We had two employees that in February had already achieved the entire full year quarter.
I'm so excited to welcome Carles Raina. Carles is the CRO at 11 Labs, one of the fastest growing companies on the planet.
Customer success needs to be a money generation function for the business.
He's scaled the revenue org from zero to over 350 million in ARR.
The role of a CRO is fundamentally thinking about not the revenues today, but the revenues of tomorrow. Let's do the things that no one is doing. That is what makes me passionate, and that is what a good CRO needs to be doing because we're not here to do easy stuff.
This is a masterclass in scaling sales in an AI-first world.
It's like the fastest product in terms of revenues that we've ever had. It's just insane.
On top of that, Carles is also an incredible investor with his own solo GP fund, BABA Ventures, which has backed the likes of Revolute and of course 11 Labs in the early days.
If you want to do something, budget is never going to be a problem. So what is the problem? If you want to do something and you're not allowed to, why would that be? Ready to go.
Carlos, listen. I know a show is successful when I get friends of mine outside of tech be like, 'Oh, love the clip with Carlos.' And I'm like, 'Really?' And they're like, 'I never thought that quota and sales comp would be so interesting.' And I'm like, 'Thank you, Sarah. I had no idea you were interested in it.' So it was such a successful show. I thought we had to do a round two. Thank you for joining me, man.
Thank you for inviting me. This is great. I'm happy people were interested in like sales and sales comp according to that clip, which again, now it's like 5 million plus views, which is insane.
Dude, I actually wanted to start on you have now kind of led the way in a new CRO charge. I think 11 Labs is probably one of the most exciting companies on the planet. You, a CRO there, lead the way. Are a generation of CROs being left behind?
Some of them, yes, but I think it's fundamentally that like the market has changed. The way that we build companies today has completely evolved. We can do deals much quicker. But also like for me the key item is like a deal can be done. You can hire teams that like have a ton of experience, but how do you think beyond a single deal and think about like distribution entirely, right? And I think that's what we're thinking like what we were actually missing in many ways. Like yes, it's great to do business development. It's great to like think about affiliates. How do you think about much more on a strategic level, but also like able to execute? And for me, those are the key components. How do you embed AI in your entire distribution component so that like you're able to actually do more with less, right?
What do you mean by that? Is that like simply using Artisan, Qualified, Monaco and having like AI SDRs do outbound for you?
Good. Glad I suggested that.
It doesn't work, like, and I've tried.
You're not hiring me, huh? Dodgy start to the interview.
No, you're fired. No, but it's like I've tried a very large number of like AI go-to-market tools and they don't work, and they don't work because they see everything as a transaction. Like if I was building it, and hopefully like some people will be able to actually use this, if I was building an AI agentic platform for sales, right? I'll be like, okay, let's actually understand each one of the core potential leads. What do they prefer? Do they prefer to actually be reached out over email? Do they prefer to actually attend events? Do they prefer to actually like have a phone call? And you can try to map some of those components, but what people put on LinkedIn and social media, right? So like that is the most fundamental element. But what we're actually seeing on the AI SDR front is that the majority of these tools track everyone as if they actually want to receive a message, and people hate it. And you see like the response rates on outbound emails has dropped to the lowest at any point in time, it's like less than 0.01%. Like people getting messages on LinkedIn has skyrocketed, and you can perceive that it's actually a transactional email must send to everyone or it was generated by AI that doesn't work. So outbound is dead. Outbound is dead unless you do it with humans or unless you do it humanly. And that's fundamentally the key item. I can tell you like at 11 Labs I spent the past two years plus trying to convince the team to actually hire engineers to actually help me build AI agents for revenue, for sales, right? And it was only last year that actually like they were like, 'Okay, let's do it.' So we end up hiring people and we end up building an AI SDR that handles inbounds. Super good results. I have now an AI proposals manager that like scans the web for RFPs and RFIs and then proposes, scores and proposes things. I have like an AI customer success manager that fundamentally lives in the back of an email and essentially proposes emails, looks at all of the data of a single customer, all of the pricing tiers and everything that we have in the contract and then proactively proposes things. So when my AI customer success, my customer success manager goes in the morning to check the emails, that person has a number of like drafts that the AI has created and then that person can change those drafts to put it out there and to send it back. We store what we actually sent and what it was originally created and what the responses are to actually fine-tune. So each one of the customers ends up getting a slightly different message with a slightly different tone, and if they speak other languages then it's a completely different language. That works, and that has closed deals for us already. We generate money from that AI customer success manager fundamentally because it is humanly right. It's human if it's perceived as human.
So are we cutting the size of our team if we can do so much with these different AI agents? Are sales teams of the future going to be dramatically less?
I think like we will end up seeing the fact that like people are becoming much more efficient. I think like the goal for me at 11 Labs is like 50% improvement in productivity. That's the one that I want to do because then it means that I can hire less people, right? And that's fundamentally I prefer to manage a smaller team that gets super well compensated. Any upsells, any contracts that the AI agent ends up closing, I will pay those commissions as if like a human actually closed it, and I'm very happy with that. But also that means that like the people that we want to retain and have are going to be extremely top talent that are performing at 11 that no one else is performing. That has a consequence that instead of actually doubling my team or doing a 5x or doing whatever it is over the next like two years, I end up hiring less people, but they're very concentrated. That has an impact for sure in the industry.
