In this episode, we sit down with Max Altucher, a pioneer in the go-to-market space and one of the most influential voices in modern sales. Max shares his incredible journey from his early days at Udemy to founding Sales Hacker, which was later acquired by Outreach, and his current role as the managing partner at GoToMarketFund.
What You'll Learn:
- Max's Journey: From Udemy to Sales Hacker and beyond.
- Investing in Winning Companies: Max's framework for identifying and investing in category-defining companies early on.
- Go-To-Market Strategies: Insights into the current state of go-to-market strategies and how they have evolved.
- Building Sustainable Businesses: Practical advice for founders, sales leaders, and investors on building successful and sustainable businesses in today's market.
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Andy:
I'll give you an analogy. So you can have the best surfer in the world, which is a great founder, you can have the best board in the world is a great product. But if you don't have a wave, you can't go anywhere. And so it really is all about that market that you're investing in and that pull effect happening. So the weather that's technological, geographical, economic, political, generational, it could be any reason that that inflection point is happening. But that is first and foremost,
Max: Ladies and gentlemen, today my guest is Max Altucher. And I'm sorry, Max, if I just butchered that, but he's a pioneer in figuring out the go-to-market space and one of the most influential voices in modern sales. I had the chance to work with Max for several years while at Outreach because Outreach acquired Sales Hacker, which he was the founder of, and he built from the ground up. And as I mentioned, later sold to Outreach. Now he's currently the managing partner at GoToMarketFund, where he invests in and advises the next generation of go-to-market companies. Here's what really fascinates me about Max, which is his ability to spot winning companies early and his practical, no-nonsense approach to building successful businesses. As one of the first employees at Udemy, he changed their entire sales process by implementing strategies like leveraging overseas talent before it was the cool thing to do, something that was definitely far from practice at the time. He's also authored three influential books that have helped shape the modern sales practices. So Max has an incredible track record by identifying and investing in category defining companies early on. Now he was an early investor in outreach, in gong, and numerous other successful startups. So his approach to evaluating these companies isn't just theoretical either. It's rooted in years of hands-on experience building and actually scaling businesses. Now, in this episode, we're going to deep dive into Max's journey from his early days at Udemy to building Sales Hacker and his current role as AVC. Yes, he's went to the dark side, y'all. Now we're going to explore his framework for identifying winning companies, his thoughts on the current state of go-to-market strategies, and his unique perspectives on building sustainable businesses in today's very tough market. So whether you're a founder looking to scale your company, a sales leader wanting to stay ahead of the curve, or an investor interested in spotting the next big thing, I guarantee you'll walk away from this conversation with valuable insights and practical strategies you can apply to your own work. And if you enjoy this podcast, don't forget to subscribe and follow it in your own favorite podcasting app or YouTube. It's the best way to avoid missing future episodes and it will help the podcast tremendously. So with that, I bring you Max. What's up, Max? Nice to see you, man.
Andy: I got to center this. I haven't done, done like multiple.
Max: Oh, are you in Arizona right now? Oh, the spot looks amazing, dude.
Andy: I don't know why this isn't centered though. It's so weird.
Max: That's, yeah, it looks good.
Andy: Okay. There we go.
Max: Yeah, it looks good, man. So how's, uh, how's the spot treating you, man? You got the, you got the, the putt putt in there.
Andy: You got the, uh, guys outside actually right now building all the kids stuff. Like there's a zip line for the kids, like a little, like instead of like a, instead of like a play set, we put a full playground in the backyard. So that's fun. Um, but all is good. Am I in the right place? Is this the right link I was supposed to go to?
Max: Yeah, dude, Riverside. We're in Riverside. So yeah, we're recording. I think we're good, man. Yes. Dude, good, good, good. I just caught up with Wes and Gordon actually, funny enough. They're doing good. They're about to launch their new product. So I think they're doing the, I don't know if you've talked to them or not.
Andy: It's like, it'll be, they'll go up against qualified. which I think is a tough competitor to go up against. Like they're smart people and good GTM. I like Wes and Gordon a lot. I didn't think, I think Spot was a tough, was a tough place to be. But I like this business better for them. And yeah, I like them a lot. They're great people.
Max: Yeah, they're killer, dude. And I think they'll, yeah. So we'll see, I think Qualified's leaning heavy on Salesforce, right? Cause they're in the Salesforce ecosystem. So I wonder if, I told them, I was like, dude, maybe there's a play there for you guys to go all in on like the HubSpot ecosystem too.
Andy: Yeah. I mean, right.
Max: Cause Qualify is not touching HubSpot.
Andy: There's plenty of room there for both. You gotta build a really great product. But the HubSpot ecosystem is a good ecosystem to go after too.
