The Great Pipeline Starvation

Pipelines are drying up. AI hasn’t delivered the growth it promised. And the old playbooks like SEO and outbound just don’t work the way they used to. We call it the great pipeline starvation, and in this episode we break down what’s really happening, what it means for sales and marketing teams, and how companies are trying to adapt.

This episode is brought to you by ZoomInfo, the Go-To-Market Intelligence Platform. ZoomInfo gives you high-quality B2B data and sales intelligence on in-market buyers across companies of all sizes, powered by AI-driven automation with integrated outreach tools to help your GTM teams build pipeline and close deals faster. Check them out at zoominfo.com/revenue-formula

Want to work with us? Learn more: revformula.io

• (00:00) - Introduction
• (02:10) - Pipeline starvation
• (05:22) - Breakout companies are dominating
• (06:50) - The cost of lead gen
• (15:54) - The role of AI in cost reduction
• (20:18) - The future of sales and marketing automation
• (27:10) - The impact of AI on job roles
• (31:05) - The limitations of AI in growth
• (35:21) - The augment Bucket: Enhancing roles
• (39:36) - Zero waste GTM
• (46:35) - Final thoughts
• (47:27) - Next week: Todd Busler on the rev tech industry

Creators and Guests

Host

Raul Porojan

Voice of Reason in Revenue / Former Director Sales & CS at Project A

Host

Toni Hohlbein

2x exited CRO | 1x Founder | Podcast Host

What is The Revenue Formula?

This podcast is about scaling tech startups.

Hosted by Toni Hohlbein & Raul Porojan, together they look at the full funnel.

With a combined 20 years of experience in B2B SaaS and 3 exits, they discuss growing pains, challenges and opportunities they’ve faced. Whether you're working in RevOps, sales, operations, finance or marketing - if you care about revenue, you'll care about this podcast.

If there’s one thing they hate, it’s talk. We know, it’s a bit of an oxymoron. But execution and focus is the key - that’s why each episode is designed to give 1-2 very concrete takeaways.

The Great Pipeline Starvation
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[00:00:00]

Introduction
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Toni: Today, Raul and I talk about a problem we are seeing across the board. We are starting to call it the great pipeline starvation and how AI has so far failed to fulfill the promise of infinite and cheap growth. We are also talking about what the downstream effects of that are and what we believe the only solution for 95% of companies.

Out there looks like, and now enjoy

Raul: the basic physics of this is leads go where attention goes. Right now, so much of the market is just being captured by. A single cloud of topics. If you have any other company right now, there's just less attention for you to grab in the market right now. There's a reason

Toni: why all of those N eight and flows on LinkedIn replacing STRs, all of these posts blow up.

How can I cheaply get more revenue? Right? They, they wanna know that

Raul: it is still a time. To do lead gen. It's just that some people are learning how to [00:01:00] adjust to this and some people are not, and I don't think this trend will go away and this is why you have to deal with it right now. The headline here is

Toni: people will start spending overall the same, or if you're super crazy and spend, spend a little bit less and you will be like, oh, wow, wait a minute.

Actually in these and these, and these paths, in those roles, I can live with a lot. Fewer headcounts and I can take those savings and try and put them to where we think the bottleneck is, which largely speaking is pipeline.

Raul: So something funny, uh, happens typically when Tony and me talk and, uh, discuss what we see out there, which is that sometimes we see completely different things.

Um, and, and we also focus on different things at different times, on different stages and all that stuff. But then sometimes, uh, we're basically, uh, speaking about the exact same thing to different people in different regions. And I think that's always an important and interesting topic at the time. So if the same thing's happening in Copenhagen and Berlin [00:02:00] and London through different stages, uh, then I think that's always an interesting topic.

And there is one of these there right now. What is it that you're seeing out there right now, Tony? I've also been seeing.

Pipeline starvation
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Toni: Yeah, I don't think it's a shocker for anyone. Um, I think everyone is feeling it themselves and uh, I think it's screwing with a lot of companies and screwing with a lot of careers actually.

And I, I started to call it the great pipeline starvation. So everyone is pipeline staffed. Everyone was trying their best to kind of change that. Um, everyone is especially kind of trying to. Automate outbound, um, doing these AI SDR plays trying to kind of figure this out, that in itself has just gotten so much harder.

So some of those tactics I feel are just too saturated now. And, and, and what you used to do two, three years ago just doesn't work the same thing anymore. I think another big one is, um, basically the whole impact of [00:03:00] AI and AI search on how. People work with SEO for example, you know, we, we talked with someone else on the show previously, but I think, was it last week or something like this?

The, you know, monday.com, you know, fairly large. Um, project management, task management now even has a CRM and all that stuff. I think they dropped their, their public valuation dropped 40%. 40% in one day. Why? On an earnings call, they said that their organic traffic collapsed. Simply because Google changed some things around.

People are using AI more to search things and you know, some of these very top funnel things that have built up kind of that, that search equity evaporate it. Do you have an opinion on this 40% drop Actually, role before we go further.

Raul: So I'm not a financial analyst. Um, which, what that means for valuation, uh, basically for the stock market.

