#3: Founder Lessons with Outreach's Manny Medina
#3: Founder Lessons with Outreach's Manny Medina
Getting more at-bats. Making connections. Pitching investors. Building capital. Playing the long game. This episode of The American Dream is all about the lessons that Elias and his guest Manny Medina (CEO of Outreach) have learned as Latinx founders.
Manny MedinaCeo, Outreach
Elias: Hi, everyone, I'm so excited you're joining us for another episode of The American Dream. In this episode, I sit down with my good friend, Manny Medina, CEO of Outreach, based in Seattle, and another hyper growth company. And we discuss what the American Dream means to us. The Latino community is one of the most entrepreneurial in this country. But we are often lacking access to capital. Today, Manny and I talk about how to find your seat at the table, leverage your network, and get that money. Enjoy, and be sure to let me know what you think by leaving a review or continuing the conversation on LinkedIn, or Twitter. I have a very special guest today here. A very good, and dear friend of mine. I came to this country in 1993. And we were chasing the American Dream. I was like, what is the American Dream? And we have a definition. We just go to Google and we get a definition. And so the American Dream is the belief that anyone regardless of where they were born, or what class they were born into, can attain their own version of success in a society where upward mobility is possible for everyone. This is so emotional for me, because I came from a country where I had no future, there was no way because of my last name, and my family that I could go in and attain anything that I wanted. I was limited in so many ways. And I came to this country. And it's been an incredible journey for me, as well as for my guests here today. Now, more than ever, I think the larger that the Hispanic, Latin X population grows in the United States, the more we see that it's so difficult for this dream to be a reality for all of us. And that's really our mission to help. We want to be here to share our experiences, our advice, and our connections and our network for you to be successful, for you to attain that success. So today here we have Manny, I think that Manny Medina, CEO of Outreach, there's not many Latino founders of VC backed companies. It's a very rare thing. I knew about Outreach, a little bit from the industry. We're in the same space, similar industry. But I didn't even know who he was. And one day I emailed him, and I just went and said, " We need to create a partnership with Outreach." I emailed him and I was in San Francisco, and I said, " I'll be there tomorrow." Two hour flight or something like that, from San Francisco to Seattle. I show up through the doors. And I see him and he's like, " Yeah, he looks like me." It's like, " This Latino, where you're from?" And he goes, " I'm from Ecuador." And I'm like, " Oh my God, here we go." Hit it off. And it's been an amazing connection. So here with us, Manny, please introduce yourself. Tell us a little bit about where you were raised, your company, and a little bit of your journey to become an amazing entrepreneur. And then we'll talk about Outreach.
Manny Medina: Awesome. Thank you for having me. And thank you for coming to the office. And back when you acquired that company here in Seattle inaudible. That's when you came and visit us. So and then I ended up at your house having dinner. I think it was a like a week and a half later.
Elias: Exactly. We agreed on a partnership. You said, " I'm going to jump on a plane. I'm going to head over to Boston." And then you were in my house on Sunday night and then, it's been incredible. This is the crosstalk.
Manny Medina: And I left your house, your wife gave me a bag of frozen inaudible which I haven't eaten in like 10 years. Not only came to your house but I took your food too. It was pretty great.
Elias: It's the Latino way, that's the only way.
Manny Medina: Yeah. So I'm from Ecuador, I grew up in Guayaquil. I grew up in the south of Guayaquil, which is now a pretty dangerous neighborhood. But I grew up close to the port. Guayaquil is a busy city, so Ecuador has about, I don't know, like 11 million people give or take. And about two thirds of them are all in Guayaquil. Guayaquil is a sprawling city where it's hot, it's muggy, it's loud. And you have to scream to make yourself heard and that's the environment I came from. I grew up in a family that was fairly left, but because of that we were attached to the wrong political party. So that means that I had no connections to inaudible in the country. And that's pretty limiting like you said, we come from a place of which, if you don't have the right last name your career is pretty limited, your future is pretty limited. So I left at the first chance I could to come to finish university here in the United States. I came in through New Jersey. I studied inaudible and New Jersey is a fairly easy way for a Latino to come in, because it's so like personally I love New Jersey there's so many Latinos there. That I already know where the Korean restaurant was, where the Peruvian restaurant was. Where the Colombian restaurant. Like everything you needed to be situated was there. And there's enough people who speak Spanish for us to get used to it. From there, I went to inaudible my grad in computer science. And then I worked for a bank. And that's when I realized that the US is whatever you want it to be. So your story doesn't have to be packed to any industry, or to your last name, or where you come from. It's such a big white canvas of possibility. And it was during my computer science degree that I read a paper by one Larry Page and Sergey Brin about search and bestow the possibilities of the internet. And that blew my mind. And I realized that I'm in the wrong place, I need to go and be in the West Coast. And somehow I found my way through Amazon, I was really early in the Amazon Web Services team. From there, I learned again, I saw an entrepreneur, and I worked with a series of entrepreneurs, for whom everything was possible, at Amazon nothing was impossible. It was an incredible journey to work on their inaudible and then eventually see business in action. And that was such an inspiration for me that, I went for Microsoft after that. And then one day, I had a, what I call my Jerry Maguire moment, I just couldn't go into work. And I said, " I quit. I'm out, I'm going to start my own thing. Because if I don't do it now, I would regret it forever." And this is, again, this country is so incredible, in which, the fear of failure is almost not there. You see what I mean? There's so many other people who will encourage you, if you develop your right network, that you just have to know where to look and get the right people together with you, and go for it. And that's when it just started. And then it became really frustrating, because I'm in Seattle, I'm not connected to the Silicon Valley, VC community, there's two businesses here. And if you don't belong to a pattern, they won't talk to you. So, I clearly couldn't raise money here in Seattle. So I eventually moved to San Francisco. And we'll get into the story later, but once I moved to San Francisco, and got to meet everybody. And eventually, got to where we are right now.
