EP 15: Patrick Hudgins, Founder & CEO at Delegate

James Mackey  0:00  

Welcome to Scale by Design! Today we are joined by Patrick Hudgins. Patrick, welcome to the show, man!

 

Patrick Hudgins  0:05  

Hey, great to be here, James.

 

James Mackey  0:06  

Yeah, we're happy to have you here. And we'd like to start off with a brief intro. I just want everybody to understand your perspective and where you're coming from, do you mind just telling us a little bit about yourself and what you do?

 

Patrick Hudgins  0:18  

Yeah, my name is Patrick Hudgins. I'm the CEO and Co-Founder of Delegate. Delegate provides Salesforce administration and go-to-market systems administration for fast-moving companies, companies that need to move quickly because either they've taken venture funding or they're PE backed, or companies that are modernizing i.e., they are stepping into the 21st century in terms of their internal technology. 

 

So that's who we are and what we do. We're about 42 people today, something like that. And we're a remote company. So we operate in something like 17 states mostly. I think that we got about eight employees in California, a couple in the Bay Area, and then scattered throughout the United States. 

 

We have a recurring revenue model, it's like a subscription-based model to access our team. And we've been in business since 2017. The business was officially started, but I didn't go full-time until 2019. 

 

James Mackey  1:21  

Oh, cool. How'd you pull that off? Did you get some real success in the first couple of years or was it really when you went full-time that it started? 

 

Patrick Hudgins  1:30  

We spent 2017-2018 really trying to figure out what it was we're selling. We understood the problems pretty well, but like, okay - what can I do, how can we solve it? The problem is that people buy technology, and then they don't know what to do with it after they bought it.

 

James Mackey  1:44  

Right, like they can't make it actually work or be valuable because they underestimate implementation cost or time? I've done that before. I'll be honest, yeah. Maybe five years ago, and I just had no idea what we were doing. And it was a total false start for us. 

 

Patrick Hudgins  2:03  

Yeah. So at the time, I was running the SMB sales team at TalkDesk. And it was my first management job, I had around 11, or 12 direct reports. It was just way too many for a first-time manager. And I just had a hard time making iterations on our internal systems and I had a lot of requests from other director-level requests to: "Hey, can you get the team to sell these types of deals? Or can you get this information? Can you send an email to the Customer Success team when a deal closes", or that type of stuff, which really should be automated inside of Salesforce if you had a team that was building in that way. 

 

So that was the frustration I had, the frustration my business partner had is very different. Which is, he's on the product side of TalkDesk. And his thought process was - hey, I'm a smart guy. I can get a master's in computer science, so why is it that the only thing I can do to control my W2 is to drive for Uber? Why is that the only acceptable thing? CEOs get to be on boards and be advisors and things like that. 

 

Why can't I use this education that I have to do things that are impactful for businesses, and control my W2 at the end of the day. And as a sales professional, I'm all about incentives and driving ownership of your W2. And so that was really the primordial ooze in which we kicked off.

 

James Mackey  3:40  

Yeah, for sure, for sure. So I'm excited to just riff with you on what you're currently obsessing about. I don't know about you, but I'm incredibly obsessive about scaling my company, and just constantly looking at challenges and opportunities, optimizing where we're spending time, where we need advisors, just constantly, right? 

 

So I could definitely share kind of where we're at and what we're working on. But before that, I just kind of want to get your thoughts, where are you? Where is all your mental horsepower going right now?

 

Patrick Hudgins  4:13  

Right this second, I feel like growing a company is like a hose that's expanding, when you put water through it, it's like there's a kink in somewhere. And once you get the kink out, water can flow through, and that kind of starts another kink somewhere else. And so you gotta go fix that kink, and you're just kind of walking around fixing kinks. 

 

Until everything grows, and then it's just about maintenance. Right this second, marketing is our biggest piece. What will happen is we'll solve it, we'll figure it out to the extent that we can, and then we'll move on to another kink that's happening, and then at some point, we'll get back around to marketing. 

 

James Mackey  4:56  

Yeah, you'll scale to a point where the ship will break down again, and then you have to think set and do something. 

 

Patrick Hudgins  5:02  

Yes. But what's cool is that that's how you can. That's at least how I get over stuff, this is why it's still fun, is that you get to learn every job again. Yeah, as a founder, you get to keep having new eyes for different things. And then you bring in a VP who's absolutely killer and just is a knockout in that department. And you're wow, okay. And then they have more to teach you.

 

James Mackey  5:31  

Right? Like the Nick Andrews effect. Yes. 