Max: Yeah, so we'll see, man. I think, uh, I've been playing around with both cause we've been, you know, building our integrations and I mean, HubSpot's come a long way, dude. It's like, it's pretty legit now. Like I'm like, you know, and they've kind of got all these crazy upsells and stuff that are annoying. Um. But I have, I'm super bullish on HubSpot as a product, I think long-term versus at least for SMB, right? Like I think people naturally in the past, as you know, they were like, okay, we're just gonna like use HubSpot for a year, then transition to Salesforce. I think that transition time is gonna be a lot longer. Let's get into it.
Andy: Yeah, let's get into it. 45 minutes, the guy, the guy.
Max: Who is? Oh, Izzy. Oh, yeah, we'll talk about that later. We can talk about that. But yeah, man, Manny, I haven't talked to him in a while, but yeah, let's get into it, dude. So long story short, I got three questions. We'll kind of just dive into these three questions and then like, we'll just jam. That's typically we keep it super conversational, right? So, all right, well, let's dive into the first one. So for those that don't know, Max is kind of the OG, one of the OGs of the GTM space. I think you were, What was the first book you wrote, Max? It was like sales hacking. Hacking sales.
Andy: That was the first one from lessons I learned doing it at Udemy. So Udemy, eighth employee. First person focused on the sales side of the business. Did some really hacky stuff. Leveraged virtual assistants in the Philippines to be our SDRs. built a Google Docs of if then statements, leverage early sales engagement platform called ToutApp. Yeah, I remember. TK. Plastered on that website, helped them. And then ended up being an early investor in outreach because, you know, met Manny. The machine was a big believer in Manny and And they were building a lot of things that I thought Tout should be building, but kind of decided not to. And so invested early, preceded into outreach and became a big outreach supporter. But yeah, wrote the book Hacking Sales. Then wrote another book called Career Hacking, focused on kind of millennials coming into the workforce and kind of figuring out their own way. You know, my My journey was, I'd say, as unorthodox as you can get. So, you know, how to do it differently when you don't have kind of an Ivy League background or a pre-established network or family, friends or money or whatever it was. And then the third book I wrote was Sales Engagement, which I wrote with Manny and Mark at Outreach, defining the sales engagement category and kind of the processes and kind of modern ways of doing things there.
Max: And it's the one thing that you are early on that that was that you're way early on, which is now a trend, which is hiring overseas talent. Right. You were big on that. Like I think in your first book, you were like, Hey, we're going to hire in the Philippines and you're doing all this. And I, when I, when I first saw that, I was like, what, like, why would you do that? You know, like the U S and then like, when I became a business owner, I started to realize like, okay, well we can get great. We can get just as good as work and pay a third or even more or less of the cost. Right. And, uh,
Andy: And AI agents, before sequences and AI agents existed, I just used them with $4 an hour Filipino virtual assistants, and if then statements on Google Docs and ToutApp, right? So like, I kind of hacked together a bunch of the things that came a couple years later, and were made technologically possible, you know, in the coming years. Now, here we are a decade later, and a lot of the stuff still endures. It's just, I think, you know, I've said this before, like tech is a magnifying glass. So if you have ratchet becomes elephant shit, you know, it's like, what you put in dictates what's going to come out the other side, what the outcomes are going to be. And if you've got a really bad process, it's just going to get even worse with technology. But if you have a great process, then it's going to be enhanced, it's going to scale.
Max: So is that, that's a great lead into our first, the first thing I want to talk with you about, which is like, you're a pro at picking winning companies early, right? You've always like, you were early investor in outreach, you were early investor in Gong, or involved with Gong somehow, I'm not sure the details on that one. But Um, obviously you started sales hacker, which was like, I think what, what most people know you for, right. Which was the blog that then, um, the media company, I should say that sold to outreach. Right. Um, and so what's your mental model or the thinking for how people should invest in a company or think, or even more importantly, join their next company on that's going to be a winner.
