Subscribe
Share
Share
Embed
A pivot. One motion - and relentless focus. That's just some of the ingredients Manny Medina shared on how Outreach grew to $100M and beyond.
In the episode we get into:
***
In the episode we get into:
- (00:00) - Introduction
- (02:13) - Meet Manny
- (03:45) - Outreach's first motion: Outbound
- (09:30) - Outbound isn't dead
- (12:22) - AI changing the outbound game
- (16:14) - Scaling at 0, $10M and $100M
- (19:59) - You don't scale to enterprise. You turn into an enterprise machine
- (22:12) - Narrowing your ICP
- (23:25) - Kicking in the inbound engine at $50M
- (26:44) - A competitive category
- (29:51) - Lessons from Outreach's internationalization strategy
- (32:20) - Deciding to go multi-product
- (39:11) - Final advice to get to $100M
***
This episode is brought to you by Growblocks. Finding and fixing problems in your GTM shouldn't take weeks. It should happen instantly.
That's why Growblocks built the first RevOps platform that shows you your entire funnel, split by motions, segments and more - so you can find problems, the root-cause and identify solutions fast, all in the same platform.
***
Connect with us
✉️ Newsletter: revenueletter.substack.com
Creators & Guests
What is The Revenue Formula?
This podcast is about scaling tech startups.
Hosted by Toni Hohlbein & Mikkel Plaehn, 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.
[00:00:00] Toni: Hi everyone. This is Toni Hohlbein from Growblogs. You are listening to the Revenue Formula with Mikkel and Toni.
[00:00:06] In today's episode, Manny Medina, who's the CEO of Outreach, joins us and he shares their journey from zero to 100 million and beyond. Enjoy.
[00:00:17] Manny: I'm into New Year's resolutions. I think it's, it's kind of fun to like, you know, find something that you want to do this year that I've never done before. So I set out to read every sales book out there this year. And it's becoming a daunting task because there is like one that comes out every month or every other month.
[00:00:38] The majority of them have the title, like the fill in the blank sales. And you can have, you know, the challenger,
[00:00:45] Toni: the whatever. Yes.
[00:00:46] Manny: whatever and whatever's and whatever's. So, um, some powering through it. I'm not, I haven't given up yet, but, um, it's, it's really fun to actually draw a line between the old school sales books, like the Zig Ziglar, the, the, the Brian Tracy, uh, of the world, uh, and compare that to like the new schools, that is a lot more.
[00:01:09] New ones, and there's a lot more steps and there is a lot more, you know, ways to challenge the customer. You don't, you know, you, it's kind of like the difference between Glenn Gowry and Link Ross and where we are right now. You're not always closing, you know what I mean? But if you're not always closing, you know, you're also not closing.
[00:01:25] So there is this like, passive aggressive tone to the new breed of books that are coming out where like, Oh, you stay away from the closing. You don't ask about the order. The customer has to like, volunteer the order. I'm like, that has never ever happened to me. In all, in every single one of the over 200 million AR that we have generated, not once have somebody come and told me, you know, take my money and shut up.
[00:01:46] So, um, it's, it's, it's just really interesting that the pendulum swing that it's sort of like it maps a little bit of the societal mood of like where we come from of like, you know, you sit down with somebody and you use one of the 10 closes, right? You use the tie down close, the wraparound close or whatever close.
[00:02:02] And now they tell you that if your close has a name, don't use it. I'm like, yeah, that's not completely true. You should be using some closes techniques because they help to actually, you know, part customers with their cash. It helps. It's helpful.
[00:02:13] Toni: if you haven't guessed yet who that is, then that's your own fault. So this is Manny Medina here with us today. Obviously, uh, CEO, co founder of Outreach, which we're like super happy to have you on interview today. And you mentioned already there, so, you know, I can latch onto this number. You guys are well beyond, uh, 200 million in AI.
[00:02:33] I think we have something like. 1, 000 people working in the organization, something like 6, 000 customers. And obviously you have a close, a bunch of funding and, you know, unicorn and multiple unicorn status and all of that stuff. Right. So super impressive and thanks a bunch for spending a little bit of time with us here today, Manny.
[00:02:50] Manny: I appreciate you having me. This is fun.
[00:02:52] Mikkel: And I can just say with that intro, I also, I felt my own excuses for not reading books collapsed pretty hard in my brain for a second there, because I know that I have a lot on in my life, but then when you talk with a CEO of a company of that scale who commits to reading that amount of books, it's, yeah, I need to go and reassess, uh, my, my priorities around reading.
[00:03:14] Toni: Why don't you, okay, Mikkel, this year. Why don't you try and read every single marketing book out there, you know?
[00:03:21] Mikkel: Every single children's book, yeah, it's all AI books by now anyway, it's all AI books. But so what we really wanted to go through today is, it's obviously super impressive what you and the team have accomplished over the last couple of years, , and we really want to Um, peel the onion on that story, hopefully to find some challenging guests along the way and some solutions to really help the listeners across the different stages of growth that they might be at.
[00:03:45] Right so super thankful that you want to share some of that advice asked today. One of the things we kind of assumed. And I guess you shouldn't do that in a podcast when interviewing someone, but given the field and we assumed. Outbound was kind of a motion that you probably bet on very early. And so what we wanted to dive into is like, what was the first motion?