 

Patrick Hudgins  5:36  

Yeah. Can we talk to Nick occasionally on this thing? 

 

James Mackey  5:39  

Yeah, we can talk to Nick there. He's in the background. Nick, Nick crushed it here in the 7 or 8 months,  he's been full-time since February. And I think in 4 or 5 months brought in 1.5 million ARR due to marketing.

 

Patrick Hudgins  6:01  

My man.

 

James Mackey  6:02  

Well, yeah. I think it's actually to 2.5 now. So with marketing, we took the path of actually hiring our VP before salespeople because my experience is in sales. So I figured, let's just kind of round ourselves out. Like I can hold on to sales longer. Now it's kind of weird because we're a $5 million company without salespeople.  

 

And it's like, okay, am I just gonna do this forever? So now we're consulting, we're optimizing marketing, but we're also consulting with a sales advisor on preparing process, optimizing process, tech, dashboards, data, everything, so we can plug in sales reps. And our sales advisor has told us he wants us to hire three salespeople at once. Just because he says one of them will be great, one of them will probably be mediocre, and you might miss one. 

 

So he says you're gonna save yourself a lot of pain and time by just hiring three at once. So we're doing all the marketing stuff first and then now getting into sales. And so we can hopefully plug-in sales people by end of the year is our goal.

 

Patrick Hudgins  7:26  

Yeah. Yeah. And it's like if you're watching one sprinter. If you're in an arena, and you see one sprinter and one sprinter sprinting, and you're, okay, they look like they're working hard, but you don't really see if they're fast or not, you know.

 

James Mackey  7:40  

Right, there's no context. But we also want to get the data in the process first, because we wouldn't know if it was us or them. Because that's the other part of it. For example, if they're not delivering - is it because our process is shit? Or is it because they're not effective at selling? so we figured that it would make sense to optimize prior to bringing it in reps.

 

Patrick Hudgins  8:05  

There's like a concept I think in SaaS that I subscribe to, which is - people are kind of tailor fit for certain segments, growth segments, and you have the zero to one people. And you have got the one to 5 million or that one to 10 million folks. And then you've got like the 10, probably 25. And then it's like 25, to probably 100. And then there's kind of cohorts in there. And I think those zero-to-one people - that's you, right? 

 

But the one to 10 people are kind of who you need on your team, and those people are going to go, they're going to take a buck knife into the jungle and come back with dinner. That's the job. And you can kind of go out with them and show them what you've done along the way, but they're really a self-sufficient breed and they're gonna thrive off of doing it the first time, and it being the first guy out there and having a virgin space to work with. 

 

And that's why they're going to take your coat. That's why they're going to work at your company.

 

James Mackey  9:11  

Let's have just a really blunt honest conversation here - how much time do you give a rep for ramp? And I think because we have very similar businesses how much time do you give them to start closing?

 

Patrick Hudgins  9:28  

You know, I'm probably a softy. I give somebody probably like up to six months maybe. Well, here's what I do. I throw them on my back and I go out and do it for them. And we just run every call together for the first 90 days because you want salespeople to get a taste of success.

 

James Mackey  9:53  

Right, maybe they need to know what good looks like. 

 

Patrick Hudgins  9:56  

Yeah, they need to know what it looks like, when it smells like it, that it's possible. You proving to them it's possible, and then I pull back and give them less and less and kind of wait for them to come after me, or I'd listen to their calls via Gong, which I recommend. Because if I'm on the call, I'm going to talk, and that doesn't give you an opportunity.

 

James Mackey  10:20  

Yes but also if a CEO is on a call, it kind of makes sense for them to take the journey. We can't help ourselves. But I also think that the prospects like it too, I think if the CEO is there, they like that level of engagement. 

 

I actually, I was thinking about that, though, for upmarket, like selling into a late growth stage, mid-market market, I actually thought, maybe having to see you on the call is not a good thing, because then they're like - why are you here? If you're a category leader, why would you be on this call unless this is unusually large of a deal for you? Would you say that's real? Or is that just in my head?

 

Patrick Hudgins  11:02  

I think that also, sometimes the CEO if they're not a sales-oriented CEO, they might be... what's the kind words? They might be a wet blanket on the call for one reason or another to not do it - if they're not geared in that way, or if they're, maybe not extroverted. Or inarticulate for some reason or another. 

 

But probably upmarket, you want to match whatever the client brings to the call. So if the client is bringing their senior level leadership, yes, if you're talking to a director level, and you're bringing your CEO, and you're bringing too much heat, they're probably going to wonder why you are on the call. 

