Alex Levin - Co-Founder & CEO of Regal: Accelerating Early SaaS Sales, Transitioning Out of Founder Sales, and Hiring Your First Sales Leader

Alex Levin  00:00

Let's say you're a person running a project at a company to improve the contact center. If, while you're doing it, you make yourself indispensable and part of every process, guess what, I literally can't promote you. Because you've made yourself indispensable and part of every process.

Callan Harrington  00:18

You're listening to That Worked, a show that breaks down the careers of top founders and executives and pulls out those key items that led to their success. I'm your host, Callan Harrington, founder of Flashgrowth, and I couldn't be more excited that you're here. Welcome back, everyone, to another episode of That Worked. This week, I'm joined by Alex Levin. Alex is the co founder and CEO of Regal, a leading cloud contact center specializing in customer engagement. Having secured forty-two million in funding from Emergence Capital, Regal has attracted over 200 high consideration consumer services and product companies, including AAA, Angie's List, and SoFi. Before Regal, Alex was the SVP of growth at Handy, where he was an early employee and grew with the company through their acquisition by the publicly traded company, Angi. The first thing that jumped out to me about Regal was how fast they've grown. They went from zero to three million in ARR in their first year, and then three to ten million in their second year. We dove into this quite a bit. And Alex gave great insights into the transitions that they went through to continue this growth rate, including the transition from founder sales to professional sales, and when to hire your first sales leader. It's no surprise, when you have a growth rate like this, that they were able to raise a thirty-eight-and-a-half million dollar series-A. Alex shared how he thinks about deploying venture capital and walks us through specifically how they have deployed it at Regal. Now one of the areas that I thought was really interesting was how they unbundled their product to accelerate early sales. This put Regal in a great position to win bigger deals down the road. And I thought it was a great approach for any SaaS company selling an enterprise product to an established market. So with that, let's get to the show. Alex, I'm excited to have you on the show. I want to kick this off, tell us about the time that you tried to sell Ikea furniture.

Alex Levin  02:42

So it's a great story. I was working for a company called Handy, which is now part of Angi, which is the largest home services provider in the world. And we had started by doing very simple services online. So the idea was, can we get people to buy, you know, a cleaning, or handyman service, or moving service online, and we're seeing success in sort of the simpler services. And we're starting to look for other services we wanted to offer online. And we had a laundry list of these from laundry all the way to you, know, more complicated things like remodels. But somebody on the team was having trouble buying Ikea furniture, because at the time, this was maybe ten years ago, if you went and tried to buy Ikea furniture online, they really made it hard. And you really had to go into the IKEA store to buy the furniture. And certainly, if you could find a way to buy it online, which wasn't available everywhere, they just delivered in boxes. And so like, this box showed up at your house, and then you were stuck putting it together yourself. And, you know, we had this theory that there could be an interesting new business where instead of us trying to sell a service to you, like a handyman. So you would, let's say, buy the handyman service from us and buy the product from a store. What if, when you went to buy the product, so whether it's a fan or IKEA or whatever it is, the service was offered with it. And so it's a you know, the first business we had we call service-led, meaning you came to us for the service. This business we called product-led. So we knew that, you know, perhaps it would be good to make a partnership directly with IKEA, and we emailed IKEA, and we never heard anything back. So we said okay, we're not going to wait for IKEA. Let's go and test this. Let's test this; test the hypothesis that, you know, product-led sale is actually a great way to sell services. And so we went and took the most popular IKEA products, put them on a Shopify site, and there was an option where you could buy it with the installation, or you could buy it just with the delivery. And I think we priced it at like 150 dollars an installation, something like that. Unit installation and assembly and all of a sudden it started selling. This is New York only, and it went like gangbusters. So at the beginning, you know, we literally went and like, rented a truck, and like, some of the folks on my team and I would like, go IKEA every day and pick up the furniture, and like, go and assemble it. Very quickly like, we outstripped ads, so we hired teams of people to do this, we had warehouses, like mini warehouses in New York, that we'd like, put things in, while we sort of decided what to do with it, and like, where to bring it to. And all of a sudden, we were selling 500 K of furniture a month, which is a lot of furniture, you know, and installing this every day. And you know, I have these photos where there were days where, you know, the team would call out or something and like, an engineer or I would like, get on the truck and like, do the full day with a truck, you know, bring the truck home back to the parking lot at like midnight or something. You know, it was hard, that was much harder work than what we were doing, for sure, in the office. But we turned this into like, a pretty big business. I can't tell you how hard it is though, to, without official permission from Ikea, be buying $500,000 worth of stuff from IKEA in New York and delivering it and installing it. And so eventually, it got to a place where, you know, we realized this is a great business, but we decided the insight was that you had to be product-led. And you have to find a way to do a product-led service sale. But we couldn't continue doing this thing, whatever you want to call it, in the gray market, on the side. It just was causing too much trouble, so we shut it down. But you know, it's just a an incredible story, where you find a gap in the marketplace where, you know, wasn't being served. And we sort of brought this in, and like, it just exploded on us. And then eventually, we actually went to all the largest retailers in the world and signed up relationships with Walmart, Wayfair, Target Lowe's, Costco, to be their official installation provider, and that became a huge part of Handy, and now Angi's, business. I will say we never got IKEA as a partner. And it's hysterical. Like it was such a good idea that in the end, IKEA bought one of our competitors, this company, TaskRabbit, to start installation service. So instead of partnering with us, they actually went and bought a company to do it. So I take full credit for IKEA buying TaskRabbit, because it was our idea originally. But really, it was a fun time.

