Riding Unicorns

S3E20 - Brad Coffey, Chief Customer Officer @ Pipe

April 20, 2022 Riding Unicorns Season 3 Episode 20
Riding Unicorns
S3E20 - Brad Coffey, Chief Customer Officer @ Pipe
Show Notes Transcript

Brad Coffey is the Chief Customer Officer at Pipe, the trading platform that enables entrepreneurs to grow their business on their terms. By treating recurring revenue streams as an asset, Pipe allows companies to transform their recurring revenue into up-front capital, instantly. Prior to joining Pipe Brad was the Chief Strategy Officer at HubSpot, where he helped grow the business from $1m to $1b in ARR. Brad is also a keen angel investor and advisor having helped many startups develop their strategy around product, packaging and pricing.

In this the final episode of Season 3 Hector and James sit down with Brad to explore the differences between entrepreneurs and intrapreneurs, the challenges of fundraising and what metrics are the most valuable. Later into the episode the trio cover the topics of cross team KPIs, the best way to build a multi product company and Brad's views on the competition and the future of Pipe. 

Make sure to like and subscribe to the Riding Unicorns podcast to never miss an episode. Also don't forget to give Riding Unicorns a follow on Twitter and LinkedIn to keep on top of the latest developments.

James: [00:00:00] welcome to riding unicorns. The podcast about growth startups. I'm James Pringle and I'm a technology entrepreneur and investor and the founder of Pringle capital. My co-host is Hector Mason. Hector as a partner at B2B investor episode one ventures. Our mission is to uncover what it takes to build a unicorn business.

For season three, we're speaking to some of the best founders, many from unicorn companies and asking them about their journey, operational insight, tips, and lessons they've learned along the way.

Today we have a very special guest. Brad Coffey is chief customer officer at pipe. Prior to joining pipe. Brad was a key employee at HubSpot and help them grow from $1 million to $1 billion in ARR and into the multi-billion dollar company they are today. Brad's last role at HubSpot was as chief [00:01:00] strategy officer.

Now he's at pipe and pipe is allowing companies to grow on that affirms the pipe platform, lets companies accelerate revenues so they can reinvest and grow faster. Regular listeners amongst you will recognise pipe as the exclusive sponsor of riding unicorn season three. And there's two VCs, Hector, and I have been very keen to support founders with alternative funding options for that business.

In this episode, we dive into Brad's experience at HubSpot's metrics, managing multiple departments, the decision to join pipe. Going from a single product company to a multi-product company, dealing with competition and much, much more. It's an incredible episode. So let's get started.

James: Hi, brad. Welcome to the running unicorns podcast.

Brad: Eh, thank you guys for having me appreciate.

James: No problem. It's our pleasure. Um, so Brad, you were an early employee at HubSpot held a number of very senior positions, ended up as chief [00:02:00] strategy officer. You're now the chief customer officer at pipe. We've asked all our guests in this season, this question, but we think you will have a really interesting perspective.

So what does entrepreneurship mean to you?

Brad: I think that's a great question. it is a little bit different. I, I wasn't the founder, uh, I HubSpot or. But, you know, I really think entrepreneurship is about like creating something out of nothing. I think those are the folks that I, at least I find I get the most energy out of. And I think that can be true, in its purest sense, you know, starting a company.

Uh, but I think even if you look at folks inside a business today or inside a growing. Some of the ones that have the biggest impact and have that growth mindset and sort of have that ability to move the ball forward and create something out of nothing is a special talent. Uh, it's pretty rare.

And I think that level of entrepreneurship, uh, can exist, various sizes in different.[00:03:00]

Hector: Definitely. Yeah. It's, uh, it's fascinating hearing. Everyone's different, views on what entrepreneurship is. And I think something we should ask more people is what they think entrepreneurship is as well. because I think, all of the entrepreneurs that we have on her founders are trying to hire people who are going to innovate in their companies as well.

they're entrepreneurs in themselves. so I wonder whether you think of yourself, a tool as a, as an interrupted.

Brad: I think so in theirs. and I've seen sort of very explicit versions of that, certainly work well. You know, as you're a growing company, usually focus on one market, either with sort of a specific product or even a, you know, we're only gonna sell in the United States or in the UK at first. And as you expand, uh, and so there's.

I think opportunity for folks to be entrepreneurial, I guess, entrepreneur versus an entrepreneur. but even in that, as you expand to different markets, you know, we used to run sort of basically like an experiments framework, back in the day at HubSpot where, you know, we would get inbound [00:04:00] leads from all over the world or all different segments of the market.