Totally get that. You mentioned the word commissions there. I'm really intrigued. Like we see like OpenAI don't have commissions. It's like here's your salary and then here's your equity. And often people say salespeople are coin-operated. You said that actually last time you have a 20x quota, which is a lot higher than anyone else. We interviewed the head of sales at Clay recently and they said theirs is six to eight. Post-20, what is the commission structure and how do you advise me as a founder on how to set the commission structure?
I mean I can tell you like we had two employees that in February had already achieved the entire full year quarter. And I put a message in Slack saying these two people have reached the Mount Olympus of sales at 11 Labs because in two months already like did their quarter, right? And I think like...
I mean this in the nicest way. Did you not massively miss that quota then?
I don't think so. It's like I think you need to put a quota that is challenging but also fair. And if people miss it fundamentally because it's too high then you need to do the right thing and then lower it or compensate them correctly, right? But also salespeople, good salespeople, they want to be the best ones. They want to actually, they're moved by the coin. They're moved by the fact like a big challenge ahead of them. If you don't put that challenge, they're just going to be like slacking. They're just not, you're not going to get the best out of it, right? And I think for me that's the key item is like we say like, hey, you reach your quota 100%. Fantastic. And then you start unlocking accelerators to the point that like I'm very happy like if we sign a million dollar commission check I'm the happiest person alive fundamentally because like that person did so much money for the business and for our shareholders and for the rest of the company that is an absolute no-brainer. Again like for me it's like for every $1 million in revenues that any single person signs and I don't care if it comes from like the SDR, the account exec, the CSM or it's an engineer that went all in and then managed to get a contract. It's like every single million has $33 million in extra valuation for the company. If you put it that way, it's a benefit for everything. Like some people get more equity on the engineering side. Great. They deserve it because they don't get commissions. Fantastic. They were popping up their entire value of their stock.
When you get the accelerators, how do you advise me on how to structure the accelerators?
It depends. Like so the way we do it, and I think it's fair, is like for every single extra year, you get another 25% extra commission on top of it. Like we start like 5% commission on anything that you sell and then we have the accelerators...
After your quota that is...
No, that is including your quota and then after your quota yes, additional. Like and we have like a 1.1x, 1.2x, 2x, 1.3x, 1.5x and so on, right? So the more you keep selling above your quota, then you hit those accelerators. But then we have like accelerators or spiffs specifically for individual products. So if we are incentivizing one product because a quarter we want to incentivize that product then we will put an accelerator or a specific spiff for that specific product and then people even are more motivated on that front.
Do you find that always works, accelerators?
No. No. I think like it's easy to get hooked on spiffs or like specific incentives and lose the entire sight of what you're trying to do. If you put too many accelerators, if you put too many incentives in one place, you create the wrong behavior, which is people try to sell whatever it is to actually unlock it. For instance, like we don't pay commissions on pilots. No. Like because why? Like it's not adding to our valuation as a company and because it's not adding to our valuation as a company like the engineers, the researchers, the ops people, the people, no one is actually getting a boost in their equity. Then why should we pay it? Let's do the right thing and let's do the complex thing which is like let's do the pilot if needed. Let's convince the customer that the metrics are there and we're doing it really well and then on top of that once we sign an yearly contract or a two-year contract then we pay the commission.
You pay on retention and expansion.
Yes. Yes. So like first 12 months like you can close it year. It doesn't really matter $50,000 or a million dollars or $10 million, whatever you want. And then anything that you like that gets expanded over the next 12 months, you will get commissions. Great. And you can hit accelerators with that and so on. If it's a strategic account and we have designation of what is a strategic account. So for instance like the top 20 or 30 accounts in a given market depending how big the market is then fundamentally then you will unlock commission for two years fundamentally and we can change it if needed right but at a practical level we found that that's like the first way.
I will never forget one of the great CROs saying to me on the show, you do not ever want your farmer going against someone else's hunter. Meaning you're kind of cushy but super nice CS enablement. Hey, like let's get champions in your company kind of happy against someone else's all-star hunter who is there to close your business. How do you feel about that? True. And then how do you think about then retaining the hunter on the account?
The hunters are important, very important. Specifically when you think about distribution, you think about like outbound, inbound, you think about like a lot of different pieces, right? But at the same time a hunter that is not well managed will create more damage than actually like opportunities. So let's say for instance you're trying to close a company that has multiple sub-companies. It's the big holding company. We can use any name you would want right and then you have a hunter that essentially tries to go to each one of them but doesn't do it in a very structured way like trying to align what are the incentives for this big account like then fundamentally you end up having discrepancies of pricing, you end up having discrepancies like what is the actual value for them and then each one of those discrepancies ends up coming back to hunt you down essentially when you try to renew the contract or the other forms. So like it is important to have them but at the same time you need to have like them together with the customer success. I actually am a big believer of customer success. I don't believe customer success as a satisfaction or happiness moment for customers. No, it's like customer success needs to be a money generation function for the business that works for the customer but also works for the business to incentivize growth, expansion, cross.
