How Outbound Sales Laid the Foundation for a 9-Figure Valuation with Michael Litt

0:01Light that spark fire nation JLD here and welcome to entrepreneurs on fire brought to you by the HubSpot Podcast Network, the audio destination for business professionals with great shows like The Hustle Daily. Today, we'll be breaking down how outbound sales laid the foundation for a nine-figure valuation. To drop these value bombs, I am brought to Michael Litt in the EO Fire Studios. Michael is the co-founder and CEO of the video platform for business, Vidyard. When he's not bringing leading video-based technologies to market, he serves as a general partner of Garage Capital, a seed stage fund.

0:39In today's foundation, we'll talk about starting our first business, what outbound sales looks like. We'll talk about what's actually working right now when it comes to emails. We'll also talk about the foundations you need to place at the beginning when it comes to supporting your business growth with sales and so much more. And a big thank you for sponsoring today's episode goes to Michael and our sponsors. The Gold Digger podcast hosted by my good friend, Jenna Kuchar, is brought to you by the HubSpot Podcast Network, the audio destination for business professionals. The Gold Digger Podcast helps you discover your dream career with productivity tips, social strategies, business hacks, inspirational stories, and so much more.

1:17A must-listen episode is one of Jenna's recents on everything you need to know about affiliate marketing. Listen to Gold Digger wherever you get your podcasts. Michael, say what's up to Fire Nation and share something that you believe about becoming successful that most people disagree with? What is good, Fire Nation? I am incredibly excited to be here today. Thank you for having me on the podcast. Great question. The thing I like to think about a lot is, you know, you're often told, you know, to find your passion and to have big aspirations for what you ultimately want to achieve. And I think as you go through that process and you start to find success, it's easy to add additional complexity to your life.

2:06And that might be additional assets, houses, cars, projects, companies, you know, employees, teammates, etc. Or it could just be, you know, complexities of personal life and things that you introduce you don't necessarily need. And I think one of the things I think a lot about is this concept of avoidance versus aspiration. And I think as I've found my way to whatever level of success I'm currently at, I always think about actively avoiding unproductivity to create a life that's aligned with my desired outcomes. Because if I'm only focused on aspiration, I'm going to add versus subtract. And I think this is kind of counterintuitive to a lot of people, but it's something that probably aligns with saying no more often.

2:54The other factor I think aligns with is this concept of like embracing boredom. And, you know, when you're aspirational, you almost feel like you need to be doing. You always need to be finding a new angle. You always need a new hustle. You always need a new opportunity. But when you embrace boredom and you just sit and think and you start thinking about avoidance versus aspiration, you can start to define what success actually means to you. And I think with that comes a different level of happiness as well. I think this is a really important topic to think about Fire Nation, this avoidance versus aspiration, being okay with boredom, being okay with being bored.

3:34And I've actually found myself saying that quite a few times over the last five years. I did not find myself saying that the first five years of growing Entrepreneurs on Fire, I was always on the run. I was always heads down. I was always just the meat grinder was chugging. But man, I can tell you, there's been a lot of times over the past five years when I've been bored and that's not a bad thing. That is not a bad thing. And this avoidance versus aspiration is something that I really want a lot of you to think about because it could save you making some bad decisions as, you know, just like my man Michael said, that lifestyle creep, that happens.

4:09You start making a little more money, you buy a little bigger car. You start making a little more money, you buy a bigger house. So I make a little more money, you're doing other things. And then all of a sudden you're like, wait a second, like, man, I actually have had this lifestyle creep just stay one step behind me this whole time. I'm not really any more financially free than I was when I was making a fraction of the money that I'm making now. In fact, if I have one misstep in the business, the economy does something that I don't expect it to do. I might even be in more trouble because this house of cards could start to collapse.

4:41So a lot of good things to think about. And we're talking to a gentleman who was able to just crush it when it comes to outbound sales, because it laid his foundation for a nine-figure valuation, which is one of the things we're talking about here today. And I want on that topic, Michael, to talk about the stage when we're first starting our business, because that's where a lot of Fire Nation is. A lot of my audience is in those early stages. What does outbound sales look like at this early stage? Absolutely. I love this question and I love your framing of avoidance versus aspiration. I think it's related to this question.