Andy: I mean, I think you have to have an original thought in your head and you have to be a student of the game if you're going to build like an enduring exceptional career. So the first thing is like where. where are you getting your information? Are you learning? Are you listening to podcasts? Are you speaking to the right people? Like, are you kind of underwriting a thesis, so to speak around where the world is going, and then putting yourself in the middle of, of that wave. So for example, you know, one of the things that we look for when investing is, we want to invest in a, an industry or vertical where there is some sort of inflection point, which means the market is being pulled. And so like, good example of that is we made an investment into Armada systems. Armada system is building containerized portable data centers. So our belief is that Starlink is going to cover 70% of Earth's surface that didn't historically have Wi-Fi access. in satellites to enable Wi-Fi. Now, if all of that surface is now Wi-Fi accessible, what other technologies is that going to enable? Well, if you have an oil rig in the middle of the ocean that couldn't get Wi-Fi previously, right, couldn't get any kind of service, And now it can, you can put a data center on that oil rig that in real time is going to be able to understand and analyze the data that's happening on the oil rig and give you outputs around that, right? Tell you what, what you need to do with that data. Yeah, there's, that's an example of a technological inflection point that's happening that opens up an area of investment. Another example might of that, you know, you're seeing Microsoft, Google, Facebook, you know, this emergence and resurgence of nuclear. And if you think that that is going to continue, then there are a lot of businesses that are being built in those areas that you should be investing in, right. So one of the investments we have is control rooms, which does sensors for nuclear power points, petrochemical, etc. You know, same thing could be said for, you know, I'll give you an analogy. If, and this is an analogy I've taken, I think Mike Volpe was the originator of this, but something we it's the best way of putting this that I've heard, this is what we subscribe to, and we invest. So you can have the best surfer in the world, which is a great founder, you can have the best board in the world was a great product. But if you don't have a wave, you can't go anywhere. And so it really is all about that market that you're investing in and that pull effect that's happening. So whether that's technological, geographical, economic, political, generational, it could be any reason that that inflection point is happening. But that is first and foremost. The second is the founder, the founder has to be a machine. I mean, that was one of the things I really loved about Manny was like, you meet this person, you're like, okay, bull in a china shop, like they'll, they'll, they'll break a couple, you know, plates and windows and stuff like that. But they'll, they're gonna make something happen, right? So we want somebody who's a machine. Personally, like I'm the, I'm the last person you'll hear from my team will hear from on any given day. And the first person they'll hear from on the next day. Like, I love that I live and breathe what I do. And that doesn't mean that I don't have a life outside of what I do. But I genuinely this is a lifestyle. It's not a job. I genuinely love this. I think you need to invest in people that think the same way. And, you know, when I wake up every morning, like, I get excited to do what I'm doing. I spend two and two and a half hours with my kids every morning and make my family breakfast. I go through a whole routine with them. But like, I'm still able to like, make sure that I'm on top of things when I come to work. So I think you want to invest in people who are absolute machines and what they do. and have some sort of unique insight or a why them to that problem that they're solving. So a good example of this would be like, you know, if somebody came to us and said, Hey, I'm looking to do a geospatial mapping company and say, okay, like why? And they're like, Oh, I went through an accelerator program. And that person running the accelerator was like, this is a good idea. Probably not going to make that investment. But if you say that to us, and you're like, Oh, well, I built this from scratch at Uber, and I'm bringing two of my team members with me. It's like, okay, that's really interesting. Like you have an unfair advantage in this space. So, you know, those are kind of like the main things. And then I'd say outside of that, what's really interesting about our fund is we have about 300 LPs who are all VPs, C-level sales, marketing, customer success leaders. And they're really knowledgeable in both like their jobs to be done, which is, you know, go to market, but also in the places that they've worked and sold before. So, you know, we have people who've done go-to-market roles in CAD software businesses, in prop tech, construction tech, insure tech, in data ops, dev ops, fintech and payment. So when we have a deal in a space or a thesis in a space, we're able to validate that very thoroughly with our LP base and understand the commercial viability of that space, of that product, of that approach, in a way that I don't think many other firms can do the same way we do. So I think that's something that we look at when we're sizing up businesses. Now, that's just us. If I were an individual, using this to find a job or, you know, angel invest on my own, I think I would try to lean into what my strengths are in, you know, my career or my skill sets, and then use that to vet companies. So yeah, I do think you need to have some sort of a thesis as an individual, like where do I think the world is going and put yourself in between that. I mean, there are a lot of people I speak to are like, yeah, climate change is a big thing. All right, go work for patch. Go. There's a lot of companies that are attacking like, there's probably a lot of money there. and you're going to help the planet right so like great if that's something you're passionate about then use your marketable skills and and go work for one of those companies.
Max: Yeah, it's, it's, it's good that you say that, because I always give people the same analogy, which is like, look at, it's kind of similar to if you're a person looking at where to work next, not necessarily an investor looking for, you know, looking at who to invest in next. But as an individual, I guess you're investing as well, right? You're investing your time and energy, which is worth more than anything.
