How We Balanced Too Many Leads to 50/50 Inbound-Outbound in 1 Quarter: Welcome Co-Founder Jerry Shen

There will be time for Q and A, so please make sure to drop your questions throughout the session using the Q and A button within the bottom of your menu bar. But Jerry, welcome. Take it away.

Thanks, Brian. Appreciate it. Hey everybody, thanks for attending my session. And as Brian mentioned, I am currently the founder of welcome. We are a virtual event software platform that allows a single person to create an experience that feels like an Apple product launch. So that'll be the only time that I plug welcome today for the rest of the session. I really want to make sure that you guys come out of here with a lot of value. So what I'm going to be talking about is how we almost sank ourselves in the early days of our business by getting too many leads. Now I know that sounds strange, I know that sounds like a first world problem, but in order to really set the context for why that was such a problem, just want to give a little bit of background about myself as well as how the, the welcome business came to be. So for me, my background is in engineering. I graduated in 2005 and I started doing startups in 2010. My first startup was a fantasy football startup that was later acquired by Yahoo and became Yahoo Fantasy Football. So after that did a bunch of startups that didn't really go anywhere. And then finally In October of 2019, we happened to get into Y Combinator and worked on a startup that eventually became welcome, which is what I'm going to be talking about today. So some of the key metrics that I'm going to be talking about today is just the volume of inbound and outbound leads. As I said in the beginning, the majority of our leads came from inbound and it almost sank us this year. So I'm going to be talking about how that became a problem and why it was such an issue for us. But before I do that, I want to go all the way back to October 2019. This is a photo that was taken back in those days. And this is actually a wholesale food market in San Francisco. And you might be wondering, what does this have to do with the presentation? What does it have to do with anything? Uh, back in those days we were working on a completely different problem and a completely different product. The product was actually a wholesale food application that let restaurants order from wholesale food markets. So getting leads required us, and by us, I mean me and my co founders to go to those, these wholesale food markets every single day between the hours of 1am and 6am, knock on doors and try to get wholesale food merchants, whether they were selling tomatoes or onions or fish or meat onto our platform. It was a grind. It was not scalable at all. I think most of you founders, at least in the early stages, can relate to this. The initial stages of lead generation and finding out product market fit are extremely, extremely difficult. So that was us In October of 2019, March of 2020. I think this is a date that lives in infamy for all of us. We all know what happened in March of 2020. Covid hit, the lockdowns hit in San Francisco. And for us, as you can imagine, that impacted our business in a huge way. Literally, all of our customers, customers, restaurants, wholesalers, close their doors, and we weren't able to sell our product anymore. In addition to this, and this is true, you know, they often say that startups feel like everything's on fire. In our case, this literally happened. So this is a screenshot from SF Gate, which is a newspaper in San Francisco. A week before lockdown, the office and our Airbnb that we were staying at completely went up in flames. So you can see the screenshot there. That's the actual fire. And I believe we were still inside when this photo was taken. I still remember very vividly rushing down the stairs while firefighters came up. It was a pretty surreal experience. So you can imagine after this, we were forced to make a pretty large pivot. And for the next six months, we worked on welcome, which is the product that we have today, which is virtual event software. In November of 2020, we finally launched our product. And for us, we immediately got inundated with inbound leads. From the launch, we were on TechCrunch, we were on NPR, and our phone lines, as it were, got jammed and flooded. And I still remember back in those days, I would be at my desk from 8am to 10pm every single day on sales calls. So back then I. I was like, okay, this is not scalable. I need to hire some more reps. But I didn't know anything about sales. I was an engineer. I didn't really know what I was doing. So in addition to hiring a couple of sales reps, I also hired a sales coach.

And.