 

James Mackey  11:46  

I think it happened to us once, we went on a call with, I don't remember how big the company was probably more than 1000 people. And it was like me and Nick - VP of Marketing and CEO, and he was like, why are you guys here? Why am I talking to you? And then he says: No, it's great to meet you but like what the hell? Why are you here? It was kind of funny.

 

Patrick Hudgins  12:10  

What you did bring - the way that I've heard it referred to is as Founder Magic. And so you bring founder magic onto the call, where it's like you're going to talk about this very differently than somebody else is. And people are going to listen at a different level than otherwise. 

 

And so, using founder magic is, I think, right. And the good thing to do until you have so many people in the process that it's just a card in the deck, it's a special card for big clients or clients where you know this is going to have a big effect. 

 

And it's probably best done, where it's one on one, that's kind of how I've sold to is that, you know sales rep does their thing - "I'd love to set up a C level conversation if you guys want to just give him a call", you set up a call just between the CEO and whoever their VP or their C level exec, and then they can be a little bit candid and be building. You know, people want to build their network too. And so that's an opportunity to do that, I think pretty well.

 

James Mackey  13:12  

It's like the more experienced I get, I feel like the less I'm actually talking about business when I'm on most calls. Yes, talk about the solution a little bit. But we've really simplified the way we explain what we do. It just doesn't take very long now. We've been able to boil it down into really just a few words. 

There are typically follow-up questions, and we have very simple answers. And then most of the time I try to just focus on relationships, and just getting to know them and understanding their pain a little bit, but very just conversational laid back approach to how we're kind of going about selling now. 

 

And obviously, investing just a ton in relationships is really the key. And if we get in with a good relationship, we're probably going to win, it's not going to come down to how we sell. It's like - Oh, I know the CEO of this company, they need to hire. They're - Hey, would you guys help, could you tell us what you do and how you do it? Yes, sure. That's kind of the conversations we've been having lately, which is what I love, right? 

 

And that's where it's interesting, we're pushing upmarket. And we have less of that, right? Because we work a lot in the growth, early growth stage startup space. Now we're pushing into larger deal sizes, like one to 2 million ARR, 500 employee plus organizations. And we have less connections in that space. So we have to take a slightly different approach to how we sell then I would to a 50-person company. Do you know what I mean?

 

Patrick Hudgins  14:44  

When you think about the types of client base you're going after or who you're talking to with your brand. Are you talking and targeting upmarket? Or, because everybody has a zone that's got to be their zone. Are you trying to pull up your zone right now or are you more opportunistic?

 

James Mackey  15:05  

We're trying to move up. So my initial goal was to sell to enterprise. And our sales advisors were saying okay, you could, but also it's easier to incrementally move up. So it goes, if you're doing startup and early growth-stage now, the later growth-stage has more in common with your current customer profile. 

 

So it's gonna be a little bit easier for you to sell to them. And also, let's say you landed a Fortune 500 deal, could you deliver on that? Or all your revenue would be tied up in one client, and that's dangerous. So he was saying, let's move up from mid-six figures where you are now, many times lower to mid-six figures, let's just say 2- to 400,000. Kind of in there, right? Like, let's push for 1 to 2 million. Let's make that a repeatable motion, then we can push 2 to 5 and gradually move upmarket. 

 

So we just rolled out our new ICP this week, and we're starting our new outreach, our sequences. And that's all happening right now. This is honestly the first time we've actually had a very targeted ICP. It's just not a motion that I did earlier in the company's development. How are you guys doing this? Are you constantly refining ICP or pushing up-market? Or how do you think about where your customer base is going and how to get ideal customers and who your ideal customer is?

 

Patrick Hudgins  16:31  

I'm kind of swimming in the long tail, is how I look at what we're doing. Most of the vendors in our space go straight up market as fast as they can, because they're thinking about, they can't scale. And so I built the company, it took us so long to figure it out. Because I built it to scale because that's how I wanted to sell, that was it, you sell software, and you can sell as much software as you can. 

 

But in a services business, you really can't oversell whatever your services offering is, right? Alright, so thinking about in advance how you would be able to sell volume was a problem that we spent a lot of time on early. And because everybody goes straight upmarket, and there's a lot of volume at the bottom of the market with a long tail. 

 

And what I mean is companies under 1000 employees that have issues in this space, there's a ton of them, it's most of them and by volume, it's the vast majority. You know, we specifically stay down there because everybody else goes up. And there's more space for us. 

