How Software Startup InsightSquared Wrestled with Creating an Optimal Sales and Marketing Strategy

BRIAN KENNY: Welcome to Cold Call, the podcast where we dive deep into groundbreaking ideas and Harvard Business School case studies. Today on Cold Call, we’re talking about a company that looks like it’s winning. It has customers, momentum, and a growing reputation in the market. Revenue is coming in, the product is resonating. From the outside, this is exactly what success is supposed to look like. But inside the company, the conversation is a little different. Leaders are staring at dashboards full of data and asking a question that doesn’t really have an obvious answer. Are we actually ready to scale? Today, we’ll welcome senior lecturer Mark Roberge to discuss the case, “InsightSquared: Developing the Sales and Marketing Plan,” exploring what leaders really should be looking for when growth shows up, and how to avoid letting early success become a very expensive lesson.

I’m your host, Brian Kenny, and you’re listening to Cold Call on the HBR Podcast Network.

Mark Roberge teaches entrepreneurial sales and marketing in the MBA program. It’s a topic we don’t cover enough here on Cold Calls, so we’re thrilled to be talking about it today. Prior to HBS, Mark led global sales at HubSpot, and he has a new book out called The Science of Scaling. It’s available now, Mark, is that right?

MARK ROBERGE: It is. Yeah.

BRIAN KENNY: Awesome. We’re going to touch base on some of the ideas in the book. And thanks for coming back to Cold Call. We had you on a couple years ago, that was a lot of fun, so I’m looking forward to this as well.

MARK ROBERGE: Honored to be here.

BRIAN KENNY: Yeah. And I do think that sales is one of those topics. We don’t cover it extensively in the MBA program, it’s talked about in some of the cases that we do in the classroom. But it is such an important part of so many businesses that people are always thirsting for content around sales, and this is going to cascade into scaling the business as well.

MARK ROBERGE: We’re getting better since we last talked. I think we’re up to four or five classes. Like unique classes.

BRIAN KENNY: Yeah.

MARK ROBERGE: And we can get even more. I will tell you for the Entrepreneurial Sales course, which is kind of like Founder Selling, we’re onto our fifth section now, and there’s still a wait list. We’re talking about 450 students, so these MBAs are craving it.

BRIAN KENNY: Yeah. And that just shows you how much the appeal is. I’m broadly out there. I’m sure our listeners are craving it as well. Let’s just dive in. We can get started. When I asked you about what case would make a good stepping off point to discuss the ideas in your new book, you immediately pointed to this case. And I’m wondering why that was, why you thought this was a good foundational piece to talk about some of the ideas in The Science of Scaling.

MARK ROBERGE: Yeah. The case is InsightSquared, which I wrote 10 years ago because it is… The learning objective is the number one failure point I see in the scaling process of startups. And that’s why I chose it. Let’s not get caught up on the company. The principles here are applicable no matter what we’re doing. And it’s to double click into it, Brian. It really is the choice of when to scale sales and how fast. It is crazy how little rigor is put into those questions and answers, and how critical they are to the outcome of the startup.

BRIAN KENNY: Okay. Maybe you can just set the stage for us and tell us about InsightSquared and what the setting is and what the two principals in the case are looking at, what they’re turning over in the next-

MARK ROBERGE: Yeah. Just like most founders, they’ve done a good job of “finding product market fit”. We’re going to get into that. So, fine. They’ve got a bunch of customers, they’ve got some revenue, and they’ve convinced a great VC to give them a series A capital. Let’s say in this day of age, it’s like eight million bucks or something. And now, the first question the VC always asks is, “Okay, what’s the number next year?”

BRIAN KENNY: Yeah.

MARK ROBERGE: You just finished 2025, let’s bring it in modern terms here. Y’all did like a million in revenue last year. What are you going to do next year? It’s crazy how little rigor folks put into that, how they even approach that question. And that really is the stage is the two founders are debating how to answer that question and how to kind of build. To be honest with you, the way the case is laid out, they would be in the top 5% in the way they’re thinking about it. And even there, there’s deficiencies to their approach.

BRIAN KENNY: Yeah. Yeah. And the case makes it clear that they seem to have really good product fit. I teased this in the intro. Things are going well. All the indicators seem to be that things are going well. They know they’re at a point, at an inflection point in the business. In your mind, what’s the thing that executives tend to overlook when they’re at this point in the process, in the growth process?

