From Outreach to Paid: Manny Medina on AI agents, SaaS monetisation, and building for the future

0:28Culture is what you live every day. and more. Our mission with the podcast is to help you, the founder, learn how to scale your SaaS, maintain your well-being, and navigate the complexities of this ever-changing industry. I'm your host, Alex Deema, and together we'll explore the good, the bad, and the ugly in the journey to SaaS success. SaaS Stock Europe is next week. This is your final chance to join 4 ,500 AI and SaaS founders, leaders, and investors in Dublin for two days that will move your business forward. This isn't just another conference. This is where machine learning meets go-to-market, where funding meets future, where AI meets ARR.

1:09Network with the industry's most influential minds and learn from founders shaping the future of SaaS and AI. Big deals, real AI insights, Dublin energy, limited tickets remaining. So be quick, book now at sasstock-europe.com slash tickets. Welcome back to the SaaS Revolution show. I am your host, Alex Thuma, CEO, founder of SaaStock, also general partner of BackFuture Ventures. Delighted to be joined today by Manny Medina, who's the co-founder and CEO of Paid. You say Paid.ai or Paid, Manny? I call it Paid. It's about getting paid. And the.ai will eventually just subsume because we're going to get more traffic as we grow.

1:54Very good, very good. Well, it's fresh. We were together last night, but it wasn't just me and you. We brought the London SaaS.local community together. Thank you for obviously joining us. It was a great gathering around sort of 50, 60 SaaS builders, AI builders there. we got a bit of a sneak peek into what you'll be discussing at sassock europe as you'll be joining us um now you're a honorary european or honorary uh londoner you've got a short hop uh to come over to dublin um in a couple of weeks time i think the 14th and 15th of october um so uh that was really helpful also going to be helpful for uh the conversation uh today and i i know like um a lot of people do know you manny for uh for outreach right you you you co-founded you were the ceo of outreach you you know grew that to over 250 million um and were there for 11 years but you're you're going again you're you're uh you're building paid uh you want people to get paid sas companies to get paid uh ai companies get paid uh and also yesterday uh there was the announcement of your 21 million dollar seed round uh and so you've done pre-seed and seed in the space of like i don't know seven months um so uh some fast uh sort of growth and and plans there um so we'd love to focus a little bit uh or more around paid around ai um why why are you building this?

3:37Why have you decided to build paid focus on this as the next big thing? A couple of things, Alex. The first one is the fact that I experienced this pain of being a SaaS company, as a leader of a SaaS company myself, and seeing the fact that agents were only moving in one direction. And that, you know, we had, at average, we hadn't been investing with AI for a long time, but the moment, you know, LLMs came to the scene, everything changed in a very significant way. So, but what didn't change is your back office and your monetization stack and your ability to track costs and your ability to build a business on the back of this new technology.

4:23And, you know, I'm a big and firm believer that you should always build what brings you alpha. You should not build things that are not going to differentiate you in the marketplace. So I'm sitting there at Outreach after a conversation that I had with Alan, the CEO of DocuSign, who was asking me, okay, so how many fewer seats do I need next year now that you have agents to hit my growth numbers? And it was a great question, A and B. I'm looking at a contraction event because he's not going to need as many seats if agents are going to take up some of the work. so you know i went to talk to you know my systems teams and i realized that our systems cannot support the all the various ways in which agents deliver value so an agent you know could be an aisdr which is you know out in the market well understood but an agent can be a compete agent an agent can be a manager agent an agent can be a renewals agent an agent could be an expansion agent an agent can be a new product introduction agent an agent could be an agent that sells in a particular market or demographic or industry that you don't, that you need help in.