 

James Mackey  17:35  

Definitely, it's really, like, simple, straightforward sales processes. You get to work with the executive team. It's I think something crazy, like over 50% of the deals we close have like a C-level involvement. Or I see our current customer segment primarily is 50 to 200-person companies. Sometimes, 30 people, if they're in hyper-growth and hiring more than 20 plus people. 

 

But on average, 50 to 200. And then we'd have a handful of clients 500-1000-2000, 1 50,000-person company, but yes we're just being more intentional about pushing upmarket. But it's a totally different animal in terms of how we have to approach the sales process. And having multiple points of contact, and many times we don't have a C-level connection. 

 

And it's something we're figuring out, it's kind of hit or miss. I feel our win rate is lower, probably a little bit lower as we start to push upmarket. For SMBs, 50 to 200, we'll close that 70% of the time.

 

Patrick Hudgins  18:43  

The enterprise motion is definitely a different motion. And one thing that I learned from software is that it's easier to go up than it is to go back down. So if you start selling enterprise, you're not going to really ever do SMB deals.  If you build your business on enterprise deals, because of the way that you do payments, the way that you sell, your motions, and stuff like that you can't go back down. 

 

You can always go up and mature because it's a professionalization process. If you're looking for a diverse client base - you don't even have any salespeople just yet - but I would say segregating them out would be the right move, you've got people targeting a market and people that are looking to do more volume, pricing. Because your pricing and packaging are going to be different as well. The legal process payment process is going to be different.

 

James Mackey  19:38  

What's also interesting about our companies, as to the similarities is that I think we both have a dedicated resource model where people are exclusively focused, as well as a fractional service, right?

 

Patrick Hudgins  19:49  

Yes. 

 

James Mackey  19:49  

So we're seeing more of the fractional model for the 50 to 200-employee count. And then, as we push upmarket to 500 employees, we're targeting and trying to get four or more people assigned per account. And just getting used to that motion is very different. Very different.

 

Patrick Hudgins  20:16  

We actually don't have a fully dedicated model, we only have the fractional model. That also kind of keeps us down to market. It's also because of the way that our team works, it's a retention strategy, an employee retention strategy too. Because the solutions engineers on our side value the idea that they get to work with multiple companies and see different orgs, see how different technologies are run, and understand different dynamics, they grow because of it significantly.

 

James Mackey  20:46  

But you can still switch them, after like six months to a new account, that kind of stuff? Like if they weren't dedicated? We do that sometimes.

 

Patrick Hudgins  20:52  

We could do that. I think for us, it would likely be an inflection point that is, okay, should the client churn right now? People value having the same, right?

 

James Mackey  21:02  

Yes, they don't like that. Yeah, well, you have to have a good knowledge transfer.

 

Patrick Hudgins  21:07  

There are so many little quirks that you have to think through when you're making changes to pricing or staffing or who to hire profile-wise.

 

James Mackey  21:19  

We should share playbooks with each other. We have a ton of delivery playbooks, if you ever need - how we onboard, or how we do knowledge transfer, anything, man, just let me know. And we'd be happy to trade back and forth with you.

 

Patrick Hudgins  21:33  

Yeah, we just did a big upgrade to the way we offer service via monday.com, which I'm excited about. If we're a remote company, and we're going to be remote to all of our clients, we have to be excellent at that, not only because it's our own company, but it's also the way that we're going to serve. And so when you're remote, you've got to have clear expectations and have an independent, verifiable space, where people can understand what work is being done and why. 

 

And that could be Trello, Asana, or Jira, it could be a Google Doc or an Excel doc or whatever. But we've really just put our own stamp on the way that we want to provide service and if clients have a strong preference one way or the other, we'll still accommodate that today. I don't know if we'll accommodate it forever. But that's been a big leap up. We just launched it so I'll let you know how it goes.

 

James Mackey  22:48  

Nice, Yes, let me know how it goes. So you talked about your focus on marketing right now? Do you have a VP of marketing? Or is this something that you're focused on or what's the structure look like there?

 

Patrick Hudgins  23:00  

Now the whole company is a DIY project. The way that my Co-Founder, Rob and I think about the business is that we will jump into a function, learn the function really well, stand it up, and then hire a replacement. So where we're at right now is Rob is in the marketing function, and he's standing it up. 

 

And then once it's up and running, it does two things. One, it lets you get by with the staff you have without getting the headcount, which we all love, two - it helps you better understand what you're going to need from that hire when you hire them. So your interviews are going to be stronger because you've partially done the role a little bit. And the last thing is, if you have a function that's up and running, it's easier to attract better talent because not everybody wants to be from scratch the hire.

