When unicorns become zombies (With Roee Hartuv)

There are 1000s of privately held unicorns. But for many of them, they will truly struggle to make a meaningful exit.

We discuss why together with Roee.

• (00:00) - Introduction
• (02:25) - Understanding Zombie Unicorns
• (04:30) - The Rise and Fall of Valuations
• (06:33) - VC Expectations and Company Growth
• (12:01) - The Fragility of High Valuations
• (15:17) - Current Market Trends and Valuations
• (19:35) - The Rise of Zombie Unicorns
• (20:18) - Down Rounds and Valuation Challenges
• (20:51) - Future of Unicorns and IPOs
• (26:48) - Impact on Revenue Leaders
• (32:06) - Pricing and Packaging Strategies
• (35:39) - Concluding Thoughts and Future Outlook

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Creators and Guests

Host

Mikkel Plaehn

Marketing leader & b2b saas nerd

Host

Toni Hohlbein

2x exited CRO | 1x Founder | Podcast Host

Guest

Roee Hartuv

B2B go-to-market consultant & speaker // Helping recurring revenue companies grow through sustainable strategies

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[00:00:00] Toni: There are thousands of privately held unicorns, but are they doing well?
[00:00:06] Roee: Zombies are companies that still operate, but they Yeah, they're practically dead. There's no way that they could achieve a successful exit
[00:00:16] Toni: That's Roy. He just completed his tenure at Winning by Design, where he worked with several pre IPO companies on their go to market. And with him, We're talking about the concept of zombie unicorns.
[00:00:29] Roee: Zombie Unicorn is a company that we all admire and we all have heard of. However, they're not telling us the truth that they are already zombies.
[00:00:39] Toni: Before we jump into the show, today's is to you by EverStage, the top sales commissions platform on G2, Gartner, Peer Insights,
[00:00:49] Toni: and Trust Radius with more 2000 reviews from customers like Diligent, Wiley,
[00:00:55] Toni: Trimble, and more.
[00:00:57] Toni: Visit everstage. com and mention Revenue Formula unlock a personalized sales compensation strategy session with one of EverStage's RevOps experts.
[00:01:08] Toni: And now, enjoy the show,
[00:01:10] Mikkel: So,
[00:01:11] Toni: Putting you on the spot.
[00:01:12] Mikkel: no, as of late, so I have the perfect intro today. As you know, my son, he goes to school is his first year. They have a library at the school and , every Monday he borrows books, brings them home. We'll read them for bedtime stories. This time, guess which book he brought home.
[00:01:28] Toni: The revenue architecture.
[00:01:29] Mikkel: That would have been awesome.
[00:01:31] Mikkel: That would have been a perfect intro. No, he brought back a book on I think it's called Fable Animals. Is that English term? It's like, and we read, no joke, we read about unicorns yesterday. Apparently they hide in the forest because people want to kill it to take its horn, which is apparently magical as well.
[00:01:49] Mikkel: So I just thought like that was the perfect intro segway to today because we have. Roey with us today. Thanks so much for joining. You've recently published a paper. What's the title of that paper, Roey? Oh,
[00:02:04] Roee: there
[00:02:04] Toni: could just make up like something unicorn, something, you
[00:02:07] Roee: yeah, yeah,
[00:02:09] Roee: Zombie Unicorns, that's
[00:02:10] Roee: the title, but,
[00:02:11] Toni: there you
[00:02:12] Roee: yeah,
[00:02:12] Mikkel: feel, I feel like for my son, at least that's the perfect combination of.
[00:02:16] Mikkel: Fable animals, like zombies, awesome, they're scary, to listen to this episode. I can tell you that. it's like, come on, what's not to like there? What's not to like?
[00:02:25] Mikkel: What, what is what is a zombie unicorn, Roey?
[00:02:28] Roee: Zombie Unicorn is a company that we all admire and we all have heard of. However, they're not telling us the truth that they are already zombies. And zombie companies, the general term, is not something that I created. I just combined zombies and unicorns together. So we all know what unicorns are,
[00:02:46] Roee: right? Companies that have a valuation north of one billion dollars. And zombies are companies that still operate, but they Yeah, they're practically dead. There's no way that they could achieve a
[00:03:00] Roee: successful exit you combine them, um, yeah, that's the new term that I'm trying to coin, but there are very successful companies.