Callan Harrington  07:04

Well, and a couple of things. One, I remember distinctly how hard it was to buy online. Before Columbus got an Ikea, everybody had to make the trip to go down to Cincinnati, because there was one in, I guess, a suburb of Cincinnati. Everybody made this trip going down there. And then Amazon, you could buy some stuff on Amazon, and that was like infinitely better to do it that way, than it was to buy from IKEA. And when I'm hearing the story, I mean, I think that it makes total sense that they- I actually didn't realize they bought TaskRabbit, but it makes total sense that they would. That service was tailor-built for IKEA. If there's any one thing that I want to buy that I want to have help with its IKEA stuff, because it always takes all day in order to build that thing.

Alex Levin  07:48

Yeah. You know, by the end of right when we were selling Handy to Angi, over 90% of our new customers came through this product-led channel. So instead of us having to go and acquire a customer who was looking for a specific service, we partnered with these major retailers, where the customer was already buying a fan or an electrical outlet or whatever, and was attaching the service to that, and we were getting that new customer for free. And then we could cross-sell the customer other services, so it completely transformed the business by moving from service-led direct model to a product-led indirect model. Were you leading that partnerships program. I know you were SVP of growth at Handy. Were you leading those partnerships with those different major retailers?  Yes. So I spent a lot of time in odd places. I like to say that all of these retailers put their headquarters in the city that their first kids, you know, got married, and then, I don't know, whatever. They all picked these random little towns, and so we're flying all over the country meeting with these retailers. I think people like hearing about Walmart the most for some reason. I think Walmart is like, this opaque world to most people. It's a fascinating organization, like they have a very clear perspective on what makes them different, in that they want to drive the price of each good down, and they want to offer the best possible price to their customers. And I like that, you know, that's their strategy. It's very clear. Costco I also love, and that they have a very clear strategy, which is that you as a customer pay an annual fee, and then every product that they sell, they mark up 15% They have- their sellers, their buyers, have no decision in the in the margin. So if you ever want to buy a diamond or a TV, go to Costco, because you know, the max margin, they're gonna make is 15%. So it's a very good place to buy for a consumer. But that makes it so that it's a very easy strategy to execute. They also make sure every support ticket goes to the buyer of that product. So if you're buying and selling TVs at Costco, and there's a complaint about the TV, it comes to you, not to a support team. So it incentivizes you to have as few skews as possible that are as high quality as possible, because you don't want to get those calls and deal with them. So again, it's a very specific way of approaching that retail. I think the retailers that have gotten lost over time, not necessarily ones we work with, but in general, the ones who have gotten lost, are the ones that are kind of in the middle and are not clear what their strategy is. And that's just a failing proposition.

Callan Harrington  10:12

Costco is such an interesting example as well. I was listening to an interview where Charlie Munger was talking about how Costco, they don't have to hold on to inventory at all. The second they get in, it's almost out, which is insane, because, you know, typically, if you've got inventory, you have to have cash, you have to manage that float, and everything else. The fact that they can get it out, because they have a fraction of the skews that most other competitors have, I think is super interesting.

Alex Levin  10:37

Yeah, and also, the smart ones pay very slow, right, so like they're on 90-day, 120-day payment terms, so that effectively, they don't have a negative cash flow.

Callan Harrington  10:47

So speaking of Handy, I'd like to spend a little time here. So you were at Handy, and you went, you joined right around, as I understand it, a million, and were there a year and a half path to exit. One of the things I'm most curious about is, because you joined so early, and you stayed so late, and you continued rising up the ranks there, how did you have to evolve personally? Because I know I've been part of this many times, and I'll just talk my most recent startup, there was a pretty mass exodus, once we got acquired, of people that left right after it, because you see, you've got startup people, scale-up people, and then you've got, I'll just say, kind of large company people. But you really went across all three of those. What did you have to do personally to continue that growth path and stay active in those positions?