[00:04:07] I'm assuming outbound here, but what was the first motion and how did it start for you to really start selling Outreach?
[00:04:12] Manny: I don't know if you know this, but outreach is a pivot. we started as a separate company that was in the recruiting space and, you know, we were running outta cash. So we built this engine to be able to, to outbound, to, to, um, corporate recruiters to try to match 'em with, with employees, with potential, with potential talent.
[00:04:31] And we built this engine that, that, um, did this, did personalize and follow it up a scale. It was only on email and it was in essence a workflow. Meaning we decided that the way to get meetings is to create one deeply personalized message and follow up like four, four to seven times depending on the person.
[00:04:50] And that worked marvelously, that, that took reply rates from, you know, 0.24% to four to 6%, which is incredible. As we were generating this business volume, we were trying to sell, you know, we couldn't close fast enough to keep us alive. So we tried to sell an appointment service to agency recruiters and the agency recruiters were like, you know, how are you generating this volume?
[00:05:12] And we talked about the engine that we build and they were like, stop. I want to buy the engine. I don't want to buy your service. So we had to pivot the entire company to become a SaaS company for appointment setting. , and then we realized one day after selling all the licenses that I could to an, to a recruiting team, that the sales team was far larger, like 10x larger than the recruiting team.
[00:05:32] So I remember this one recruiter that held my hand. He was at AppDynamics and walked me over to the sales floor. Cause I was trying to do an Excel. Walked me into a sales floor and he said, pitch to them, not to us. We're not lot of people. So, but they have all these people. I walked out of there with 50 licenses and the rest is history.
[00:05:49] That's how we, that's how we grew Outreach. Now, when you have a product that does something that has never been done before, you are creating a new category. And when you're creating a new category, there is no latent demand for you. You see, I mean, there is no, like, I can go and tap into like the, the search stream for whatever, because that doesn't exist.
[00:06:09] So you have no choice but to educate the market outbound. And there is, you know, sure, you can write SEO all day long, but that takes a long time. And we're, again, we're still running out of cash. You see, I mean, we're still running into the same problem and we need, you know, money to survive. So the easiest way to generate it is by calling somebody and selling something.
[00:06:27] And it does two things. One it adds to the product market fit equation, right? For every sale that you make and every customer that you retain, you know, that you're getting better to, you know, add product market fit that you were before. And the second piece is that by doing, you know, I think you, uh, you call it in your podcast, this founder led sales, , you're able to hone in the pitch in such a way that you can actually scale it, you know, cause there's two parts that are difficult, right?
[00:06:50] And one is. How do you get the door open? How do you get somebody interested on something that they noticed this before to solve a pain that you didn't know you have? So you have to create that wedge and get really good at that because then you have to bottle that up and give that to a bunch of SDRs and AEs.
[00:07:03] And the second thing is that how you navigate a close to an organization that did not buy software. So when we started selling outreach, CROs and VP Sales did not have a budget. So they have to go in and borrow from marketing and borrow from headcount and borrow from Ops and borrow from X to actually buy Outreach.
[00:07:18] Now it's less of a thing, but back when we started it, they didn't have a budget. So we have to, A, generate the need and B, generate the budget. So it's like, you know, new and new and new all, all along. So like, if I didn't blaze that path, you know, I wouldn't be able to scale and bring in salespeople alone to actually do it.
[00:07:33] And that's, that's how outbounding for us, that's what outbounding for us means. So we were born from cold outbound. We never, we never knew inbound until we were, I don't know, a hundred million or so, like, it's, it's kind of like, I don't know if you remember that fighting scene between the Bane and Batman.
[00:07:49] And they're fighting in the dark and the Batman can't see Bane and Bane is just like kicking his ass. And Bane makes fun of Batman. I was like, I was born in the dark. And now this is how we are. We were born cold outbound. Like we never knew, you know, soft inbound LOBs and whatever. Like that's, you know, that's for other companies, not for us.
[00:08:06] Toni: Born in the dark, outbound. That's what I heard. I love that. Absolutely. So I mean, so again, right, I was kind of saying this before we hit record. So we had And the company, uh, actually the two of us were working kind of, uh, a bit ago, we had kind of the same thing. It was a bit more of an established market, but very well dominated by extremely strong competitors.
[00:08:24] And we then just started going up on like crazy, you know, worked out. So I still remember our CEO calling it, you know, we are, it's kind of an aged statement now that I'm thinking about, but we are carpet bombing the market. Right. It's kind of, it's, you know, it's maybe we cut this out later.
[00:08:42] But basically kind of using that in order to kind of very go precise out there and sort of having the ads run and all of this other stuff. I need to wait and wait and wait and nothing happens. Right. So I really, I really love, I really love that story obviously.
[00:08:54] Mikkel: But I think it's, it's also like you see with PLG companies today.
[00:08:58] So everyone's like, Ooh, look at Slack, no Salesforce. And then you fast forward the clock a couple of years, like, Oh yeah, they have a big Salesforce. Yeah. What was it? Airtable, not abandoning PLG, but also going enterprise. So, you know, even with, with the new motion, that's, that's the thing.