What do you mean by that then? Because I had Chris Degnan on the show who's like one of the all-time great CROs, Snowflake, you know, 0 to 4 billion or whatever it was and he's like CS is complete [__], complete [__]. You have professional services, pay for it and we'll make you great. To what extent do you agree or do you think customer success is in the world where like Snowflake grew up?
Like that made sense in the world we are in today with AI that doesn't make any sense because fundamentally like anyone can spin up a competitor of your product in the next two days, anyone. So fundamentally like your customer success you need to actually like go as deep as you can as early as possible and try to close it as soon as possible a single contract and then your customer success is the one that actually will help you expand it quickly and retain the customer. So if it becomes a services business only where you're charging for every single penny then you become a transaction, you're not building a community, you're not retaining of the long term. You should be incentivizing them to actually like do both things, community trust and also like incentivize the long term. So that's why like I am in favor of charging for like services but in not all the cases it makes sense fundamentally.
Totally. The game has changed. Where else has the game changed? Where else the old-school CRO is out of date?
In general like you like one single market going one market at a time it doesn't work. Traditional VCs like they've like the traditional method has been like oh you open one market you go deep you win the account you show like the value then you go to the next one and then you go to the next one and so on and this is like the [__] advice that like VCs have been giving like for many years and I know like now it's changing fundamentally because like hey like the reality is like if you're going to have 100 competitors in the next like month because you're starting to get some traction or because of whatever reason or everyone is thinking about the same problem then going deep then opening one market after the other one after the other one instead of actually parallelizing and trying to do multiple bets at the same time then it's just counterintuitive.
Is that only enabled by a PLG motion though? Like PLG motion allows you to do multiple markets at the same time much easier because if you have enterprise motion you need everything from SDRs to AEs to CS in that place.
Why? No, not really. So for instance like one of the, and I know like this is going to be controversial but like I think like all of the tech startups are afraid to actually hire someone that has had 20 years experience, 25 years experience and the excuse that they use is like that person is not going to fit the business and I think it's [__]. I think it's full wrong. Right. Fundamentally, someone that has 20 years experience in sales and has been selling for the past 10 years to the same like financial services firms in the city or in the US has so much wealth, so much knowledge, they can propel the entire business. Now, the question is like not all of them are going to fit your business, but a good portion of them if they're still hungry and they still want to actually do something that is meaningful, they're going to fit really well. Those type of profiles will shorten your sales cycles because they will join and be like, 'Okay, now I know the product really well. I know the vision. I know how to properly like pitch it. Let me call off my friends that have been interacting and all of my stakeholders that have been interacting for the past 10 years, 20 years, and I would just go directly to the C-level.'
Dude, is that not a massive misalignment of cultures when you think about like the super young hungry reps and then you're bringing in 50-year-old Simon who's been selling into the city financial services for years?
The biggest example is like Google in the early days. You have like Sergey Brin and Larry Page like together with Eric Schmidt. Like that's amazing. A guy that had ton of experience was really successful ended up coming in and magic happened. I think fundamentally like both parties want to make it work. It can happen, but you need to make it work and you need to hire the right people that will be in the same brain wave as you are.
Do you worry that people pull 11 Labs so much out of your hand that anyone could sell it?
No, I don't think so. I don't think it's that easy to sell, especially in this environment. Of course, I think if you have a big brand like an OpenAI or like an easy a little bit and...
The nice thing about this being a round two is I can push back more. You can't have a 20x quota and say it's not easy to sell. You can't have that much better people than everyone else.
I think you can. I think...
Your people are not, I love you dude, but your people are not 4x better than everyone else in market.
I do 100% believe that our people are like 4x better like without thinking twice. And I would take them to war. I would go to war with them. Every single one of them. It's because like we are tough on them, but also like they're tough on us. Like they give us the feedback, the difficult feedback, and I get it every single day. And I'm happy that they give me the tough feedback because what we're trying to do here and I've always believed and grew up with the idea of like we're trying to like find the ground truth and what the ground truth means like today means X, tomorrow means something else and the following day will mean something else. So if you don't have people that are constantly challenging you and constantly thinking beyond what is actually happening today, you're not going to be able to survive. Those are the people that we hire.
Where are people challenging you where you don't have an answer? Which market should we be opening? Like how deep should we go into like some of the structure changes like the company is growing very quickly? Do we need a global accounts team?
So I'm already thinking about the global accounts team. When do we implement it? How do we implement it? How do we motivate people? Like should it be 20x? Should it be something else? Like which product should we be selling? Should we be selling to competitors? Should we be selling to resellers? So there is all of those things like the team challenges every single day. And I love it because it's intellectually stimulating but also because it forces the entire business to rethink our position every single day.
So you would advise founders today to go to as many markets as possible as soon as possible.
