In this episode, Outreach Founder & CEO Manny Medina shares how he and his team have not only built a company that delights its users, but also allows employees to bring their full selves to work. He discusses his perspective on conscious leadership, practicing radical honesty with oneself and teammates, the importance of vulnerability, learning to speak your users’ love languages and more.
Christopher Lochhead:
Thanks for pressing play. Welcome to Conscious VC, where we have real conversations that explore how to build businesses that shape the future while making a giant difference at the same time. Hosted by Navin Chaddha, managing partner of Mayfield, and me, podcaster and author, Christopher Lochhead. Today, Navin and I are glad to welcome Manny Medina, who is the CEO and founder of Outreach. And Outreach is on a tear. They are pioneers in the category of sales engagement, and recently they closed a $200-million financing round at a $4.4 billion valuation. Prior to founding Outreach, Manny was employee number three at Amazon AWS. And prior to that, he led the mobile division of Microsoft.
What you’re about to hear is a riveting conversation about Manny’s unique point of view on leadership, mission, conscious capital, why making end-users happy matters so much, and pay attention to this, why developing a love language in business matters. Enjoy. Well, Navin, it’s great to see you again.
Navin Chaddha:
Absolutely, it’s a pleasure. And it’s a pleasure to have Manny Medina, founder and CEO of Outreach with us here today, Chris.
Christopher Lochhead:
It sure is great to see you Manny. And we must congratulate you on an extraordinary financing that you just completed.
Manny Medina:
I appreciate that. Happy to be here.
Christopher Lochhead:
Congratulations. Now you have a couple extra bucks laying around to do stuff with, huh?
Manny Medina:
That’s right. That’s right. Hopefully this is my last private fundraising. I bet I say that every year and then my wife holds me accountable to it.
Christopher Lochhead:
Well, does that mean there’s an IPO coming?
Manny Medina:
I can’t tell that. It’s at least my last private, I can’t tell you that much.
Christopher Lochhead:
One way or another.
Manny Medina:
One way or another, I’m done.
Christopher Lochhead:
Now, you’ve taken a pretty strong position that people should, “bring their whole self, bring their full self to work.” A, what do you think this means, Manny? And B, why do you believe this?
Manny Medina:
The way that we lead here and the amount of production and outcome that we look from each other, that we demand from each other, that we expect from each other, on behalf of our customers, is very high. It’s a very high bar. Working at Outreach is a hard job. So sometimes that means that you’re going to be working longer than the regular 8 to 5, that you got to put in some hours on the weekends, you’re going to be putting some hours at night. You got to be working on that problem that requires your thinking. So maybe you’re not working on it, but you’re thinking about it. In the shower, when you’re at home, when you’re in bed, when you’re running.
So if I’m getting the full self when you’re not work, why should I not allow your full self when you are at work? I think otherwise it’s about trade. And I think that those who are saying that, I’m only going to get your analytical thinking, and your analytical hands, and your analytical mouth to come into the office or to come into Slack, or to come into Zoom, the rest of you needs to stay at home and you can have that situation at home. It’s just foolish. Or like we say, in Spanish, you’re covering the sun with your one finger, and the sun is still out there. You’re just not seeing it. And I think that a more productive vein of conversation is one in which, what are the boundaries? What are the cultural ethos that you take into account when you have these conversations?
For instance, you don’t have this kind of debate on Slack. Slack is not Twitter, right? You find spaces to have a group of people that want to talk about your subject and have at it, right? So you create a little zoom room, and you invite people, hey, who wants to talk about Black Lives Matter? Who wants to talk about voting rights, who wants to talk about LGBTQI, who wants to talk about those things? And get together in a room and talk about it, create affinity groups. And they don’t even have to be affinity groups. It could be discussion groups, but then you set the rules of the discussion groups, you’ve got to respect each other. You got to assume the best intent, you got to meet where the other people are, you got to respect the nuance.
You got to honor the nuance. These issues are nuanced. So you can’t solve the Israeli-Palestinian conflict in one conversation that doesn’t exist. So as long as you have the cultural norms establishing being lived, then you can promote the whole self to work. I feel like saying that you’re not going to bring it, means that you haven’t built a culture that allows for, full, honorable, respectful, loving discussion with the rest of your crew. And if that’s a culture you choose to build, I mean, that’s fine, but we’re not Coinbase. We like to bring your whole self to work because you cannot go and think about those things at home. And we don’t run a transaction company, we change people’s lives. We change people’s businesses. We give each other and ourselves to our customers. So I expect the whole of you, and you’re going to give it to us, but I also expect you to bring the other grief and the other societal issues and worries that you may have.