And we weren't sure how the right way to attack some of those opportunities where, but if you. Smart folks, you know, typically it'd be like somebody on the sales side, maybe somebody on the services side, maybe one person in product and you can put them together and say, Hey, can you go figure out how this applies to the enterprise market or how this applies to this European market or how this applies?

e-commerce helps. So as a B2B company, Hey, can we actually use this for e-commerce and, you know, try to give them like a very explicit box to work with it. I think that's important about a little bit about entrepreneurship versus maybe entrepreneurship, where maybe that box is wide open. If you own the company and it's, a few folks in a garage or something, but I think once you define that box, it allows people to be very creative within it.

You know, they understand what they can innovate on what they can't and. It's not always gonna work. I think, too many folks maybe feel like they need to bat a [00:05:00] thousand on those opportunities and, uh, therefore maybe lower their sights or don't be as aggressive or don't try something quite as, Quite as impactful as they cooks are trying to solve for not failing, or maybe you're not even taking that opportunity because they don't want to fail.

When I think a lot of founders and a lot of executives would love to see people try those things, you know, and, and, and as long as they actually are doing it the right way and are honest about how it's going, uh, I think folks realize, look at a lot opportunities.

Hector: Yeah, it's great to now. I wonder, I wonder whether the, whether one of those boxes for years sort of. One of these kinds of challenges was ever fundraising. I know you were quite involved in the fundraising at HubSpot and, uh, pipe as well. I wonder whether you kind of, you know, saw that through a fresh set of eyes and thought, right?

How do we tackle this? And whether you have any advice to pass on to our listeners,

Brad: I would, I would say that box is a little, maybe a little bit different. for that, cause, uh, at least I will say through when I started doing fundraising, I had no [00:06:00] idea what I was doing. A lot of people don't like it, especially if it's your first time through it, you know, you don't know. And I felt really lucky that I got to ride shotgun a little bit on it.

I, you know, we had a CEO, Brian that was sort of leading the fundraising and. I was at the data geek for like the first couple of rounds, which was perfect, where it was like, I was the one who like, I'd set up our CRM. I knew how our business worked. I could run the metrics and I learned an incredible amount.

I feel like I'm still learning an incredible amount, from the really, really smart questions that. The right investors ask through that process and that forces you to, I think, be a little introspective in your own business. and so I, I probably learned much more than it would probably have been like, oh, I, you know, made it on this sort of like, and we fundraise in this like super creative way.

so I learned a lot, I would say the, a couple of things. [00:07:00] If I did have advice for folks. I think that relationship, that level of engagement, you get that back and forth. You get from the right partners in the right investments. I think serves as a really good foundation. It's very typical for how that relationship is going to unfold in the future and picking the right.

I do consider it a partnership, right? you're getting capital, but it's really going to be a partnership for a long term And so picking someone who can push you, who can help you think through problems who can ask the right questions is like as valuable sometimes as the actual capital you're bringing in.

once we started to see a little success, I'll say two other little anecdotes that are maybe a little less intuitive and a little more specific, but, at least when I've done it before, we've been a little anti syndication of deals. like one of the things that I think is important. Sort of in any negotiation.

And I think fundraising is no different is you actually want to create a little bit of competition, you know? So if you've got two folks that are interested, instead of [00:08:00] letting them won't do the deal together at maybe a lower evaluation, like you want to create that level of scarcity and, but try to get them to compete as much as possible.

and then, uh, the other thing we did. is, uh, whenever you do go pitch, you know, you want to, you need to be honest and you want to sort of pink the company going in the right direction. But I think it's helpful to also expose a little spots where you're maybe not as strong or that you could use a little bit of help.

And especially where you leave that thing where it's like, man, if we just could solve this park, Like this, the curve will bend even steeper up. And it's really important to sort of be able to have that. So would be very intentional about that in the beginning. And what was always funny about it is for us, it was always pricing packaging.

It was always that we thought we'd get pricing and packaging better. And since I own that, Brian would throw me under the bus, like every single time at the end of the meeting and be like, oh, if Brad could just figure this one piece out, we'd be doing way better. [00:09:00] Like get out of breath. No. but I think it was.

It's true. You know, like whatever that thing is for you as an entrepreneur or a founder, I feel like sometimes, you know, when I've been on the other side of the table and listening to pitches, people kind of try to like cover that up or they try to like seem invincible and like everything's perfect. And I actually think that works against them slightly because often it's like, oh geez, no, here is this one thing that it's, we could really figure this out.

Actual pricing actually turned out to actually be a really thing that we needed to figure out. it can actually really move the needle for a company and point them in the right direction.

James: Yeah, I think that's really good tip. It leaves a bit more imagination and blue sky for the investor thing, or maybe people are saying no for that reason, but we can actually fix that and then we're going to be off. Um, so yeah.