5:28So the ability for you to, so like micro strategize what an agent can do is only a matter of like, you know, the prompt and the data that you have available. But the systems for me to go in charge for it were just obsolete. And, you know, I was, you know, we're a Zora, Salesforce, NetSuite stack, and none of them have been touched for over 20 years. And none of them were built in a time of agents. Matter of fact, like the common term in a SaaS world and even in the pricing world is a SKU. Just think about a SKU. It's a stock unit. It's a chair. It's a microphone. Like why does that belong in software?

6:08Like it's just nonsense to me. So when you look at what an agent does, an agent is providing all these services. An agent is performing all these activities, providing you a service and giving you two things. One is a set of outputs and outcomes that you care about, that you're paying, that you should be paying for. And two is, you know, preventing you or like, you know, in this case, relieving you from hiring to have another human being to do the same work. Right. And that concept was just not understood and brought in into the picture. So to answer the question, why did I go start this? It's because that problem just kept bugging me.

6:43You know, starting companies is a very irrational thing. Like people don't do it for a lifestyle, right? People don't do it to live the Silicon Valley life. They do it because they have a problem that they are very personally involved in solving and they really want to solve the problem. I mean, I really wanted to solve that problem, not only for outreach, but for all the SaaS companies out there that need to move to agents because seats are going down. So I feel like if I don't solve that problem, you know, in the position that I'm in with the knowledge that I have with the superpowers that I've acquired for the last 12 years, you know, I would be wasting, a good chance and an opportunity for me to really change the world.

7:20Would you assume that the Zoras, ChargePs, all the other billing platforms will also need to start to solve this problem, but they're going to have a lot of legacy tech debt and not necessarily be AI native at its core. And so it's just going to be harder for them to rebuild, to get there. How do you view that with where you are and just building this from the ground up with AI at its core? You know, the fastest way to lose a raise is to look back at the people you're leaving behind because that actually slows the body down. So I don't know what they're going to do and what they should be doing.

7:58But I can tell you from experience is that when you're running a few hundred million dollar company, repositioning yourself as something you are not is really hard, right? Because people buy you for a particular set of reasons that you're known for. and the things that you're not known for, you have to go and disrupt yourself. So I think it's going to be really hard from a positioning and messaging perspective to begin with. But second of all, because the technology is significantly different. So the way that we solve the problem for agents is that we actually see everything the agent is doing for us to be able to figure out what you should charge for and what should you be given away for free and show the customer that worked that you did.

8:37And that is not something that can easily be done through third-party systems right now. Third-party citizens now live in this configuration world where you tell them who bought what and what entitlements they have, and they will give you the pricing back. And you need all these people around it, like deal desk and finance and approvals and blah, blah, blah, blah, which is in this day of AI, it's just nonsense. So we are reimagining the whole monetization for infrastructure from the ground up, built purposely for agents. Is it your view that traditional seat-based pricing is going to be extinct?

9:14And in what period of time, if so? So I put up a bold claim that I actually lifted from a few others that in five years, we're going to see half the org chart being occupied by AI agents. So we're going to be moving to a world where you're not going to be hiring new humans into the organization, but you're going to be hiring agents. and then the question is how do you pay them? Where do they belong? Who is their boss? How do you onboard them? How do you onboard them? What is their, you know, what is the security clearance an agent should have? What access to information should they have? How do you observe them?

9:51How do you monitor their behavior? How do you even performance reviews to the vendors, to the people who create the agents? So we are going to live in a world where the agents are going to be very much tied into the fabric of the corporate culture and the corpus of the organizations. Is your initial focus and ICP positioned around SaaS companies to help them with this new model of pricing? How would you differentiate the AI native SaaS startups, which are really B2B software, but they've just got AI at their core? Would you say one you're focusing on rather than the other or both? So the analogy that I will give you is I have this hose of water, and I began over getting the garden of all the different SaaS, all the different AI agent startups that were coming out of the ground, and they needed this infrastructure for them to scale, and that was my primary ICP.