And he helped us build the foundations of our sales playbook, from how to do discovery to running the demo to closing the deal. What we didn't consider back in those days was how to get those leads in the first place. Because things were going well. Our inbound leads made up the majority of our sales pipeline. And really, for the next quarter and a half, this flood of inbound leads continued. We went from 2 reps to 3 to 4 to 5 to 10 and reps, they had more leads than they knew what to do with. In fact, this was sort of what it was like to be a rep back in those days, right? You just had this all yucca buffet of leads of pipeline. And while this seems great on the surface, this naturally led to a couple of things, both on our sales as well as on our marketing teams. Number one, for sales, they were focused primarily on closing business. But the downside was we weren't able to generate that outbound muscle on the sales team. So they had no idea how to go after their own leads. We just, we didn't have to do that. And on the marketing side, we focused a lot on brand marketing. So things like generating content, paid ads, sponsorships, right. But we really didn't know which channels worked well and why they were working. So there was really no, no sense of growth mentality on the marketing team. And both of these things are simply a result of the situation that we were in back in those days. It was nobody's fault, right? But when you have a ton of leads coming in, then you're really only focused on the problem that's right in front of you, which is closing those leads. So Fast forward to Q2 of this year and we started getting caught flat footed. In retrospect, we totally should have seen this coming. But what happened was inbound leads started to level off, but we kept hiring reps. So you have this situation where our sales reps were used to this all you can eat buffet. And now the leads started becoming slimmer and slimmer. And on the marketing side, what we thought was a pipeline that was influenced by our marketing team in reality was just a single dominant channel. And that channel was Covid. Covid was a reason we got so many leads in the first place. It was a reason that we didn't have to do any outbound. But because of all the vaccines, because of the world opening up, that channel has started to dry up and it started to level off. So we had to think quick. So what do we do starting in Q3 of this year? Number one, we started to build up a BDR, team, BDR, SDR, whatever you want to call it. And the reason we did this was because we felt like, okay, if we shift our marketing to more of a growth mentality, that's going to take a little bit longer to build up. We all know that marketing takes a while. So the shortest pipeline, shortest time to a pipeline boost would be to hire BDR team and directly go after the leads that we want. Secondly, we told account executives, look, you've got to hunt your own kill now. It's not going to show up on your doorstep. Right. So we gave every AE50 target accounts for them to outbound into directly. And third, we stopped doing marketing activities that we couldn't directly measure because we wanted to find out which of these marketing activities are actually helping us build pipeline for low cost and low effort and which ones are we just throwing money away. All right, so we wanted to optimize our marketing team. Instead of trying to use a shotgun approach, we wanted them to find one or two channels that would really overperform. So we ran into a few challenges as we were implementing this. Let's go to market shift. Number one, what we found out was that the BDR team needed a lot of structuring coaching. I was used to hiring account executives that were a little bit more plug and play. They, you know, had more sales experience. They were able to come in, hit the ground running and close deals with BDRs. They were a little bit more junior and they just needed a lot more handholding that we than we had prepared for, at least at that stage in our startup. So that was one challenge. Number two, getting AES to do outbound was like pulling teeth. It was not easy to get a team that's used to having the leads fed to them to go out and hunt. Right. So that was extremely difficult just from a management perspective. And lastly, our marketing team was not well equipped for this growth marketing mechanic that we wanted to implement. And that's partially because of the types of folks that we hired. And it's also partially because of the motion that they were doing this brand marketing motion that they were doing for the past couple of quarters. So how do we adjust to these challenges? Well, number one, we didn't have a BDR manager, so, so we put our director of revenue operations, who's amazing, in charge of coaching the BDRs and spending more time with them and trying to figure out, all right, how do they send the right messaging, who should they be reaching out to? Providing a lot more structured day to day around the BDR team. And secondly, to get AES to start doing more of their inbound, we started to reward it more. Right? You, you reward what you measure. And so we started to measure the number of self generated opportunities that the AES were putting out and we started to highlight those wins. Starting next year we're starting, we're going to be putting more financial incentives for self sourced opportunities. In terms of having self sourced opportunities count more toward their quota, we haven't implemented that yet, but that's one of the ideas that we're thinking about. And then on the marketing side, we actually moved our CTO to help the marketing team and provide more engineering firepower. And the reason we did this was because we realized that growth marketing wasn't just a marketing problem, it was an engineering problem. Right. We had to optimize our marketing channels, figure out which ones were doing the best, and really double down on those and throw away the rest. Right? And that was emotion that engineering and product is very used to. So by combining the skill sets of our marketing team and our cto, we were really able to supercharge that. So the results were pretty clear. We started to get a lot more of our leads from these outbound activities. One channel that we found that outperformed the rest when it came to cost and when it came to money and when it came to effort was third party events. And what I mean by third party events is events that are hosted by other people on our platform. And when you think about it, for a virtual event platform, that makes a ton of sense, right? The, the best vote of confidence that we can get is when another company uses our software for something really important. So we started to partner more with other companies that also reached out to our icp. We essentially gave them the product for free and encouraged them to run a ton of events on our behalf. So now we weren't directly responsible for running those events. Plus, a lot of these companies had orders of magnitude more reach than us, so they were able to get more people to show up to those events. And as a result, our AES and our BDRs that were inviting prospects were able to say, hey, you know, come and check out this welcome event that so and so is doing. Come check out this welcome event that this other company is doing, just so you can see how the platform works. So, bringing us in for a landing here, guys, top takeaways number one. And I can't stress the importance of this enough. You've got to understand how you're getting your leads. One of the things that shot us in the foot was we were getting so many leads and we were celebrating and we thought that was amazing, which it was. But we didn't understand and we didn't take a step back and say, wait, how, how are these leads actually coming in? And how do we actually scale this? Right. We didn't realize that the only reason a ton of Inbound leads were coming in was because of COVID and because a lot of marketers and a lot of internal comms people were forced to go to a platform like ours. Right. So it's not, it wasn't really sustainable long term. Number two, you gotta start the outbound motion early. Even if your sales team has plenty of inbound leads, they're not going to be used to doing the outbound motion unless you make it a part of their daily habit from the very beginning. So you want to start that early. And outbound, it's a lot more predictable than inbound. Right? With inbound, your leads can go up and down, but for a sales rep doing the work on cold calls, sending cold emails, working your LinkedIn network, those things are a lot more predictable in terms of generating opportunities. So you really want to make sure that your sales team starts doing that early on. And number three, and really this is only for early stage companies, I would say, but for early stage companies, I would say it's really important not to work on marketing activities that aren't directly measurable. And the main reason I say that is because your marketing budget is going to be a lot smaller than your competitors. For us, our biggest competitor is Zoom, right? We have a fraction of the marketing budget, so we're not going to be able to go head to head against Zoom dollar for dollar. So we've got to make sure that we find channels that are specific to us, that can help us generate leads at a fraction of the cost and most importantly, actually a fraction of the effort and time, because that is almost more scarce of a resource than money when it comes to early stage startups. Right? So for us right now, we discovered that one of the channels is third party events. So for myself personally and a couple of other members on our marketing team, we are 100% focused on finding these partnerships, onboarding these partners and having them run events as much as possible instead of being led one way or the other for social media or for, for paid ads or things of that nature. So that is it. Hopefully that's helpful, guys. That's our story of why getting a lot of leads, at least early on in our business, didn't really help us.