[00:09:11] Manny: Even Atlassian that famously had no salespeople, of course they have salespeople. You know, what is it, what is the hottest brand right now? OpenAI. do they have? They have salespeople,
[00:09:23] Toni: absolutely. Yeah, yeah,
[00:09:24] Manny: ton of employees, but they don't have a ton of enterprise contracts. And that's, that's useful.
[00:09:30] Toni: So, I mean, we were joking also before the show that you listened to our episode, Outbound as Dead, which was great that you listened to that specific one, Manny, but what's your message to people that, you know, are on LinkedIn and it's like, you know, bashing outbound and saying, Hey, you know, this is, this is such a nineties tactic.
[00:09:45] This doesn't work anymore. What's your message to those folks?
[00:09:48] Manny: Look, we're, we're, we're all trusted advisors at some point. So like, if you have a big voice on LinkedIn, you should take on the responsibility of knowing that your advice is being heard and sometimes acted on. And I think that creates a higher onus of work in that you, you, you should make statements that help an audience as opposed to statements that get you clicks, uh, especially in LinkedIn.
[00:10:14] And for some industries outbound may not be, you know, a strong channel. I accept that, but just calling things dead, it's a little misleading and it doesn't help neither the company that is trying to grow revenue. Or the customer journey that you're trying to empower.
[00:10:31] So, you know, in your episode about, um, this outbound, instead, you were talking about how it's annoying in outbound and like, yeah, the great, great majority of outbound is annoying. It's a distraction and it's a low value, but that doesn't make the medium bad. If somebody hits me with something that is top of mind for me right now, I will pay attention to it.
[00:10:49] But that's hard. It's really hard for you to figure out what's top of mind for somebody else. So the best way to do. Outbounding is to, is to figure out what are the, you know, you, you, you, you establish two or three hypotheses of what may be top of mind for the person you're reaching out to. You then elaborate on that hypothesis by bringing some amount of value, go do some research, you know, build out two, three points or some things that you think are going to hit the mark and then experiment. It's the same way that if you're trying to make a friend or find a date at the bar, like you look at the person and you, you're trying to figure out what is your opening line that is going to get you the next 30 minutes of conversation. And you may fail and it may be annoying and that person may kick you out, but it's not like you're not going to try, you know what I mean?
[00:11:33] Otherwise you stay single for the rest of your life. So there is, you know, you, you gotta be able to go out there and, and have a message that resonates with somebody. You know, the other thing it does is that it allows you to really build your marketing muscles. Because when the market, you know, you were mentioning like, Oh, the marketers look at the brand.
[00:11:49] And if it's not on brand, off it goes. Nobody cares about your brand. They care about their problem. So the outbounding forces you to establish, to create your point of view from the point of view of the, of your customer back. And then you have to reflect that back. So to me, it's misleading and it's unhelpful because.
[00:12:08] You know, it gets people swinging from left to right and, and, and it's not really what we're here to do. We're all here to, to grow revenue, help other organizations to grow revenue. So it, it, it creates this loss of, of advisership for all of us who are only trying, trying to, to help out.
[00:12:22] Toni: How do you think with AI, and I'm sure you have had this question now probably 20,000 times, but how do you think AI is gonna change this outbound game?
[00:12:31] Manny: I think it's going to make it way sharper. You know, AI is a, is a prompting game. So you have to prompt the AI to extract the hidden knowledge in this LLM that, you know, that depends on how you approach the question. You may get a different answer. So I think it's going to make you more efficient at coming up with great hypotheses that may resonate with your recipient.
[00:12:52] But at the end of the day, it's all about getting in your recipient's head and trying to figure out what is important to them and then serving that, you know, go find industry, articles that benefit them. Go find this nugget that benefits them. Become an expert matter, expert subject matter on the thing that is worrying them.
[00:13:09] And only then you should have permission to outbound. All the rest of the stuff is noise.
[00:13:13] Toni: So I think this is, probably, at least from my perspective, the right way of how AI, will probably have an impact on this, because the alternative route that many people are, I'm not saying scared of, but, but saying, Hey, this will destroy the whole thing is instead of making the individual outreach more valuable, which is your point, basically generating more volume with ish kind of value.
[00:13:39] and then kind of, you know, making this a, uh, an even more spammy. approach that it might've been previously. Right. And I think this is, , and I totally agree with you. I think the, the game is going to be much more around enabling that SDR, enabling that rep that's outreaching, by, you know, doing that in a much better way than trying to get rid of the SDR, and trying to do all of that automatically, right.
[00:14:02] Kind of, I think this is, uh, totally agree with kind of your approach there.
[00:14:06] Manny: I think, I think that we need, we need to separate the, the, the job description from the, from the activity and from the result that you're looking for. the mission here is to generate qualified pipelines. Meaning to get somebody to give you permission to engage, to exchange, you know, valuable information for 15, 30 minutes of your time to see if we have a zone that we can work together.
[00:14:29] That, that could be done by anybody. Now, it turns out that AEs that happen to have more experience are better at doing that than SDR that happened to have less experience and that shows up in the conversion numbers, but that doesn't mean that an SDR couldn't get great. And gain that experience by doing research in the industry and become just as good as better as any other AE.