[00:03:09] Roee: We all heard of them. We all admire them, but honestly,
[00:03:14] Roee: we don't know them. They probably do, not in all cases, but yeah, they cannot succeed.
[00:03:23] Toni: yeah. So I
[00:03:24] Toni: think
[00:03:26] Mikkel: they won't die, because that's the zombie thing. Oh,
[00:03:28] Toni: but they're, they're already dead, I guess, but so I think I think we, we previously kind of called them the walking dead or something like
[00:03:33] Toni: this, but kind of going the same direction basically. So before we jump into kind of the really interesting stuff you know, how, how did they get there?
[00:03:42] Toni: Right. Because no one is setting out, Hey, let's build a zombie unicorn and we have achieved it. It's like, you know, they, they, they did something well, let's just, let's
[00:03:50] Toni: just be clear about that. Right. Not, not everyone even gets it. to the, the, to the unicorn status. Um,
[00:03:55] Toni: and and I think for our listeners you know, maybe we have a couple of folks that operate in, in, in unicorn companies, but then we have a bunch that maybe, you know, don't that are below that threshold that might have seen some similar patterns actually, and those patterns might also affect them, right?
[00:04:10] Toni: I
[00:04:10] Toni: think
[00:04:11] Toni: zombie smaller than unicorn company is, is less catchy title. But it kind of the same physics probably apply. Right. So,
[00:04:18] Toni: Jumping into this, how did these companies get that? Yeah,
[00:04:26] Roee: of our industry, right? We all know that.
[00:04:30] Roee: The SAS market came crashing down December 2021. I think the, the point is DocuSign shares fell by 40 percent in a matter of three days. This is considered like the, like the first signal that we all witnessed, but we all saw what happened after that. Most of these companies, if not all of them, grew in a different age. Um, and things were different. The numbers were different, and mostly the valuations were different. And we all know that. Valuation was skyrocketing. You just needed to show Basically, valuations was done mostly on one thing, which is growth rate.
[00:05:13] Toni: yeah,
[00:05:14] Roee: If you had a high growth rate, two, three years, Then your valuation would skyrocket.
[00:05:20] Toni: yeah. And, and kind of translating this into high valuation always is like, okay, cool, cool. High valuations, but high valuations really also means. It's high expectations, right?
[00:05:30] Toni: Kind of
[00:05:30] Toni: those two things kind of go hand to hand. So, if you are in a hype market, if you are in a market of like, you know, infinite capital, basically, and then you get this massive label put on you, which you know, might be unicorn or less or more than that, right.
[00:05:45] Toni: Kind of a couple of the examples in your paper are like, you know, nine X unicorns and stuff like that. Like what does that do to a company? What does it do to a leadership and how do you make decisions? Once you have those crazy valuations that you are, frankly, you, you expected to catch up to eventually, right. Kind of,
[00:06:01] Toni: how does that change an organization?
[00:06:03] Roee: Yeah. So, first of all, there's a fanta So, you guys know Silicon Valley, the TV show, right?
[00:06:10] Roee: There's a fantastic scene that I'd like to use, and we'll, if we can, we'll share it in the in the podcast notes.
[00:06:17] Toni: yeah,
[00:06:18] Roee: There's one of the founders and the guy there, the main character him in a bar and you see him like, why nobody told me I can say no to the money.
[00:06:33] Roee: In the good old days, founders, higher valuations meant you're going to get more money. And nine out of 10 founders, entrepreneurs were not in a position to say no to that money. And with, as you said, with higher valuations come. higher expectations. So we're giving you so much money, we expect you to reach that point, these goals, and these are the milestones that we're setting up for you.
[00:07:06] Roee: And it's usually around growth, growth, growth, all about growth. So we've got A lot of money in the bank. Spend it. Hire more people. Go to events. Create pipeline. All that. Just focus on that. And people were spending like crazy. Companies were spending like crazy. And then you saw the cost of acquisition skyrocketing. And when money is no longer cheap and you're wasting so much money and in a lot of cases, as we saw from 2022 onwards, the growth has dropped dramatically because people start, stop buying. SAS companies started, stopped buying from other SAS companies. Yeah, it's, it's the goals and milestones are no longer achievable for a lot of companies.
