The Twenty Minute VC (20VC): Venture Capital | Startup Funding | The Pitch
00:18:49 · Harry Stebbings, Max Freeman
[00:18:49] S1: I'm so sorry. What is an OATS program? Why is it a data infrastructure problem? Why is it a math problem? Can you just help me understand this seriously? [00:18:58] S0: Yeah. So outbound used to primarily be a writing and a calling problem. I think increasingly it's becoming an engineering problem. In late twenty twenty, early twenty one, even before the rise of AI, we built our own internal infrastructure to help automate a lot of our outbound, and that's what OATS is an acronym for, outbound automation team. And so let me break this down. So the team was understanding what I was doing to go to market, how I was creating signals inside of accounts, and the signals could be unbounded. It could be a new hire just joined the business, It could be, I went to the same university as this person. We have overlapping investors on our cap table. And that was very manual. You know, you got to build the templates, you got to find the contact data. Why is our sales team doing that? They should be focused on just speaking with the customer and helping solve their business problems and getting Ramp deployed. And so our team of engineers built a lot of automation to do the list scraping, do the email outreach, and it was [00:20:05] S1: I'm so sorry. If I'm a founder then listening to this wanting to see the same, what what do I do? I tell my engineers to get Zoom info?
00:20:05 · Harry Stebbings, Max Freeman
[00:20:05] S1: I'm so sorry. If I'm a founder then listening to this wanting to see the same, what what do I do? I tell my engineers to get Zoom info? [00:20:13] S0: No. That's part of it. You tell one or two of your top engineers that, hey, we could build the coolest product in the world. It doesn't fucking matter if it doesn't get into the hands of paying customers. And so we need to obsess over growth as it's existential for our business. [00:20:28] S1: What are we solving for here? I didn't get it. Are we solving for finding new leads or for outreach to them? How do we handle the integrations of whether it should be an email or a LinkedIn message? [00:20:38] S0: Yeah. You're you're solving for coverage. Right? In the the early innings of your business, you're not gonna have an army of go to market talent. You might have three to a half a dozen of folks that are responsible for outbounding. Guess what? If you do that manually, like, maybe you could get a couple 100 emails out, maybe you could make a 100 dials. That's not enough. Especially in markets today where the TAMs are becoming more and more unbounded, you need leverage. And so the the the problem you're solving for is coverage and brand awareness and getting your name out. You just can't be dependent on sellers to do that.
00:20:38 · Max Freeman, Harry Stebbings
[00:20:38] S0: Yeah. You're you're solving for coverage. Right? In the the early innings of your business, you're not gonna have an army of go to market talent. You might have three to a half a dozen of folks that are responsible for outbounding. Guess what? If you do that manually, like, maybe you could get a couple 100 emails out, maybe you could make a 100 dials. That's not enough. Especially in markets today where the TAMs are becoming more and more unbounded, you need leverage. And so the the the problem you're solving for is coverage and brand awareness and getting your name out. You just can't be dependent on sellers to do that. [00:21:11] S1: Do you know what think you have efficacy reduction, in other words, less efficient outbound with scale versus if I sent 20 really, really great messages that are researched, thoughtful, included a joke about our alma mater, and a picture of me and my mom walking on the weekend, my efficiency would be through the roof. A genuine asking, not telling.
00:21:11 · Harry Stebbings, Max Freeman
[00:21:11] S1: Do you know what think you have efficacy reduction, in other words, less efficient outbound with scale versus if I sent 20 really, really great messages that are researched, thoughtful, included a joke about our alma mater, and a picture of me and my mom walking on the weekend, my efficiency would be through the roof. A genuine asking, not telling. [00:21:33] S0: That that is a concern. You have to make the system recursive to actually understand what is yielding results such that it optimizes over time. And so if you're just relying on automated emails that are going out and out and out, that's irrelevant. You have to constantly be AB testing and pulling in what's actually gonna yield the best results. And then guess what? You still allow for manual outreach from your sales team because they, to your point, if you're going to send 20 unbelievably curated notes, the likelihood of those getting responded, sure, it is higher. And then the system can identify that, take that feedback, pull it in, and start actually doing it at scale. [00:22:09] S1: Do you have engineers in sales permanently? This isn't like a one and done sales tool build. [00:22:14] S0: We have a growth engineering team. Yeah, I think there's at least half a dozen engineers that truly obsess over building products for go to market. [00:22:23] S1: What's a good response rate when you're sending outbound in a tool like this?
00:22:23 · Harry Stebbings, Max Freeman
[00:22:23] S1: What's a good response rate when you're sending outbound in a tool like this? [00:22:28] S0: Response rates over time since the acceleration of AI have actually regressed pretty meaningfully. But, response rate isn't the right metric to index on. It's meeting response rate. It's like you could get a 5% response rate, but if they're saying please never email me again or opt out or fuck off, that's not directionally helpful. It's [00:22:50] S1: And so it's it's how many convert to a meeting? [00:22:52] S0: Yeah. And that should be just a hair under 1%, I think, is really, really strong standard. So for every 100 emails you're sending, those convert to one. That's that's great. [00:23:02] S1: How quickly do you verticalize your sales team? Because all of this can become better, more efficient, more accurate with verticalization. Hey. We've got clients including British Airways, Delta, and Ryanair. Oh, wow. Okay. We're we're targeting the travel industry and specifically airlines. Do you see what I mean? When is the right time, and how do you think about that?
00:23:02 · Harry Stebbings, Max Freeman
[00:23:02] S1: How quickly do you verticalize your sales team? Because all of this can become better, more efficient, more accurate with verticalization. Hey. We've got clients including British Airways, Delta, and Ryanair. Oh, wow. Okay. We're we're targeting the travel industry and specifically airlines. Do you see what I mean? When is the right time, and how do you think about that? [00:23:24] S0: Yeah. I think the right time to verticalize your business is when you need to pull the lever to inflect conversion. I think companies actually verticalize far too early, especially if you have a huge addressable market. You're in land grab market share mode. And so I think verticalizing the business may actually be counterproductive to doing that. But as you own more and more of the market, I think this is arbitrary, but I'd say, you know, three to 5%, guess what? The total amount of opportunities you can go after starts to become contained. And so the lever that you need to pull is you need to be able to convert leads to close one at a higher clip. And so I think that is the moment when you start to verticalize, you know, looking at companies that I think have done this moderately well, the Oracles, the Workdays, the SAPs of the world. That's exactly what they've done. One of the