their bosses and things like that. So that, oh, just make an exception for us. When
Michele Hansen 13:42
sock two has come up, we have been able to, you know, have have the champions help us get around it. Whether that's because the so it's funny, sometimes you see those things? Like, it's a really hard requirement. You're you then you just are like, Yeah, we don't have that and they're like,
Colleen Schnettler 14:00
Wow, your sales process as it sounded like it was like early days,
Michele Hansen 14:03
clearly a no go without socks, you know, you're saying it's not important, or what it actually is important. So, um,
Josh Ho 14:12
if I go back all the way down, I was doing that it was started out with me having no idea what sales was. So it started out with me just thinking I was all I was doing was helping people on like chat support, and then I'd be just frustrated and annoyed because they would it would just I'd be sitting there like typing back and forth. And I'd be typing while they're typing. And you're just like, I just want to show you versus trying to have this asynchronous chat conversation. So it started with me just being like, do you want just share, do a screen share? I think this is pre dated zoom a bit like where's zoom was prevalent. It might have been like, oh, let's do a WebEx or something I don't remember. But we'd get on a call and then I'd basically kind of help them. So that was like very early. stage one, just still having people coming in bounce using the app. And once I started talking to people kind of got, oh, there's a lot of other questions. And they also figured out, they did need the manual help. And it wasn't just something that they could just sign up the app for so. And quickly after I realized how many more people were buying after I talked to them, and I'm like, oh, that's, that's interesting. Now, they actually know more about what we do, and how to set it up. And all of these things, and oh, lo and behold, it's like, half of the people bought, it's like, Oh, I gotta talk to more people, it just kind of was this natural, ergo, I want more sales, I should talk to more people. So that was that that base level finding. And then I went through trials of trying to find salespeople, I won't divulge too far into that side of the story. But eventually, we I found someone that joined me, and this is like, after post revenue, we were doing well enough to pay for itself and, and pay for a couple people. And I brought someone on slowly to like, slot into that into that spot. So I had a an early I would call him like a partner. Now, not quite if you go by strict definitions of founder, you know, he probably joined about two years after I started. So this was 2017. And he kind of took that over and level one was just slotting in and doing what I was doing. And then taking it further because he could be full time on it. So he was doing that he split up our customer success area, because naturally once people bought that it's like, okay, they need onboarding and support and all of these pieces. And then over time, we grew that to, to have, you know, like two salespeople under him as the inbound engine kept going, as we kept building out more SEO and trying to what I call, like being in the conversation, I think you and I have talked about that before from a marketing standpoint. And now, if we're speeding up now, tour now, like we talked about that whole, like letting buyers buy how they want to buy, and we started as our product approved, we could start steering more people directly to that, to that split between start in the product or start to talk to someone. And since then, we have also added another layer of type of salesperson where we've pulled from our CS team who is extremely experienced with onboarding. And actually just from a resource constrained perspective, we're like, Hey, these are really helpful people that know a ton about programs. So instead of a typical salesperson trying to get someone over the line, we're like, Hey, we're gonna do these demos, we're going to do these like one quick call consultation, almost like back to the roots of where I started, and then not any follow up, or just doing very more follow up. And we call that like our, like buyer assist process versus like a sales driven process. So tracking back when we had the sales one with two salespeople. That was like a traditional commission based model, like, like you have a salary and you have some commission, but over the past year, we have spun up a new like that, that middle area where we have a CS person that just does group calls just as really helpful. And, and has maybe one call with people and and and some follow up.
Colleen Schnettler 18:26
Nice. So this is a little off topic, but I'm intensely curious about what you're you have 16 full time employees. So the transition, where were you at your developer?
Josh Ho 18:40
Ah, yes, I was I started I built like the initial versions. Yeah. So I come from a development background and started with that. So how
Colleen Schnettler 18:49
did you learn how to manage hire, even like salary? Like how was that building it out? I mean, what was that transition, like for you going from software to people business stuff?
Josh Ho 19:03
Well, I did have a tip into kind of some business stuff previous to starting for rock. So I did have like some software consulting businesses with just just myself not large. I had maybe like two people, maybe two other developers working for me. So there's kind of that I could do my taxes, I can do all those things. So it's, you know, those those I do refer back. And then even pre, the consulting, I was a developer at another company and then worked my way up into be like to manage manage developers. I think the last role I had that was not paid by myself was technically I think I was the Director of Technical Operations at a benefits administration company that we built software for it was like a first step there. So I kind of worked my way over more towards the business side after after, like leading the dev teams and different stuff like that. So So anyway, if that helps,
Colleen Schnettler 20:02
just like, it just seems like a big transition.
Josh Ho 20:05
Yeah, I mean, I guess there was a lot, I'm probably, whenever people see me or meet me, it's like, I'm probably, you know, I'm older than I look with my Asian jeans, I suppose. But there's a lot of that. And then also, we've grown organically, right? So it wasn't like, boom, all of a sudden, two years into referral rock, I have six people it was, you know, people, if you talk to other founders that have been through this, it's, it's like, okay, first you are managing two or three people that were extensions of yourself. And then, you know, the next big step is like, Okay, how do I now perform this magic trick to where we have, like two people working in an area and person's like, kind of the lead and not really a team? It's like, where do you go from this flat structure into sort of a more hierarchical structure to where you have managers or you have leaders, and all of that has just taken time. And each, even each department or area that I've talked about, had gone through different parts of that, like, marketing was pretty much like me and one other person for a really long time. And then, like, I talked about how the sales and customer success area grew. And that one, you know, we sometimes we had to push forward to grow out of needing redundancy, and like coverage of time and things like that. And then, you know, another area for Dev was like me bringing on a tech lead. But that was actually I brought on my first developer, because I brought on a first developer under me who was just helping me execute. And then later on, I brought in a tech lead to kind of start managing the team and build out kind of more of the like, get to handle more developers to manage the other developers to put some actual structure in place versus, you know, me just get a push.