[00:07:56] Toni: But so the, the thing is that I was kind of thinking back at it, it's like. Would you say that everyone was just an idiot or, or would you say like, well, you know, to a degree in this system of, you know, free money, valuations going up, very competitive market, you know, growth is kind of happening. People then defaulted like, okay, the only thing to keep the valuation life is more growth. So the only thing we need to do is grow. So let's spend all the money on growth. This is where this growth at all costs came from. Like looking back, we obviously like, you know, all of us were idiots, but the thing is, you know, from how the system was back then, would you actually say that everyone just made a massive mistake or was everyone was kind of self optimizing in the right way, but the system kind of brought us to the, to the brain kind of, if, if you know, you know, perfect 20, 20 hindsight, look at this thing, do you think? We were all idiots. I
[00:08:52] Roee: we were all idiots, but there, there was a problem with the system. And, and again, coming back to the title, I'm talking about the paradox here. Let me ask you this, who do you think defines how companies grow, how companies operate, how companies are evaluated in our industry?
[00:09:15] Toni: mean, I think there's probably kind of a know, some of these things are more operational pieces, but I would say obviously it has to do with the investors, it has to do with the board, it
[00:09:23] Toni: has to with
[00:09:23] Toni: the CEO, CFO. Right.
[00:09:25] Roee: That's right. Let's talk about investors and sometimes in some cases CEOs and CFOs. What's the investors, mostly VCs,
[00:09:34] Roee: business model? Their business model is I'm taking somebody else's money. I'm giving it to companies. Again, 80 percent of them will probably fail. But there's the 20 percent that will rock stars, right?
[00:09:48] Roee: The Ubers and, and those type of companies. That's their business model. And in order to mitigate that risk, they want to invest and get their money back as fast as possible. That is not, in my view, that is not aligned with how companies should grow. In a lot of cases, there are companies and deal and Wix, and there are a few other companies right now that are blitzscaling, right? They're growing. crazy year over year, quarter over quarter, most companies out there cannot achieve that growth rate. But does that mean that they don't have a right to exist? Of course they do. So the business model of the VCs grow as fast as possible. I'm giving you money. I'm expecting you to grow as fast as possible to for you to achieve an exit and for me to give back the money to my investors.
[00:10:48] Toni: Yeah.
[00:10:49] Roee: Companies in a lot of situations, yeah, maybe grow at all costs, grow as fast as possible, is not the right thing. And that's that paradox that I'm talking about. The business models are not aligned.
[00:11:02] Toni: Yeah. Yes. And, and basically kind of, it also speaks into the. You know, it's a line for some very few organizations, like some, some companies can grow like this. Some companies are these rock stars in the portfolio that, that every VC brags at the dinner party. Right. But for, for most, for most other companies, this is not the case.
[00:11:22] Toni: And then it becomes this. You know, become a unicorn or die trying kind of thing, right? Kind of that that's kind of, that's the business model that, that is being implemented then from, from the board and so forth. Right. And, and I think kind of, I just recently reread kind of the, the, the paper a little bit, kind of that then obviously has led to lots of top down pressure from the board to say like, Hey, you gotta, you gotta execute this plan that we funded because that's what my business model looks like. Then they hire a bunch of people spend a bunch of cash maybe grow, maybe don't grow, but still have like a, like a large cost basis. Right. Which.
[00:12:01] Toni: Basically, and, and I, you know, I haven't seen it said like this before, but it is crystal clear to me now that situation basically created a lot of fragility in those organizations for what could come right for what could, could happen.
[00:12:17] Toni: Then enter what the DocuSign crash, when was it in, in, in 21, 22.
[00:12:22] Roee: 21, yeah.
[00:12:23] Toni: Yeah. And what happened then to those organizations, right? Kind of suddenly, you know, what, what happened there that that kind of created this stumbling in the industry from, from your perspective.
[00:12:34] Roee: To the companies that are already showed sig signs of failure because the, the un, the zombie unicorns It's not apparent. It's not clear that they're failing right now. So, DocuSign, we know that they're struggling. It's clear. Like, they're a public company. We see their their reports. They are struggling. The rest of the companies, we just don't know. They're running out of cash. They're not growing as fast as possible. Fundraising is Practically it's very hard unless you say A. I. All right, that's that's the cyber and A. I. That's the only industries or technologies that are being funded. Yeah, so that's basically it.
