Gabe Luna-Ostaseski grows and scales sales teams at Hustle Con

Uh, Gabe founded his first company when he was 18 and then sold it at 21. And followed by that, he launched CowFinder, where he bootstrapped that business to $25 million in sales without bringing in a cent of outside funding. After exiting CowFinder, Gabe started Upshift, which is a growth stage accelerator program to help startups scale sales teams in months as opposed to years. In the past 6 months, Upship graduates have raised over $52 million in funding. I first heard about Gabe when Tim Ferriss retweeted this amazing blog post about how he bootstrapped Cowfinder. Right when I saw it, I knew we had to have him here. So today, Gabe's gonna give the lowdown on how he's been able to help teams scale their sales teams. So please give a warm welcome for Gabe.

Good afternoon. So my name is Gabe, founder of Upshift Partners. We help startups scale sales and make money. So like many of you, I'm an entrepreneur. And I'm here today to share some of the lessons that I learned going from an idea in a spare bedroom to a multimillion-dollar company without ever having without having to raise a penny of outside funding. To say that my journey here was unique, I think, would be kind of an understatement. So, didn't go to an Ivy League school, in fact, dropped out of college. Never raised a penny of VC funds, bootstrapped it on my own credit cards. And I also grew up on a hippie commune. In Northern California, where we didn't have electricity, we didn't have a television, we didn't have internet. And I didn't have a whole lot of examples of, I guess, successful entrepreneurs. In fact, the only entrepreneurs that I knew on the hippie commune were farmers. But yet, 8 years ago, in, in the heart of Silicon Valley, I started a tech company without having an email address or computer. So if I can do it, anyone can. So again, the reason that I'm here today is really to share some of the lessons that I learned, and in the hopes that that you don't make all the same mistakes that I do, or that I did. So these are really 3 powerful lessons that I learned, unfortunately the hard way. The first one was really the power of doing more with less, 'cause we didn't have a lot of money in the bank, and we had to focus. The second thing is making the system the hero from the very beginning. And the third is to let data drive decisions. So I'll dig into these things a little bit more throughout my talk. I also wanted to give everyone here an opportunity to just listen and learn. So I actually wrote an article on exactly what I'm talking about today, including all the fine details of it. And it's available at upshiftpartners.com/dispatch. So you'll be able to access the entire article set. I encourage you to just, you know, put pens and computers down and just sit back and relax. So doing more with less. We started our companies just simply with our credit cards to be able to get our company launched. So we didn't have a whole lot of cash in the bank. And fortunately, we were able to get it off the ground, and, and we were able to get it up to about $3 million in annual sales. Then we just hit this plateau where it was like no matter how much brute force we were using, the top line numbers just weren't growing. I can remember this one day sitting down and we were pretty ambitious. We wanted to double the revenue of the company every single year. I can remember sitting down, actually looking at the numbers and thinking, oh, shit, I'm gonna have to hire 3 more people. 3 times as many salespeople in the next, like, 4 months to get this growth. And although I was willing to do that, like, I'm a hustler at heart, I knew that, God, I just don't want that to be the first option. I knew that in my gut, like, there had to be a better way than just simply brute force. And so the next morning, I came into the office, and I printed off our entire customer list. At this point, we actually had computers, so it was amazing. So printed off the customer list and sat down with it and actually started looking through all the customers and how much they were spending with our platform. And I, something caught my eye. I found that there was these two customers that were spending about 10 times the amount of revenue in the same period of time as our average customer. And it got my attention. Kind of the light bulb started to go off and I started to ask around and ask the different team members, You know, why are these people spending so much more than everyone else? And honestly, nobody had a really good answer for me. So I went on Elance and I hired an internet researcher to basically take our top 10 customers and our bottom 10 customers and look at, like, all the other attributes that we didn't currently have. So, you know, we had name and address and that kind of basic information, but what we didn't have was things like how many counties did these businesses cover, How long had their website been up, or when did it— when was it most recently updated? What were they doing as far as online advertising? What were they doing on social? And we got the results back a few days later, and I can say that 98% of it didn't tell us anything. But it was that 2% that was actually really valuable. We saw these similarities between the customers that were these kind of 10x customers, and also similarities in the, like, the bottom 10 customers. And I started to look at it and say, wow, like, in order to double the company, I only need to get 20 of these customers as opposed to 200 other customers. And I always describe myself as being productively lazy. So I look for the fastest way that also requires the least amount of effort in order to kind of achieve the goals. So I started looking at it and said, okay, I went back onto Elance, hired another researcher, and said, I want you to find 100 people that match this exact same criteria that these two 10x companies match. A few days later, we get this list back. What we did is we said, okay, we're gonna go after this really small list of super high-value customers. The first thing we need to do is get their attention. They don't even know about us. So what we did was we designed this really clever campaign where basically, and this is I think where my hustle side came in, is basically said, we're gonna hit these companies from every single side for 12 weeks straight. And we're gonna get all of their attention. So what we did is we sent out a little direct mail piece with kind of a clever gift and a clever handwritten note. That got their attention. We sent that out every single week, and then we would call behind the direct mail campaign. So we sent out the first one, waited for the phones to ring, nothing happened. Sent out the second one, waited for the phones to ring, nothing happened. 