Cracking Hubspot’s Playbook for Emerging Markets with Paul Rios

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Episode Outline

[01:22] The importance of manufacturing your own luck

[07:25] How leaders can ramp and grow teams

[12:25] The state of LATAM for Hubspot today

[14:50] How companies can expand into emerging markets and what mistakes to avoid

[24:05] Paul’s inspirations


Paul’s Inspirations

Brian Halligan

Mark Roberge

Peter Caputa

Jeetu Mahtani


Connect with Paul

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Hubspot

All right. Let's do it. Okay. So today we've got Paul Rios on the line, excited for our conversation. Paul is the country director of Brazil and director of sales. Um, came up through the ranks in sales at HubSpot. And today we're going to focus this episode all about going into emerging markets and the challenges that, that are entailed in there and just like.


The things that HubSpot had to overcome and Paul had to dream up in order to make that a big success. So Paul, welcome to the show. Yeah, thanks for having me. That's quite an intro, so I hope I can live up to it. No pressure. I like that. We're both rocking the hats today. Yeah. It's a pretty casual Wednesday, so yeah, no, those are the best.


Alright, well, let's get into it. I mean, um, I think it would be helpful to anchor the dialogue dog in, you know, what was your role before you were sent in to handle emerging markets? And what was the challenge that was presented with you when that first was brought onto your plate? So that's a great question.


And I love the framing because I'll take the opportunity to reframe a little bit. Sure. I think one thing that I always try to impart on people is to create your own luck as I call it. In that if you find yourself in a high growth startup, or even if you're in a more established mature company, I think there's often opportunities to be an entrepreneur, um, and basically find new spaces or make new spaces within the company.


Um, and so specifically when I say make your own luck, it's. Being self aware enough and aware of your surroundings to see new opportunities and then having the skills and determination to actually seize on the opportunity that you identify. Okay. And so I can speak to mine and also make reference to another one that I saw here.


And actually two that I saw here at HubSpot that led to two big things. So no was 11 months ago. So HubSpot as a sales rep, uh, back in those times and have an international team, we didn't have international offices. Um, we were all rotated the leads as they came in, um, from Mark to, to marketing. And, uh, one day I received save the lead from a hotel in Mexicali, in Northern Northwestern, Mexico, real close to the U S border near San Diego.


And, um, You know, I obviously saw the location. I went to their website, Southern Mexico, uh, saw that the person who converted was obviously Latin, Latino, um, and at the time in our conversion forms, we had a question that asks, what is your biggest marketing challenge? It was a free, free form. Like you can put in texts, right?


You didn't select an option or anything like that. And they responded in Spanish. And so. My parents are from Latin America. And I was like, wow, cool. You know what? I speak Spanish. Let me give this a shot. Um, and it was fun to use my native language skills to close a deal. I had never really thought about it previously.


And, uh, you know, upon completing that deal, I went into the CRM to see how many more. Prospects like this one could be in our database because at the time I was the only Spanish speaking sales rep. And so I had a differentiable ability that I thought I could lean into. And so I went into the CRM and I was dumbfounded to find like 30,000 leads that were coming from Latin America or Spain.


That pretty much no rep was following up on because they assumed that there was easier prospects to work and close. Right. So a lot of these were good fits for HubSpot. You know, reps will always follow the path of least resistance to get to the objective. And so. You know, I saw here an opportunity to Excel exploits, a unique skill that I had, um, to buy benefit.


And for the benefit of HubSpot as well, obviously 30,000 leads is nothing to scoff at. There was obviously some, some market fit there, right. Or at least our message was resonating with the market. Better said, um, it shouldn't be ignored. And so the business didn't really ask me to go after emerging markets or Latin America specifically, rather I raised my hand and asked if I could.


Have that opportunity. Okay. And just to round out that thought around making your own luck a more can Jacobson is, is another, a old time HubSpot or here at HubSpot? I think he and I are, are coming close to 10 years now, which is just crazy to think of. Um, he did the same thing. E-commerce vertical. So, you know, he was a rep in the funnel and he saw that, um, You're selling to an eCommerce business was, was a little bit more nuanced than just for frame of reference HubSpot doesn't verticalize.


Um, and so this was an early attempt at HubSpot to dabble with verticalization. Um, it ultimately didn't didn't pan out. He did found a nascent e-commerce verticalized team, um, that he led for close to three years. Uh, eventually the business, um, decided against verticalization, but it really did. Uh, send Morgan on a accelerated career development path that today he's a director as well.


