Sales engagement startup Outreach recently earned itself a $1 billion valuation: not bad for a company whose co-founders at one point had to resort to listing inventory on eBay because they only had two months’ worth of cash left.
Sitting down with Computer Business Review, this week, CEO Manny Medina explained that the company’s redemption came in tools it built to deliver its own sales pipeline, rather than in the recruitment software it was originally selling.
Outreach’s four co-founders were working hard to sell their product to businesses, but things were not going well. If they could arrange more meetings and chances to sell their product things would even out.
“We had to build Outreach almost as a solution to the problem that we were running out of cash,” notes Medina. But in client meetings, it started to generate more interest than their actual product…
“We’d gone through hell and we couldn’t get any lower.
“We had less than two months of cash in the bank, we had no product market fit, we have one semblance of a good idea… So like the only thing that we can do is, you know, double down on this idea and see where it goes.”
Seven years later, it’s gone to unicorn status and ended 2019 as the fourth-fastest growing company in North America.
What does Outreach Now Do?
The firm has gone on to build a software suite that automates information gathering about sales prospects and establishes tasks that customers sales agents can use to reach more people throughout the working day. The platform brings together all of the contact points with a client such as LinkedIn or Gmail records.
The offering that they created started with an acute understanding of how email systems worked. When an email is sent, it is broken down within a server before it is distributed and shown to its recipient. This deconstruction of the email into smaller bits makes it very hard to track when it has been responded to.
As Medina explains, part of Outreach’s solution was to “put trackers in different parts of the email so probabilistically we had a higher chance of picking up a reply when it came back, because as it got assembled again we look for the trackers in the email and say, ‘hey, this is a reply to a previous email; we need to stop the next thing going out’.”
A key part of the tech at Outreach is machine learning which optimises the sales communication process. Working with its customers Outreach uses metadata such as the timing of emails and whether or not they have been replied to: “In our world, we get to see the reaction to every single email. So for us, it meant the training piece of the machine learning is actually more scalable,” Median notes.
Billion Dollar Evaluation
It’s safe to say that the founder’s punt on a new product paid off. With 4,000+ customers including Cisco, Cloudera, DocuSign and fellow tech unicorn Snowflake, (which describes the sales engagement platform as “the single most impactful technology to boost sales productivity that we use”) sales, it says, are growing fast.
The recent capital injection meanwhile will go on a predictable split of R&D and sales growth, Medina says. As he puts it: “The beauty of having a system of action where you have visibility into what the rep is doing, is I continuously optimize the time the rep has spent in outreach and the outcome for that time.
“So you can measure that in meetings generated, you can mention that in dollars per head, you can measure that in the sentiment of that customer over time. As long as we continually make that better, we’re going to be busy.”