Warmly’s unconventional growth strategy

How Max plans to go head-to-head against competitors that have 100x their marketing budget

Author

Manuel Bleve
February 02, 2024

In partnership with

Two weeks ago, Maximus Greenwald, the CEO and co-founder of Warmly, announced on LinkedIn that he was going to start building in public. And by building in public, he didn't mean simply sharing their financials. He meant sharing EVERYTHING going on at Warmly — revenue, investor updates, 1-1 calls with his team, personal struggles, Slack screenshots, and so on.

The result? Over 200,000 people reached, over 1400 reactions, hundreds of comments, and most importantly, their inbound demo requests doubled overnight. In this Founder Secrets episode, we will discuss the reasoning behind this decision, as well as many other lessons and mistakes from building and scaling Warmly.

Lessons learned after five pivots

When looking at Warmly’s growth chart, it looks like they instantly found product-market fit — they launched the product in November, immediately started generating revenue, and have been steadily growing since then. But as the saying goes, "it takes ten years to be an overnight success."

The truth is that Warmly is the result of an iterative process of quickly developing business ideas and pivoting based on market response. Looking back, it's interesting to analyze previous products and understand what didn't work.

Tinder for co-founders: In 2019, Max created a Tinder-like app to match potential co-founders, but this idea didn’t gain traction because, as he says, "nobody wanted it or was willing to pay for it."

Tinder for salespeople: In 2020, they shifted focus to help salespeople connect with prospects by matching people based on what they could offer and what they needed. The idea was popular, but in Max's own words, "It was something people wanted but nobody would pay for it."

Job change tracker: In the second half of 2020, they quickly pivoted to a tool that alerted salespeople about job changes within their customer base. "People wanted it and were willing to pay for it," says Max. However, they faced scalability issues in scraping LinkedIn so they decided to discontinue the product. Considering what happened to startups building Twitter tools when Elon decided to end free access to their API, it's wise to be careful if your entire product depends on external platforms.

Zoom integrations: In the next 18 months, Max experimented with developing apps for the rapidly growing Zoom ecosystem. While their apps gained traction, Max realized that the problem they were solving and the size of the market were not significant enough to build a large company around it.

After three years and many pivots along the road, Max developed Warmly, a tool that provides companies with warm leads on autopilot. Through a combination of IP addresses, browser fingerprinting, and cookies, they identify individuals and companies visiting your website and automatically reach out to them using AI. The main lesson learned from these 5 years in startups is, of course, to build something (a lot of!) people want (and that they are willing to pay for).

The importance of hierarchy

One of the main factors behind Max's success was that they were moving fast, tremendously fast. Indeed, it takes time to find product-market fit, and it requires continuous testing and iterating. However, if you don't move fast enough, you will either exhaust your resources or burn out. The faster you iterate, the easier it is to get to product-market fit.

"Most startups don't move fast enough," Max notes. The more a company grows and the more stakeholders are involved in decision-making, the easier it is to get stuck. According to Max, the key to solving this problem comes down to having a well-defined hierarchy of decision-making. “Sometimes I try to please everyone,” he notes, “but sometimes I have to say 'hey look, this is the decision. I'm going with it. I want you to disagree and commit.'"

It’s a leadership style built on a foundation of pragmatic urgency. "I would rather make 10 decisions fast and get one of them wrong,” he says, “than make 10 decisions slow and get all ten of them right.” This approach allowed Warmly to pivot quickly, adapt to market changes, and stay ahead of the curve. And if you are passionate about speed and decision-making, I highly recommend reading about Parkinson's Law of Triviality.

💡 From Wikipedia: The law of triviality is Northcote Parkinson's 1957 argument that people within an organization commonly give disproportionate weight to trivial issues.[1] Parkinson provides the example of a fictional committee whose job was to approve the plans for a nuclear power plant spending the majority of its time on discussions about relatively minor but easy-to-grasp issues, such as what materials to use for the staff bicycle shed. This happens because a reactor is so vastly expensive and complicated that an average person cannot understand it (see ambiguity aversion), so one assumes that those who work on it understand it. However, everyone can visualize a cheap, simple bicycle shed, so planning one can result in endless discussions because everyone involved wants to implement their own proposal and demonstrate personal contribution.

The evolution of Warmly sales organization

According to Max, most of Warmly's growth is largely due to their robust outbound sales efforts. However, the journey was not that straightforward. Like many technical founders, he was initially reluctant to step into the sales role. "I was a product manager at Google," he recalls. "I thought I was a product guy."