And so it really opened a lot of opportunities for him. And, uh, another opportunity for, uh, Mike peachy and other, uh, longtime Hubspotter here. Um, when we only sold marketing software, he saw an opportunity with some engineers, um, to make like this lightweight CRM that we were almost developing on the side, um, which then the business side have to lean into and, um, and really put resources behind.


And today it's our second. You know, biggest seller behind our marketing suite of tools, our sales suite of tools. Which competes with like salesforce.com and things like that is our second, second biggest product line. And Mike is now a VP, I believe on the product team. And again, he saw an opportunity. He sees the opportunity, created his own luck and off he went.


So sorry, a little bit for my sidebar. No, I love the, I love the manufactured luck. I I've given that line before and it's like, yeah, there's a ton of luck involved, but you also put yourself in situation. Right people, right. Time, right. Place to create a lucky outcome. Yeah. And, and, you know, some people might have a really good opportunity at their feet and just fail to even realize it.


And so that's like missing out on luck almost, you know, or, you know, some people might see the opportunity, but fail to execute. So you need a little bit of both, right? You need to be in the right place at the right time. If to put yourself there, you have to spot it and then you've got to execute. Right.


So there's a few different components there that I think. People sometimes gloss over and maybe commiserate and like, Oh, I didn't get as lucky as such. It was like, well, I don't know. Let's dig deeper and see that. Yeah. Okay. So how did you go from this moment? It's like, aha. Moment of, wow. I've got this green field of 30,000 untapped leads and I'm just going to make heyday as a rep.


To let's codify this. Let's think about how this could become something bigger and actually create a program around that. What was that transition like? Yeah. So I think I got lucky that I had a lot of mentors at HubSpot who slowed me down. Um, I tend to see the forest before I see the trees. And so I was crafting this grandiose vision of what land could be for HubSpot and how big we can scale it.


And I think I got a lot of. Sage feedback saying, Hey man, like slow down and take it one step at a time. And so, you know, first things first as an individual contributor, I had to keep amassing small victories to be able to ask incrementally for more resources. Okay. So step one, they told me my, my bosses, my team told me like, Hey man, you can go dabble in that with have no idea.


If that's going to, you know, actually be scalable for you or not. So we kind of followed like the Google, like concept 20% time on focus on personal stuff and, and or side projects call it an 80% on my core responsibilities. And so I spent most of my time working my normal demand. And then what I would do is from like 5:00 PM to maybe like 7:00 PM.


Follow up on West coast, Mexico leads. Right? So once most of the leads on the Eastern time zone or, or central time zone, we're shutting down and going home, I would call West coast, Mexico, which was three hours behind, also Mexico, and a lot of Latin countries. It's interesting. They'll take like a two hour lunch and then they'll work until seven or eight in the evening.


So, um, you know, at first I did that, I just took 20% of my, my time or my, my bandwidth as I like to call it. And I dedicated it to that. So the first thing I had to show was a little bit of traction and, you know, every month closed one or two deals from, from an emerging market, um, to show that there's a little bit of traction there.


And so I was also very persistent, um, and kept insisting that I wanted to do this full time. Eventually after, you know, the data showed that consistently every month with only 20% time commitment, I could close two to three deals. They gave me the green light to pursue this full time. And then. Um, I was pretty successful.


And so a concept that I get with a lot of other sales leaders who are looking to ramp and grow teams is finding a KPI that is a common across the business or that other people agree is a fair KPI to use, to measure whether you're showing success or not, whether you're getting traction or not. And so the way that I was trying to justify additional help in growing lat am.


Was productivity per rep. So if I could be myself as productive as one and a half or two average reps, right? So we measure at a company level what our productivity per rep is in terms of dollars per month. Um, so if I could consistently be in like 1.5 to two X, the standard productivity per rep that is justification, or it's a good signal at least.


There's other metrics you've got to look at as well, that you could use more headcount in that team. And so that's what I did. And so we grew the team from me to two to three to them for a, I think at five I became a player coach. Um, so I would more or less managed the team day to day, but I still had my quote out of Carrie.


Um, I took that on with Gusto, probably failing to realize how difficult it would be. Luckily it turned out okay. But my personal productivity. As an individual contributor definitely took a little bit of a hit as I had to make bandwidth to manage the reps, but it was worth it because it opened doors to bigger things.


Eventually we got to ratios is sufficient to justify a manager overhead. So once we reached the thing, six or seven reps, I formally became a manager and I no longer had to carry my individual contributor quota. And we went that way, kept basically over performing consistently. In a way to suggest that we could handle more bodies in the system.