MARK ROBERGE: It’s a surface level Excel sheet for them. They just literally say, “Okay, I just raised capital. As part of that fundraising process, I had to have a valuation. Because of that, I represented some really big numbers in my five-year plan. Someone bought it and now I have to go deliver.” And so, now their just like, ‘Okay, well, I have to go from one million to five million this year. And I don’t know. I heard that salespeople bring in $800,000 each.” So I just probably do that math in my head and figure out I need seven salespeople and I’m going to hire them next week, and that’s my plan.

BRIAN KENNY: Yeah. Yeah. And where are they going to get leads? Where are they going to get… Where’s the awareness going to come from that opens the door for those salespeople?

MARK ROBERGE: So many questions, and that one it teases out. But everything from like, number one, how many salespeople did we hire last year, one or two?

BRIAN KENNY: Yeah.

MARK ROBERGE: Do you know what kind of recruiting muscle is necessary to attract that caliber of talent? The horsepower to actually properly assess those people. And onboarding methodology. Did you know that the average rep to manager ratio in this context here is eight to one? So now we need a manager too. Where are we going to find that person? To your point, the demand gen situation. The list goes on on why that fails.

BRIAN KENNY: Yeah. Let’s jump to the book a little bit, because I want to be able to transition and get some of the ideas in your book and how those play into the situation that InsightSquared finds themselves in.

BRIAN KENNY: One of the central arguments in the book is that product market fit is often defined too loosely. If we look at that in the context of InsightSquared, using your framework, what would you want the leadership to be looking at differently? What should they be measuring?

MARK ROBERGE: The end point of your revenue machine is not when they give you money and sign the contract, it’s when they’ve set up the product and seen the value that you promised them. That’s the big thing folks mess up. And that can be attached to how we think about product market fit. When I teach this class or go around the country or the world and challenge founders like, “Hey, when are you ready to scale?” Some of you have been in that seat where we just talked about you just did the big series A and the VC asks for the plan. All of you aspire to be there. How do you answer that? And most people are like, “Product market fit. When I have product market fit.” Beautiful answer. Invented by maybe Eric Ries and the Lean Startup 20 years ago, beautiful answer, beautiful evolution of us as a startup ecosystem.

But then you go back and say, “What’s product market fit?” And every founder has a different definition. And half of them around like when you have 20 customers or a million in revenue. And I just couldn’t disagree more. Because product market fit qualitatively is that the majority of people that you acquire as customers see the value you promise them. Signing a contract and giving you money has nothing to do with that.

BRIAN KENNY: But when you get that investor, talk a little bit about what the kind of pressure that an investor can apply once they’ve bought into your idea and your business. You’ve got to listen to them at that point. They’re going to have expectations-

MARK ROBERGE: It’s so hard.

BRIAN KENNY: … for what you should and shouldn’t be doing.

MARK ROBERGE: It’s so hard.

BRIAN KENNY: How do you balance that?

MARK ROBERGE: In so many cases, you’re a 29-year-old, you graduate from Harvard or MIT, you’re a beautiful technician, and now you find yourself in the CEO suite. And some fancy investor who’s had three IPOs and just gave you $8 million, more money than you’ve ever seen in a bank account. And they’re like, “Hire ten reps next month.” Of course you’re going to do that. And one in 50 times it works because there’s such strong product market fit and the rest of the time it doesn’t. And that’s why we have an unnecessary failure rate, because we haven’t properly analyzed that situation.

Yeah, it’s a tough pushback, but the best way to do it is to do, first off, a bottoms up revenue model, which is highlighted in the “InsightSquared” case. Instead of just saying tops down like, “Hey, we should 5X revenue because that’s what Snowflake did in their first year. And let’s just do that and then calculate how many reps we need and quotas.” You need to do a bottoms up around, how many opportunities are we creating every month? And what’s the sales cycle? And how many convert to stage two and stage three and then ultimately close? And how long does it take to hire a salesperson? How many of those will be fired?

These are all the more complexity. So we have to start with that. And then we can attach those metrics to how we’ve historically performed. And you start getting a conversation like, “Okay, if I’m going to 2X next quarter, then I need to triple the close rate in three days.” So you start to like-

BRIAN KENNY: Reality starts.