[00:14:51] The, at the end of the day is the activity and the result of that activity that matters. We went through this period right now and I'm sure you heard of like, oh, we're going to get rid of SDRs, you know, and we're gonna, you know, we're gonna let AI do the whole thing and, and, you know, the, the, the job of pipeline generation doesn't go away.
[00:15:08] It's like saying, I'm going to get rid of pipeline generation. It's going to sit here and wait for orders to come in. Good luck. somebody has to, the pipeline has to be generated by somebody. If it's not SDR, sure, then it's marketing. And then there's the AEs. But if you get rid of your SDRs and you don't have a strong pipeline generation culture in your AEs, you're just going to miss your number. And that's the part that this advice starts getting a little tricky, right? Because that's the kind of stuff that I'm seeing is spewed out on the interwebs and it's not helpful.
[00:15:34] Toni: and also when you think about it, right, the, I'm not sure that I think they have 15 ish thousand SaaS companies, and then there are all kinds of other companies obviously out there, really, you know, the ones that cutting through on an inbound marketing kind of perspective. You can probably, you know, count them in two hands or something like this.
[00:15:52] Everyone else is either dying or using outbound in order to kind of keep growing or get to the next milestone and get to the luxurious position in order to then have a marketing engine, you know, know the right things to say, run ads and build that piece on the side. And I just want to kind of take this one step back here, because we have like one or two things we also wanted to get kind of your input on.
[00:16:14] So. We were kind of trying to break this down in like a zero to 10 or one to 10 and 10 to 100 million journey. Was there that difference for you or was it, was it all just, hey, the first thing was 20 reps and then it was a hundred reps? Kind of, was there a difference between, uh, one to 10 or 10 to 100?
[00:16:32] Mm-Hmm.
[00:16:32] Manny: Yeah, it was significant differences. Especially for us, because what we were selling did not exist. So. if you peel back at Outreach, the entirety of Outreach, it's a workflow for sales. Meaning there is a workflow that you follow to generate pipeline. So you, you, you, you find out, you know, you, you pick your accounts, you find the right people in the account and for each persona in the account, you have a number of steps that the medium may change, the communication may change, but you have to follow the workflow.
[00:16:59] And once you get a person engaged, you have another workflow for, for sort of like finding the zone of engagement and finding if there's collaboration opportunities. You know, it used to be co qualifying. I think that's, that's misnomer right now. Cause like nobody likes to be qualified. I think that you need to figure out like where there's a problem you need to solve.
[00:17:15] Then, and then you use that to then, you know, you know, find the buying group and then engage in them forward. That's another workflow in which you have to figure out where's the buying group and then, you know, how you stitch them together. So the, um, the, to answer your question, because our category didn't exist, we had to say, and we have to generate revenue right away, we were selling to whoever wanted to buy.
[00:17:36] You know, all the way to 10 million. And that could be anybody that could be a sales organization. That could be a, a fundraising for a political campaign. That could be a repo shop in Hawaii. That could be anybody that needed to do some kind of outbounding. Then we realized that, that having such a broad, diverse customer base was actually unhelpful because we couldn't success on a scale because each of their workflows.
[00:18:00] Look very dissimilar. So I couldn't get leverage of, you know, selling to the same type of workflow and then just teach everybody the same workflow in the best practice. Because if I have people doing all sorts of things, then I can't get the learnings fast enough to scale. That was problem number one. So we have to then reduce our, our ICP, our ideal customer profile to only the people that, that we knew that we can success.
[00:18:23] And that the success was scalable, meaning that the success that we drove with one client was very similar to the next. The next thing was that, um, our short, our cycles were very short and we were happy with getting 10 to 50, 000 deals on the regular at high velocity. The problem with that is that when your high velocity deal landed you're at a very low level.
[00:18:45] So you get, you know, back in, you know, before 2022, anybody, any 20 some year old could write a $200,000 check. And so they will buy one of each, right? So landing those deals are very, very easy. And then when, when we got to a hundred million or even, no, when we got to 50 million, that's when I realized that this will, we will not be able to scale this and retain our customers at a higher rate.
[00:19:07] And given the success that we, they, they need, if we don't, if we don't start selling significantly larger ticket items with much more involvement in this success of the client and with a lot more professional services involved in sort of like change management involved. You know, we're going to be in this thread mill of getting in this short contracts that, you know, the moment that person gets fired, that, you know, we're returned and in not scale the organization.
[00:19:31] And then the next layer from a hundred to 200 and beyond is that now we have multi products. And when you have multi products, then you have to figure out, you know, what is the right approach to the customer so that you can fit the right sort of product solution and then sell the remaining of the products.
[00:19:46] And it became an expansion game rather than a new logo game. So there's all these phases that we have to navigate from being a transactional sale to a bigger sale to a platform sale. Each of them look vastly different than the last.
[00:19:59] Toni: I think the really cool, the narrowing in the ICP, I think that's pretty cool actually. And then doing the high velocity stuff. Many of us would be happy with that by the way, right? Kind of, this is a very successful business to get to like, I don't know, 25 million with that stuff. did you then bolt on the enterprise pieces or did you evolve the whole go to market to then focus on the enterprise stuff?
