Manny Medina Founder of Outreach.IO On Almost Shutting Down His Company To Raising $250 Million

Unmessable Podcast

Manny Medina grew up in Ecuador and spent most of his summers on his stepmother’s shrimp farm helping during harvest. In addition to working on the shrimp farm, Manny was obliged to read a number of books during his summer vacation. A little unusual, but it served Manny well in developing a curiosity for learning.
The first time Manny set foot in the US was to come to college where he completed his Masters in Computer Science at Penn State, then he got his MBA at Harvard. The culture shock was real and although he knew some English when he arrived, he wasn’t proficient enough to have a full conversation. To compensate for this obvious barrier, he consciously sought out a publication to study, in this case, the Economist because he fancied the writing style. Manny spent countless hours teaching himself how to speak and write in the Economist voice, which seems ambitious but once again, served him well.

After a corporate stint at Amazon and Microsoft, Manny decided to launch his own business in partnership with his co-founders. But things didn’t go so well initially. In fact, after 3 years of trying countless business models and product features, and having almost burned through $1 Million dollars of investment capital, he was contemplating shutting down. At this point, they were inventorying computers and selling them for cash to pay for outstanding invoices. It was that close to the end.

While weighing what to do with the company, Manny attended the TechCrunch Awards Conference. During a break, a lightbulb went off. It dawned on him that this one feature he had built (a side feature to the core business at the time) was something prospective clients were showing interested in. Why not build that out and turn it into the core business? He saw it so clearly but needed to get his co-founders on board. After delivering the pitch of his life, and getting his co-founders energized and on board, they did their final pivot. And thank god. It worked. Today, Outreach.io is the leading sales platform, employs 350 people, raised $250 Million in venture capital money and produces millions of dollars in revenue annually. Not to mention, growing at a rocketship pace.

Tune in to listen to the incredible pivot Manny pulled off as a last-ditch effort to save the company and his story behind building one of the leading sales platforms out there.

In this episode you will learn about:

• • • Pivoting
    • Runway challenges
    • Growth hack strategies
    • Product Market Fit
    • Raising capital
    • Differentiation strategies
    • Scaling operations
    • Product development- how to build a product people love
    • Leadership mistakes and lessons

Manny Medina’s biography:

CEO of Outreach, the #1 Sales Engagement Platform.

Previously led GroupTalent, Microsoft’s Windows phone Business Development team in Latin America and Canada. Prior to that, engineered Amazon’s compensation system for Amazon Associates (the web’s largest and most successful affiliates business) and Web-Services which accounts for 15% of A’s traffic.

MBA from Harvard Business School, MS in Computer Science from the University of Pennsylvania.

Connect with Manny Medina:

• Website
• Twitter
• Linkedin

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Full Transcription:

Manny: I grew up in Ecuador. I don’t know if that makes any difference or not.

Tanya: That’s Manny Medina, Harvard grad, founder and CEO of outreach.io, the number one sales engagement platform that raised $250 million in funding and now employing a team of 350. Outreach made it to the Forbes Next Billion-Dollar Startup 2017 list and is a two-time winner of the Forbes Cloud 100

Manny: I didn’t grow up with a lot of technology. I did grow up with a lot of people. People tend to be an important thing where I’m from. However, I’m more of an introvert than an extrovert so a lot of times, I, sort of, lived inside my head. I’d play games that I would make up and for teams that I would live in my own imagination and just run throughout the day. My mom is Russian, so I have my Ecuadorian side of my upbringing and then the Russian part of my upbringing, which is – there’s a broad Russian diaspora in Ecuador, and I got to spend time playing with those kids and those games were slightly different than what we play in Ecuador.

Then during the summers, my stepmom’s family had a shrimp farm and I would spend the summer at the shrimp farm. I would work during the harvest and earn a little bit of money and that’s a lot of back-breaking working. It usually happens at night because apparently the shrimp sleep or something at night, or they’re quieter, or something happens. It needs to happen pretty quickly. The moment you get the shrimp, it needs to go to the processing plant relatively quick because we want to pack it fresh, so it’s a non-stop work.

One of the funny stories about shrimp farming is that crabs – the shrimp farms are all set up along the coast of Ecuador and crabs come from the sea and go into the shrimp pools and they eat the shrimp. When you’re shrimp harvesting, a lot of crabs comes out. Most of the time you discard this crab, but the crab is delicious. I usually will have a separate bucket for discarded crabs that I would eat every night and I’d eat throughout the day. I would eat a lot of crab during shrimp farming season.

Tanya: That’s amazing. How old were you when you were harvesting shrimp?

Manny: This is between my ages of maybe 7 all the way to 15.

Tanya: Wow! You would do that every summer?

Manny: I would do this every summer, yeah.

Tanya: Would you do this other family member or just with –

Manny: Yeah. The shrimp farm was owned by my stepmom’s sister, so all my cousins were there and the day labors and [her] brother would be there sometimes. It was a big affair; a lot of hands had to go there and help. Where I’m from, we have a lot of cousins, I just don’t remember them all. I’m sure that half the people there were related to me to some degree.