10:55and then I realized that, you know, not too far away, there was a massive fire that in a building with people in it that needed to be rescued and I'm the only one with a house. So now I have to do both. I have to continue to irrigate my market but if I don't save those who are in SaaS right now who are charging per seat in a world of declining seats, unemployment, by the way, in the junior roles is up 13%. So seeds are not being added to organizations. If anything else, every organization that I know is cutting seeds as they're growing, which is, you know, operationally impressive. But it's bad in general for SaaS companies who are selling against those human beings in seeds.

11:35So if I don't help solve that problem right now, there's going to be a lot of a lot of bad news. And I'm trying to prevent those bad news. So I'm running as quickly as I can with this host to try to douse a fire that is happening in the SaaS world that haven't changed their pricing from seats to agent-based pricing. Would you say SaaS is in a kind of like existential sort of like moment that if they don't become AI first, AI native, and, you know, very soon, that, yeah, it's just going to be critical for a large number of companies, right? A hundred percent. And some of them are realizing and some of them are not realizing that they're sitting on a burning platform.

12:18Hard to say, but do you think like the term SaaS is still, like, are we going to be using that, you know, in the near future or in a couple of years time? Are we just going to be saying these are like AI startups, like AI software companies? I don't know. That's a great question because I actually think that SaaS may be running to extension too. And it's for a different reason. And that, first of all, most software right now is consumed as a service. Or I wouldn't say most, but a large quantity of software is consumed as a service. So that in itself is not a, you know, when you say software, you assume SaaS.

12:56You see what I mean? You assume that the delivery method of that software is going to be via the internet. So I don't know that SaaS makes sense anymore as a nomer to define where you are. the second piece is that because of the vulcanization of personal data because of the vulcanization of hyperscalers and what each and the imperative at the national level of owning your LLMs and your infrastructure and your compute we're going to see a lot more regional clouds and we're going to see more custom deployments that are going to be looking like more on prem and now that we have containers and many other artifacts to be able to deploy on-prem and hardware is cheap.

13:40I don't know that SaaS actually gets there. Like when, you know, we just signed a deal with a company called IFS and a lot of their deployments are in parts of the world where you don't, you know, your delivery method of, you know, as a service is kind of like poorly defined, right? Like in an oil rig, you're not hooked up to the internet. You know, now that with Starlink, maybe you are, but like your systems are not, you know, constantly being updated and refreshed. So you need different policies to update those systems and you need different strategies to be able to get to those remote locations.

14:12So I don't know that SaaS is going to be, as a term, alive for very long. I think we're going to come up with something new. And agents feels like the right direction in general. And you've been building pay since early this year, right? I guess kind of officially kicks off this year. What are you doing differently that you did, I guess, kind of outreach? And then also, I guess, during that point to get to the traction of where you're at. I think maybe you shared yesterday you're at around a million ARR or something like that, which has helped you with the seed round. So I guess, what have you been doing differently?

14:52And what's been working for you to get traction for paper? Yeah, so let me start with what I'm doing the same. So in terms of outreach, what I'm doing the same is we're selling right away. We're selling ahead of capability. We're selling and we're getting, you know, we're getting our feedback on our product direction directly for somebody who will pay us money for the product. That is very helpful. We're also very customer obsessed. So we make sure that we stay on top of the customer. we take a look at what the customers are doing every day to make sure that we have an understanding of, you know, what kind of value they're getting from the product.

15:34What we're doing differently is pretty much everything else. So, you know, outreach was my first company. So I didn't have a good notion of what building a company would look like. So I took a lot of advice from VCs that in retrospect was bad advice, and I don't think I will ever do that again. So number one is that the most important thing is not the code or the engineer or anybody here in particular. The most important thing is the customer. And as long as we are wrapped around the customer and what the customer's problems are, understanding the true needs, and we're constantly solving that problem with alacrity, with panache, with good taste and with urgency, we're going to be okay.