MARK ROBERGE: Yeah, reality starts. Obviously, and then the VC’s like, “Okay, that’s not going to happen.” Okay, so what are we going to talk about? Now we bring that conversation to a much more tactical data driven context. And the other thing that’s really useful is a framework we call the “stay or go or slow.” Where this is rooted… Essentially, it just means like every quarter we’re going to reevaluate where we are. And we’re going to ask ourselves, should we be going faster based on what we’re seeing? Should we stay the same? Or should we slow down? And that’s very different thinking than a lot of startups do. For whatever reason, this is an area where startups inappropriately copy big public companies. Big public companies, you have to do an annual plan, because it takes you all year to get the right staff and all that kind of stuff. For startups, that’s terrible.

So many times it’s like, okay, we missed the first quarter by 20%. And the board’s like, “Hire more salespeople.” That’s just putting fuel on the fire. This thing’s broken. Figure out where it’s broken and fix it. That’s usually another technique I coach founders to have a healthy conversation with your board is, “Okay, let’s set up a plan that gets us to 4X. And let’s agree what we will see after the first quarter, that if we see this we’ll go faster and get ourselves onto 6X.” And like, “Oh, that’s going to be great.” “And if we see this, we’ll stay the same. And if we see this, obviously something’s really bad and we’ll stop hiring and fix it and get back on track.” That tends to be a better conversation, a healthier conversation with the VC.

BRIAN KENNY: Yeah, but the key is having those conversations, right?

MARK ROBERGE: Totally.

BRIAN KENNY: Frequently explaining to them what you’re doing and not waiting to spring bad news on somebody. That probably is a failing strategy. What is a good indicator? Because you talk in the book about the leading indicator of retention, and you’ve talked a lot here today already about revenue. Should people be looking at retention differently than revenue? Are those things complimentary? What’s the right way to think about that?

MARK ROBERGE: Yeah, they’re very related. You’re really not going to be able to scale a business if you have less than 100% what they call net dollar retention. Because net dollar retention is basically when you start the year with say 100 companies, customers that are paying you a million dollars. It means that at the end of the year, let’s say you lost 10 of them and now you have 90. And we’re totally ignoring everyone you closed in a year. Of the 100 that you started with, you have 90. But they’re paying you, those 90 are paying you 1.2 million because the expansion and success that those customers had offset what you lost.

You have to have a net dollar retention above 100% to successfully scale, because at some point you’ll be so large you won’t be able to outsell that loss. Let’s say you have a 90% net dollar attention. Fine, you’re at a million dollars, so you lost $100,000. You can easily offset that with the sales. But someday you might wake up and be $100 million in revenue. And if you have a 90% net dollar retention, it means you’re losing $10 million. So you have to sell $10 million just to be flat, nevermind achieve growth.

Circling back to your question, Brian, which is, okay, we need product market fit in order to be ready to scale. Most founders get that, yet there’s no consistent good definition about it. And many founders root it in revenue acquisition and customer acquisition, which I argue is very wrong. It should be rooted in whether your customers see value that you promise them. The best metric to measure that in the world we often talk about, like say software, is revenue retention, customer retention.

Now, the problem with that is you don’t really have a good sense. If you go out and acquire like 20 customers this quarter, you don’t know what the retention is of those customers, for maybe like a year. And that a year is just too long in startup world. That’s where the concept of leading indicator of retention comes from is, what can we see in the first week or month of a customer’s experience with you, that if we see that event or behavior they will likely be with us forever and have great retention? And if we don’t see it, they will likely churn. And we can quantify that.

A very famous example is Slack. Theirs was if the customer sends 2,000 team messages a month. Great. They’re a collaboration software. If they send 2,000 team messages a month, we can check off our leading indicator of retention, or LIR, and assume they’re going to be with us forever. And if they don’t, they’re probably going to churn. It’s not always perfect, but it’s very statistically correlated. And that’s a great way for us to anchor and measure product market fit in real time and whether we have it.

BRIAN KENNY: And that puts pressure on your product management team to make sure that the product is satisfying customer needs. It puts pressure on your customer service team to make sure that the customer is succeeding and using the product. So it sets up a bunch of metrics across the organization above and beyond just sales.

MARK ROBERGE: Very holistic.

BRIAN KENNY: Yeah.