4 weeks go by, and my co-founder and our salespeople are like, "Yeah, that was just another one of Gabe's crazy ideas. That didn't really work." And it's a Wednesday afternoon, and my cell phone rings, and I pick it up, and guy says, "Yeah, is this Gabe?" I said, "Yes." He says, "This is Steve. You've got my attention. What can you do for me?" I was so caught off guard that I had to tell him I was in the middle of a meeting and call him back, and I looked up his information. This is the CEO of a $4 billion company that has just called me on my cell phone. So end up setting a meeting with Steve. Week 5, get another phone call. 2 weeks later, get 2 more phone calls. Play it out, 4 months later, we'd signed over $2 million in new business. And when we tallied up what we spent in marketing, it was less than $2,000. The most amazing marketing return you could ever imagine. And what I learned in doing that was a couple big things. First off, and this is more for people that don't yet have customers, is focus on customers that kind of meet 3 criteria. They have the most pervasive, urgent, and costly need. The second thing is, If you're already running and you already have a customer base, look at the top 10 and the bottom 10, and actually spend the time, dig into all the attributes, and try to understand what makes those people the top 10 or the bottom 10. Don't just kind of use the spray and pray approach. And then in the words of Notorious B.I.G., "Mo money, mo problems." The reality is, if we had $10 million in the bank, I wouldn't have been forced to be that creative. So money buys a lot of things. It doesn't necessarily buy creativity, and it certainly doesn't buy hustle. So lesson 2 is really about making the system the hero. When I was in college, my— I would say my first job after making deli sandwiches, where I actually got fired from, and that's when I decided that I should be a CEO. My kind of first real-world experience, I got an internship where I got to start and run my own house painting company. I know you're all thinking, wow, what a not a sexy job. But over the course of a summer, what I did was actually go, literally go around and knock on doors and get leads of people who want to get painting work done, and then do estimates and, you know, and end up booking work and running a house painting company. What I learned in doing that was two really core things. One was the power of hustle, like knocking on 10,000 doors before I ever turned 21, getting chased by dogs and whatnot. And the second thing was really the power of a good system. And so I took that into the next company that we started. So we started my last company, CalFinder, literally without email addresses or computers. But we knew the power of a system. So we wanted to test the concept. And what we did was we took 4 yellow notepads, 4 pens, and we wrote down a really simple script that we were gonna test on homeowners to see if they would wanna get connected with home service professionals. And we took those basic scripts out, and we took our yellow notepads, and we went and knocked on doors, because that's what we knew how to do. We didn't know how to build software or anything. And first day, we get back, and we'd collected about 10 names and phone numbers, people that wanted work done. It's pretty surprising. The next day, we followed a similar process. So what we did was we looked in the Yellow Pages and tried to find contractors that had the biggest ads, because we knew they were spending money. And we, wrote down a script and a kind of a pitch that we would use. Then we went to their offices, and we pitched them on the concept and said, "Hey, listen, would you be interested in getting homeowners that want to get work done on their houses?" They said, "Yes." We said, "Well, how much would you pay?" Classic hustler move. And they said $80. So we asked them if they had a photocopy machine. And we took these yellow notepads, and we went into their office, and we made a copy. And we got them to write us a check for $800 to buy the 10 names. And that was like our seed capital. And then we went to the next contractor's office and we followed the same script and asked them how much they'd be willing to pay. They said $100. So we did the same thing, made another $1,000. Third contractor, we asked the same questions, says $120, make $1,200 more bucks. So we make like $3,000 on our first day. We're like fist pumping and thinking we're gonna be fucking billionaires by the end of the month. But what we were able to do is we took those same scripts, and the next week we went to college campus and we said, "Ask college kids if they wanted to make $30 an hour." Took them out the next week, got 40 leads using that same script, followed the same process with contractors. And we just rinsed and repeated. We made the system better every single week. And that's what enabled us to go from me being the first salesperson to 10 salespeople to 25 to 50 to 100 to 200. 