7 Phases of Hiring That Took Outreach From $0 to $230M

so we actually have outreaches uh first employee in SBP of sales Mark cow he is now the CEO of a new company called operator [Applause] mark thank you Sophie thank you appreciate it uh hey everyone my name's uh Mark cago uh as Sophie said I'll actually be announcing officially next Tuesday that uh I've raised a fairly large preed round to start a company

called op operator and I'll let y'all figure out on Tuesday what what we're doing and how we're doing it but uh most people know me though as uh the first employe and the person that led sales at Outreach to about $230 million uh I then um after I left Outreach went to be the cro at Catalyst and it had taken them five years to get the five million bucks and in 16 months I took them from five to 10 and got them acquired by a PE firm that owned their one of their larger

competitors uh to combine those two platforms and decided that that space wasn't right for me anymore so uh decided to do something else but what I wanted to talk about today was um at Outreach uh there's kind of seven phases of hiring as a Founder I think that they're very interesting to know and be aware of of how do you think about hiring especially in the goto Market side uh as you scale up and then probably maybe more importantly is a sub

headline which is how do you make sure that your sales lead leer is the right sales leader to grow with your organization so that you don't have to keep firing and rehiring people uh I led sales at Outreach for the almost eight years that I was there and uh that consistency creates a huge competitive advantage against other people that are constantly churning and re introducing new sales motions and new sales leaders and new sales culture so uh sometimes you do have to get rid of your sales

later early stage uh but uh if you help them understand what they need to do to grow with the or then can keep that person and get those advantages so this is outreaches revenue growth right here you can see when I started at 2014 I'd met Manny Medina who's a CEO we became friends uh he asked me to help him with some sales calls uh after a couple sales calls I was like why am I not selling Outreach he said we can't afford you I said I'll do 100% commission he said we

can afford that and uh I sold a million bucks worth of Outreach at an outrageous at an outrageous commission rate in six months uh we then took that Revenue chart and then uh took that to the seed investors and got a big seed round and then he asked me to build out the sales team which I did until 2022 and you can kind of see the revenue growth there uh I've overlaid that a little bit with some uh different types of sales leaders or sales leadership traits or the kind of

role a sales leader has to play during each phase of this and we'll go over that and just so you know those are doer Builder doctor architect and communicator Ator and the bigger Your Role the uh and the bigger your org the more Revenue you're responsible for at the end at at Outreach I was doing $25 million a quarter and the reason is because I had to immediately uh I had to change roles and right between 50 and 885 I had an identity crisis I'd been a

very much a what's the problem let's get in a room and figure it out I'll help you execute it and let's go well all of a sudden I'd hired a bunch of VPS who are smarter to me smarter than me in their domain area I had a smarter SMB guy than I was I had a smarter Enterprise guy than I was I had a smarter mid-market guy than I was and I was here trying to solve the problems of smarter people which made no sense so I had to re-evaluate my role and I worked with an executive coach and redefined what my value was the Outreach which

allowed us to then spring up to those other areas and I went from the person that was the fixer and the implementer to a person that did three things I clearly communicated my expectations I clearly communicated the timeline on which I needed those expectations to be met and I evaluated the mental model by which people created solutions to create those outcomes and when I did that that's when I went from being a VP or whatever to an executive and I felt like I was really helping Outreach again so

we'll talk about some of those changes along the way and I got some fun pictures in here so 2014 I get started I'm on commission only uh I'm in uh San Francisco this is a picture taken from a guy named Jason vargas's apartment we were so uh poor at this time at Outreach we hadn't raised any money we had about 50,000 bucks left in the bank I had to call people and be like can I stay with you for a week so if I can do sales calls and so this is outside J Jason vargas's apartment uh still love Jason Vargas great guy and listen the first

thing that you have to hire for is you have to hire the first right and the first is a very very important person most companies that I advise or consult and I do with early stage this is the first problem that they have is they Mish hire the first the first has to be a doer that means that you can't be just a seller and it means that you just can't be a planner there's kind of three kinds of hires that you have to have or three types of first hires that you can hire one is