Alex Levin  11:32

Yeah, look, I mean, I'll start by saying, the founders of Handy, you know, my bosses, paid more for my education than my parents ever did. You know, I made a lot of mistakes in my time there, some big ones even. I like to think that I gave back more than I cost them, but certainly, you know, I made a lot of mistakes and learned a lot. So I think for me, the incentive to stay for so long was to learn, and as long as I was continuing to learn and see new opportunities, I was happy to stay. I think, like, from the very beginning, the handshake deal, you know, I made, and Rebecca made, with the founders is, hey, you know, we want to come work for you guys. And we want you to put us on whatever is the most challenging, you know, important problem for the business. And by and large, like, you know, they held up their side of the bargain, and so we were constantly doing different things, learning about different parts of the business, figuring out different types of challenges. And so that's what kept us very engaged throughout the lifecycle dependent no matter what the size was, and I think one of the things we learned from them that I try to pass on, is you have to stop thinking about success as running big teams. At certain big companies that, you know, they talk fiefdoms, literally, and like, the more people that work for you, the more important you are, that, you know, or even the more revenue in your P&L, the more important you are. You have to forget that. What you need to start thinking about is, how do I make myself entirely replacable. So the most valuable people at a company are not the ones that are managing big parts of the company. They're the ones that are able to go make themselves replaceable. And so I'll give you an example. Let's say you're a person running a project at a company to improve the contact center. If, while you're doing it, you make yourself indispensable and part of every process, guess what, I literally can't promote you. Because you've made yourself indispensable and part of every process. On the other hand, if you come in, and think of like a consultant, you say, what are my goals, what am I trying to do, I'm going to do it myself first, and then I'm going to use either technology people or, you know, some other method, process, to go and automate as much of that as possible, so I am not indispensable. And if I were hit by a bus, it would all continue on its own without me. What that allows is for you to then go and do something else or for your boss to go and promote you. So instead of thinking, how do you make yourself the boss of more and more things, think about how do you solve a problem and extricate yourself from it? I think, at first people don't want to solve problems. Eventually they learn how to do that, but the hardest part is learning how to remove yourself from it without it all falling down. And as you learn how to do that, I mean, that's a fantastic skill, you actually become much more valuable to the organization. Because, you know, sometimes the solution may be hire a different person to run that team. Sometimes the solution may be bring in engineers to build a product. Sometimes it may be document a process, teach other people, but you have to be able to do that for a business to be able to grow. And so I think both Rebecca and I were able to do it successfully, as we went through the business, and it meant that we could continue to be valuable to the business at whatever stage it was at.

Callan Harrington  14:34

Yeah. So what I'm hearing you say is, you almost have to put it in position where you're developing systems and you're developing people to be able to take you out of that position.

Alex Levin  14:45

Yeah, look, and I'm not saying from the beginning do that. Like when you're in a new role, do it yourself first. Like one of the rules we have at Regal for managers is we want at least 20% of their time to be doing independent contributor job on their team. Because that way, if you're assigning people stupid work, well, you have to do it too, and you figure it out pretty quick. Or if you're going to go do something new, you have to do it too, and you'll help figure out the process. So we do like managers to have a pretty significant percentage of their time actually doing something, even, you know, as you grow. So we're- I'm not saying like, automate everything immediately. Go do it yourself, but once you have and figured it out, then you have to start getting yourself out of it.

Callan Harrington  15:23

I 100% agree with this. And this is always very apparent on the sales side. Oftentimes, you see somebody that's in a sales position, that's doing really well, maybe they get promoted to manager, but a lot of times when they get promoted to manager, they make it so dependent on them, it's hard to move up. It's because they feel that if this person moves, then will never replace this.

Alex Levin  15:46

One of the fascinating things to watch in very high-growth businesses is the interplay between sort of people and process. So you know, what I think about, you know, in high-growth situation is to solve this problem, is the solution set in you need a better person or good person to go solve this problem? Or is it you need better process? And the mis- you know, there are mistakes both ways, right? So, if you're at a big enough scale, and you try it, but you try to solve it with a person, sometimes that fails, because really you needed a process. On the other hand, like there are some companies that put in process way too early, and it slows everything down. And they would have been much better off putting in a smart person, and dealing with all the things that weren't quite right. I mean, another way of looking at it is like, you know, people sometimes talk about, how do you prioritize your day? Like, do you just do what's in your like, email inbox, and like, kind of try to fix the broken things on the edges? Or do you have a clearer perspective of like, what is the goal you're trying to reach? And you make sure that you're solving that bigger goal, even if there's a bunch of messiness on the edges.

Callan Harrington  16:44

What's your process for that specifically? What does your prioritization process look like?

Alex Levin  16:48

You know, I think within the Regal, and we did a similar thing in past companies, we try to be clear about what are the priorities for the business, and we try to make sure that everybody can articulate those. So you know, to some extent, it just means repeating yourself quite a lot, until everybody understands what those business priorities are and why they are the priorities. And we try to teach people about a two-by-two matrix between what's important or not important, urgent and not urgent. And anything that's not urgent and not important you should never do. But, you know, and everything that's, you know, urgent and important, of course, you do. But things that are in the other two quadrants are the hard ones. And you have to learn how to prioritize and understand like, which things you're going to do first and which things you're going to abandon. Personally, within my life, I use the calendar to do a lot of this stuff. So I color code my calendar, understand, you know, how much time I'm leaving for different kinds of things, depending on what my priorities are, and then every month, I'll review that and make sure that I'm spending time the way I want to be.

Callan Harrington  17:41

Do you ever take a week or two and track your time? Like actually track your time, like with a time tracker, or anything?

Alex Levin  17:47

You know, I was going to say, I use my calendar, so every week is tracked. Like, literally, you can look at my calendar, and see the colors, and see exactly what I'm spending my time on.

Callan Harrington  17:56

How do you prune that? Or do you? Where, if you see some things where it's, as an example, it's like, I spent X hours on something that is a medium priority initiative, or I shouldn't be doing this, I should be delegating this. What is your process look like for that?

Alex Levin  18:12

Yeah, like I said, every month, I'll sit down and look at it, and make decisions about whether I think that I'm focused on the right things, you know, and you know, if I need to drop something, or add something, or move something, and then I'll go and do that. And, you know, it's not that I get it right every time but it certainly is an intentional process.

Callan Harrington  18:28

I think it's probably one of the most underrated things that you can do, is actually, whether using a calendar, I actually use a time tracker. I think I read The Effective Executive, Peter Drucker's book, and he talks about this. And it is, it's the most eye opening thing I think that I've done. But I looked at what are you doing, like you are wasting hours in a week. And until you know, until you actually objectively track that, it's so difficult to know where your time is actually going.

