The Best Episode of Season 1 - How Ada Pivoted to a $1B+ Valuation w/ Mike Murchison (Founder & CEO)

Pablo 0:00 It&#39;s 2024. It&#39;s the new year. And so it took some time to look back at some of the episodes we, we did in the past and specifically looked at the episodes. We did it back in season one in 2022. So I thought I would re-release this one. I believe this one is the best episode. The story that Mike Ghost through the pivot , uh, it&#39;s engaging and there&#39;s just so many lessons for founders. Many of you probably haven&#39;t heard it, those that have probably forgot it. Uh , and even if you remember it, it&#39;s worth listening to again, 100% because it&#39;s just that good of an episode. So here it is . Welcome to the Product Market Fit Show, brought to you by Mistrial , a seat stage firm based in Canada. I&#39;m Pablo. I&#39;m a founder, turn vc. My goal is to help early stage founders like you find product market fit. Today we&#39;re talking about how to pivot with Mike, the co-founder and CEO of ada, a no-code AI chatbot for customer experience teams. ADA is based in Toronto. They have 350 employees and have raised over $200 million. Mike, it&#39;s great to have you here today. Mike 1:02 Great to be here, Pablo. Pablo 1:03 You know, today you&#39;re, you&#39;re the CEO of a billion dollar company, one of Canada&#39;s hottest startups. But of course, it didn&#39;t start out this way. And, you know, I think a lot of people will be surprised to hear that ADA , kind of like Twitter or Slack, is actually the result of a massive pivot. You know, about two years before ADA launched, I believe you&#39;d started a company called Volley . So maybe let&#39;s start there. You know, can you tell us a bit about Volley ? What was it, what was the thesis there? Customer Support and User Growth Mike 1:28 So, ADA&#39;s story really begins seven years ago with Vol , which is a completely different product going after a completely different opportunity. Volley was a social search engine. Our goal was to make it easy for people to help each other solve problems, specifically problems related to , uh, entrepreneurial opportunities. People were, were pursuing , uh, by, by helping them connect with relevant experts in their network or through their social network that had the skills to, to help. We built this. David and I built this product on iOS and on the web that was growing really quickly , uh, at one point, quickly out of the gate, and we felt like we had sort of lightning in a bottle. Uh , it was very exciting. We encountered this customer service problem pretty early on. Uh, the problem was how do we scale our customer service operations in line with our user growth? Now, this was a particularly challenging problem for us because everything that we&#39;d ever built , David and I go way back building a bunch of different software together, and everything we&#39;d ever built that had been remotely valuable had come from a really tight feedback loop between our users and our product and engineering teams. You know, we knew our customer&#39;s names, we had a relationship with them . And I personally believe that, you know, great software, you know , bestows ownership on its customers, you feel as a customer, like the software, the product is yours, sort of in the same way that, you know, you might have a , a feeling of ownership over your favorite restaurant or your, your , your favorite cafe. We use the word, you know, that that&#39;s my restaurant, my cafe, my gym. And I , I&#39;ve long been very interested in that level of ownership , uh, when it comes to, you know , software and that that intimacy was really eroding as volley got bigger. You know, we went from treating our customers as people whose names we knew and whose lives we felt like we were somewhat a part of, to treating them as numbers, to then treating them as numbers that we were trying to keep at bay. Pablo 3:26 And to be clear, these are, which, which types of customers? Like, are we talking business customers that, that you need to service or these consumers, like these Mike 3:33 Are all , it&#39;s all B two css , is it B2C app. So these are all consumers all not paying us. I should be clear too. So customers might be a generous term, users , um, and users at some point that we were hoping to figure out a way of monetizing. Pablo 3:47 I see . But there was still a big customer success element to it, customer support element. There Mike 3:51 Was, you know, we wanted to make sure everyone was successful. And , um, you know, and , and especially in the early days of our, our app&#39;s growth, you know, we were really, we really, really cared about the quality of the community and the quality of the, you know, the, the engagement that our initial user base was, was experiencing. And so, you know, it was, it was pretty sad to see us sort of pursue the conventional customer service playbook, which is essentially figure out how to talk to your customers less, the bigger you get. And that&#39;s what we, we were pursuing. I mean, that was the, that was the playbook that, you know, we like almost every other business in the world was running. And I, I&#39;d say that that playbook was, when