just the seller and you have to decide on this before you hire listen your job is just to sell you don't sit in on product meetings you don't go to the board meetings your job is to sell the second one is your head of sales in other words I need you to sell but I also need you to kind of build out and create some processes because I want you to build out a team and then the third is like the commercial co-founder that's the person that's going to help run the business you know sit with the co-founders at Outreach Manny Medina made it very clear to me that my job was ahead of sales I didn't go to board

meetings I didn't talk to the investors I didn't do stuff with product all I did was concentrate on go to market and selling and that's one reason why you know in the last couple months of 2014 we did about 250k in ARR and then we quickly jumped to 2 and a half million the next year because because all I had to do was think about building out sales and and doing deals right so after you get to the first uh your first then you have to the first has to build out a team and this is our fun little office in State College Pennsylvania most

people don't know the first probably 20 sales hires at Outreach were in a Tiny Town in the middle of Pennsylvania that were all late 30 early 40 year olds with kids and my friends and guess what this was the best job they ever had and they all worked hard they all gave a and guess what that meant that that we had explosive growth and we had a ton of fun doing it together and so you have to go though from being a doer as a sales leader to being a builder at that point like how do you build a culture how do you build a process how do you build a

team and so that's a very important thing is this the first team the first hire sets the tone and you have to be really really careful with your first hire if your first hire can't hire first team members from people that they know then they shouldn't be your first sales hire unless you're just hiring a seller right the reason for that is simple is when you are getting started there's a lot of variables do we have product Market fit is our pricing and packaging right are we going to go down tomorrow one variable you can eliminate is do I

know the people I'm working with and do I trust them and I was lucky my first four a all lasted four years at Outreach minimum the first one left because she got a job offer for 2x what I could pay her and I told her she had to go she's now my CEO at operator we've reconnected the other two retired as reps at Outreach after 6 years because they made so much money and both of them went on to be pastors oddly enough and then the last one is still the uh one of the top three AES at Outreach and just closed

like eight million bucks last year so you know the reason why that is is because we were all together we all knew each other I knew them they knew me I didn't have to worry about half the stuff a normal sales leader did did I have to worry that Pleasant was working when I wasn't watching her hell no I didn't because I'd worked with her for five years and I knew she would work I hired a guy that ran a coil machine at a 3M Factory to make school notebooks that was one of our top sellers he closed Zoom info for over a million dollars

within his second year at being at Outreach I hired a guy that sold cleaning services and cleaned Banks and you know what he turned out to be one of the Outreach Legends too so you know you have to make sure that your first team is cohesive and probably I would say maybe necessarily linked to the leader that's hiring them in some other way and some kind of relationship if your first hire can't hire their first team of people they know you probably don't have your right first hire so we got to two and a half million and then we went to

uh 10 million and I call this stopping the cry for mercy and so um a lot of people think at Outreach we had tons and tons of money we actually didn't in the beginning and we had to make some really we had to be very careful it was much more align in the beginning now later we had tons of money we could just throw it around but in the beginning we had to be very careful with the money and so one of the things that I did is is rather than uh hiring ahead of time what I would do is I I monitor something called

active open opportunities and what I found was around 25 active open opportunities in a reps pipeline all of a sudden their win rate would go down their ACV would go down and their sales cycle will go up guess what that means we have too many deals to work them the right way so once we've got to 25 I would push them a couple deals more than that and then I would hire another rep into the pipeline that was already already there and rather than hiring reps and hoping I find Pipeline to F

them or asking them to F it on their own what we did at Outreach is we created enough opportunities until we had the ability to hire somebody to hold those opportunities so it's the exact opposite and literally I can I'll still remember a meeting with my sales team was on a Monday morning I was in State College we had a couple people remote couple people in State College with me and I'll never forget they're like Mark you need to hire another rep and I'm like why aren't you guys making money what do you want to do they're like no we we have too many Ops we're working too hard we need we need help and that's what I called