Alex Levin  18:56

Yeah, and look, I've seen all these- there's, you know, some people like calendaring everything, other people like lists. I saw somebody recently built themselves a little app. I think they call it CallApp. So instead of you scheduling on their calendar, what they do is they ask you to tell them sort of when you're free, and then they prioritize all the people that want to talk to them in the way they want to, and call when, you know, when they can. And it allows them to make sure that they're within anything they need to do, prioritizing the most important things constantly, instead of just doing the thing that happens to be on the calendar there that day. The idea is that kind of is like what Hollywood agents used to do or something. But it's a funny concept to like, get away from the calendar, because it's the calendar forces you to do something that was pre scheduled instead of what was most important that moment.

Callan Harrington  19:41

Interesting. Yep, I'm gonna look this one up, because that sounds super interesting. So you mentioned Rebecca a couple of times, your co founder. One of the things that I would love to dive into is, as I understand it, you both knew that you wanted to found a company, but you didn't necessarily know right out of the gate, or you didn't really think right out of the gate, that you wanted to found a company with each other. What was that moment? What was it when, wait a minute, we should be doing this together? What did that look like?

Alex Levin  20:08

Yeah, I mean, I'll put it slightly differently in that I knew that I wanted to start a company with Rebecca, it took me maybe a year or two to convince her that like, now's the time to go start a business. And I think there's a lot of things, you know, what's going on in your personal life, what's going on at work, you know, do we have the right idea? So it took some time. But you know, certainly, I knew the day that I convinced Rebecca that we should go and do this, that it was going to massively improve our chance of success, by having both of us working on it instead of just one of us. And, you know, we have a good partnership, I think. Like, from the beginning, the decision was like, was always to be 50/50 in everything. And I think from the beginning, we were open with each other about what our goals were like, what was success? What is real financial success? What is real non-financial success? You know, what do we want out of a company? If this works, what do we want to do next? So I think, like, being very clear upfront with your partner is important. And then as we sort of built the company, you know, we continue to give each other feedback, you know, at the beginning, on a much more frequent basis. Now, at the very least on an annual basis, if not biannual, to make sure that, you know, we continue redirecting each other and in the areas that we think that like, you know, we may be drifting in the wrong direction.

Callan Harrington  21:21

What does that process look like? Well, let me ask you this: is it like a structured process that you're doing that? Do you have a framework that you're using in which you're doing that? What does that look like?

Alex Levin  21:30

Well, so, at the very beginning, there are a lot of frameworks for, you know, sort of founder dating, or whatever you want to call it. There's a bunch of people that have written lists of questions. So I'd highly recommend going and looking one up. You know, it's a bunch of questions about personal life, professional life, goals, things like that. So I definitely recommend doing that, so you don't find out six months in that there's a disagreement on something. You know, if you haven't worked with somebody full time in like a normal office environment, go do that for a little while, before you go, you know, start a company together, or go do some kind of project together for a little while and learn how each other work. You know, I think, obviously, the best is if you could work together for years in advance, but at the very least go do some projects together. In terms of like a framework around giving feedback to each other, we have a framework internally that we use, in terms of giving feedback, where we do both a 360 degree feedback for folks. And then we do upward feedback, you know, and like, manager feedback, and so we have that, like establish feedback primarily around the idea of what are the values of Regal and like, how somebody's doing on those. And you know, are there certain things you want the person doing more of or less of. And so we focus it that way. So Rebecca and I have done this for a long time, and so have a more perhaps informal process, but it's effectively the same thing. Like, you know, how are we on those values? And then, from key company initiatives, like how are we doing and are things that we should be doing differently?

Callan Harrington  22:53

Gotcha. So what I'm hearing is, this was important from the get go. I love that idea on going to do a project with somebody. I've never heard that before. Typically, it's do the founder questions, you know, make sure you're really clear on expectations, which a lot of people won't even do that, and I would highly recommend doing it as well. But doing some sort of project together is a great idea, because that's going to really put those things to the test.

Alex Levin  23:15

Why do startups fail? Founders break up or you run out of money, that's why startups fail. So like, you know, at the very least, like, get- you know, make sure that the founders are not going to break up, make sure that that's not the one that's going to cause it, you know, on the run out of money, that's a whole different topic. Like, that's a much harder one.

Callan Harrington  23:32

So you've got your co founder, you've settled on the idea, and you've officially launched Regal. Now, here's something I am super curious to dive into. As I understand it, in the first year, you went from zero to three million, in the second year you went three to nine million, and then in the third year, you're on track to double that again, is that right? Zero to three million?! I know, you had some B2B experience, because of the partnerships and stuff that you were doing with these very large retailers, which is, you know, pretty much an enterprise sale really, in how you were doing that. Zero to three million is super fast in the first year. What led to that? What were some of the things that were like, okay, this works, this really started to work for us. What did that look like?