Elias: So many things that you're saying, are striking a chord with me. The people here are not afraid. And this is what makes America great, the United States of America. And we're going to touch on a whole bunch of this things. But, we're such a small community, we gather you and my network, yours and mine, we have all these people here. I am so blown away right by the number of attendees that we have, the number of people register, over 400 of you have register. We're going to get close to half of you in here. It is incredible, the connection that we have, and that we feel and that we want to hear. Let's do a little bit. But sometimes we just don't know each other. Please give us some numbers for us to understand the magnitude of Outreach. And what kind of company you're building? So people understand, to get a little bit of context of where your story is coming from.
Manny Medina: Yeah, so Outreach is a pivot. A lot of people have heard the story. But when we pivoted into Outreach in 2014, we started selling Outreach in 2015. We are now about 5000 customers, we have raised over$ 200 million in capital. Our last operation about a year ago, came in that at 1. 14 billion. And we needed to grow an excess of 60%, year over year. We employed about 600 people and I don't know, at this point for three different countries. And we inaudible that it's very early. Again, we have 100, 000 daily active users in our platform, but the majority of them are sellers, and there is 6. 8 million sellers in the US. So the space where we operate is just very, very large. And we're just getting started.
Elias: That's incredible. I mean, it's a not only a unicorn company, one that is valued over a billion dollars is a very rare thing to do. It's like, you cannot start... there's not that many of those companies around. But one started and founded by a Latin X person from Guayaquil, that it's incredible. I'm so proud. I'm so proud to call you a friend.
Manny Medina: Thank you.
Elias: And that here you're a role model for everybody here to learn. So what you've done is nothing short of amazing. Tell us a little bit of really the topic of this webinar today. It's going to be about, how do we raise money? We have so many stats, Latin American entrepreneurs are the most entrepreneurial community in the United States. 17% of the US population we're the largest minority, numerically. The Latino scores in entrepreneurs in the different communities is off the charts. But there's one problem. We don't have access to capital. We don't have access to capital, and it really boils down to, we are not making connections with the VC firms. We're not getting through those doors. We're either not invited, or we do not know how to invite ourselves. And one thing that Latinos know is how invite ourselves. So, we just need-
Manny Medina: We just show up.
Elias: We just show up. But the problem is that there's something blocking us. We do not know where to go. We don't know where the party is. If we know where the party is, we show up. So what we want to hear is, keep in mind, tell us from that context, how do we find it? Where is this place? How do we show up? How do we dress? How do we act? And what are the requirements of like, how do we get there, so we can get the money to get started to build the companies that you and I are building?
Manny Medina: Yeah, that's a great question. And I was having a conversation with my son about this not too long ago, is that, you have to embrace where you are. Especially as a Latin X, especially as an immigrant, you can be wishing things were better. I mean, you just have to get real as to where you are and create a path of where you need to go and be very realistic about how to get there. So for me, I didn't have connections into Silicon Valley. So, I know very few people. And I don't know how to get in. I'm not from Stanford. I didn't work at Google or Facebook. I just have all the things that I didn't do. And on top of that, we all Latinos have the fundamental problem, which is, we don't look like founders that other people have invested in. I mean, inaudible they see is are pattern matters, they need to find a pattern, and you don't fit the pattern. So what are you going to do? So for me, it was a game of, look, I need to figure out a way to start funding from the early days. So for me, it was a game of, go meet people who can intro you to people who will eventually get you to a VC. So I spent my first year in San Francisco, just looking for an introduction to investors. And many times it was cold calls to investors saying, " Hey, I'm new in the game, I have this idea you invested in something like this, would you might taking a meeting and ask for advice?" And the second thing that is really important is that you have to have a mindset to be successful. And the mindset that I had in every situation was, I am going to get this person to like me. He may not fund me, he may not intro me, but he or she will like me. And once they like you, you can ask for a favor. Once you ask for a favor they're in your pocket. And one of the things that dawned early on me was that when you get when you get an angel to invest in you, they actually like that you put into work. So the moment I take money from a person, I will say, " I need five intros to the customers and I need five intros to other angels, and they love it. And getting through that barrier, that mental hurdle that you can actually ask people to help you, was a big deal for me. It's funny because where we're from, rich people and I say this and with all the love in the world, tend to be the lazier ones. They don't want to do work. They want to give you money and they want you to go away, and then come back and just return it and big pockets. In US, it's different the people who are entrepreneurs, who became rich to entrepreneurship, they love to help. So you have to lean in, in that help and say like, give me an intro to somebody else. Give me an intro to all your friends. So one of the things that I broke in early is that, to actually tell your story, we started Outreach, we went and looked for everybody who invested in something that looked like Outreach. And at that time, there was a company called Relate IQ that looked like Outreach. And Relate IQ got sold for$ 400 million to Salesforce. So you know what I did? I went to angels, and I looked at every single angel investor that invest in Relate IQ and I called him, " You don't know me, but I got a product that looks like Relate IQ, let's go make money together again." I made 20 calls out of the 20 calls, four responded. And I got four meetings. And I was saying, I raised$ 50,000, and I was $50, 000 angels to four other people, and so on and so forth. That's how we started.
