Larry Kim: Scaling Sales with a Product-First Mindset

All right, I never thought I'd say this, but I don't take notes on my sales calls anymore. And it's not because I'm getting lazy. It's because I'm using Otter.ai to take them for me. Otter.ai lets me invite an AI note taker into all my sales calls, which not only transcribes them for me, but summarizes them, pulls out sales specific insights and syncs everything to my CRM. Oh, and it has an incredible AI chat feature that allows me to ask it any question I have about any meeting. Even if my note taker wasn't in the meeting, I can simply upload any recorded conversation to Otter. The amount of time it personally saves me is absolutely ridiculous. And that's not even scratching the surface of what it can do for teams.

So I'm super excited to be partnering with them to give you an exclusive offer to get Otter.ai for sales today for free. Go to otter.ai, that's O-T-T-E-R dot A-I forward slash JBSales to get your free offer and start saving time and selling more effectively today. Website ID providers like customers on AI, they have one job and that job is to tell you who the heck that person is. You know, everyone else is like mostly wrong and we're like, you know, mostly right. That's crazy. That's like a GPS that sends you to the wrong address or like a pregnancy detector that like you're pregnant. Yeah. Oops. Just kidding. Hey, everyone. Welcome back to Make It Happen Mondays, where we talk about sales, business, entrepreneurship, personal growth, mental health, and everything in between with guests who I truly respect and I think make a positive impact on the world around us.

And today's conversation is with Larry Kim. Larry is the CEO and founder of Customers.ai. And prior to Customers.ai, Larry is the founder of WordStream, a leading pay-per-click software company managing over a billion dollars of annualized ad spend for tens of thousands of agencies and businesses globally, which was acquired by Garnett in 2018 for $150 million, which is pretty damn impressive and where we kind of started the conversation, quite frankly. Well, as always, we do background stories and it's interesting. He has a electrical engineering degree, which is what my dad had. And he's an engineer. There's no question about it. We even got into this later on. You've heard me say before on the podcast and probably if you follow me on social that I have an approach or a nexus about it doesn't matter what you sell, it matters how you sell and, you know, these days your product, it better do what it can do.

That's table stakes at this point because otherwise you're not even invited to the table to have the conversation about it. But then it's how you sell, which really makes a difference for him. He takes a little bit of a different approach here because especially in his industry, there is a very specific metric of as far as data quality that they're measured on. And he's got something that he claims is about 80% accurate compared to his competitors or more like 5% to 20% accurate. And that's a pretty damn big difference. So for his industry, he really focuses on the product and the engineering side of the house. But he has a healthy respect for the go-to-market strategy, which is where we got into founder-led sales.

You know, he did after his company with WordStream and getting into customers' AI, he did the typical, you know, hire a VP of sales and put them through the process and they came in with all the wonderful things they said they could do. But within a couple of months, he realized, ooh, wait a minute, this isn't going the right way. So he let that person go, got back involved, slimmed down his sales team from, I think, 11 to about four and tripled the results. And he really says, you know, the main reason was he just got customer focused in what does the customer need? Improving ROI and really putting them through a process that ensured it. So we talked a lot about the learning lessons all throughout and as far as hiring, scaling, how he keeps things aligned.

And so it's, again, an interesting combination of sales and product with him leaning a lot more on the product and the engineering side, which is definitely contrary to what I believe. So we got a good conversation around this. So hopefully you enjoyed it as much as I did. Let's make it happen. Hey, real quick, before we get to the conversation, I want to chime in and let you know that I just recently relaunched my entire JV Sales membership with all new content and different ways to engage. I know I have three different programs, core, pro, and elite. The core program gives you access to both of my world-class programs, filling the funnel and driving a close. These are the same programs I've used to train some of the fastest growing companies in the world, like Salesforce.com, LinkedIn, Google, Amazon, and hundreds of others.

The pro membership gives you everything that's included in core, plus all my tactical tips, workshop recordings, all the different GPTs I've been working on, and access to my live events, including AMAs. The Elite Package is everything in core, plus one-on-one access to me, which I have never offered. You get a monthly one-on-one call with me to help you talk about whatever you want to deal with, whether it's sales, entrepreneurship, business, life, any of it. I'm here to help you get to the next level. As a special bonus, anyone who signs up for the Elite Package before March 28th gets to join me, the other Elite members, and five other sales experts and influencers in New York City for a free training Friday hosted by LinkedIn at their office at the Empire State Building, and tickets to come with us to the Broadway production of Glenn Gary, Glenn Ross, with my favorite comedian of all time, Bill Burr.

It's going to be an incredible event, and I would love to see you there. All you need to do is go to www.jbarrows.com and click on the training link for individuals at the top of the navigation and see what the details are for each program and sign up today. Now let's get back to the conversation. Larry, Kim, welcome to the Make It Happen Monday podcast, my friend. How are you doing today? Doing great. Thanks for having me, Joe. Yeah, thanks for coming on board. This is, I was looking forward to this after doing a little bit of prep on you and where you've been and what you're doing these days, kind of right in the thick of things. So before we get into kind of, we're going to talk about founder-led sales and bootstrap versus VC and, you know, how do you stand out in today's bananas world right now?

But before we get there, I always love to hear the origin story here, Larry. Like, not just the stuff we can see on LinkedIn, but talk to us about, like, where you grew up, parents, what gave you the bug to kind of get into entrepreneurship and running businesses and all that stuff, and then we'll take it from there. Sure, sure. Well, I'm from Canada, and the entrepreneurship bug was through my mother, who was an entrepreneur, but just, like, a piano teacher, and believe it or not, there's, you can learn everything about business from one of these small businesses. Like, she would put flyers in the church newsletters or in the bulletin boards or the announcements for the schools around there.

