Joe Manuele is the Senior Vice President of Corporate and Business Development at Dialpad and former Chief Executive Officer of Highfive which was acquired by Dialpad in August 2020. He has over 25 years of IT and communications experience in the enterprise and global carrier markets, gained at organizations such as Avaya and Cisco.
For several years now, Joe has had a ringside view of the transformation in the selling process. In this episode of The Orbit Shift Podcast, we talk to him about his journey and the need to continuously evolve as a manager. The top traits and abilities he looks for in salespeople, the metrics with which to track a sales team, how companies can wed an inside sales motion along with a product-led growth motion, and the lessons learned from the acquisition of his previous company Highfive.
Q. Joe, you were raised by first-generation Italian immigrants in Montreal, started your career as a software developer, moved to sales, worked at startups and multinationals. Tell us what made you successful at sales?
Joe: I adopted a consultative sales approach very early in my career because I had more of a technical background. I understood that the most valuable asset is our customers’ time and when you secure that meeting — that 15-minute call, or that half-hour meeting, or the one-hour lunch — you’re getting the most precious thing. And I try to make that time as valuable to them as possible. So doing research on their industry, asking questions and listening to what their concerns are, and being able to add value are some of the things that worked out really well for me in my career early on.
Q. If I’m a founder and I’m trying to set up my sales engine, what’s a good time to bring in the first few salespeople from outside?
Joe: That’s very dependent on the founder. If the founders are technology people and are software developers themselves, they may not be comfortable running sales initially.
But whether you hire salespeople or you do the first $2 million of ARR, yourself, you’re going to be involved with your first 10, 50, or 100 customers. You’re going to touch each and every single one of those customers. But as far as bringing in someone from the outside to be in sales versus doing it yourself, that’s completely dependent on the skill set of the individual. For example, if I was starting a company today because I have strong sales experience, I would probably hire a CFO before I hire a sales rep.
If you’re a technical startup entrepreneur, hire your first salesperson, when you’re ready to have revenue, and look for certain things. Have they been individual contributors? Do they take pride in being a representative of your company and doing what’s best for your customer or are they more interested in title? If they come in and say I want to be known as the Chief Revenue Officer, then that’s a flag for you.
You want to find people that are happy to be sales reps who love the trade, who can possibly scale up to be a manager, and then can really contribute to your own skillset.
Q. When you bring in a sales leader, do you see that the leaders struggle a little bit with the initial set of customers because they’ve been sold to by the founders and then there’s a new person coming in?
Joe: The old saying is ‘you sell the sizzle and you deliver the steak’. A good sales rep will talk about the vision of how wonderful the product is going to be. Not necessarily how wonderful the product is today.
If you’re a technical founder, you’re focusing on the product as it exists today, you’re going to be limited in how you sell the product and who you sell it to. A good sales rep understands the vision and that’s where the tension comes in where the sales rep wants to talk about the next thing and the next three product iterations. And a founder or Chief Product Officer will want to sell what you have today.
When you’re a startup, you want to sell the functionality you have today. But your first customers are going to end up telling you what your next features need to be. So that’s the balance. When it works really well, you strike that balance between selling the vision and delivering the product, by driving towards what your customers want.
The best customer is the one who renews for that second year and expands. Getting that first purchase order is great but getting that second purchase order is when you actually have a customer.
Q. What’s a good way to think about when to choose the inbound product-led engine couples with an inside sales approach versus a sales-led approach
Joe: That’s definitely the one thing that’s changed dramatically from when I was working at Cisco as an individual contributor. I still remember my first day at Cisco, I got a list of 300 customers and it was all outbound. It was like here’s 300 customers call them. Of course, we were building the internet back then, and everyone needed a router. And they were happy that someone from Cisco was calling them. So it was a very different approach.
For SMB, ads that generate inbound leads that are fed to SDRs work really well. At Dialpad, we have a great motion, we have 70,000 customers, about a third of our business is SMB, and a lot of it is self-serve. Our customers can go on our website when they need a cloud-based telephony system, and within minutes, they can set up their own contact center without any human interaction at all.
But when you go up to the enterprise stack customers that we have like Twitter, Motorola, or WeWork, you definitely need that consultative direct enterprise sales rep presence.
So you can have a plan as you go upmarket to have reps that do more direct touch. That being said, the way we’re touching people is changing. SDRs are communicating now, over video. Video is becoming a more personal channel But going back to what I said earlier, people buy from people. And if I can connect with you on a personal level, I can build trust and I don’t want to minimize that. You can scale with inbound, but when you’re going to close those big deals, face-to-face building trust, is really what it boils down to.