5:18You commented, you know, early days, Fire Nation, just the grind that you had to put in to building this foundation and building the flywheel that exists today. And the same thing is true, I think, for absolutely any business in any category in the world. When you launch a product, you launch a website. Nobody knows about it. There's no brand. There's no SEO. There's no social. There's no podcast. It's just you and an idea. The only way you can get that idea out in front of people is to put yourself in front of those people. And the only way to do that is by getting outside of your comfort zone and getting in front of those people with email, with social, with events, with conversations.

6:06It just has to be this unrelenting approach. And so when we started Vidyard, we were in California, Silicon Valley. We're at a program called Y Combinator, which is like Mecca for technology startups. So fortunate to get into the program straight out of undergrad. We were working on Vidyard for three or four months. And I got to meet with Paul Graham. And Paul Graham, founder of the program, amazing individual. He said, you guys have a product. You've built that product for customer needs. You've got to get it out into market. So I want you to pick a metric, whether that's signups, whether that's videos uploaded, whether that's revenue.

6:42And I want you to grow that by 10 percent per week. Next week, tell me how you're going to do it. So we went home. How are we going to do this? Right. Ten percent from nothing is like really easy. But once we have those first 10 signups right next week, we've got to find one more. And we've got to find, you know, one point one more after that. And soon that number gets to a point where, you know, you're a thousand signups. You've got to find a hundred. Right. You're at 10 ,000 signups. You got to find a thousand more. And so what we did was we built this crawler that sat in the corner of our office and scanned the DMOZ, which is a business directory for every single business in the world that had a video embedded on the homepage.

7:24And we were a video hosting platform at the time. That's how we started. And so that meant a lot to us. It meant that the company that we were going to try to talk to had invested in video as part of its strategy. So we took those companies, put them in a database. We had 80 ,000 of them. And then I found somebody on Odesk. Her name was Hazel. And Hazel went out and would find 100 contacts for me a day from this 80 ,000 list of companies. So she would find directors of demand gen, CMOs, VP sales, VP marketing, VP demand gen, and she would add a row to this database, a spreadsheet essentially, with their contact information, their email, their phone numbers.

8:09and I would spend all day doing 100 personalized outreaches a day. So I was researching the company. I was reading public earning reports. I was doing whatever I could to retrofit our solution to a problem that I thought they had. It was a tremendous amount of work to do this 100 times a day. I would wake up at six o 'clock. I would interface with my co-founder who was building code through the night. He would tell me what he built. Then I would go and I would try to sell it. I would finish at about 8 or 9 p.m. I would cross all the different time zones. He would wake up, start writing code. I would tell him what I learned.

8:48And we did that process for six months straight. And it was it was like gut wrenching. It was soul sucking. It was so difficult to bring the passion every single day. But we had the aspiration. We had to put the work in. We hadn't got to the point yet where I decided that that wasn't necessarily something I wanted to do. Interesting artifact of this story is I was learning what companies wanted our technology to do. And I was embedding those learnings into our roadmap. And so that exchange between my co-friend and I every single day was fed and informed by those interactions that I had with those potential customers and prospects.

9:28And so I was running an agile process. We were building what people wanted. And then eventually what I was able to do is go back to those individuals and tell them that we'd launched that technology. Interestingly enough, one person really and truly loved what we were doing. She spent a bunch of time with me on the phone. She started using our product early. She cared deeply about what we were building. And so we had a picture of her on the desk or in our office where we were writing the code and building the product and a list of her requirements. And I would just continuously call her back and update her.

10:01And we basically built this product for Donna. I built such a great relationship with her that when we moved from San Francisco back to Waterloo, which is where ultimately she ended up residing, we met, we developed a romantic relationship, and we've been married for just about a decade now. So, you know, I grinded so hard that I eventually found my life partner. And, you know, it was a big part of this process. So I attribute so much of this early grind to, you know, my success in life. and we're very excited now to be building products that can help companies and founders and entrepreneurs do this for themselves with like a fraction of the work.

