Hi everyone, today we’re talking to Manuel Medina, CEO of Outreach.io, which is hands-down my favorite sales automation tool. He’s got a really interesting outlook on building a business that’s product-based rather than growth-based, and it seems to be working really well for him. He also talks candidly about what it’s like to be a competitor in the increasingly crowded space of sales automation, and what he’s learned from meeting his competition in flesh and blood, which is something we hardly ever hear about on the show.
Realizing What Recruiting & Sales Have in Common
Before Outreach.io, Manuel had a previous startup in the recruiting space, and since recruiting is essentially a match-macking business, he noticed that not only was follow-up important, but it was essential to sound human every single time you did it.
To become more effective in their own recruiting business, they started building a tool that let recruiters scale the communication aspect of their business while retaining the human touch.
But while they were building it, they realized the tool itself would actually be more efficient in the sales realm, letting sales professionals touch as many leads as possible while sounding genuine in their continued follow up until the leads converted.
Why the Outreach.io Team is So Incredible
Manuel says that at their core, their team is all about the product… to the point that one of the things they spend a lot of time working on is the day-to-day operations of their customers.
Because some of their customers are totally bent on email automation and others are totally bent on manual, practical communication, they build their tool to suit both needs and everything that falls in between.
The majority of their team members are engineers that at the end of the day really only care about building a beautiful product that’s as responsive to their customers’ needs as possible.
In fact, they pride themselves in the fact that they do three releases per week to accommodate all the little requests they get from their customers to help make the product gets even better. Whether it’s a bug fix, a new feature, or a small user-requested change in template language or for a better-looking icon, they make those changes like clockwork.
Manuel says the ability to please even the smallest customer requests goes a long way. It leaves the customers feeling highly satisfied and makes them feel like they’re a part of your team, which they really appreciate.
Users & Customer Acquisition
Today, Outreach.io has over 180 accounts in their system, and they’re growing at a rate of about 20% per week, which is incredible.
Right now, they’re customer acquisition efforts are made up of about 80% outbound and 20% inbound sales. They flew under the radar for such a long time because they never had a big marketing effort.
In the beginning, they did a lot of LinkedIn prospecting, guessing emails, and so on to reach out to potential customers.
Later, Manuel met Jason from Datanyze, and when he started using the tool, he could be more focused on finding better prospects. For example, he would go in and sort out old Pardot users, because if somone used Pardot, it meant they had SalesForce, which meant they would be a good customer for Outreach.
Beyond Datanyze, Manuel started utilizing people who do prospecting for a living, and he says the ability to buy and exchange lists allowed him to hustle it out to get really high-quality names and companies that made the build of their outbound efforts.
Moving forward, he says that since Outreach’s products are relatively complementary, he’d like to create partnerships with people who do LeadGen for a living to find leads and continue their outbound efforts.
Outreach.io vs. All the Other Guys
Sales automation is becoming an increasingly crowded space, and more and more startups are trying to enter the market everyday.
The benefit Outreach.io has over all the other tools is that it lets you define what your cadence of touches is going to be and put that cadence into a track so it automates itself.
With the data it yields, you get to see the performance of the cadence as a cadence, and not as a series of templates you’ve thrown together.
The second thing it lets you do that the other guys don’t do as well is see the data difference between manual and automated emails (or manual and automated touches).
When you take the effort to do a manual touch, Manuel says it still needs to be scientifically driven by data, and Outreach is a tool that lets you do full automation if you want, but also allows you to mesh in manual steps as a part of your cadence to yield the best results.
Having an MBA When No One Cares About MBAs Anymore
Even though there’s a trend in bashing MBAs and saying they’re not that useful anymore, Manuel holds an MBA from Harvard and says that an MBA helps out in more ways than meet the eye.
“At the end of the day,” he says, “You go there because it’s a self-selecting pool of really interesting people.”
His MBA class had consultants and managers just like the rest, but it also had people like the mayor of a city in India and a Egyptian politician. He says he studied alongside a number of incredibly fascinating people that gave him a broader perspective of the world.
“It’s sort of a degree of humility that is hard to grasp,” he went on.
In addition, he said Harvard in particular put a lot of emphasis on the way they taught, really emphasizing leadership.
And even though leadership has become somewhat of a wishy-washy term, he said he learned things like how to properly lead teams, what incentives look like, and so on – things that are typically overlooked in the core curriculum of a typical MBA program.
Meeting His Competition in Flesh & Blood at SaaStr
Both Manuel and I agree that the SaaStr conference had one of the highest-quality attendee lists we’ve ever seen.