 

James Mackey  24:01  

Do you pull in advisors to help, for instance, let's say it's not a department I could stand up, but if it's not my core background, I wouldn't think that I probably could do it as well as an expert. So I'm huge into strategic advisors, and I really try to handpick a strong team that I think really matches very specific skill sets. So, did you do that too - so standing up marketing? Are you - okay, in addition to us doing the hands-on implementation, so we learn it, we're gonna pull in advisement from somebody that's one of the best marketers in tech or something like that. I mean, what's your thought process there?

 

Patrick Hudgins  24:41  

Yeah, usually we'll stand it up. And then, we can't be standing up for every function all at once. So currently I'm in sales, and Rob's in marketing but, for HR, for example, we had somebody who had a strong background and aptitude and interest in leading the HR, our ops function, we stood it up with basic, basic everything. And we were - okay, so you don't you know, you're coming into anew, you want a path, you want to build this, your career in this direction, we need this from the business. 

So it was a good fit for a couple of reasons. But what we did is got her a mentor externally, who is in an agency. And so she has someone to learn from, she can take the credit, she can do the work, right. But she's got the oversight of somebody who's been there and done that. And so that's been good. And she's learning. And that's another way that you retain people, make sure that they get continuous education. 

 

James Mackey  25:40  

Right. Yeah, absolutely. That's definitely been our approach. We have a really good sales advisor, we just brought on a really amazing delivery advisor, like a chief customer officer, operating officer type of profile. We have a great financial advisor now. That's also Ops too, Ops HR - understands that whole space.

 

Patrick Hudgins  26:04  

Oh, yeah, we had a good conversation. He's cool. 

 

James Mackey  26:07  

Oh, you spoke with Tom?

 

Patrick Hudgins  26:09  

Yeah, Tom was great. 

 

James Mackey  26:10  

Was he able to provide some value on the call?

 

Patrick Hudgins  26:12  

You know, what he reaffirmed was a lot of what we're doing is hard. Sympathized how hard it is, but we didn't get any silver bullets from him. 

 

James Mackey  26:22  

Okay, gotcha. Yes. Tom's transformed our business, man. He just set up our accounting, and financing is so much better from where we were having trouble getting approval for an extended line of credit. Because our banking, our finances in accounting, were just so messed up. They were still being done like a mom-and-pop kind of SMB feel versus a scale motion. Wasn't mature enough. And so we, he fixed all of that stuff up. And then it's like, boom, we immediately got approved for a 500k line.

 

Patrick Hudgins  26:56  

Do we want to talk about financing and how that works? And what the struggle is or is that off-limits?

 

James Mackey  27:02  

I think we can talk about that. Yes, let's do it. 

 

Patrick Hudgins  27:08  

Yeah, we did an SBA loan, which is still out there, which I'd advise. You do need reoccurring revenue and history for that. So you can't do it from day one. But another thing that's been great for us is Pipe, I don't know if you guys have used Pipe. 

 

James Mackey  27:28  

What's Pipe? 

 

Patrick Hudgins  27:28  

It's a tool that you can use to sell your reoccurring revenue, leverage your reoccurring - borrow against your reoccurring. 

 

James Mackey  27:36  

Oh, like an AR loan? What are those, like a factoring company?

 

Patrick Hudgins  27:42  

Yeah. And then they sell your reoccurring revenue on a market. So there's a market for your reoccurring revenue. And so it's based on your churn percentage and all that kind of stuff that they use to give you a price for your recurring revenue. And when money was absolutely free and cheap, it was a killer option because it's instant,  you've got a credit line to draw from that's pretty mad. It's bigger than your client base, but you can get into trouble for it. And the payback term is very tight.

 

James Mackey  28:16  

And then like, you kind of lose like that personalization when it comes to collections, probably. 

 

Patrick Hudgins  28:23  

Oh, no, they don't do collections. 

 

James Mackey  28:26  

Okay, so they don't mess with the client relationships and stuff like that. That's good. The loan is actually a good idea. I don't know how much detail you can share. Can you share, like how much?

 

Patrick Hudgins  28:38  

SBA loan you can get a bunch of money from the government, but you need a personal guarantee, so they can come after your house and everything if you default.

 

James Mackey  28:46  

Default everything of value, like financial values, and my company. I'm not diversified. 

 

Patrick Hudgins  28:52  

Oh, you're broke too? Me too! 