She would, like, I didn't realize this, but, like, when we moved, like, we would always be living next to a school, and I later found out that it was, like, business development, because, oh, that's ICP right there, man. So it's like, oh, you can just walk here from after school. Genius. So I just learned a lot about, you know, marketing and, you know, ICP and taxes, like, that you could, you know, actually make that money and keep most of it instead of, you know, my father was or is a government worker, and, you know, in Canada, they're taxed at, like, 50-60%, and it's pretty rural. So, yeah. Hey, I hope you're enjoying the conversation so far. I want to take a quick minute to share with you what I'm working on these days with my new JB Sales membership.

It includes live monthly training delivered by me on my two signature courses, which are Filling the Funnel and Driving a Close that cover all aspects of the sales process. It also includes monthly workshops that I'll be running on specific sales skills and different tech skills like ChatGPT and how to leverage AI throughout the entire sales process. Finally, the membership gives you access to my entire online catalog with every course and every tip I've ever done. And as an exclusive offer to my podcast listeners, if you go to jbarrows.com, click on the individual membership link, and use coupon code PODCAST at checkout, you'll get 25% off. Now, let's get back to the conversation. Cool. So then, and actually, you know what?

I didn't check. That's the one thing I didn't check out. Where'd you go to? Where'd you end up going to school? Yeah, so then I'm an electrical engineer. I went to University of Waterloo in Canada. It's kind of like a boot camp for engineering. And originally studying like power systems and like, you know, power distribution and this kind of stuff. But later, learning about software in like a third or fourth year. And that was like, you know, 1999, 2000 ish, like during the dot-com boom. And I did an internship in Silicon Valley with semi-connected companies. And I was just like, oh my God, like this is, this is so amazing. Everyone's just getting rich off of these, these software companies.

You know, it was even like a pets.com or like little, you know, and like, we're going to do this online. And, and, you know, they're just going to be thinking like, I need to switch all my, you know, third or fourth year electives and, and, and just focus on software. And, you know, that was sort of the entry point into, you know, a career in software development slash, um, uh, slash, uh, product management and marketing. Um, so, um, that's, uh, no, I see I might, yeah. And here we are. So my dad was, uh, there you go. My dad was an electrical engineer too. And I know like, you know, a PhD, all that stuff, super smart dude, never got out of his own way when it came to like building businesses or anything like that.

But, uh, you know, you know, the AWACS, you know, that, uh, plane that, that's by his dad, so he was part of the team that actually built that. Um, and so I, my mom's an artist, my dad's, you know, an electrical engineer. And so I kind of have both the art and the science, uh, which kind of put me in, I lean more towards the art with the sales side of the house, but I take a very scientific structured approach to it. Uh, but it was always fascinating to me that, that the application of engineers and I would get from an engineering standpoint, right. Cause you're going to, we're going to talk a lot about go to market and how you, you know, fired your, with the most recent with customers AI, you kind of fired your VP of sales and went and founder led sales.

But when did it shift for you or when was the realization for you on your journey from being an engineer, um, to understanding kind of the, the importance of sales, go to market strategies, those types of things. Cause I, I find a lot of engineers still believe that the product is, you know, you just got to build the best product and they will come versus the sales angle to it. Realizing that, you know, it's almost table stakes these days, as far as the product can do what it can do and you have to get out there and market. So where in your journey, where you kind of exposed to the importance of the, the sales component of building the business. On in my career, I was just building software for, uh, you know, building and product managing software for various software companies, like, uh, B2B software companies.

And, um, it just, uh, early on the, this is like, you know, the Genesis of Google and Facebook. This was like the two thousands. And, and, and, and, and basically, uh, we, we used to like, uh, you know, do print ads and trade magazines and stuff like, uh, you know, going to these, these, these, um, I guess the events are still around, but, um, uh, but like I was actually Google's largest, uh, customer back in, uh, 2001 in terms of, uh, an advertising partner. It was like, we spent a grand total of like one or $2 million annually. Like, like nowadays, like, you know, they won't even call your, call you back if you, if you spend that much. I was going to say, like that, that was like a big deal.

And, and, um, and, and, um, at the time, and, you know, I even met all the like Sergey Brin and all these guys, like, uh, uh, but, but, uh, the, the, um, the point is just to say, like, it was really eyeopening to see how, you know, like just keyword advertising and stuff like this would, you know, radically open up the, the market for like a, uh, like a, a business software thing where you could kind of just teleport into people's minds at the right time and, and, and, um, be there, uh, to, to, uh, you know, be, be evaluated by a customer. And, um, you know, in a very short period of time, like the revenues grew from like, you know, 3 million to 15 million to 33 million, like, like for these various companies, like we were, they were all in hyper growth.

And, and it was this realization that like, there's this, the, the go to market is just so leveraged and like, like, like how you execute. And, um, you know, if, if you've, uh, especially in a field like software where the, the kind of the marginal cost is, is very low. And like the, the, the cost of development is, has been kind of already been accrued, uh, like, wow, like there's just so much leverage in this. And that just got me very interested in like Facebook ads, Google ads, um, that kind of work. Love it. So what was, what was kind of your big, I mean, you were right in the thick of it. I graduated 98, right. I was in, I was brand new in sales in 2000 and then the crash hit, right. What, what was one of your bigger takeaways from, or learning lessons, I guess, from the pop, the, the bubble burst of that first.com error that you were to apply.