That is a little bit of a different question. Yeah. I think the underlying mechanic is, [00:04:00] is more interesting there. I'm a bit surprised actually that this is what happens to the big players because part of the mechanics that I'm seeing is that the small, the startups, the. Early stage players, the not so big names yet are being kind of priced out of them.

The, the, the lead gen or top. Of the funnel market, uh, and monday.com has already been basically an established player, or at least more established than most people out there. Yeah. So it's a bit funny or at least peculiar that this is what happens to, to this kind of player right now. Um, I do think though that these are the, the, the two trends that I'm seeing.

So, uh, one is that smaller players are being priced out just by the fact that the brand doesn't generate the leads that they, that they would. The difference is just so much bigger. Yeah. Um. Funnily enough, if you do work at the Salesforce or HubSpot monday.com, you probably disagree for sure, because you also feel the second effect, which is everyone [00:05:00] just has it harder right now in leads gen.

Yeah. Um, and so from your point of view, things are also screwed right now. And you're probably like, wait, wait, wait. You're telling me we have it easier than the smaller ones? Well, no, I'm just saying that you're both affected by the same, uh, problem. Right now, lead gen is difficult. The smaller ones are affected even harder and you're profiting from some brand equity right now.

Breakout companies are dominating
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Raul: I think there's a third thing going on,

Toni: actually. It's a few breakout. Companies are seemingly sucking all the oxygen, the attention, oxygen out of the room, right? There's, you know, everyone talking about lovable, everyone is talking about, you know, some of those breakout companies and they seem to dominate what everyone is talking about, and it's really difficult to try and step into this.

And take a share of that. Um, if you're just an average, normal company with a average, normal, doesn't even need to be boring, but boring story. Right. Um, and just kinda circle back on the monday.com thing. I think this is [00:06:00] to a degree. Obviously what people are thinking about. Like, I don't have a clue about the 30, 40% drop either.

By the way, I think you're right about this, but the logic is pretty clear, right? Like, well, um, you've just lost a major asset that was producing revenue for you for free. Now you have two options. You can either spend more in the more expensive channels to make up that gap. Or you don't do that because maybe you can't afford it.

Um, and you just grow less, right? And both of these outcomes are kind of terrible. You know, I'm not sure what level of terrible is it 40% terrible? I don't know. But I think that's what's behind that, right? People are basically seeing heli. Okay? So that will have a downstream impact on either your profitability.

Or your growth. We don't like either of those scenarios, so therefore you're gonna get, um, you're gonna get punished, basically,

The cost of lead gen
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Raul: really happy that you introduced the, the third lever as well, which is kind of the basic physics of this, is [00:07:00] leads go where attention goes. Um, especially when it comes to. Online lead gen or any other kind of non outbound calling or non outbound human generated, uh, uh, lead generation right now, so much of the market is just being captured by.

A single cloud of topics or a single cloud of excitement, which basically has to do with ai, AI and go to market and all these different variations. And if you have any other company right now, there's just less attention for you to grab in the market right now. And this, to foreshadow this already is one of the major reasons that players and, and people are already turning their away as much as possible from, from.

I would say relying on grabbing that attention also, because that attention's becoming more and more expensive, right? So the scarcer it is, yes, you can still get it, but that's gonna cost you top dollar. Uh, and turning to taking matters into their own hands. Um, we're gonna get into that in a second, but this is [00:08:00] really.

To some extent, people are, are not thinking about this like systemically or like, how does this work right now? But it's, it's just the intuition for people when they realize, Hey, there is no attention for my topic. I have to create it. Yeah. And I think this is the time right now to create that attention more and more when you're not the hot, lovable AI startup.

Toni: But I really think that that taps into, well, you know, okay, everyone is pipeline staffed, um, because of things just starting to change and more and more people are feeling it. So how's everyone reacting to it? Right? And at least from what I'm seeing is, yeah, people are scrambling more and more to try and generate that attention.

Trying to spend more dollars to generate more pipeline to, uh, you know, do more top funnel work, basically. Right? There's a reason why all of those. N eight and flows on LinkedIn, uh, replacing STRs, all of these posts blow up. It's like everyone is interested in how, how can I cheaply get more revenue? Right?

They, they wanna know that I'm [00:09:00] seeing, uh, more and more teams adding kind of events, setups and, and trying to see people face to face. Well, I think that's great. I think it's the right thing. I think this can be, you know, very, you know, CAC efficient. But it probably is a little bit more expensive than whatever you did before.

Right. And, and equally so I think as some of those channels collapse or just get less efficient, we talked about outbound being less efficient than it used to be. We talked about SEO not working anymore. Um, they're basically pouring more money now into ads and other top funnel campaigns in order to try and attract the same amount of attention that they need in order to.

Feed their funnel. I think, and this is true for every company, uh, from my perspective, is the whole setup that you have, uh, you know, the number of a AEs, uh, SDRs to degree, um, CSNs, the, the whole shebang. It's really just a function of. How, how much pipeline you get and, and [00:10:00] needs to be worked through, right?