Tanya: Well that’s amazing. Honestly, that’s a great experience to go through when you’re young because you realize the value of work and the value of money. I think that couldn’t have been better. Okay, so that was your summer but what were you like – did you play any sports or were you the kind of kid that liked to play video games with your friends at home. What did you mostly spend your time doing?

Manny: I grew up in a fairly intellectual family. My dad was a professor and my grandfather was a professor too, so video games were (a) not a thing because they were really expensive. In Ecuador, things had incredible taxes coming from the US, and (b) they encourage, as in cajoled, and really had a very – I had a lot of reading to do during the summer that was not school-related. It was, sort of, an expectation. It was funny, until I had my own kids, I didn’t know you could actually do that to kids but to me, it was just what we did. I had a very broad array of books that I’d have to go and read during the summer and I was expected to be done with it and report back.

Tanya: What would they make you read?

Manny: My grandfather was really good friends with this book salesman and it was a bit of a racket, thinking back on it now. He would encourage all this reading. The bookseller, he would sell my grandfather incredible amounts of books. The one time that is highlighted in my mind is one time that he sold him an entire encyclopedia of World War II. Mind you, I’m, like, ten, so this is the last thing I want to do in my summer, but here I am hauling my encyclopedia of World War II all the way to the [beach], where I’m doing my – spending my mornings doing nothing and shrimp farming in the afternoon or at night. I do have to read this entire encyclopedia so I power through it. Luckily, it had a lot of photos.

I learned a lot about World War II very early on in my life, which, kind of, helped me because I ended up – in Ecuador, private schools are not as expensive as they are here and most middle class or lower class kids end up going to private schools. I ended up going to a private, school; I went to a German school. International schools, German schools, American schools, etc., tend to be cheaper because they’re subsidized, so I ended up going to a German school that was subsidized by the German Government. Having a running start with the whole World War II affair ended up being a good thing.

Tanya: That’s great, so that helped you at school. Did you learn German when you were in school?

Manny: I did. You have to be fluent by the time you graduate, which [05:59] pain. Don’t ask me anything in German right now because I can’t [06:01].

Tanya: Well that’s okay then. That’s not a language that I speak but my husband speaks it.

Manny: I noticed three languages in your bio and I was a little worried there it was going to go this there.

Tanya: If you would have told me Turkish, maybe I would have able to challenge you on that because one of my old boyfriends is Turkish and I really was interested in learning that but not German, so you’re lucky, you’re lucky. Okay, this is an interesting beginning. You started in Ecuador, very strict intellectual family and very in-tuned with working, so that shaped who you are. How do you think that your childhood and the culture and the influences of your family and the practices of your family influenced your thinking today?

Manny: Growing up that way gave me this enormous amount of intellectual curiosity, where having a professional path was not enough. That your intellectual development was not by all means cut by your formal education but it was something that you continue to cultivate all the way to adulthood. My grandfather had one of the largest private libraries in my city and he spent a lot of timing reading and was friends with a bookseller so I spent a lot of time reading and buying books etc. This ability to never stop learning and being increasingly interested in problems and problem sets, really helped me frame a lot of my life.

One of the interesting things about doing a startup or even going through grad school was that you have to live with irreconcilable problems in your head for a very long time. The story that you hear about startups or the narrative is that you come in, you have this drive for action and to get it done and you get in here and get after it and get it done and do it again and so on and so forth. That is very important, but there is also the other problems that you can’t verbalize. You know they’re coming; you can’t really put your finger on it so you stew on it. You may stew on it for months, while you take the problem, turn it around, look at it upside down, look at it from the bottom up, have other people come and take a look at it and, sort of, just live with an intellectual problem is the rigor that I developed growing up and then throughout my career.

Tanya: Well actually that’s a really good problem to have – or skill to develop. Being with uncertainty, most people can’t do it. They see a void and they want to fill it immediately, which then cuts off that inquiry, which, I think, is where most of the power is and what you’re pointing to, so very interesting. Can you walk us through what it was like coming to the US? At what point did you come to the US?

Manny: I came here in 1995, a port of entry Newark, New Jersey.

Tanya: That’s why it says on your profile on LinkedIn, immigrant, a port of entry, Newark, New Jersey.

Manny: Correct. That was the first time I had set foot in this country. I came here to finish undergrad. I was already almost half-way done with my education in Ecuador and I was going to a local – there is only one technical school, so I was going to a local technical school, a university that is. One of my professors, actually my professor of algorithms, had got his PhD from Stevens where I went to grad school. I applied to a number of schools and I visited a few of them when I came here. One of them was Cornell. I didn’t see myself braving that kind of cold, to be frank. I’d never been that cold in my life. Then going too far south, my dad was afraid – especially around Florida, my dad was afraid I would never learn English. I had to be in a place where my parents were comfortable with me going to school and it wasn’t that cold, so I settled in New Jersey and that’s why I ended up going to Stevens.