Andy: You should look at every job you take, unless you're incredibly desperate. You should look at every opportunity as like, should I spend my time here? Because this is where I'm going to make my money, right? Like, And it's really gonna build your career. I had a buddy who was a cybersecurity sales rep. And he had done like two or three companies in a row in that space. And he got a really good job offer from a company called WalkMe. And his company had just sold to Microsoft. And he was like, now looking for something smaller again. And he's like, should I go take this job? And I was like, no, stay in cybersecurity. He's like, why? This is a great offer. I'm like, because when one the space is only going to get more hot and exciting, like this isn't going away. This is like future proof. Two, when people are hiring in that space, and they look at a stack of a resumes, if you have a track record in this space, you're at the top of the pile. you're gonna they want to hire the best person from another company in that space. Like if you're selling something in the CrowdStrike space, but you're like a sub billion dollar company, like you probably want to hire CrowdStrike reps who come with an understanding of that space, a relevant Rolodex, CSOs, like etc, etc, etc. So he ended up listening to my advice. And instead of just taking this, like this offer that he had, he went out and did a process and stayed in the space and I think it's, it's what's best for their career. But I think like, if you're early, early in your career, or any point in your career, you should be re underwriting your kind of thesis around like, where's the world going, and then putting yourself between, you know, that opportunity in a role in those companies, and ideally in one that's going to endure for a while. So like, by the 10th year in your career, you're the person to go to in that space, you're the best hire, you're the number one, and maybe that manifests as being like the first AE at a place, maybe that manifests as being the CRO of, you know, that the next snowflake. And if you look at, you know, like a Chris Daggett snowflake, for example, like Dennis Leandris, a pro core, like there are a lot of situations where somebody has been hired at a lower level, and then turns into the CRO, or, you know, start their career in that sector, they get picked for that thing. So I think that's the way to go.
Max: Yeah. It's, uh, that analogy you made, it was amazing. The analogy of like the best surfer in the world, the best board, but if there's no wave, right. And like, so every, everyone needs to be looking for the wave and where the world's going and little story. Like when I joined outreach, like, you know, it was one of the early employees or whatever. Um, I had just left Chile. I did like startup Chile. I built a solar thing. Cause I, you know, we're building solar tech cause I was electrical engineer. And when I built that, um, when we were done with that, I came back to the US and I was like, all right, well, what are we gonna do now? And I was like, man, I was doing sales and engineering and it was so arduous, the process of sales. And I was thinking about like the sequence and how all this stuff can be automated. And then someone who was a product manager was like, hey, you should talk to these guys. They're actually building something like that. And it was really just like me looking for like, okay, this needs to be solved. It's also solving the problem that I had. Right. And so I looked at them, like, I've had this problem. I'm empathetic to it. I understand it. This is where the world's going to be headed. Right. And so I think another way to think it was like, what's that problem you've had that no one's solved yet that, you know, you've also a million other people at least have that. Yeah.
Andy: I think any seat you could take on a rocket ship is better than like the best seat on, you know, jalopy. Right. Like, It's, you should just figure out where your expertise is and then go figure out the best company you could possibly work for and then go take any seat at that.
Max: Yeah, yeah. And for you, like, so now you're investing in founders, Max, you were an operator, you're still an operator, kind of, I think you're running go to market fund, right? So you're an operator slash founder, I would say running a fund, you're still raising money, you're still doing a lot of work. I'm not.
Andy: Yeah, exactly. It's still an operator. But you know, we have we have the incubated company operator.ai. And I'm still you know, de facto CMO for and we've got a bunch of other things. So like, I am, I'm doing a lot more work than just running a fund. We have two incubated companies now that I'm kind of part time ish at so yeah, kind of can be considered.
Max: Yeah. Yeah, you're doing a lot. You're doing a lot. Okay. And so you know, you and I both have been in this go to market game for a long time. It's gotten a lot harder than it used to be. I don't know if harder is the good word, but it's changed according to, you know, I would say the the era where outreach first came out, you sequence people, you know, you throw people in, you could predict, you know, what you're going to get meeting wise, and then that turns into x pipeline, and that pipeline converts at 30%, blah, blah, blah, blah, you know, the whole process, but Now, you know, it's changed. You're also part of an incubated companies that are trying to like get revenue and all this stuff. So how are you thinking about go to market these days, versus how you thought about it? Like in 2016? 17? Yeah, right. I think we're
Andy: in a period now where less, where people are less eager to buy, because we just went through kind of a little depression and budgets got tightened. And those budgets really haven't expanded yet. So I think there are a lot of people who've only been in the game during the run up. And they're like, well, all the old tactics and everything no longer works. That's like, no, we'll just like, just people in general are not buying everything that they saw before. And like, this comes back to the right companies. In the investment world, I mean, the 10th best company in a nice to have category was getting a bunch of funding. And now, it's like you have to be a top three in a need to have category in order to get past the seed round. And so like, of course, things are gonna be harder. So of course, things will be different. Of course, things are gonna have changed. I do think there are a lot of things that run their course, and that there are plays that we create as an industry that, you know, start to work, and then everybody does them, and then they stop working, and there's a lot of noise. And so now you look at even a company like