[00:13:16] Roee: And again, it reminds me of there's a joke in 2015 like Jeff Bezos when he was still running Amazon. He still is. But, you know, or at least had the title of running Amazon. There's a joke out there that Every quarter, the CFO entered Jeff Bezos's office and told him, Hey, listen, we're very close to becoming profitable. Next quarter, if we continue like that we will be profitable. And every quarter, Jeff Bezos yelled at him, get out of my office. Um, I need you to find where to invest that money. I don't want to become profitable. We need to spend in order to grow. Right. So that's the mindset of that grow at all costs.
[00:14:03] Toni: Yes. I think I think Bezos and Amazon did it slightly differently, right? Kind of basically that they were always almost on this break even point. Basically they were less reliant on other people's money, but I think this is the big difference, right? To kind of those, those other companies that, you know, maybe we're successful, we're growing. They were relying on outside cash coming in.
[00:14:23] Toni: Uh, and suddenly that rug was pulled from under their feet. And that created. A couple of things I'm going to, I'm going to touch on, you know, a few, and maybe kind of we jam on this a little bit, but. Number one, they kind of realized, Hey, we can't spend so much more money on growth. And then, you know, with that and a couple of other things, like the whole industry, not growing, basically your old, your old customer, your whole ICP, not growing, spending money, basically. And suddenly across the board, growth plummeted across. Right. And, and that obviously then has an, as a follow on knock on effect on you being able to get funding afterwards.
[00:14:56] Toni: Right. And.
[00:14:57] Toni: And kind of, is, is that basically the, the, the typical setup of, of this you know, of the zombie unicorn where, you know, basically some growth was happening, was great. They were relying outside cash, cash is gone, growth is gone. And now, now where do you go? Right. Is that the setup from, from your perspective?
[00:15:17] Roee: It is, but there's a, there's a, there's a bigger problem. That's, that talks about financials. Let's, I'll give you an example. There's a company, I won't mention the name. But they do travel SAS, SAS solution for business travel. So basically they want to become your booking slash Expedia slash everything all bundled up to serve enterprises.
[00:15:45] Toni: I think we have an idea who that is,
[00:15:47] Toni: but anyway.
[00:15:48] Roee: At the peak, they were valued at 12 billion
[00:15:53] Toni: Yeah.
[00:15:55] Roee: and it's a private company. They are, is not disclosed, but it's assuming we're assuming it's between 300. to 500 ARR.
[00:16:05] Toni: Yeah.
[00:16:06] Roee: So they disclosed their ARR in, in, in the last funding, which was 8 billion, and now it's 12 million, so it's like, yeah,
[00:16:13] Roee: 400, 500 million ARR. Now, this was their valuation. That valuation is what 24X, right?
[00:16:23] Roee: 500 million multiplied by, yeah, 24X, right? Facebook, Meta, Google, they're at 6x, 7x. Can they continue to grow to justify that high valuations? They can't, of course they can't. So the real valuation is probably around, given today's numbers, 3 billion, 4
[00:16:50] Toni: Yeah. Yeah.
[00:16:52] Roee: But Andreessen Hurwitz and other very successful investors invested at a valuation of 12 billion. What does that mean in terms of how much they need to cross in their books, entries in Horvitz? Like their asset, they thought, they last invested at 12 billion, and really it's 3 billion, 4 billion right now. That's the problem.
[00:17:19] Toni: No, but also Andreessen, they, they don't want to get 12 billion out. They want to get like 20 billion out, right? Because they, they invested at 12 billion, right? It's like, it's not only that you need to get to 12. You actually need to kind of exceed this whole thing. So let's, I think Mikkel,
[00:17:34] Toni: you had some technical issues in between. just you know, you jump in.
[00:17:37] Mikkel: So I was just going to say like, do you think this is still going on? Because then what goes on in my head is like clay recently announced. What was their valuation? Two and a half, three and a half billion on, and I think, I don't know if it was publicly also mentioned, but I think someone said there, yeah, it's around 20, 30 million I want to say or something like this, so
[00:17:56] Mikkel: the multiple on that is just bonkers, like what do you think about that?
[00:17:59] Mikkel: Are we, are we back to stupid or what, what's going on here?
[00:18:03] Roee: I don't think we're back to stupid because we don't see that that that often, but I think the example that you gave is spot on. This is like, and I forgot that the CEO's name, the founder's name, but like, hey dude, you could have said no to the money. Like. With that 2 billion valuation, the expectations from you is to grow and they're growing fantastic.