Christopher Lochhead:
Now, I’m curious as a founder and CEO, Manny, you can get yourself in a lot of trouble with some of these positions. Because you could say something on a topic, if you think about the last year or so, you could say something on Black Lives Matter, defund the police, getting vaccinated, wearing masks, not wearing masks. All of these things have become political and huge social topics. People are very hot and angry about them. And so if you come out and say, well, you’re for this or against that, you could potentially piss off 1/3 to 1/2 the potential prospect base and employee base that you’re trying to recruit.
Manny Medina:
Yeah, no. And this is why it’s an uncomfortable place to live, perhaps, but you have to be true to yourself. And that reflects how you present yourself, and how you carry yourself and how you show yourself. I think in the end, your trueness will attract other like-minded people and it will accrue to your recruiting to customer growth, et cetera. I mean, you can say same thing about Benioff, right? Benioff stood against the Indiana legislation that was against the LGBTQ community. And he came out ahead. So I think what you need to stay away from is this one liner slogans that defines your position. Is wearing mask a Republican or Democrat issue? No, it’s just safety. And it’s safety until we know what’s safe and what’s not safe.
Does the Black Lives Matter? What kind of issue it is? No, it’s like this baggage of racial oppression that we have that we just have to deal with. So I don’t know. I think that we all need to work on taking away the emotion, but my job as a leader in that, what I think is more important question is what do I do as a leader? My job is to educate everyone as to what are the issues that your coworkers care about, so that we can meet each other where they are. And then we can have productive conversations. And in those productive conversations is the only way you’re going to build trust. And you’ve got to build rapport. One of the seminal pieces of work that I read is a book called Honest Signals by Sandy Pellman.
And he makes the argument that the only way that you’re going to remove all the friction between human beings working together is to actually discuss meaningful topics. That’s how you’re going to learn how they react. That’s how you’re going to learn their facial expression, when they’re angry, when they’re happy, when they’re sad, when they’re thinking, et cetera. It’s by getting into it about things. So you can only do it at work, but that gets boring. I’m going to tell you, you’re going to talk about other things and it’s fine. That’s productive. You’re building teams, you’re building rapport, you’re building community, you’re building culture.
Navin Chaddha:
Yeah. And I think Manny, what I love about you is, you’re really authentic. You have an authentic leadership style and my belief is, any company or any leader needs to start by being authentic. They need to operate as conscious leaders who combine empathy and radical candor and bring their employees and their customers into their zone of trust and respect. But I wholeheartedly agree with you. If you’re a company that is people first, it’s all about the people and getting them into a zone of comfort where they can engage in a discussion and getting their perspective out, you’re then making them work at the top of the Maslow’s hierarchy. That’s what you want. You don’t want people to be worrying about, “Hey, am I going to get measured? Am I going to have my bonus if I said this?”
No, be yourself. Be authentic. And if that’s the mission and those are the values and the culture of the company, I think Chris, I don’t know what you’ve seen. I think I see people do their best in those things. They’re not defensive. And you want those kinds of people, right? Who can lean forward and say, “Hey, it’s okay to disagree.” Right? “It’s okay to bring my perspective forward because my voice is actually being heard.” And they want to go work for those companies. And they want to work for leaders who give them voice. Now it might be right, it might be wrong, but they’re not hiding stuff. It’s on the table.
Manny Medina:
Yeah. And it’s important to recognize that this is not like rainbows and kum ba yah, and we’re just giving each other hugs all the time. This is hard. The whole point of Brené Brown’s book is that being vulnerable is hard. That’s where the hard conversations go. And usually the problem with not being vulnerable is that you create this facade that gets it hard to be coming to agreement. So you can’t ask somebody to disagree and commit, if you haven’t been vulnerable with that person, if that person hasn’t been vulnerable back, because you have no idea what they’re agreeing to, you have no idea how hard that agreement is. You see what I mean?
You have to recognize, and honor, when somebody disagrees with you vehemently and still decides to go forward with a plan, how hard that was for that person to walk into your plan and eat their own disagreement. That is what really creates the culture. And that’s what creates a momentum, those are coins in the bank if you would have trust that, that person came and met you in that side and you acknowledge that, and you see that person has fought for what they gave you. And you honor that trust.
Christopher Lochhead:
So I find this conversation fascinating. And it leads me to a place in my mind, which is I’m concerned that in the public forum, around what you might call society design and around political discourse, that we don’t have discourse anymore. We have yelling. And there’s a word that used to be a popular word that we don’t hear anymore. That word is conversationalist. Used to hear people say, “Well, I’m really trying to be a better conversationalist.” And of course, being a conversationalist requires two things. Well, it actually requires three. Listening, and speaking, and probably most importantly thinking.