Elias: That's an important thing I want people to realize. It's like, I've got a couple of questions. I see a whole bunch of stuff flying in the chat. One of them is, do you have a technical background Manny? I don't know.
Manny Medina: I do. But I haven't done it in a long time, and Elias makes fun of me because he inaudible now that I couldn't.
Elias: No, we don't make fun of each other. Not in public.
Manny Medina: So, assume I don't. So why don't you assume I don't just leave it at that. Elias inaudible
Elias: So I think that the big question is, if you don't have a technical degree, should that stop you from starting a company? Will that stop you from becoming a unicorn? The answer is, Manny?
Manny Medina: Absolutely no.
Elias: Absolutely not. I think that it is an important lesson. Whatever question you guys asks us about, is that a requirement to build a billion dollar company? The answer is always going to be, no. No one should stop you from achieving what you want. What you really have to find is you have to have a purpose, you have to have a mission, which I think Latin X businesses tend to move more towards that, as opposed to white- funded companies where they're more focused on, I'm going to return this much money. I'm going to make this huge valuation, huge profitability. We care about mission, maybe more than the rest. And so you're focused on your mission, you're focused on your purpose. And you can accomplish it by bringing the team together that complements you. So that should not stop you. The only thing that you're doing is that secret of finding your competitors, and who funded them, it's an incredible tip. And not to be afraid of reaching out, sometimes I think people don't reach out. What's your framework when you send in that message? What do you send? How many times do you send that kind of stuff, any tips around that?
Manny Medina: Ask for help. You have to put yourself in the minds of the people who want to help you. Individuals who want to help you. Individuals who love, so what I love about the American Dream is that we embody the American Dream. And what I love about the culture of Silicon Valley is that they want to make the American Dream come true. So even though they don't want to fund you as an institutional investor, individually, they want to like you. You see what I mean? And this is why we're getting into the mindset of like, they want to like me, I want to like them, let's make this happen. Let's come into this relationship with a check. That is not weird, and it shouldn't be weird. So like I said, a lot of these perceptions are self- limiting beliefs, you just have to get rid of them if you want to be a successful founder.
Elias: And so I have a question here from Veronica. It says, " What tips do you have for getting people VCs to like you?" I think you're touching upon that a little bit. But is it, I think, sometimes the stereotype is that, hey, I didn't go to the same fancy school that you went to, I don't play water polo. I don't play golf. I don't even know all this stuff. I didn't grow up in a Country Club, or something? It's like, how do you find similarities? How do you find similar interests with those people? What is the definition of they like you?
Manny Medina: So that's a great question, you probably know this too Elias, and that VCs will have to spend a lot of time with you. Anybody who invest in you is investing because they want to spend time with you as a person. Because I mean, you as a business, but also you as a person. And somebody liking you, as you take an interest in their likes. I mean, you don't have to have gone to any good school or in or have a particular sport, they have other friends who do that already. You see what I mean, you can't be their friend without exploring new things. So your idea is a new thing. If you match that at that level, then you can continue to explore that idea. Everybody has a broad range of interests, everybody's curious about where you're from, what is it like in your town, what your upgrade upbringing like? And that creates a level of empathy and a connection that people like. And especially, one of the advantages that we have is that we are different. And because we're different, we're interesting. And that is a powerful weapon. Because the VC community loves to engage with this kind of people. Because all of a sudden, they can say I was the first person who funded X, first person who funded Y. But you have to break through that barrier by getting them to like you. And we Latinos have a handful of things. So firstly, one is that we're very emotional, we show up. We're not afraid of talking with our hands, we're not afraid of being loud. And that creates a level of difference. It's not for everybody. So some people will not like you. But the people who do will like you a lot. So as long as you have that mindset of, getting people to like me, and then they get to like my idea. And they get to fund my idea. And then do it again, 20 times more, that's how I did it at least. That's how it worked for me.
Elias: Have you faced racism, in sales, in fundraising?
Manny Medina: I talked about this with some of my VCs a lot in that, we always seem to get a slightly lower valuation than my PR, whoever is fundraising around the same time. I always get a couple 100 million dollars less in valuation that somebody else would have. And frankly, I think inaudible Latino discount. They got the Latino discount for funding an immigrant Latino who doesn't look like anybody else. But I don't take it too seriously to be frank. Because, the game is very long, you and I are both here to build large companies that are going to be the new, large enterprises, that are going to rule the world. A little bit of dilution in those checks is not going to matter that much. I mean, we're here for the long play. So let's just play the long play. So nobody has said, " Hey, I'm not going to fund you because you're Latino. I feel like they're going to say, I'm going to give you a little lower valuation and see if you take it because you're not from here.
Elias: So, I think I'm one fundraising round behind you by that. I think that the way that I went and valuated Drift was, I just did a comparative analysis and I asked for more. I remember, I just wanted, I think my approach in this has been, why not? It's like, I just don't understand how companies are valuated, especially in the early stages, by the way. Once you get into the later stages, it's all about the numbers. It's all about the growth rate, it's all about productivity, average selling price, inaudible rate. That one is pretty mechanical, you got to have the numbers. If you don't hit the numbers, you're not going to get the evaluation, and it's market driven. And early days, it's a little bit of market and it's emotional. And it's about you asking for something. I remember, our first round at Drift, our valuation was 45 posts. And we had nothing. I think one of the questions, we heard, " Do you have a prototype?" And it was just really based on the team and what we had seen recent companies that had just fundraised, what they had raised. And we're like, " Well, I want what Silicon Valley is getting." It's like, " Yeah, why not?" I said, "Because in Boston, I have to get less." It was just not fair. And so we asked for that until we found the right partner. And in that case, it was TRV, which is a firm that really respects immigrants. And so we made an amazing relationship, because we already had, we knew each other from before.
