At PI, we are humbled to partner with companies that we believe have uncommon potential. Our evergreen, established capital base allows us to invest over long time horizons, during which we seek to serve as a sounding board for entrepreneurs and to help uncork growth opportunities. We deploy capital using a synergistic crossover strategy, leveraging our understanding of public markets and operational benchmarks to the benefit of our growth equity practice. PI’s listed equities strategy benefits from growth equity’s deep sector knowledge and portfolio to partner with companies through a public listing and beyond. Today, we’re thrilled to announce a new partnership with Manny Medina, Melissa Fisher, and the rest of the Outreach team; it is an honor to be leading their Series G growth financing. We’ve been more than impressed by Outreach’s advancement of sales engagement through their data-driven platform that allows revenue teams to better engage prospects in an increasingly digital-first world.
The Status Quo is Inefficient and Disorganized
We’ve been tracking the evolution of the sales engagement process for a while. Sales and marketing teams are often the core growth drivers of an organization — they build brand, attract new customers, and retain those customers. They’re often the cogs that make the machine turn. Given their crucial role within an enterprise, we were initially shocked to find that much of a sales rep’s role is highly manual — picture excel sheets tracking prospects and Word documents as the medium for haphazard call notes. Cue the disorganization of passing prospects down the pipe, and hunter-farmer communication being done verbally, or through email. Information gets lost, follow-ups fall through the cracks, and prospects fizzle into missed opportunities.
The only data tracked on prospects is reply rates.
Reply rates vastly misrepresent an enterprise’s true pipeline, and to our surprise, generate incorrect data nearly 50% of the time. It’s double clicking on reply rates — to understand sentiment, drive real-time insights, and pin to prior interactions for context — that drives better prospecting outcomes. And once prospects have become customers, it’s having full-funnel coordination and context on relationships that drives more informed conversations, and boosts expansion within an established base. In fact, we believe that the core opportunity to drive better productivity, conversion, upsell, and ultimately revenue lies within a medium that we all have come to know well: data.
Outreach Has Reimagined the Modern Sales Cycle
Enter Outreach, who have used data to unlock what it means for revenue teams to truly engage. Outreach quite literally checked all of the boxes that we had constructed throughout our diligence process. They eliminate manual sales processes through gathering, and then leveraging, data to automate and optimize critical sales functions and improve engagement. And it’s safe to say they do this well — the company was actually founded as a recruitment startup, but had built an internal sales engine that boosted customer reply rates by 40% and increased productivity by 10x.
For us, the proof of Outreach’s value was in the pudding. When we first met Outreach, we were immediately struck by their customer success stories. They have built a leading product with unparalleled results, enabling customer-facing sales reps to automate their workflows, better engage prospects, and drive powerful productivity gains. It didn’t hurt that the world-class Outreach team is led by the founder, Manny Medina — a strong, admirable, and thoughtful leader. To speak to his nature, we weren’t surprised to learn that Manny was formerly employee number 3 on Amazon’s AWS team and led the Microsoft mobile division from launch to $50M in revenue.
We believe that part of what makes Outreach a market leader is its data-driven approach. Outreach integrates with and pulls in data from >80 CRM systems and marketing/communication tools to enable a single engagement platform for revenue teams. They refer to the platform as a “single pane of glass,” which we found to be entirely accurate. We think Outreach can aptly be dubbed a true end-to-end “system of action,” bringing insights to each stage of the sales funnel.
Double clicking on its functionality, we found that their cloud-based software helps sales reps to organize the data behind customer interactions. Namely, the platform logs all communication history with prospects across channels (phone, email, chat, etc), and tracks engagement metrics such as opens, clicks, and responses. It also automates tasks and communications, which effectively frees up reps’ time to spend more time selling and less time on backend tasks. The value proposition has resonated especially within the SDR community and has become absolutely essential to their every-day. Based on our interactions with Outreach’s customers, we know that this capability has been critical not only in boosting reps’ ability to prioritize leads, but also to ultimately close deals and upsell products.
It was also made apparent to us that Outreach’s value expands deeper within an organization’s broader sales team — for the first time, sales managers can have deep insights into the sales funnel. The platform allows managers to inspect the health of the deal pipeline through surfacing actionable suggestions, content creation, and team organization functions. Outreach even offers Success Plans, which provides collaborative deal management, effectively creating a hub for all important information exchanged during a deal cycle and increasing visibility into pipeline opportunities and risks.
From here, we believe Outreach will drive even greater productivity and success stories for their customers. We’ve already noted the company going full-tilt on its intelligence tech, and believe that as the company scales, its value increases with use. Outreach has already leveraged their proprietary AI/ML capability to drive important insights, and generate simple & easy to use action items and outcomes. We’re so excited about Outreach’s most recent rollout — Kaia, an intelligent virtual sales assistant that utilizes natural language processing for real-time transcription and analysis during customer communications. Kaia is able to surface suggestions and product knowledge cards with >90% accuracy. Even more, the company also introduced Insights, which synthesizes buyer sentiment using machine learning to analyze petabytes of sales activity data, effectively detecting buyer sentiment and emotions at scale.
We believe that Outreach’s data advantage and AI/ML technology reinforce its leadership within the emerging multi-billion dollar category of sales engagement, and the broader $30B global sales market as well. The global sales market is largely underpenetrated (<1%) with <200,000 sales engagement users today — presenting a massive white space opportunity for Outreach. Even more, as the next gen of engagement extends throughout the broader sales & marketing funnel, Outreach’s TAM could reach as high as $130B. Within our diligence process, Outreach’s TAM was never a question — we believe that this is one of the few companies that can build the next Salesforce. The company has already amassed a massive, loyal, and highly engaged customer base with best-in-class weekly active penetration, but they believe that they’re still early on in their platform growth opportunity. Needless to say, we agree.
A World-Class Team
Our team greatly admires Outreach’s CEO Manny Medina, a strong leader with unparalleled grit and drive. Outreach was founded in 2014 by Manny and his colleagues Wes Hather, Gordon Hempton, and Andrew Kinzer when they found themselves short of cash for their prior company. Instead of facing defeat, they turned around and built a sales engine that superseded their startup and became the multi-billion dollar operation that Outreach is today.
We feel firmly that great leadership attracts more great leadership, and Outreach has done just that. We’ve been even more impressed by the team he has formed around him, including CFO Melissa Fisher, CRO Anna Baird, and EVP of Product and Engineering Amritansh Raghav. Prior to Outreach, Melissa served as CFO of Qualys, during which the company’s stock price increased >400%. She brings 20 years of additional strategic finance experience as well, including investment banking roles at GS and BOA. Anna previously served as CFO of Livongo, and Amritansh brings experience as prior Corporate VP of Microsoft, in addition to prior & wide-ranging experience with cloud infrastructure, operating systems, real-time networking, developer platforms, and enterprise productivity.
The broader Outreach team is to thank for hoisting Outreach to market leadership, and building the very products that warrant success stories from its customers. We have them to thank, and we couldn’t be more excited to partner with them to modernize sales engagement and beyond.