16:18So this customer obsession is something we had at Outreach. But here we bring it to like the nth degree in that every single one of our engineers gets forward deployed as a part of their onboarding. Not as a part of their onboarding, just as part of their life. And forward deployed means that here it means truly what it means, which is we will work in our customer's code. When we sign a deal with somebody, we tell them, okay, so as part of this money that you pay me, you're going to give access to this person that is going to sign an agreement with you that he's going to come in as a contractor.

16:51That person is going to fork your code. He's going to install the work. He's going to make sure that you are set to success. And then we're going to PR it. And, you know, a lot of people find that a little weird. But for us, it's critical that we are working in our customer's code base so that we understand their problems at their rawest, most primitive level. Not in the way they're telling us their problem is, but in a way that we observe in the problem is in their code base. And when I built Outreach, that, you know, that was not possible for a number of reasons. one like the most precious thing was the developer you have to respect everything they were doing and like their their time being hits down and the sale was was the most precious thing and and right now we we don't like our most precious thing is a customer and if that's going to set back our product roadmap and execution is so so be it we'll we'll work a little harder work a little longer work a few weekends and we'll get over the line um so things like that are completely different for us yeah on that on that so you and you shared that sort of yesterday in in terms of uh around sort of culture, the obsession on customer.

17:50And I don't know if you would use the word obsession, but the culture around winning. And how do you view that? How do you hire for it? How do you install a culture of winning within a business? I think it starts, culture is developed in sort of concentric circles. So the original team of the co-founders and the founding engineers, we act it that way from day one. So when we are acting that way from day one, meaning you are going to your customers, you know, code, you're doing the deployments yourself. Like Raj flew out to meet with Happy Brody and he lived in their offices for a week to make sure that it got done.

18:33When that is what you do, then the other people who join you and do the same, then they start adapting to that culture that you start wondering, why is that we do it? Oh, we do it because customers are the most important thing. Oh, we do it because we can learn that way faster as opposed to like hearing customers feedback or putting on a spreadsheet. No, you go and work in the customer's shoes. So culture is what you live every day. It's the actions that you take and the actions that you don't take. And by doing the things that we say we're going to do as opposed to calling them out and putting them on a document or on the wall, that's how you instill culture.

19:07You had, with outreach, as you I think crossed one million, or maybe it was before, but you had this i don't call it like a motto or something you're trying to instill 10 million or die tmod um is that something that you're bringing into uh to to paid you know as you you look forward to to 10 million um you know how do you view that is is it something different we're a different company and i want to honor and and acknowledge that that was awesome that we did at outreach and other people like the founder hey reach he copied tmod or like the founder of um i forget this other company he copied timo to anything it's kind of awesome that you do that we're gonna do here whatever is gonna work for us um um i'm not you know i'm trying to bring i'm trying to be light on the artifacts that i created at outreach because this is this is paid paid is built by different people paid is in london paid has a different vibe paid paid is just different so so i don't know i don't know the answer to your question but i'm sure we'll come up with something cool is it is it easy or or hard then like given obviously you have this like 11 year experience you know kind of with outreach to say okay i did that here but this is a new company and just you know thinking back to like the past and the things that you did to try and say actually no it's a different company let's not do that you know let's think of something different think of something new as a new business like do you ever uh you know are you thinking about that like whether it's a lot or during you know during your uh day-to-day no i worry about the customer yeah I want to make sure that we're addressing customers' needs.

20:47I worry about different things. I worry about things I didn't worry about average. For instance, yesterday I showed this chart that I think that you remember that I wasn't plotting revenue growth. I was plotting ACV. And I think that's one of the things that most people miss is that revenue growth, anybody can flex revenue. I can hire five reps right now and hit$1 million in a very short period of time. This is not the hard thing to do. The hard thing to do is get high quality revenue that sticks, that is scalable after 25, 30, 50, 100 million. And what I said yesterday is you have to figure out what is your optimal ACV for the product you're delivering and the problem that you're solving and then operate at that efficient frontier.