we saw that, you know , I became pretty curious about why it was that, you know, we were, we were investing in talk , figuring out ways of talking to our customers less because it struck me that the , you know, the bigger we got, the more valuable customer data would become to us. In other words, this whole paradigm felt backwards. And so I, you know, I became very curious about that. So picked up the phone and, and called , uh, as many VPs of customer experience as I could, I could find. And , uh, David and I interviewed a bunch of people and we asked them like, why is it that you&#39;re speaking to your customers less and not more as you&#39;re growing? And virtually everyone agreed with, you know, the, the premise that it was sort of backwards to be pursuing the strategy that they were, but they also echoed, they also echoed each other in saying that, you know, customer service is a cost center. You know, this is, this is how we&#39;re, this is how we are structured. This is how we are , we&#39;ve designed things. This is my job, and while I know more about the customer than anyone else in the company, we, you know, can&#39;t afford to increase our level of interactions. That was really the understanding of that problem that became the, the sort of laid the ground where it ended up becoming a pivot. Pablo 5:42 This Software as a Service Pablo 5:43 is where the insight kind of really starts, right? I mean, I think to an extent the reason is , is obvious why you wanna minimize, you know, the amount of customer interaction. It&#39;s just like, it&#39;s more profitable. And you could argue the other time thing too, which is the less, in a sense, customers reaching out to you too much might mean that your , your product&#39;s not working well, you should just make the product more user friendly, et cetera, et cetera. What did you, you obviously disagreed with that, at least to a certain extent. Like what, what were , what were your , what was your thinking? What was your reason for, for disagreeing with that in the first place? And not just, I think like everybody else, just , you Mike 6:13 Know, it was a few fold , a few reasons. Like, one was just this deep belief that, you know, software is a service. We know this as like, you know, people who work in the SaaS industry. The , the , the word service is a really important word. It , it&#39;s, you know, we don&#39;t tolerate an experience where in the physical world where we , we don&#39;t like to tolerate experiences where we pay for something and, and we don&#39;t get what we paid for, you know , the, the , the service bar in the, in the software world. You know, I think we just had a sort of visceral reaction how low that was. Um, so maybe that was the , the first thing. The second thing was that I think that the, the world, the , the paradigm of talking to your customers less, you know, it was really , really born of an era where people really weren&#39;t making as many data informed decisions. And it might&#39;ve been because a lot of this information wasn&#39;t digitized to begin with. Very , if you&#39;re running a , a legacy contact center and you&#39;re doing millions of phone calls a day, and those are analog phone calls, very difficult to mine that data extract insights and, you know, inform your decision making . And that&#39;s really where, you know, customer service was born. It&#39;s through the, the telephone. However, you know, in the digital era where we can actually start to make use of this information, you know, you can do more with this, it becomes much more action, much more useful. And so I, I felt as though the technology was actually quite a bit ahead of the strategy, and that seemed like an opportunity for us in building volley felt like we, we really should be, we knew our success had come from really rapid feedback loops between our users and our product teams. You know, the , the question was, why , how do we, if that works at a small scale, it should work at least as well at a big scale, maybe even better if we had more data. So how do we figure out how to solve that problem? That was the, that was the question. Pablo 7:56 I see. And at first solving that problem was, was not so much about starting a new business venture, it was just about making volley better, right? Mike 8:03 It was, and I, you know, I went through this, you know, this really difficult period where it started to become clear that, hey, maybe this customer experience opportunity was, is is a bigger one, a more difficult problem to solve than the one we were trying to solve with Volley . But yes, initially this was about a curiosity we had around, you know, solving a , a problem that we were experiencing as, as the leaders of Volley and not as a, you know, as a, oh , this is a pivot opportunity, or this is a new business venture. It was, it was about solving our own, our own operational challenge. Pablo 8:37 So maybe Steps to Customer Success Pablo 8:38 let&#39;s, let&#39;s walk through some of the steps, right? So you , you mentioned first you call a bunch of VPs and customer success and, and you validate the idea that they&#39;re thinking about it that way. And, and , and that, that that is the current