Uh, eventually the team grew too big for me. We added another manager and so it was just incremental steps, right. There was, I did have like a personal vision of what it could and should be, but it wasn't what ultimately sold it to the company. Was those incremental gains and proof and consistency over time.


The. Personal vision was more so a recruiting tool for me that I would use and not pitch to reps or people that I wanted to recruit to come to the team about what we could accomplish together over the course of many months and years in a, in building lot and to be a bonafide business unit of the company.


So now let's fast forward. Describe to us what is the state of. Lat M for HubSpot today. I mean, what is it, what does it look like? Yeah, it's, it's awesome. And I don't know if the conversation will go here or not, but there's a lot of intertwined themes here and let em, has the com what I envisioned and then some, um, But what's interesting is like my participation in it currently is not exactly what I envisioned originally.


Um, so what it's become is amazing. We, we even opened an office in Bogota, Columbia. Um, I wanted to head up the Latin business unit, um, originally than through many years. You know, but life dictated that, uh, my family and I weren't, I'm ready to uproot and take our children to Columbia. So we had to hire a leader in Bogota to whom I now report to.


So it's a really interesting dynamic, um, where I kind of had the roadway to continue leading this effort to make way for somebody else. And now you're the person running the office down there as a great friend of mine. We get along fantastically well, And then it created a new space for me to be able to go and grow Brazil, which, although it's in Latin America, that didn't vastly different culture and language.


And so there's still room for me to contribute and feel like I'm driving impact. Uh, but answering your question, you know, platinum am went from a solitary rep, not even con con uh, committing his whole time to this project too. Uh, well, I think our Bogota office is probably nearing a hundred head count.


We have, uh, in the U S yes, we have some legacy sales head count to the tune of maybe like 20 ish people, tons of what we call surround sound. So SDRs marketing, customer success, uh, and the Langham business is a eight figure business for us now. Right? So we're talking. Um, probably coming up on like $30 million run rate.


That's amazing all from a checking in on a lead that wasn't written in English. That's amazing. Yeah. It's kind of interesting to see how it snowballs over many, many years. So now. Okay. So for our listeners who are, you know, likely series a, B and C company's executive founders and investors, um, who may be thinking about, you know, what is our plan globally to expand into emerging markets?


That sort of a thing, how do we find our low hanging fruit there? Or what could that plan look like? What are some of the, you know, when you look back and reflect. What were some of the things that you did really well, that you would give as advice and maybe even sharing some of the missteps if there were, or if there were any that you would avoid, if you did it again, and we're starting from scratch,


I feel like I could almost write a chapter of a book on this, but, um, let me try and be concise with my thoughts. I can sometimes find myself rambling and just, uh, A little bit of like verbal diarrhea, but, um, we'll take it. Um, I would say follow the signals. So something really interesting, uh, is that, like I told you, You know, circa 2012, we already had 30,000 leads from Latin America and something worth mentioning, you know, in that story that I just related is that all of our content, our product, all of our offers back in 2012, when I closed that first lead from Mexico was in English.


Right. So here where you are generating 30,000 leads from Latin America and nothing is localized, like literally nothing. Um, and at the time and probably still now, but it's very pronounced back then when we were a smaller company is you had to predominant, uh, camps when it came to how to think about expansion.


And so if you want to think about a spectrum on far end of the spectrum, you had people who believed in tried and true ways of sizing markets and market opportunity, um, which is mostly like a mathematical exercise around total addressable market. And how much of it can we capture? How many businesses exist in this country, what's their GDP.


You know, how many fit our customer profile? Like literally it's a spreadsheet exercise. The other end of the spectrum is, as you can imagine, HubSpot, um, the creators of the inbound marketing space and concept, you had people. Who were saying, Hey man, doesn't matter what the Tam is. You got to go and where we have traction, right.


I was obviously leaning more in that direction. Shouldn't saying, Hey, cool. You're allowed to, I might not have the Tam of Europe, you know, Western Europe, or maybe even like Japan or some other markets. But we can't ignore the traction. We're gaining with Lou surely zero effort whatsoever. Like you cannot say it is not a true statement to say that back in 2012, we had anywhere near 30,000 leads coming from Germany or France or Japan or anything like that.


Right. And so that's an overly simplified, you know, construct and there's definitely people in the middle or, or, you know, I don't think most people. Would, uh, would, you know, say that they're only the only way to size a market or to determine international expansion is through spreadsheets or only through how many inbound leads you get.


Right. It's a mix of the two, but. Yeah, I do think it was a missed opportunity on, on HubSpot's part. Just being brutally honest. I think a lot of them could be multiples of what it is today. If we had leaned a little bit more and quicker into following where the market was showing us that we were getting traction rather than the more traditional path.