Q. How can sales work effectively with marketing?
Joe: I highly recommend that sales and marketing report into one person at a startup. As we get older, we can spin out marketing and have it report to the CEO. But at the beginning when you’re first starting off, the role of marketing is demand gen. There might be a little bit of brand awareness in there too. But you don’t have enough money to really establish your brand.
You’re going to go out and slug it out for your first 100 customers and all of your activity should be top of the funnel. You should be measuring conversion rates and you should be working hand in hand with your sales teams.
Further down, when you’re growing and your business’s hits, around $50 million of ARR you might want to consider splitting that off and then adding product marketing folks which are critically important, and start adding brand marketing, establishing your brand, and making sure that people recognize who you are.
The biggest mistake that startups make is they have marketing reporting, as a silo to the CEO and they view themselves as peers to the sales team. Early on marketing solely exists to be a lead generation engine for your sales organization.
Q. When you’re in sales, what are the key metrics that a startup should measure and track?
Joe: The single biggest one is your close rate. And if you’re not closing a certain percentage of your opportunities, then is there a lead issue? Is it a sales issue? Or Is it a competitive issue?
You learn so much more when you lose than when you win and it’s really important for sales leaders to do postmortems and to track these metrics. At Highfive, if we won a deal, we would always put who our competitors were that we won against.
But if we lost the deal, we asked our sales reps to be very specific, why we did not win that piece of business and it allows the leaders of the organization to react the way they need to react.
It gives them the tools to say, hey, we’re not being competitive. The last five deals were lost on price because your competitors are now giving away something that you’re charging for. Or if you’re lacking features, you don’t have screen sharing on your video conferencing product and your competitor does then you realign your deliverables and your roadmap based on that information. So the biggest thing to measure is why you’re losing.
As a general rule of thumb, your close rate should be 5 to 10% of your funnel, and then your win rate versus your competitors should be above 50%. You want to make sure that you’re winning more than you’re losing against your targeted competitors.
Q. In August of 2020, Dialpad acquired Highfive. What are your top learnings from that experience? How do you think about acquisitions and what makes an acquisition successful?
Joe: It’s funny because Highfive was the first company I sold even though I have been involved in about 15 acquisitions on the buy-side throughout my career. Cisco had a great formula and John Chambers, who was our CEO at the time, always spoke about culture; that there has to be a cultural fit.
One of the reasons the Dialpad and Highfive teams jelled was the cultural fit. We also had common shareholders. We definitely viewed the world through the same lens and the opportunity in a similar fashion. The biggest learning was when we did the entire process virtually over video. It made me realize that that is how transactions are going to occur moving forward.
So look for cultural fit, and look for common missions. I’ve been a part of many successful acquisitions, and a couple that failed. And the number one reason they failed is that the company being bought wasn’t aligned culturally with the company that was buying them, and they had different views of the world.
Q. What are some of the best practices that founders and chief executives can follow as they go through different rounds of funding?
Joe: One of the most stressful parts of being CEO of a startup is you’re always checking your cash and that’s the conversation in every board meeting. You’re always raising money and people that say I’m not raising money right now they’re lying to you.
For the younger founders out there my advice to you is this is not real. It’s not always going to be like this. There’s a ridiculous amount of capital available from so many sources. I read something yesterday that said there’s no difference between venture capital and non-traditional venture capital. There’s only capital. Everyone is investing in everything right now.
LPs are making direct investments in companies instead of just putting them through VC funds or private equity funds. Private equity funds are doing growth funds. So number one, you’re always raising. Number two, if you have the ability to take money off the table and give you a little bit of breathing room, take it and focus on your business.
If you can increase your runway from a year to three years and you get a good valuation and people want to give you money, take the money and then focus on your business.
Also, think of non-traditional sources. The company that led our last round at Dialpad was an organization called OMERS which is the Ontario Municipal Employee Retire Savings Fund. It’s a pension fund for municipal employees of the province of Ontario, which has a $2 billion venture fund that they just started and they led the rounds. We found them through a partnership and we would have never found them traditionally.
So above and beyond the Sequoias and the Andreessen Horowitz’s, there’s a couple of great organizations out there, think outside the box for your sources of income. And then make hay when the sun shines. If you have the ability to raise right now, raise, and go focus on building your business.
Q. If our listeners want to reach out to you what’s the best way to do that?