Outreach. or, you know, six cents or whatever it is, like, people are doing these signals. And we used to run these plays before these products existed, where it was like, okay, this company raised the Series B, you know, maybe they raised $50 million, you'd go reach out to the VP of sales and say, Hey, congrats on the Series B, check out my product, essentially, right? Like, that was the gist. And that might have worked when you actually had to go do a lot of work to figure out they raised the Series B to figure out who the VP of sales was to like, go and create that message and like to know to do that, right. And now, everybody like that's common practice, everybody knows the play, they can get the signal very easily, like it's right piped right into their Salesforce. And the information on who the VP of sales is also piped right into Salesforce. So now when a company raises a Series B, Okay, there's 6,000 outreach customers, there's 6,000 Sixth Sense customers, there's 40,000 Zoom Info customers. So how many emails is this VP of Sales going to get that are like, hey, congrats on the Series B, check out my product? And then all of a sudden, now this tactic that worked when one or two people emailed them, because it was harder to do, now that it's super easy to do, because the technology enables it, it's the tactics not going to work. Because it's just, it's just noise. And it's delete. It's they don't even see it. It's like, it's just another piece of noise, right? So you have to go past the tactic. And this was why, like the best day the best and everybody else kind of fast follows. And then they end up in this kind of like, soup of, okay, cool, like, careers, because they're not really thinking outside the box. Like they don't live it. They don't breathe it. They don't, they don't go the extra mile to figure out like, okay, well, what's the new play? What's the new thing to do? And there are definitely some people, you know, online who geek out about it to like an entirely different extreme that honestly, like are probably great follows on LinkedIn, that get into the whole weeds on like, you know, what operators going to do. Clay's doing all this, but these things right now that are new ways to, I think Brandon Short's calling a micro segmenting, things like that, where you can, you can go in and figure out, okay, well, like, what are the harder things that I can, that I can figure out here that I'm really one of the only ones that can figure out that I can put a play together around, that's going to give me more defined messaging to a smaller group of my ICP, that's still a scalable process, but isn't just one big kind of spray and pray or dump or anything like that. So I think Kyle Coleman's another one at Copy AI is posting a lot about this. Jordan Crawford, I think does it on behalf of Clay. Mark Kossoglow is talking about it a lot on behalf of Operator AI. But I think everybody's trying to figure out like, okay, like, where, where does this go from here now that buying and selling has just become a more difficult process in general. And all the stuff everybody knows is the stuff everybody knows.
Max: Yeah. Yeah. It's, um, I geek out on cold email just cause that's the world I come from. And for us, like we're running a bunch of experiments. I think the one that, that, uh, now a lot of people are doing it, but, uh, cause I put a note out there on, we were doing it and now it's hilarious. You see like a lot, I get a lot of cold emails of the same stuff I was doing, but it's, Essentially we do these campaigns called email wise, two things. One, every campaign I do is a micro campaign. It's only two steps. It's main email and I treat it like an ad, right? So we're getting into this. That first email is just an ad. And so in that email, I use humor. I use copy. One of my like campaigns has an 8% reply rate, no joke. And like most are positive, right? And people are like, how the hell are you doing that? Cause it's treated like an ad. with all the same type of components. And then the second email is just a bump to the first. And so if that one doesn't work, then we go back to the drawing board and we send a completely new email. Like we've never contacted you in the past zero personalization, right? And going back to what you were saying, which is interesting, is like now personalization is a commodity. So it's almost when you see personalization now, you know it's AI, you know? So it's kind of like, oh, this is AI, freaking contact me, whatever. Whereas I'm like, okay, well, if everyone's using AI to personalize, I'm not going to personalize at all. I'm going to do the complete opposite. Right. And so now no personalization at all, just literally a two step email. And it's like, and it works. You know, so going back to that thing is like, um, my buddy, I have a friend who calls it the tequila test where he says like, name a list of like the 10 things everyone else would do. And then look at that list and go, Nope, I'm not going to do any of that. I'm going to take a shot of tequila. Right. And like, he's going to do the exact opposite of those things. Um, and so that for me is kind of what I've looked at. And like, that's, that's kind of where I play around. It's like, okay, is Sally going to do this? Probably. Is Johnny going to do this? Probably. Okay. Well, let's say something that a lot of people may not like. I get, I do get some responses like the, you know, you shouldn't say that type of thing. It's unprofessional. But for every one of those, I get 10 that are like, Hey, this is rad.
Andy: I want to copy that. It's doing the harder thing while everybody's doing the easier thing. Typically, honestly, like, yeah, I just, I think that's why so many people didn't do it for a very long time. Like everybody knew band. Okay. How do you figure out budget? Oh, well, you know, if a company raises money, right. Like, and then also at the same time, like, these seed rounds are probably the easiest round to raise in a very long time. Plus, like a lot of these older companies that raised in 2021, 22 haven't really gone under yet. They're still kind of out there with like their 10 employees kind of in zombie mode. There's more companies that are selling. And they're all it's all somewhat incestuous because they're all selling to each other. So there's more companies also reaching out to like SMB and mid market companies. So and you're only really hearing from people like, oh, it's really hard from companies that are in that space, right? Like, you don't have public company reps talking about how this is happening with while selling to other public companies. Like, I don't think a lot has changed there as much as it has set like, smaller companies selling to other smaller companies.