Brad: I think that's where I would think that I'll say, just add that. I think it shows that if you're willing to do that as a founder, that you're always going to be honest and transparent, and it shows a level of like curiosity and desire to learn from [00:10:00] others, which I think are two traits you need to be successful as an entrepreneur.

James: you mentioned you were the data guys, so interesting question would be to ask around metrics. I think founders and investors can get quite obsessed by metrics. So what metrics do you think. Really worth measuring. And are there any metrics you think some founders measure that you'll not let an advisor and they think that that.

Brad: I think it's a great question. Uh, and obviously a little different now at pipe versus a SAS company. at HubSpot that answer was hundred percent revenue retention. And so, You know, there are a couple of different types of retention or churn. So people sort of look at the opposite side of that, but we always talked about customer attention, which is like, how many customers are you keeping, you know, a year of a year?

And then the revenue retention or net dollar attention is how much are those same set of customers paying you over the course of the year? And this was one of those ones that I got grilled at by one of our investors and, forced [00:11:00] me to really understand our business. And the answer was a HubSpot. It was really poor, you know, back when we were in that sort of series, a series B sort of stage, we had 65, 70% customer retention. So if you had a hundred customers beginning of year, we're only keeping 65 or 70. And then, our revenue retention was about 75%. So each of those 65 70 customers were paying us just a little bit more, you know, five or 10% more a year.

And when you're small, I find that that's not that big a deal as a company, you should try new things. You should try to grow. Cause you can just hire marketing and sales. And you know, if you have a hundred customers adding another, 25 or 30 is not that big a deal. Well, we realized whenever you sort of did some of the math as you scale, and you go from a hundred to a thousand to 10,000 or a hundred thousand customers, we had Gail Goodman, who is the CEO of constant contact is email marketing vendor in the United States on our board.

And they had a hundred thousand customers, but they had like 75% customer attention. So we were losing [00:12:00] 25,000 customers a year. And so that is just a massive hole that they would have to dig themselves out of every single year just to stay. Let alone try to grow over that. And so we became very obsessed.

We trying to get both the customer attention up and then that revenue retention above a hundred percent. Because if you can get above a hundred percent on your revenue retention, as you go from a hundred to a thousand to 10,000 to 100,000 customers, suddenly that becomes a tailwind and actually a flywheel that allows you to grow even faster versus an anchor.

And that dynamic there, particularly for a SAS company. Just vitally important. Uh, and you see that as it translates down to the LTV to CAC, for your business. And so we looked at. At that every way that you possibly could. I spent sort of like months of my life, trying to correlate retention to different market segments, different geographies to different uses of the product, which is something I rarely ever see, you know, can you actually [00:13:00] correlate and turn out to be a massive insight for us?

Where at HubSpot you had an SEO to. Turn out. If you use, you kind of used it once or twice, and then you stopped. And so there wasn't very sticky. Whereas if you actually created content, had a call to action that went to a landing page and actually got contacts into the system that turned out to be a much harder sell.

It was less, less sizzle on the sales process. But if you actually set that up, it was massively stickier. And like, we'd never done that. And we actually oriented our entire strategy and our product development strategy around some of those insights. And it, and really it allowed us to in a couple of years dramatically improve that retention number, and drove us to be able to go public and beyond.

Hector: Yeah, it's incredibly interesting actually how, tactical you can be. And I think for years, people have been talking about data as, as oil and onus is really only quite recently. I think that people have actually. Practical insight out of data analysts. And I think that's a, that's a great [00:14:00] example is it's just thinking in a smart way about your customers and how can you actually improve the business I think it's a great, part of that is thinking about what all the important metrics and KPIs, and it's not just customer growth. It's not just top line annual revenue.

Brad: Yeah. And I will say too, cause I feel like I, I meet with folks that are always like, Hey, I want to do like strategy at this startup. Like, how do you do that? And I'm like, well, first off, there's like one person that described your startup and that's like the CEO. I was like, but most importantly, I think if you're like one of the, like a data analyst or you have some like key insight into one part of the day, That can get you that seat at the table.

And so I'm always trying to coach folks, it's like, you're going to get a question one day, which is like, Hey, can you run a chart that has this on the X axis and this and the Y axis. And I think it's important that you give the chart exactly what you want, but also ask why, or at least ask yourself why they're asking for that.

And then based on what you know about the data, or, you know, the customers maybe say, Hey, this is actually the way I would look at it. And when you present that and [00:15:00] then you go, well, actually, and then based on the way I would look at it, this is what I'm seeing it. You know, and so maybe this is what we should actually do.