The Cry for mercy and after that we kind of set that active open opportunities thing and you still need the Builder here the Builder again is the person that is you know building out the team building out the culture building out the processes he's he or she is also in deals and still selling right there's a little do a little doer you know if you think about a contractor building a house you know there's the person that's doing the drywall and then there's a person that gets into the drywall when they need help right but mostly what that other person is doing is is like looking at the plans and making sure everything's happening the right way so

you still need a builder uh this is uh actually outside one of our first $500,000 deals when we closed mindbody uh in St Louis Obispo which is a great place to sell if you've never been there um then uh 2017 the next thing you need to do is now that you get you get to a certain point where hiring a a cry for help becomes unsustainable because the cries for help comes so fast that you just need to start to get ahead of it and that's when you start hiring for capacity and hiring for capacity means

our I need to do I need to go from 10 to $25 million I need to hire enough reps to be able to handle $15 million of increased ARR and that's when you go from being as a sales leader from a builder to a doctor because what you're going to do in this stage this to me is like the hardest stage this is the biggest transition this is the one that most people screw up and I'll tell you the next phase in a second because it's always a result of this phase every time I talk to a company that's gone through this and so the doctor's job is what is the problem let me give you a

prescribtion fixed for it and this is what I was saying where I kind of got stuck at Outreach for a little while is I was like oh man I can diagnose a problem give me the numbers let me take a look at it all right here's the fix let's implement it let's measure it make sure it's working and double down on if it's not if it is if it isn't working let's trash it and and figure out something new and so you have to hire a head in order to create that capacity and then you try to build the uh the demand to fill it which is the exact opposite of what you do up till $10 million in my personal opinion and in my

experience with a lot of companies and so you know this is us at a huge um all hands with this entire sales team uh and I think C CSA marketing teams uh in Seattle learning command of the message which was uh the way that we do value communication if you don't know command of the message they're an unbelievable organization but uh got to hire for capacity next that got us to about $25 million at Outreach in 2018 we had to hire to catch back up the

first time we hired for capacity we didn't really know what kind of rep we needed and we hired all wrong you know what I thought I needed reps that were number one at good brands that knew how to sell you know I figured out didn't work people that were at number one at good brands that knew how to sell and you know why is because Outreach wasn't a brand it was a nothing it was just an a movement and what I did is is I looked at my best sellers and you know what they were they were evangelists they were John the Baptist they had honey and

Locust in their teeth and loin cloths around their groins they get out there and they'd be like you say an Outreach doesn't work I'm going to show you it works right now let me show you how I got you on the phone and they'd open up the platform and be like look I sent you 17 emails I made 13 phone calls like you it didn't work worked on you what are you talking about and like they would get passionate we have a saying it outre let your passion overcome your professionalism right and that's what we had to do is we screwed up we hired a bunch of professionals and not a bunch of passionate people and we needed still needed passion passionate

people there's so many people in this picture that are millionaires now because of how much money that they sold at how much they sold at Outreach and we had to catch back up because we made so many mistakes highing the wrong people the only thing that kept me afloat were some of my first sellers that were so over producing that kept us going but it allowed me to hire to catch back up so this is a phase you want to avoid but I found very few companies that can avoid it is the first time you start to hire for capacity you will M hire just

realize it quickly what's going on and then you got to kind of hire to catch back up which is you know at this point we're probably on boarding between two and three reps a month every single month which is almost a full-time job as a leader and that's when you go from Doctor to architect because now what you're doing is is you're not diagnosing what's wrong you're no longer looking at the plans and building you're no longer doing the work you're the one that's responsible for the blueprints and that means that you need to start looking out multiple quarters that means that you need to start understanding what are the

pluses and minuses you need to start working interdepartmentally with your marketing team way closer with your CS team way closer with your product team way closer and that architect allows you to create you know sheets plans resources and all that kind of stuff that your the new org that you're starting to create can start to use to be so you don't always have to be there all the time in order for things to happen that got us to about 50 million bucks well what really got us to 50 million bucks was my first four core Sellers and a couple good hirs that we

made that get bought me time to make up for this horrible mistake we made um now that you starting to hire for capacity now again that you're starting to you know catch back up the next thing is is uh you have to build an organization and an organization is a very interesting thing right it is made up of Frontline leaders but when I start to say when you build an organization that's when you're starting to build a second line all of a sudden I went from knowing every single Celler all of their