Cause you know, we've hit a couple of cents, right. The 2007 was more of the, you know, real estate crash, but it crashed the market. 2023 was the SAS tech to a certain degree crash. So what was kind of a, a, a aha moment or something that you looked at back then that helped you with the subsequent, uh, ventures that you've been putting together here? Um, you know, one is just like, uh, I have a really great appreciation for timing and luck. Uh, it is like, you know, people who graduated in 99, um, you know, like that was like, I don't know if you know this guy, Chemath, uh, on the all in podcast, like, oh yeah, yeah. Yeah. Like he was actually like just one year ahead of me in my class. And, uh, and like, yeah, he ended up like getting all these opportunities at Facebook.

I graduated the next year and it's like, uh, completely, completely different, different space. Um, so, so just, you know, uh, I guess, um, more philosophical on, you know, luck and the possibility that like you got here, you know, but it wasn't necessarily like, you know, all just based off of your own actions. Um, another crazy thing was like when I got my first business funded, uh, it was actually in August of 28, uh, 2008. Uh, and like the whole financial crash happened in September of, of, of 2008. So like, I was like the last deal, uh, to, to, to make it through. And then after, after, you know, September of, of 2008, it was like pens down, we're not writing any more, um, investments, you know, for like, you know, three, four years.

Um, so, so it was, um, yeah, I mean, it's hard to, you know, come up with, with something, uh, you know, very concrete, I think. But the one thing that sticks out is just like, you can either be very lucky in the case of my second venture or very unlucky in terms of my graduation. Mm-hmm. Yeah. I mean, you know, I'm a big believer these days, you kind of make your own luck, but you know, and, and you look for opportunities because you got to be agile. I think the one thing for me is just more agility, right? It's to be able to pivot fast and adjust and, and have an organization that can pivot. Cause I think a lot of these companies, when something big happens and they're too structure oriented or they're too kind of hyper-focused on one certain thing and they can't adjust, usually helps them crash quite a bit.

So I think right now, specifically in the world of AI, uh, agility is the number one thing. So let's talk about, you know, WordStream, was WordStream your first, uh, venture that you got your funding for? Yeah. Um, so I was just doing sort of, um, computer ish, uh, product management work for various software companies. Um, and, uh, kind of discovered all these go-to-market capabilities of, of, um, you know, online marketing and, uh, quit those jobs and started doing, um, uh, consulting work, um, which at the time was quite lucrative. Like you could, you know, there, there wasn't as much, uh, information on the web on how to do this and you could charge, uh, you know, five, 10 K a month, uh, for, for every counter base services.

And you could, you could hire, you know, eight to 10 clients on, you know, as a solopreneur. And, um, I, I, I wrote software to, um, to automate stupid repetitive tasks. Uh, and then around 2007, I just thought like, what the heck, like I should really consider, um, just trying to productize the tools that I was making. And, and, um, and I just, uh, pitched that idea to a bunch of VCs and, you know, it was a process, but, um, eventually got to, uh, a couple of turn sheets and, uh, and one of them closed, like, as I was saying, uh, it was a $4 million series, a investment with Sigma partners, um, in, in, in Boston. Uh, that was, uh, I was in my twenties and that was, uh, kind of a big deal. And I thought I was, I thought I made it, but, uh, but of course.

Hey, $4 million closed, man. That's, that's a pretty big deal to close. Yeah. For like a 20 year old or something like, like it feels great. Um, you know, I actually thought we made it, um, you know, but in reality it was a, you know, it takes a decade to, uh, to build a meaningful business and exit. Yeah. Yeah. Did you, um, how was it, what did the funding process teach you? I mean, how, how many no's did you have to go through to get that one? Yes. Were you the typical, you met with a million of them and only a couple of them, or was there a pretty targeted list that you went after? Um, you know, it's, it's, it's a hundred pitches. Sorry, sorry. Two, one to 200 email pitches or intros. Um, you know, that results in, uh, several dozen, uh, kind of first meetings, uh, and, um, uh, eight or so second meetings and, and two offers.

Uh, it, it wasn't that, uh, linear though. Um, uh, I would describe it as follows. Like the first time I went through the process, I, it was like all, all no's. Um, and, uh, some of them would write emails back of like, here's some tips of like what we were looking for and that kind of thing. Uh, and, uh, if you, uh, if you, if you can, oh, I had revenue, so I had consulting revenue. So it wasn't like, uh, I needed this, like I could continue to operate. Uh, and, um, but, uh, I, I kept that feedback in mind and I actually implemented some of those changes, like hiring more of a larger team or getting more beta customers or, or, you know, just like there was a bunch of things that they were looking for.

And then it was kind of easier because I could just reply to the rejection letters and saying it's, it's been a, you know, a year here's the, um, the progress we've made, which I'll be open to, to, to, uh, take a second look and, and, and, um, that was sort of the bottom of that funnel where eight said, yes, we'll take a, another look into, to made offers. Nice. Now you're back now with customer, uh, you're back to bootstrapping again, right? Um, you know, the company did a series a, uh, in 2023 around this time, uh, like spring of 2023, uh, and, uh, it was a 5 billion, um, okay. So with the, with the funding, was there a difference? Uh, cause a lot of EC there's a lot of, there's, you know, obviously different types of VCs invest differently.

