SPOTLIGHT: AI Is Rewriting Sales. Are Your GTM Teams Ready? with Dan Lee of Nooks | with Dan Lee, Co-Founder and CEO @ Nooks

0:13Sam Jacobs: Hey everybody, it's Sam Jacobs. Welcome to Top Line Spotlight. Top Line Spotlight is that short segment where we go deep with an operator, an investor, a CEO, people that are in the field building, and we ask them about a challenge that they faced over the last 12 to 24 months. We're trying to get tactical, and we're trying to learn about the challenges that operators face in real time, particularly in the age of AI. And today we are excited because we've got on the show Dan Lee. Dan is the co-founder and CEO of Nooks. Nooks is an incredible company. We're big fans of them here at Pavilion. And Nooks is the revenue agent platform powering many of the fastest growing and most advanced companies today, like Cursor, Replit, and Deal.

0:53Sam Jacobs: Nooks provides agents and execution infrastructure to drive outcomes across the revenue lifecycle. From accelerating outbound pipeline, automating inbound leads, accelerating deals, and coaching reps, Dan, welcome to Topline Spotlight. Thanks for having me. We're excited to have you. So I gave the overview of Nooks, and for those that are listening, Dan just wrote that overview, so that is an accurate description. But Dan, in your words, if you wanted to tell us a little bit more about the company, where you are in your growth journey, how old the company is, and why you're so excited about building it.

1:25Sam Jacobs: Just give us a little bit more information in detail on what you're doing with Nux. Yeah, at the very highest level, the opportunity that we're going after, every knowledge job is transforming right now, and they're all following a similar curve, right? The job of a software engineer is completely different than it was two years ago. Similar is happening for legal, for support. The job of a salesperson has changed, but not that much over the past couple of years. And the outcomes in sales have not nearly followed the progress of model capabilities as they have in these other domains. We believe that sales is the next job to inflect and the future will be entire go-to-market teams collaborating with agents to deliver orders of magnitude better outcomes.

2:16and we're building the agents and revenue infrastructure that power that future. So on the evolution of Nooks, you know, today Nooks, we just crossed 300 people. We're growing just in terms of like revenue, you know, 3x year over year. And started hacking on like the early, early versions of Nooks in 2020, but it really started looking more like it does today, you know, closer to 2022. too. So that's like the very, you know, kind of high level background on those.

2:48Sam Jacobs: What were the, so, you know, one of the things that we want to hear from operators on Toplight Spotlight is just about challenges. And I know one of the challenges that you're facing a couple different challenges. One of them is related to just growth and urgency. Talk about the evolution of the product from when you started in 2020 through what it is today, because it started as one thing and now it's very different. And talk to us about how you're prosecuting that opportunity in the age of AI? Yeah. So when we started, for context, my background is in AI, machine learning research. And I first was not building a sales product that I'll save, you know, or the quick TLDR on that story is in 2020 was interested in human AI problems and saw that there's this interesting human problem first in remote collaboration because it's 2020 and the pandemic.

3:37And I was interested in building, you know, if you get this remote collaboration problem, like, you know, building kind of in the Zoom space, if you get that working, you have a lot of data on how people work. And can you start making it smart? So can you build like a virtual office and then make it a smart virtual office? That was like the high level idea and found that salespeople were actually like the biggest users of that collaboration product. In terms of the evolution, we started by building. So once we started focusing on sales, We started by building tools for sales reps. It was, you know, the first tool of which was calling because there were a lot of people making calls together in Nooks in the collaboration platform.

4:20And we expanded then to own all the tools for a rep, especially for, you know, generating pipeline. So think like not just calls, but emails, research, finding prospects, making account plans, you know, logging things to the CRM, enriching data, all the things around generating pipeline. So expanded from one tool to now the whole toolkit for Top of Funnel, and then expanded that to be not just the tools for sales reps, but also the tools for agents. Because in order for agents to do work like a rep, they need access to the same tools. And from there, I've expanded to not only the tools and agents for the very Top of Funnel.