[00:18:26] Roee: They're doing a great job. Like we all are seeing their, their their, their marketing campaigns, but still
[00:18:32] Roee: like,
[00:18:32] Mikkel: Yeah,
[00:18:34] Toni: There's a, there's a rumor and you heard it here first. There's a rumor that this was primarily a you know, money dispensed to the founders. Actually, it was not money going to the organization. It was money directly into. And it's, it's fine, you know, and I would say yes to that, you
[00:18:48] Toni: know, I would say yes to that,
[00:18:49] Toni: but obviously kind of that completely misaligns kind of what the founders want, what the
[00:18:54] Toni: business wants, what the investor wants, kind of, that kind of fuels this whole thing even further.
[00:18:58] Roee: and exactly that. And there's where the paradox is even greater. So you mentioned the investors Earlier, like we've got the investors business model and we've got maybe what's good for the company and we tend to think that the founders are always looking what's for the best interest of the company. But as you said, no, it's not. Sometimes the founders and the investors are on the same side. Let's increase the valuation that we can do secondary and we can get rich even before the exit while what's good for the company slash the customers is only second.
[00:19:33] Mikkel: yeah,
[00:19:35] Toni: I think what I found staggering is I think something like a number of 600 businesses that we're trying to go public. So I'm not sure if all of them would be classified as zombie unicorns, but it's, we're talking like a bunch, we're
[00:19:49] Toni: talking like a lot of companies,
[00:19:50] Toni: right? And people listening. I mean, those are, those are companies probably like, like your sales loft, your outreach, your gong. And I just named kind of that category, right. Kind of, and then they're like 1500 more, um, which is, which is crazy. Right. And I would say though we're not seeing to your point. We're not seeing unicorn valuations being announced every day anymore. Kind of
[00:20:13] Toni: that, that was a thing from 2021. We now see something with clay and maybe we see something, you know,
[00:20:18] Roee: But you know why, why
[00:20:20] Toni: there, there are a couple of others.
[00:20:21] Toni: No, No, Tell us.
[00:20:22] Roee: Because everybody's downsizing. Sorry down rounds. It's happening
[00:20:27] Roee: left and right, and you don't, don't talk about down rounds, right?
[00:20:30] Toni: Yeah, well, that's true.
[00:20:31] Roee: from 12 billion, you're doing a down round at what, 6 billion or something. You don't tell
[00:20:36] Roee: everybody, you just take the money.
[00:20:38] Roee: Yeah, and continue.
[00:20:40] Roee: But what's, what's that? Those 1500, by the way, that's, that's a number from a deal room from 2021. The number of unicorns.
[00:20:50] Toni: Yeah.
[00:20:51] Roee: How many of those 1500 IPOs or exited in the past two
[00:20:57] Toni: don't know. Two handfuls, one handful
[00:20:59] Toni: or
[00:20:59] Toni: something like this. I mean, it was very few. Yeah.
[00:21:02] Roee: 10 exits. So there were sales for bought a few
[00:21:06] Toni: that's true. Yeah. Yeah.
[00:21:11] Roee: We'll,
[00:21:11] Roee: we still have 1, 450 companies that used to be at unicorn status that want to do some sort of exit, right? You can't stay. Although private companies, although open AI and SpaceX proves to us that there's another model that, but not all of the companies are open AI.
[00:21:33] Mikkel: Mm.
[00:21:34] Roee: What's going to happen with all those 1, 450 unicorns?
[00:21:39] Toni: What is going to happen to them? Rui and lighteners.
[00:21:44] Roee: Yeah, I, I started to do the math. I mean, it never works out what we can, assuming IPOs will. Come back. We can do IPOs a year. More than that, like, the public investors cannot absorb, like, they won't invest. So, that's
[00:22:02] Roee: 50, 60. Google's Salesforce, the big tech will buy what? Each company will buy
[00:22:11] Toni: But even on that, like these guys weren't that acquisitive in the last couple of years, right? They didn't buy much,
[00:22:16] Toni: actually.
[00:22:16] Toni: Kind of, there, there was
[00:22:18] Roee: but that was because of regulations. Lina Khan and the SEC did not allow these companies, they objected companies doing M& As. Now with the new
[00:22:27] Toni: might change.
[00:22:28] Toni: That might change now.