And then something like that, that's how you have impacted the business. That's like, you want to do strategy like that is your strategy. You're looking at the numbers and you're understanding your driving conclusions and some ideas, some action steps you can take from that. Uh, and I feel like a lot of people.

I want to be able to do that, but end up just sort of like, oh, I got asked to do X or I'm only gonna do X, like that's I think the opportunity, for a lot of folks that are maybe not the founders, but the folks that are trying to grow inside some of these startups

Hector: Yeah, great advice. And I know you've, sat across lots of different areas within businesses and. on day one, when companies are small, it's relatively easy to keep tabs on what everyone's doing and have a unified strategy and it will be working towards same goal. And then, you know, as, as a company scales and you have, almost miniature businesses within the business, and.

[00:16:00] Becomes really hard to unite everyone and to get people sort of singing from the same hymn sheet. So I wonder if you've had experiences that, how do you think about, cross team KPIs and making sure that people are, working strategically and thinking about the right thing.

Brad: Yeah. Uh, I think it's a great question. In fact, we actually spent some time at pipe just last week, talking about this sort of exact topic. And, I'll say first, I think there's a difficult balance that happens that as you grow, because when you first start this desire that like everyone kind of makes decisions.

but the problem is, as you grow and grow with us with more people in the room to basically try to veto that decision, right. We always just call it like an uninspired compromise or basically it's like, you take some idea and if it's sufficiently bold, like somebody is gonna like, be like, oh, I'm not sure if that's right.

And then do you try to always make those decisions in a giant room? Oh, eventually just from the math, even if, you know, you're just like, if there's like a 10% chance that somebody might think it's a bad [00:17:00] idea, like, boom, you get enough people in the room and suddenly the math, just like, there's no chance that you're actually going to get that thing move forward.

And so what happens is a lot of people end up watering down their ideas to something that can like placate everybody. And then it's like pretty useless. And so we would like actively, I still believe we need those sort of like actively fight against that. And the main way to do it is, to assign them.

I think it doesn't mean a lack of communication. you know, you want to still share what that is, but one person needs to own it so they can make sufficiently bold decisions and move forward. so I think that's sort of like the grounding, there. And if you want to allow a small group of folks to try, just try something sometimes,

Hector: Yeah. Just on that. I mean, I think it's, it's a fascinating point because we have the same issue in VC, right. Where, a group of. Who have to decide on which companies to invest in each year. And we're very purposeful about not investing on consensus. You don't need every partner [00:18:00] in the partnership to be saying, this is great in order for the, for the investment to go through, because been enough research to suggest that actually outlier businesses, the ones that are really good and using the analogy for what you're doing and the ideas that are really good.

And they're going to play out successfully are often the ones that divide. Um, and they're really polarizing ideas that ended up being binary and either falling flat or exploding. And so I think it's the same, it's the same thing here. And I wonder whether through your experience, you've, you've seen sort of any decision frameworks in how you decide on what experiments you mentioned earlier, you sort of follow through with.

Brad: Yeah. so the, there is, one thing we ended up talking about a lot and I talked about a lot. It's like, I look two by twos, but it's a two by two. That basically is like, how big a bet are you making? And is it a one-way door or two-way. You know, how can you reverse this change? Right? And so if there is something that is like a, Hey, we're going to like bet the [00:19:00] company.

And once we make that change, like there's no coming back. Okay. Let those decisions probably need to be made at an executive level and probably lots of thoughtfulness and lots of diligence. but I think pour of your job as a leadership team and as an executive is to try to not let things end up in that bucket and try to tweak it, or sort of look at things through a lens that allows it to be sort of in the lower left, which is, Hey, can we actually run this just as a little experiment so that if it, you know, we brought it up there and it fails, I will just pull it back.

Nope. Right. You know, or, Hey, like, what we can do is instead of making this a giant, that community get a smaller bet, you know, so that we can test that out first. And so I think there's opportunities like that where you once you do that, feel much more comfortable around giving folks real ownership of it, you know, real autonomy.

And I, I do think there is a little bit of a difference between, giving autonomy, Without accountability, I guess not like unconvincing, it doesn't mean that [00:20:00] you sort of like, you're not accountable for the decisions and so what you do and how you spend your time. But I do think there's a massive difference when folks feel a level of ownership in the company and what their work is to be successful.

So if you can maximize that in a way that, allows you to, when there are mistakes, roll them back. Or if there is a loss to sort of accept that you had that expense and you tried something and didn't work and move on that it can be really successful. And I think the best companies find ways to, you know, develop product or develop new go-to-market motions that sort of shifts stuff as much as possible into that lower left-hand bucket.