Alex Levin  24:15

Yeah, I mean, so start with, some of its philosophical, you know, a lot of companies spend their first year trying to build an MVP before they ever show it to anybody. That's just not how we wanted to approach it. Like, to us like it made a lot more sense to immediately be in front of customers. And so before we built anything, we had little images in a deck that we'd be showing customers to get feedback. And it helped us understand which types of customers cared about those and which ones didn't. You know, it helped us understand which features we had to build first, which ones we didn't. Helped us understand how to build features. So we were selling, signing contracts before there was any product, and then building a very basic version of the product for them first, and getting a lot of feedback on it. And, I mean, completely changed the things we built first, completely changed how we build features, so it was a huge value. I think the second part is that at the beginning, had a strategy specifically to try to accelerate how fast we got into organizations. We sell contact center software. Historically, that's a twelve to eighteen month deal cycle for a decent sized deal, because you have to rip and replace the current product. And they're typically on a two or three year contract, so it's a slow process. We didn't want to wait for that. And so what we said is, look, we do have full software to replace somebody's contact center software, and help them drive more revenue from their customers. But we're not going to force them to rip and replace from day one. So if we meet somebody, and you know, the metaphor I used for a long time was, you find somebody who's in their car on the side of the road with a flat tire, and you have a car dealership. Do you just come in and say, hey, why don't you buy a new Ford? Or do you say, hey, let me help you change that tire? So our strategy was, okay, even though I have a car dealership, I'm going to help you change that tire, build good rapport, so that one day when you want to buy a new car, you're going to come to me first. And so from the beginning, what that allowed us to do was unbundle our product offerings and help them with, hey, you know, you want to get more people entering, here's a set of things; hey, you want to have better on call conversion, here's a set of things; hey, you want some A/B testing, here's a set of things. And it allowed us to sell much faster, to move much faster. The third part of what made grow so fast, it's probably a bad thing, we overpriced at the beginning. And it's just, we were trying to figure out the pricing. And at the time, it was a very new market, and the ROI supported a higher price. But at the very beginning, that was fine. Now like we've brought pricing in line with where the market is. So that helped the revenue grow faster, but ultimately, it was a negative thing. I'd also argue that sometimes we were guilty of selling an unbundled product. So let's say selling somebody SMS-only in a situation where they were never going to ever buy the whole product. So it's a very funny thing. You have somebody who wants to buy something you make, and so you sell it to them. But now we've realized that was never a customer we should have sold to. Like, we should have said no. And so all those things helped us grow really fast, but at the same time, now, it's not like we do all of them. So we're much more regimented about making sure that if we're going to unbundle and sell them an individual product, they could buy everything. You know, we're much more, you know, on pricing, we're much more sophisticated on the pricing. You know, I will still say, I think it is a- you know, we're lucky we're in a market where there's a lot of need, a lot of opportunity, and not great technology products. And so that enables us to serve our customer well and keep them happy, and, you know, without there being much competition.

Callan Harrington  27:44

I want to circle back to that, the second one that you mentioned, and you were going in there and selling- Was it that you were doing POCs, or proof of concept, or pilots with a small group and then landing expanding? Or were you creating technology that could first layer on top of what they're currently using, and then, because you're in there, and you're providing value, you're then able to upsell into taking over their whole call center suite.

Alex Levin  28:13

We tried both, but we found in our market, the latter worked much better. So instead of trying to like, take a small number of agents and test, we would say, okay, you have the contact center software that they're dialing from, but do you have a tool to figure out when to dial? Do you have a tool for SMS? Do you have a tool for branded caller ID? Do you have a tool for AV testing? And depending on the challenges they had, we knew they didn't have tools for any of them, but depending on the challenges they had, we'd sell one of those. And it was a, you know, an add-on, so to speak. And it would allow them to improve on one of the metrics they cared about, and drive value, without them having to rip and replace everything. And, you know, then we had a better relationship with the client, because that meant that, you know, they liked us because we provided something that offered value, and they're happy to talk about what's the next trick, right? What's the next thing we should be doing to drive better outcomes?

Callan Harrington  29:01

And, am I right in assuming- I sold into this world for a little bit, and specifically in some of the areas that you're in, because you guys work with a B2C that needs a little more human touch, like insurance and financial services and things like that. I have to assume by doing it that way, and please correct me if I'm wrong on this, that because you're already in there, nobody is ever happy with their incumbent call center software. Like, almost never. There's always something that comes up with those dialing platforms. So did you just have this built in trigger event? So when you did this, and when that thing happened, you guys were there to rip and replace?