And yet for the most part, we live in a world where what most people call listening is actually called waiting to talk. And there’s actually very little dialogue. And most people don’t give a… you know what about authentic dialogue. All they care about is winning a debate. So they get their way. And so I’m curious as a startup founder, somebody who just raised tremendous amount of money, and a massive market cap with big dreams and big plans for your business, how do you cultivate a culture where people can have real dialogue and really be conversationalist?
Manny Medina:
So I was blessed and cursed of having three other co-founders, who are drastically different than I am.
Christopher Lochhead:
Is it more cursed or more blessed?
Manny Medina:
It’s like we’re family, right? You’re blessed with your siblings or your parents or your crazy uncle, you get the good and the bad. And that’s the beauty of humanity, is that it comes in these neat packages where you get both. And my co-founders would just not take me at my word many times. They will not. They will say, why? Or like either you’re crazy, this is stupid. Let’s go fact check. Let’s go figure this out. It is incredibly frustrating to start a company like that, but this is a slower path of building a company, versus the utter new man, super guy is Manny, everybody gets behind me and let’s go build an empire. No, I had to actually explain my way through it.
And when you build a company like that, you build it in the core fundamental values of the four co-founders, and then the people who come behind it, so there’s this element of honesty. And when we have honesty as a core value, but honestly actually began as honesty with yourself. You need to check yourself that you’re not full of BS, to be able to open your mind to new ideas and to grok that you may be wrong. Look, 99% of startups fail. So your way to navigating away from this failure is to have an incredibly open mind and be ready to take the feedback in massive amounts. And a lot of it is not grateful to you, is grateful to the facts on the ground, but it’s not grateful to you. So we cultivate it from the very beginning this sense of honesty. And self honesty and self-evaluation, and the ability to be open to other ideas.
And we did it by having hard conversations of all sorts. I joke to my teams now that half my co-founding life was break design fights. I’ll have my front-end developer and I’ll have my mother who is a designer. And then we just get after it. And I will be the break in tie and I say screen, or it’s rounded or whatever. But the other fights were more fundamental in which we actually were learning from each other. And we designed the garden in that way. We want these all sorts of plants because these kind of arguments help us get better at the other arguments that we haven’t had yet, but we will have, that will be harder to resolve.
And for us to be able to resolve those arguments, we need to get through these baby arguments right now. So this ability to be honest with each other and to be honest with ourselves, helped us have a very open mind that we can always be wrong, and that we’re fallible, and there’s nothing wrong with it. And to be quick with owning our mistakes and saying, look my bad, help me get better. Let’s move on. And when you build a company from that core, everybody who comes after, has the same open and honesty and transparency about themselves. And now we make it an attribute of hiring. If I cannot identify you, how are you self growing, how are you self-correcting, how are you calling your own BS, how are you introspecting on what you just did? This is just not a place for you. And if you hire a large, vast group of people almost a thousand people who look like that, then you’re winning.
Navin Chaddha:
Yeah. I think Chris and I are firm believers, right? In not beating around the bush. And we had a great conversation with the author of Radical Candor and the whole topic was how do you care deeply about each other and create a culture where the other person knows you care about them, and you’re watching their back, but you’re going to challenge directly. Right? It’s all about winning and doing the right thing. And as a company, not as an individual. So it’s better to go wrong, but have the company go right. And that notion essentially leads to teamwork. And the belief, all of us are better than any of us. And it’s fascinating, right? You and I haven’t chatted about this topic on how much in sync I am with that. Because when you run a VC firm, like I do, you’ll have partners and all of you sit at a table and there’s seven, eight, nine of us.
And you sit and you’re discussing a deal and people can get emotional. Should we invest in it or not invest in it? And my point to them is guys, “Hey, we’re just sitting down, we haven’t invested in, is let’s just relax.” We have a sparkling bottle of water. We have mineral water. We have regular water. We have diet Coke. We have Coke. We have Sprite, we’re just brainstorming. We should invest if we have it all.
Christopher Lochhead:
Do we have any whiskey, Navin? I think I might prefer whiskey.
Navin Chaddha:
Yeah. I think that’s not on the Monday discussion table to work for, it’s in the evening. Right? If you will. And my point is, if you can make the conversations less objective, and focus on making the best investment, at that point, you get the best out of people. And then it’s a conversation. It’s not about my deal versus yours. It’s about doing the best thing or doing none. And I think once people get on that page, get on that culture just wonders happen, right? Wonders happen because you’re not looking after the deal you brought, you’re looking after what should Mayfield invest in. And once you invest, we are loyal to a fault, and Manny can relate to it. We just go, right? But most of the time, we are the first money in, and we don’t exit. Even if the company exits for a while, even in an IPO, we just keep going.