Manny Medina: Yeah. So I didn't have that, I forgot my initial series evaluation. But it wasn't 45, it was lower than that. And I was like, sure, all I need is a first chance. All I need is a chance. I just need to get in the door. I get in the door, I'm going to drag this home. So I just need the chance to execute and I can do the rest. So I wasn't that worried. And it has worked out well for us. So my advice to all those who are listening is that there will be fluctuation in the price of how much people are going to value the company, just find the right partner, play the long game, you have many fundraises ahead of you. So like just find somebody who is inaudible fairly, who you want to work with, and then just go.
Elias: And it is not only that, but it's like, nothing is going to be perfect. And this is not the only company you're going to try to build. Nobody just built one company. And that's it. This is for the rest of my life. Like most companies will fail. Most companies will last two to three years, five years, and then you have a long life ahead of you. Most people start company in their 40s. So don't need to think that everything is going to be done perfectly. That's how we learn. What we need is more advanced. How do you do know that... I have a question here, Manny. How do you know if you have a good idea and you should go get funding? What are the challenges there?
Manny Medina: So I don't know the answer to that question. But I think the easiest way to find out is if you can get as an early stage idea, is if you can convince 10 people to give you money. Like pick a number five, 10, whatever. If you can convince 10 people to give you money. Even if the idea is bad, you're a really good salesperson. So just go with it.
Elias: I think that this makes me think of one of the things that we wanted to talk about was storytelling.
Manny Medina: That's right.
Elias: And so I think that it's like, go convince 10 people, that's great. But the question is, you need to be able to convince 5000 customers. You need to be able to convince a larger market, more investors, some of my rounds we talked to 30 different VC firms. And you're going to get a lot of nos. And so, I think that that happens to all of us. Tell me about the story. I think that I see this personally when Latin X come and they tell me their story. They're so passionate about their idea, but they're not really connecting it to the larger market. Because what we see is one is like, how is this going to become a billion dollar company? Let's make sure that we all understand. So tell us, what is your story? What is the Outreach story when you first started fundraising?
Manny Medina: So that's really interesting. So my story's a little bit different. Because when we started fundraising, we already had raised about half a million dollars from angels. Not only we had a prototype, we came into the market, and we already had a million dollars in run rate, meaning we were generating a million dollars when we fundraise.
Elias: Wow. Amazing.
Manny Medina: So we were fundraising, it was more about look, salespeople need our workflow. And we can provide a lot of automation and remove things from what they day to day. And make their life easier and create more opportunities for them. And this is what we do. And by the way, there is 6. 8 million salespeople in the US and we sell this thing for about at that point, it was $ 70 proceed per month. So you do the math. Like the term in the US alone is worth of like$ 10 billion. So you need to appeal to the grid. And the key of the story is that the story needs to resonate, but it also needs to point to a large market without you having to spend too much. If you happen to say hey, this is a great idea because if I only get 1% of the Chinese population, I'm going to be rich. I'm like, no, it needs to be easy to get it, and it needs to be without you making a lot of jumps. You see what I mean, just make one big jump. 6. 8 million sellers in the US we sell to salespeople. You know what I mean, like pick a number that is big, because they know that even if you miss it's still a really big market and you can pivot.
Elias: That's one aspect of the story is, you did the back of the envelope real quick. How many sales reps are in the United States? Yeah, how much you sell, proceed? And how many you already gotten? You've got a million dollars. Momentum is very important. How quickly you do those things. You always have to really take the best part of this story, sometimes if it takes you 10 years to build a company. Everybody thinks that everything happens overnight, but takes you 10 years. But it's the past year that you've done the most growth when you really started selling it when you figure out that product market fit. Well that's the part of the story you're going to say. It's like, people need to know what's really happening now and where the shift, the explosion starts kicking in because that's when they want to jump into.
Manny Medina: The thing that is important is that you have to be different. When you're pitching go for a memorable, you can be like my Series inaudible had three slides. We sell to salespeople, there are 6.8 million of them. And this is my revenue growth to date from zero to one million in six months. That's it.
Elias: Wait, hold on The Series E.
Manny Medina: My Series inaudible had three slides. Why? Because after three slides people are like, What? Tell me more. Like, how are you doing? It's like, well, why is this important? I mean, you want them to walk into your story, you want to open up with like the boom. And then engage them into, well, we will this portfolio. And we realize that Salesforce doesn't provide all the pieces that they need. So we build this other thing, blah blah blah. So you can't actually walk them through the story. But you need to hook it early. You see what I mean, find something that is going to hook them early, like a big market, big term, some momentum, a lot of register and something, and then go into it.
Elias: Absolutely. Did you have-
Manny Medina: Don't be like everybody else, yeah, that's the main thing for me.
Elias: Yeah, we're very memorable. We're very loud. So did you have a personal story around that? I believe in a lot of personal stories? Did you come... and I've heard stories about you and tell us some of those. Did you use someone fundraising? I heard, I think it was Adam or something I heard people say, oh, I've been using Outreach from day one, when I got onboarded by Manny on Saturday at 2: 00 PM. Because they had... did you use any of the stories in fundraising? Because it's like, that's what shows the investors the draw, the pull that you're getting from your customer base?