James: Yeah, I think at Uber, they had a situation where they wanted to test cash payments instead of just credit cards, because Some of the product team had a theory or the growth team had a theory that it was gonna create explosive growth in more like emerging model. And Travis said no.

And then the growth team had been so successful that they said we're going to try and [00:21:00] Hyderabad anyway. And then. And it created amazing growth. And then they went back to the data and he was like, oh yeah, of course you're allowed to do stuff like that. I said, no, but yeah, I'm happy you did it. At least you have the culture of like, they knew they could kind of get away with testing it.

but they, they moved it from trying, like you said, Brad, instead of going, we're going to try this globally in every market because we think it might work. But if it fails, the company's dead, they just went. We're going to try it in Hyderabad. And if it doesn't work. It doesn't matter cause it's not really working here anyway.

Brad: I think that's really hard for a lot of folks, to believe are in sort of like you need to celebrate those. And I think that's really important. I'm a big believer, not. Telling people what to do, but holding up examples of what a plus looks like and letting everyone else see that and aspire to.

Hector: I guess it's partly a cultural thing and it People supported through failure, right? Until they feel empowered to fail. and will that seniors, I suppose, stand by them. [00:22:00] once that big, new shiny idea falls flat on its face and they have to get up and start again.

Brad: Yeah. I will just say in that example, I like being more intentional about it. So like me, like, yeah, I know. I said nobody did in secret anyway, but I think if you're intentional about, Hey, there's going to be some experiments. So like, Don't get worried if you don't know about it or don't like, go sleepless nights because you're worried that somebody is doing something, you know, I'm like, look, we've been shell and yes.

You know, if you're like the head of the CFO and you're like, oh, I think that's a terrible idea. We'll look like we're already here. They've got a cap on which they can sort of accept the cash payments and let them do it that way. It's like, I think everyone just is much calmer, uh, and sort of much more rooting for success in that way versus trying to like cut stuff off before it even gets out the door.

James: Yeah, absolutely. And so Brad, you were, yeah. Uh, HubSpot been there a number of years probably knew the team well and knew the company well. So what was it that made you want to go into the rocket ship that is piping. In thought high [00:23:00] growth stream and, uh, yeah. What was it that made you want to go from looking at the business from an investment standpoint, actually being dedicated full-time work.

Brad: I feel really lucky. It's, it's a fun story. So we, you know, it helps a lot, a few years of, especially right at the beginning of the pandemic. We have some agency partners, you know, these partners of ours that we pay some revenue share too. And we were really worried that once the pandemic hit that, they might go out of business.

They're not going to be there to service our customers anymore, but we knew that we had this sort of like this payment stream coming to them in the future. So like, why don't we. Why don't we just take their next six, 12 months of payments right now and forward that to them, give it to them today so they can make cashflow, they can start pay their employees for the next couple of months while we figure out what's going on with this pandemic.

And I will tell you, it blew their minds. They were like, so thankful and appreciative of what we did that I was like, wow, this is interesting. We need to find a way. [00:24:00] To allow more of our customers to be able to do that. Like, is there ways for them to get capital, that's not going to force them to sell a bunch of equity in their business or go through some giant process, you know, to try to like, get a loan or something like that.

uh, so we looked at some alternative financing options. that's what I was lucky enough to meet Harry and Josh and the founders of piped. And so we invested as part of the strategic round a little over a year ago, and it was like last winter. And just through that, I became very enamored with the business.

I was fascinating to learn more about the impact you could have. I could see sort of the long-term vision, not just sort of where the company was then, or even sort of where we are now, but I think what we can be in a couple of years, Uh, and I remember I was actually down in Miami. I was taking like a long weekend with my wife and kids.

You'd never been there before. I was like, Harry's down here, what I want to [00:25:00] see if he wants to grab dinner. And that was sort of the start of it, of us talking and, felt lucky enough to be here a couple months later.

Hector: Yeah, it's a, great story. And, um, super exciting company. so we have lots of, guests obviously on the podcast and. Some of them work in companies with some of them founded companies that are single product. and they managed to build big businesses around basically a single product.

But, uh, obviously, you know, HubSpot you've mentioned had, various different products, and you know, I'm sure pipe doesn't has ambitions for many more. I wonder how you've seen companies thinking about multiple product lines and how you, launch new products, how you manage them, how you, how you make it efficient, using resources that are already in the company.

Distribute and manage customers, all of this kind of thing. what are your sort of thoughts around, building and then, and then managing and growing a multi product.