Tanya: You didn’t know English when you came to the country or you had a basic form of it.

Manny: That’s a great question. I had a fairly good written English. One of the books that impacted my life the most and life in general, is a book called Elements of Style by William Strunk. To this day, I’m not going to pat myself on the back, but I think I write pretty good prose, and it was all because of that book.

Tanya: Wow that’s amazing.

Manny: The second thing that I did is that – I read a lot so I started reading a lot in English, and I figured that if I’m going to pick up a new language, and I learned this when I learned the German, is that the best way to do it is to emulate, or copy, a style that you really like. I read a lot of magazines and a lot of different things and I narrowed down around The Economist. I really like their prose, so I just started writing like if I was writing for The Economist, and it ended up serving me very well through college and then grad school and then eventually work life.

Tanya: My God that’s ambitious! The Economist is a fabulous media publication, and if you’re going to emulate anything that sounds like a good pick. Okay, so take us through – here you are, you came to school, I’m sure it was a huge culture shock, which in itself is an adjustment. Did you know anybody when you moved here?

Manny: I had a little bit of family from my stepfamily here, but none of them college-related. It was a good refuge for me to get Ecuadorian food and that kind of thing on the weekend.

Tanya: What was it like, that transition for you?

Manny: It was difficult. It was difficult because when I got to college, I had a fairly robust social life in Ecuador and making that happen here in the US was just not immediate. My spoken English was fair – is not interesting. I couldn’t go to a bar and talk to somebody and make interesting conversation because my accent would have just got in the way and I didn’t know the words, I didn’t know the slangs. It took me three weeks to figure out what “wassup” meant. Things of that nature just stump you. One of the things that I did really early on joined a fraternity. I figured that if I didn’t do something about it, I would just be always surrounding myself with Spanish-speaking people and never learn English. That got me a quick indoctrination into the underbelly of US life.

Tanya: Yes, the culture.

Manny: Right. I’d like to be born around here because I think I was only half there.

Okay, let’s shift a little bit and go towards your professional career. You go to college and then you go to – you studied computer science undergrad and then business grad.

Manny: Yeah. I did a master’s in computer science as well and then I went to business grad, yeah.

Tanya: Then you went to Amazon and then later to Microsoft. Can you walk us through that a little bit?

Manny: My business school life was a little irregular in that 9/11 happened my first year and it felt like the bottom fell off. You usually walk out of HBS thinking, I’m made, I’m going to take any job I wanted and whatever. There are not that many jobs that were available. Everybody was reconsidering what the economy would look like for the next ten years and hiring plans just came to a standstill. One of the very few companies that were still hiring as if it was the party just started, was Amazon. Amazon hired about 11 of us directly out of business school, and Bezos did a lot of the hiring himself, Bezos and Jassy.

Going to Amazon was really interesting because I went to a group that was called Amazon Associates. Soon after I’d landed at Amazon, Jassy was Jeff’s right hand. He actually had a job called – I think it was called Jeff’s right hand; that was a job description with a job title. He did that for a year and then he was asked to go and run this new business that at that point was not called Amazon Web Service. It was called Amazon something else, I think it was Matrix or something, and he rolled up into my team. The first year I joined there, I learned everything I could about starting a completely new business from scratch. At Amazon – in Seattle, there was a play that was playing in the theaters that were started by a bunch of Amazonians called “Dog Years” and it was the life at Amazon. It was a play about life at Amazon and the things you have to do. It sort of reflected reality in that at Amazon, time would move a lot faster than at any other company.

At that point, they were a public company and they were still growing, but it acted as if the world was going to end tomorrow. Everything was just super-fast. My boss came and told me, he was like, “Most people tell you that you can get one of the three – or one of the two. You can either be fast or have high quality. At Amazon, there’s no such thing. There’s no trade-off. You do it fast and you do it high quality.” That really stuck in my mind and everything was done that way and everybody was really smart. That was, I think, my true MBA in that people were so smart and so numbers-driven that I had to buy a book on speed math that I could number and keep up with the conversation. Multiplying two large numbers – it wasn’t so much about getting it right but you need to be in the right zip code to make the right decision, so you need to make it quickly because conversation just moves and moves and moves.

Tanya: When you said you either do quality or you do speed. Which one did you do?

Manny: No, you have to be good at both.

Tanya: Oh you have to be good at – okay.

Manny: You have to be good at both. I remember my first set of meetings and I was off in a calculation or I made a wrong assumption in a model and that’s when my boss sat me down and, “I know I asked you to do this fast…” and I said, yeah that’s probably why I made mistakes. He said, “Well there is no such thing here!” You don’t have that trade-off; you have to be both.

The second lesson that I learned there is that, and it’s probably related to the first, is that to Bezos, you’re either buying or selling. When you’re making an idea for an argument or a change, if you decide not to do it, you’re actively selling that idea. When you decide to stay with the status quo, as supposed to implement a change, you’ve sold the change and bought more of the status quo. You see what I mean. I know decision is the decision. Going into a meeting not having enough time to look at all the data without a decision that means you decided to invest more in the current situation. You see what I mean. It’s a very different way of looking at the world. It, sort of, keeps you on your toes and it forces your thinking and it forces you to make decisions. That was an incredible lesson there.