Not as many markets as possible. I think like you need to map out and have a reasoning and a thesis of why that market so that you cannot refer to that and understand whether the market conditions have changed and then you have to actually like evolve your thesis. But for me this is like go-to-market is similar to like investing in venture capital, right? You need to test like a hundred things to actually be able to find like the three, four, five, six things that actually perform and do really well. We do the same in venture, right? We invest in companies knowing and believing that all of them are going to work and all of them can be like a billion or trillion dollar company and then we realize like [__] it not worked but I still have like three or four or five that are going to be working really well. Go-to-market is exactly the same thing like test as many things as you can not only in the opening markets but also like do you need to try like self-serve? That you need to try like working with resellers like with partners with the cloud ecosystem like with a grants program with an affiliates program there's so many things and opening markets is one of those ones.
What did you test that didn't work and what did you learn?
At 11 I've tested like endless endless amounts of things and I absolutely love it like for instance like media entertainment in the beginning did not work for us it just didn't.
What does media and entertainment mean?
So big brands like big entertainment studios and the thesis was like they're generating so much content we should be able to actually sell to them and make a ton of money on this. And the reality was that like yes, they do make a lot of content, but when you have like an industry that essentially like is very heavily influenced by the public, the audience, the quality they need to produce like events, all of that stuff, then potentially the industry might not be ready for technology that you're trying to sell. That was a big learning. And we spent months and months and months trying to break into the entertainment industry to realize that like we were not growing as fast as we wanted. So we ended up switching and having another ICP was like okay let's work with media creation platforms right that worked really well for us and then we end up saying like hey actually the world is moving we had a thesis around like the world is moving towards agentic systems how do we also bring a product to market that fits really well in the agentic world and we had a vision on that. So we ended up working on that and today AI agents it's actually fantastically huge for us fundamentally because we had the vision we bet we went early we started working with partnering with like some companies and that panned out really well.
You said the words not growing as fast as you wanted. Now you're an ambassador on the other side of the table. You've seen how fast a company can grow with 11 Labs. You've also seen with Revolute to be fair to edge cases to be fair. Well, you need those two education business like that. That is the business of venture. My favorite thing with VCs is when you get other VCs be like, I don't know if Carles is very good because like if you actually take out 11 Labs and Revolute, he's not that good. And you're like, yeah, we'll have done four unicorns. That's fine. Like, you know, okay, sure. But my point is, has it changed how you think about attractiveness in company growth?
I don't know. I think you still need to have companies that grow from one to four or from zero to one and it takes them like 18 months to get there. And I think that's actually not bad. It's like just means like you need to incentivize the portfolio to be able to actually like iterate and experiment as much as they can because we don't know what's going to work. And I think it is like us still even with new products that like I'm heading and I'm trying to get to market. I truly don't know how we're going to price it. I truly don't know if it's going to work out. I'm just trying to iterate. Is it going to take us a little bit longer to get to like the first million and the first 5 million and the first 10 million. Fine, we have the ability, but we need to iterate. And I think it's exactly the same. At 11 Labs, we have like a business that grows extremely quickly like we like smashing it, all of that stuff. But at the same time, we have like brand new bets like are not generating any revenue. And that's great, but it's bets that we're doing for next year. So, I think like the...
What's the biggest bet you've got today that's not generating revenue?
So we're generating a good amount of revenue but like government work fundamentally just like it's a tiny portion of it and I think that's okay because like the role of a CRO is fundamentally thinking about like not the revenues today but the revenues of tomorrow. I'm already thinking like all of this quarter I've already been thinking like how do we put the pieces together so that 11 Labs next year grows even faster than this year because I know this year we'll smash the numbers. I have the right team. We're going to continue hiring. We have like the motion that we set last year. It's going to grow really well. How am I doing it for next year? Being very creative so that I can start putting the right bets. That's what being my quarter this year.
You'll hit a billion in revenue by end of year.
Who knows? Who knows? I would love to hit a billion dollars in revenues by the end of the year. We have some targets internally. If we're creative, we can do it. If not, it will be a little bit later. That's fine. That's absolutely fine.
Any big lessons on forecasting? It's freaking hard to do.
Impossible. It's just impossible. Like we forecast and then we realize usually that like we've like we would just like...
But that's different. Traditional sales leaders on the show for the last three or four years because I've done have been like oh I can pretty much get there to 3 to 5%. Yes. I'm like wow now.
But it's impossible if you think about it from an experimentation perspective and I always tell my team like I want us to test as many things as possible. I only need one of those ones to work really well to give me another hundred million dollars in revenues or 200 or 300.
And so when you say things, do you mean like channels like affiliates, like partners, like referrals or do you mean like products?
Channels, products, ideas. Should we be pitching services? And I was like in a meeting with a CEO of an airline very recently a few days back and we were talking about like agents and all of that stuff and then at some point he's like, 'Pard like everyone keeps pitching me. I get over a hundred pitches every week of pitch like companies doing like customer support. Like I mean I don't want to have another pitch on that.' And I was like and you're 100% right. And I hate it. Like actually don't get me wrong, we do it and we do it really [__] well. But at the same time it's boring. Like the majority of companies will start with the bottom line optimization.