Brad: yeah, I will say it's, uh, one of the things [00:26:00] that really attracted me to pipe is I think the ability and the vision that, you know, Harry and Josh and the team had. Not just be the, the marketplace to trade, you know, recurring revenue contracts that we are today, but be able to have multiple products to fundamentally help companies grow on their own terms.

and it was a playbook that we ran at HubSpot. And I remember when I finally was leaving, HubSpot was talking to our, now CEO Yamani and like, that was the one thing she said. It's like, you know, if you're, if you're going to go. Find a company that you think can go from one product to multiple. Cause that's going to be the type of company that can grow and evolve in a very sustainable way.

Long-term, you know, I was lucky enough to be running the product or work, uh, when we went through this transition at HubSpot. So we. core marketing product sold exclusively through inside sales. And we wanted to move to a multi-product company and move to a freemium, product company. And, I [00:27:00] don't know that this is the only way to do it.

but, uh, we were really successful in trying to say, Hey, why don't we place a couple of bets? Why don't we try three or four different products and really carve those off as pretty independent spokes is a little bit, we were talking about. earlier around trying to give those folks real ownership and autonomy in how they did it into the more that you try to like share some of those services, even share pricing infrastructure or share some of the support infrastructure.

The more there'll be sort of. So way down, I guess, by some of the legacy infrastructure and some of the way things had always been done. And I think you want to give folks a lot of independence to really, truly, innovate. And, you know, I think the other thing we did right at HubSpot at the time is don't want to put like your B team on that stuff.

I feel like a lot of companies, when they try to move to a second or third product, they find folks who are. Maybe aren't quite working out and scaling in their current jobs and [00:28:00] maybe they've been around for a while, so you like them. And you're just trying to like give them another project, but like, it can't put like, it needs to be the 18, you know?

And if I go back and I remember some of the folks that worked on the CRM and the sales process at first, like all of those folks are just incredible people. They went on to have like, massive roles and massive titles inside of HubSpot. I think that's really important because. You need to be good to sort of get things done.

And they're going to have to sort of run through some brick walls depending on the size of your organization. And so you want to have your best folks working on that. And you know, now at pipe, I feel like we're, we're starting to see some of that. Uh, you know, I don't want to spoil anything that we've got coming down the road, but I've been very impressed and excited to see.

where we're able to carve off small teams work on something really innovative, try it without sort of like worrying too, too much about sort of like how it's all going to come together and how the go to market might happen in the future, but try to put some of our [00:29:00] best people and give them, an opportunity to try to move the business forward in ways that are very complimentary to sort of an existing product line.

Hector: Yeah. it's absolutely fascinating to me because I think it's, When a team becomes, you know, encumbered by the existing ways of thinking and doing things that that's where you end up with sort of your classic, slightly boring, slow corporate innovation type,

Brad: And it's just, it's, it's hard. It's hard to move quickly. I find in those, right. Just because. Even if you want to suddenly like, oh, I've, I've got to train, a hundred support reps on this new thing, and they've got to be ready to talk about it. I got it. You know, so you have to develop all this process before you tune versus once you have a small team.

And it's, it's like when you're a founder where you're like, oh, Hey, you know what, we're gonna, we're gonna like figure this out. And we're going to like change course this afternoon. And I can just text a couple of people are sort of hit up a slack channel and just go, right? Like you want to let teams be able to move at that level of speed versus.

Okay. We've got [00:30:00] another executive team meeting in six weeks. So why don't you like create a presentation and make sure that you share it's like, no, like you're innovating, like just go, uh, I think that's important.

Hector: But it's got to be that level of trust, right? It comes back to that point, you know, putting your age 18 onto the job, because there is, friction between, letting people go off and do what they do. And risking brand damage and things like that. there's a tension there, but it comes back to putting your, a team on it, people you trust and having that culture of experimentation and, and willingness to fail.

Brad: yeah. We, one thing we always say is, and especially if you just think about growth of an employee or person, it's like, why don't you take an existing person that, you know, really well and knows the business really well and put them on a new problem. And then you want to take the new people to the business and put them on existing.

Right. And that's a good transition. It gives growth for that person to try something new and for them to innovate on, well, actually sort of being able to backfill them with maybe some external hires or new [00:31:00] folks that you're going to bring on, but into spaces that you already know pretty well. And that's a good way, at least I've found to, grow and expand into new markets or, new product lines.

James: Yeah, really, really amazing insight that. At HubSpot, you had competition across CRM and marketing tools and pipe. Isn't the only player in the alternative financing space, although is really cleverly positioned more as a platform, which is interesting. but how do you view competition? How much attention should founders give it and investors.

and then maybe, yeah, you could expand upon why pipe is differentiated and in such a amazing place to be a category defining company in this.