The other lesson that I took was when I got there, the whole flywheel that Amazon prides itself on is selection brings customers who bring down the price because you can attract more sellers who bring more selection. That whole self-reinforcing growth wheel was not present at Amazon at that time. That was the pitch but that was not how it was working all the time. We did not have the most selection, eBay did. We did not have the lowest price, Walmart did. It was in the middle of that fight that we were trying to start Marketplace for the seventh time, beating off eBay and beating off Walmart.

Google coming in and driving all the traffic away from Amazon into all the other stores that we decided to start Amazon Web Services. It’s just the vast amount of mental capacity a team can have when it’s set with the right challenges and just let go do their best work, was really what impressed me at Amazon. It’s one of my guiding principles here. How do you continue to execute with excellence, while never keeping your ambitions in check is keep getting in after the bigger dream?

Tanya: Speaking of ambition, you did a few years at Amazon and then you did seven years at Microsoft, then you quit. Can you tell us about that decision?

Manny: I call it my Jerry Maguire moment! Literally one day, I couldn’t drive into work because I was tired of yet another Windows phone launch. I called my boss on my way in and I quit.

Tanya: Did you have a plan?

Manny: No.

Tanya: What was the non-plan?

Manny: The current Windows phone launch was winding down and we were trying to figure out our next Hail Mary. There was a lot of time just idle so I picked up a book on rails and I started programming. This is one of the byproducts of being intellectually curious is that you start creating links in your head of ideas that were not related to each other. Picking up programming is almost like picking up a second language or a new sport. You start creating [clashes] in your head of what is possible. A lot of ideas came to my head of what is possible as I started programming. Then once you have those ideas firmed, I started hanging out – there are bars here in Seattle where startup people come and hang out and get together and talk shop. I started hanging out in those bars and I met a few people that wanted to work on the idea with me, and that’s how I ended up – me and my co-founders, we applied to Techstars and we got in.

Tanya: The rest is history.

Manny: Well, no actually, the rest is when it got hard. We actually got into Techstars, fast forward to when we launch a company called Group Talent, which was a business in the recruiting space just like hire.com or [21:15]. The business was just not growing as fast as we thought, and we had raised, I don’t know, less than $1 million, or maybe $1 million. It was not the home-run success. We tried to throw product at the problem, meaning if we maybe got better profiles, people will come. Maybe if we opensource the code. We tried all sorts of things that, in retrospect, did not make sense.

What we were dealing with was a market supply and demand problem and we did not come from a marketing background. My co-founders, two of them are engineers and my other one is a designer so we had the wrong team for the problem. Of course, it didn’t dawn on us when we were there, but what happened was that in January 2014, we were running out of cash. I think we had a month or two of cash left.

Tanya: How long were you at it at this point?

Manny: About three years.

Tanya: Wow that’s tough, yeah.

Manny: Sorry, this happened at the end of 2014; we were running out of cash – 2013 when we were running out of cash. Then at the end of 2013, we decided to give it one more go and we decided to build a workflow internally that would make our sales reps book 10x more meetings. The reason we came up with a number was that we figured that if they were able to book 10x more meetings, we would sell our way out of the problem. Meaning generates our own cash to get out of this problem. We sat down for about two, three days and we mapped out all the elements of sales and all the things that could be automated. Then our team built it and we deployed it and the meetings started coming through.

As our salespeople and myself were going to these meetings, the conversation quickly turned about the tool that they were using that got into that meeting. We were selling to recruiters or recruiting agencies and the recruiters were saying, I love what you guys can provide but I’d rather buy the tools so I can book my own meetings. After probably about 60 of those conversations, we decided that it would be better to pivot the entire company and build a workflow and sell the workflow instead of what we were doing before.

Tanya: How did you position because a pivot is – you have a team; they were brought on to execute on whatever vision you had before. First of all, how did you handle the transition internally, within your co-founders? Was everybody onboard and everybody aligned and how did you position that to your team?

Manny: That was probably the best pitch of myself is when I had to convince three co-founders and myself that had almost no cash left in the bank, had already put in three years of their lives, working very hard, startup speed, to give it another go and start from scratch in a completely new business. I distinctly remember that afternoon because I called them – I was in my car and I got invited to the Crunchies, I don’t know if you know, the Crunch Awards.

Tanya: Mm-hmm.

Manny: I got invited to the Crunchies and I was sitting outside waiting for the Crunchies to start and I called my co-founders and gave them the pitch. The summary of the pitch was, yes, all of you can walk out of here and go get a job. That’s fine, we can all do that. We have an asset at that point, which is unbeatable, which is the fact that we are very talented people in non-overlapping areas. One was a front-end engineer, the other one is a back-end engineer, and a designer and myself. We have very talented people that have been through hell and back. The ability to develop this chemistry is trust, is a passion, is very rare and if we were to break up right now and go our separate ways, that value disappears immediately. If we decide to give this another go, and I can’t promise you at this point whether it’s going to be a success or not, but I can tell you that there’s a lot of pain around this. I can promise you that if we give this another go our chances of success are a lot higher than before.