10:41Fire Nation, this is the unexpected gold that you uncover when you just flipping work hard and you're hearing right now a playbook that worked. How can you apply this playbook that we're talking about to your business, this unrelenting approach, putting in the reps? That's why when I look back, I just love the fact that I just committed to a daily podcast because it made me get up every day and put in the reps. I couldn't take an off day. I had to make 100 outbound emails to find two guests that would say yes. I had to be relentless. What are you doing, Fire Nation, that's making you relentless at your stage in your life, in your business?

11:18And I love, Michael, sharing what's working right now. What are some of those best emails that you use? Maybe just pick out one in particular that landed you actual customers? Personalization is a huge part of it, especially now, right? The amount of noise that we get in our inboxes is pretty distracting as professionals. And so the reality is I have problems. Every CEO, every executive spends their day solving problems. And your job as a seller of any product or service is retrofitting your solution to those problems. I like to think about sales as like this process of equalizing knowledge asymmetry, right?

12:04The sales rep, the seller, the entrepreneur, they know what their product does. The buyer knows what their problem is, but doesn't know what the product does. And so the sales process is the education to verify if those two things connect and if the service or product is a solution to those problems. And there's so much information out there right now about what companies and people are going through. There is more gold than ever to help you personalize those messages. And so the most impactful thing I could do was like go look at an earnings report and see what executives in a business were talking about, the challenges those businesses had, and try to retrofit in the subject line, in the email, why I felt like we had a solution to that problem.

12:52And I wasn't trying to sell something. I was trying to educate. I was trying to add value. That's a very difficult and time consuming thing to do. But those are always going to be the most effective outreaches. And a lot of people approach this problem and say, you know what, the solution is just more volume. Like if you send 100 emails a day, copy, paste without any personalization at all, you're going to get a response rate of one to two percent. and that's fine. But with personalization, with doing the extra little bit of work, with showing that you're passionate about how you can solve this problem, you can boost that response rate to 10, 15, even 20%.

13:31You just have to be willing to put in that work. But right now, it's getting a lot easier to do that because of things like artificial intelligence, right? You can use ChatGPT to get a quick overview of a company's earnings report to understand the pains they have and then retrofit your solution accordingly. And you can also use AI to write that email for you. Fire Nation, I hope you're taking notes because these are value bombs from a person who's been there, done that, and had the success that goes along with this relentless, unrelenting adherence to just putting things out there, seeing what works, tweak, pivot, having that avatar, Donna, that perfect client who ended up being his perfect soulmate as well, but thinking about that individual and everything that you do along your roadmap.

14:19We have so much more to talk about around this topic when we get back from thanking our sponsors. Artificial intelligence is at the top of everyone's newsfeed. So we all know there are plenty of business pros out there benefiting from AI. AI can help you save time, brainstorm ideas and tackle your to-do list. But knowing about it and putting it into practice are two different things. So what's the first step? If you find yourself spending hours each day on content creation, then meet HubSpot's new AI-powered campaign assistant, a totally free-to-use AI tool tailor-made for marketers and business builders who spend hours each day on content creation.

14:52Campaign assistant will transform the way you work by crafting personalized emails, ads, and landing pages with just a few prompts in a matter of minutes. And you can start seeing the benefits fast. Just pick the content type, add key selling points, and let AI take it from there. Campaign assistant isn't just free. It's also fully integrated with HubSpot's smart CRM. so you can publish the AI-generated content directly into your landing pages and emails from your CRM. So work smarter, not harder. Head to hubspot.com slash campaign dash assistant to test drive campaign assistant for free. As the host of a daily interview podcast, I know how important storytelling is.

15:31So recently I jumped on Masterclass and took a class on storytelling. I'm always looking to improve. And with the holidays upon us, Masterclass is a meaningful gift that can help you and someone special in your life become the best versions of yourselves with classes on everything from leadership to effective communication to cooking. With Masterclass, it's like having your own personal mentors without the massive investment that one-on-one classes from the world's best would be. With Masterclass, memberships start at just$120 per year for unlimited access to classes with all 180-plus Masterclass instructors.