MARK ROBERGE: Right? It’s like it aligns everybody. And a lot of people think that when you’re not hitting it, you’re measuring the LI. You’re Slack and you’re like, “Oh, only 20% are sending 2,000 team messages. We don’t have product market fit.” Most people think it’s a product issue. Most of the time it’s a sales issue. Most of the time it’s the salespeople are choosing to sell to the wrong folks, to the folks we actually didn’t build the product for. And so, this really surfaces it quickly on what’s going on.

BRIAN KENNY: Yeah. Yeah. And actually, that’s a great segue into the next question I had, which had to do with timing. Because there’s a horse and cart scenario here. You need the salespeople to sell the product, but you need the interest and the awareness and the leads to give the salespeople something to feast on. How do you figure that equation out? When do you actually hire the sales people?

MARK ROBERGE: Yeah. And that’s the other big framework in the book, is not only do I lay out the steps of knowing whether you’re ready to scale. We’re talking about product market fit right now. But I also define a go-to-market system that we think about revenue as a system that encompasses the salespeople we hire, how we pay them, our pricing model, how we generate demand, our sales methodology, our target market and ideal customer profile. And to your question, the components of that go-to-market system are contextual to the business. Who are we selling to? What are we selling? Are we selling pencils or jets? Are we selling to marketers or finance people? Are we selling culturally about our business? Are we in Japan or Brazil? And very importantly, to the context of the book, what stage are we at?

To your point, if we’re in the pursuit of product market fit, that system is designed differently. We think very differently about how we generate demand, the type of salesperson we hire, how we pay them, how we price the product, the sales methodology that we use. And as we move to the next stage into the scale stage, that changes.

To your point on the hire, the number one salesperson at my alma mater, HubSpot, right now would be probably a terrible hire. Even though intuitively they’re like, “Oh, my gosh, that’d be great.” But if you think about starting a business right now and you’re in the product market fit phase, they would be a terrible hire.

Because when they joined HubSpot two years ago, they went through a month of training with all the decks and all the objectives, and they had a trainer and then a manager to help them, and the methodology was defined and all the objection handling was defined. When they joined your company, you have nothing. And furthermore, you don’t even know if you have product market fit. You need someone that has the commercial experience of an account executive, but half their brand is more like a product manager. This is the first person you’re going to hire that’s going to 20X the number of conversations you have with the market. As a product founder, you didn’t have time. This person’s going to talk to the market 20 or 30 times a week. They need to be able to step back, see the patterns, and communicate that to your engineering team. It’s a very different skill than the current top performer at a multi-billion dollar company.

And that’s why founder selling is often used here. Founders realize they don’t have to be a professional seller, they need to have some of the basics, but they tend to bring both those sets of the brain to the table.

BRIAN KENNY: Yeah. I think we talked about this maybe the last time that we spoke as well. Let’s just talk about founders for a minute, because many times the founder becomes a little bit of a cult of personality in an organization. They created the product. In many cases, they know it better than anyone else. And they had their vision and they understand it. And maybe they don’t articulate that or transfer that knowledge in a way that’s as helpful. What should a founder do in this situation? When they’re trying to build a sales team, what should their role be?

MARK ROBERGE: Most founders think that their playbook is the 20 slides that describe why they started the company and how the product works. There is extremely rigorous research in every nook and cranny that shows that the top sellers in the industry speak less than half the time on the first call. When I show this to my MBA students or when I go do speeches and terms of founders at tech conferences, they’re just like, “What? I thought I should just go… ” “How’d the sales call go?” “It’s great. We got through all 20 slides. They loved it.” You are performing like the bottom 25% of sales professionals. Your job in the first meeting is to discover and qualify. It’s to ask open-ended questions around how your buyer is thinking about this problem that you solve, before you tell them anything about your product. What they’re prioritizing, what their ideal solution is, that’s the discovery so you know how to tailor your pitch. And you’re qualifying as to like, are they even prioritizing this? What’s their tech stack? Are they the decision-maker? So you can decide if you should spend time with them. That’s why great salespeople speak less than half the time, is they use most of the first meeting to discover and qualify.

BRIAN KENNY: It’s the old two ears, one mouth expression.

MARK ROBERGE: Show up and throw up, alligator selling, one big mouth, two little ears. There’s all these cartoons and phrases that you know, Brian.