50 without ever raising any outside funding. So my advice is make the system the hero from the very beginning. You know, when you look at companies like Uber or Lyft, they're expanding into all these new markets and they have a playbook for everything. And so it's never too early to start building your playbook. The second thing is if you're doing something more than twice, it needs to be documented. There needs to be a checklist. Otherwise, you're always going to do that task, or somebody else is going to do a shitty job of it. The third thing is set a schedule to iterate. Especially if you're early in the game, there's probably some really simple things that you're doing every week, whether it be having conversations with customers or trying to get your first sales. Start then. Build a playbook, and then iterate on it every single week. So lesson 3, and I would say this was one of the most painful lessons that I learned, and I've had to learn it a couple of times, but I wanna share a story with you that was a pivotal moment in my last company. So we had taken the company, and at the time, we were going after kind of a small business segment. So it was a very much like a high-volume approach. And we had built a sales organization to 50 salespeople, which is an incredibly challenging thing to do, and it's also kind of like herding cats. Imagine 50 salespeople in one room. It's kind of a nightmare. So we had built the company to 50 salespeople. We had 4x the number of deals that we were doing even a short period before. And we had had about 6 months in doing that, and started to look at the numbers. And it was like, I remember this like rock dropping into my belly and realizing that we had made like a massive mistake. And only 6 of those salespeople were actually performing when we looked at all the numbers. What had happened is that we hired all these people, very excited, signing lots of deals, but all the customers were churning out. And we had really like bad customer satisfaction ratings. So we looked at these 6, and these 6 salespeople were just, they were killing it. They were doing incredibly well. And we looked at the bank account, and again, we didn't have a whole lot of buffer. And if we looked at the numbers and we said, if we continue on this path, we'll be bankrupt in 45 to 60 days. And I, like, it still hurts when I think about it, but We had to make a massive course correction. This is one of the most difficult things I've ever done in business. We let go of 42 people the next week. These are people that had given their lives to helping grow the company, and it was just heartbreaking. And what we did is we went back to the drawing board, and we looked at all the data from the 6 people that were being really successful. And what we found is that they were going after a different kind of customer type. and they had a certain kind of timing that they were using to get in touch with them. And so what we did was, again, going back to lesson 2, we started to build a recipe around what these 6 people were doing. Play that forward, and we had actually doubled the revenue of the company without hiring another salesperson over the next 12 months. So one of the most difficult decisions that I ever made But if I let my ego get in the way of, of actually making an objective decision based on data, I wouldn't be up here on this stage today talking to you about our success. So what did I learn from this? I learned to always let data drive decisions. This is something that's just absolutely critical for startups. There's so many moving parts and so many challenges. That you have to let data drive decisions. And if the highest paid person in the room is purely relying on gut, you're gonna get yourself into trouble pretty quickly, and you might end up down a road that's really hard to course correct from. The second thing is doing the best to remove ego from decision making. So our question always is, you know, what does the data say? Not what do you think, what's your opinion on it, What does the data say? And then the third thing is to manage by the numbers. And this is oftentimes a transition for startups from the early craziness where you're just like throwing spaghetti against the wall, seeing what sticks, and transitioning out of that and actually building a sustainable company and having that kind of transparency to run the company by the numbers. So, you know, this last lesson, I don't mean to harp on it, but it was one that was kind of a culmination for me. and it's an area in going through that process and having to actually let go of all those people and also to rebuild the company. What I learned was obviously that the power of focus and doing more with less. I also learned to let the system be the hero and build the system around what's working, and then also to let data drive decisions. So now I, I, um, I wanted to take a little bit of time to answer some questions either on my own path of scaling my last company or what we've learned in helping 7 startups to scale sales over the last 7 months. So happy to answer questions.

Hey, Gabe, thanks for taking the time to do this. I helped Sam a little bit with HustleCon, but during the day I'm a sales development rep at Zenefits. So I thought what you said was really interesting. Can you talk more about those 6 people that were sort of the outliers with— in your organization and what they did differently than the other 42 that you cut off?

Yeah, so the things that we started to notice was they they were going after actually a different customer segment, and they were taking more of a, I would call like a sniper approach, as opposed to like the AK-47 approach. So these people, if our average salesperson, they were calling on SMBs, right? So it was a big volume game, and the height of things, we were doing about 20,000 outbound calls a day. And these salespeople were doing like 5,000 calls a day, 5 calls a day each. But yet the people that they were talking to were highly qualified and also had the potential to spend a lot more on the platform. And they also set great expectations, so we didn't have churn with those people. So those are the kind of the attributes that we found with those salespeople.

So were they doing mostly email outreach, or how are they getting these customers?

They were doing email and then following up with a phone call. And so that was the approach that seemed to be working for them. Okay, cool.

Thank you.

Cool. Any other questions? Please come down. No? Oh, okay. You coming? Nope. Nope? Okay. All right. Thanks very much, Gabe. Sure.