Manny Medina: That's a really good question. So we did. So Outreach as you know, is a pivot. And we built Outreach in our previous company that was called Group Talent, that did not work, and we're running out of cash. So we decided we needed to build something to generate more meetings. Because we figured that we generate enough meetings, we're actually going to be able to generate cash to pay our bear zones. So we built this workflow that did both personalization and automated follow up, it was very simple. You had a one liner personalization on every email, and it will follow up with everybody else after that until somebody answered. So we build that and we release it internally. And we generate like 20X more meetings per rep. And then we run into the next problem, which is we actually didn't have enough reps to handle the meetings. So we try to do is try to sell the meetings, and we will go to cases and be like, I will sell you meetings. And they were like, "Where are you getting these meetings?" And they were like, " Well, we build this engine internally that allows us to generate meetings." And they were like, " No, I want to buy the engine? So after 50 of those conversations we're like, guys, we really got to pivot the company and build it. That story resonated with everybody. And I think I don't know whether the story is because I'm a good storyteller, the story is very compelling, or because I sound like Slack. Slack has also a pivot like that. So like, I don't know exactly what made it pop. But that was a story that I've been telling since we started, because that's something I started in, and that regenerate a lot of traction.
Elias: I think you just really... yeah, that is a very, very important point. This is the journey of companies, for everybody here attending today. A journey in a company to a successful company is never a straight line. It's like, oh, we figured this, and this is what we built. And then we built this and we sold this and we sold that. And then they don't just work. Companies have to go through so many different struggles. And you really have to pay attention. You cannot fall in love with your first idea. Because it might not be a good one. It might not be big enough. You might not have the right people. And market timing might not be there. And so what you did is a very smart thing. You were paying attention to the situation. And you started seeing where people were looking at part of what you had created. And so that is an important thing that allows you to reset the clock when you're pitching. So you went and pitch before for Group Talent, and then you go and that's not making progress, and then you pivot. Then you can go pitch again and so it's, let me tell you, you need an excuse. You need a compelling event when you're pitching to investors. I got to let you know what happen. They love, they eat this stuff for breakfast. We were doing this and you know what, that was a dumb idea. We found this, and it's amazing. It's blowing up, you got to jump in right now. And you've got to create that scarcity. You got to create that inaudible and so I think that is, you keep that in mind. Pivots are your way to reset the conversation, to start over, and to show people that you're learning. I have investors told me... for Drift we did about seven different ideas in the first two years of Drift. And our investors were saying, " Can you please coach some of my portfolio early stage companies that it's okay to pivot, it's okay to tuck, it's okay to not be so stubborn sometimes. So that's important-
Manny Medina: Because there is a stigma around pivoting, like, that it's hard to find pivots that you have all this baggage and I don't think it is. When you own the pivot, that shows resilience. That shows that you're really listening, but you're really good at taking feedback, and that you will make the right choices for the companies. So I don't know where I heard that advice that is bad to be a pivot that people like to clean stories. I think that's completely absurd.
Elias: Yeah, you were telling me earlier. So we'll go back into that about bad advice that we get out there. Okay, let's just jump into that. Give me the Manny, not only the secrets, but it's like, what do you think is bullshit advice out there that we get?
Manny Medina: I got a list for that. Alright. So the first bad advice is that to raise a round the cash you need a lead. And that is bad advice. You don't need a lead, use the cash in the bank. So if you find somebody who's interested, if that person tells you, " Hey, I'm willing to jump in when you have a lead." Screw it. You make your own decision, how much money are you willing to put out at valuation, just get the cash in, that's the first bad advice. Second bad advice is all about, it's good to self circle money and then execute around. That's also bad advice. Because there is no such thing as self circling. You can't pay rent, and salaries and yourself with self circle money, you need real hard cash in the bank. The third piece, this is a bit more complicated, is that you have to raise on a price round. That is not true, you can raise as much money as you want, at any point in time on a convertible note. Meaning literally you go and download a convertible note from one of their websites. And then you can say, your own valuation there, your own discount rate, and whatever amount of money that person wants to put in. So you don't have to price your company early on. You can't just say, " Hey, how about you invest$50, 000, on a$ 5 million cap, zero discount?" And it's all conversation, it depends on how you're feeling, how they're feeling, what's going to get the deal done. You don't need a serious A B, C, price round to get it done. You just need the money. So don't be beholding by this advice, because it doesn't work. Just do whatever you need to do to get it done.
Elias: Yeah, no, I think that's fantastic.
Manny Medina: crosstalk advices.
Elias: Bad advices, yeah. I think that there's different types of businesses that the Latin X can actually start, and I want to make sure that I create those categories. The one that we're talking about here the most is really VC backed tech company to be on par as any company in the Silicon Valley. And so this is like Outreach, Drift and others. So that's number one. Second, is the ones that the we Latin X can do that no one else has the insight or the visibility to do it. And so for example, we're talking about, we understand the need for teaching English, to a large population in the United States, for minorities. We know things that are happening in Latin America. So we have a special lens to see those problems that most of the white founders are not going to ever see. And so there's great companies, I think it's Open English, in Colombia, inaudible there's just so many fantastic businesses out there, because we have an edge, we have an angle, a perspective that other... So you can start one of those companies. You can start one of the normal tech companies that is just tackling the whole market. And then there's also businesses like, smaller businesses, lifestyle businesses, that our community is so good at. And that we just need to help them build, to make better business decisions. For the case of VC tech funding, I think there's a lot of things that we just don't know. What is the process? Do you just go and talk to them? And they just give you 100 million dollars? Is that how it works. And so I want to just say that the basic process, so we understand that it's going to take many layers. And the steps are you first have to get that introduction to a VC firm, you have to then get your first return meetings with them. This is a very rough process. Then there's due diligence. When you have develop a relationship during those meetings. It's like you have to give them the details of what you're building. Where you now both are going to go and dive in into your progress, the market, in order for them to justify bringing you into a partner meeting where the partners are going to make a decision, the go no go whether to fundraise. And then you're going to have to discuss terms, because they're going to present a term sheet. And lastly, it's like you wait for the process to get the funding. So that is for everybody here to understand, what does it take, with just one investor to get from zero to money. So let's talk about that from your perspective. What lessons, you talked about introductions already, I think. You just knocked on every door, get as many as possible. What about those first meetings, tell us what have you learned from those.