BRIAN KENNY: Why don’t we transition a little bit to speed, because the book really is about the science of scaling. When should you start? How do you know how fast to move once you do it? And we have these conversations a lot on Cold Call, because a lot of our cases focus on entrepreneurial ventures and founders trying to figure out what the right speed is, what they should be focused on. Whether it’s revenue growth or scalable growth, or manageable growth, however you want to look at it. In your estimation, if you think about the book and if you think about the InsightSquared case, what’s the biggest mistake companies usually make when it comes to speed and how fast to scale?

MARK ROBERGE: They look at it as a lump sum hiring at the beginning of a fiscal year right after a fundraise. And then just like, they’ll be like, “Okay, cool. I got a 5X. This is the quotas for my reps. I got to hire 12 reps. Let’s do it next week and cross our fingers and hope the year goes well.” And the breakthrough is how you change that for pacing as opposed to lump sum hiring. And so, to your point, the subtitle of the book is: “Using data to determine when and how fast to scale.”

We’ve talked a little bit about the when. And the how fast is most people are just like, “Okay, we’re ready to scale. Let’s hire 12 reps and hopefully our year goes well.” And replace that with, let’s do two reps a quarter. Let’s hire two reps a quarter and let’s use our “stay or go or slow model” to see if we should increase it. Let’s revisit this in two quarters. And if we’re in the go side, let’s go to four reps a quarter. And hopefully we’ve executed well and we’re in the go again two quarters after that. And now we’re going to go to eight reps a quarter. And two quarters after that, we’re going to go to 16 reps a quarter. And congrats, now you’re a unicorn, and you did it in a very controlled way.

And I’ve never seen a business not have the go-to-market system break through that journey. But when you use this approach, you figure out where it’s broken two quarters ahead of your peers. So you can fix it in a week, or two weeks, whatever, and get it back on track.

BRIAN KENNY: Have you seen investors bail though? Have you seen investors get panicky? And how do you manage those conversations?

MARK ROBERGE: All the time. It’s like, “Oh, gosh, we missed by 20%. Let’s hire more reps to catch up.” Because let me tell you what the VC’s mindset is. They have a particular IRR, a return profile that they’re solving for their asset class. They have a quarter over quarter growth rate that you need to stay on to match their IRR. They want you to go big or to go home. And what the ecosystem doesn’t appreciate is these startups we hold for five or 10 years. It’s rare that we sell them quickly. And when you sell this company in seven years, no one’s going to ask you what your growth rate was from Q2 to Q3 seven years ago. You have some wiggle room to slow this down for a month, fix it, and get it back on track.

Now, granted, yes, we have to go do a series B, but hopefully we have some time to be able to do that. The series B investor cares about the last two quarters, and the acquirer probably cares about the last 18 months.

BRIAN KENNY: Yeah. Yeah. You also talk about building moats and the importance of having a moat as part of your strategy. Maybe you can explain what a moat is for our listeners who don’t follow that, and why it’s important to have that backfall as you are moving down this path.

MARK ROBERGE: Yeah. The moat’s the definition of how hard it is for someone to copy you. Whether it’s an incumbent that’s like, “Oh, that was a good idea. Copy it.” Or, if a startup’s coming in and how long that would take and how hard that would be. Whenever I ask founders, “What’s your moat?” Most of them reference a feature they have that’s different than the competition. My next question is, “Okay, let’s say you’re right, you have two great quarters, word gets around. Your competition, whether it’s the incumbent or the startup, sees you winning deals against them, they see the buyer saying it’s because they have this feature. How long is it going to take for them to build the feature?” And they’re like, “I don’t know, probably a quarter.” I’m like, “That’s not a good moat.” It’s a moat, but that’s temporary. You need a sustainable moat.

And one of our esteemed professors here, Michael Porter, I think has the most rigorous work on moats and his Porter’s Five Forces. One of his five forces is bearers to entry. He wrote a phenomenal paper in HBR in the 70s.

BRIAN KENNY: Yeah, a long time ago.

MARK ROBERGE: Defining different elements from network effects to switching cost to brand, that I personally have helped founders modernize it in the world we talk about today. An example in our world today with AI agents is there’s a bit of what he calls an “economies of scale” moat in AI model development. Let’s say in the InsightSquared case here, you have built a AI model that analyzes sales calls and gives you coaching on them. And a week goes by, a month goes by, three quarters go by, two years go by and you’ve now analyzed a billion sales calls that have been incorporated in your model. And now the incumbent’s like, “Oh, we should do that.” Or a startup’s like, “Oh, we should do that.”