All, all of these people, um, really just, well, just really important, but their, their, um, job is to, um, you know, create throughput through the funnel, right? If you have fewer things coming into the factory. You will simply need fewer hands to put them together and assemble a customer. That, that just, that's just what it is, right?

So really all of those jobs are depending on how much pipeline you get. So what a lot of people have been doing now then is while, um, if we were to reduce the team, that would be a sign of weakness. We are not growing in the right direction, so we need to spend more on the top end of the funnel in order to keep growing and keep, you know, feeding the machine basically the problem that is.

Coming from that though, and I think, I think, uh, this, this problem is starting to, uh, to show up in more and more dashboards is that it's just too expensive. It's, it's simply too expensive. [00:11:00] If you previously spent a million dollars on your top funnel, um, and now you need to spend $2 million on our top funnel to get the same results, it's still only the same results, meaning your revenue didn't go up to pay for that additional spend.

Probably a revenue is flat or decreasing, um, you know, depending on the scenario, right? So, and ultimately the CFO will, will come knocking and say like, Hey friends, this just doesn't work anymore. Right. And I think there was some really interesting research from, um, you know, bench side and winning by designer.

Maybe Bart can pull in the, the graphic here. Basically showing the public SaaS businesses, um, and how much money they're spending. To acquire one additional dollar of revenue, and it's stunning. It's really stunning. There. There are a handful out of those, I think 70 ish companies, there's a handful that spends $1 to acquire a dollar.

The vast majority is they at least spend [00:12:00] $2. Some of them spent $8 to acquire one single additional dollar in revenue. I don't think you need to be a CFO or have like a, like an accounting degree to be like, wait a minute, guys, I don't think this works out. I, you know, I, I don't think you need to be a genius for that thing.

Right. So, and I think, um, people are more and more looking, uh, you know, staring down the barrel with this conundrum of like, okay, I can choose to grow a lot less. Um, or overspent. What, what, what should I be doing here? Right. I think that's the, that's the problem out there right now.

Raul: So while this might seem like doomsday, right, and basically there is no leads to be generated anymore unless you are doing something with ai, which by the way, to that point and to also add fuel to the fire, I think this will make some people who are not doing an AI startup thing quite furious.

But, uh, here's the reality of things. I have seen calendars physically stood [00:13:00] next to founders of something related to AI startups. And I have seen their schedules, and this already has started three years ago, um, but also as recently as two weeks ago. And it is wild how little they have to do to get all the attention.

And it can also feel unfair, but it's kind of their reality right now that, uh, uh, Hassan Formula, max had a whole calendar booked out two days after launch, uh, launching Ellis. That was about two years ago, from eight in the morning to eight in the evening in 15 minute slots, inbound basically with almost no ad bed and with almost no.

Any visible kind of marketing or anything like that. That is wild. And uh, same example two weeks ago, a founder who basically has to turn off notifications for inbound leads during a meeting we had because there was so many, and he couldn't show me the stuff he wanted to show me. Um, and that is just a reality of things.

It's, it's, uh, it's cool to be on [00:14:00] that side. It's not so cool to, not to to be on your side, but it is still a time to do lead gen. Um, it's just that. Some people are learning how to adjust to this and some people are not, and I don't think this trend will go away, and this is why you have to deal with it right now and, and get started on this journey right now of finding your own ways.

Now again, if you are a AI startup, you're golden. You basically have to do nothing. Um, and you'll be fine in commercially now you just have to do some things, but the barriers are very low. And if you're not, then you have to do a ton of things by now to still have a company that has a chance to become profitable, uh, or kind of at least executable at some point.

So first of all, I don't,

Toni: I don't think all the AI teams are having, no, none of the problems. I, I think, I think that's probably not true. Um, but certainly, uh, some, some, some of those teams. Hit message market fit really quickly and then just get a lot of attention, right? And I think this [00:15:00] works out. And sometimes there's also just a spike and then flattens off, right?

But, uh, and in some cases this can continue for a really long time, but for everyone else out there that runs a real business, that is real problem market fit, that is real employees, and it's like 10, 20, 30 million in size, like, yeah, you, you're right. Um. It obviously sounds grim, but what, what do we think here is, is the potential way off, right?

Because we, we don't wanna just sit here and say like, yeah, that kind of looks shit. Um, but what we wanna do is we wanna plot a little bit of a course where people need to maybe start thinking about how to execute against that. Whether and maybe whether, whether they even do want to execute against that, because.

What I've seen, uh, so far and what's starting to become more clear to me is, you know, we're starting at the pipeline starvation level. Like that's the problem. I think everyone has that.

The role of AI in cost reduction
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Toni: Um, one of the solutions to the pipeline starvation was basically to say, [00:16:00] okay, AI is going to help us grow. It's going to accelerate everything.

It's going to make things so much easier. We have less friction. Um, we can just flip on this agent from Hassan and the imbalance will reign in. We can just turn around this clay table and we know exactly when to call and everyone will buy. Right. Um. That actually hasn't happened like that. It simply hasn't.

This AI SDR thing hasn't worked out, at least not as a growth level. We're gonna get to that in a second again, right, and, and so to a degree, while. Every single board on this planet is currently talking to the CEO and saying, Hey, my friend, you need to use AI for the business. You have to be on the forefront of that.