Alex Levin  29:40

Yeah, so it's funny. I mean, contact center software, the number one complaint is sort of from agents, hey, the call quality isn't good. So even like the best of the best, like, you know, some percentage of the time, the agents complain that the call quality isn't good. So yes, agents are always unhappy with some percentage of the contact center software. And then from a manager standpoint, typically, there are certain features that are missing, if you really dig into, it's true. That said, even with all that they, you know, if you're an established contact center in a certain dialer or certain system, it's not like you want to just get up and change, right. You have, well one, you have people that are admins, specifically in that tool, and they're worried that if they go to another tool, they may lose their jobs. Which is unwarranted, because they're smart, and they figure out the new tool, but it's a real worry in their minds. And two, you have, again, a lot of stuff that's been built up around training and onboarding, not just like, you know, how do I create one campaign, but how does every agent work within the system, that will take time and, you know, to move to a new system. So there's a reason why, I think it's something like 70% of contact center software is still unprep, not even in the cloud, because, again, there's so much resistance to moving to new tools. And a lot of contact center software, their value proposition is, hey, we're in the cloud, it's the same as the tool you have now, but we're in the cloud. We laugh at that, guys, like being in the cloud is not a value proposition, you have to actually offer a differentiated software. And so you know, what we pride ourselves on is having a very differentiated software, where people don't go, shit, like, I'm gonna lose my job if I don't switch, because it's so obvious that if I were to do it in this new way, it would drive better outcomes, right? You know, it's where you go, and you work with the, you know, execs, and the CFO, and they go, wow, like, you know, we make the switch, we could drive an extra couple of million dollars a year to the business. You know, it's worth going and making this change from product to product. But you know, I think it's a more complicated sale, and then a stickier product, once you do have people on it. I have somewhat developed this opinion that some of these very high growth startups, or some of these very high growth products within startups, are not always the best businesses. So I'll pick on Ramp, or something, where, you know, if you're just selling somebody a new credit card, it's easy, because it's not hard to change, but at the same time, and that can help you grow fast, but same time, that means it's easy for somebody to switch to another product. So you better pretty quickly figure out how to get them into a platform, where you have some network effects, or you have some value to them beyond just the initial thing you sold, so that they stay with you for longer. Otherwise, whoever has the new credit card that offers a slightly better rate, they're just going to switch to that one. So I think as an investor, while I love fast growing products, I also kind of think, well, hey, why was it so easy to sell it? And does that mean it's just really easy for somebody to rip it out?

Callan Harrington  32:32

To that point, how did you help them with that change management process? Because I have to assume that is a huge- I have experienced exactly what you're saying to the tee. Even with my own, when I've ran these, they're hard to pull out once you're in there, and you've got all the different workflows and everything set up. It is a pain to do. I guess two questions: how did you get over that hump, to say, okay, we're willing to do this? And then, two, how did you help them with that change management?

Alex Levin  32:57

You know, again, it depends on how sophisticated their system is. So like, if they're an earlier sales organization, or contact center organization, they may not be that deep into a system. It's probably easier to move on to a new system. If they're deep, deep in an existing CCAS system, like NICE or Genesys, yeah, it's going to be a harder process. But at the end of the day, like, as long as there's a clear business case, a business goal, you know, then these organizations are very smart and very capable of going and making that change. It's not that it's impossible, it's just work to go and do it. And so you know, hey, if they know, they're going to make an extra ten million dollars, by switching, it's worth them taking a month or two and doing all the work to move agents to a different system. So it's just about making sure that people are bought into the business case, that leads to that new software. They then typically will like to sign two and three year contracts to get the pricing guaranteed, so the pricing isn't going up on them in that period. Because they know once they're in, they're not going to go switch into another system any time soon.

Callan Harrington  33:57

One of the things I'm really curious about too is, you raised a really significant Series A, if I remember. Was it forty-four million for the Series A?

Alex Levin  34:06

Yeah, something like that.

Callan Harrington  34:07

So, significant Series A. How are you thinking about deploying that? How do you deploy that? What does that look like?

Alex Levin  34:15

You know, a lot has been written about this. And so I'll try to like not rehash too much of it. I think you have to be really careful about raising money. There's a lot of businesses that should not raise venture money, because they're not venture-growth businesses. We're lucky we're in a venture-type business that has the opportunity to have the outcomes that venture investors need, and so it makes it an attractive investment for venture investors. I think as a business, we very quickly took revenue to a place where we were able to raise that kind of money, because the business support it. I will say that our processes and a lot of things internally were behind where the revenue was, and so it took time for that stuff to catch up, so it's not like everything was ready for that level of investment. We, as a company, you know, are a relatively efficient organization. We go to market processes efficient, and so we don't spend that much money. You know, and that's one of the fantastic things about SaaS businesses, you're not wasting tons of money like you might be in D2C businesses to acquire new customers. Waste is too strong a word. You're not spending a lot of money to acquire new customers, you know, it's much more efficient to get the customers, and then they stay with you for a very long time at a pretty high margin. So you can actually use those funds to actually invest in software, right, invest in building better technology for those companies. So if I think about what we chose to do early, really, we over invested in engineering. We had a forty, forty-five person engineering team from very early on from a revenue standpoint, which allowed us to catch up and build out features that players that were twenty years older than us had, and allowed us to then go beyond them in some areas, because we were investing in engineering and R&D. So I think the value for us of having the dollars was be able to massively over invest in product and engineering, versus what we would have been able to afford, if we didn't have that money. In our world, we think that there'll be a good payback on the investment, in that now people are on that new product paying us for the next fifty to a hundred years. And so there'll be returned. I do think like, you still have to constantly reevaluate. And so you know, some of these big private equity firms now do zero base budgeting every year. So instead of saying, cool, you get whatever you got last year, plus something new, they make you fight for every dollar, every person again. So we're not quite that ruthless, but you do, each year, have to look at it and say, hey, here's what it takes to run the core business, and hopefully that's profitable from a pretty early stage. And then everything else is investment, either in improving processes, or improving the product or whatever. And on investment by investment, like case, you have to go and make sure that it makes sense to go and spend those dollars. So if you're saying, hey, here's this team that I'm going to spend two million dollars on this year, are you going to get a payback on that? If not, you shouldn't be allocating the dollars that way.