21:32If you don't find that out early, then you're suboptimal and then you decide to scale revenue. And guess what? The moment you raise a series A or a series B, that VC is going to come super stoked over your revenue growth. And he will want to see points on the board on the regular. And now you're forced to put points on the board in a really bad way, in a way that doesn't really scale after a particular number. So, you know, I seen that movie before. Like I did. Outreach was 2 to 10, 10 to 25, 25 to 50, 50 to 100, 100 to 190 or 180 something. and then when they get something to 200 and something and then 200 and something to 250.

22:07So that's a very fast clip of growth. But if I were to redo it all over again, I would optimize for what ACV I'm solving for, slowly work up to it, and then scale fast. You see what I mean? And that's what we're doing here. I'm tracking ACV like a hawk to make sure that when we scale, we're going to scale an efficient operation. It's not going to be sugar revenue. It's going to be all good macros and proteins and stuff. what what are some of the uh let's say uh challenges or like just just with the the current uh uh ai era that we're living in this you know the state of the market that um that you see ahead you know for startups of whether it's yourself but you know of your size and that you're looking at and thinking of and you know dealing with trying to overcome i i think i i see nothing but opportunity.

22:59I don't see any challenges. I think that the world is richer and more meaningful and, you know, with a lot more possibilities than ever was. It's just, you know, how do you, it's the mindset that you put to it. Like, you can frame it as a challenge, you can frame it as an opportunity. For me, it's all opportunities. And I'm extremely grateful to be surrounded by this group of individuals here in the office that, you know, relish that opportunity, that see it as a challenge and deal with it with curiosity and urgency. So, for instance, when I was at Outreach, you know, rebuilding code was a huge deal that required many, many meetings and a lot of feelings hurt and, like, what are we going to do about this?

23:45You know, we're going to have to rewrite it. Technology here moves, like, every other month or something now. And it's your duty to offer to your customers the best solution for their problem. Our duty. so if we have to rewrite code so be it who cares nobody dies your customer you keep your customer so like every day we have to walk out wake up and walk into the office and earn our customers trust and love you see what i mean and like that is a very privileged position to be in and as long as we continue to execute that way we're gonna be okay where are you on the because given this is the second time um you perhaps didn't need to do this right uh but you're doing it you saw the problem you wanted to solve for this but where where are you in terms of let's say like work-life balance and um you know the the amount of effort that you put into the business obviously there's a lot of talk around 996 sort of culture i read something by howard lerman uh who's building rome now after he did sort of like yext and uh you know in terms of like what he's doing?

24:51You know, where are you on this sort of scale? You know what was so funny about that tweet? Nowhere in that tweet, he talked about his customers. Yeah. Nowhere. And I love Howard. He's a good dude. But you know, it was all about his fitness and the fact that his calendar was empty and open and ready for whatever. Like if I am him, I will have his calendar chock full of conversation with his customers. So look, it doesn't matter like how you schedule your day. this is all nonsense that is brought in by the VCs who have nothing else to do. Like we should talk about how do you win at the point of the customer?

25:26How do you retain those customers? How do you grow your ACV? How do you scale your teams? Like those are the meaningful conversations. All the rest of the stuff is noise. What about then in terms of then, like how many customer conversations are you, you know, having, you know, on a... I have a steady diet of five a day. Five a day. Are they mostly, do you see this, um you know are these like online meetings given that customers may be geographically dispersed how do you balance and view in-person customer relationships and look at that from a schedule versus doing online meetings because i don't like with our business you know for instance and if we talk about like our acv it's under 50k right and let's say a battle that i've had seems to be sort like losing is trying to get you know my sales reps out to visit customers but we have a lot of you know customers in in the u.s and not necessarily saying it's an excuse but people have spread all over you know the teams in in london uh their customers are used to doing business you know on google meets and you know being efficient um and just kind of finding uh finding that balance and so for me it's been like i love to go visit the customers it's hard to scale It's not as efficient.