Um, the CEO then goes off and has a conversation with the CRO, uh, and tells her or him the same thing. And obviously the CO thinks about, well, [00:17:00] let's use AI to grow. Right. And I would say that has failed. Now the CEO also talked to the other friends on the exec team, and one of them is the CFO and to the CFO.

The CEO said, well use AI to cut costs, right? Because that's, that's kind of the division of labor year between those two C levels. I think what's probably going to happen now, and I don't think it's a popular topic still, because it's just, it's a negative message. It doesn't fit into what all those companies want to kind of tell you.

Um, but I think what's going to happen now is that the, the growth AI play is not worked out yet despite a bunch of investments and two years trying and better models and everything. Um, and I think. The CFO will simply step in and be like, okay, so we can't get more revenue with this technology. Um, I think what we [00:18:00] can get with that technology is we can use it to replace headcount, um, and do that potentially more aggressively than we've been trying before and actually using AI to reduce costs.

Some of those roles in order to frankly pay for all of the top funnel stuff that we need to do in order to get even enough in order to grow, hit our targets, yada yada. Right. So I think, and we'll, we'll dig a little bit deeper into this, but the, the headline here is if you look at the funnel, if you look at the bow tie, if you look at, you know, however you envision your revenue engine, it.

I think what is probably going to happen in the next six to 12 months, very aggressively across the board is people will start, um, spending overall the same. Or if you're super crazy and spend, spend a little bit less, right? You don't wanna spend $8 to acquire one. That's not a good idea. Um, [00:19:00] but what they're gonna do is, I think they're gonna start shifting.

Simply the cash are out. Like you will, you will, you will look at your funnel and you will be like, oh, wow, wait a minute. Actually in these and these, and these parts, in those roles, I can live with a lot fewer headcounts and I can take those savings and try and put them to where we think the bottleneck is, which largely speaking is pipeline, right?

So there will be a redistribution of. Where, uh, in the funnel, the majority of the money is being invested, and my back is, it's gonna be the top end of the funnel. Before we get back to the conversation, a quick break. Most teams I talk to that are trying to scale strategy is not the issue. It's almost always execution.

They've got all the dashboards telling them what happened. But nothing that actually drives what to do next. That's why I've been watching closely what ZoomInfo is up to Lately, they've completely rebuilt themselves. [00:20:00] It's not just contact data anymore. It's a full go-to market intelligence platform that sees buyer signals and launches the motion automatically.

Strategy turns into action finally, and growth becomes predictable. Check it out at zoominfo.com/revenue minus formula.

The future of sales and marketing automation
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Toni: Let's kind of maybe look at this from another perspective. Um, let's not look at salespeople and CS folks. Let's look at simply, um, manufacturing over the last 40 years, going from a heavily labor dependent perspective of people need to put things together to, um, you know, assembly lines where, where people basically shut off the light.

Now they simply shut off the light because there's no human being there. All of this is done by. Uh, robot arms and, and these things just assembling everything. Right? I would say that was pretty good improvement efficiency wise for the world. Um, you know, that, that, that probably helped a lot [00:21:00] or maybe a little bit, right?

Um, what I think is peculiar with that specific example, by the way, is it's not like those companies, um, suddenly started creating a bunch more profits. Well, isn't, isn't this peculiar? It's like, well, you know, suddenly we don't need to pay all of those salaries anymore. We actually can do this with robots, ensure that it's also expensive and CapEx, we need to install this stuff and, and so forth, right?

Um, but actually what happens is a little bit what I kind of said previously. Basically the funds were just reallocated. Uh, meaning, you know, people stopped spending on salaries and I had those robots in place. So what are they doing instead? Um, that, you know, in manufacturing you usually have some pricing pressure.

Maybe you get basically less revenue per item, but therefore more revenue because you sell it more, right? Kind of. There might be that thing that they basically did. Um, but in other cases, what they started doing is. Investing even [00:22:00] more in r and d for automation. Basically investing a lot of money into additional future gains.

Right? And if I were to translate that to the SARS and software world, the way I actually see it is, um, let's just say, and we are gonna talk about in a second, how, uh, how you can actually reduce your, your cost across the funnel, right? But basically, once you've done that. I think you basically have two main, you know, options that are sitting in front of you.

You can either take the money and throw it into short term P Gen, you know, try and, you know, try and figure this SDI thing out, try and, you know, send more money to Google, uh, try and do more events, try and do all of that stuff. And I think the vast majority of people will do that. Um, I think there's a whole other problem going on with go to market, which is short-termism, but you know, we are not gonna talk about that now, the other part of that money.

I actually think it might end up going outside of go to market, um, and go [00:23:00] towards product development. And the idea is there to take that money to generate. Long term value pipeline, right? Kind of, hey, we want to add another product. We wanna add another feature in order to win those deals. Or, you know, less churn and so forth.