So what's boring? Customer support.
Customer support optimization for me is like yes your mindset is like yeah I want to automate increase a bunch of percentage point my profitability so that's where I'm focusing and that's great don't get me wrong it is fantastic. What I'm actually interested is like how do we figure out a way to partner with a company and create a labs area so it's company X labs right so that we can figure out a way for them to generate new revenue opportunities for them. That's what actually makes me passionate but that's we have to prove that that is the right. So that is one of the experiments and I'm spending a lot of time these days on like how do we prove that the idea of labs for companies where we essentially are their consultants and help them build those agents that will generate topline revenue with new ideas, new products is actually something that we can scale and generate like hundreds of millions.
How do you think about the trade-off between doing that where it's maybe a little bit more low margin given the fact it's quite hands-on? I'm thinking like British Airways Labs where you have amazing voice agents who call you up and are very personalized. Give you tips on how to enjoy New York with your wife.
Great, super nice idea. May get more money from it. Boom. Versus actually we can do it avatars and we can compete with all the avatar companies.
Higher margin very adjacent product.
I don't know. I think like I would rather do things that are actually much more complex than the ones that are actually like less complex. I think we here as like startups and VCs to do the difficult things. I don't believe in like doing the short path like things are actually like are much easier if someone is doing it and someone is like super good maybe we should be buying the company great or maybe we should not we should just partner with them fantastic right let's do the things that no one is doing that is what makes me passionate and that is what a good CRO I think needs to be doing because we're not here to do easy stuff.
I think customer support is uninvestable space and I get so much [__] on Twitter for this because everyone shits on but I'm like Sierra and Decagon obviously two market leaders in terms of brand and yeah how much money they've raised and you've got 16 providers who've raised over 75 million in the last 18 months and you've got all the incumbents and your Salesforce and Atlassian and then your Intercoms and Zendesks and everyone in between OpenAI will do a customer support product if they continue doing new products not quite sure why that product road map is maybe it was going to happen maybe not anymore do you agree it's not investable?
I would not personally invest but I also think that like the opportunity for companies that are like established and growing a lot to go into that space is big, right?
Why doesn't 11 Labs do it?
We do we do customer support and the majority of our customers starts with customer support and we make an absolute ton of money on that. And the ROI for our customers that like use for customer support is insane. Insane.
Like what percent of your revenues customer support? Give it 20 30 40.
We don't share that. But I think like it works really well. It's like the fastest product in terms of revenues that we've ever had. It's just insane.
But I also think like you look at like all of our competitors like you mentioned Sierra, Decagon and all of the other ones. We power all of them. So we actually make money off like literally customer support with our agents platform but also we make money from our API foundational model layer across the board. So that's the good thing about 11 Labs that is like spread so widely.
How do you think about empowering your competitors?
I think like fundamentally like we've been very happy to actually support the entire infrastructure layer because we believe that like the opportunity in the market was like way bigger than anyone was expecting right boys and interactions with humans and human technology interaction like it is the fundamental piece that was missing in the entire puzzle. Now you end up having situation where like similar to I don't know like a Nvidia that was like competing with like powering everyone but also competing with everyone right like I think that's actually fine like it's okay that the market is big enough for multiple companies to coexist and then try to target the same customers. I'm not going to deny it I think like also means that like everyone needs to be aware that that will happen so when we launch our agents product I called the biggest platforms agents platform that were operating in our platform and I told them like guys FYI like in...
The next couple of months we're going to be launching our agents product. We're going to be competing with you, right? Just wanted to make sure that like you're okay with this. I wanted to make sure that like you understand that like we are going to this space. And the funny part was like all of the founders that I interacted with telling them this, they were like, yeah, welcome on board, that's okay, right? And it's good because like if you're able to actually be transparent with that and say like, hey, I'm going to be competing with you, but at the same time, I'm partnering, and in some deals you will win it, and in some deals I will win it, and in some deals we will partner together. That's when you end up creating a good ecosystem in parallel.
So I think you have to be unwaveringly aggressive now on BD and sales because I think you have an 18 to 24 month period where CIOs, CISOs are like, AI, we have to have it, we have to have a message for it. That won't last forever. Do you agree?
100%. And our team is dedicated to that. It's like everyone is like selling agents left and right. We've had the best quarter ever. It's been fantastic. But people are incentivized to sell agents because we know like we are competing with other companies. And sometimes those companies end up complaining to us being like, why are you competing with me when you're also like selling me? But the reality is like, hey, if I like you charge me like you pay me like $1, $1, and I could be charging the end customer like or you're charging the end customer $20, then I'm like, I mean, maybe I'm doing something wrong here as well.
I totally get that. One of my dear friends is Jason Lanin who built a game. And he built a game and he used ElevenLabs for the voice. And he was like, it was great. Amazing. It was such a beautiful product. So amazing. So amazing. It was expensive. And then people started using it. It became even more expensive. And he's like, this will be the year of substitution where you try a great product like ElevenLabs, it's amazing, and then you go, oh, it's expensive. And then you substitute for the cheaper, but 80% of it. Do you think that's true?