paradigm. What do you start doing? What are the first few steps you start taking towards fixing customer success, at least, you know, within volley at first? Mike 8:58 Yeah. So I think , uh, step one, and hopefully this is helpful for, you know, the entrepreneurs in the audience who are thinking about, you know, perhaps in their own companies or were exploring a pivot themselves. For , for me, what was most useful is we, we first heard, confirm that there was a pattern that the same problem was manifesting across industries. Like, that was, that was a very important, a very important learning. And the way we knew that was pretty simple. I mean, picking up the phone call, you have a 10th phone call in a row, and people are saying almost, they&#39;re all using the exact same phrases when they&#39;re describing the problem and they&#39;re reacting to it the same way. So I al you almost feel like, like an anthropologist, like you just sort of get to a point where you can kind of predict what someone&#39;s going to say in response to one of your questions. So that was, that was step one s . Step two was, was really the , the commitment to understanding this problem at a much deeper level. And for, for us, you know, making that commitment meant going back to these VPs and asking if we could join their team , uh, as agents. And seven of them said yes. So our, our belief there was, okay, we, we, we have this, we , we, we&#39;ve, we&#39;ve identified there&#39;s this problem across industries. Now let&#39;s understand it more deeply. The way to understand it more deeply in our view was to experience the pain firsthand as manually as possible. And so we became customer service agents, and we were the frontline customer service reps for seven different companies. Pablo 10:28 And that was you and your co-founder, like as your CEO of a startup that&#39;s funded. You take some time to be an agent for another company. Mike 10:36 Yeah, yeah. Pablo 10:37 How much time are you devoting to this? Like how are you making that work? Mike 10:40 Well, I mean, this is, there&#39;s a gradual transition between Oli and ada . Um, but we became full-time customer service agents. So, you know, we were, we were, we were employed by seven different companies at one point, all at the same time. And we lived and breathed customer service <laugh> for the better part of a year. I mean, this was, this was an intense, an intense period, definitely the, one of the low lights of my entrepreneurial career. Like at that point, I just, I couldn&#39;t , um, I , we , a lot of folks, and one of the pressures you face as, you know, as a , as a founder is, especially in the early days, a lot of folks are asking you what you&#39;re doing. Like, what, what , what is your job? What do you do? It&#39;s one thing to justify that, you know, explain that when you have, you know, a couple hundred employees and you know , you know you&#39;re financed and you know, you, you , it&#39;s clear what your company, your company actually creates value much harder to do that in the earlier days. And you know, I , I&#39;m someone, you know, who, you know, I , I I, I found it difficult to be in a situation where, you know, it was very difficult to explain what we were doing. The only the only people who really knew what we were doing were David and I, and we were just obsessed with learning. We were just obsessed with learning how difficult and painful it can be to provide, to scale customer service, you know, from the, from the ground up as a frontline, as a frontline employee. So that , that was the second step. Pablo 12:03 Had you Mike 12:03 Paused the , the third step, Pablo 12:04 Had you paused Volley at that point? Or like, I&#39;m just , I&#39;m curious when you decided, yeah, let&#39;s move to this thing and how that, that decision was made. Mike 12:12 So I think, you Moving on from V1 Mike 12:13 know, the, this is, this is the behind the scenes . You know, what , what&#39;s the real story when I think about this story? I think of it as a immediate moment, immediate transition. There was Wali and then there was the path to Ada. The reality is that there was a messy transition between the two , and there were moments where we were running both, there were moments where Volley was sort of put into a , um, was was sort of put into maintenance mode and was still, was still operating. There were, there was a period where we were, you know, fully into, you know, what became ada , but we&#39;re fully doing customer service manually. But everyone thought that we were still working on Volley. So there, you know, it was a , it was a messy sort of gray area , gray gray period. But the, the , the actual where our time was going was pretty quickly, pretty quickly shifted away from volley towards, you know , doing manual customer support and , um, and investing in, in trying to learn as much as as possible through that experience. Pablo 13:12 Was it just the two of you? Did you have other employees? Did you have other stakeholders that you needed to tell them we&#39;re not spending any more time on Volley ? How are those, how did those discussions go? It&#39;s Mike 13:22 A great question. I remember. So we, we had, but