And as far as the resources and the tools, was it important to you, even though that equation, right? So let's go back to the word stream one with that original funding. And then I'd like to talk to you about the same one with the customers. They are with that series a round is we're, were there certain criteria that you were using to evaluate the funders this time, the second time around, so that you kind of knew the type of partner you wanted, or were you really of the mindset of, I just, I really just need money. I don't need all the additional resources that some of these other VCs bring to the table. What was your thought process on who to partner with on this one? Um, yeah, it's funny.

So typically when you, we, we didn't mention this, but I, I did sell word stream for almost $200 million. It was, it was acquired by a Gannett for 150 million. And there was all these escrows and earn outs and cash. Um, so that was a pretty spectacular exit. And typically, typically what happens, um, like I raised about 18 million. Uh, uh, so that's like plus 10 X, um, return. Um, the, uh, uh, typically if you can do that for an investor, um, you're kind of set for life and like, they'll just write you a check for your next thing. Uh, like, like on day one, you know, no, no, uh, business plan needed kind of scenario. Um, unfortunately, uh, Sigma partners, um, uh, had, uh, decided to, uh, you know, cease to, uh, operate and, um, you know, and, uh, so fund number eight was their last fund, which was, which was a half a billion dollar fund.

Um, so, uh, basically, um, I was kind of on the street and trying to, um, you know, just find, uh, another kind of series a investor. Um, you know, you look for people who have, uh, experience in the field that you're, that you're, um, operating in. And so like sales tech, MarTech was, was, was the field, uh, I ended up getting an intro to, uh, a guy named Kevin O'Connor, who was the founder of DoubleClick, uh, which was, uh, you know, big remarketing company acquired by Google for, you know, $3.2 billion or something like that. Um, so, so, um, and I was, it was a really great fit because, uh, like my current company is a, uh, remarketing company. Oh, so, so, uh, uh, uh, you know, it, it's, uh, uh, it, it's like a second generation remarketing company.

Mm-hmm. So with this new company, right. Talk to talk us through that, this evolution of growth from, you know, you had a VP of sales and then kind of restructured. And I think from what I understand, let go of the VP of sales, drop the team from like 11 to four or something like that, give or take. And then you stepped in as founder led. Am I right on that? Yeah. Um, so it's just like scaling is incredibly difficult. Uh, and, and, uh, uh, we were pretty sure we had what it took to, to scale the business. And that's why we, we did a series a, uh, because we had more leads than we could deal with and wanted to grow faster. Um, you know, uh, I think we, I hired a kind of traditional, uh, sales leader.

You know, managing history of managing, uh, you know, AEs, this, this kind of thing. And, and, um, you know, I, I, I, John, do you believe in this whole, um, founder mode kind of, um, kind of thing? Yeah. So like the, the, the theory of founder mode is like, you shouldn't, you shouldn't just like hire, uh, you know, department leaders and have them run black boxes because what they'll eventually do is just like lie to you and run the business into the ground. Um, well, um, you know, essentially, uh, you know, there was all sorts of sins, like, you know, being really lax on like ICP compliance, like selling to, you know, people who really have no business using the software or overcharging. There was a lot of sins like, and, and, um, you know, because they're under pressure for, um, you know, making certain numbers and, um, you know, uh, I think, uh, you know, I kind of figured that out, uh, what was happening, uh, you know, a couple of quarters in and, um, you know, eventually we did a, a reboot of that, uh, whole, whole team.

Um, uh, and, and, um, uh, you know, when all founder wrote and started, you know, getting more intimately, uh, involved with these, these, these deals and running, you know, sales processes and, um, doing, doing, um, you know, trials and evaluations and establishing, um, kind of, uh, sort of success criteria with the client and then working through a trial to, to make sure that the success criteria was met. Uh, and, and so just instituting that, that motion, um, over the last year and it's been pretty successful. We, the, you know, I've got, you know, a single digit, but basically I cut the, the number of AEs down by, uh, by three times. Uh, so a third of the AEs are generating, um, you know, roughly twice the, the MRR.

Uh, so, uh, that's, it's pretty exciting. So what was that, what was that shift? Cause that's a pretty significant shift, less, more. Um, and what were some of the metrics that you put in place that were really important for you? Like KPIs wise, right? Versus, okay, Hey, we're growing. I got this guy, black box and you know, we're going to put some stuff on their head. But now with the shift towards more, you getting involved and really understanding these proof of concepts or whatever you were trying to put in play there and, uh, in trials, what were some of the metrics that you were paying attention to when you made that shift to, to help you get to that next level? Yeah, I think we, uh, have, uh, less of a, I mean, that's how this stuff happens.

Like you start focusing on KPIs rather than really getting to the nitty gritties of, of the fundamentals of what's happening. Um, so I would say that we actually, um, uh, kind of started ignoring some of these, these KPIs, which, uh, I think were, um, you know, you can, you can optimize for a KPI or, you know, what I make it look as, as good as you want it to look. Um, the, the, the shift was more structural slash fundamental around like, uh, training and education of the reps to, um, truly understand the solution that we're offering and, and, um, the solution space that we're operating in. So just being able to, to run those, um, those trials and, um, speak your language and understand the business problems.

So it's like, it was more like, uh, uh, uh, education and training effort as, as opposed to say, um, let's come up with new KPIs and, and, um, uh, et cetera. I think another kind of focus was around, um, optimizing for return on investment. Uh, so, um, you know, we had, uh, uh, a CS leader who, um, you know, was a little reluctant to, um, go all in and promise like a hard ROI, like that certain, uh, certain dollar amount or lift, um, uh, but you know, this is pretty leveraged technology with, with, um, card abandonment and stuff like this. Like it, it does seem, uh, seem to print money here. Uh, and, and so, um, so, so then shifting the focus of the, of the sales process and the expectation setting, uh, to be more around, um, you know, hard ROI.