And we are investing that money in that part of the organization, uh, instead of, instead of blasting our pipe check. But both of these things are kind of pipeline related. One, a short term, one is long term actually, if we are doing this in the right way, at least that's my, um, that's my conviction. That is my conviction. We can use AI to try and automate a bunch of things. Um, in our sales of marketing in cs, um, reduce the head count, then that is really unfortunate news for a bunch of people. I totally get that, but I think that will be part of the reality. You know, the, that that discussion is kind of playing out on LinkedIn right now.

Um, but you know, in manufacturing it didn't play out anyway. Played out in a boardroom and then the decision was made and it is done. And I think the [00:24:00] same thing will happen here too, by the way. What, whatever happens on, on, on social media in this regard. Right? And, and I think if you overcome some of the challenges of which there are plenty, right?

Um. Again, think about it like this kind of a company that was doing manufacturing 40 years ago. All kinds of people, everyone is kind of following process, but not really. You couldn't install today's robot arm hardware there because, well, the process just wasn't defined well enough and you know, this whole thing wasn't put together well enough and these things weren't thought through and, and when I kind of read up on some of the things that were obstacles back then.

Then I'm hearing like, ah, we can't automate because, sorry, our Salesforce data is just too shit. It just, it just doesn't work. Uh, or, well, you know, all of these SEOs doing their own process, can't, can't automate that. It's because we don't, we don't have one process. So therefore, sorry, I can't do it. I think what's gonna happen, my friends, is your bosses or your boss's [00:25:00] bosses are eventually just gonna.

Call bullshit and all that stuff. And so like, well, my friend, I think then it's time for you to either leave the company or to sit down and fix this now, because I think that's really what's actually going to happen. Right. Um, and, and that was maybe that was my counter rant to, to, to you as a role, but, but I think, um.

I think everyone can decide right now on on which side they're like, Hey, is it either it's not gonna work out or, you know, I don't think we have another choice. And my thinking is, I don't think you have another choice.

Raul: Funnily enough, this time unplanned, we both are saying the same thing because. I'm not saying that's an argument for AI doesn't work, or Tinder doesn't work and all that stuff.

It does work for the top 5% of people. The top 10% of people. Right. The top 5% of people on, on that was a crazy statistic. That was insane. Someone sent me that thing, like top 5% on Tinder are having basically 90% of the, of the. Attention dating, whatever the top 5% of [00:26:00] people in on social media get all the likes and all the comments and all the views and all the attention.

The top percentage of people on whatever kind of lead platform or lead gen you're thinking of are getting most of the, uh, attention, kind of like equity there right now. And, um, what basically happens is it's kind of like, uh, these revolutions. Are kind of like, and obviously none of them were as big as AI might be, are kind of like, um, a catalyst for.

You might call it like natural selection, right? Um, kind of like the strongest will survive and when they do survive, they're gonna get outsized gains and the others are kind of like screwed. And that's what I meant with the Rand earlier, is like big parts of society are basically screwed because of that thing.

But then the top people will be because of that thing, more fitter, faster, stronger, uh, make more money than ever before. And they'll be like, I dunno what you're talking about. Like, I'm making so much money because of ai right now the message to me is like. AI is not just gonna magically make you more money.

[00:27:00] Like if you're among the top five to 10% of people and companies, it might do that. Otherwise it might actually make you less money because it's gonna take away, uh, money from you and, and give it to the others.

The impact of AI on job roles
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Toni: We're gonna, we're gonna go into like specific examples in a second actually, and I think a lot of people are like, you know, skipping forward on two, two XB to kind of get there.

But, um, here is always the junction where people go, oh, no. Now, now we need to talk about cutting people and how terrible that is and, and so forth. And I totally get it. And I, and I totally understand that people don't like negative messages, but I think that's just, you know, we had this episode about AI and remote work and basically we're like, Hey, both of these things are making us less proactive and, and dumber.

And some people reached out and were pretty upset as I expected. Um, and I think the same thing will happen now again. Um, and, and, and that's okay. Um, so, but here it goes. So. How, how do I believe should we go about this in, in simple examples? And once you [00:28:00] start going down this train of thought, by the way, the examples can go crazier and crazier and more fantastic.

Right? And really it is, you know, the, the beginning is, oh wow, I can basically kind of what that person did previously here on the manufacturing assembly line. I can put a robot in there. Um, that's kind of the first level. Thinking here, right? What people are then forgetting is the second and third level impacts of that thing, which is just, let's just say the whole factory completely runs on robots and you can shut off the lighting and walk away.

Um, right? Kind of that is the, the first thing is easy, but seeing where this journey can end, that's usually, um, that only starts once you start kind of going into this. So we got, we are gonna stay in the, in the simple examples here. Very simple examples. Um. For me, it basically kind of currently splits into two cams.

One is replace, the other one is augment. Yeah, replace an [00:29:00] augment. So what roles are very likely to be replaced fully. And I don't mean, oh, you know, we're gonna make a super human, uh, roll out of that and then we have a bunch of robots around it. Now it is fully replaced and I believe that is already happening for.

Uh, outbound SDRs for inbound SDRs and for support reps. Yeah, I'm sorry. Um, and the only argument that even Raul and I in a previous episode couldn't come up with why there should still be in our outbound SDRs around is calling. But it's the, it's the only reason. It's the only reason why that person, and you know what, I'm not, I'm not a DOMA or trying to be shitty about this, but.