5:03I give this chess analogy. When you're selling to an account, just like, you know, kind of like this chess game where you first need to understand the board and come up with a strategy, make the moves. We started with the openers, which is like, you know, creating opportunities and generating pipeline. And in building the best solution for that, have earned the right to own the end game, to, you know, help with deal management, renewals and expansion even afterwards, help basically working across the entire revenue lifecycle. And a lot of the same things that we built in terms of like the execution infrastructure, you know, the context layer, like this way to learn company sales processes, you know, that has translated across the whole revenue lifecycle.

5:43Wow.

5:44Sam Jacobs: How did you talk about how AI has changed, you know, software development and Nook specifically because you've, you sort of referenced the Mike Vernal, you know, barbell idea. Tell us about that idea. Tell us about that mental model and how it impacts this, the rate and the pace of feature development and kind of, you know, surface area coverage to the point of what you just said. Yeah, it's a lot easier to build software today. I'm sure everyone has seen that. And that means, you know, there's been historically this natural distribution of software tools. You know, this distribution, say that this x-axis is the breadth of the platform, right?

6:25And ranging from point solutions to things that do, you know, like, you know, in the middle to things on the on the end, that's like huge, you know, behemoth platforms. And because it's a lot easier to build products, the middle is kind of dying out, right? Because on one end, you have companies building in house, right, building their own internal tools that are pretty niche. And again, easier to build now. And then on the other hand, you have companies that are able to build and ship a lot faster. that are compounded to these huge platforms and are able to add more value because you have lower customer acquisition cost, synergy across the products.

7:06And because this middle is getting squeezed, one, I think this presents a problem for people in the middle. But I view most of these problems also as opportunities. There's this opportunity to go way faster and be way more aggressive than ever possible before because you can ship software at a much faster rate.

7:25Sam Jacobs: The challenge with, there's a disconnect between the speed at which people can build software and the speed at which your buyers can understand and interpret the problems that you're solving. Meaning, you can build 50 different features, but if they think about Nooks as a power dialer and now you're trying to do many more things, there's an element of marketing re-education that you need to do with your customers so they understand how to think about the problems that you're solving. And that is compounded by the fact that your ability to solve problems is probably increasing more quickly than their ability to process how to fit you into their mental model.

8:03Sam Jacobs: How do you think about that? It's a hard problem. It's not just that. There's the evolving, quickly evolving products. There's the noisy space, right? There's like a million sales tools that are saying, you know, we deliver X outcome or Y outcome that's, you know, very hard to distinguish between. So a couple principles that, yeah, there are a couple principles that we focus on here. One is actually showing outcomes. We run, you know, often run POCs, you know, even when it's not POCs, like we are very focused. every product team, engineering team, you know, go to market team is focused on what outcome are we delivering for the customer.

8:50And it's hard to knock that. Right. It's like, you know, we have a 70 percent conversion rate from like trials across all our products to, you know, to pay customers. So, yeah, one is like actually this focus on delivering outcomes. Related to that is we have a much broader product than we did originally. Right. And building like a single tool for calling is now a lot broader. but we never take the strategy of, hey, it's just a consolidation play. We never say, oh, we're okay having like a mediocre product in that area and a mediocre product in this area and just rely on like the strength of this product.

9:28And hey, you just use these others to consolidate. Whereas a lot of other companies take this approach because you can build software a lot more quickly today, we need to hold ourselves to this very high bar, right? where it's like we're not actually sacrificing quality. You can actually, on this curve of quality and speed, the curve is pushed out, and we can actually just do both. And part of that is, you think people call it the software factory. Can you build the engine that actually lets you iterate and compound way faster than any other company by having the best engineering talent, by having the best engineering practices?

10:07So we've invested a lot in that.

10:10Sam Jacobs: What are some of the best practices for engineering? Because again, that's where my next question was, how do you maintain quality when you're developing features at such an accelerated rate? Yeah. So we were saying that the job of this software engineer has changed. Engineering has shifted from engineers spending time writing code to defining the objectives and the success metrics and creating tests and even teaching agents how to create tests to make sure that what they're building is directionally correct. So if you end up, you know, if we have a ton of products and we're getting 100 tickets a day, instead of engineers thinking about them, Instead of engineers going and solving those tickets and building the features or squashing the bugs, they're actually instead building the agents that can go do that themselves.