Boris and Angela from version one Ventures led our l uh , led our pre-seed rounds at the time was a $500,000 round into volley . And, you know, we are about two years into volley , and David and I look at each other in one day, and we go, you know, we&#39;re, we&#39;ve just spent 15 hours doing customer service all day. Like, we&#39;re not building volley right now. Like, we&#39;re off trying to do, figure something out. It&#39;s clear that vol , we&#39;ve done this for long enough , it&#39;s clear that volley isn&#39;t really working. There came a time where early in this transition where of course I needed to communicate to , uh, our investors that, you know, we were, the original idea they invested in was not something that we were currently pursuing anymore. And I, I distinctly remember going to , uh, tell Boris this Boris words , and who, by the way, is still on ADA&#39;s board today. Uh , so he&#39;s seen the full, the full journey. But at the time when we were volley , I was so nervous as a founder about telling him our lead investor that we were essentially had failed and are moving on to work on something new. And we didn&#39;t know what that was yet. We haven&#39;t read a single line of code for this new thing. In fact, we&#39;re just doing customer service manually for a bunch of different companies. And I, I wrote , I was so nervous. I wrote out, I was , I didn&#39;t trust myself to be able to convey what I wanted to convey just through memory. So I&#39;ve printed out a speech that I wanted to read to Boris. We met up for lunch on Spadina . We sat down and Boris asked , how are things going with Oli ? And , uh, the waiter comes by before I can answer and, and says, do you want anything to order? And I said, no, <laugh> and I, and I take out my piece of paper, and I, I am like, Boris, if you don&#39;t mind, I just wanna read this to you. I start reading to him how, you know, we, we started on this journey to reimagine search. We learned a ton about scale, trying to learn a lot about user engagement, rapid feedback loops between product and engineering teams and customers. And it wasn&#39;t working like we thought it would. I had this whole, the whole part of the speech was all about, you know , I totally understanding what your money back. I&#39;m so sorry to disappoint you. You know, I get how like, if, if this is like no longer aligned with what your investment thesis is, like, whatever that means , I , I didn&#39;t know any better. And Boris looks at the paper, pushes it to the side and says, no problem. What are our ideas? What are we gonna do next? That&#39;s awesome. I start talking to him about, look, we&#39;re doing this customer service. We think there&#39;s something in this space. You know, we think it&#39;s really important to understand the problem really intimately at a like, really, really deeply, you know, a couple minutes later, Boris . Okay , sounds , seems interesting. Um, you should talk to, So-and-So , um, he made an introduction to someone who , uh, worked at Shopify because at the time, Shopify, of course was scaling super quickly and had customer service problems. And sure enough , um, you know, fast forward , ADA is born, Shopify is a customer of Ada . And , um, you know, we , we , um, we made it through a successful pivot, which I&#39;m sure we&#39;ll get into more about how that actually happened in detail. But the , the point is that the, for me, there was such a profound lesson there about what it really means to be founder friendly as an investor, and Commitment Vs Attachment Mike 16:58 how I think some of the most difficult challenges associated with entrepreneurship, namely changing your core idea and what your core pursuit is , your core identity. They really do require a certain amount of breathing room and just support, you know, the last thing that would&#39;ve been helpful in that situation would&#39;ve been, you know, are you sure you don&#39;t want to , you sure you want to make this move would be to challenge the idea or force us to lean into, you know, what we had originally pursued, you know, or to, you know, or to just to , to bow out and not be supportive. But that was a core moment in our company&#39;s history. And, you know , it&#39;s a core reason why , um, you know, I&#39;m so grateful to be, to be partnered with, with Boris and Angela. Pablo 17:40 There&#39;s this concept of not giving up right. Within, within entrepreneurship. And it&#39;s , it is really important. And relentlessness is , is obviously an important trait, but at the same time, it&#39;s not, not necessarily the answer. I mean, sometimes you have to give up fully on an idea &#39;cause it&#39;s not gonna work, and you&#39;re wasting your time and sometimes you gotta give something up to, to work on something else as you did with, with volume ada, was that a tough thing to, to go through? Did you feel at one point, like you mentioned failure, right? But did you feel like it was sort of, was that a battle internally, right? Like, oh , are we giving up on this? Should we just double down on volley and just push harder and maybe growth will come? Mm-Hmm, Mike 18:12 <affirmative>, absolutely. You know, I think, you know , one of the