No. I think like there was a lot of like conversation last year and I actually and I've evolved my mind on all of these things but um and of course it will continue to evolve right but um a lot of people were talking last year about like oh open source models are going to take over like even on the AI voices space like you're going to get commoditized and so on and for a period of time I kind of believed it. I was like yeah I mean there is a point in time like open source models will take over like it will be fully commoditized great like we just need to continue going deeper on the product integrations full verticalization distribution all of the stuff great and what I ended up realizing is like even if open source models become extremely good at the same quality level that we have like it is the additional hustle it is the additional components that like make it very difficult for any organization so if you're a bank already you might want to play with the idea of what if I use open source models. The problem is that those open source models are not built for the scale that you would want, right? You would still need to maintain them. You would still need to actually make them operational. An ElevenLabs actually takes that away from you. An ElevenLabs agent takes that away from building the entire orchestration and managing it, right? Everyone can be building anything from scratch. It's just do you have the time and do you have the resources? And if the priority in the company changes, are you going to be able to continue adjusting and making sure that you get the right funding in there? And I don't think that is true. And we're seeing it all around the world. We're like, yeah, we could go with open source models. Excellent. Do it. You try to operationalize it and they've lost 3 months and then they come back.
So interesting. ElevenLabs is almost a bit like OpenAI in the way that or Anthropic in the way that it's like it's this foundational layer and you can go in any strategic product direction you want from that foundational layer. There's this LLMs, yours is voice, and the question is will I be claified so to speak, and then there's a question of will I be ElevenLabsified. You can do SDR agents with voice. How do you think about weighing that off in terms of where your product direction goes?
I think it's like it's an evolving question all the time and it's not that simple to decide.
Do you have verticalized sales teams?
We have verticalized sales team right now uh in specific markets, markets that are much bigger or markets that are much more mature. 100%. We have people that only do like BFSI, only teams that do like uh healthcare.
What does it take to do vertical sales teams and what have been your big lessons on what mistakes people make?
So I will give you an example like in India like I tried to implement vertical sales team too early and essentially kind of depressed the revenues for a single quarter and it was like an absolute disaster and then I realized like no.
What happened there then? You divided everyone and then it didn't work. Like what happened?
It didn't work because like a people were not passionate enough, b like it was like a lot more like it needed a long time to actually close like some of the biggest sales, and c like the team was way too small and like if you do it like early on if you segment too early then you fundamentally end up like screwing things up. So what I realized like I have this placeholder in my calendar every single week that is called pipeline construction and that pipeline construction um it's like similar to like portfolio construction that you're familiar with but for me it's like pipeline construction. Do I take a VC term and put it in like in my mindset? It's like how do I design the perfect pipeline for any given market and segment? And that's when you start thinking it's like actually you need like the liquidity but you also need the big whales. So each one of my account execs needs to have the ability of like closing big whales specifically on the enterprise segment but also having like liquidity in the pipeline so that they don't lose the confidence because people were losing the confidence.
So just towards me you have pipeline construction. What's the next subsequent step? You break out how many sellers you have in that market.
Correct. So how many sellers? Let's say we have 20.
Let's say 20 for any given market. Doesn't really matter. I mean we have a lot less than those ones.
Sure. Let's just say but like what do we do then? 20 average deal size.
I look into the average deal sizes. I look into like what are the numbers of companies in there?
What's the average deal size? 100K?
Depends on the market. Depends.
Let's just say 100K because it's easy for our maths. 100K. And then we're like, okay, if I need to hit, what's the math we're trying to get to? I'm just trying to understand.
So for me, the key item is like how many companies are in that market? How many like very complex enterprise in that market? And how do I create enough liquidity in that market to close deals every single week so that the team stays motivated and sees the challenges of closing deals?
Have you ever had a situation where you're like, the ramp I need to get on my sellers to get to my quota is too high? Yes, I'm not equipped enough to hit that quota.
100%. Government vertical is one of those ones where like we said, you know what I like and it was one of the big bets that I made this year was like I don't care.
Why do government? In the nicest way, hard sale cycles, tough to get in. You're crushing in other areas. Why do government?
Um fundamentally because one is very sticky. Number two is like it's a benefit that we make to society. If we can deploy agents for people to have better interactions with like the actual like government and government services, it's an absolute no-brainer and I don't care if I don't make enough money to justify it or like I lose money. It doesn't really matter to me. And then the three is like it's a hard industry to get in. So the moment you actually get in, then it's just like you never leave that industry. So fundamentally like when you start mapping those things out, you need to make the bets and one of the some of those bets will pan out really well, some other ones will not like pan out that well, but it's like literally portfolio construction like how quickly can I do some of these sales so that I can spend time also like in the difficult ones and my investors don't call me saying what the fuck are you doing? I'm going to fire you. Right? And I think that's like a fundamental idea of like portfolio construction and you do it at a country level. Each one of the countries that you actually want to be launching and that is a completely different concept than what the majority of like CROs are actually thinking these days. If you tap it into like AI agents for like uh go to market and other pieces then you have like something that is quite unique for your business.