11:00They're figuring out, hey, how do I build the system so that agents can automatically go take, one, not rely on customer bug reports, but instead build really good observability. Or even when a customer bug report does come in, it just goes and fixes it automatically, puts up the PR and says, hey, it's done. You can give it a check if you want. So moving a lot more from like engineers, like doing the work to more orchestrating the work.

11:24Sam Jacobs: How did you think about retraining your go-to-market team? Again, you know, they were trained on selling a dialer to SDR leaders a few years ago. Now they are selling more things. And it might also be a different profile of person that can handle a multi-product sale where you're probably, you can tell me if you're wrong, But if you're pursuing any kind of mid-market or enterprise strategy, there's a lot of incumbents that you need to replace. You know, you can do so many different things. You have to figure out, well, where do we start? What's the, you know, thin edge of the wedge? And then how do we replace those incumbents?

11:59Sam Jacobs: How do we have that conversation at a high enough level so that we can take full advantage of the opportunity? Yep. So I'm starting to think about our sales reps and AEs not as, you know, sales reps, but as revenue AI consultants. And that means really deeply understanding, like, a company's problems and opportunities, right? Maybe it's even problems that they're not thinking about. I view problems and opportunities pretty interchangeably. But understanding, like, yeah, how does their revenue org work? What is their sales motion? How do they generate pipeline? How do they push deals forward? What are the things that they're thinking about and prioritizing the numbers that they are trying to move and the lowest hanging fruit?

12:40What are they building internally? And what are the things they're not thinking about? And help explain, because Nooks will solve some of these problems. We have agents that can help generate pipeline, that can help automate inbound, that can help accelerate deals, coach reps. Everyone is focused on one of these problems. and the question is like, okay, what part of Nooks, like how, you know, what do we need to build for them? How do we partner with them? And it's a lot more consultative than it was before. Another like framework that I have is in, you know, moving from selling like a pretty straightforward tool to now kind of this like revenue agent platform is the difference between serving demand and generating demand.

13:24And people, you know, a lot of people think about demand gen as like a marketing thing. It's not just a marketing thing, it's a sales thing. Uh, sales reps can spend all their time, you know, uh, uh, I have a ton of hand raisers saying, you know, our customers saying, oh, I didn't hate outreach or sales loft and I want to switch. And like, that's easy to service that demand. Uh, it's a lot harder to generate demand, right? When they're like, yeah, it's like fine. I'm not really trying to switch right now, but like, you know, I, these are the problems that I'm actually, that I actually have. Right.

13:52And how do you actually take those problems, uh, and say like, help them understand why Nooks is like the solution for that. So it's important that our sales team is moving in that direction. But I think all sales teams are moving in that direction because as agents free up rep time, then the rep, in order to compete, actually has to be a lot more consultative in understanding the customer problem and can deliver more value in the sales process.

14:13Sam Jacobs: What do you do? What's your prediction on the future of sales? You know, there's I'm friends with Amanda Kalo, who's the CEO, one mind. And she has a point of view that, you know, many SMB deals that the bar for human involvement interaction will continue to go up in many, many deals. More things will look like PLG because they'll be agent or AI assisted. How will the sales organization change over the next couple of years and what role? Yeah, I completely agree with that. there's a spectrum of difficulty, similar to how an agent working on a basic arithmetic problem looks very different from the agent that's going and solving the Millennium Prize problem, right?

14:57Because your chat to BT can go do basic math, but the Millennium Prize problem took like 10 ,000 agents working over 90 hours. And I think there was some human involvement. in sales, like that range of difficulty, an easy problem, an easy sales problem is someone's on their website and they mostly want to buy your product, but they just need a couple of questions to get them over the line. Uh, you know, it's pretty easy. Uh, a hard sales problem is, you know, you're cold calling a VP who's never heard of you, uh, who, you know, is not prioritizing the problems you solve. Uh, and it has a budget freeze right now.