We sat around and – mind, you we were inventorying computers at this point because we were putting the money away to sell it. It was that close to the end, that close to the bottom of the barrel. We decided to give it another go. Once we decided to go, I felt this surge of energy come through and I went to my Board, I pitched the new idea. One of my new Board members jumped aboard, which forced the hand of the other Board member. They decided to fund it.

Looking back now, it’s a blessing because we’re building a tool for salespeople that by definition will make us better salespeople as well. As we were building the tool and selling it to salespeople and seeing what they were doing with it, I was not only learning about to sell it, but I was learning from people using Outreach, and I will take those learnings and use them myself. It was of the accelerator effects, which not only I learned a lot from my own customers but then I was able to teach them more about how to use Outreach and be better at it. We went from zero to $1 million in AR in less than six months, once we’d made the pivot. Then yeah, the rest is history after that.

Tanya: How many people do you employ today at Outreach and how much capital have you raised?

Manny: Three hundred and fifty people and we have raised over $250 million.

Tanya: What has it been like to lead Outreach for the past six years; think about the good, the bad, and the ugly.

Manny: It’s been an incredible journey and learning experience of transitioning from four co-founders to four co-founders and [a small team]. There’s a milestone at every point in time in which things have to completely change. I’m not an expert in startups, so I can tell you my own story there. Raising the first round of capital was one inflection point because when we raised from Mayfield, we were selling almost individual licenses. I was cold calling whoever I could cold call. If I got you on the phone and you would invite for your company, I will sell to you individually. It’s you. Give me your credit card and I’ll give you Outreach. You can cancel anytime. If I don’t deliver some sales metric like more meetings, or more conversations, or more opportunities or a bigger paycheck, or a bigger commission check that is, then happy to cancel your account.

That experience of selling individually really helped me frame my development as a leader. Then –

Tanya: You said something interesting. “That experience helped you frame who you are as a leader.” Can you expand on that a little bit?

Manny: When you’re growing this fast and when you have this much capital and you’re in a “hot” area, you tend to lose sight of the work that needs to get done to deliver the number, any number, revenue, retention, uptime, the work that happens in the trenches. The work that happens day to day. With 350 people, you start losing sight of the work that gets done to make a customer successful every day. Having sold myself the first few customers, having supported my first few customers, having made my first few mess ups in deployment, taking late night calls from customers for whom things went down or they press a wrong button or the button did the wrong thing, gives you a lot of empathy for the work that goes on day to day.

Growing this fast, we’re doubling every year, even on our [big] days, it’s exhilarating but it’s also stressful and you tend to lose sight of what it takes to do the day-to-day work. It’s back to the original, how we open up the conversation and how you have to be able to live in your thoughts with dichotomies. I think the key sign of a leader, and this is one of the things I learned at Amazon, is you need to be able to think in systems because you’re managing a system but also think in terms of individuals. The system is composed of individuals and they have feelings and they want to be heard and they want to matter.

I feel like having the experience of building the company from the ground up, in which I played every role, allows me to develop empathy at the fundamental level, at the bone marrow of what everybody here does. Sometimes, I will go into the support floor and take a ticket with them just so that I can chase her down, and let her know that no work is above me.

Tanya: That sends a strong signal.

Manny: Yeah, or I will make time to sit down and prospect with AEs, with the account executives. That sends a certain signal that prospecting is for everybody. There is no free lunch here. We all have to work. We all have to put in the time.

Tanya: One of the things that usually leads to huge insights are failures. What in your life did you have to go through? Any challenge failures that has taught – that has led to some of your biggest insights?

Manny: Yeah, it was when we were about to close down. There’s no bigger failure than losing about a million dollars of capital and have nothing to show for it. It was heart-wrenching because it was under my watch. You are the CEO, so the buck stops with you. It just made me realize that I had no idea what I was doing in the recruiting space at that time. I just didn’t have a good calibration for the edges of my ability, and I took a bunch of people and run with it.

Now, the learning out of that experience is that, when you get to see the bottom of the precipices, nothing else scares you anymore. I developed this feeling of being invincible, of we can rebuild from any point in time. Outreach operates in an incredibly competitive environment. When we came into the market, there was already three products that were being near – so A), they raised many million dollars more than we did. Second of all, they had a lot of momentum. We had to come in and compete with them, and as the market grew and the awareness of sales engagement as a category became a big thing, now we have to compete with everybody, even [31:55] is getting into the space.