Callan Harrington  37:11

You're looking at it from the perspective of, okay, where can we over invest to get higher future value, because you were fortunate to be in a position where you didn't have to invest all that money in order to get to sales. You were getting the sales that you're needing to get to be able to justify the size of the investment. And then as a correction, you had thirty-eight-and-a-half on the Series A. And I think at that point, you were at like, around forty-four total or or something along those lines?

Alex Levin  37:36

Yeah, yeah.

Callan Harrington  37:37

Okay. And regardless, if you're talking about thirty-eight-and-a-half versus  forty-four, they're both at a pretty similar ballpark, which is gigantic in a Series A. So you had the revenue to justify that though, so you feel confident being able to do this. One thing I would have circled back to; I'm super curious about is, you mentioned that, yes, we had that. Yes, we over invest invested into the engineering team. And you mentioned the processes weren't all the way there yet. From a sales perspective, where was it? What was that point where it got to, it's like, okay, what got me here won't get me there? Do you remember that? What that looked like?

Alex Levin  38:12

Yeah, definitely a couple of different transitions. So my co founder and I sold the first three million in AR ourselves, like, you know, which I think is, whether you go to a million or three million, like founders should be doing the first stuff by themselves. We probably waited too long to get some professional sales in. And then we started building a mid market team from there and got a very transactional sales motion working quite well. I think now we're at a different stage, where we have to make sure that we can do more than just a transactional sales motion, where we can sell a more solution sale, more complicated sale into bigger clients that are looking for, like we were talking about, you know, the certainty that they can really move from the old system to the new one, and the certainty about what that will bring them, and the confidence that Regal is the right company for them to work with long term. So I think, you know, each of those are important shifts that we identified, and then had to execute against to go and make sure that we did it correctly.

Callan Harrington  39:08

What did you do specifically to execute on that?

Alex Levin  39:10

I mean, this shift from founder led off, like we started hiring, first individual AEs and BDRs , and then eventually hired a sales manager, once we kind of understood what that motion looked like. So I would highly recommend doing some of it before you hire the sales manager so that you can- well, if nothing else, you can prove to the sales manager that it works, so that they're not coming in not wondering, you know, not knowing whether or not it works. But also like, it makes sure that you can set the culture of it in a team before you bring in a manager. And then you know, like I was saying, we made it- we're making another shift from more transactional sales into more solution sales in a more complex relationship sale. And you know, that's a part of it is changing the leadership and changing the people who have experience in that, and part of it is then changing the level of investment in, you know, enablement, and in solutions consulting, and in the things that the sales team need to be able to go and do that, and then making sure marketing is paired with it. So it's clear to marketing that we're also not trying to get just a transactional sale, we're also trying to make sure we build that very important connection with the company over a longer period of time, such that when they are ready, like we are the right provider for them. So you know, a customer comes in and buys one product from us, eventually does go and buy everything.

Callan Harrington  40:24

Yeah, I mean, what you just laid out is probably what I say to people the most often. A VP of sales, sales manager, VP of sales, whatever that first sales leader is, is a catalyst. They're not going to come in here and restructure everything. And there's just so much value in the founders handling that. I always say to zero to one as well, because you're also the ones that are impacting the product. The product's rapidly iterating, based off of this feedback, and you're cutting out that feedback loop altogether, by doing it, it's just so much value. Do you see it that way? Or what are some of the big drivers in why you believe that?

Alex Levin  41:01

Yeah, I mean, for sure. I think that's all right. I mean, some pieces of advice that, you know, I give people, you know, is if you're a founder, and you've gotten kind of half a million, a million in AR, go hire, you know, kind of a junior salesperson, you know, who can help you. And what I mean by help is literally like have them write all the follow up emails. It can be from your email address, if you want. Have them write all the outbound emails to the people you want to try to reach out to. Because if you don't have that person, very quickly, like as a founder, you get caught up in other things, and you may not spend a week engaging on sales, and then you've missed a week of all that progress. So by having that helper like, it really makes a big difference. I mean, some other advice for sure is, be very diligent in documenting, like, who is the ICP? How do you identify them? How do you do it like, at scale, without having to do any manual things? In our world, it's a little bit, there's some of the attributes that are hard, they don't come in the datasets they usually get for sales. And so we've had to be more creative in finding those datasets. But then, you know, what is the core selling proposition of our product versus other products? And how do we position ourselves? How to position other products, so that as you bring in sales teams, you're not just hitting the leads, you're also handing them a toolkit of what they're supposed to say and what they're going to do next.

Callan Harrington  42:18

Totally agree with all of that. Now, I thought what- I thought about, when I was researching this for this episode, in particular, you call it a BDR plus, I heard in another one of the episodes, and I've never heard that position before. I thought it was really interesting, because it's really, they're doing account executive level items as well, because they're following up, they're staying on top of it because it essentially, it's almost like a sales assistant, is the reality, and they're kind of shadowing you to eventually become-

Alex Levin  42:45

Yeah, in ideal world, that person becomes your first AE, right? That, you know so if I think about when I went to sell the retailers with my then CEO, for the first couple, like he really was leading, you know, the pitch, but within a couple of meetings, like I could say word for word what he was saying. And he knew that if I went to the meeting instead of him, I could say it word for word. Now, eventually, maybe I decided, like, we should do it differently. But for the first X months, I literally said word for word, the stuff that he said, and that took us pretty far. So I think like, you need to find people who are of that mindset of like, cool, I'm gonna go and help the founders bring that to fruition, and then start iterating from there, once I've been there long enough to understand why certain things are being done the way they are.

