“Once you nail your product-market fit, you can scale north of billions.”
This week’s guest on The Business Leader Podcast is Manny Medina, the Co-founder and CEO of Outreach, a Seattle-based sales tech company that reached unicorn status in 2018 and is valued at $5bn. He has previously held positions as CEO at the hiring platform GroupTalent and Director of Business Development for Microsoft. In this exclusive interview, we speak to Manny about the secrets to facing adversity as a CEO, how he scaled a billion-dollar company, and the importance of product-market fit to success.
Can you tell us about your journey?
I was born and raised in Ecuador. Unlike many of my peers in tech, my journey didn’t start with me getting a computer at the tender age of five. I grew up between the coast and a shrimp farm, which is where I worked in the summers. I decided to move to the US and pursue a career in software. As I progressed through my career, I realised I wasn’t good at programming, so there must be something I’m better at. I spent most of my career between Microsoft and Amazon.
I left Microsoft to start my own company, GroupTalent, which didn’t work out well. What we built to save us and stop us from running out of cash became what is now known as Outreach, and I am the CEO of that 1,200-person company.
Do you think your background and experiences in Ecuador have contributed to the way you operate as a CEO?
Shrimps can only be harvested at night because it’s too hot, so you have to work together to harvest them really quickly. I learned about teamwork, having each other’s back, the spirit of collaboration and the uniqueness of a goal. It’s not fun pulling shrimp out of a pool at 2 am. But if everyone is together, it gives you a different sense of purpose.
One of the hardest things you have to do as a founder of a start-up is convincing other people of something that doesn’t exist yet. In religion, that’s called faith. But there’s nothing like that in business that exists which allows people to fully commit themselves and their funds to bring a vision together.
You can only achieve that vision by doing the work with them instead of leading them from the front. One of the things I always tell my colleagues is that I would never ask them to do something I wouldn’t do myself.
You were the CEO of GroupTalent as well as Outreach. Did you always know you wanted to be in this role?
When we founded GroupTalent, I took the CEO role because it was the only role left. My co-founder was a designer, my other co-founder was a front-end developer and my other co-founder was a back-end developer. Everybody sat down to work on something and the only thing that wasn’t taken was the ‘everything else’ job. The CEO role begins as this non-descript role.
What is the most important thing in leading a company?
I ask myself this question a lot, and the reason for that is I have a tremendous amount of respect for CEOs from both small and large companies. Everyone has to develop a leadership style. I like to borrow ideas from other CEOs. The job of a CEO is to define the culture of a company, and the artifacts and rituals of that company.
For me, that trademark is energy. I hire people based on their energy. Our meetings are really energetic. The second thing is making sure you hire the right people. I don’t feel that culture is static — it’s an evolving thing. The third thing is trust. People have to trust me and others. Trust is integrity, intent, capabilities, and results.
When these come together, you have fluency of business. When this doesn’t come together, you have friction.
Another thing is clock speed — what can be done in less time than it is right now?
Outreach gained unicorn status which is something many tech founders can only dream of. If there is a secret to achieving this, what is it?
Unequivocally product-market fit. One of our secrets to success is that we were clear about who we were and clear about what we were not. We were clear that we were always selling to the sales rep. We always wanted to make the sales rep successful and so built the product to make the sales rep successful. We narrowed it down. We sweated the details around whether the rep was seeing value and more importantly, whether they were feeling value.
Most of the time, the adoption of a product doesn’t happen because of a conscious decision. If you feel you’re getting value from the application because you see your pipeline building, you’re closing more deals, you’re going home earlier, or buying things you couldn’t before. Once you nail your product-market fit, you can scale that north of billions.
How do you approach business development?
The most important thing to consider is pipeline. You need a very strong pipeline of business that you generate yourself and that you have control over because once you have that pipeline, you can get better at figuring out how to convert that pipeline into cash.
In the early days of developing that pipeline, it’s a little bit all over the place because you don’t have a business or a way of generating pricing. In the early days of a business, it’s all about trial and error, but the most important thing is having a valuable amount of opportunities flowing through the business.
How is the economic climate impacting Outreach? Is there a way to continue growing even in this economic environment?
Absolutely. There are about seven million sales reps in the US and our biggest goal is to get to them quickly and attach ourselves to their problems. We are doing well at this because the economic situation hasn’t impacted the transition of sales becoming more digital.
What has been the most significant challenge you’ve faced?
In December 2013, we found ourselves with two months of cash in the bank. We weren’t scaling with GroupTalent and we were doubting whether what we were doing was useful in the market. It’s really difficult to focus on something if you don’t have confidence, energy and impetus. It was then we decided to build a workflow internally – that if we increase the number of meetings, we can generate enough profit for us to grow and scale. That took one month, so we only had one month left of the cash.
When I would go to the meetings, recruiters would ask me how I was generating so many appointments and I told them about the tool we had built internally. They didn’t want to buy the service but wanted to buy the tool we built. The hardest part was the transition from a business that wasn’t doing well to a business that took off.
What motivated you to keep going at that moment?
A part of a leader’s role is to understand the facts on the ground and not make them worse. When you have one month of cash left, everything feels bad. But we also knew we had a path to magic because our product was developing a 40% reply rate to cold emails. We used that conviction to raise money and develop the product. It became such an efficient machine that I forgot we only had one month’s pay role.
Do you ever have moments of self-doubt?
I have moments of self-doubt every day. You breathe through it and shake it off. I couldn’t believe that we could get this big. You don’t focus on how big you can get, you focus on the problems of the now.
It calms your mind and allows you to realise all of the good things that come about. It stops you from focusing on the negative things. It stops you from worrying about things and focusing on your sense of inadequacy.