Really, really frankly, and honestly, I cannot tell the difference between an outbound email that is maybe shitty, maybe not from an AI or from an SDR, and whatever the SDR is [00:30:00] running comes from a sequence anyway that someone else wrote on the team. Like it's, you know, let's not pretend that there's some kind of magic that's always being added.

You know, don't get me wrong, I think the top five, 3% of sts, they have that ad magic and they kind of duet that stuff, but the vast majority. Just not the case. Right? The one thing that s STS should be doing like crazy in the outbound function is calling, by the way. And the funny thing is, if you talk with SDRs about what they don't wanna do, it's called, right?

Yeah. Um, right. Like that's simply what it is. So tools already that replacing these is obviously 11 acts. We talked about the Hassan piece, uh, I think they're called Artisan, the other guys doing also kind of that stuff. And then, uh, out of Germany, paa uh, doing the support. Stuff basically. Right. And there are a bunch of other tools that, you know, help with that.

And you know, I think you're working probably with five of them right now, uh, role with those companies that, you know, help replacing this. But I think that is [00:31:00] a very clear replace. Potential for me.

The limitations of AI in growth
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Toni: Um, will this increase your growth? No, it will not. Which is also why the hey CO use AI to grow more has failed.

It's not, you know, it's not gonna replace you, uh, increase your growth. And you and I discussed this a little bit. Um, one of my learnings is, um. If you previously were simply cost constrained, you couldn't hire another SDR into the segment because the segment is too small or the a CV is too small or something like that.

Deploying AI SDRs will probably give you more money, will probably kind of give you more pipeline what happened in the vast majority of places. Is that you have 5,000 accounts that are being worked on by 10 SDRs or something like that, and they can work through those 5,000 accounts like in 4, 5, 6 month, and then start over that.

That works out. If you're on top of that, put an SSDR AI that works on the same accounts. Like, yeah, it's, it's not gonna [00:32:00] work. It's not gonna work. You, you're not gonna be able to generate more problem. You will have a spike in the beginning and then for it flattens out for everyone basically. Right? Yeah.

So the right approach here is not to add the ISDR to the team, but to. Make the Ai SDR the team and remove the sts, uh, from that equation. Very rough. And you know, some people will be sitting like, well, but in my example, it's maybe a little bit different. And, and, and I agree it probably will be a little bit different.

We're just talking about, you know, generally speaking, vast majority. Um, what I think this is, uh, the right approach.

Raul: I think the central argument here is that. No matter how you do it, there's the risk of attention or the lead end just kind of being a spike rather than, uh, an increase of the curve. And so the example that you gave me, just very pragmatic within a company that I've seen is, um, they're operating in three markets.

Language markets and regional [00:33:00] markets, and they also have a bunch of beautiful leads in 50 other markets that they don't speak the language of. It's not worth hiring an SDR for these markets, but in each of those, whatever, whatever have you, right in, in Ethiopia, in like Laos in, in Mexico and or Mexico is probably too big, but whatever.

In each of those countries, there's 10, 15 very interesting companies with a high likelihood of closing. Previously they were never gonna go and hire an SDR for each of these countries 'cause language is kind of the thing, right? And now they had the idea of, okay, let's uh, get an AI for that. It can kind of go into most of these languages and we're golden.

We're just gonna collect the top 10 to 15 leads there. And that worked out really well for them. Uh, yeah, like, let's say four to six months. Um, they were mining great customers. Uh, the first one was actually Brazil. I don't know why they, they, they couldn't figure that out. Uh, figured out Brazil within a month.

Then they moved to, I think it was somewhere in Asia. I [00:34:00] think it was Indonesia, maybe it was the Philippines, which is an incredible market, by the way. 300 million people on there, but couldn't figure it out. I helped them do it, and now we're about six months after. Nothing's happening anymore. They're, they're basically down to exactly where they were, um, which was, they didn't fix any of their general problems.

They didn't fix any of their efficiency losses. They didn't fix any of their wasteful use of, uh, resources, money, time of the SDRs, of the AI use. They basically just took. Spike for about a couple months, let's say half a year, uh, approached some of the most promising, and that was well researched, uh, accounts and worked those through.

Got great money off of that are down to exactly exactly where they were. And funnily enough, the CRO is. Fearing for his life because even though he delivered that great money, and that was a lot of his idea right now, the, it feels like he's losing because where is all that revenue from? Why are we not growing?

Why are we not growing? We were [00:35:00] never growing in the first place. We were just taking a little bit off the top right now and, and making some quick buck. I

Toni: think you know what is also, hey, don't, don't complain about it. I mean, they got more money out of that, so, you know, kind of shall up. Right. So, but I think that's the replace bucket.

And there's some stories on the fringes where, where, you know, some of this is potentially working or working in different ways and yada yada.

The augment Bucket: Enhancing roles
---

Toni: I think then there's a much larger bucket, which I call the augment bucket. Yeah. And this is really AEs, um, solution engineers. CSMs, account managers, uh, even managers, frontline first, first row managers.