So our mission is how do you be the first money and the last money to leave? And I believe if you can build that kind of a relationship with your entrepreneurs, they know you care deeply, but at the same time, you’re going to challenge them. But do you want to be their safety net and go with them all the way? And when I see CEOs and founders do that to their employees, to their co-founders, just wonder happens. It’s a winning formula of creating a built to last company. And I think Manny has been successful. And I was joking with him before we started, “Hey, you’re sitting at 4.2 billion valuation. It seems like yesterday, but I think it’s beginning of the next journey.” And Manny, you should say what you told me.
Manny Medina:
Yeah, it was hard getting here. The valuation is nothing but the expectation of what you’re about to deliver, right? So now somebody actually wrote it down on paper and said, “Look, you owe me this valuation. You owe investors to be a company that lives up to this standard.” So now we sign up for that. That’s what’s ahead of us. I’ve read this somewhere that there’s four levels of motivation. And I feel like we have lived through all of them. So you can be motivated by fear, which is the natural motivation of a human being, which is protect yourself. And we weren’t about to fail, we were a pivot and we brought out a cash and this is how we invented Outreach, but we weren’t about to fail. We were just running on fear.
Once we found product-market fit, there was a slight moment in which we were running on greed. Like, Oh my God, how big can we make this, we’re all going to be rich. And then it was a moment right after that, when we found that people’s jobs and people’s performance, depending on Outreach being on point, being up, being running, being easy to use, being accurate, being reliable, et cetera, you move from that point of operating out of greed to operating out of duty. Because now you have a thousand customers that depend on you. We have 120 thousand active users every day that show up in the platform that are here to make their customer successful and to make money. Those people don’t make money if we’re not up.
I remember the first time we had a massive outage, I got a call from a VP of sales in New York saying, I just send my team to lunch, it’s 11 o’clock here in New York. I just send everybody to lunch because your stuff is down. It needs to be up by 1:00 PM when they come back or nobody’s going to eat here. So that puts a different motivation to you. When you have dependencies and you are that dependency. And then there’s the next one, we’re still working on getting there, which is being motivated by love. By the love of the game, by the love of your users, by the love of what they do with your platform, by the love of what you’re seeing your creation turning into, by releasing that into other people’s imaginations. And I feel like every company should be somewhere in that spectrum in operating out of duty and operating out of love, because then that changes how you think about things. That changes your decision making frameworks, that changes how you interact with each other and whether you’re there for your customers.
Navin Chaddha:
Yeah. And I think we had… Chris remember, Manish, the founder of Poshmark on this series. And he has built Poshmark on leading with love with the community. And it has become, now it’s a public company, a massive scale community with like 70 million users. And that’s where if companies can go, where their technology or software becomes something that people are depending upon and they feel they’re getting love, they’ll give you back love. Right? Wherever they go, whichever company they work for, they’ll take it with you. And that’s a powerful place to be because now you have built a bi-directional bond essentially between your customer, and between the vendor, which is pretty rare. It’s very, very rare because it’s a very hated relationship usually. Right? People feel, I’m not getting the value, you’re charging me too much. And that’s fair, right? I would like to understand from your perspective, right? I don’t know if you’re sharing the number of customers, but you shared. How many users do you have right now?
Manny Medina:
120,000.
Navin Chaddha:
120,000 users. So what do you do for them? Right? Like how are you making them super humans? Right. That’s what I believe. And I look at, and I talk to our companies and say, what do you use only towards Salesforce and Outreach. Any salesperson that I talk to tells me, and they love what you’re doing, but they are hesitant to use Salesforce. And I know you may not want to comment on it. I can because that’s what… I’m not a competitor to them. And they’re a great company, but salespeople just use these two products. Right? But they look at one as your repository system of record, but they sit in your product and say, this is how I do work. This is my system of engagement with my customers. So what do you think that your software is doing, that customers love you, and why is it essential to them?
Manny Medina:
So it’s a great question. And I’ve got to approach it from a couple of angles. First of all, we always set out to build an application that makes the end user happy. Not their manager, the end user, which is really hard to do in B2B SaaS. Right? Because your end user is not the one who’s paying you your check. He’s not the one who’s buying you. So building end user applications don’t have a sales model. They have this adoption model that eventually enough people buy and you get enough sales because there is momentum like that. We decided to build an application that is for end-users, but irrespective of who the buyer was.
And that was really hard. But then when you made that jump, which was not obvious, then you are accountable to that end-user. And to that end user, you need to be all things. You need to be easy to use, just like Slack. You need to be reliance and performing just like Salesforce, but you need to show them what have you done for them lately? Pretty much every day, because they can just stop using you from one day to the next and all of a sudden, yes, we have yearly contracts, but you can see our usage going down and that’s a prediction of a churn. So not only have to make you better, I have to show you how I make you better. And remind you every morning, how I made you better last night.