Jerry, great. I have a couple questions here from the gallery here. So let me just start off by asking, right, that's a huge pivot from Whole Foods to virtual events in six months. So maybe how quickly did you make that decision and then simultaneously, how was it received internally?

Yeah, I mean, we made that decision over the period of about A month. And to be honest, like we were, we were pretty down on ourselves after not only, you know, Covid wiped out our business, but our Airbnb caught on fire. Right. So we needed some time for ourselves just to recuperate. But it took us about a month to land on this pivot. And it's mostly because we realized that as a founding team, we were just much more naturally fit to do this business compared to the food business. The food business, we were very reliant on customers to tell us what to build. Whereas for events, me and my co founders were used to doing in person events. So making event software made a lot of sense for us. And in terms of how it was received internally, it was only the three co founders at the time, so it was received pretty well. We didn't really have a huge team and we really didn't start hiring up until we launched and we started to get just a flood of inbound leads.

Well, so you're see a CEO and you're. You're salesperson number one. That often happens. Right. So, but how did that. I guess when did you decide to go and hire that VP of sales? And maybe how did that process as being salesperson number one, help inform your ability to scale?

Yeah, so I was the first salesperson. I'm not actually the CEO, I am the president. But we actually didn't hire a VP of sales initially. So what we did was we hired two. No, I'm sorry, we hired three sales reps and we hired a sales coach. And the reason we didn't hire a VP of sales initially is because we just needed bodies and seats to close deals more so than we needed somebody to actually come in and build those processes. Right. So I think as a result of that, we focus on what was directly in front of us, which is closing all these inbound leads. And we didn't build up that muscle within the team to go after their own. Their own deals.

I got one more question for you and then we'll wrap. But can you provide a few examples of marketing efforts that you stopped because they weren't measurable and maybe what tools you found to help measure those marketing efforts?

Yeah, sure. So we almost entirely stopped doing first party events. So events that we ourselves were doing. And it wasn't because it was immeasurable. It was because we realized that we couldn't get a lot of people into those events because we just didn't have the awareness. We drastically reduced our paid ad spend, and we also drastically reduced our content marketing and those things while they are. I mean, paid is somewhat measurable, but not really because you don't know if like a paid ad directly corresponds to somebody going to your website or they see a bunch of ads and then a few months later they come back and. And it was a result of that ad or not. Right. And also, like our. Our paid budget was just significantly smaller than our competitors, so we were never going to win that way. And in terms of content, we wanted to write a lot of content, but we looked at ourselves and we said, you know, are we really going to be able to do content better than our competitors? Are we really going to be able to optimize our ad spend better than our competitors? Maybe. But we know one thing is that if we enable and empower other organizations to run amazing events on our platform, that's something that we can do and we were very well equipped to do because we have that in person event experience and a lot of our customers trusted us for that.

Jerry, this was a great session. Thank you so much. And for those of you that are watching at home, we have a lot more great sessions ahead today. So hope to see you in the next Saster scale session. Thanks, everyone.