Manny Medina: I'm a little bit different. Or maybe I'm very similar to the people online is that, because I don't have a connection in Silicon Valley. I spend a lot of my time, for that first year in which I raised half a million dollars from almost 40 people. I continued that momentum and that I always meet with investors. And the reason I do that is because I want them to already know me by the time I need to fundraise. So I'm always about a year ahead of where or who I need to know, before I ask for the cash. And to be frank, I still do it. We're sitting on$ 140 million in the bank, we're still growing, we don't need the money, but I still do it. And now I meet with different kinds of investors. I now meet with public funds, and I meet with inaudible. And the reason I do it is because, fundraising is what you do when you're a founder, you're never up front, because you're always selling yourself, you're selling your team, you're selling your company, you're selling everything. My process has been that I keep a number of five to 10 firms that I talked to constantly, and I give them updates. And then when I decide to fundraise, you stop and you say, all 10 of you, I'm fundraising and this is a timeline. So that that way they know. You can knock out a fundraising in two weeks, if you're that organized. You see what I mean, if you put all the work upfront, to make sure that they know you, then you can say, here's my data, here are some meetings, first of all, you're going to meet with all the executives on day one. And then on day five, we're going to go meet with your team so that you can have that partner meeting them. And then we're going to get term sheets, it works really effectively for me, and I raise all$ 200 million of cash. And every single one of the rounds took about two weeks to raise. But you have to do all the work upfront. The other way to do it is to say, I'm not taking the meetings without ready to raise, and I'm going to meet with 20 people, and then I'm going to get to inaudible, that's also a good way to do it. I don't like it, because I feel like, if I'm going to partner with somebody, I want to know that person really well. And I want that person to know us really well. Because again, we're different. And I think that this is the point that you were making before when we Latinos companies, we build them in different ways. I mean, we have different cultures, because our cultures reflect who we are. So I want them to know all that coming in, before they write a check. That's how I do it.
Elias: Incredible. What about due diligence? What nuggets for us there, because we have some of the questions here are like, when is the right time to ask for funding? That might be connected to it? Or, what do you have to have ready to show, during that process? What questions are okay, what kind of questions are rough?
Manny Medina: Yeah, no, it's tricky. Because this is why you spend time getting to know the firm's that you want to engage with, or the people who are going to write your checks. Is because, that you want them to know exactly where they are. If they're expecting you to have a $ 10 million run rate before they write a check, and you're only a five, forget it, then just don't do it. I mean, I'll call you in a year, and then we can start talking and then whatever. So, you know their due diligence questions by how they interact with you. So you need to anticipate those questions, if they are a surprise to you, by the time you're fundraising, you're already screwed. Because everyone asks for stuff that you don't know that you have that you need, et cetera. And it's just gonna be a bad experience. So you want to guide that due diligence around the things that you want them to know. You want them to know your customers, your happy customers, you want them to know, who's using your product, and how they're getting value from it. You want them to know your great team that you build over the last three years. And you want them there to just go in that direction. As opposed to, call all the employees and call all the people who inaudible, and call the people who are not happy with you. And call your friend in high school who never liked you. We don't want any of that shit to happen in your life. So yes, you can tighten up that relationship. So that would go exactly the way that you need it to go.
Elias: Yeah, absolutely. I think that right now we see there's so much to talk about. And there's so much to talk about related to COVID as well. Now, what about profitability versus companies that are just racing on growth on the future? How do you start a company in this day and age? Is this the right time to start one?
Manny Medina: You have to show up to profitability. And it sounds like a lie, but people live on this lie of, whatever money you raise, it has to show that it's going to get you to cashflow positive. You raise$ 5 million, you have to show a plan that it gets you to cashflow positive, and $5 million. So you raise$50 billion, you have to show up to profitability of $ 50 million. So you have to show up to profitability.
Elias: Right. That's an important thing, I think, back to the due diligence. Is that, I think in the past, we used to say maybe, okay, what am I going to do with$ 5 million? Where am I going to take the company? How much in sales we can reach? ARR or nature and number of customers, market penetration? But you're saying that now your pitch needs to say, how long would it take you to get to profitability with$ 5 million, with 10 million?
Manny Medina: Yep, exactly. It's a new world right now. And you look at the market, the stock market right now is rewarding those who are profitable and punishing those who are not. So it's a new world and it will change eventually, but that's where we're live right now.
Elias: Right. I see a question on the chat that says, can you talk about your key challenges prior to Outreach?
Manny Medina: I know there's so many, I don't even know where to start.
Elias: I think I saw another question that said like what about the glass ceiling? If where you are you worked at a company and... did you ever feel like at Amazon, you were at Microsoft too, did you reach a glass ceiling?
Manny Medina: Maybe I did, but I used ... I don't know maybe. I'm pretty sure that I did. But I use never. I mean, maybe this happened to you too where like, I never saw myself being like a VP somewhere like, you're not like that just wasn't in my imagination.