[00:20:23] Manny: We were told by advisors, investors, and, and so on to just bolt on the enterprise, just bring a great enterprise leader and we'll sort you out. And. If you're not, it's one of those things that is a, is a, is a self referential problem. If you're not already enterprise, it's really hard to attract all the enterprise leaders because your sales cycle is completely different.
[00:20:41] Your product roadmap was completely different. You don't scale your sales to enterprise. You almost turn the entire company into an enterprise, you know, machine, right? Your product is oriented towards an enterprise need. Your go to market is oriented towards an enterprise need.
[00:20:58] So the first time we did it, we tried to just bring in enterprise sellers and leaders to go after that market. Then we realized it was really hard. We had a few people that were super successful and you know, the remaining were not, and then you start wondering, is that a product market fit issue? Like, what was it?
[00:21:16] And it turns out that there was just a, uh, kind of like the iceberg. There is a, uh, a ton of. Enterprise requirements that you have to have to be able to even play in that, in that, in that space. We changed the, uh, the entire organization to be more consultative because even in the lower mark, even in the lower segments, in the smaller segments.
[00:21:35] Um, an enterprise approach is helpful. It helps you land bigger. So if you bring an enterprise approach to say an SMB or commercial segment, what will happen is instead of landing a 20, 000 deal, you'll land a 100, 000 deal that is more wall to wall. Now the sell cycle will be longer, so you have to be careful for that, but, but it will be a stickier land.
[00:21:55] It will be a more strategic land. The conversation that you have will be more about change management and future and getting you into a road to success. with me as opposed to just buy the tool and be done with it. So I think that for us, it was helpful to bring this entire enterprise motion across the organization.
[00:22:12] Mikkel: So one thing I also want to double back to here is specifically on the, um, the ICP, kind of the aha moment, okay, we need to focus in on this, this slice of the market. Was there just a cold hard decision to then say, well, we're just not going to prioritize anything for anybody, you know, of our existing customers that falls outside of that category?
[00:22:29] How did you navigate that part? Because I can also imagine this being difficult when you look at the MRR you have on the books, right?
[00:22:36] Manny: Well, that's what a, that's the beauty of Outbounding, is you get to pick. You get to choose where are you going to appoint your people to. And when you decide that I'm not going to sell to this segment. I'm going to sell to this segment. Well, you have to at least change the phone numbers and the profiles and boom, you are in the right, you're heading in the right direction. And so it had, it had the, the problem, it became at scale that you wanted to use. evidence to show to a bigger customer that you know their space and that you can success their space. If you're too broad, it's really hard to get evidence. So you have to be able to focus so that your marketing can focus, so your product marketing can focus, so that your sales can focus.
[00:23:11] so you just stop selling, stop cold outbounding to the areas that you don't want to call outbound. That's why I love it. Like it's, it's, that is way harder to do. When you build an edifice of inbound leads that are all crap, you see what I mean? It's switching off of that. It's really hard.
[00:23:25] Toni: So I love that. couple of questions in my mind. I'm just trying to kind of get organized. I think the, uh, we've been talking a little bit about marketing here and there, and, uh, and how it's sometimes helpful or not helpful. I think you mentioned you're only layered in marketing around a hundred million or something like that.
[00:23:41] I'm not sure of kind of where,
[00:23:43] Manny: you No
[00:23:43] we had marketing before, but what I'm saying is the, uh, the inbound engine didn't kick in until around 50. And then he became a meaningful driver of, of growth, you know, or like closer to a hundred. But we, we, we had, you know, we brought in a marketer and immediately helped us, establish the category, create our brand awareness around who we were, the word engagement or sales engagement did not exist until we had this marketer come in and sort of help us, you know, narrow that.
[00:24:10] And so like, what is that we are, and then defining what engagement is and defining like, what is our, our persona in the market? What's our brand? And so if our brand became, \ , this engagement workflows, our brand became, , our conference called Unleash. That became really quickly a very popular conference.
[00:24:26] , and that allowed us to then, you know, help us with a calling card, right? So when you say, hi, I'm Manny from Outreach, the response is, what the hell is Outreach? But the response is like, I heard of you, tell me more. You see what I mean? Like, so it creates, it gives a little bit more of air cover to your cold outbound.
[00:24:41] It still doesn't get the, you know, the, the floods open of inbound, but at least it gets our sellers to have an easier conversation and less of like, who the hell are you and why are you calling me?
[00:24:50] Toni: And the way you kind of saw that, you know, help out besides of the inbound pieces, just like you mentioned, right, that there's a bit more recognition, especially in the first touch or the second touch or something like this. Would you, would you say you've seen similar effects on, I don't know, conversion rates, sales cycles, a couple of other things?
[00:25:06] Really what I'm fishing for is this, And I, by the way, I hate the term all bound. I don't think it's helpful. I mean, I don't know how kind of you see this thing, but there is certainly a co mingling of those two motions that, that does happen successfully. And especially when you have such a pure outbound motion and then so let, you know, Don't want to say late in the game, but so late in kind of, in terms of ARR kind of really adding this.