16:06Plus, there are new classes added every month like Aaron Sorkin's screenwriting class, which is the one I took to learn more about masterful storytelling. Boost your confidence and find practical takeaways you can apply to your life and at work. This holiday season, give one annual membership and get one free at masterclass.com slash fire. Right now, you can get two memberships for the price of one at masterclass.com slash fire. Masterclass.com slash fire. Offer terms apply. Michael, you've invested in over. 150 startups. So you have quite the understanding of the challenges that businesses go through, especially during those early stages.

16:46So what are the main challenges that you found, of course, personally, but with these 150 startups plus in going from zero sales to actual sales? I mean, I think in the end of the day, it's the grind. And the process I'm describing that we went through and I prescribe this process to every single company that's selling a product to a large audience, large market. The single hardest thing about that is just the effort and the time and how soul sucking it can be to, to basically not get any responses to every single day, put your heart into the work, to personalize the messages, to feel like you can truly add value and solve a problem and be passionate about that and get nothing in return.

17:36The reality is this is the moment, and I've seen this in a lot of different companies. I was fortunate enough, my co-founder and a good friend of mine started investing in 2013. That became a fund. The fund's now called Garage Capital. We're on our fourth fund, 150 startups, as you mentioned. So I've seen this time and time again. The thing that separates successful companies from unsuccessful companies is the willingness to do this work and the founders having some kind of a chip on their shoulder or some reason to succeed, which is unnatural. Because being a CEO, being a founder of a company is like Elon Musk said, staring into the abyss and eating glass.

18:17And running this kind of an outbound process is like eating glass every single day. For me, fear of failure was paramount. I was not a good student. I came out of an engineering program at the University of Waterloo, and I felt like I had to be an entrepreneur to prove myself to my classmates. And the ego risk of failing was enough to motivate me every single day to be successful, to get out of bed, to do that grind. And so the thing I tell founders is you have to love this problem and you have to love the work that's required to make this thing successful. And the good news is when you start to see responses, when you start to get that feedback, when you start to book that meeting, when people start to open their wallet and pay you money for your product or service, you have to reward yourself.

19:09You have to celebrate that experience to pay for the pain that you put into earning it. and once you start that process right we had a we had a bell in the office we rang the bell every time a customer signed on that was a celebration of the work that went into that process but also an acknowledgement of the work that now starts to continue earning that customer's trust every single day but that was a celebration that was an earned moment and that like pavlovian response we created with that bell was such an important part of the early days of vidyard of going from zero to one, one to 10, 10 to 100 and so on and so forth.

19:42So highly recommend that response. We took the first$10 ,000 we made as a business and brought it to Vegas. $10 ,000 is not a lot of money in Vegas, let me tell you, but we had a lot of fun and that inspired us and motivated us to keep going, which is such a special time in my life. And now I look back on that, that very difficult time. And I look back on it so fondly because so many amazing things came out of that grind. Fire Nation, you have to embrace the grind. Now, why? If it wasn't a grind for you, that means it wasn't a grind for somebody else. And if it's not a grind for somebody else, that means it's easy to do.

20:21That means everybody's going to do it. You have to recognize the reality of Fire Nation that the higher the barrier, the lower the competition. A daily podcast interviewing an entrepreneur every single day was a really high barrier. Doing that once a week, not so much. Finding four people to interview a month, not that hard. Finding 31 people to interview a month, a lot harder. The barrier was a lot higher. I couldn't be replicated. My grind was a grind that other people weren't able to do, weren't willing to do. Michael's explaining the same thing. So you need to find your grind, which is why it's important.

20:56You need to be passionate about the solution you're providing to a real problem and then put your nose down and outwork, outgrind the competition and know that the harder it is, the happier you should be because that's all of your competition, whining, crying, complaining, and falling off the wagon because they can't keep up, because they can't do it. Now, we all, Michael, hear about automation. Is it possible to automate some of this outbound process? Because listen, both you and I have hammered home the fact the grind has to be there to learn the process, to understand your avatar, to understand the uncovered goal that's there.