Callan Harrington  43:31

Yeah, I think it's a great idea. Never heard of it, but it makes complete sense. What comes next for Regal? What comes next for you?

Alex Levin  43:37

At a very high level, we have this fascinating opportunity where there's about five million people that sell consumer products, some online, some offline, and consumers are pushing those businesses that employ the five million people online at lightning speed. And in this market, as you go online, and you get to more and more scale online, there are no tools to help you treat these millions of customers like one in a million. You know, maybe when you're offline, you could do it because you kind of knew them, you met them, you had some notes, whatever. But now they're online, like do you know they clicked on your email? Do you know what they did yesterday? Do you know what they told support? Do you know what else is happening in their life? Well, no! And without that, it's really hard to be successful. So what our technology at Regal empowers is the ability to use the data about what customers are doing, all of the first party data, to drive personalization at scale, leading to better customer relationships, more revenue, you know, higher lifetime value. And so, you know, that's a very exciting opportunity. Because these businesses are coming online fast. They're developing new playbooks that were never used before. And they need new technology and a new data strategy to be able to go and do it, to execute against it. I think the Northstar we use is: how much revenue are we driving for our customers? So at this point, we've driven over three billion dollars in revenue for our customers, and if we keep building products and doing things that help our customers drive revenue, we'll be successful in the end. As long as they're successful, we will be successful. And so, you know, we keep asking ourselves, you know, what are those things. For sure, there are some products within our core product that we need to keep improving. We're also, I mean, we built a whole conversation intelligence product at the end of last year. We're building a whole set of new AI products that we're rolling out to people, you know, depending on the roles that they have. I think these are all like, exciting areas. We also have started investing much more in being the source of truth for companies, so they don't need to use a separate CRM, and they can use us. You know, I hope one day in the same way Salesforce is the default B2B tool, and Shopify is the default retail tool, that for these more considered businesses, Regal will be the default tool, and anybody coming online, you know, for more considered business, whether it's healthcare insurance, or something else, like education, goes oh, I need Regal, because that's going to be my source of truth and how I know to do customer engagement across all the channels, and then I'll build everything else on top of that.

Callan Harrington  46:03

I love it. You're bringing intense personalization to a traditionally transactional sale, and it's going to be needed, and it's going to be a differentiator. So I think it's- I think it's excellent. Last question I have for you, Alex. If you could have a conversation with your younger self, what advice would you give them? What would that conversation look like?

Alex Levin  46:21

I guess, you know, I'd tell them to be a little bit patient. You know, I think when you're right out of school, it feels like, if you take one door, you know, you lose another, you know, if you don't do something as fast as everybody else, then like, it's a bad thing. You know, I almost wish I'd taken a year off, and just gone and done, you know, whatever, travel the world, gone and skied- You know, because it really wouldn't have mattered honestly, like would have been perfectly fine. You know, I wish that when there were interesting problems, I spent more time digging in on them, knowing that it was okay that I wasn't making obvious progress, because I was learning from that. It's hard to hear that when you're straight out of school, and you're very ambitious. But you know, I do think it would have been valuable. But yeah, you have to focus on the opportunity right in front of you, and make sure that you're learning as much as you can from that, knowing that, you know, years down the line, you're going to be in a situation where you're going to need all those things that you've learned. Like, when I sit down with, you know, the biggest potential customers now, and they're asking us about our strategy, what we want to do, that's not just informed from the last five minutes, that's from the last twenty  years of, you know, what I've learned.

Callan Harrington  47:26

I think it's advice, like, I need right now. So what it is, it's like, advice, it's kind of like that constant reminder that it just- and also that it just doesn't happen at the speed in which you want it to happen but builds over time. So.

Alex Levin  47:39

Yeah, I mean, in the end, you know, I would highly encourage very ambitious people to go to early stage startups. It's, you know, there's two sides of the coin, you know. For sure, there's a lot more uncertainty in that world and risk. Yes, like, it might fail, but on the other side, you're gonna get a lot more opportunity, and you can learn a lot more things more quickly. So you know, it kills me when I see people go into- very ambitious people go into larger companies, because they're just- the rate of learning is going to be much slower. I'm not saying large companies are bad. Eventually, you may want to go there. But you know, early in your career, if you're very ambitious, like go to early stage startups. What you should be looking for is a company is growing quite a lot, because as long as there's growth, there'll be new opportunities, and a boss who's going to look out for you. You are not going to know as a new employee, what you should be doing and what you shouldn't be doing, what you should be asking for and what you shouldn't be. As long as you have a boss looking out for you, you'll be perfectly fine.

Callan Harrington  48:30

I love that advice, and it's a perfect place to wrap it. Alex, thanks for coming on today. This has been excellent.

Alex Levin  48:36

Yeah. Thanks for having me.

Callan Harrington  48:42

I hope you enjoyed Alex and I's conversation. I loved Alex's approach to transitioning from founder sales to professional sales. If you want to learn more about Alex, you could find him on LinkedIn in the show notes. Also, if you liked this episode, you could find me on LinkedIn to let me know. And if you really want to support the show, a review on Apple Podcast or Spotify is very much appreciated. Thanks for listening, everybody, and I'll see you next week.