Elias: Well, you didn't want to be Satya Nadella?
Manny Medina: No, I don't think that's going to take forever. Who has time for that? No, I didn't. So I did have challenges, though. And the challenges are, I came to this country when I was 21. And my English was atrocious. So it took me a long time to get my English to be where I could even like, go out to a bar. So, it took me a year to get there. And then once I got a job, then it took me another year to get to where my English was professional. My emails were a disaster when I started working. So I had to do a lot of like self reading. I read, there's a book called, " Elements of Style," by William Strunk. I swear by that book, everything I know about English came from that book. And then I would literally make a list every day of five words that make me sound more professional than inaudible. So I would sit down, read the wizard journal, and I will highlight five words and I would write them down, and I would use them that day, in some context, so that I will memorize them. And I will do that every day, being great at communication and sounding professional, it's a big deal. And I spent a lot of time doing that. But I would say that was the number one challenge that I faced when I came to the US.
Elias: Yeah, absolutely. Yeah. My advice for people if you're reaching the glass ceiling, as a business founder, I really implore you to speak up. I think that you have power because of your feet. You're at a company, and you can walk out, that is the power that you have. That's how you really show whether you want to be there or not. And so I think that for us, I want to hear from you, before if you feel like you're reaching a glass ceiling, and so you got to go and speak up. Because in the end, I think a lot of people don't say anything out of some fear of speaking up. And then when nothing gets resolved, because you don't speak, then you end up quitting, and then you go somewhere else. So if you're going to quit anyways, why not just speak up and say whatever is wrong, whatever you feel, and go talk to people. Because you might be surprised, maybe more people are willing to hear us than what we think. And then you can make that change. And if you can avoid making a change, you don't want to be with that resume that is like changing every year. And a new different position, you want to show that you have the stability and ability to grow within a company. That's what we're looking for when we're hiring talent. And so I think that, do that, go and talk, go speak up, it doesn't matter. You got to do that. Just like if you would be starting a company, and then if not, go somewhere else where you're not going to have that ceiling. I have a question here for you Manny, what do you advise to women founders?
Manny Medina: That's a great question. And I feel like women founders will have the same challenges that we do, as just not being part of the pattern. That we don't fit anybody's pattern. So you're going to have the... and so my advice is that acknowledge where you are, don't wish the world was different. Just see the world as it is. And go and make it happen. Go like I did build a network of people who like you, who are willing to invest in you, who like your idea, who can advise you, who can be there for the long term. One of the things I mentioned, is that I have a series of other founders who advise me in different periods of the company, who are still my friends. And I would have made many more mistakes if it wasn't for those founders. Like, I remember one of those is this guy called Dan Adika, who's the founder of WalkMe. He's an Israeli entrepreneur, also an immigrant. I remember, he sat me down just one night, on Sunday night, it was Sunday night at the W Hotel in San Francisco, I think it was like 11: 00 PM. He bought me a drink and he told me the story of his company, and every mistake he made. And I just wrote down pages and pages of notes. And I went back to my phone where it was like, guess what, this is the shit that we're not doing. I mean, it was very clear, exactly what are the mistakes we're not going to make. And I like, women entrepreneurs to do that is like, go find a group of network that will support you, that will fund you, that will be there with you. Go find mentors who can help you go from point A to point B, and surround yourself with positive attitude and can do attitude and you still get it done. And then the last thing is make sure that you should send the elevator downstairs, if you're making the Series B, go help out, somebody has the seat state. If you're make a series A or C or D, go help out somebody who has a Series A, don't be selfish. And just make sure that you bring up the rest of the community with you.
Elias: My philosophy is that, we're going to have to find commonalities to build relationships with people. And so you're going to have to go with whoever looks the closest to you, and you're going to have to search to find them. So if you're a woman, I would go find women investors. And then like they'll understand you much faster than we would. But then after that, if you can't find them, then come and talk to the Latin X, because at least we have the commonality there. We have to stick to our people. And then we keep expanding. And speaking of women founders, I have one here inaudible Rodriguez. She has a question here, we talked before, we connected. She's using the network, she'd reach out to me. And we had a great call. She's asking, we got to talk about COVID a little bit? Have you started to see the impact during COVID? What advice do you have for SaaS companies that are seeing the impact?
Manny Medina: There is definitely impact in COVID, and what we're seeing is that, you have to make sure that you're selling into markets that are still growing. So I don't know what it's like for consumer companies. So let me start with that. I only know B2B companies. So for B2B companies, make sure that you're selling into an area that is still growing. And if you're not selling into area that's still growing, make sure that you pivot quickly to an area that is still growing. I don't know how long this is here to stay. But don't count on the government turning this thing around. This thing doesn't seem like it has any heads or feet right now. So go make sure that you're continuing to sell into an areas of growth, like IT's band is still growing, telemedicine is still growing, banking and insurance are still growing. So make sure that you have a product for that, and go sell it.
Manny Medina: I wanted to plug, so on the previous question, I wanted to say something real quick, there is networks of people out there who will fund, or will coach and mentor women. And the reason I'm saying this is because one of my earliest pitches was to a group of women called Broadway Angels, Broadway Angels, I think it's 10 women in San Francisco, who are loosely affiliated, but they fund companies. And they took me in. I mean, it's really hard to get in, you have to be referred by somebody, it's kind of a hard network to get in. But once you get in, they will bring you in, you will do the pitch. And even if all of them don't give your money, some of them will, and they will become your lifelong friends. Two of them did, and one of them is sitting on my board. And the other one is like one of the most crosstalk Silicon Valley I've been living. And I call them all the time. And they introduced me to other people. One of them just introduce me to a board member. And it's just like, just make sure that you get into those communities, because they're important. They're here to support you.