21:35But you're going to get to a certain point in our businesses when we're successful that we do want to automate some of the process. Tell us about that. Yes, absolutely. This is an amazing moment in technology. It's like a watershed moment where we can use artificial intelligence and automation to do a lot of the things I described. And one of the best moments in my career as the founder and CEO of Vidyard was realizing that every single thing I've prescribed to these 150 plus startups I've worked with, to my past self and the success we had with this process, we could start building into a product and a workflow that would be better at doing this than I would have ever been.

22:24That was a moment that I can't even describe to you, a moment of sheer joy where I realized we could support entrepreneurs, founders, early stage CEOs, people that were pursuing their dream and help them do this work I'm describing in a way that gave them the opportunity and time to do all of the other work involved in building a business. because today, you know, when you start something, right, you've got legal contracts, you're hiring people, you've got corporation process, you've got your logo, your website, you've got your sales process, as we've described, you want to hire, you're continuing to develop an innovative product.

23:01There's very little time in the day to run this process. And I was so fortunate to have a co-founder that could support me in building the technology and covering a lot of those other things so that I could generate the demand. So today, just two weeks ago actually, we launched a product called Prospector. And what we did was we found and built a contact database over a huge period of time, and we've made this contact database available to our customers. So you can go into Prospector, you can pick a geographic region, you can pick a size of company, you can pick an industry, You can pick titles.

23:40You can pick subtitles. And every single day we will find you 20 leads that match that territory. And based on who you are, your company, your profile, what it is you're selling, product or service, we will personalize a message for each of those 20 contacts and send it to them every single day. And the personalization of this is amazing. One of our engineers, her name is Nyssa. She was describing that one of the personalized emails got sent out to another Nyssa and Prospector said in the email, hey Nyssa, it's really great to meet another Nyssa. What an interesting name. It is incredible what this thing does from a personalization perspective.

24:27I posted on LinkedIn in about this product, somebody jumped in and said, hey, I'm skeptical about what AI can do in terms of generating these emails for me. So I said, hey, I'll put you in the cadence. So I put his email in the cadence manually. The next day he got the email. He responded and said, hey, thanks for the email. I'd really like to see an example of what AI can write. And I said, you responded to the example of what AI can write. And he said, ha ha ha, you made me laugh. And I said, no, I'm serious that was the example here's the workflow we booked a call it's incredibly powerful and what we'll do is we'll do the follow-ups to that customer and user prospect for you and if you use something like Calendly you can embed that link you can also embed a Vidyard video in that email so you can add your personality they can watch the video they can click the Calendly link they can book time in your calendar my co-founder Devin our CTO the one who built all that technology when I was doing up and prospecting, he's never prospected in his life.

25:25And he has a 15 % response rate using this product, which is better than our business development team has on average. And again, a lot of companies hire individuals to do the work I described. You know, they're new grads, they're fresh out of school. They don't understand the context of how our solution solves a problem that a VP or CMO has. They just don't have enough experience. But Prospector leverages every single successful email we've ever sent. All the pro tips about how to personalize emails for responses, the collective wisdom of all of humanity and builds those messages from public information like earnings calls, etc.

26:03All that stuff I described, it will do 80 % of the job that I described earlier, this outbound process, for$80 a month. And that is because of automation and AI. And that was not possible even eight months ago. So this is an incredible moment for entrepreneurs to use these tools to scale their efforts. And then guess what? You can spend your time doing the things you're passionate about, design, building product, because you've got this prospecting agent out there doing the work for you, booking the meetings and booking meetings with people that want to talk to you based on those emails that are sent.

26:38It's a beautiful moment. I hope everybody can have an opportunity to check it out. I would love to hear about the success rates they're having. Again, we're two weeks in. We've got thousands of users on the product, so it's clearly working. But we've got a lot of very exciting innovations to come around this moat of using automation and artificial intelligence to build this tech. And where can Fire Nation go to find out more? Vidyard.com or prospector.vidyard.com. Fire Nation, you need to understand that you are the average of the five people you spend the most time with. You've been hanging out with ML and JLD today.