Max: And are you so like, In my shoes, so we can get tactical here, like I'm selling distribute, we call it like the one click followups for sellers. We're in the digital sales room space. Right. But like we take it, we're more like a notion versus like a website builder. So a lot different. So what I'm, you know, I think the problem that we're having is, um, It's actually interesting. We're getting into some big logos, right? Which is amazing. Don't get me wrong. It's awesome. But it takes time and all that stuff. And I had, I'm having an issue with more of the 50 to 500 employee range. And why that is, is I don't know, I haven't figured out positioning yet or whatever, but I'm also thinking is that, my thinking is that that range, as you mentioned, is the range where everyone's trying to sell into that 50 to 500 range. Cause they're like, that's easy money, you know, quick deal sales cycles and all that stuff. So I'm like, shoot, should I be playing more?
Andy: Yeah. But also those companies are fighting for their lives from a budget standpoint and everybody's selling into them because of those reasons. So yeah, that's what I'm saying. I think, I think you probably get more pickup in the, in, you know, higher up and you probably have to do a little more security and governance and things like that early on in your product, but you might be more successful because it's not as saturated from the sales side.
Max: Yeah. I mean, that's what I'm feeling, dude. Like we, I won't say it on here cause we're being recorded, but like, yeah, some of these I'm like, shoot, maybe we just do the big enterprise, which I thought it was going to be the separate we're sock to type to blah, blah, blah, blah, all the fun stuff. Right. But, um, I'm like, shoot, maybe we just play up here because. We know we're a great product. We know that we have a use case for these bigger enterprise companies. And we know that like, we can probably take out a thing or two in terms of their budget that they're not using because we're consolidating yourself.
Andy: Really good at one thing for the enterprise, because like the wider you get, the more you do. And then it's like, Oh, we're going to add sequencing. Okay. Like now you got to attach the inbox. All right, cool. Like, you're just opening up a can of worms at that level that, you know, you could spend, I mean, at Outreach, we know this, I think we spent like two or three years of dev resources on enterprise functionality that like not a lot of customers actually saw the fruits of labor for. And so like, you kind of lose some of the mid market is like, why aren't you guys innovating more? Why aren't you doing this stuff? And it's like, well, if we want to be a $500 million a year business, you have to start adding customers that are going to pay you one to $10 million a year. And those customers need government governance and, you know, certain like structured data and, you know, certain other things with security that like 500 employee companies just don't need. But 500 employee companies are going to give you a 50 or 100k a year. And you just you can't build a I mean, it's tough, you can, but it's tough to build a big business doing that long term and hubspot has a bunch of others have but you know, their path was enterprise. And we'll see if, you know, we'll see if that works for Apollo. Like Apollo went SMB and mid-market way and they're probably half the revenue of outreach. So, you know, it was just the way that they decided to do things, but it makes sense.
Max: Yeah. Yeah. It makes, yeah. So that's what, that's what I'm toying with right now. I'm like, okay, maybe we, we stick up there. We kind of stay up there and you're right. I think you made a good point that a lot of, a lot of people make mistakes on, which is there's kind of like, this all-in-one solution vibe that like, oh, we can be all-in-one, consolidate costs, you know, but then with that, the curse of that is that it's like, well, because you have all these things, I don't get what it is that you actually need.
Andy: Yeah, I mean, Calendly is a good example of not being anything more than what you promised you. A calendar. And they've done a really great job, right? So like, and they probably raised more money than they needed to raise and, you know, I don't know, good for them. They probably did a lot of secondary, but like, it's a great business. I don't think they have a ton of costs. And like, I don't know. For all I know from the outside, it looks a great business. From the inside, maybe they have all the same issues Outreach had on the, you know, selling the big company side of things. But I am a believer for especially your type of business, like raise one round, never raise again, rip it to 15, 20 million ARR. stay focused on kind of your one thing that you do really well. There'll be a buyer, you'll make a ton of money. Everybody will be happy. Great. Good outcome. Right? And then the second you say, okay, I'm going to raise more money, I'm going to widen, expand the product. And then that all the trickle down effects from that, which happened, which are like, okay, cool. We'll buy this from you, but you need X, Y, and Z. Now you got to go hire the team to build X, Y, and Z and maintain X, Y, and Z. And all of a sudden, like you're upside down in your margin. And it's a shit show. And then your other customers are like, Hey, you forgot about us because you're only, you know, you're only focused on these guys now. It's not a fun game.
Max: Yeah. So you said something interesting, which is raise once and then be done, right? Like, which I think is counterintuitive to what most investors want you to do. Or am I wrong in that?