Could be coaches as well. Like, think about all of that, all of that, right? So what do I say and think when I say augment? Well, um, it's wildly known anecdotally. I sometimes call it the, um, the calendar test. Pull up [00:36:00] any random calendar of an AE and see how much white space there is, and you know how productive that person is, right?

So that anecdotal wisdom has been now proven over and over again by, uh, folks doing surveys. So Salesforce did basically, I think they do a survey every two years around this topic, which is like, how much revenue generating activity, um, are your reps doing in any given day? And the numbers between Gartner and Salesforce and all of those.

Ancient big companies, um, we're talking 33rd, 35%, like, you know, off, off any given rep's day. That will be the amount that they spend on true revenue generating activities. And, and those are like having, um, customer conversation or prospect conversation, preparing that, you know, working on a proposal, working on a deck, stuff that really requires.

Uh, the, the top end of, of the brain of figuring this thing out. Right? [00:37:00] Um, 70%, 60, 70% of the rest of the day, they're spending on not these things. They are doing data entry. They are sitting and forecasting meetings where they. Just repeat what they've heard on the calls, just kind of hand that information further.

Sure. They're also sitting, you know, having an enablement sessions and one-on-ones with their bosses and they have a lunch break and do you know these kind of things? Sure. Um, but really, if we're really honest about this, 35% is kind of locked. 35% is kind of low, especially for some, some reps that you pay 250,000, sometimes OTE in the enterprise, you know, named accounts, strategic accounts, like half a million, million dollars a year, 35% of productivity.

I'm sorry, that's pretty bad. Right? And when you take that as it is, and let's just do some back of the napkin math here. If you could double their productivity. In [00:38:00] that regard, if you could take it from 35% to 70%, um, what is going to happen? Well, what's going to happen is the only way you're gonna get there is by giving them more pipeline to work on in order to fill that time down, right?

Because suddenly they have more time on the hands to have those customer conversations. Um, what then will happen is you need to take that pipeline from someone. You know, sitting on the team potentially right now, and that team or that person will not have anything to work on and you basically would be parting ways with that person, right?

That line of thinking. We'll go into a couple of more examples here, but that line of thinking really is what I think is going to drive the reallocation of funds across the fund. I think you will have, um. Parts of your organization and the funnel that will be replaced, and then it will have path that will be heavily augmented to really [00:39:00] support the two main things.

I think we as people and humans are, you know, really good at, we are great at building relationships. I don't believe this AI buys and sells from AI bullshit. I, I just don't believe that. Uh, at least not for, you know, you know, couple of years. I know. Um, and then the other piece is true mastery. Being really, really good at something, um, AI is not able to replace it and it's probably gonna take a while until it does.

Um, for whatever reason, I don't know what the reason is, but we are, you know, we are still pretty good at some areas and very specific areas, um, and we, you know, kind of average in all the rest.

Zero waste GTM
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Toni: And I think, and this is the, the, the term I'm coining sometimes, now I'm calling it zero waste, GTF. If you really think about zero waste GTM, what you're basically doing is you're looking at your entire organization.

You're thinking about who is building relationships, who is having mastery, and those [00:40:00] people should only be doing that stuff and everything around that should, you know, for better or worse, be trying automate it away. You know, you should have AI taking care of all of that stuff. The easiest stuff to cut is.

Everything. Data entry, everything. Data entry and everything. You know, updating systems, updating people like. Hey, manager, let me sit down for an hour where you ba where basically read out my Salesforce forecast, give you some additional flavor on all of those different deals so you can memorize that and then talk to your manager about the same thing, right?

Um, that is, all of that is useless time, that that shouldn't happen like that. Um, and you know, the, the list goes up like, okay, I'm a coach, I'm an enablement person. I want to help Raul get better at his job. So what do I do? I sit down and listen to some of the sales calls. Well, some, you're cherry picking, you're kind of looking around, you're not seeing the full picture.

You, you know, you're just, you know, [00:41:00] you're just trying to consume some information. AI can actually do that for you. AI can kind of sift out the things that are important, you know, gives you the snippets you need to listen to, and then based on that you can address your, uh, the, the coaching needs. Right. So, ran over in a second. What will this lead to? What this will lead to is that you will have fewer folks in your go-to market teams, but those folks will be. Let's just say the ones that previously were considered to be above average, you know, part of the top 40, 30%, something like that. What will, what will, what is the second order effect now that will happen?

Um, and I think this is pretty key, these guys and ladies wear in the top brackets because of three main reasons they were, um, converting at a higher, uh, pace. Having bigger win rates, higher conversion [00:42:00] rates, um, they were showing better ACVs, like selling bigger deals, right? And on the CSM side, they were showing higher NRR numbers across the board.

So what will happen now, if instead of only a fraction of the deals and customers go to those high leverage reps, all of your customers and deals go to those high leverage reps, well suddenly you will basically not only pay less. Maybe you pay them more because they're just elite now. And, and they will kind of play that advantage.