experience, one of the things that, that volley taught me , uh, about as a, as a founder is , is really the difference between commitment and attachment. You know, I learned that looking back on that experience, that I was so attached to a particular vision for the future. That attachment, I think really blinded me to the different ways that, that you can solve a problem. I really struggled with that transition as a result. You know, I felt like a personal failure. I felt like, you know, as our CEOI need to be the, the , the keeper of the vision. And I need to be right. And I need to, you know , the reason people are investing is because of the clarity of this vision and where we&#39;re going. And it&#39;s, it&#39;s hard to sort of understand the relationship between conviction, vision , you know, success. I , I think those are, I think those are really complicated , uh, concepts to understand the relationship between, you know, what , what I, what I learned, you know, based on that experience is that for me, I believe it&#39;s tremendously important to be committed, but not attached. I, I think that, you know, I , I am, I am with ada. I am so committed to forever elevating the quality of customer experience that we as consumers can expect from brands. Like, I just believe that that experience bar is so fundamentally low right now. And that the eyes of history, it&#39;ll be, it&#39;ll be laughable how low it was. And I&#39;m so committed to Ada being the company that forever elevates what we can expect from brands. And my , I&#39;m no longer an entrepreneur who&#39;s attached to how we get there. And in fact, I think that what&#39;s been core to our success at ADA is a belief that you actually, there&#39;s so much value in not being attached. In fact, there&#39;s this openness, there&#39;s this, there&#39;s this excitement, there&#39;s this creativity that comes from being committed but not attached because you start to view the world differently and you start to be much more open to different solutions. And so that, that was really the, that was really the lesson. I mean , I think the, the, the, the, the psychology of what was going on for me , uh, when I thought about the, the , the transition from volley to what became ada , Pablo 20:32 Is there anything that ties at any level that ties Volley and ADA together? Like you think about, you know, the Twitter story? Mm-Hmm . <affirmative> , and it was always about sharing ideas. At least it went from podcast to Twitter. Yeah . Whatever. Is there something like that here? Mike 20:47 Oh, absolutely. I mean, volley was fundamentally about helping people. You know, it was, volley was a, was a, the way Volley worked is you, you know, it was a community built on requests. You put a request out. I&#39;m looking for, I&#39;m looking for help building a, a refining my user onboarding experience. Does anyone know any product designers that are really skilled at B2B SaaS onboarding experience, whatever. And Val&#39;s job was to connect you with the , the , the best expert through your network who could help you with that. Not that dissimilar from a customer service inquiry. <laugh> . That&#39;s true. You know , I&#39;m looking, it&#39;s a , this a , it was a B2C incarnation of, you know , what ended up being a B2B business for us. But yeah, many similarities. I think, you know , they go, they run deep. I mean, I , I&#39;ve never worked on a B2B company , uh, a B2B SaaS company before starting ada . And I think a lot of our successes come from a lot of conviction and ex and expertise in building B2C software , um, prior to ada and Volley is a good example then we, we just fundamentally believe in the craft of software. I would even say like a obsession with great customer experience, great user experience has been a real, a real asset. That that was definitely something that we carried from, from Volley . Pablo 21:59 As you, you spent 15 hours a day of being agents. Mm-Hmm . What were some of the things that you learned that you then decided to build a product Lessons Learned Pablo 22:05 around ? Mike 22:05 Mm-Hmm, <affirmative> . So, I think, I think the first thing, like , uh, as we learned, we really fought the temptation to write a single line of code that was really important. And I think for, you know, I think there&#39;s a lot of founders out there who think that, you know , they measure progress in code. They , they, they assume that like the way you make progress in the early days of a business is to build an MVPI, I think core to our, our success was actually a re a rejection of that premise. We , our, our goal was actually to go as long as possible without building a MVP, like without writing a single line of code. And the reason for that is because we just, we, we wanted to understand the manual processes that we, our software would eventually automate better than anyone else. And the one of the core beliefs there was that this core belief that software is not inherently valuable, like all software is at a , at a fundamental level, all software does is it, it, it replicates and scales some manual process that exists in the physical world. And our belief is the extent to which you can understand that manual