Elias: There's a question from Ignacio that says, " What are some of the mistakes you made, and how did you recover from them?" Have you made mistakes Manny?
Manny Medina: Not sure, I have a catalog of mistakes. I don't even know where you want me to start? I made-
Elias: The biggest mistake you ever made.
Manny Medina: Jesus, what is the biggest mistake? I don't know, probably the biggest mistake that I made was to stay on Microsoft for too long. I think that if you're going to start, start soon, don't think about it too much. Take the risk, you won't regret it. Either way, you're going to be happy whether you fail or not.
Elias: Yeah, no, absolutely. Let me see, I'm going to look for another questions. And I'm going to wrap up here. How do you find mentors? What do you think?
Manny Medina: Mentors are really hard, because they have to have the time, they have to have the experience, and they're have to be relevant to you, and they need to be able, there is a lot of chemistry in that mentorship. So you're gonna have just have to meet a lot of people. And the mentorship is going to come from ... You're going to know, that person got to know when the mentorship is happening, and you're going to just latch on. And that's going to happen. And the second thing that I wanted to make sure that I advise is that, the mentorship only lasts for so long. A mentor is good for a period of your life. And then you need to move on, and it's fine. So make sure that you have this mentality that you're here together for a reason. And then one of the reason stop, you can still be friends, but you need new mentors.
Elias: Absolutely. There's another question here. What are you reading? Is reading important?
Manny Medina: I read a lot, I read a lot. So I read all sorts of things. But the most important book that I've read, that I recommend everybody to read is called" Think Fast, Think slow." And the reason it's so important to me is because he lists all the different ways in which you fool yourself. All these different biases in ways that you think about that you think are correct, but they're not. The number one problem you're going to have in this industry is there's the ability to believe that you are right all the time. Yeah, I have exactly. All those are incredible reads. For entrepreneurs, the hard thing about the hard things is one of the most fun, super valuable reads that I read in a long time. There's just a lot out there to read.
Elias: This is what we do. This is something that, this is my book here, " What's Your Problem?" I highly I cannot encourage this more. This is something I started really late in my career. David, my partner, CEO at Drift, he's just obsessed with books. And the most successful people on earth don't stop reading. If you watch the Bill Gates documentary, highly recommended. You're going to see how he carries just books on every trip that he goes. You have to read I cannot recommend that much higher on Drift. One of our Drift leadership principles is called, Be a curious learning machine. And really spend all your money buying books and just have them all over your place and just read them and look at it and look at it over again. You're going to learn some different every time. So I think we're going to start wrapping up. I really have a question here from... I'm going to close this with, obviously and thank Manny for taking the time out of his really busy schedule to do this. We have to pay it forward, and we have to be available for our community, for our people. And from John, we have a question that says, " Before seeking funding, or even starting a SaaS type of company, what are the milestones that one has to have reached personally, spiritually, or even professionally, to go through in order to start a business?" Or in other words, how did you know where you were ready to start a business? What gave you the confidence to do so? What would you say there Manny?
Manny Medina: I don't know that there's milestones. I mean, so there's no milestones, yes, just go do it. But you're never going to be ready. It's like being a father, you're never ready to be a father or a mother or whatever. You think you are, but you're not. I mean, there's so much new things that are going to come at you, you need to find an ability to define calmness, because this shit is hard and is treacherous and unpredictable, so you have to be comfortable with that. But outside of that, just go do it.
Elias: I think that the reason why I picked that as the last question is that what we are doing here is to encourage all of you to understand that there is no requirement for entrepreneurship. The American Dream is the place where we can all find a way to find our own success. And be in a society where we can all find upward mobility. And to find your own version of success that not everybody has to be building a billion dollar company. And so I think that what we're saying to you is that remove any preconceived notion of what you have to have accomplished. Did you go to Harvard? Did you not go to Harvard? Did you go to Princeton? Did you go to this? Did you educate in Latin America or not? Did your family have money? Do you speak English? Do you have an accent? Please, please, please forget about those things. Go do it. Go solve a problem that has a potential meaningful impact in the lives of many, and that they're willing to pay you for that. And then we do that I do to separate my philanthropic, my societal benefits and rewards, I want to get to that, I want to make money first, and then I want to go do that. And I think sometimes we combine those things too much. And I want to make sure that you understand, go solve somebody's problem. And you will find someone to back you, someone that wants to help you. We need to believe in ourselves. Because the reason why people want to like you and be friends in the valley, everybody's talking to everybody and you never know who's going to become who. And so everybody's very respectful, believe it or not. But we have to get out there and we have to go knock on some doors. So remember, just go and invite yourself to the party. And we invite you. Thank you very much.
Manny Medina: Thank you. Thank you, Elias.
Elias: Thanks for listening to The American Dream. Let me know what you thought of this episode by tweeting me at EliasT. Be sure to hit subscribe and leave a five star review, ( speaks foreign language). If you're looking for more leadership insights and stories like the ones you just heard, sign up for my series, theamericandream @drift.com/ american- dream. Every quarter, you'll learn how Drift is progressing towards our mission of remaking the face of corporate America. And you will get insights from amazing Latin American and entrepreneurs of color. And leaders like Manny Medina of Outreach, Maria Martinez of Cisco and many others, along with curated content, news, events and ideas delivered straight to your inbox. ( speaks foreign language) and don't forget to sign up.