[00:25:30] I was wondering if you kind of could clearly see a shift, you know, stable conversion rates, more marketing, suddenly conversion rates go up. Did you see something like that in the data?
[00:25:38] Manny: We did see an increase in conversion rates and conversion rates defined as an opportunity open , and then close one versus divided by everything else , you know once marketing started kicking in But it makes me wonder whether it was marketing kicking in and or the fact that the category became And I don't know which I can't give you causal Reason into one or the other.
[00:26:01] It did get easier. It's a short of it. over time. Um, I'm sure that some of it was our marketing, but I'm sure some of it was our competitors marketing. Some of it was the fact that the entire, I remember this was one piece from Lemkin that talk about the sales stack. And that got all of a sudden the entire, at least the B2B tech market talking about what's your stack.
[00:26:20] So if you stop being just, you know, use bot, you know, zoom in for the Salesforce, it became like, Oh, you have to buy this stack of things. To get your sales engine going. Um, and the moment that became popular, then, then people start talking about their stock and we were part of the stack. Meaning not only we, but like sales engagement was part of the stack.
[00:26:40] And, and, and the stack continued to grow up up to the point where it is today.
[00:26:44] Toni: And you mentioned a couple of times, kind of this category being established, you guys figuring out, Hey, it's sales engagement. A couple of others jumping on that bandwagon as well. I'm not sure, you know, what order. Can you talk a little bit about the competitive situation starting out and later on when it kind of developed and matured a little bit more, and did it, you know, was it helpful or was it not helpful, right?
[00:27:04] Because so many people are scared and worried about competition, but then there's so much evidence also that it's a good thing. So we'd love to have your perspective on that.
[00:27:12] Manny: Yeah, I think at the very beginning competition was very helpful. Because it helped us establish the, the, the market. So when we showed up to the market, we were actually scared of going into such a busy market. Which is sales technology. And we were pretty sure that somebody has solved the problem that we're looking at, which is how do you create a workflow for sales as opposed to point solutions?
[00:27:32] So there was a point solution for calling, there was a point solutions for emailing, there was a point solution for slide sharing, there was a point solution for, booking appointments, there was a point solution for everything. And what we realized is that for the, you know, at least for the pipeline generation part of the job was interlinked, meaning like there wasn't just calling or emailing or LinkedIning or texting, it was the whole of it.
[00:27:52] And then you have to figure out like what works when, right? Because some of the activities are, are useful at the beginning and some of the activities are creepy at the beginning, right? So if you. You know, if you LinkedIn somebody, , to make a connection or even before then, like if you like somebody's comment or you comment or you po or you engage with them on socials of some sort, and then you use that to, to drive a conversation and then you, and then as , the trust grows, your relationship becomes more intimate and now you're texting, that's one path.
[00:28:21] But if you use the same medium and you start texting right at the very beginning and try to sell something, that's just creepy. So the understanding of what mode of communication and what kind of language needs to happen where in the pipeline generation cycle was super important and nobody was attacking it.
[00:28:35] Like nobody was creating workflows and testing and becoming intelligent around it. So we saw this opportunity, and build a product around it. But again, it was really hard for us to just lift the whole market by ourselves. So as others joined , in the fray and sort of became this, you know, ballooning of other applications that sort of like looked like outreach.
[00:28:52] And some of them are still around, right? Like, you know, Apollo was born back then. It died for a minute because it had, , hacking issues, but you know, it was, now it's born again. Um, you know, there was, there was other competitors that came into the fray, , that, you know, buoyed the market, created sort of like , this awareness that we needed, that everybody needs something, right?
[00:29:11] And , the job for us is to position ourselves as the leader in that category. So that if you're buying number two, number three, you know, as a trade off, you know what I mean? Like that you decided to like go with number two for whatever reason. , but as long as you're the leader, you get the full awareness. Now it's tricky because the market is, it's just tough. The market is tough for everybody. Like it's not just tough for us, it's tough for everybody. And now the, you know, because we're sort of like, it's still selling a lot into tech. You know, the competition is just creating a lot of traits. And that is just stalling everybody.
[00:29:40] So there is a point in which, you know, we're going to have either the market has to, you know, go back and grow again, or we're going to have to figure out how to consolidate it. But at the right time, it's helpful. At the wrong time, it's unhelpful.
[00:29:51] Toni: So let's talk about, internationalization a little bit or going global rather. So, I mean, you guys obviously started in the US, US is a big enough market to grow to, you know, large numbers, right? When did you make the move to go beyond the US? And I'm sure you did it without bounds. So I'm not going to ask about that.
[00:30:10] But when, you know, when was that decision made to jump over and what was the thinking around it?
[00:30:16] Manny: Yeah. Our move to, um, our first international market was of course, EMEA and they are our decision to, to put people on the ground was due to the fact that we already had customers there. And we. We're paying people in the U S to do, you know, odd shifts to be able to serve that customer base. The first thing we did is we move supporting success.
[00:30:38] And that was our start of the internalization because it was all about supporting the customers that we had abroad. Or the customers that were not in the U S rather. And then once we do that, then we can scope the size of the market and put sales behind it. The problem with that approach is that you lock yourself into the customer base that you have, not in the customer base you want to have, you see what I mean?