process better than anyone else, or at least understand it incredibly well. A lot puts you in a position to build software that is truly excellent. That was the philosophy that was informed by, by Volley . And then we just set out, as you put it, to learn. You know , I think we, we learned three core things in the , over the course of, of being agents. We learned that first of all, 30% or more of the inquiries we were responding to were repetitive and mundane. In some cases, it was upward of 80%. And that was surprising. It&#39;s like you show up on day one to any new job, and then you expect that there&#39;s like this like onboarding period and take some time for you to become productive and a useful colleague. You know, in our, our experience, we were , we were effective on day one. That&#39;s how basic so many of these inquiries were. Two, we learned that the software we were living in, the agent experience that we had was like, far from ideal. It was super negative. You know, no one, no one was waking up outta bed in the morning going, I am so excited to spend more time in this enterprise customer service software. Like, it was just, it was, it was a painful product experience. And then the third thing we learned is that everyone, all our colleagues, they wanted to talk to their customers. Like they talk to their friends, which meant they, they , they just couldn&#39;t figure out like, why is it that I&#39;m talking to this person on the phone and this person clearly who I&#39;m talking to, hasn&#39;t been on a phone call in like a week, you know, that they&#39;re not using their phone for phone calls. They&#39;re like, why can&#39;t I message this person? Why can&#39;t I text them? It doesn&#39;t make any sense. Why don&#39;t we open up a messaging channel to , for customer service? And this we heard over and over again. And that idea was always rejected. And it was rejected, remember, because of the, the conventional customer service paradigm, which is reduce customer contact messaging, was, was thought of as, as, as likely increasing it. So that&#39;s what we learned . You know, the, we , we became , uh, amongst the most productive agents on each one of these teams. You know , we essentially , um, we just work really hard. Is, is the simple, is the simple <laugh> the simple way to say it. And we saw the impact of that work. Um, we, we saw that customers were less likely to leave. They liked our businesses more. Turn isn&#39;t exactly a novel insight. Like we all know this in the physical world. If you have to wait for four hours for your Starbucks coffee, you&#39;re not gonna go back to that location. Secondly, we, we learned that the, that our colleagues liked their jobs more and were far less likely to leave when we were handling as many of the repetitive inquiries as possible. And that was a big deal because we knew that attrition rates in contact centers are on average about 45% annually. Meaning that in the enterprise, about half of all customer service agents will leave their jobs every year. That&#39;s how repetitive and mundane the , the role is. However, if you remove the repetitiveness of the , of the job, what you&#39;re left with is something that&#39;s way more intellectually stimulating. It&#39;s way more challenging. It&#39;s much more conversational and consultative. And people, our colleagues ended up loving their jobs way more. And so that was, we were like, that&#39;s , that&#39;s fascinating. Like this is, we were, people just loved working with us as a result. And the third thing we, we witnessed was that the data that we were privy to these customer conversations, they felt like a gold mine . They had sales opportunities in the product insights, strategic information. We felt like it was pretty clear that businesses, our colleagues, our bosses, you know, VPs across the organization really should have been using this information to inform their decision making . But instead they were, they didn&#39;t even know it existed. And so it was, it was then, it was once we&#39;d essentially proven the value of the software before it existed, proved it manually, we still to this day at ADA say, do it manually first when you&#39;re solving a problem that it was then that we set out to build the software that replicated that manual behavior we had engaged in. And, you know, the, the solution became, it sort of appeared, right? It was so painful that we were going through that . The software almost became medicine. It&#39;s like , take the pain away. And we took an ML approach &#39;cause we had access to so much data, and then we focused on making those ml techniques that we were developing as easy to use as possible. &#39;cause all our colleagues were non-technical. And those, those insights which have been absolutely core to ADA&#39;s success continue to be, to this day, we , there&#39;s no way we would&#39;ve realized those, those are not insights that you glean intellect intellectually. Like you need to live those things. You need to feel them emotionally. And there , there&#39;s no way that we would&#39;ve had them , uh, had, you know, ADA been developed through this academic, you know, business model, canvas exercise. It had