And, and, uh, those were, you know, two among many things that we were focusing on. Going back to the, the education and training, did you hire reps or the ones that you kept, were they from the industry or like how, what's, I guess what's your hiring profile, right? Cause some people hire for experience and industry knowledge, others hire for grit and passion and drive. Like, what are some of the things with this, with this new approach, you know, your shift coming back in as you now scale, what are those characteristics you look for so that people can be plugged in? Sure. The people who we kept, um, like the third that we kept have a certain, um, you know, aptitudes around, um, uh, around grit, around resiliency, around, um, uh, just intelligence.

Um, like one of them is, uh, played college football even, um, you know, which is extremely competitive, uh, so, so just rather than, than, um, skills, um, skills would be like, oh, I know how to use Apollo, blah, blah, blah, blah. Like, um, so I think the mistake is to over optimize or over index on skills, um, which I think is okay if you're like a series C company and every, all the concrete has been poured and everything is like, you know, all the buttons to press and everything. The issue with an earlier stage company is like, you're still trying to figure it out. And, um, you know, that, that requires more of this, um, you know, ability to problem solve and, and, and be resilient to change, uh, those types of aptitudes.

And that's kind of what we're optimizing for. You said you, you also said that you have higher on intelligence. So what, what's your definition of intelligence? Like GPA, like this kid's really smart in this thing, or how do you, how do you look at an intelligence when it comes to a hire? Uh, just cleverness, uh, like, like, you know, to, to, to, to find it's, it's not, well, I don't get me wrong. I do, I do, uh, value GPA, especially in the context of, um, engineering hires and stuff like that. Um, but in sales, I think it's just more, uh, like resourcefulness and, and, uh, and grit and, um, scrappiness. Yeah. It's, I, I don't want to name the company, but I, about 15 years ago when I was training one, I was, I couldn't connect with the audience.

It was the first time that I was standing up there and I'm like, something's off. They were taking notes, but like, there was something off about the connection. And I remember asking the, the sales leader at the time, I'm like, can I ask, like, he's like, how do you think it's going? I'm like, I don't know, man. I think I'm bombing up there for the first time. I don't think I'm connecting with this audience at all. And he's like, what, what's going on? And I was like, can I ask you what your hiring profile is? And he's like, oh yeah, yeah. We hire from the best schools, the best, you know, the highest. And I was just like, oh, okay. That, that's why I'm a state school kid. And I grinded my way through and I drank my way through college.

Like, you know, for me, I always want the, to your point, the grinder. I want the kid who had like two or three jobs paid their way through, maybe, you know, did okay, but didn't, you know, ace everything, but shows the ability to be adaptable to, you know, handle adversity and those types of things. So I look for kind of the EQ intelligence versus the IQ intelligence when it comes to sales, obviously. But a lot of the other roles right now as well. Of course. Do you, is there something you do specific to look for that in a, in an interview? Is there a specific question or test or background that you look for that, that kind of says, yep, this person has grit or this person has adaptability?

Look, I don't want to say that I'm a, a psychic hiring person. Like I've, I think it's like 50, 50 or, or perhaps worse. Like, like it's, it's, it's just very, very hard. I think to ascertain like how well people will do, you know, you know, an hour or 30 minute interview. I think, uh, and I can't claim that I've, I've, I've figured it out, unfortunately. Yeah. Well, that's the art and the science of it, right? I mean, there is a certain gut, but unfortunately the, when it comes to interviews, right, I always say with sales reps, this is their best, this is their best sales job, or at least it better be their best sales job. And so to be able to pull that, you know, pull that apart and really figure out what's real behind that sales, you know, that, that sales pitch, if you will, is not exactly an easy thing to do.

Um, cool. Well, let's start. So now let's, you know, the trust factor here. Um, when you went back and you kind of got back involved and you said you kind of took a much more customer centric approach to this and figuring to figure out about the KPIs and really wanted to figure out what the client needed. This is an industry, you're in an industry that, you know, regulated and all these, so trust is a, is a big factor with people investing. And you and your, and your, your solution here. So how do you build trust these days in a world that is so skeptical on almost everything and, and balancing that with growth, right? Cause I think that the easy answer is, oh, you nurture each client. You make sure that they get all the, you know, white glove service and everything that they need and you over, you know, under promise and over deliver and everything else, but tie that to growth.

And that's where it starts to get a little squirrely there. So how do you continue to build trust with your clients as you try to scale this organization to the next level? Um, we have a, um, customer journey. Uh, so, um, there's four States, um, and, and, and this, like it, it, it controls our customer, uh, like our CSM, uh, comp plans, like they're like how much you get paid. Uh, and, and the user journey is as follows. There are four States that the customer is in. Uh, it's either they're onboarding, they are optimizing, um, or, or, or they've, uh, kind of, uh, uh, uh, confirmed an ROI, uh, uh, a, a, a fourth stage is like, you know, if they've renewed their contracts. So really, really it's, um, uh, you know, onboarding, optimizing ROI confirmation.