[00:31:02] And of course, you know, when we did that, our customer base was a small transactional and buying single point solutions, as opposed to bigger, more strategic, and we are part of the sales transformation conversation. And, you know, if, if I were to do it again, I would have a definitive strategy as to what am I trying to do in a market expansion move?
[00:31:23] You know, what are the things that look like the U S and what are the things that don't look like the U S? So my current hypothesis is that it's best to pick markets, but it's best to pick markets and industries in that market. And then go after that. You see what I mean? Because that you have momentum from other industries that kind of look the same.
[00:31:41] And then you can get the leverage of the industry where you're already sold and looks very much similar into the other country. , the case studies, the sales motions, et cetera. You can even teach something to that same market player in the industry that they may not know, as opposed to go geographically.
[00:31:56] Geographically doesn't, you know, we'll, we'll, you'll end up always with the easy path where they fill you the tank with a bunch of SMB companies that churn over the moment that the market gets off. So that's, that's, that's my learning.
[00:32:06] Mikkel: And I think that makes sense. Like we had, Arun Mani from Playo on the show, obviously a different company because they do FinTech. So there's a lot of requirements locally in the markets, but his point was. When you enter a new market, you almost also need to re establish some level of product market fit.
[00:32:20] So I think that resonates a lot. One of the things I, uh, kind of was wondering about because you talked about market expansion, another way to kind of expand your growth is something you mentioned earlier, which is going multi product, right? Having, having, uh, different offerings. How did you go about, you know, so when did you do that?
[00:32:36] And how did you go about that decision? Because there's so many, Ways you can go. You can go for another department, another ICP. So I'm curious how, you know, why you made that decision to go multi product and what that looked like for you.
[00:32:50] Manny: I forget exactly where it flips, but if you look at the majority of ad scale B2B SaaS companies. , and at scale, I'm speaking, you know, over, let's call it half a billion. You can, we argue it's a billion, but let's call it half a billion. When you're at that size, over 60 to 70 percent of your sales are expansion sales, are up sales, cross sales.
[00:33:12] And, you know, getting that growth rate on the back of new logos is just too expensive. So when you do the math and you have to contend with the fact that the great majority of your sales are going to come from expansions, then you have to figure out whether it's going to be seed expansion, it's going to be use case expansion, meaning the same seed by using the same product in a different way, or it's going to be, you know, division expansion, like find other divisions within the company.
[00:33:35] Where it's going to be product expansion and, you just work back the conversion rates and everything else. And you realize that if you don't have an approach to all, meaning if you don't have one of each, you're going to miss, you're not going to get the full juice out of the expansion squeeze, if you would.
[00:33:52] If you don't have multi, multiple products, now the decision that you need to make is what kind of product do you build, right? You know, do you build a marketing product? Do you build an Ops product? Do you build, so the easiest thing to do is to expand into the same buyer. So if you can sell to the same buyer, a different product, that's far easier than finding a net new buyer, , in the same organization.
[00:34:12] And even then it's hard, right? Because usually when you expand into multiple products, there's already a product incumbent. And the new product that you're building that you have to displace. So the question is, how do you do it with a platform sale? And how do you shift the market from best of breed to platform, which in sales hasn't happened yet, but it's in the middle of happening.
[00:34:28] so the, the, and the last thing is that you, you just look at the market, like you look at public markets and you'll bring it back to, to, to where we are, and you can see that there is no public company that's gonna have multiple products. So you have to have multiple products because that belt and suspend is your ARR
[00:34:44] Toni: On the back of that question, and I'm not, not quite sure. I'm, you know, sometimes I'm good at, you know, asking the right questions in the, in the right way. But so you look at this cluster around sales engagement, , those four companies basically, right. , there's you and SalesLoft that had a similar origin.
[00:34:59] Then you have Gong that has a different origin. And then you have Clari that has a different origin, right. But ultimately all of those four. If I'm not forgetting anyone, have basically kind of built a similar suite now. What is in my head all the time when I hear gong, and I know for a fact that they have all of those.
[00:35:17] different tools. Gong is for me still a, you know, a demo recording tool. Clari for me is still forecasting tool. I'm sorry. They can buy as many other stuff as they want. It's a forecasting tool. And you and sales loft, um, probably in my head, at least for a while, it's going to remain kind of a, Hey, this is an outreach, you know, sales engagement tool, right?
[00:35:36] How do you, how do you navigate that? Right? Because this is so complex and, you know, trying to get into the, you know, the buyer's mind that now it's all encompassing. It's kind of this line extension problem almost, right? How are you navigating this?
[00:35:50] Manny: by winning. So, I mean, it's, it's just that,, it begins as a game of corner. So when I started Outreach, I was living in San Francisco, selling door to door to all the startups in Soho and in the Soho area. And word gets out that there's this new thing on the block that looks like X, you should take a look at it.
[00:36:13] And as momentum builds, you sort of grow with it. And I think we're all sort of heading in that direction and that we're trying to use, parlay our strength in where we are to capture the additional pieces of what you need to grow. And here is where points of view become important because, just saying that I have it too, it's not going to convince somebody to switch because what's happening right now is we all came to the market heavy.