to be something that, that we lived. And it, it , it&#39;s been core to the product that we&#39;ve developed and the, the pillars, it&#39;s , you know, it&#39;s still standing on Pablo 28:24 This , I , I have to pull on this thread just because it&#39;s something I&#39;ve, I&#39;ve seen a lot, which is, and I&#39;ve , and I&#39;ve , we&#39;ve , we&#39;ve talked about this in, in other episodes, but Lean Startup is, is useful, but it&#39;s gotten to the point that when somebody has an idea today, the first thing they do is they build an MVP and they put it out and they , and they get into this test and validate mode. And what I&#39;ve seen is that well , companies aren&#39;t doing enough of is before there&#39;s startup mode, there&#39;s research mode. And you gotta spend time in that research mode where you&#39;re really mm-Hmm . <affirmative> not building where you don&#39;t have a company, let alone , like , you don&#39;t have a company, you don&#39;t have a startup . You have some sort of insights and ideas, and it&#39;s really more of a project. And sounds like that&#39;s exactly where what you guys did for, for a long time when you were working as agents, is that you just stuck to research mode for a really long time. Until you, until the things that you needed to build were no longer guesswork, right? It was like , you know, if you build this feature, these companies are gonna buy it because you&#39;ve lived it. That&#39;s The Lean Startup Mike 29:23 Right. Now, you know, we, two thoughts there. So one, I completely agree that lean, the like philosophy of Lean, I think has been misinterpreted in, in recent years. You know , lean is about learning as quickly as possible. And sometimes, you know , writing software is the fastest way to learn, but in my view, it actually rarely is. It can be, but it rare , it rarely is. So I think we&#39;ve conflated progress. We , we&#39;ve , we , we&#39;ve conflated like developing an MVP with, with Progress or Rapid progress. Those are two very, very different things. You know, as an , as an aside, you know, lean , the Lean Movement is, you know , the really, the, the , the, the founding father of Lean is Steve Blank , who was, you know, Eric Reese&#39;s, professor at, at Stanford wrote this book called The 12 Steps of the Epiphany. Highly encourage everyone to read that book. That really is the precursor to what became the Lean Startup. And the core takeaway from that book, in my view, is the importance of getting outta the building. That&#39;s right. That&#39;s the, it it , that&#39;s the research phase. It&#39;s, you know , you , you don&#39;t, you don&#39;t fi you don&#39;t find a product market fit, you know, by coding in your basement or, or by, you know, thinking up a solution. You , you, I think you find it by going out, usually your imm probability of, of finding it , let&#39;s say, of success is increase , increase dramatic when you get outta the building. So that&#39;s Pablo 30:50 A lot of, a lot of stars get outta the building by having 10 interviews where they try to sell, you know, people on there . And that&#39;s getting, and that&#39;s not getting outta the building, I think is part of the point, right? Getting outta the building is getting as close to the customer&#39;s day to day , in your case, doing the job, right, but getting as close to it as possible. Yeah. Before you have some clear preconceptions about this is what I&#39;m building and I hope people say yes when I try out to them . Mm-Hmm , Mike 31:15 <affirmative> , and this is the difference again, between commitment and attachment, right? If you&#39;re attached to how you think it&#39;s gonna work, I think your ego gets in the way. But if you&#39;re committed to solving the problem, the way you run those interviews, you&#39;re actually looking for someone to say no to you. Like you&#39;re, you&#39;re looking to create an iron , like just a, a, an airtight thesis that you know is that you can defend over and over again. &#39;cause you know it&#39;s right. And you&#39;re seeking the no , like you crave it because, because again, you&#39;re committed and you&#39;re not attached. You know? And , and I , I just to build on the , I think this , the other thing I was gonna say is like, you know , it&#39;s not like for us at least, that we knew this was gonna work. We felt the pain, the solution seemed like it was sort of a peer because the pain, it was so acute, we didn&#39;t really know. We then tested it. The reason we knew Ada worked in the early days or was going to work, &#39;cause we didn&#39;t get fired, you know, we, we ran this software and our managers, you know, they, they didn&#39;t care. Like they, they loved the fact that response times went down. They couldn&#39;t tell the difference between our responses and our software&#39;s responses. Pablo 32:23 So you substituted yourself , colleagues Mike 32:24 Were having Pablo 32:24 By software that still working as agents. Mike 32:27 That&#39;s right. So it&#39;s, you know, we, what , it&#39;s, it&#39;s a classic experiment. You know, we, there , we, we held one variable fixed, we manipulated another, and we saw that the, the results were the same and we knew that, that the software