So what did you do in India then? You verticalized too early, segmented too early, depressed for.
We went back to zero. We went back to like horizontal. Let's do horizontal. Let's allow people to do like much deeper and then we will start segmenting again when the right timing comes. And what ended up happening is like I would then we would then give them like I would then give them like a name account list based on um and negotiate with them based on like fundamentally like how I was thinking about like the portfolio construction and that worked really well like literally we lost a quarter we end up changing all of that from the ground up and then you could see like people starting closing deals in the first month and it was like insane because like it was day and night we had changed the culture in the team in the local market by getting it wrong. Let's go back to the basics. Let's redo it from scratch. Accept that we made a mistake and then move on.
Does brand dramatically reduce enterprise sales cycle when you can like no offense ElevenLabs in India I'm sure like a year ago not actually a very big brand. Versus in the UK and the US very big and much easier. Does brand reduce enterprise sales cycle?
Yes, 1 million%. And whoever tells you no it's like just lying that is a fact right and I think like the ideal scenario is like no one gets fired like the idea like do you remember like IBM right it's like no one gets fired for actually buying IBM it's like that is the ideal scenario for any brand it's like literally you become the safest asset in the block great it's a long way I think like the two companies that today have been able to make it is or three companies if you want OpenAI, Anthropic, full respect for them, Cursor. The three of them I think for me are like.
Cursor has killed enterprise unbelievably well.
Yeah, they've done super well and it's fantastic. Like those are the three like brands that are like blue chip organizations right now in like in the procurement like teams perspective and IT teams perspective. It's fantastic. It's great.
Everyone on Twitter, it's one of those really funny ones where everyone on Twitter is like and no one uses them anymore. We use Claude Code. You're such idiots. And it's like sure we're going to HSBC in Hong Kong like or wherever around the world like Barclays Bank in Swansea like I promise you they're using Cursor actually in their local dev shop.
And which is great like it just means like brand will help you solidify your position but also you need to like the bigger pro like.
But also the stickiness of these big enterprises like that's also the unwavering.
And it's not that easy to get into the big enterprises anywhere right it's not that easy you've done it you've done it with like the portfolio companies you know how difficult it is for them but once you start getting into the motion then fundamentally.
As a venture capitalist I've done it period. I have all of the companies we invest in we basically found you know we do all the work. Really? That's exhausting.
Would you do it with LPs? So imagine your LPs like it's exactly the same content like your LP is like the big multi-cycle. I mean seriously multi-cycle. One of our biggest LPs was a six year sales cycle.
But how do you create enough FOMO? How do you create enough brand to be able to actually like reduce that six years to like a lot less?
What percentage of your new sellers work out? The majority of them.
The majority of them. Yes. We're talking about like our churn rate on the sales side is actually not that big.
It's because like when I make an offer um I tell every single person like ElevenLabs is going to be extremely difficult, right? Extremely difficult. We are a hard company to work for because we have extremely high expectations. You're going to work like a huge amount of hours. I expect full commitment and people love it. So you end up filtering out people that actually don't want to have that type of life and I think that's okay.
Do you think it's possible to retain that at scale? You get these soft management people who are like oh no we need to filter down the messaging. Do you think that's possible at scale?
I think it is possible but it is possible if you try to retain like a smaller team and you implement the latest technologies to actually like become make everyone more efficient in general. I think like of course like the bigger the company then I think you get softer but you look at what Marc Andreessen was saying the other day and like companies are overstaffed by 25% and even more right like of course there is a trade-off between like overstaffing and understaffing so like if you understaff and people have like even in sales or like revenue you have too much pipeline they end up not closing nothing.
How many sales people do you need to hire this year?
We're about adding about like another 120 people more or less. So it will keep the entire sales team.
What's your sales team now?
It's 130 people. So, we'll keep it under 250.
Okay. But you're doubling sales team.
Doubling the sales team. Yeah. And the sales is going to grow much quicker than that.
And that's a lot to bring on board doubling a sales team.
What are the pitfalls that you need to avoid?
I mean, one is the dilution. Like if you're not upfront about the expectation, I think you end up diluting because people come with different expectations, they essentially like behave in a specific way that is not the way that you wanted. How many can you correct it? I went to a company the other day. But essentially there was the sales leadership board of all the reps and there were like seven reps and six reps had between 5,000 and 8,000 points and just points just think that and then the bottom one had 2,000 and the next best one had 5,000.
Pretty freaking clear this person is way off. Do you just cut it there and then or are you like give them time? It's been a it's only been a month.
Yes and no. Like I think for us like all of the stats are publicly open to everyone. So everyone knows how much revenues we make. Everyone knows like each one of the reps.
Do you have a leaderboard internally?
How do you do that to create that competition?