Uh, so the ROI confirmation stage, uh, requires, uh, that the customer, uh, write a positive review for us, um, or refer a friend, uh, and, and, and, and the reason why, like, that's kind of a high bar. You're like, right. Uh, but the, the reason is, is like, you know, NPS, like the question for NPS is on a scale from one to 10, how likely are you to recommend this product or service to, uh, uh, a friend or colleague? And so we're kind of like instantiating like that definition of saying like recommendation to a friend or colleague, that's either a referral or a review. And, and so when we, but your question was like, how do you engender trust? Like we, we, we start these, uh, uh, these customer kickoffs with like, this is our process.

We're going to get you to like an ROI confirmed, confirmed state. And at, you know, at that, at some point you're going to be so happy with us that you're going to want to refer someone or, or, um, you know, write a review. Uh, uh, and this was like, like we, we kind of tell them what, what to expect. Uh, and, and that, that it's like our job to, uh, you know, get the product to a point where you're, you're seeing, uh, you know, strong value. And, and, you know, if, if, if we do that, then the customer stays, uh, for a very, very long time and expands and, uh, and our business grows together with them. Uh, if, if we don't like all of the churn is in the, is in the non, uh, ROI confirmed pile basically.

Okay. Do you, do you find just a small nuance that like, do you find the, once you get to that stage, the ROI is there, the clients say, do they give you more referrals or they give you more reviews or is it 50, 50? Um, uh, it's, uh, I, I think, uh, you know, referrals is a decent chunk of our, our revenue and, and, um, but, but some people like just maybe they don't want to write a review or something, I don't know, I don't know, it's just whatever they prefer. Yeah, I get you. Well, I just, I'd bring it up because I think the referral asking for referrals is, is just an absolute lost art, but it's the, it's the easiest lift of any sales organization just to do what you say you're going to do.

And then two to three months into the relationship, if it's doing like, you should, to your point, put it as part of your process where, Hey, we want to create raving fans out of you. And our goal is to get, you know, to earn a referral, to earn it, to earn a testimonial, but too many reps just kind of pass right by that or sales reps, quite frankly, how does that brings up, how is your sales rep and your customer success team? Talk to me a little bit about that, that, that handoff, if you will, and how involved, um, in that transition is it? And then how involved does the sales rep stay in the account once it's transitioned to the customer success? Sure. Um, so the, the, the AE has to like, I mean, the, the AE has to run the trial.

So they have to establish the success criteria. Uh, they have to do the discovery and, you know, like, you know, what would be an exciting outcome if we were to do this, they have to document it. Uh, and, and, uh, and we, we need to, um, uh, you know, get the customer far enough along where they can see a path to, uh, getting to that ROI. Now, you know, the, the, the issue is like, we can't have a sales cycle that lasts forever, right? Like, you know, marketing and sales, like there's tweaking, there's, there's, um, you know, campaigns and, and like, you have to execute, you know, uh, you know, and, and iterate. Uh, so, um, you know, the handoff happens like when at the juncture where there's like a clear path to, uh, ROI and, and the success criteria, um, you know, when the, when they sign, um, typically we haven't like, um, started, uh, doing all the, um, the campaign work because that's like, you know, that's basically like consulting work.

Um, but, uh, but the, the, the handoff happens like at this juncture where they've seen enough that they have belief in conviction that, that there's a path to ROI. And then they, they, the, the CSM takes over at that juncture with, with the notes and, and, and recordings, call recordings of, of the discussions today. Okay. And does the sales rep after that handoff, do they stay involved at all? Or do they, you know, and are they the one that doesn't circle back and when it's time for, Hey, we hit those ROI metrics or does the CS really just take it from there? You know, I've seen it done different ways for, for us. Uh, we, we just have the, uh, the CSMs manage the relationships, but I, I don't know if, um, if, if this is something that we should, you know.

Um, be open to, um, you know, continue to continue iteration. Like I'm, I'm, I'm, I'm open to, I've, I've seen it done in different ways. Yeah. I mean, we're starting to see a shift back to kind of full cycle sales and, you know, sales reps owning the relationship for cross sell up. So I, um, I think it all depends on the business model, what you're trying to accomplish. And also quite frankly, however, however you're trying to scale, which brings me to the next question, which is, you know, with relatively fast paced, right. Making decisions quick. How do you maintain the kind of alignment, if you will, across the org from marketing to sales to customer success while you scale? Is it really just structure that you put in place and those milestones, like, Hey, here's the plan stage one, two, three, and four, and everybody knows their role, but, but how do you do that and, and continue to evolve, uh, with how fast things are moving right now?

Just like macro wise, you know, it's typically like, so, so we don't monthly all hands meeting and, and, and, you know, clearly, um, articulate like what the key vision is and where we need to get to and what, what each department is responsible for. And that of course, uh, is, is a, uh, derivative of, uh, like a quarterly offsite, um, uh, planning, uh, from our exec team. Okay. So you, are you shifting a little bit more? I'm curious, you kind of your approach right now, you said a lot of your stuff comes through referrals and obviously from an inbound standpoint as well. Um, are you moving towards outbound? Did I read through this a little bit where you're moving a little bit more towards the outbound motion?

And is that, how are you balancing, uh, lead gen, if you will, from a channel management standpoint of the different types of channels and where does outbound fit for you? And the reason I'm asking is because I'm seeing that shift of outbound, like the, the typical SDR BDR model really starting to shift under marketing and be looked at as more of a marketing function from a brand exposure standpoint, you know, positive impression points and, and taking it back away from sales. So how are you looking at the outbound channel right now? Are you investing in it and, and where does it sit? Sure. I mean, uh, you know, inbound marketing is, you know, it's, it's, uh, it's just not targeted. Like you, you can't, you can't stop, um, you know, randos from signing up for your, your offers and stuff like this.