Andy: There's different strokes for different folks, like for this type of business. And your early investors can be pretty happy. Listen, if you do two on 10, or something like that, or three on 12, or whatever it is, you give up minimal dilution, you have an option pool, And if you get pretty far with that, and get to a good place and sell the company for, you know, 150 million bucks or whatever it is, like early investors get to double or 10 or 20 extra money. That's fantastic. And you get to walk away a ton of cash and everybody you hired brought on and give pretty good equity to gets to walk away with good money. Like, that's a great route. And you don't have to go build a platform. Like there's there's a such thing as a departmental tool or an organization transforming platform. And at Outreach, we had the second one we had, we were all about organization transformation, the ways you did things before are completely different. It's a platform for your entire organization. And there's a departmental tool. And that's that you don't need. It's not a platform. Like you just, okay, this is pretty simple. This is pretty straightforward. We don't need to go raise a ton of money. We don't need to, to run it like the other business. That's fine.
Max: Yeah, yeah. Yeah, it's it's one of my good buddies here in Austin is Adam Robinson. And you know, he's doing our b2b. And, you know, we were wake surfing the other day. And the funny thing he was saying, we were talking positioning. And he goes, dude, I do website identity. I'm almost at 2 million in ARR. I think he's past that now. I think he's almost three or something. And he's like, I'm just going to do that. I'm not going to build a platform. I'm just going to get really good and be the best at this website identity.
Andy: And that's it.
Max: They just bootstrap, total bootstrap, right? And it's crazy. And I'm like, Oh my gosh, that's amazing. Right? It's like, you know, and it's so sad. And they got no, you know, 2 million in just website identity, which now there's other players, but they're like slapping it onto their tools and all that fun stuff. But he's still the guy for website.
Andy: Not everybody should raise a boatload of venture capital. It's just not the way to go. And I'll be the first person to say that, like as a venture capitalist, I mean, we don't want to invest in businesses that want to raise a bunch of money and shouldn't. I'm like, I'm not talking my book here. Like, That's the reality of the situation. Like not everything warrants raising a ton of money. I think one and done rounds are pretty smart.
Max: Yeah. Yeah. Yeah. Have you seen anyone do that successfully? That like recently that are like, okay, we raised once and now they're just like killing it.
Andy: Um, no, but it's kind of like a new thing and not off the top of my head, but I'm sure they exist.
Max: Because typically companies, if they raise once, they're going to, they're going to go through the process, right?
Andy: There's been a bunch of companies that raised like, I don't know, two or three rounds, too much money, like post COVID happened. They had the pop, they came back down and now they're running better businesses now than they ever were. Leaner, running, didn't need the other two rounds of funding. If they had to just run it like this, they'd be in a great situation. And the shitty thing is like, their preference stack is going to be a high hurdle to clear for them to get a great outcome, but they'll still have a good outcome. I mean, like, you know, it just, it would have been a lot better had they just never raised the other two rounds of funding and got caught up in the, in the craziness. But listen, like nobody has a crystal ball. I think if, if we did have crystal ball, we all would have sold our outreach stock in 2020. I was just going to say that.
Max: I remember those 35. I still have my other half. You still have at the peak? Did you start at the peak?
Andy: My blended price is pretty close to the peak. Yeah. So like they were, they were off setter and a bunch of these others for like over the peak, which was great. Um, but yeah, I did.
Max: Uh, thanks for the heads up, dude. Thanks for the heads up, Max. No, it's not terrible.
Andy: I mean, listen, I wish it sold at all or like, I am optimistic on the other hand, if I think like, it'll come back up quite a bit from where it is now, but not probably probably a long time until it's back to where it was, especially beyond the peak. Like our peak was 4.4, but on the secondary markets, it was up to like 5.7, 5.8. So, uh, it's crazy.
Max: Yeah. Yeah. That, that, uh, going back to that, I think, um, I'm shooting myself on the foot, which on that one. Right. But again, crystal ball wish would have known all that fun stuff. Like shoot should have done that.
Andy: A lot of people would have done things differently in 2020, 2021, even before that, even after that. But I do back to the original point, like think, the one and done is not a bad thing if your company is in that spot. So.
Max: Yeah. Yeah. What it, so going back to the whole go to market on this, like, let's say you have, you have these founders, some that raised at the peak, the Zerp era. Right. And they got these crazy valuations, which we all, we all know now things are back to normal. Right. Or let's call it normal at least. And now they have to grow into these valuations. I'm going to call the elephant out in the room. How do they stay motivated, man? Because now they're like, that's a valuation that I don't know we're going to hit.