So it’s a little bit like being in a relationship for the long term. You know what I mean? Each of those, you need to speak each other’s love language at all times. You know what I mean? So for some of them, the love languages generate meetings for me. And that’s a love language. For some of them, their love language is I want to see how many opportunities have you generated for me. For some of them, their love language, I don’t want to ever want to touch Salesforce again. So I want you to do all my Salesforce thinking. For some other love languages, I want my manager of my back. I want to report so that my manager can see so that I don’t have to talk to them.
So just like we have love language, our individual users have love languages, and then we have to provide for all of them. Some of them are important. Some of them are not as important, but they’re all there. So we build the application that way. Now the second piece is that, when you build an application that way, we also went to market that way. So before we raise around with Mayfield, we got to our first, almost half a million dollars by selling to individuals. So I will call you, Navin, and I wouldn’t say, hey, it would be great if Mayfield bought this. Well, I would say, no, it will be great if you bought this tool. Because I’m going to make you money, right? I’ve got to make your meetings successful. I got to send you home earlier.
I got to remove the grind from your job, and that will find whatever your love language is and find that and we pitch you. And the best way to find product market fit is to make the end user part with their credit card. And once you do that, you know you have product market fit. If you’re making that end user successful. So for us, it’s always being about making the individual successful and now that we are this size, that supersedes making their manager successful because managers also have a love language, right? They want to spend time doing the stuff that they love. And they’ll say stuff that they don’t, right? So they don’t want to start reminding every rep to put their stuff at Salesforce.
They just want to see it done so that they can coach and work on deals and do the hunting and stuff. And the same thing for the VP, right? The VP wants to see forecast. They don’t want to have to worry about whether the rep is doing whatever they’re supposed to be. So all these actors have this innate like value functions, love functions that we cater to. And we’re just very disciplined in making sure that we’re building that, selling that, and marketing that.
Christopher Lochhead:
So I find it fascinating here, gentlemen that three guys, manly men, are having this conversation about love in the context of starting a technology company. What’s going on here in this conversation here, boys?
Navin Chaddha:
I think we are working at the peak of our Maslow’s hierarchy. Basically, we are at a place where we are demonstrating who we are as humans. We are demonstrating vulnerability and we are playing to our strengths and playing to our passion. I think that’s what it is. And when people can get to that state, that’s when growth happens, right? That’s when companies grow. That’s when leaders grow, that’s when co-founders grow, that’s where your VC and board members grow. And to get to that place, it’s not an easy place for folks, right? It’s not an easy place. And it’s similar this conversation to Chris, what you and I are doing about conscious capitalism, right? It’s not easy. It’s not easy, but if that’s what is driving you, you just go do it. If the aim is, right, like if a company not to provide tools to essentially cut jobs, not displace humans, but to make them superhumans?
That’s where the next 5,000 billion dollar company is going to get created, right? Because people, if you make it like a utility for them, when they wake up in the morning that if electricity isn’t there, what are they going to do? And I think Outreach is that kind of a utility for salespeople today. That it’s essential to the way they operate. It’s their operating system. It won’t. It’s like windows, you log in, or Mac, you log in. Similarly, like if I’m a salesperson, I want to do my job, I better love this product because that’s where I’m going to live it.
Christopher Lochhead:
Now I’d be remiss, Manny, if I didn’t ask you, you have carved out a distinctive category in the broad mega category of CRM. You’ve created a new space for yourself. And so I’m curious how you think about designing and creating categories.
Manny Medina:
I think we’ve spent more time talking about it than doing much about it. I think that this whole category creation construct is something you are awarded once you’re there. And there’s no clear path to get there. I think that you need to find ways in which you are deploying your capital and innovating on behalf of your customer. And we have these milestones here, we work back from customer need, of course, but we always try to see what pace are we solving that are durable in time? The problem is going to be there forever that have massive markets so that we can continue to invest in and grow and get operating leverage.
And the third is that, we have a good shot of creating a differentiated experience. So what is fundamentally broken right now, we have a good insight to not only break it, but change the paradigm. I think it wasn’t the hard things over the hard things in that book and where, I don’t have a silver bullet for it. I just have a bunch of lead bullets. And I just shoot each of them very deliberate and very carefully. So we will brand around this thing, right? So not only we built for the end user, but we take pride and make it a thing. So when we do our conference, which is Unleash, we decide the greatest experience for end-users to come and mingle with other end users in the context of a sales kickoff, right?