26:41But when you have that in-person customer meeting, build that relationship, it's often so much more impactful. Right. But conscious of or curious to your view and how you manage that and balance it. I try to have as many in-person conversations as I possibly can. So that's where London is both a blessing and a curse, in that London makes it very accessible to be somewhat central to all time zones. But my customer concentration is in the West Coast of the U.S.

27:20And traveling, as you can imagine, is very far. for the customers I do have here in London, I meet with them in person. You know, I have them come to our office. We go to their office. I think customer in-person meetings are the most valuable thing that you can do. And we were even talking about that for our four employees, that we did a couple in person and they were significantly higher value post-deployment to, you know, work through problems than when you were, you know, just online all the time. I'm trying to think, the majority yeah so we we try to make the majority of the meetings in person it turns out like for the customer sometimes it's difficult but what i do try to do is after the deal is closed it's go meet them in person for sure so like you as a ceo should make that a hundred percent of a priority to go meet customers what about um just sort of switching gears a little bit in terms of your own use of ai as a ceo on a day-to-day basis like what are a couple of tools that you're using?

28:22How has it helped you be more productive, more effective? So I use Grok, ChatGPT, and Claude as a thinking partner. And I gave the same problem usually to all three of them. So when we're thinking about strategies, we're thinking about go-to-market, we're thinking about approaches, we're thinking about our own pricing and packaging, our own scale-ups, things of that nature. So, but I don't use them to just compose documents. I use them as aspiring thinking partners. I love to talk, to give myself notations. So I use a lot of WhisperFlow. I love that product. I use a lot of granola, of course. And, you know, we send the summaries around quite a bit.

29:15We actually have granola on all the time, even in the office. so that if we impromptu just get up and chat with each other, Granola's still recording. So that we're able to summarize some of the stuff that we said. Those are my main tools of the trade. At home, I use Perplexity. I don't go to Google over Perplexity for any questions.

29:36What else did I use that has AI embedded in it? I don't know. I'll come up with something else, but that's a majority of it. and as we look um ahead like in less than two weeks you're going to be to dublin have you been to dublin before i haven't that's a great question most people don't ask me that question i haven't been to dublin okay first first time well hopefully uh i'm sure you'll love it it's a great city great people um uh you know the the city that should come alive somewhat with uh with sasdok in town so more founders and builders and uh our people there so it will be great i'll send you some tips and maybe things to do depending on how much time uh that you heard that you have a secret a secret list of of the the funnest bars so i i do i do i'm really i'm really excited about it i'll try and make the time myself to uh to attend them but it's difficult when you're running the event itself what will you be speaking about uh at sasso this this will be your first sassoc europe uh event what will you be speaking about who you're looking forward to to meet whilst you're there.

30:45So I'll be giving the same presentation that I gave to your crew yesterday. So it was great to get the feedback. It was great to sort of like iron out the chinks, the kinks rather, of the presentation. So yeah, if you have any feedback about what worked and what didn't work, what to do more, what to do less, please send it along. So it's going to be the same about my journey at Outreach. And I focus mostly on the zero to 100 because that's the hardest part. and that is where the majority of the mistakes were made. SaaS is kind of weird in that you have to really be very careful with initial conditions because when it does work out, so many times it doesn't work out, right?

31:22And you stall and you're small and then that's it. Then it doesn't matter. But when it does work out, if you don't pay attention to the initial conditions, you will have to, you'll walk yourself into a world of hurt that you didn't need to. And one of the things that I didn't speak enough about is about the operational debt that you incur when you're small that doesn't go away. And I think it was the founder of Rippling who said it best that operational debt doesn't go away as you scale. It just becomes harder to solve. So things like product debt or customer support debt or HR debt or things that you decided to skip and throw people at it, you hit your 10 and then even triple, triple, double, double doesn't work anymore.