 

James Mackey  28:54  

Yeah. I'm like, you know how people say they’re house-poor? I'm business-poor, everything I own is in the company. 

 

Patrick Hudgins  28:54  

Nobody cares. Just me, James.

 

James Mackey  28:55  

Yeah, at some point, I need to change that, I don't know. But I'm just having so much fun scaling right now. I want to make that, just optimize that, right? That's where I'm gonna get the best return too, I'm not gonna get this type of return on the S&P 500.

 

Patrick Hudgins  29:20  

Right, no. And you can have your own mind about these things, which is cool. I've got a Co-Founder, and we've got to work together on these things. And that's a marriage. I'm married. I'm married to a wife and I'm married to Mike. 

 

James Mackey  29:32  

You've got two marriages. 

 

Patrick Hudgins  29:34  

Yes, and they have highs and lows, conflict and beautiful things and you can see how people mature. And having a witness to your life in that way, it's a blessing too. 

 

James Mackey  29:51  

Sure. It's a lot of work, but it's here. Yeah. So returning to the loan, what is SBA? Low-interest rates? I'm assuming like pretty low.

 

Patrick Hudgins  30:03  

Yeah, it's the low-interest rates, and they're long periods under which you can pay back. I think it's like a 10-year or something like as payback period.

 

James Mackey  30:13  

Okay. And then they're like, with COVID. Wasn't there some kind of disaster?

 

Patrick Hudgins  30:16  

There was the there was a PPP loan, which you could take

 

James Mackey  30:20  

Oh, there was that there was like another one. It was like a 30-year or some crazy timeline like that. I should have done that in hindsight.

 

Patrick Hudgins  30:26  

It might have been a 30-year SBA version. I don't know. 

 

James Mackey  30:30  

Yes, there was something that was crazy, low-interest rate, crazy long, payback. And then in hindsight, if I had a better finance person at the time, I totally would have done that. I just didn't know how to go about it or had the time to do it.

 

Patrick Hudgins  30:44  

I recommend the SBA loan. If your business is stood up, you can't get a lot of money, I think it's capped at 5 million bucks.

 

James Mackey  30:56  

That sounds like a lot of money to me!

 

Patrick Hudgins  30:58  

It's a ton of money to me still, but it's not if you're already a larger company, it's not really that big. You know, that 5 million.

 

James Mackey  31:08  

No, that's great. So we're at around 5 million in revenue, right? How much could we get? Are they gonna give you the full 5 million? Or do you need to be at 500,000? Or assuming there's some kind of thing, that's great, man. I could accelerate scaling my sales team.

 

Patrick Hudgins  31:29  

Yes and you can do it, and you can refinance them and stuff like that. It's a traditional business that does it. And it's government-backed, you can usually get pretty low-interest rates, I think we got around 6% or something like that. And I don't know, interest rates have changed. But yes, and there's a personal guarantee past a certain threshold. I think below a certain threshold. I'd recommend it. It's the right fit for probably what you're doing.

 

James Mackey  31:58  

Yeah, because I want to not necessarily like my advisors say - you gotta hire three salespeople and the budget for that is obviously more than hiring one. So now I gotta figure that out.

 

Patrick Hudgins  32:09  

That's the reason I'm hiring one.

 

James Mackey  32:13  

Exactly. But then I guess the timing of that's also, the confidence in when the market is going to bounce back because you don't necessarily want to try to tie the loan too. I think hopefully, the market is bouncing back. Now. It seems like tech is making a rebound, which is really cool. 

 

Patrick Hudgins  32:40  

A lot of the big companies reported it's just a question of absorbing information. So we had a change in the market in terms of what money costs to borrow around December. And it actually trickled down to people probably around February in terms of businesses, and leadership, because board meetings happened, and they talked to leadership and that matriculated down to the way people spend money in the March-April time period. And then we had that initial round of layoffs. And then we had another round of layoffs that happened after Q2 because everything's board meeting related. So it's, first quarter board meeting happened

 

James Mackey  33:28  

That's an insight man, that's smart. You're right, that makes a lot of sense.

 

Patrick Hudgins  33:32  

Second quarter board meetings happened around the layoffs. The information about what happened to interest rates has been absorbed by the people that are borrowing money, and so people have adjusted their businesses to support the new reality.

 

James Mackey  33:50  

So are you anticipating a strong Q4? What are your thoughts?