The early days reminded me that there’s nothing to be afraid of. You already seen bottom in the eye, and from now on, it’s – all the things that you see coming your way are circumstantial and, by all means, good news. Competition is good. It drives the market. It drives awareness. It drives capital to the market. It makes a more resilient leader and allows you to put that resilience into your own team members who sometimes are faced with a bad customer call, or an outage, or something else that is incredibly unpleasant and feels like the end of the world. Bringing that perspective in is super helpful.

Tanya: Yeah, so perspective, that – it seems like the first – your first major almost failure but, luckily, you turned it around in a very significant way was perspective.

Manny: Mind you, the turning it around in a very significant way was not obvious when we were going through a transition.

Tanya: A hundred percent, it never is, hindsight.

Manny: Right, so you have to – you’re navigating this in incredible amounts of uncertainty. You’re at the border of what is optimism and what isn’t? What is a lie? You see what I mean? Most people demand that you know what you’re doing, and you full well know that you don’t. Yet, you have to convince other people that you do. You see what I mean? This is why this is such a difficult thing to do is you have to tell people that, yeah, we’re going to be okay, even though you yourself don’t know if you’re going to be okay. You have to navigate with that.

Tanya: What draws the line?

Manny: I don’t know. It’s like a de-risking exercise, right? For me, the first line that I drew was I’ve done 60 of these calls myself, and I know people want this product. That pointed to the right direction, and if we have to do micro payments between this big payment and the next thing, that’s going to be okay. The second thing is that, as we find out more about the kind of people that are buying the product, it’s easy to start wrapping your head around the total addressable market. As long as the total addressable market is big, you’re going to be okay. You see what I mean?

Tanya: Mm-hmm.

Manny: The narrative becomes crisper and becomes truer as you validate these assumptions. Make no mistake; the very beginning is just assumptions.

Tanya: Exactly, you had no idea of most of these things. Wouldn’t you say that the – what really draws the line between a lie and success is the outcome because so much goes into it in the journey?

Manny: It does, and the outcome is usually a happy customer. You find a customer for whom you solve a problem. That it was meaningful enough for them to pay you. The amount of de-risking of the business that you do by doing that is incredible. You see what I mean?

Tanya: Mm-hmm.

Manny: After that, there is two outcomes. Either the market is big, or the market is small. At worst, you end up in the small market, and then you have to figure out how to grow out of that. At best, you end up in a huge market, and you’re solo execution on it. You have to find these points of validation where you turn it from optimism into realism.

Tanya: Yeah, no, absolutely, and actually, one of the foundations of performance that drives results is team alignment. In fact, I’m actually reading a book right now from Eric Schmidt, the Trillion Dollar Coach. I don’t know if you’ve seen it. It’s really good, and it’s all about this man, Bill Campbell, who was very successful and ended up coaching a lot of people in Silicon Valley. Most of the book is about teams and the teams’ dynamic, and how the team functioning in alignment and perfect harmony is what creates this unbelievable outcome. How do you manage that within Outreach?

Manny: It’s a really good question. I’m not going to go into OKRs and goal setting, etc. I mean, there’s many books you can read about that. I think the most important piece is team alignment when you’re growing 40% year over year, it’s not that hard. Team alignment when you’re growing 100% year over year, it’s I would say a third of my job making sure the teams are aligned. The reason is that you got to this level of growth by doing two things, one, finding a rich vein of a large market that is increasingly excited about your technology, but the second thing is that we instituted really early single threaded ownership into everything that we do. When people are running with ownership and single threaded in a fast growing environment where you are inventing the road as you go, there is a high likelihood that you end up varying on any day five to ten percent or ten degrees off the mark, and that compounds quickly over time. You see what I mean? If you’re growing really fast and you deviate from the aligned course by five degrees or ten degrees, two months from now you’re going to be super misaligned. You see what I mean?

Tanya: Yeah.

Manny: It compounds so quickly, so you have to catch these things early. You have to make these micro corrections early. You have to update yourself and each other on your current thinking often, and that’s a tax. That’s a tax that you pay for growth. If you don’t do it, then you can choose to grow slower, in which case it’s easier to align, or you can just grow really fast, and then just live with a misalignment.

Tanya: What do you think are the drivers of having really reaching alignment within a team?

Manny: The easiest way to do it is to make sure that everybody is in agreement as to why we’re doing what we’re doing, and that you have a set of core values that are closer aligned to the business. You’ve seen core values. There’s a lot of good ones like grit and etc. that we have. If you have a set of goals and a set of core values that speak to the business at hand – like we have a core value called being one with the customer and then another core value about ownership. Our goal is to help every customer facing rep in the planet. Then, even if you are misaligned, you’re not misaligned by a lot. You may be working on something that is in the wrong order of operations, but you’re generally in the right zip code. You see what I mean?

The hardest part is getting – the thing about alignment is that alignment is to have the limited resources that you have working on the most impactful things. That’s what alignment brings. The definition of that most impactful thing in a fast growing market may change, and the moment it changes and the moment it becomes common knowledge, that’s when misalignment happens. Everybody knows that the most impactful thing is this other thing. Yet, we’re not working on it. This is why misalignment is like an active sport. It’s not like a one and done. There is no secret recipe for it, but you have to actively stay on it. There is no application to this job. You have to do it all the time.