For him though, going to the conference was particularly interesting because it meant that he met the leaders of the businesses competing with his face-to-face.
But rather than being intimidated, he found it interesting. At the end of the day, they’re all in the same boat, sales automation is still in its infancy, and they’re all trying to help the same group of people become better sales professionals.
“To see what each brings to the table was very, very interesting,” he said. It also gave him a forecast on how the different tools would evolve moving forward.
One Big Struggle While Growing Outreach.io: The 1/2 Year Battle With Reply Detection
“Unequivocally, the biggest struggle was getting reply detection right.”
Without getting too technical, Manuel explained that there’s two ways to do reply detection.
Neither one is perfect, and since Gmail and Microsoft Outlook have done completely different things with email’s imap protocol, there’s essentially two totally different protocols you have to work with.
It took Outreach six months to get their reply detection to work correctly, and now they’re the only service (with the possible exception of RelateIQ) that does a good job with it.
Based on the complaints they hear from prospects about reply detection with other sales automation companies, they estimate the other tools miss anywhere from 10% to 20% of replies, whereas Outreach.io only misses one in 5,000 (or 0.02%).
Hiring & Team-Building Secret: The DNA of a Company
“I think the first secret [of hiring a great team] is that our co-founders are developers,” said Manuel.
“The DNA of a company is made of the cofounders.”
For example, he says that SalesLoft and Cadence are outgrowths of their founder, Kyle Porter. The tools he sells involve everything a sales person is supposed to be doing because he has the process down in his head and he’s putting it out in his software.
But for Outreach, since they have technical DNA, they decided to bite the technical challenge first, which is the drive that sets them apart from the competition.
CEO Lessons from Working Directly Under Jeff Bezos
Earlier in his career, Manuel was one of the first few employees of Amazon Web Services. It was way before the cloud was a thing, but it was an idea Bezos wanted to pursue even though everyone was pressuring him to stick with selling books and DVDs.
“I think part of leadership is to be both detail-oriented without being a micro-manager, but you have to understand the details,” said Manuel.
Since their team was small, they reported directly to Bezos on a weekly basis, and the way he managed the team was to have a deep understanding of the problems, and having the team report directly to him until the problems were resolved.
In the reports, he wanted know the specific details of how the engineers on the team were architecting the software to solve the problem.
Manuel said he learned that it was important to know what makes your customers tick, what makes your software tick, what makes your team tick, and to understand your overall strategy.
Being on the Brink of Failure for Two Months
“We’re all on the brink of failure at some point, especially when we’re small,” says Manuel. But he doesn’t necessarily believe in being on the brink of failure.
He says he’s a big fan of Nassim Taleb, who makes the point that when you’re small, the high risks you have to take actually make you stronger. When you deal with the risk, you learn to do whatever the task at hand is really well, and after that, it’s not a problem anymore.
At one point though, shortly after they’d signed up some beta testers for Outreach, one of their co-founders said they’d never be able to fix the reply detection problem unless the went back and recoded the entire thing… which would take two months.
At the time, they barely had two months of runway, but they still decided to pull the product from the beta testers, which was a really scary move.
But the moment they made that decision, they continued to fundraise so they wouldn’t be totally out of cash after those two months were up. Because of this, Manuel knew that the absolute worst case scenario would be to take a pay cut for a short time and keep going anyway.
Advice to His 25-Year Old Self
“Surround yourself with good people.”
“Start looking for potential cofounders early in your career.”
“Finding yourself instead of chasing the glitter and glamour is very important when you’re that age.”
Manuel says he’s never seen calendar reminders to follow up work well, so it’s important to figure out a way to do follow up on the spot.
He says you either need to book a time in the day to follow up on your emails, or get a tool like Outreach to automate the follow up for you.
Follow up is incredibly important: you usually need to do five to six follow ups to get a proper reply rate, and Manuel’s said that he’s noticed even the warmest leads require four touches to get 75% reply rates.
One Must-Read Book
Manuel recommends New Sales. Simplified. by Mark Weinberg.
Since he doesn’t really see himself as a natural sales person, he says the book changed his life on how he thinks about sales.
Weinberg recommends approaching sales with the mindset of the doctor: to diagnose to see if you can help someone and how you can help to prescribe the right medicine for them.
It’s an older book written a long time ago, but Manuel says it’s as true as they come.
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Eric Siu (@ericosiu) is the CEO at Single Grain, a digital marketing agency that focuses on paid advertising and content marketing. He contributes regularly to Entrepreneur Magazine, Fast Company, Forbes and more.