 

Patrick Hudgins  33:56  

I'm saying that we had some big information change, people have adjusted to the new reality and so buyers are back because they have a new reality to work from. If you go to the store with $100 and the next day, you don't have $100, you've got $50 you're gonna buy differently. But it's actually the big drop that is causing you to pause and understand okay, how do I put this money to use? But after that you have $50 for a few weeks or a few months, and you become more accustomed to that reality.

 

James Mackey  34:32  

I think they're saying it looks like inflation might be coming down, apparently gas is an indicator or something. 

 

Patrick Hudgins  34:39  

I'm expecting consistency from here on out, not a boom not a bust, not a what have you. I'm just expecting consistency because what I see is that the problems that are affecting evaluations and money are resolving. They just need time. Time can resolve. I mean, granted, I've been nose-deep in my company, and I'm not a public market investor, this is not investment advice.

 

James Mackey  35:19  

Yeah, I hear you. So, how much are you trying to grow this year? Have you adjusted growth targets based on all this stuff? Are you just holding strong, what's your approach there?

 

Patrick Hudgins  35:30  

Yeah, we just had some adjustments. We are still gonna grow, we're just not going to do double backflips as we thought. We're going to do that, the growth is more modest.

 

James Mackey  35:41  

I still need to do that, I still need to adjust my revenue targets. I'm hoping that we could come through.

 

Patrick Hudgins  35:46  

Well, you've got a board of one. So you can afford to live in a delusion if you want to. 

 

James Mackey  35:53  

Fair enough!

 

Patrick Hudgins  35:55  

Yeah, when you've got more parties to angle to, but the people on your team that is spending money. What you want to do is just not get to Q1, not hit your number, and then have to massively adjust the direction that you've provided them. That's kind of how I think about it. I have a responsibility to not keep changing the goalposts on people and changing the ammunition that I'm putting out.

 

James Mackey  36:23  

Well, I don't have like a sales team, either. So it's been me and Nick constantly talking. But we're still like, our goals are our goals, we'll see what happens if we can reach them by end of the year. But if we could figure out this updated ICP and start closing more 1 to $2 million deals, we don't have to close that many to get to where we want to get.

 

Patrick Hudgins  36:46  

That's true. When you're playing Home Run Derby, you only need to put well a couple of times.

 

James Mackey  36:51  

Well, you just have to get a few of them in. And I wanted to hit 8.5M by the end of the year. And we were pacing perfectly toward that. For the first couple of quarters. This quarter, we're seeing a bit of a contraction, which I believe is temporary. But yes, companies are starting to feel, again, more comfortable, information-absorbed as you said. 

 

And I think I actually think from a hiring perspective, Q4 is going to be pretty good. I think a lot of companies that have hit pause, they're going to have more pent-up demand and roles that they need to hire for but they just haven't, because they were holding off and now, like the pressure is going to be on to fill more roles. I think that's a good thing.

 

Patrick Hudgins  37:35  

And I think, look, you and I are a microcosm for everyone, the entire market, we are the market, we are part of the market. And we are there. We just went through this, we're looking at our annual goals, and having this discussion -Should I lower them? Should I keep them and so on, what's going on - that needs to trickle down in most companies to the VP level or the next rung of management, who's also thinking like, holy shit, I gotta hit my numbers for the year. 

 

And so after the information has been digested, they still have those numbers to hit. What does that mean? That means they need to execute, that means they need bodies, that means they need more juice now than they did in the first half of the year. Because a lot of people missed their targets in the first half of the year. 

 

James Mackey  38:22  

Hey, a question for you and you can decide how much detail we get in here, but, email marketing and email outreach are pretty strong for your team. Is that accurate?

 

Patrick Hudgins  38:34  

Yes, that's the piece that works. I think it was talking about this in the pre-show, but I think if you start a company really, you only need one successful channel to work for you. And I worked at TalkDesk -  they had killer content marketing. And that was a huge source of inbound for them and so they had enough volume that they could figure out how they could improve their product in the right way and meet the market and grow successfully because of the volume of that. 

 

So if you've got that one channel that works for you, and maybe it's this podcast - Hey guys, consider SecureVision for your recruiting needs, right? You only need one successful channel and then that'll be the place that you start off and build from other channels. That becomes successful and pulls back. For us cold outbound works.

 

James Mackey  39:35  

Yeah. So question about that. There are two modes of thought that we're working through right now. Our advisors telling us with our sequences - stop selling and start a conversation and take a less direct sales-y approach and talk about their problems and provide value and that kind of approach to outreach 

 

And what we've been doing up to this point is much more direct like - Hey, this is what we have, do you need? Do you want it, set up a call now, it's very direct, and we've had success with that direct motion. And so now we're, okay, the advisers are telling us we need to shift that. And they also think as we push upmarket, that we're going to need to change strategy a bit. 