Tanya: What about trust? I mean, you can have alignment on culture, on values, on objective, but what about team members trusting each other? How do you actually – how do you get your team to play nice together?

Manny: I don’t know that that’s a goal, at least not for me, and it wasn’t at Amazon. I think we all want to be impactful together. I think that we have – we want a respectful organization that – we have a core value here of having each other’s back. I don’t know that nice is what we’re solely for.

Tanya: Now, what about trust? In a team, if there’s drama, or mistrust, or egos, there’s a lot of miscommunications that happen, and fundamentally, an organization is able to function based on the health of its communications, its speaking and listening. A huge, I would say, driver of that effectiveness could be measured in whether you trust somebody or not.

Manny: I agree. The first thing is do live your core values. The second piece for me is that – I have this conversation often with my directs, and I often have it with other managers as well about the fundamental attribution error. The common name for that is giving somebody the benefit of the doubt in that we will make mistakes, but you have to believe that the mistakes were made because of lack of communication or the wrong circumstances appear in front of you. Not because somebody is essentially a bad person or ascribing some kind of bad value to that person. There’s a tendency, especially in fast growth, high-intensity organizations to ascribe behavior to a circumstance. When in reality, it’s just like, yeah, a few things happened, and hence, I made a mistake.

The other piece is that you have to be super open and honest in all conversations, and you have to be – there shouldn’t be any secret topics that you couldn’t talk. I lead that very much by example. You always address the elephant in the room head on early and at the beginning of a conversation, but to do it effectively, you have to have some amount of care for the other person that you’re talking that through. This is very similar to the Radical Candor book. In my mind, if I were to summarize my learnings is that you can only be radically candid if you truly care about the other person. Otherwise, you’ll just be an ass. The ability to speak candidly and honest to a person requires a fundamental level or a foundation of care. Then on top of that you build trust, and on top of that you build honesty and candor. Only then you’re operating at the peak performance that you were looking for for the team. I don’t know if that made sense.

Tanya: Yeah, no, absolutely, 100%. I’m a huge believer in candid and, actually, something that we practiced in the business. Frankly, in the early days, I was just an asshole without the care and empathy and slowly developed that muscle, which made all the difference in delivering the message and actually elevating the people around me.

Manny: That’s the other thing that you asked me. What did you learn about in growing the organization? It’s that. Being honest is not enough. At the end, you’re trying to accomplish a goal, and to accomplish a goal, you have to be able to be – you need to be able to grow people. You need to be able to make people feel good and in power in the fact that they’re growing. If all you’re doing is walking around giving feedback [43:21] without developing that empathy, then you’re not really successful.

Tanya: You’ve mentioned empathy a few times. I just wrote about that. At what point did you realize that empathy was effective for you in your leadership?

Manny: It was sometime two years ago when there was a period, and I was just mad all the time. Something seemed to not be working right. I was just going from blowing gasket to blowing gasket almost daily. It didn’t feel right. Then my CO pulled me aside and was like, “Manny, what’s up? It seems like you’re mad all the time.” I was like, “Yeah, this is screwed and this is screwed and this is screwed and this is screwed.”

We’re growing. We were killing it. We raised some amount of money, and we doubled our revenue, etc., but I just couldn’t live with this level of execution gaps. We settle in on a coach, and finally, around the same time, I started – I took a mini sabbatical. I think I took two days off, and I went to one of the islands here off the coast of Seattle. I started reading a lot about adult development and adult development frameworks, and I read a lot about this guy called Bob Kegan. Bob Kegan has this path of how you – pretty much, how you become a wiser adult. How do you develop more points of view?

One of them is that you can have – you can be mad in a situation, or you could be mad even at a person, but you can have empathy at the same time. The ability to hold this both feelings and thoughts with you together while you ruminate and come up with a better solution where your instinct will tell you or your gut will tell you is the difference between being incredibly successful and giving somebody a boost in between that and you’re chewing somebody out, or just being mad at all the time and not chewing somebody out. I don’t know if that makes sense.

Tanya: It absolutely does, yeah.

Manny: It helped me realize that I can hold conflicting feelings for a while, and that is okay. I don’t have to have resolution, and I can come to a person and be candid. On the one hand, I love you, and I love the work that you’re doing. On the other hand, I’m mad at this situation that happened under your watch. Help me reconcile that. Just saying that and getting into that conversation is incredibly powerful in a relationship and incredibly powerful in an intense and honest relationship like the ones we have here in that you’re able to openly talk about both conflicting things, seemingly conflicting things at the same time and piece it apart. You see what I mean? Seek growth out of that.

Tanya: It sounds like two years ago you hit this pinnacle moment where, like you said, it just became the gap between where you were going versus where you were became difficult for you to manage, and your response was anger. Part of what you did is you looked to see what tools you had to really elevate yourself and your level of consciousness to be able to effectively deal with the problem that you had in front of you. What other learnings or things do you do to train yourself as a human being to guide other humans and to really lead them and lead your business?