Why do I say that? Because. You know, HubSpot at HubSpot Latin America represents mid single digits percent of revenue contribution. And I talked to peers regularly at companies he's like Salesforce and Microsoft and Atlassian and Latin America typically represents mid single digits in terms of revenue contribution.


And recently, uh, I was talking to some high growth startups, um, coming out of Israel, right in the SAS space and their revenue contribution from Latin America is in the high single digits. And well, one of them decided to do or historic. It was in the high single digit. So probably around like 50% higher revenue contribution from Latin America as compared to more legacy SAS companies.


And what they decided to do is like double down, triple down on the fact that they were showing such great attraction in Latin America, specifically Mexico and Brazil, and year to date 2020, their revenue contribution from Latin America is 28%. Like that is a number that in my nine years of working and HubSpot and helping to grow emerging markets is astronaut.


I've never come across a number remotely close, close to that. Right. And so going back to your question, I think. You know, that is a case study without me being able to, to provide information that I'm not allowed to disclose, um, that shows like what can happen when you follow those signals? Right? So here's Latin America, traditionally tricky market to do business in, uh, volatile currencies, volatile governments.


Um, You know, you could, you could bone up a little bit in Google, you know, COVID Brazil just, or COVID Latin America, just to get an example of some of the volatility, uh, politics wise and economy-wise, um, but they kind of like, they, they, they, through they through that, to the wind and trusted the data and saw the traction they were getting and leaned into it and it paid off, you know, they saw like four X growth in revenue in that market in where we September.


So like in eight months they saw like four X growth in that market. You know, they just doubled down. So follow the signals, man. Like yes, you know, tried and true analytical, you know, ways of sizing markets are still valid. And I'm not saying to throw those away, but you definitely want to take as many relevant data points as possible.


And I think sometimes companies, you know, they don't, sometimes they, they ignore simple data. Like the, the existing traction that you're getting, instead of doubling down, you just kind of go with old assumptions about the difficulty will be too to, to scale that market. Um, one other thing I can offer of kind of like mistakes is if you're seeing good traction in international markets, um, open a presence there ASAP.


So for example, In Brazil, uh, Brazil and the U S don't have like tax a tax treaty. They don't, they don't collaborate well when it comes to like corporate taxes and business development and things of that nature. So what happens is that, um, if I generate revenue in Brazil and I have an entity in Brazil, I'll get taxed at their corporate tax rate.


And then when I try to repatriate the money to the U S I'll get charged corporate tax rate here. So you get double taxed to the tune of like 30 plus percent making it not viable. Um, So we sell into Brazil, but we don't papers. They'll taxes. Do we have no legal entity there? And if we're a SAS model, so recurring revenue, if we were to open a, an entity in Brazil, we would instantly become, or we expose our install base to instantly become taxable in Brazil.


And then if we try to repatriate that money, like I said, we get taxed again. So we'd have to leave that money in Brazil. Um, and depending on your company and your structure and your operations, Yeah, that could be not very valuable to you. So for us, for example, we have no operations in Brazil, having millions of dollars sitting in Brazil, no head counter, or real estate to be paying for it with that money.


You know, that money just sits there and it's a lost opportunity cost. Cause they can't deploy that money too, to help me grow my business. Right. And so. Um, a lot of more nimble startups, um, early stage startups that don't have significant revenues in Latin America, Brazil, Mexico, other emerging markets. Um, they're quick to open an operation there.


Um, and then, uh, that minimizes our tax burden, you know, then that maybe also improves their ability to generate operations or, or establish operations in there company, and then have that money be useful to them. Right. So, For us, it's almost like if the ship has maybe even sail well in opening in Brazil, because if we opened a legal entity in Brazil, we'd literally have, you know, almost $10 million tax bill out of the blue, like from day one.


And that's just a nonstarter, you know? So now we're almost constrained to only operating through partners, um, or the way we are now, which is selling from abroad and, and you kind of miss some of those opportunities too. Uh, have a bigger presence in the market and show the market that, uh, you want to be more proximate to them.


Right? Right. No, that's huge. All right. So now I want to steer us, um, Off a different course, looping back to the original statement where you said, you know, manufacturing, your luck, creating a situation where you got lucky. I'm curious, who are some of the folks who have been mentors to you or significant in your own process of growing up within that organization and pushing the boundaries in the way that you have.


Who's been there to support you through that process. So I'll name drop a little bit to names that probably people listening will recognize and then mention some names that they most likely will not recognize, but should totally Google or look them up on LinkedIn. Perfect. Um, so Brian Halligan is one, you know, I was fortunate that when I started at HubSpot, we were.