[00:22:29] Roee: It is already changing. We, we see that. So, that's gonna happen. The big tech will buy, again, a few tens, a hundred. SAP is going to join the party 150 Still what's gonna happen with the rest?
[00:22:45] Roee: They cannot raise any capital. They're
[00:22:48] Roee: just gonna be
[00:22:49] Roee: bought cents on the dollars. It's like
[00:22:51] Toni: But kind of those, those guys, and let's kind of talk an outreach. So many Medina was on this, on the, on the show. He's a great guy. I think he built a great company. But for example, these guys, they might be a great example to be picked up by someone.
[00:23:03] Toni: I could see that. Um, but also, I mean, by now there must be profitable, right?
[00:23:08] Toni: You can't main, you know, you can't keep running this thing, for example. And still shed lots of, lots of millions of dollars every year. Do you, do you think that many of those 1500 companies by now, basically I'd break even a little bit profitable so they don't need to rely on outside funding or are there still rounds going on that because they're down rounds.
[00:23:26] Toni: We just don't see that stuff. And there's still, you know, basic require capital to rush into those, to those companies.
[00:23:33] Roee: Again this is like a gut feeling at least half are still burning cash like crazy
[00:23:41] Roee: because moving from a grow it all cost mindset to let's Get to that breakeven point is really hard to do.
[00:23:50] Roee: So I'm assuming that there are successful companies that were able to downsize and maintain their cost at a good enough point. But still, Tony, these companies needs to, somebody needs to give the investors their money back. That's their business model. I gave you, even our, whatever, I gave this company five years ago, 50 million dollars, 20 million dollars. I need to give my investors the money back. How is that? Who's gonna buy that for me?
[00:24:23] Mikkel: Mm.
[00:24:24] Toni: So, so I think this is just not going to happen. I think that, that is just, you know, I think in my head I'm separating, there is a, what's the future for shareholders. And, and I think that's. Messed up in many cases, let, let's just, let's just be honest about it, especially the ones that came in super late,
[00:24:41] Toni: right?
[00:24:42] Toni: Let's, let's not forget just because, you know, this travel aid company it's Navar. I think it's in your, it's in your, it's in your thing kind
[00:24:49] Toni: of, I think there's a public knowledge just because, you know, Andreessen valued them at 12 billion in the last round. It doesn't mean that all the investors that came in at pre seed, seed, series A, B, D, and whatever, not going to make money, right?
[00:25:00] Toni: They, they, they will still make money, right? Let's, let's not forget about that, right? So there's, there's a certain tranche of the investors that are going to get completely aft
[00:25:08] Toni: and just
[00:25:08] Toni: forget about it. This money's gone. It's, it's over. Um,
[00:25:11] Toni: if they have controlling power on the board and kind of block assets, which they're kind of doing sometimes. That that's obviously a shitty kind of situation, but then also that's not forget. I mean, you, you can, you can say about, for example, outreach and it's just the company we're using next, next example. You can say what you will about them and SDRs and AISDR, but, but it's a solid company. I mean,
[00:25:32] Toni: it's a
[00:25:32] Toni: good company. They have lots of customers. Customers are happy. They're kind of, you know, recurring value, recurring revenue, all of that good stuff. It's a good company and eventually you know, that good company will either continue to generate profits or dividends or cash or something like this. I'm not sure when it will get there, if that's the case, or it will be picked up by someone for a reasonable price, like not the sky high, whatever they were kind of valued at, but for like a reasonable. Hey, you know, three, four, five, six acts, you know, acts kind of, multiple. And a lot of people will still see a lot of gain from that. Just not the last folks. Right. So,
[00:26:10] Toni: so I think,
[00:26:12] Toni: I think there's a kind of, there's a middle ground and I think what's going to happen is that you know, all of these companies, if they do survive and we, we're seeing the first one stumbling by the way.
[00:26:23] Toni: If, if they do survive, I think they will just become, you know, what we used to call a normal business, we'll just be a good business you know, hopefully making cash and having a good customer base and so forth. Right. And that in itself also is value. I think it's just not this hype value. So I don't know, this is, this is how I think it will get resolved, actually kind of the, the last investors are aft, but everyone else kind of, let's, let's see what they can do with this asset.
[00:26:48] Mikkel: So what about all these wonderful folks on the team, all the revenue leaders, what, you know, what are they, what are the consequences for them? What are they to do? How can they basically help get this company, these companies out of this I guess, limbo they're stuck in.