Michele Hansen 21:55
I have a question about something you mentioned earlier. So you mentioned how when you first started trying to hire someone to do sales, it sounds like it was a little bit rocky and took you some time to hire that the the person who ended up becoming a partner and becoming a really good fit. And I feel like it's worth drilling in on that, because I learned recently that that's a very common experience. I was talking to Harris, Kenny, and well, I don't know if it was at founder summit or is on Twitter, it all blends together at this point. But um, you know, he runs a sort of sales as a service kind of thing. And he was saying how most of his clients have several failed sales hires before they come to him. But it's like, it's like really hard to hire a good salesperson. And, you know, I recognize that you may not you may not want to dive too much into that sort of the specific situations of what happened with the people that didn't work out. But I'm curious, like, you know, is there anything you wish you had known about hiring your first sales person? That, you know, the the that took you some fits and starts to figure out that maybe you wouldn't have had to go through that if you had known it?
Josh Ho 23:16
Sure. I mean, that I'm perfectly happy to talk about it. I just feel like this is one of those topics I've talked about a lot in the past, but obviously on this podcast, but perfectly happy to dive in. What the first subtracting back in that part of the story. It was like after me. And that was the whole like, I didn't think what I was doing with sales. I just thought I was just being helpful. And I had that mindset of like, oh, like, like, the guy at the car dealership. That's like a sales guy. I've worked in organizations that have used, you know, that have had salespeople, and it was like, they go to conferences, they do this Patagonia, you know, this, like, like, Yeah, I'm not, I'm not a salesperson. I'm just like, I'm just like, I just built the product. And I'm helping people like that's and and so my first hire for that sales role. Pre the one I found that I said, that had worked out very well, was a person that looked and talked to like a salesperson, and, you know, they're like, Yeah, I could sell anything like I sell to SMBs. I think, if I recall her previous work was she would do SMB sales, she would go to restaurants and like, go to the restaurants and talk to them and build relationship Build, Build candor, build rapport, and, and you know, sell the product. So that was like her tact. And I was like, Okay, great. Let's that's your real salesperson. Let's give you a shot. So I like redirected all the demo requests to her. And I recorded myself doing some and then I kind of handed it off to her. And honestly, like, it was just what I realized what I didn't realize was how large gap it was in terms of her needing to understand the product to relate it to customers and all of these things. It was like, oh, okay, you, you really don't know much about the product. And I tried to explain it to her. And we went through all of these types of things. So, one, she was a traditional kind of salesperson now, could she have been successful if he had the right, like onboarding in place, or it wasn't just like, hey, you're just gonna slot in replace me, and this is what I did. So kind of just do what I did, or go do your thing. And it, there was like a large gap. And that was probably the biggest mistake. for her and for myself, just not knowing, like, just what that what, where, where the transition point really was. And then, when I did find the other person, it was more of the entrepreneurial type of person. His name is Mike. Oh, by the way, I don't. It's easier to probably say names since this person in that person. So Micah, who's still with me, you know, he came in and the biggest thing he kind of joked about was like, it's funny, if you ever meet him, he doesn't have like, much of a, like an ego, per se. But one of the first statements he said, he's like, I could do everything you could do. But Sal, oh, no, sorry, but Bill, but write code. And I'm like, okay, like, all right, like, let's say, you know, here's, here's the challenge, you know, go ahead and just hear some recordings and go wild. And the biggest thing he could do was be consultative and be adapting to the customers. And that also, that first thing of like, he knew he didn't know and would happily be like, I don't know, let me find out. And those were some of like, the early parts of the trades that he was just looking to relate to the customers look to bridge that gap between them. And I think the biggest challenge is like, that's not what I look for initially, like the whole thing. The other salesperson, I was like, she sounds like a salesperson, she's done a sales job. And coming into that realization that, like his approach was much like mine approach. And I was like, Oh, this is selling, this is like consultative selling, this is different. This isn't ramming something down someone's throat, and all these things, and this can work. And this can scale outside. It
Michele Hansen 27:18
sounds like it was important for you to realize that you the salesperson, I mean, in talking about our business is to like the salesperson not only needs to align with how you conceptualize sales, even if you don't have a particularly strong sales, you know, strategy or philosophy yourself, right. But also that you know, how your business is set up, right? Like a business that's very SEO based, that's entirely inbound is a very different business where then one where you've got to go out like pounding the pavement. And it sounds like the approach of mica is really one that just kind of jived more with the business model, as it already was, rather than kind of pivoting to more of an outbound approach. And and it being difficult for you as a manager to like really support that person in that role, too, because it because it just kind of wasn't aligned with with how you thought about just the concept of selling in general.
Josh Ho 28:19
Yeah, I definitely agree with that. I think it makes me like what as you're saying, it was like, I didn't know that. How important that the alignment needed to be at that time, because I thought sales was this black box, and I need a black box. Right. And so I think, once I did come to terms with what I was, what I was doing, is is a way of selling and again, that mica was in alignment from a like a cultural standpoint, from an approach standpoint, all of those things, then it kind of that was more important than the actual like, what, what I've been done the things I didn't know that I thought I didn't know if that made sense.
Michele Hansen 29:03
Well, thank you so much for coming by today. Josh. It's been really interesting talking to you about scaling up sales. We kind of set this up that like Coleen could ask questions and then we just talked together. But if if anyone has questions about for either of us about doing sales, feel free to reach out to us on Twitter. Now we'll talk to you again next week.
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