Imagine your best self kickoff, your best yearly kickoff of the year. And we knock it up three notches up, right? So for instance, our first user conference was pretty much templated, out of the Tony Robbins Unleash the Power Within show. So it was managing energy and it was like boom, to boom, to boom, to boom. And then we sent you to take a break and then you come back for another dose of energy and strength and making you feel good and making you feel challenged, et cetera. So we built this entire aura around the product, the experience, our branding, our persona, our co-founders, our leaders that gave you the full experience. And that becomes a category. Then four, it turns around and say, look, that’s a category that needs to be taken seriously, or gardener turns around and say, that’s a category. And now the investment bankers turn around and say, that’s a category of their funds and they call it a category.
Navin Chaddha:
And Chris, you are like one of the best person, right? Like who has worked on creating categories and is helping others do that. What is your view on this stuff? Right? I think you’re the one always asking us. Now, it’s my turn to ask you, right? What have you seen which makes companies build to last, right? We’d love to just hear your summary views on that.
Christopher Lochhead:
Well, I thought you’d never ask. I think there’s an aha, and the aha is most companies in the tech world are very focused on what you might call product design and company design. And those are the two big levers that they pull. Let’s build a legendary product and legendary company, which often includes culture, often includes business model. And if we do those two things, the world will beat a path to our door. And it turns out that’s not what the most legendary entrepreneurs and innovators do. They do a third thing, which is they’re very thoughtful about designing the market category. That is to say the way market categories work is not an accident. There’s a reason a high-end pair of sunglasses cost $350. And there’s a reason, a relatively high quality flat panel television costs $150. Somebody designed it that way. We are taught to value everything we value, and we’re taught how to value it.
And so if you take that perspective, there’s this aha that says the most legendary entrepreneurs pull three levers, product design, company design, and category design. They teach the world how to move from the old, to the new and establish a new value in doing so. And as a result, they become the leading company to dominate that category. And it turns out when you do the research and we did, in the tech space, the category king, the category designer, if they can execute product company and category, earn 76% of the total market cap available in the space. And so, Manny, you were talking about how very few startups are successful. And I believe one of the main reasons is, most entrepreneurs fall into a we’re better than them trap, as opposed to we’re different than them trap, and the different companies carve out their own space. Everyone else, whether they realize it or not is only competing for 24% of the market opportunity. If they’re not trying to design the category.
Manny Medina:
That’s a fascinating insight. I was literally talking to another company where they asked me, if you were to pinpoint a singular point of growth for the company, that was a little bit of inflecting, it was when we stopped selling features and we stopped selling solutions and experiences. What is it like to be an Outreach customer? What are we solving for you? What are other Outreach customers get, feel, outcomes? And once we started doing that, it changed the mind completely. Right? But doing that took us about a year. It took us about a year to get reps to stop talking out features, to get our marketing to stop talking about our features, get support teams talking about our features. To get ourselves to stop talking about our features. But it was a really hard trick to execute it.
Once we did, it was the growth. It shot up exponentially. I made this point to Premji this morning, we are larger than the entire category combined right now, take all our competitors. We’re not even a bucket. And we’re about two to three times larger than them, in terms of market valuation. So your point is absolutely right.
Christopher Lochhead:
And it happens over and over and over again. And the companies had fallen to the competition trap. That is to say, they think what they’re doing is fighting for existing demand. They don’t realize that companies who fight for existing demand, will always lose to the company, creating the demand.
Manny Medina:
Yeah. When people ask me what is our biggest barrier to growth, and it’s the fact that there is… So there’s 30 million B2B reps in the world. We have about 120,000 of them. The entire category has another, 100,000 of them. So as a combined entity, we have less than 250,000 them. So less than 1% of the market is penetrated, which means that we are… If you look at the crossing the chasm chart, it’s still in the early innovator. We’re not even an early adopter yet. We’re in an early innovator. We’re about to get into an early adopter, which is 5% market share. And then you cross the chasm into the 15 and 20 or whatever. Exactly. So when you’re that early, what you have to do is, you need to pull demand forward from the other side, right?
So you need to pull demand forward from the early adopters, you need to start getting the late adopters excited. So that, that generates your pipeline for one or two years out. Right? If you’re not doing that, you’re not growing, you’re not playing real growth. All you’re doing is swimming in this red ocean of like tech company, going through another tech company, going to another tech company. And essentially to me, we came to the market, the market was already busy. I actually met one of my largest competitors at a Mayfield event. The market had already very large customers, but they never redefined the category to be something larger than a bunch of I think the book is called a bag of doorknobs like that. It was always a bag of doorknobs. Whoever had the biggest bag with a bit more door knobs, sort of won, right?
Christopher Lochhead:
By the way, I have to tell you, Manny, that story is from my book.