You still win. It takes them years to catch up to a billion. And it’s like, “Hey, someone else said they have the same product as yours and they’re giving it to me for half the price.” I’m like, “Yeah, you could go with them, but ask them how many sales calls they’ve processed, because it’s under 10,000, and we’ve done a billion. So if you want to save 50%, go ahead. But if you actually want the model that’s going to accelerate your sales, we’re the one.” That’s a much better moat.

BRIAN KENNY: Are there moats that startups focus on too long? Do they do that at the expense of something else? Because you talk about the importance of having the system evolve over time. If you focus too much on maybe one moat, are you doing yourself a disservice?

MARK ROBERGE: It could shift. That’s the big thing with the go-to-market system is you constantly have to evaluate because the macro context changes, the competitive landscape changes, customer expectations change. Sometimes the economy changes in terms of what people are looking for, the tech landscape changes. I think once people get a really good moat, they can typically feed it and stay ahead. I would say it’s a little scarier right now when I go out and ask native AI founders what their moat is, and they say they’re going to work harder than everybody else. It’s seriously what they’re saying. They’re like, “We don’t believe in moats. We’re just going to work harder.”

And last year everyone was like… Two years ago it was like, “We’re doing 9, 9, 5, 9:00 AM to 9:00 PM.” And then someone was like, “Oh, we’re doing 9, 9, 6.” And now we’re doing 8, 12, 6.” It feels like that episode, that movie, like seven-minute abs. And then someone’s like, “I got an idea, six minute abs.” It just feel like we’re on this hamster wheel. So it’s not-

BRIAN KENNY: It’s not sustainable.

MARK ROBERGE: It’s not sustainable. It’s not a sustainable moat. Someone can copy it. I would say, within that moat conversation there’s this major design big, start small. Where you usually aren’t solving for your moat or building toward your moat at the product market fit phase. You’re just trying to get customers going, you’re just trying to prove this, but you have a vision for what that moat could be. And you’re just hustling to create awesome value, drive revenue. And then at some point you might be making some product decisions that compromise next quarter revenue that allow you to build a deeper moat. And that’s the kind of conflict, the natural, good tension that you want to have happening in your product roadmap.

BRIAN KENNY: Yeah. You’ve mentioned AI a few times, more in the context of AI startups. I’m wondering, as you think about the sales function, and this is a little bit off the topic path of what we’re talking about. But how do you see AI either helping or hindering the sales function?

MARK ROBERGE: The appendix in the book is titled, “How AI Will Change Sales.”

BRIAN KENNY: Oh, there you go.

MARK ROBERGE: Yeah, we could do another podcast on that. I’ll try to do the 45 second answer. It’s very hard to predict. The way I like to phrase it is, the hard thing about it is how fast humans will be extracted from their current point of work. And I think that could be applicable to many evaluations of how AI will impact things from doctors to finance people to salespeople. I think the first phase is going to be just around automating and streamlining the current process.

It’s embarrassing, in the world of sales there’s a term called selling time. That on a weekly basis measures what percent of the week a seller is in front of a buyer or prospect. If you’re good, it’s like 30%. That’s terrible. AI will turn that into 80 or 90. We’ve seen some companies last year pull that off. So that’ll be phase one, is just completely eliminating all the unnecessary paperwork, administrative, a lot of the stuff that pulls you away from a face-to-face meeting.

Phase two, I think will be the seller becomes an AI agent. There’s a couple startups working on this. It’s going pretty well in product-led growth funnels right now where the purchase is pretty simple. And I think that will bleed into SMB and transactional sales soon.

After that, I think you’ll have the buyer become an agent as well. It’s crazy that you have these hundred employee committees at large companies trying to put together an RFP for the needs of the business. AI can do that way better. So we’ll eventually have buyer agents buying from seller agents, which will just make it a really honest, hopefully a high valued transaction. Not based on how good the country club is, or if your salesperson or how good of the steak dinners they take you to.