[00:36:40] We evangelized a point of view that's talked about a stack and best of breed. And we told everybody that we used to buy best of breed. Fast forward to today, we're going to the back of the market and saying, forget the best of breed, buy everything from me. Right? So, that's hard. It's going to be hard to shift that market.
[00:36:55] So our point of view is that instead of selling the platform, what we're approaching the market with is that let's figure out what are your, the workflows of your sales organization. So how do you want your sales organization to perform? And then where is it performing right now? What are the gaps that you see in performance?
[00:37:15] And then we can attach solutions to each of those pieces. So our platform doesn't force us to say, Hey, you should buy the whole thing from Outreach, but we can say, look, the technical solutions that you need for where your workflow gaps can be supplanted by Outreach, but can also be supplanted by anybody else.
[00:37:30] And this is the beauty of sales, right? , the way that you approach a customer needs to be from their point of view and their problems. And then you can attach your solution to that if you did a good job in the sales cycle. But if you added value in the sales cycle itself, you should, the customer should leave that conversation smarter.
[00:37:45] And that's where we come into the point, , to the market by saying it's all about creating the workflows and how do you get tighter alignment to your dream state from where you are right now. You know, it's really interesting that back in the day, and you probably heard about this, there was this whole movement around Six Sigma. There were processes that you took from A to B, especially manufacturing, right? So GE, Evangelizer, et cetera. And what it, in the Six Sigma, I told you that you wanted to bring the tolerance of the errors down to a Six Sigma event, which is, you know, out, out, out, out on the far tails. If you look at sales, sales is not even like half a Sigma.
[00:38:20] You know, sales is, is very, you know, depending on the person, depending on the training, depending on a faster number of things and having a disparate You know, stack is actually compounding the problem. So, you know, one of the ways that you choose ICP or who you're going to be, your great customer profile for you is somebody who believes in this thesis, that your sales needs to be a system that is repeatable where everybody can win.
[00:38:46] Right. As opposed to say, I'm just going to hire great reps and, you know, let them, let them do their thing. Like you have to have a point of view of what great looks like and what is a system creation that you're going to build and then deliver that. And that's our point of view. You know, the rest of the competitors will have their own point of view and where they come from based on their marketing, on their taglines, et cetera, but ours, if you create one that is out there and differentiated and from, and helpful to the customer, that's going to help us get into the, into the full category.
[00:39:11] Mikkel: So, I mean, it's been quite insightful so far just to hear, uh, hear their journey. Also, if you've, you know, if you listen to other episodes, there's a lot of stuff So we had Dave Boyce on the show and we talked about When is it time to develop, you know, a new motion? And he said, well, if you have a motion and you can go to a hundred million, why not just focus on that?
[00:39:30] And it kind of sounds like you've been, you've been following that, uh, you know, maybe not his advice, but been following that approach. And I'm really curious because a bunch of our listeners, they're going to probably sit at 10, 20, 30 million. They're going to look at that a hundred million number that every SaaS company is initially at least, uh, gunning for once they're past 10.
[00:39:49] With all the things you've learned, maybe this is a good kind of note for you to take us home on. What are some of the things you would pass on to the listeners, to the revenue leaders out there listening to this show, that would be helpful in the journey towards 100?
[00:40:01] Manny: The time to worry about things and is when everything is working. Because right after that is when, you know, it hits a fan. So for us, we had a number of breakage points at 50, and then at a hundred where we're, I'm like, what's going on? Like things were growing, but not in the way that you anticipated.
[00:40:21] And you knew that there was a problem in the system. Right. And that forced us to go from you're selling feature and capabilities to selling. The solution to selling the value of the solution, not just the solution, but the value of the solution is going to create selling the platform. Each of those were distinct motions.
[00:40:38] And if you didn't take the whole organization through that distinct motion, you were going to hit a wall. The problem of getting to a hundred is that the moment you get to a hundred, you wake up and you have to do it again. And if you don't have a plan, doing it again, it's going to be a tough go.
[00:40:57] Mikkel: This must be like how professional athletes feel like after they won the gold medals, like, yeah, it's like next year we need to do it again, guys.
[00:41:03] Manny: Kobe Bryant said it, you rest at the end, not in the middle. You see what I mean? So like, thinking of 100 as a destination, it's resting in the middle. You rest when you want to rest. But 100 is not a destination, it's a milestone to wherever you want to go.
[00:41:14] Toni: This was Manny Medina everyone. Absolutely pleasure to have you here. Just kind of a quick wrap up, obviously very much outbound focus was actually a pivot coming out of something completely different. Like, Hey, no, this is working. Why don't we build some software around that? Uh, building up sales engagement as a category going, going, going, and then, you know, maybe this is really the inspirational message for everyone here.
[00:41:35] It's like. Well, you know, get to a hundred and then realize you just need to do it again. Yeah. It's like, no, no problem. Manny, thank you so much for being here, spending some time and, um, yeah. Have a great rest of the day.
[00:41:47] Manny: Thank you, it was fun.
[00:41:48] Mikkel: Thank you. Bye bye.