Andy: There are some that are recapping. There are some that are doing pay to play rounds. There are some that are selling a private equity and, you know, salvaging what they can for it. A lot that are pivoting that raised a ton of money early and can pivot, pivot, pivot until they find something that's explosive growth again. And, you know, hope that they do. I don't think there's any right or wrong answer or one way that, you know, prevails. We'll see. I mean, I think there are some good actors and some bad actors and all that. I think there are, you know, a lot of silly, silly VCs who gave crazy secondaries at like really early stages and Hey, that's not the founder's fault. They played the system to a tee. That's fantastic. Good for them. I don't think like from a fiduciary standpoint that that does good for anyone like long term. I don't think that is bodes well for anybody involved, but hey, like everybody took advantage of the situation that they were in at that time. And, uh, you know, you gotta take care of yours, right? In those, in those situations. So, um,
Max: Yeah, I was I was at a stand at a point where I was like, man, I should have like raised money earlier. Like when it was way easier, because I raised what last September, right? And we raised like, you know, 1.7 last September, whatever. And when I raised, I was like, man, it was it was hard. Like, in the last year, it was just like, everyone was like, what's going on, at least for my, me and my friends were like, what is going on? Right. And when we did that, I was like, shoot, I wish I would have raised in 2021 when it like people were just giving money away, you know, but then now I'm like, thank God I didn't do that. Right? Like, because, you know, well, maybe I would have been in a place where I'm in that spot where it's like, holy crap. Like what do we do? We raised that a hundred million dollar valuation or whatever the heck it was. Right. And like, you know, what, what do you do?
Andy: So the amount of money raised is the real, is the real killer. Um, like the, the, if you're going to raise again and you're not going to clear that hurdle, yeah, that sucks. But like the, the, the preference stack is where you really get crushed. Like if you raised 80 million and the highest valuation, you raise that at like a $250 million valuation. And then like, now your company is only worth like 50 million. Like, yeah, you're screwed. You're not gonna make anything. But if you raised 10 on 100, and your company was 50, it's like, okay, it's down from the down round or whatever from where you raised last. But at least you pay back your investors, and then everybody makes money. So like, yeah, yeah, yeah.
Max: And all right. Well, the one thing I want to get your take on before we head out here to Max is Some of the people ask me, they're like, why do you do all this content? And why do you do all this content out there? And I tell him, I go, dude, because I've always known distribution is king. And I'll tell you that, like, my, my thing here is that like, every product company was like, okay, we're a product company. And now we need to create media and be a media company. Now I think that's flipped where it's like, you almost need to be a media company kind of first mindset and like product second, still a great fucking product. Don't get me wrong. Right. But like, you need to be thinking about it like that, which really just means distribution is king.
Andy: Justin Conn quotes in our deck. It says, first time founders think about product. Second time founders think about distribution like that. That's just how it goes. I think it's important. I think you should have a great product, great distribution, but oftentimes like you still need that GTM muscle. You know, as far as having content and media and whatever else, like there's a lot of different ways to do this right. You know, you can have the community do it for you, user generated content, you could do your own content, bring people on, put people on a pedestal. Yeah, I don't think there's a right or wrong answer. I think it's just up to this, the skill set and like the preference of the founders, but I think it needs to be founder led. I think that's what you're good at, which you do well is like rallying a lot of people around you doing the media stuff, lean into your strengths for that. Don't try to be something you're not. And like, usually you'll make that work for you really well. Um, you know, it's, it's just, it's funny over the years, watching all these SAS companies always try to create their own communities or try to create their own media brands or whatever. Like they always fall face because it's like some hired gun that, you know, doesn't really care. They're not the heart and soul of the business and they're going to get a better job and then it goes somewhere else. Then it gets handed to somebody else. It's just, it doesn't work the same way. It's really gotta be, um, I think founder led, but.
Max: Dude. And I will agree with you on that. Just having worked with literally thousands of people on this founders specifically is like the ones that make it work are the ones that are doing it themselves. Right. And so it's like, you know, my friend Adam, you know, Chris Walker, good buddy, might as well, like same thing is like, they all write their own content. Right. If you're not doing it yourself and getting in that mindset, it's very difficult to make it work. I don't think I've seen anyone that has a ghostwriter for their brand or that's just trying to basic delegate it all that's making it actually move the needle. So that's what I tell people, like, how do I get started? And I'm like, you have to start yourself. You have to be the one doing it. And they say, well, I don't have time. And what I tell people is you don't have time, dude. You're telling me, if I told you to get on stage in front of 1000 people, and say whatever the hell you wanted, every single day, and slip in your company, you wouldn't want to do that. And they're like, Yeah, of course I would. I'm like, that's literally what you're doing. Right? And then they go, Oh my God, that's a great point. And so now I think people are starting to see the light a little bit, but I think going back to it, it's not just like, Oh, let me do content on LinkedIn, but it sets the precedent top down for like, here's how we're going to think about like distribution, right? Like, and then you get that distribution hat on and you start to think about content. Like why are we putting out the shitty content and why is this content not have a good hook and all that. So, you know, I'm sure you tell your founders that all the time, but I'm like, look, it's going to be a pain in the ass. It's going to be hard. But once you do it, it's going to make all the difference if you're the one, you know, making it happen. So, um, but yeah, man, uh, well, Max, thank you for jumping on my friend. Um, this has been awesome, dude. Um, yeah, I'll stop the recording. Um, everyone go check out GTM fund.