[00:27:01] Roee: Yeah. So I think what we all saw is that people downsized their teams. That was the first urgent thing to do, but now they're still expected to continue to have, let's say, a decent growth. But to keep the cost low,
[00:27:19] Toni: Yeah.
[00:27:21] Roee: and this is where you need to push for efficiency and productivity
[00:27:26] Toni: And,
[00:27:26] Toni: and what what, what camp are you at? Are you, are you the Hey, AI will do all of that camp or is it, is it the boring process optimization? Like what, you know, what is it? Is it give me the one cue and fix it all. I just need to kind of, you know, one, one piece of medicine and I'm done. Or do I actually need to do the hard work?
[00:27:45] Toni: Rory, what's it, what's your perspective?
[00:27:47] Roee: can I choose the middle ground?
[00:27:49] Toni: Sure. Yeah.
[00:27:51] Roee: I'm there. I think we there will be tremendous efficiency and productivity gains using AI, but I do think it's going to be slower than Some people even with within my circles that talk about that. a bit slower than people predict and in specific areas. So I'll reach.
[00:28:20] Roee: Yeah, I believe that a I can do a decent job. Outreach is mostly outbound, but it also inbound so they can replace inbound and outbound. They could help. Speed up the process and take the manual research part, which, and yeah, there's, there's a lot that they can't, that it can't, it can do.
[00:28:44] Roee: So AI will, we'll see a lot of efficiency and productivity gains with AI, but yeah, let's hold on. We're still, we're
[00:28:55] Roee: still not there.
[00:28:56] Mikkel: do you think we're seeing like on the back, on the tail end of all these zombie unicorns, do you see, think we're seeing a new breed of companies? I saw a list of teams the list included folks like cursor and lovable reaching, I think 50 to a hundred million. With a team of 20 and it just made me keep, I keep going back to the Instagram example, which was exit.
[00:29:16] Mikkel: I think at a billion dollars, there were 10 people. Do you, do you think this is kind of almost the, the counter movement happening right now? Or are those like very unique edge cases potentially making this really difficult for us to navigate?
[00:29:30] Roee: I think these are our edge cases. Like, fantastic. This is where we all want to To be right, but the entire system, our entire industry is based on humans. We all know how to sell in a certain way. We buy in a certain way. It will take time for us to move into selling enterprise grade solutions using a PRG motion kind of, which is, is the Holy grail, right?
[00:30:01] Roee: Can we sell to enterprises? Without humans or with, with minimal human touches.
[00:30:08] Toni: I also think there's just such a perfect storm for those companies happening that, that just make this, that fuel this growth, right. It's kind of easy to understand value like, ah, you know, I don't need to code. I can build a app now by myself. Okay. I get that value. What's the rollout implementation or you just load up this website, you put this thing in and it's there.
[00:30:27] Toni: It's like, ah, okay, no, no problem here. And and then people are getting excited about it. And then, you know, you kind of get this whole wheel running. And I think if you, if you're able to find a product that kind of has those features, like
[00:30:40] Toni: insane, that's, that's awesome. But I think it's, and NVCs will set the bar there.
[00:30:46] Toni: Right. And we kind of saw some folks now kind of busy saying this, like, Hey, you know, this. This triple, triple, double, double thing that we used to say, it's, it's really not this anymore. We're kind of more like quintuple, quadruple, triple, double, you
[00:30:58] Toni: know, it's like
[00:30:59] Toni: that, that should, you know, and I think I think using those examples as your guiding light, I think you, you'll, you'll jump off a roof very, very quickly because it's so, so, impossible to get there.
[00:31:10] Roee: yeah. And, and it's, it mostly is based on good product execution or development. And less, which is in with our focus, which is GTM and, and selling and methodologies and all those stuff. So, yeah, a great products. Eats processes and sales and GTM every day.
[00:31:35] Mikkel: Hmm. Yeah.
[00:31:38] Toni: who's listening, you guys are not that important actually.
[00:31:43] Roee: Yeah, yeah.
[00:31:44] Toni: but it's like, I, I think, I think you're right. But at the end of the day, I think there's only so much space for, you know, crazy products hitting kind of
[00:31:51] Toni: the spot exactly right. Versus just, you know, kind of executing this really well.
[00:31:56] Toni: Right. And I think this is also where I'm. And I think by now it's known, right. Kind of, you've you've kind of moved on from winning by design was very process focused over there.