So people like we post automatically. We have a bot that actually will post automatically into the sales channel every single week a summary of like what percentage of quota attainment year to date for that specific quarter and all of that stuff and the forecast.
On a per rep basis. So anyone can see it anytime and if you're at the bottom then hey you're going to be able to see that you're on the bottom. At a practical level for me it's like it's beyond that. It's like that's one component, but if you have someone that is like building strategic accounts, then I'm not too worried. If someone is actually building like the right pipeline, I'm also not too worried, right? But they need you need to see the action. You need to see like how many meetings are doing. If I open a calendar and someone has a full calendar that is empty, I'm like what did you do this week?
Do you worry about demoralization or losing? I mean, dude, if I'm looking at the report and it's like Harry Bottom, next week, Harry Bottom, I'm like, oh fuck. You know, it's so mean. It's like public. You know, I was the fat kid at school and it was horrible because you had running races and that you're losing in public was so public because everyone could see how far behind you were.
Something nice. Sales attracts a different profile. Sales attracts the people that are much more outspoken, people that are much more extrovert, people that actually want to do something different, right? So by definition, you don't go into sales if you're not willing to take like the harsh feedback. If you're not willing to do.
You think most sales reps are softer today?
I think a very large portion of them are because they don't have the environment to actually like just push harder or because they've already lost the passion on that. They just want a normal job. And that's okay. Don't get me wrong, that's absolutely fantastically well. It is not what I'm hiring for.
What's your tell for the obsessed that wins?
For me? Like you can get it very quickly, right? Like people that have extremely high energy, that are sharp, that like are thinking quick and also like there's other people that like will be slightly opposite, but also like they're going to be very very deep. And it's like it might take them a little bit more time to actually like get there and those are like less obvious, but once they do it's just insanely good, right? But like if people are like sharp and they're energetic and passionate and they come across as like someone that really wants to win and you can ask them like hey like pitch me ElevenLabs as if I was I don't know like a fish whatever it is like it doesn't really matter right like then you get a sense of like how quickly they're thinking and how much passion they have like how much actually like they research the company who are they thinking all of that stuff like you end up having in a very short conversation like I don't need to spend more than 20 minutes to know if I want to hire someone or not. And I will tell you like the majority of times I end up putting my feedback in Ashby. We use Ashby internally. I end up putting my feedback in Ashby during the conversation. By the middle of the conversation, I have my feedback and I'm one of those like crazy guys that like write a lot while I'm talking to someone. I hate when it gets recorded. Because then people end up behaving in a very specific way versus actually like being themselves. So I write a lot while I'm interviewing people and then I have my summary and in parallel I'm writing and I'm doing my summary and that's it and it works really well for me.
And why do you hate the recorded element? So for me all of our calls in the launch fund are recorded because it's important for us that we can share them and I can ramp up without being in the room.
My personal take is like interviews like people behave differently if they think that they've been recorded versus if they think that actually they have freedom to say whatever they think is best. In sales we are always like ask everyone to record it and we have like it's mandatory for everyone.
We use Gong and then automatically fills out our like Salesforce and so we try to automate as much as possible. And by the way like Lovable has the best CRM that I've ever seen. Those guys have really smashed it. Like shout out to them.
Yes. Like so Lovable ended up building their own platform where like.
Can you imagine if they didn't? I mean that would be.
We should be building our own platform as well but like we're not.
Do you buy that? Do you buy the SaaS apocalypse of like you will customize your own software entirely in the future?
I think like for like core application core things yes so a CRM I would love to customize it. I would love to actually build it myself. Even like it doesn't really matter. You don't have to spend that much time. It's just like a pool of data.
We haven't done it. We use Salesforce. But for some other applications like I mean why wouldn't you do it? If it fits better in your entire ecosystem of applications if it's easy enough then maybe you should. Would I build an entire Google Drive or a Gmail? No, I wouldn't. Like it wouldn't make any sense. But for a good amount of applications, for sure. If I was like a procurement guy, I would be building a procurement software for myself.
So you think the SaaS apocalypse is overexaggerated?
I think there is a very large portion that is overexaggerated. But I think like there is a real fact that like people will end up building their own applications and I think that's key. I think it's why not.
What would you like to do with ElevenLabs today that you're not able to do because of lack of budget?
Oh, we've never actually like put any constraints on the lack of budget. Like if you want to do something budget is never going to be a problem and that's been since the beginning.
What is the problem? If you want to do something and you're not allowed to. Why would that be?
It might well be because you haven't proven with a test or experimentation that that is the right thing to do right now. So for me it's like you want a budget, you want what do you want 100K, you want 50K, you want 200K to actually prove that things do it. Don't ask me for a million dollars and ask me for like dedicate an entire team to it. Don't ask me to actually dedicate six months of your time for that specific thing. I'm not going to do it. But if you do it on the side and then you prove me that like you can actually make it work and I start seeing some results, we will scale it and we will give you all of the budget that you want.
You're the CRO and you said that it's so interesting about kind of I want to see the data before I scale it. You now do paid and you do paid but you know on an F1 car. Remind me of the team.