This reluctance led to a critical early mistake: hiring a salesperson before achieving product-market fit. In his own words, "I was so bad at sales that I thought if I just hired a salesperson they'd make the problem go away." And here is why early-stage startups shouldn’t hire for sales and marketing roles too soon:

  1. If you haven't found product-market fit, the new hires will have a really hard time understanding what to sell and to whom (trust me, I've been there!)

  2. It bypasses a crucial learning phase for founders. Trying to sell your product to customers for the first time is not just about growth, but it's an invaluable opportunity to understand their objections and needs directly.

  3. As a founder, you have a unique advantage during sales calls. As Max notes, "I could promise random things on sales calls that no seller could. And the product was so early that I kind of had to do that." And this flexibility to customize and adjust features on the fly is not only about making the sales but also about building your products based on direct customer feedback.

Recognizing this, Max decided to hone his sales skills and challenge himself to meet sales quotas. To his surprise, he did. "At first, I thought sales was hard and weird," he says. "But I realized that the ability to convince people, understand the psychology of their objections, and work through them is beautiful." So after hitting sales quotas for a few quarters, Max hired junior reps and subsequently a sales leader, laying the foundation for scaling Warmly's sales operations.

According to Max, one key factor behind their sales team efficiency has been the strategic use of a sales assistant. To amplify the impact of his sales team, Max employed a virtual assistant to handle manual tasks, such as writing follow-ups and updating the CRM so that he and his team could concentrate on the more strategic aspects of the job. He wrote in-depth about this in this LinkedIn post.

💡Focus on what matters: Hiring a sales assistant was a significant turning point for Warmly. In this way, Max and his team could focus on the things that really matter. This doesn't just apply to sales. If you are a founder, you will find yourself dealing with compliance, HR, finances, and dozens of other things that won't let you focus on what matters, which is working on your product and growing your revenue.

But what if there was a way to delegate all the boring stuff?

Probably the smartest thing you can do as an early-stage founder is to partner with Levy. Levy acts as an outsourced COO or Chief of Staff (at a fraction of the cost!), saving founders 10+ hours a week by managing all the boring but critical back-office operations. A good friend of mine works there, and they are already trusted by organizations like Khosla Ventures, YC, and Hustle Fund. If you want to focus on the things that matter to grow your startups, you should give Levy a try!

*this is a sponsored callout, but we like Levy for real :)

Building in public

After successfully establishing a robust sales organization in 2023, Max has now shifted his focus to an equally crucial aspect of growth: brand building. The reason is rooted in a fundamental marketing truth: only ~5% of your potential market is ready to buy at any given moment. Therefore, regardless of how compelling your cold emails are or how good your sales reps might be, if someone is not ready to buy, they will likely ignore your outreach. This is where brand building comes into play—to capture the attention of the remaining 95% of the market so that when they are ready to buy, your brand is the first that comes to mind.

💡 The 95-5 rule: If you want to read more about the role of brand building and the 95-5 rule, I highly recommend reading this research on advertising effectiveness from the Ehrenberg-Bass Institute.

The problem, though, is that brand building poses a unique challenge for startups, especially when competing against rivals with significantly larger marketing budgets. In a David-versus-Goliath scenario where you make $1M in revenue but your competitors have a $100M marketing budget, it’s really difficult to compete by playing the same game.

That’s where Max's idea of building in public comes in: by publishing content that people genuinely want to see, they can reach a B2B audience comprising founders and salespeople at no cost. The strategy is simple—Max announced on LinkedIn that he was going to go “100% CLEAR,” sharing everything from metrics and revenue to the more personal challenges.

"There are going to be some downsides," acknowledges Max. "Maybe a customer will poach a deal. We could mess up and post something we shouldn't have. And that’s actually already happened. I posted a live meeting between myself and my head of sales, we mentioned somebody by name, and they got really upset. I had to take that post down and edit it."

Despite these risks, Max is optimistic about the benefits of this strategy. "I think that our brand will be a lot more known out there, which is important for our business. And I think that will lead to us punching above our weight in terms of getting name recognition and market share," he explains. And as mentioned previously, the strategy is working. Max's announcement reached 200,000+ people, got over 1400 reactions, hundreds of comments, and most importantly, their inbound demo requests doubled overnight, as Max shared on LinkedIn:

*****

To wrap up, Max leaves us with one last piece of advice about the importance of writing and storytelling. "Every week for the last four years, I've written a startup diary entry for myself," he says. "I write down what happened, what I'm learning, and my thoughts. I do this because I believe that the best founders are storytellers. They can sell a vision to investors, customers, and employees. And the secret to being a better storyteller is to write as much as you can. The more you write, the better you will be at clarifying your thoughts and improving your sales and marketing." By regularly documenting his journey, challenges, and victories, Max has refined his ability to articulate Warmly’s vision and mission. If you want to follow along, you can find Max on LinkedIn.