Brad: Yeah, I will say, oh, an old mentor of mine used to always say like, you want to watch the competition closely, but not follow them. Right. And so I do think it's important to study and understand what's happening in the market and sort of what substitutes your [00:32:00] customers may have for you. But that doesn't mean you should always just try to go copy them if they get into a certain market first or not.

And, you know, I think that's, you know, at pipe, uh, certainly there's a sort of fundamental, we believe difference in how we think about our platform maybe versus other alternative financing partners. Right. So those alternative finance generally are taking on debt or loans themselves, and then just turning around and basically like reselling it.

A specific market. And so in some ways they're motivated to try to have prices as high as possible and try to sort of capture some of that profit themselves. Whereas we think our marketplace will create network effects over time. And our goal is actually to have like the cheapest cost of capital, because we think that'll sort of facilitate more trades and that each side of that marketplace grow.

And so we just think we are so we're more closely aligned. you know, with our, we call them our vendors, but with our customers who are seeking capital and what I think [00:33:00] is interesting, sort of more to your point, a little bit on the differentiation in how you grow and evolve is, you know, we recently announced that we acquired a company in the media and entertainment industry.

Right. And so when. You have some of our competition. If I step back, I see. Oh, geez. Maybe they've mentioned this geography. There's that geography. I think we're really interested in how you can actually take this fundamental marketplace that we have. At our core, but then customize the front end for specific verticals.

Right? Can we do something really interesting for media entertainment? Are there sort of other ones that sit right next to it that are going to be good fits where it needs a little bit of customization on that go to market, but can leverage the, liquidity, uh, that we can have on the marketplace for these recurring revenue contracts.

And so I think there's opportunity there for pipe to differentiate ourselves. and I think that's the right way for most businesses to grow. I guess the other, thing I'll share is I [00:34:00] actually got this wrong once, uh, earlier in my career, HubSpot was like really good at inbound marketing, that's what they're known for, but they do, they should create content to get found online.

And we acquired this company and we're in the midst of sort of rebuilding our, our email marketing, marketing automation feature. And, our chief product officer David cancels, like, oh, we should get into email marketing. And I was like, I thought it was a terrible idea. I was like, is this like the reddest ocean?

Like there's tons of competition. Like, why would you do that? And his point was, he's like, if you have a differentiated offering, you know, one spot, a little bit of a wedge, but you're basically competing. It's not consumption. Move to other spots that have a lot of money already being spent. So when you're trying to sell the original products, you can be like, oh look, well, you're already spending money over here. Why don't you just reallocate that budget and buy sort of a full suite. And then if you're competing in that market director, Well, geez, like why would you compete sort of head-to-head relative in differentiated, we've got this unique spot on the [00:35:00] side.

And so I think having that combination for HubSpot was really successful. I think we think about that very similarly with pipe where we've got this relatively unique business model that we've got. And then how can we then sort of pair that with, things folks would expect and things that our customers are already buying and using.

Hector: Yeah, very interesting. You've talked about, growth, you know, you're, you're rolling growth. your role in product, various other areas. what does chief customer officer, mean at pipe? what is your.

Brad: Yeah, I think the thing that's most important. Making sure that our customers are happy and successful. And so I work really closely with our marketing team, with our product team and our sales team to ensure that we are growing as a business. but very intentionally chose that title versus a, you know, a sales title or something like that, where, cause it's, I think it is about your customers at the end of the day.

And you want to make sure [00:36:00] that you are sort of obsessed and you're talking about them. That's one thing that was drilled into me, especially in my time in product at HubSpot it's like, you got to talk to customers, you got to listen to them, you got to understand what they want. And don't sort of let a bunch of executives, fat rocks or something go in.

And so I think the title is very intentional in trying to make sure that sort of encompasses, and it's a good reminder. So every day that we should be doing that, but that's the obsession of like, how can we grow, but grow in a way that really helps. Our customers, grow on their terms.

James: Yeah, it's great. I mean, you'll product naturally feeds that as they grow, you grow. So customer successes out, see critical. So parts just getting started really mean. I think you guys are the fastest. Unicorn to $2 billion valuations, something like that. So, what's the big vision for pipe without giving away some of the stuff that's maybe coming around the corner.

Um, and what's the one thing you'd like listeners to take [00:37:00] away about


Brad: Yeah. Well, one of the things that I, I love about pipe is we have a mission to help companies grow on their terms and certainly the capital product and the capital marketplace we have right now is the sort of on their terms piece is really critical. And the business model that we have behind. That's really interesting, but like part of the strength, I think at least I've seen through my career has been this idea of like helping companies grow.