[00:32:06] Toni: Now maybe you kind of very quickly kind of just mentioned where you are now kind of, and, and how you, how you want to help companies going forward.
[00:32:11] Roee: Yeah I discovered. So in Winning by Design, we talk about processes, peoples, and tools. This is how we increase growth. Lately, I've started to talk to Ulrich, Ulrich is leading willingness to pay. He wrote a fantastic book on pricing and packaging and we started to, to, to have conversations and I discovered that there's another way. And basically I would say in a lot of cases, easier and quicker
[00:32:42] Toni: Hmm.
[00:32:43] Roee: increase revenue and that it was with the right pricing and packaging. And that's what I'm currently doing. I'm focusing and adding that tool or maybe starting off with let's first get the right pricing and packaging and then we can talk about all the rest.
[00:33:00] Roee: It's like getting closer to what our product actually does. Like again, product eats GTM any day. So I think somewhere in the middle there's that pricing and packaging. If we Get this right, we'll be able to unlock a lot of potential. And then we can talk about, okay, let's continue to improve our sales motions and introducing processes, etc.
[00:33:24] Roee: Everything else that I was preaching for the last five years. But now I want to focus on getting the pricing and packaging right first.
[00:33:36] Toni: Yeah,
[00:33:37] Toni: I think I think there's lots of value to unlock. I think a lot of people are very afraid of doing any pricing changes, myself included, by the way. But, but ultimately, right. I think you know, getting unstuck from this, you know, walking dead zombie unicorn you know, perspective, I, I think, and I would love to have your perspective on this and your take on this, but. Um, there, there are a couple of just really good business decisions that are required. Like, Hey, you need to reduce your cost. It doesn't matter how it doesn't, it doesn't matter. You, you have to, right. You have to not be reliant on outside funding. And I think a lot of people have realized this, right. Now the hardest part is like, okay, how do we get the go to market motion to be, you know, you know, profitable and sustainable and scalable and all of that stuff. And that is a lot of process work. And then obviously kind of culminating also in some of some of the pricing kind of things around it. But it's like, it's the boring work that's required. That, that's kind of my perspective on this. What's, how do you see it kind of, how do these zombie unicorns get unstuck and kind of get moving whatever the cap table says?
[00:34:39] Roee: Yeah. So maybe let's start off with my new passion, pricing and packaging. My new old passion, pricing and packaging. I think there's a lot of potential to unlock there, even for existing customers. As you said, people don't don't visit their pricing and packaging as they should. And there's a lot of potential to unlock there.
[00:34:59] Roee: So let's increase the top line. And all of a sudden the gross margins the margin, the cost margins, are all of a sudden in our favor. So I think that's probably the first thing that I would currently look into. And that's outside of the processes and streamlining everything that we talked about. So probably that's the first step I would look into.
[00:35:19] Roee: heh heh.
[00:35:23] Toni: um, a closing question from your side?
[00:35:25] Mikkel: Really. Do you
[00:35:29] Mikkel: kind of throwing me on that with boss? You can't just throw me. It's like, oh, do you have a closing question out of the blue? It's like, that's, that's not okay. That's not cool, man.
[00:35:36] Toni: yeah, no, it's because we're not sitting next to one of
[00:35:38] Toni: those that have kicked you under
[00:35:39] Toni: the table and like kind of getting, getting, giving you a heads up nor are we, I mean, it's, I think I'd be interested just to hear from you some musings on are we, are we headed in that direction again?
[00:35:50] Toni: Have people learned are we just waiting for the new cycle to kick off in three or four or five years? And. And. the same thing happens again, or what's your, what's your thinking here? Have, have, have we as operators matured or, or have we not?
[00:36:02] Roee: The cycle is already happening. I don't know if we're mature, but again, say AI and you'll get funding.
[00:36:11] Toni: Yeah. Yeah. There you go.
[00:36:14] Roee: There you go.
[00:36:15] Toni: Well, Roe, thank you so much for spending some time here with us.
[00:36:18] Roee: Alright, it was
[00:36:19] Roee: my
[00:36:19] Roee: pleasure. Thank you for having me,
[00:36:21] Toni: Yeah.
[00:36:21] Toni: And everyone who's listening, if you like this hit the subscribe button or leave a leave some feedback if you want to. And otherwise see you next time. Have a good one. Bye bye.