And, uh, I think the challenge is that, um, uh, you know, AEs, if something is rotated to them, uh, they, they want to work it. Um, and, and, uh, it's sometimes difficult to ascertain the, um, kind of the, um, the discovery metrics, like in terms of like, you know, is this, is this the right fit for us or not? Um, I think, uh, you know, outbounding, you know, is, is sort of very key for, for the, for this type of, of, of, of industry. Um, and it's, it's just something that we're, uh, doing a lot of experiments in. I think outbound marketing channels are like, you know, it would be, uh, you know, targeted advertising, emailing, calling, um, you know, that, you know, that, that kind of list of emotions and, um, it, it just, it's just a work in progress, I would just say.

Yeah. Yeah. I mean, I think right now things are changing so fast. It's almost, you know, I'm hunting for what works and what doesn't work. Right. But I think it's all this testing iteration and being agile because what worked six months ago is just not working anymore right now. So how is, how is the culture of your team? How are you, how are you experimenting, I guess, when it comes to, uh, trying to figure it out? Do you have a, do you have a, an approach that you use to say, Hey, let's, let's do this for a period of time and see if it works. And for this persona versus that persona, like what, how do you experiment, I guess? Uh, uh, well, we start with the, the goal in mind. So like, you know, it would be nice if X percent of the, the, the deals were, you know, sources are outbound or whatever.

Uh, and then we try to enable the, um, the tools and skillset, uh, required to meet those objectives. Um, uh, so maybe it's certain type of software, uh, for, for doing outbounding or, um, uh, you know, or, or certain, um, certain marketing types of events that are more conducive to to that type of, um, relationship building. Um, and, um, and, and, and you just iterate like it's, um, it's hard. It's, it's, uh, uh, you know, we, we, we, we're actively working the problem. So, yeah. And I, and quite frankly, I think that's the best answer, right? Cause if somebody has an answer to me right now, this is working, so great, it'll work for now, but let's talk again in six months. And so many people get stuck on something that they think works because it worked a few times and it drove a quarter or two.

And then they stick with that without iterating and constantly testing and looking at the data, um, that they, that, you know, the, the results keep going the wrong way. And then they just try to throw more activity at it, more, you know, more bodies at it. And it never works. Can I give you one example? So, um, uh, I'm, I'm, uh, uh, of the belief that, uh, you know, trying to scale and, and doing outbounding is, is kind of, um, well, it's hard because like, it's like you can get one reply off of like 10,000 email center or, you know, something about it. It's, it's, it's, it's, it's, it's terrible. Um, and so, um, you know, one of the ideas we had was to, um, you know, strengthen the differentiators.

Uh, so yeah, typically in sales software, like, you know, is, I don't know, like Carta any different from like pulley, which is like a different cap table management. Like they're, it's more or less the same. Um, so like that's pretty typical. Um, so one, one idea that we had in terms of our GTM was to really significantly increase the differentiators, uh, like, like not making it just like, Oh, this is like 25% better or, you know, a little bit easier to use or if there's a new feature or puncher. Um, we, we did some data testing of, of our competitor products, uh, in our, in our space and found that like, so we do ID resolution. It tells you like who, who, uh, who's on your website, um, without them having to fill out a form.

So, so we're making guesses and using signals to try to predict who this person is. And, um, you know, what we discovered was, and then this was like over a year ago, uh, that the, um, the, uh, uh, competitive companies were, um, the competitor companies were mostly wrong, like, like, you know, not completely wrong, but they were, they were making a lot of guesses and maybe they were right, like five to 30% of the time. Um, and, and, uh, you know, we, we do things quite differently here. Uh, like we're more of an engineering company and, um, you know, we, we just, it's closer to like mostly right, like six, not, nothing's perfect, but it's like 65, 75, you know, 80% accurate. Uh, so, so like we've been trying to scale outbound using more of a product led angle.

Okay. So like you have to have something to, to highlight, uh, like in, like in, in, in, in, in the first place. Uh, and so the, the offer now is, is like, um, I mean, we still have the standard offers of, um, you know, try out the thing. Uh, but, but, but we, we also are able to do like a data quality test. Like, so, so we can, you know, quite easily set up a, a way of just checking to see if the guesses being, being, um, provided by other competitive, um, uh, you know, ID resolution providers are like on the mark or completely wrong. Um, and, and, um, you know, the thing that that's quite surprising is that even though this technology seems to be producing decent ROI, it's actually wrong most of the time.

And so, uh, uh, so, so like just getting back to the question around like how to scale, like it, it's less at this juncture, it's less about like, uh, you know, trying this channel or that channel. Um, it's more about sharpening the ROI and differentiators. Uh, like, uh, you know, Google doesn't do any marketing for their search engine when they, when they came out and when I went after like Alta Vista or Yahoo, like it was just a, a better quality product. Yeah. Uh, so, so, uh, I think, you know, that's sort of what we're, we're, we're doing right now. Interesting. Cause, so it sounds like, you know, cause I talk a lot about, you know, not what you sell, how you sell, but you're leaning in on the, on the key differentiators and then just testing different approaches to different, you know, to drive different traffic.