Manny Medina:
I know, this is what I’m saying. So like from the Play Bigger book, it was always this bag of doorknobs. They were always playing like, who can have the bigger bag and put the door knobs in it until somebody said, look, no, we’re selling workloads. And it’s all about the intimate solution and what you get out of it. It’s all about selling outcomes. Not these bunch of knobs. So, I don’t think we’re geniuses. I mean, to be frank, this is why I hate the word design because it sounds like, Oh, we came, I’m the architect, that came with a slowing rope. And we saw the world, we went to the future, came back and decided the category. We stumbled into it.
And we re-read the book like every year to see what we’re doing wrong. And like, we were doing everything wrong. So, it’s really hard to design the category because you only know that you sign it after you’re on the other side of it. And the category has to be created and be like, oh, look at all that we did. And we didn’t know we were doing, but we’re roughly right.
Christopher Lochhead:
And that actually, Manny, brings me back to where we were earlier about dialogue and discussion and bringing your whole self to work. I was recently reading in HBR a fascinating piece about how to change people’s minds. And the story that was being told was of Steve Jobs. And most people today look at him and go, “Oh, he was this incredible visionary. And he made these declarations and stuff happened and all that.” And in the article, they point out how flexible Job’s mind was. He absolutely did not want to do a phone. His team talked him into doing a phone. He was adamant, vehemently adamant. “We’re not doing an app store. It’s just our technology.” They’re like, “No, no, no, we got to do an app store.” Right?
If you think about just those two decisions, right? The guy we all put up on a pedestal, rightfully so, but we’ve now imbued him with all these super powers that are stupidity. Right? The reality is even the guy that we look to as sort of one of the greatest innovators of all time had to be “talked into multi mega billion dollar ideas.” And so I guess with that, I’m curious how you as a CEO, how do you know when to listen to your team and when to go with what you think is right even if what they think is right, is diametrically opposed? How do you know? How do you make those decisions?
Manny Medina:
I wrote a piece a long time ago about imposter syndrome. And I suffer a lot about imposter syndrome. Every day I show up to work. It’s the biggest job I ever had, so who am I to be running this company? Right? I mean, can I just go to the board and say, look we need a guy who knows what they’re doing. And that’s debilitating, but sometimes I use it too to keep my mouth quiet and keep my mouth shut, and not assume that other people know better than I do. Because we hire an incredible team that is very experienced, especially in B2B Saas, that can bring very good perspective, very good ideas.
So I let my imposter syndrome take over a little bit and run things, and let me sit back and listen and see if I can learn from the discussions that are happening. And I use that to my advantage, to be a better listener, to listen, to really understand, to listen, to really get their ideas, to listen, to really get even help inform them better. So I feel like this is why I’m a better runner of a company and growth, than I’m a better than a startup company. I think I looked into a great idea and now I am much better at getting good ideas out of all the people. One of my favorite books is Team of Teams by General Stanley McChrystal.
And in that analogy, I’m more the gardener. So I’m walking around removing weeds, making sure that there is enough fertilizer and water and everybody’s getting a fair share of sun and there’s a good complimentary set of plants that are protecting each other that forms a good viable ecosystem. So that’s how I see myself. I’m always tinkering and with a patch, if you would, than leading from the front.
Christopher Lochhead:
Well, thank you for that. And I know we don’t have you for much longer today, so I’m curious, gentlemen, what’s on your mind as we wrap this discussion?
Navin Chaddha:
I think for me it’s always been, right? How do we build business for better, than business as usual? And how do we create an environment where we’re all focused on rise of the individual? So everything I am focused on right now is can we build business for better? And how do we essentially invest in companies that are empowering individuals, that are making human superhuman? So those are the two things which are driving me every day.
Manny Medina:
I wonder how, whatever I’m doing is not going to work. I’m a huge fan of American history because I’m not from this country, so I learn a lot. And this constitutional democracy experiment that we’re running, because monarchies have lived a lot longer than democracies have, how long is this going to work? And in terms of how that turned for me, as a leader of the company is, as we’re seeing our opinions getting more and more polarized, how long can I have a culture that allows you to bring your whole self to work and have this vibrant discussions and bring your whole self and where does it break?
It hasn’t broken through a thousand people, but does it break at 10,000 people? Does it break at 5,000 people? Does it break… I was talking to the people at Amazon and when Jessica Mack supporting Black Lives Matter, there was a good contingency of people who were upset about that, who do not agree with his point of view. And how do I continue to do this that I’m doing, this experiment and this bring your whole self to work and where you can have the conversations and we can create this space, where does it break? What needs to happen for us to not break? How do I scale this culture up? And how does it translate in other languages and other cultures? So I spent a lot of time thinking about that, because I haven’t done it before. So just going with it.