And it's not just sort of like big enterprises or even some of the companies I that directly, but like helping our customers grow. And so I think the big takeaway I would say is that, I think pipe has potential to be a great partner, for companies that are looking to grow. both with the products that we have today and the products that we have coming down the line.

And, I think we will be a great partner. Uh, I think we'll be someone that can be there and help folks, understand their business, better, get the capital that they need to grow, and [00:38:00] really accelerates, uh, what they can do and have, have a bigger impact on the world.

Hector: Yeah, I think it's. Great what you guys are doing. And, you know, I think ideologically getting founders to own more of their business. By the time they accept seems right. I'm a VC, but I wouldn't argue that lining VC's pockets, is necessarily the right thing for the world.

Brad: Yeah, well, like, you know, especially for, you know, I know SAS pipe works only about half of our businesses, SAS now. So we work with lots of different recurring revenue, companies, but in SAS, it was fascinating. Once we dug into, we talked about metrics awhile ago, but I knew it cold.

I knew that if we spent a dollar on sales and marketing, that we are going to get that dollar back, but it was to take. 18 months to get it back. Right. And I knew that actually, if I spent a dollar, I was going to get $4 back, but it's gonna take years to get there. what happens right now, traditionally, the only options you had to sort of fuel that working capital gap that you had was to celebrate portion of your business.

So when we did that, at HubSpot, if you're a unicorn or, you know, there are [00:39:00] moments where that's probably the right thing to do, we're not anti-obesity at all, but we do find that like, That if folks know their business really well, if they're growing and they know those unit economics, well, that's not a venture type return.

There's a lot of confidence that that money is going to come back in. So why would you sell a portion of your company that could become a very expensive way to finance that when instead you can just trade those contracts when they come in and get the cash now to then reinvest in your growth the following month.

And so I think there's, there is sort of like that's part of it. I think it makes a lot of sense to me, logically wish we had this, what does that also we're going, it probably would. All of us would own a little bit more of the business. uh, and so that's where I think fundamentally the market is, is why there's an opportunity here.

Hector: Yeah, that was a great final pitch there. And, yeah, a compelling one too. Um, so before we finished, we always play the dinner party guests game with our guests. So if you could invite three people. [00:40:00] Famous not famous, whoever you want and after be tech, who would you.

Brad: I think that's a great question. you know, my instincts are to sort of like, you know, name all of the folks that I'm total fanboys of, like, Steve jobs back and talk to him, you know, Elon Musk, and talk to some of those folks that are just more. Uh, my aunt is actually going to be a little different though.

and a little bit of a personal one. So, my parents actually got divorced when I was, about seven or eight years old. And I had to, you know, I have kids about that age now. And so it sort of bring back some memories. And part of that is, my mom actually came out of the closet and so she, came to the world as a lesbian in the late eighties, which was very rare, very hard.

I will say my father and his side of the family understood, and I've actually never, ever heard him speak ill of my mom. but her parents do cylinder. And so I haven't spoken to my grandparents or my uncles or my cousins on that side of the family and 30 years. And so if I had a group of dinner guests that I could bring over, I [00:41:00] think it would be to try to reunite a bit with that side of the family show that.

I like to think that I turned out all right. And my brother turned out all right. And our kids have turned out. All right. Uh, and just show that, you know, there's more to the world, uh, than maybe they thought at the time and to be just much more open-minded and just try to see if we can reopen some doors there.

Hector: Love it. Great. When it gets personal at the end. So thank you very much, but it's been absolutely fantastic. I have to say. What are the episodes with the most practical insight actually, some really good, tactics that genuinely listeners can use in their day-to-day.

So I think it can be a really useful episode. and yeah, we could have gone on for hours, but we don't have hours. so yeah, thanks so much for coming on the show.

James: Thanks so much.

Brad: Yeah, thank you guys. Really appreciate it. I enjoyed this.

James: Well, that's it for season three, we've released 20 amazing episodes. It all started back in December with Alex Chesterman founder of kazoo. Since then [00:42:00] we've had sensational episodes. We have incredible guests that shared their operational insights on what it takes to build a unicorn business. If you haven't listened to every episode, please do go back and have a listen.

There are some incredible tips along the way. Uh, final massive, thank you to our sponsor pipe that have helped make season three, so special. If you're a founder or an employee and a company with recurring revenue, go and check out how they can help you grow on your terms. You won't regret it. Go to pipe.com forward slash riding unicorns.

Lastly, we're going to be back bigger and better in season four from may the fourth with more insightful conversations with founders, investors, and operators in the fast paced venture space. Please follow or subscribe on your favorite podcast platform to be notified of all future releases and happy company building. In the meantime from all of us at riding unicorns.