Yeah. Like I website ID providers, like customers on AI have, uh, or, you know, other vendors in this space, they have one job. Okay. And that job is to kind of tell you who the heck that person is. You're as accurate as possible. So if this, this is a situation where like, you know, everyone else is like mostly wrong and we're like, you know, mostly right. Um, that's, that's crazy. That's like a, I don't know, like a GPS that sends you to the wrong address or, or, uh, like a pregnancy detector that like, like, you're pregnant. Like, just kidding. Uh, you know, it just seems like a kind of a existential, like type of, uh, you know, area to, to focus on. That's all. Yeah, yeah, I definitely agree that because you know, there is, there is commoditization across the board on, I think on everybody's product.

Right. But these days, like I said, table stakes is you got to do what you say you're going to do, but then the, all right, if you're super like, this is exactly what we do. And that accuracy needs to be pretty much where it is. Then it's a, a pretty easy to cut discussion because it's objective, right? Like you can actually prove that through, through your, you know, cause a lot of people put stats out there to say, Hey, but how, I don't know. If a lot of people believe stats, like, Hey, we're 35% better or whatever it is. So how are you, how are you showing or proving the, the differentiator to the audience? Cause a lot of us hear numbers like, yeah, yeah, sure. Okay. We're, you know, when 95% of the fortune 500, why?

Cause they have one license of your shit. Right. So how do you, how do you really articulate that in a way that's believable? Sure. I think, uh, it's, it's going to be case studies, uh, the, the, uh, not everyone is going to want to do a data test because it, you know, like it's, it's inertia. Like, like you, you have, uh, the thing that you have, uh, but a meaningful fraction of people will be, be open to doing that. Uh, and, um, and, and if, if, uh, you know, since, since there is a, it's not just like a little bit different, it's like, you know, drastically. Yeah, you're talking five, 10% versus 80%, man, that's, that's a pretty drastic difference. Like, like it's, it's, it's a multiple, like when it's, when you have something that's like two, three, four, five, 10, 20 times better, uh, like the, uh, you know, some will, will be open to doing that and, and, and we're showcasing the results.

Um, uh, and, and, um, you know, I think it's good for the customers. I think it's good for, uh, the industry. Uh, and, uh, I'm sure I, I painted a big target on my back right now. Hey, it's a way to differentiate, man. Like there's, there's one thing about, I think, respectively, you know, sharing content and ideas out there on social without, you know, shitting all over everybody else, but basically saying, look, here's the data and, and educate, educating the audience on, you know, what they should be paying attention to or what the reality is and, and the journey that you're on as far as figuring this out, I think is the way to do it without ruffling too, too many feathers, even though the competition usually gets pretty pissed when you call them out.

Yeah, um, we're, we're, um, uh, I mean, it's just, I've, I've never, this is, this is a new experience for me. I've, uh, traditionally just on the, like our product, it has this feature that this other doesn't like, it's never been like going for the Jaguar, uh, like they're giving you the wrong, wrong person a lot of times here, you know, uh, uh, but, uh, but you know, like, like what we do is hard. Like what we're doing is, is very, very hard. And, um, you know, I just, I, I can't imagine our competitors would be able to build this kind of infrastructure. Like, but like we're, we're more of a, you know, engineering background than, uh, than a sales, sales, sales, a traditional sales marketing, um, kind of thing.

I love it, man. So focus on your strengths, right? We're going to build like, like, uh, you know, an advanced, uh, technology here. And that's our GTM here. Love it. Love it, man. Well, look, anything else? I mean, anything, any other learning lessons for the audience on this journey of yours or thing that you want to share with the audience before we wrap things up? Just an appreciation for, you know, how long these years journeys take, you know, and, you know, like my company Workstream was an incredible success. It was like, you know, close to $200 million distributed to shareholders off of $18 million raised. And that included venture debt. So, like, that wasn't even that dilutive, you know?

So, you know, looking back, it was like the hardest time ever. Like, it was like rolling a rock up a hill the whole time, it felt like. So, you know, it's just any encouragement around, you know, the journey here. Yeah, stick with it, right? And also, if you genuinely have a belief in what you're doing, I think that's the key. If you're all in on this idea and you get the alignment, the vision and all that other stuff, you can't get discouraged. You got to keep pushing through or else you'll give up a lot. You'll give up too quick. And that's what I see a lot of people. They have ideas. They have good ideas and are willing. But, you know, it gets really freaking hard. This glamorization of entrepreneurship over the past five to ten years has really, I think, put a false narrative on, oh, you know, leave your company and just start a business.

And, you know, then you work for yourself and you have all this freedom. And it's quite the exact opposite. But to me, it's a healthier stretch. It's just the hardest thing ever. Yeah. Okay. Yeah. Awesome, Larry. Well, where can people find out more about Customers.ai and where you want to send them? You know, if you have a website of visitor identity solution and you're wondering if it's lying to you or if it's actually correct, like we do have an offer, Customers.ai slash test. It's pretty new. And, you know, otherwise, you hit me up on LinkedIn or Twitter and also on those two platforms. Perfect, man. Well, I'm looking forward to continuing to watch the journey here and see how it all plays out online.

That's the fun part about this is sometimes you can actually watch the evolution based on how active we are on social and see how it goes. So I'm looking forward to following the journey here, man. I appreciate you coming on board. Awesome. Thanks so much. Yeah, absolutely. And hopefully everybody enjoyed the conversation as much as I did. Like I said at the end of all of these, go out there and make somebody smile today because no matter how bad your day went or how bad you think it's going, you make somebody smile today, you know you had a good day and the world means a lot more of that right now. So thank you all very much and I'll see you on the other side. Hey, everyone. I hope you enjoyed that conversation as much as I did.

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