Sub 250 employees. So, you know, it's still pretty common to run into Brian pretty often, or, or even just, you know, ask him to lunch informally and get some feedback from him. Um, that's actually kind of like diluted a little bit as the years have gone on and yeah, we have, you know, several thousand employees and Brian is exponentially busier.


Um, but I remember early on. When I was starting to, or trying to scale that M and we showing traction on the sales side, we're having some friction with collections, um, and with success, uh, the success team, those onboarding these customers and running into some friction around, um, you know, English fluency and things of that nature.


And, uh, it was a little bit of like a bull in a China shop. I had this big, like I said, grandiose vision of what we could be, and I wasn't really good at. Communicating that vision to other people and rolling them in my vision and getting them on board to collaborate with me. Um, and so I kind of had a reputation there for a moment, which I'm hoping I shed.


Maybe I have, maybe I haven't, that I wasn't a good collaborator. Um, and so, uh, Brian took me out to lunch one day and he was like, look Rios. The only thing that can stop you is you don't be an asshole. And the rest, the rest will get figured out. Right. And so it was pretty awesome advice on, you know, basically.


You know, get over yourself, uh, and make sure you can collaborate effectively. Uh, and like I said, that is a vastly reduced version of the interaction, but it came down to mostly like, Hey, you need to communicate and sell your vision, enroll people and get them on board to collaborate with you and not just, you know, try to steam, roll them into doing what you need them to do.


Uh, so Halligan was one. Um, another Mark were bears. He actually hired me, uh, at HubSpot. Uh, so thank you, Mark. If you ever get to listen to this. Um, and so Mark, Mark's pretty well known now written a couple of books, teachers over at Harvard business school, uh, learned a lot from him in the beginning. He's actually the person who greenlit or gave the green light to me.


I'm doing the Adam experiment. This was called back then. Uh, so I, at least he bought my vision and at least one person did. Right. Um, So that was cool. And then two people who maybe, um, the audience may not know is one is Pete Kaputo old time HubSpot, or he's now a CEO of a company called Databox. Um, he founded our channel, uh, go to market, uh, play or our channel sales team.


So when he started, we only sold direct, um, Yeah, the channel is, is a massive revenue contributor to HubSpot and he basically, um, laid that foundation. So I learned a ton from him. I'll I'll double down on that, uh, on the data box endorsement that started. Yeah. We're like at matter made we're power users of data box, use it for all sorts of executive boards and visualizations.


Yeah. Yeah. That's awesome. And, uh, and the, and then the last one would be a  he's our SVP of international sales. Uh, so when I started at HubSpot, uh, he was still an individual contributor. He was a sailor, Mmm. Early on in my tenure, he became a manager. Um, he was actually the leader of the landing party as we actually call it, um, in Dublin to establish our operations there, um, which is now a massive multi hundred million dollar operation with.


Probably nearing a thousand head count. Uh, he then went from there to open our Singapore Asian operations based out of Singapore. Um, he eventually made his way back here to Boston. He runs our global sales organization, um, from here in Boston, Avalara learned a ton from him. And I think he's been my manager on three different occasions.


Um, you know, joining a company when we're two 50 growing to where we are now over the course of a decade, we've been very fluid and restructured several times. So it's kind of funny because. You know, G2, like I said, he's my manager, then he's not, then he's again, then he's not. And so it's always like, Oh, Hey you again, type of thing.


Um, that's cool because I've learned a ton from him even as he's grown as an individual and gone through this different phases. So I grew up, I, you know, I, I learned from him and when he was the first time manager I learned from him and I was an IC and individual contributor. Um, then I learned from him when I was, became a people manager and he was just.


Director probably, or, or VP. Uh, and now most recently as I'm a director and he's a VP learning from him, you know, so it's really cool because at every stage, the skills you focus on, the things you learn are very different. So those four individuals, I would encourage you to look them up on LinkedIn or Google them and learn a little bit more about them.


Awesome man. Well, this conversation was super fun. I know that our audience is going to eat it up and, and there's so many actionable tidbits here for them to think about their expansion into emerging markets and, and learn from the playbook that you established at HubSpot. So thanks for taking the time to chat with me.


Yeah. I mean, I hope I can help as many people as possible. And even if they just take one or two little tips from the conversation, um, I'd be thrilled. Right? The only thing I aspire to do is leave a little dent in the universe. So as much as I can learn, uh, share my learnings and my, both the positives and the negatives and, and in so much as they can help others.