15:34It's like, it's pretty hard sales problem, right? It's like a lot of persuasion that needs to happen. And I think the easy problems, you know, like in coding, for example, the easy problems are automated, right? Where you don't need people to handle those easy problems. Agents are great at talking now. They can demo the product. We actually have like a product for this. But on the other end, it's pretty hard. Like Asians are not naturally good at these really hard persuasion problems where you need to build trust. You need to understand like real human problems. You need to be creative. So, uh, I think on one end you have like fuller automation on the other end, you have like these 10 X reps that are able to get a lot of leverage through agents to doing, you know, the more admin busy work, and they can focus on actually being consultative and solving these hard problems.

16:23Sam Jacobs: What, uh, last question, we're almost at the end of our time together. It's always great to have on the show. My question is for you as a CEO, you know, Nooks is growing so rapidly to your point, right? Your backgrounds in machine learning and AI, but even when, even though you are relatively early in your career, when you were in school and when you were building the first version of Nooks, the world of software development looks so different than it does today. And even the pace of change today is, can be overwhelming. Well, it could be overwhelming or it could be exciting or it's both. Depends on the day, depends on the minute.

17:00Sam Jacobs: How do you make sure that you're the right CEO for the moment, given that Nooks, you know, a couple of years ago was a glimmer, a twinkle in your eye. You're approaching a hundred million in ARR now. Next year, two years, you'll be three, four, 500 million. How do you make sure that, and, you know, how do you make sure you're the right person for the job at every moment. Yeah. One of the first reason why I started just hacking on Nooks, my goal was to learn. I had done a lot of machine learning research and wanted to learn what building a product was like. I wanted these faster feedback loops where research takes weeks and months to run experiments and quarters to make them useful and shipping product would be a lot faster.

17:42I didn't know that it was going to be this fast. but I think a big part is making sure that I'm I know where I should be learning like so I think the self-awareness of like okay these are the things that are most important uh here's what I'm good at here's the gap uh so I need to learn and then like how do I learn right there's uh uh trial and error uh there's uh advisors there's uh you know there's like a bunch of like there's reading books. There's a bunch of different learning mechanisms. But I think the first is understanding what is the objective? Where do we need to go? What is my skill set today?

18:21Understanding that gap and then figuring out what are these different ways that I can learn it. I think the other is just the mindset of the fast feedback loops. We need to move really fast because you go make an annual roadmap and you're going to get screwed. because, you know, the, I don't know, like wasn't it like Meta was working on Instinct for like a while and keeping it behind closed doors because like, you know, they were worried about some security problems and changing passwords and stuff. Then Instinct comes out and they're like, oh fuck, we got to move really fast. So yeah, and like Mark just made the call, right, to go launch it.

18:59So like, you know, in our case, like we see this, I think proactive agents are really powerful. And we launched Node, our personal proactive agent, the first personal proactive agent for sales, where it's helping manage follow-ups and schedule and prepare collateral and kind of all these use cases that a sales rep needs in their day-to-day so they can focus on the meeting and the customer value. So I think it's like the speed of iteration, like the awareness of where we need to learn, and then also just having access to like, you know, good ways to learn these things where I have, you know, some great advisors.

19:41Sam Jacobs: Dan, thanks so much for being our guest. We're so excited to watch Nooks grow. If folks want to reach out, if they want to become customers, should they go to the website? Should they email you directly? How do you want people that are interested to learn more? So if you want to use the products, I would recommend go to the website. You know, our sales team is great. They'll help you out. Also, feel free to reach out to me, of course. And we're also hiring across the board. We have 100 open roles this quarter. So literally across the board. And if you're interested, yeah, definitely reach out because, you know, hiring is always my top priority.

20:18Awesome.

20:19Sam Jacobs: Dan, thanks so much for being our guest and thanks for supporting Pavilion and Topline. Yep. Thank you.

20:30Okay. And against all odds, you're still here.

20:33Sam Jacobs: Look, if you want more Topline, check out the Topline newsletter at topline.beehive.com. Beehive is spelled weird. It is B-E-E-H-I-I-V.com, topline.beehive.com. Or if you're a video person, because video is great, check us out on YouTube. Topline-media is what you want. Have a delightful day, everybody.