 

So what we decided to do is, we don't want to ignore the advisement because they're very bright, successful, people that have worked in start-up and growth-stage. But we also know what's worked for us. So we're just A/B testing it. We're doing it the way that we've seen success. And then we're also trying it their way. What are your thoughts? What have you seen work for your company? Because I feel it's probably going to be pretty similar to mine. 

 

Patrick Hudgins  40:51  

If you're just asking: "hey, we do this, do you want this thing?" You're gonna get people that are right at the point of looking for this thing, right? Which is cool. That's a subset. It's a viable subset of people. But it's not the majority of companies. And so the majority of companies are not currently in that motion of knowing that they need this thing. 

And so building a relationship, having a conversation with those, if you're not doing anything, it's a big mistake. Now, that's a hard thing to do. You need somebody that writes excellent emails and can build and craft a narrative and a personality and have a conversation. What are you telling them? What are you bringing to the table for that conversation? That's another step. But having it is important, and you're not going to be able to sell upmarket. Because enterprises don't buy like that. 

 

James Mackey  41:51  

Yeah. So you do more of the education approach, like the softer value-adding, less direct sales kind of feel to your email outreach, or?

 

Patrick Hudgins  42:04  

We try to.

 

James Mackey  42:07  

And is that like a ton of emails? Or shorter? I mean, again, I don't know how much you want to share publicly or whatever? Because I don't know how confidential you feel like that is.

 

Patrick Hudgins  42:19  

Well, yeah, I'll just say this, you should probably strive to provide some amount of value in every email and communication that you have. That's not initiated by the other party.

 

James Mackey  42:29  

So like, some kind of statistic or like, I mean, what are another few examples of what that looks like? I guess there are ebooks and stuff like that, right? 

 

Patrick Hudgins  42:39  

I think it's a statistic, or I mean, I think an insight can be lots of things. And insight could be a statistic, it could be a customer conversation, it could be a new way to look at an industry. It's an insight. You know, I think people are more interested in reading content that is insightful. And so insights would be just what I mentioned - a stat, a customer story, an insight that you have on the industry or the world that they don't have or is unique that you deem worth telling. The gimmick of "This is your football team. It's mine too, sorry they lost" to take a meeting? That just doesn't really work anymore. 

 

James Mackey  43:21  

Yeah, I don't like that stuff. What I also find I don't like which is I guess, pretty common now. It's when somebody's like - I saw that you liked so and so's post? It's just like, why? I find that kind of creepy. Like, Why are you stalking my activity?

 

Patrick Hudgins  43:38  

Do you get a lot of outbound? Do you get a lot of people reaching out? 

 

James Mackey  43:42  

Yes, I get a fair amount, of people reaching out to me. It’s not crazy, but I would say three to five a day, of people reaching out to me. Very few do it. I never pay attention to those though. 

 

Patrick Hudgins  44:05  

I've totally taken a meeting if the reason they're reaching out to me seems to be informed, I'm interested. And I took a meeting with somebody who was like - "Hey, we're working with somebody else in your space. They can't actually service more clients. Do you want to have a conversation? Because we're already helping them build their client base. And we've already kind of built this motion." Okay, that seems like it's directly to me, right? I talked to them and it totally wasn't haha. 

 

People who just reach out to me on LinkedIn and connect with me, I don't typically connect with them. Unless, you know, they're, like known commodities in the industry or something like that. Right? I've got like 50 connections in common. Yeah, sure. Maybe I'm interested. The "I see that you're in the IT professional space." is not good. 

 

James Mackey  45:06  

Oh my God, I don't think that's real. 

 

Patrick Hudgins  45:10  

I think those are bots anyway.

 

James Mackey  45:12  

Yeah, probably when he was banned. We're coming up on time. It's always great speaking with you and learning from you and just kind of riffing on what we're experiencing and seeing in the market and what we're doing with our businesses. I just wanted to say, thank you for coming on today. And let's, let's plan on doing around two sometime in the next 3 to 6 months.

 

Patrick Hudgins  45:31  

Yeah. And I'll see you at SaaStr! 

 

James Mackey  45:33  

Yeah, we'll see you there! Thank you, Patrick. Appreciate it. Cheers. For everybody else tuning in, thank you for joining us, and we'll see you next time. Take care!