And then the final piece will be a blurring of our functions. I think we have finance and engineering and sales teams because of limitations of human brains. There’s very few people that get a PhD in finance that go code, and vice versa. But those department structures create inefficiencies within organizations. AI allows us to rise up above that. And I think that’s really Star Trekky, but I think those functional divides that we commonly see will start to blur as we get to that fourth phase.

BRIAN KENNY: I could imagine people listening to this though might be thinking, “Yeah, but that’s not going to take as many people.” Will everybody rise above because AI is doing all this busy work for us? And what happens to the human element? I’m building a relationship with you, you trust me, therefore you buy from me. Does that go away?

MARK ROBERGE: In certain places. That’s a whole, I think, a big thing that I talk a lot and study a lot. Is like, you never want to be bringing tech to the world that hurts society. And I do feel that we’re spending a hundred times more on building this stuff than we are understanding the implication, and that needs to change. And I’ve been talking a lot about that recently.

But, yes, I’m growing in conviction that there are going to be a lot of situations that AI could do the job, but humans will prefer to have a human in the loop and involved.

BRIAN KENNY: Yeah. It reminds me a little bit of when we went through COVID. And Harvard Business School, like every other school, figured out how to go online. And everybody thought, “Oh, that’s it. That’s the end of campuses. Nobody needs to come to campus anymore.” But our dean at the time, Nitin Nohria, I thought had a great insight where he said, “No, actually, campus becomes more important in this equation.” Because, yes, we can extend our reach much further into the world, but we’re leveraging technology in a way that we didn’t. It forced us into doing that for the better, but people will still want to be present with each other. And that’s how you build networks and relationships and things-

MARK ROBERGE: It’s a great analogy. Yep. Spot on.

BRIAN KENNY: Yeah. If we go back to the InsightSquared case again, because that’s where we started off. If you think about the decision that those founders were trying to make, really the central theme there was they were having a disagreement about how to scale. Should they be hiring more salespeople? Should they be investing more in marketing? And that’s the central tension there. Are those the right things for them to be looking at? Or as you have people listening to this podcast today, what would you tell them to be looking at?

MARK ROBERGE: Yeah. There’s two things I’ll highlight that we went over here. The first one is to root your readiness to scale in consistent customer value creation, not consistent revenue acquisition. So where so many people get messed up. And I think we covered that. You need to look at your sales and revenue funnel, not the endpoint at contract signature, got the payment. But the end point is they set up the product, they saw the value, they’re going to buy more, and they’re going to refer customers. That’s point number one.

Point number two is, this is a lot more complicated system than just hiring reps and giving them a quota. There’s a lot of dimensions to that system. There are no universal answers to those dimensions. And by the way, those dimensions are your comp plan, your sales hiring profile, your demand gen strategy, your sales methodology. All of those component designs need to be rooted in your context. Who are you selling to? How complicated is the product? Where are you selling? And what stage are you at? It needs to be continually evaluated. Your go-to-market system is not a static optimization, it is a continual optimization. Those are the two points I’d like people to take away.

BRIAN KENNY: Okay. Okay. And I guess one last question, while we still have you here, is for people who are listening to this podcast. You might be in a similar situation or can relate to what you’re saying. What should they stop doing tomorrow versus all the things you’ve told them they should be doing?

MARK ROBERGE: The north star for the company should not be a revenue target. In the early days it should be the LIR. The leading indicator of retention. And as you evolve is just a little more holistic. Yes, we have to grow revenue, we have to pay the bills, we have to support people, but it ultimately needs to be rooted in customer value. So don’t just say, “We hit the revenue target.” That’s a part of the equation.

BRIAN KENNY: From your lips to the investor’s ears.

MARK ROBERGE: It’s weird as the sales leader be saying that, but it’s true.

BRIAN KENNY: Yeah. Mark, thanks for joining me on Cold Call.

MARK ROBERGE: It’s an honor, Brian. Thank you.

BRIAN KENNY: If you enjoy Cold Call, you might like our other podcasts: Climate Rising, Coaching Real Leaders, IdeaCast, Managing the Future of Work, Skydeck, and Think Big, Buy Small. Find them wherever you get your podcasts.

If you have any suggestions or just want to say hello, we want to hear from you. Email us at coldcall@hbs.edu. Thanks again for joining us. I’m your host Brian Kenny, and you’ve been listening to Cold Call, an official podcast of Harvard Business School and part of the HBR Podcast Network.