Manny: One of the exercises that I wanted to have is – that I started getting into is that, in large meetings, in large settings where an active discussion is happening and I see a gap in reasoning, or I see a gap in alignment, for instance, I don’t stop the conversation, which I used to do. I used to manage by intervention. Now I try to manage the system. What I do is I write down furiously. It was weird for a while where I would just take a [47:26] on a note. It’s like why didn’t this person think of this other thing? Why didn’t you bring this up, or why didn’t you bring this up? All the things that I would’ve said live in a conversation, and so to completely [47:38] it, I would just write it down.

That will do two things. I will have a – I will call a quick five to ten minute post meeting briefing where I will actually ask them. All right, this discussion went on, and there’s these five points that we’re missing. Why? In a much more – A), in a much more setting, and B), when I’m already – I deescalated myself from the heat of the moment. I can think more clearly about what’s about to happen. In a smaller setting, people are more open to share with me how they were thinking about the problem.

I try to make those things more coachable moments and coachable for both ways. I may learn something that I didn’t know through that coaching that is coming to me, or the other person may think about – may learn from how am I thinking about the problem for me? It becomes this really rich dialogue that really move to go forward in terms of elevating the conversation and elevating the people and the person. What it does is that it creates a very deliberate motion towards coaching and elevating the team, including myself, as opposed to just me intervening at the moment and trying to change something on the spot.

Tanya: Yeah, so it goes from an opportunity to learn versus a moment to diminish or disempower somebody.

Manny: Correct, an interesting thing and that was one of my learning is that I – you don’t even need to do it purposefully. To me, it was happening. Sometimes I would do it. I’d know it, and I will only get the feedback much later on. Those are the worst situations. You’re doing something that is not moving the conversation forward. You don’t even know it. You see what I mean?

Tanya: Yes.

Manny: That’s the part that is hardest as a leader is that you may not find out until you stop doing it.

Tanya: Yeah, hopefully, you have people around you that feel confident enough to be honest with you and help you see your blind spots.

Manny: You may but you may not all the time. You don’t want to have to deal with the consequences of not having that, so you want to self-correct.

Tanya: Yeah, this was very interesting. Okay, last question, if you could rewind – how old are you, by the way?

Manny: Forty-five.

Tanya: Forty-five, okay, if you could rewind 10 years so you’re 35, what piece of advice would you give yourself?

Manny: That’s a great question. I would’ve started a company a lot earlier. I would’ve gone through this entire journey five years ahead.

Tanya: I mean, your experience, the experience that you had built upon where – built upon your skillsets and your frames of references and possibly allowed you to build what you did now.

Manny: It’s true, but you don’t learn this by working at Microsoft. You learned it by doing it. I learn a bunch of skills at Microsoft. I think I may be a better CEO now. They’re not that useful when you’re early and you’re four people.

Tanya: Or when you’re in the trenches. Like you said, I mean, having the constant feedback and catching yourself in the moment not being effective with your team and having to think about how do you change this around, it’s been – some of the people that I’ve spoken with – actually, most of the people that I’ve spoken with, the biggest challenge is personal growth. Personal growth, you can read a lot about technical and operational experience. There’s a lot of resources out there, but actually, personal growth not as in you read a personal growth book but discovery of yourself. Going through and having these insight moments allow you to literally be more effective with your team and, therefore, produce amazing results is where the huge challenge is, especially as you scale.

Manny: Yeah, and it’s not clear when you need to go through it. It’s constantly happening and the signals don’t come. Nobody is going to come with a 2 X 4 and knock you over the head and say you need to grow up.

Tanya: Although, wouldn’t that be great?

Manny: Yeah, that’s a startup on itself.

Tanya: Yes, exactly.

Manny: No, you have to well-tuned.

Tanya: Yes, well, Manny, thank you so much for being on the show. I’ll say it on air. Outreach is an amazing product. I’ve been an early user of Outreach and absolutely love it and use it for – okay, for the last five years now and have introduced a bunch of people to it so really, really awesome. You guys should check it out. What is next for Outreach? You guys completed your Series E. Are you guys going to do an IPO, acquisition? What are you guys thinking?

Manny: There’s a lot of customer facing reps that are still living in the Dark Ages and could use a boost in performance and change their life and perception of how much time is spent with customers, so there’s still a lot of ground to cover. We’re just going to go ahead and cover it.

Tanya: So growth, the path is growth.

Manny: The path is growth.

Tanya: The path is growth, amazing. How do people get in touch with you?

Manny: Easiest is to send me a note via LinkedIn or [e-mail]

Tanya: Okay, amazing, well, thank you so much for being on Unmessable and really enjoyed having you.

Manny: Thank you.

Tanya: Unmessable is recorded in the heart of New York City, and a special thanks to all the team involved in producing the show. Visit tanyaprive.com/unmessable to find a transcript of this episode, and be sure to subscribe to our newsletter.