But at the same time, they will also produce higher quality results. Um, lift your conversion rate, lift your a, c, b, lift, your NR, all of these things that we've been struggling for decades to figure out. Um, that will just be a side effect. Of redistributing more pipeline, more customers to the higher leverage employees.

And that being enabled by you saying, okay, um, these folks now have more [00:43:00] time on the hands because we use a couple of tools to automate those things away and now they can work more.

Raul: I was, I was talking to some guy who I recently got to know. He basically is doing. Different work in the AI sphere. Um, very, very smart guy got to really be interested in his ideas and he over a pizza basically said, Hey look, um, what do you think an AE or whatever equivalent is gonna be earning in five to 10 years?

Yeah. And um, I was like, I don't know, like maybe three, 400 K, 500 k. I don't remember what I said to be honest. And he said, I think if you're a great ae, you'll be making five to 10 million a year. OTE and I was like, ah, come on. What the fuck? He's like, no, no, no. I actually think so, but those are only the great ones.

Um, and, and, and basically he's saying that's, that's not even an like, he thinks the efficiency gains can be 10, 20, 50 x. Um, that's not even a 10, 20, 50 x improvement to where we are right now. So there's a lot of efficiency gain also still to the company and a [00:44:00] lot of money left over for all kinds of people to feed and, and, and walk through that.

And I don't know if that is true, but what I'm trying to get across here is there's people who think that this is gonna go completely different from the reality that a lot of people have worked into right now, which was let's just replace all the average people with average SDRs, uh, from, from a AI work, and that's gonna make us money.

And that clearly seems to not be working too well. In fact, what seems to be, at least to some extent, there's, there's first signs for this. What might be a direction going forward is the. The idea is not to replace all the average people. The idea is to enable the top 5% of people, and it's kind of gonna be a self-selective process where everybody else will drop out and the gains are gonna go more and more to the top.

The good leads are gonna go more and more to the top. And who knows, maybe we will have Christiano Ronaldo sales. Uh, type of people, um, who will be making five to 10 million in your random SA company because all of a sudden they're [00:45:00] making 3, 5, 10 x more than they're doing right now. That is what this

Toni: thing is going to, to enable us.

And I think the CFO in this regard, you know, we are calling it the cfo, uh, doing it, but I think it will just be CROs waking up, frankly. Um, so what do they have to overcome? You know, there are some data challenges, there's some automation challenges, um, and those are clearly massive. Otherwise, you won't be, you know, you wouldn't be stuck at what you're doing right now.

Like all these innate end flows are really not actually solving the problem. I was just talking about it in a excited and convinced way. I actually am pretty excited and convinced about it. Um, and, you know, to a degree and to a level where. This is also where, um, where we're taking at, right? K. The, the Atif story is really going into enabling that shift and it's, it's really a, a core belief that has struck me now, uh, in our working.

Alongside [00:46:00] all of that, seeing this unfold, seeing how these, you know, 11 xs kind of fail, how that story didn't actually work out. I think they will be great and the company will be great in the, you know, the category will be great, but this story didn't unfold like they would say. Right. And I think what's gonna happen now is there's gonna be a shift in the other direction and, and, uh, on that shift, I'm, I'm banking a, a, a bunch of chips myself actually.

Right. Um, just to kind of. Not like, oh, this is why you're saying this, Tony, but to underline how much I believe in this being true, um, because I totally believe this is what's going to happen,

Final thoughts
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Raul: not to make this any longer than it is already. Um, I, I think this is just such an interesting area that also is at the same time, highly relevant for you.

So don't put this off as just like philosophy, uh, philosophy, um, or just like random ideas from these randos on the internet. These are things that within the next couple of years will. Influence your business very strongly on a financial [00:47:00] strategic CFO level, not just like on a, what CRM do I use? Um, I think it's good to think about them right now because everyone kinds of gets it wrong.

And unless you start thinking for yourself and maybe collecting ideas around it, um, chances are you're also gonna get it wrong.

Toni: No, I think, uh, I think you said it. Roll. Um, and uh, we'll, we'll leave it at that for today. It's already been, uh, quite an episode and, um, see ya everyone next week. Cheers.

Raul: Thanks everyone.

Next week: Todd Busler on the rev tech industry
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Toni: Next week I'm talking with Todd, CEO of Champify. We are talking about what we believe is overhyped and underrated in this extremely busy and super confusing. Revenue technology industry. If you don't want to miss it, hit subscribe and see you next week. And I think what I'm seeing

Todd Busler: is a lot of pressure from boards and CEOs to inject AI in every part of their business.

Most people probably feeling pretty inadequate in terms of their knowledge to how to do that. You read on LinkedIn and everyone's. For [00:48:00] building some crazy workflow, that probably doesn't work. Yeah, right. But it's impossible for these leaders, in my opinion, not to feel like shit. Does everyone else have this figured out?

And I don't. And I think these A-I-S-D-R, like the promise is incredible. Right, like you don't have to coach 24 year olds and do tons of skill development and role play and babysitting, which is the reality to get that function to work really well. The premise sounds amazing in practice. I have not talked to one company that says, an A-I-S-D-R is making up a sizable chunk of my pipeline.