Navin Chaddha:
What about you, Chris? What are you thinking about?
Christopher Lochhead:
What I was thinking about is this imposter thing. And I had an aha, we recently did a newsletter about what some people are calling a YOLO economy. YOLO standing for you only live once. And there’s some research that came out very recently from Microsoft of all places that said 50% of people they surveyed are looking to change jobs in 2021. And there’s a lot of people who the pandemic has forced existential questions for most of us, in our lives, in our careers, in our work. Anyway, one of the ahas about taking control of your career, having agency now, this old paradigm of I’m going to work my hoo-hoo off until I’m 65, retire and that’s my reward, that’s not acceptable. I want to love my life all the time. And I love my work every day.
And so, how do you go YOLO? How do you have a life worth living now that is rewarding along the whole way. And so, as part of that, I was thinking about this imposter syndrome, as you were talking, Manny, and here’s the aha we had writing this letter. Which is, most companies hire people based on their past performance. And they get valued that way and paid that way. And they have a job spec and a series of background, and an education, and a career trajectory and titles and the like. And I was having this conversation with a young finance executive. She’s being hired to be the number two person in the company going public. And I was telling her that the offer was a low-ball offer, and that she needed to go back and tell him it needs to be double what they’re offering her.
And she says to me, “Yeah, but Chris, I don’t have any of this experience.” And I said to her, if they wanted a been there done that person, you wouldn’t be up for the job. They’re not hiring for somebody’s past. They made a decision to hire potential, not past. Because you don’t have the past. And that’s like a company swapping out its investor base, from value investors to growth investors. And so what I was thinking about Navin, was I think a breakthrough here in this imposter syndrome is, well, sure, Manny, you’ve never run a high growth startup that’s just raise money at a several billion dollar valuation. That’s hopefully on its path to an even more exciting, et cetera, et cetera, et cetera. You haven’t done that.
I’m not on your board, but if I was, that’s exactly why we want you in the job, because venture capitalists, the savvy ones, the legends, they’re betting on potential. Not prior experience. And so when we understand that, there’s no need for this imposter syndrome, because of course you haven’t done it before. That’s why they gave you the money.
Manny Medina:
That’s fascinating. That’s a really good insight. That’s a really good have on it.
Navin Chaddha:
Yeah. And I think one of the values of Mayfield I can relate to so much, it just clicked to me is, we always believe in embracing the unconventional, the different than the unusual, and our belief is it’s actually most of the time founders who don’t come out of central casting, but have the grit necessary actually succeed against all odds. And the other belief we have is great people evolve. Almost no one comes into the job with all the skills and experience they need. If they do, there’ll be no sales. They’ll tell you a hundred reasons why the biggest company in that space is going to do it. And there’s no chance, or they’ll say, “Hey, there’s no time for this thing. It’s a useless idea.” So that’s where you need the unconventional, the different and the unusual, and then make a bet on them that they will evolve.
And that’s how the venture capital industry works. 90 plus percent of the returns are created by people like you, Manny. Who haven’t done it before, have the passion, learn on the job, because if this was a category, the big one companies will be doing it. It’s a new thing. You need new adventures to climb. And hopefully the VCs, right? We can be their sherpas and carry their bags.
Manny Medina:
I like that analogy.
Christopher Lochhead:
I do too. Well, gentlemen, clearly I could talk to the both of you for 20 hours. But I want you to know how deeply I appreciate this conversation. And I’m constantly surprised, Navin, how heartfelt these discussions are. I mean, I wasn’t keeping track Manny, but you had to have said love double-digit times in today’s conversation. It’s very extra-ordinary.
Manny Medina:
That’s awesome. Yeah. There is a little bit of YOLO there and that this is the only way I know how to live, and to live well.
Navin Chaddha:
And Manny, always it’s a pleasure talking to you, spending time with you, keep doing what you’re doing. And I think you didn’t say it, but I’ll say it, right? Like you said it, you have like less than 1% market share. I think this is just the beginning. So don’t worry. 4.2 billion is nothing compared to where the potential for you as a CEO in Outreach is.
Manny Medina:
Thank you. Thank you. I appreciate the time, good to talk to you both. Thanks for our conversation.
Christopher Lochhead:
Thank you so much, gentlemen. Thanks for joining us on Conscious VC, with Navin Chaddha, managing partner of Mayfield, and me podcaster and author Christopher Lochhead. You can find me on the internet at lochhead.com. Conscious VC is presented by Mayfield. Visit mayfield.com today, where you could learn more about the five pillars of conscious capital and much more. Thanks again for pressing play.