kids what they cared about been working deals with them for months or years to all of a sudden there'd be somebody I pass in the office and I'd be like who's that and they'd be like that's the new AE I hired six months ago and I'd be like oh you know and I but this is where to me culture takes over culture becomes the engine and that's what is the the thing behind an organization is culture and at Outreach we were really lucky like um we hired people that were either additive the culture that we

wanted or reinfor reinforc culture that we had and so I had uh at this point I had four VPS that were all uh very much smarter like I said in their subject matter areas and they all had a distinct flavor but you could tell it was the same thing it was like the difference between diet coke coke and Cherry Coke it's all still Coke but it's a little bit different for a little bit different folk right and like my SMB guy who was doing you know 30 or 125,000 deals in 30 days or less he had a very different

culture than my strategic guy that was doing you know a Million Dollar Deals over 9 to 12 months and they but still when we would progress somebody up through the different segments it felt familiar but there was a Nuance like my midmarket leader who was here in New York City uh he had a awesome team meeting every Tuesday it was like I would go to it just because I got good vibes from it my Enterprise leader he didn't do that my mid-market leader hired in New York City because he loved

people coming in the office my strategic leader hired remote but you know what if you went from one team to the next it still felt familiar it was just a little different and so building an organization and hiring for an organization is about hiring those second line leaders those directors those VPS however you structure it that can help build on the foundational culture that you're already in and that's how you build an organization otherwise what you end up is you build out organizations and there's different whole these little thief Dums where

everybody's doing I can't tell you we still talk fairly regularly me and three of those VPS uh we all will say that was probably the best four-year run of our entire careers we had so much fun we helped each other out so much we learned so much so you got to in order to start to get to 100 million you have to have an organization filled with second line leaders that can create their version of your culture but it still feels good and this probably is an encapsulation of our culture this picture is one of my favorite pictures ever when I moved to

Seattle to start to build out the sales team in Seattle these were my uh three of my first Seattle hires all three of them ended up being top five AES at Outreach and some of them have formed their own companies and a couple other things but uh unbelievable culture uh we we crushed it there and then the last is and this might seem late stage you know and it depends on your business but at some point you have to hire to go up market and I'm telling you hiring to go up Market is the biggest change that

you'll make in any company ever we had a saying at Outreach with uh my uh VP of Enterprise sales his name was Chris Alro it was called Enterprise state mind we walk around with t-shirts we made banners we would go up and bust into meeting rooms and be like Enterprise state of mind and close the door I mean we were like on a mission to help the company understand that we would not go up Market because we hired experienced Enterprise sellers we would only go up Market if everybody decided their job was to help us go up Market we needed

marketing Finance business office we need everybody to help us do this and that's when you become a communicator and that's when the that's to me is like the final step is when you start to get to a place where your leader is someone that can communicate clearly what's going on bring people together and start to change what's happening inside of organization and I don't think that there's any change bigger and listen most Technologies now are disruptive they're not unique uh disruption is proven to be most effective starting an

SB in lower mid-market and moving your way up because most of the incumbents have started to not care so much about that part of the business because it's a little more volatile and so your company will surround itself with what made it successful to go in those lower uh low Market areas and in order to go up Market you have to completely change the entire company's outset I will tell you that I would feel like we were mildly successful with this at Outreach and we had probably F by the time I was done five customers that were spending over

$10 million with us so we did have some big ones but we this took us way too long it was way too hard and it was probably the hardest thing that I did at Outreach and I'd give myself maybe a c minus on it so so so anyway that's uh that's kind of how to think about hiring as you're uh moving through the different stages of Revenue these Revenue things are obviously in contextual to me in my experience but I will tell you in the dozens of companies that that I've helped out in my time at Outreach as customers and and other

relationships I've had with them that progression of your sales eader is something that you can 100% coach and help with to create that consistency that gives you that Competitive Edge if you in up trying to say what what got us here won't get us there and you're constantly churning sales leaders like I hate to say it but Outreach is already on their third sales Leader Post me and it's only been two years you think they got any kind of consistency there you think they got any kind of culture there no I get calls every single day about people crying about what we they used to

have and what they want right and so you have to be really careful because if you constantly churn a sales leader that means that you're sales or will be in shambles in my opinion and so make sure that you're growing that sales leader along through these seven stages of of hiring so thanks so much y'