was, was validated. You know, I think that that, that was, that was a big moment for us. But, you know, I think that the, the , the point being that this, this, the way that these tests manifest , um, I think it&#39;s different in every, in every context, but so long again, is you&#39;re committed to solving the problem and not attached to how you get there. I think your one&#39;s ability to identify different types of tests that are useful becomes a little bit easier. Community Support Pablo 33:06 So you&#39;ve validated the problem . You&#39;ve gone in, you&#39;ve really learned what it&#39;s like to be an agent. You&#39;ve built software, you started to replace yourself. When do you package the software and sell it to , to your first customer? Mike 33:18 Well, that&#39;s a good question. We , um, not long after that, then it became the next problem to solve is how do we get people to rec , how do we identify people who also have this problem and help them recognize that we can essentially solve it for them? And that we did through a, you know, initially I&#39;d say two things. One was a lot of, a lot of outreach to friends and friends of friends companies. Uh, and the other was through a lot of cold emailing and, and messaging iteration, you know , on the, on the former, this is where I think it&#39;s really important , uh, that our communities support one another. I mean , this is, I think a , a core, a a core reason that Ada was validated in the early days after this period we just talked about was because, you know, the, the founders of companies, you know, that we all know today, the, you know, the Eva and Alan Laos from Wattpad, the Kirk Simp Sims from Wave , you know, the, the Mike ENSs from Wealthsimple , they all responded to our email and they said, I&#39;d be happy to introduce you to our head of customer service. And they gave us an net bat . And it&#39;s not that, it&#39;s not that they gave us the deal, but they gave us the opportunity to get in front of the decision makers within their companies. And I think that we as startup founders in our community startup founders and and investors in our ecosystem, this is the role we, we need to play. It&#39;s a very simple decision that we can all make , uh, to support the future of our, of the Canadian tech ecosystem. We need to give each other more at bats. And , um, I think that that was, that was a , a huge, it was the learning from those that really informed the second thing, the messaging which allowed us to acquire customers that we didn&#39;t have any connection to. Love Pablo 35:06 That. So maybe as a final question, you know, you&#39;d launched Volley before you&#39;d gone some traction, you said it wasn&#39;t a complete failure and now you&#39;d launched ADA and gone some traction. When did you know that ADA was the thing like that this was way different than what you had launched before? That this had really, really big potential. Mike 35:22 It was a pretty big deal when we made a dollar of revenue <laugh> . And , uh, I had not generated a dollar in SaaS revenue in my entire career before ada . And so the per one of my personal goals was, you know, $1 literally was make a dollar on the internet. And um, so that was one, that was one milestone. I was like, this, maybe this is gonna work. <laugh> , we , we , we can make $1 and we can make two. I I think, you know, there was no singular moment where, where, you know, it became clear that, you know, that that ADA was going to , uh, continue to , uh, succeed or continue to grow. You know, I, I don&#39;t know if I&#39;ll ever feel like there is, I, I, I feel like, you know, even now, like I, I feel so excited to be in a position now as, as a , a co-founder of, of ada where, you know, we&#39;re now in this privileged position where we can, we can look long term and make investments long term and really build for the future that we really, that we , we really are committed to realizing. But, you know, I, I really do believe that the, you know, the , the , the problems we&#39;re gonna solve ahead will really dwarf what we&#39;ve done so far. You know, I don&#39;t think there&#39;s any like, singular moment where maybe there will be in the future where like, you know , we feel like, Hey, that was the, this, this is where we knew things all came together. But , um, it , I guess it&#39;s hard to say that maybe, maybe, maybe in a , in , in a couple seasons from now, I&#39;ll have a different reflection on that when I&#39;m , um, lemonade is a little bit, little bit , uh, bigger and I&#39;m, I&#39;m thinking even further out. Maybe Pablo 36:55 If you&#39;ve listened to this episode and the show and you like it, I have a huge favor to ask for you. Well, it&#39;s actually a really small favor , but it has huge impact. But whichever app you&#39;re listening to this episode on, take It Out, go to Product Market Fit Show and leave a review, please. It&#39;s going to help. It&#39;s not just gonna help me to be clear. It&#39;s going to help other founders discover this show because the algorithms, whether it&#39;s Spotify, whether it&#39;s Apple, whether it&#39;s any other podcast player, one of the big things they look at is frequency of reviews. It&#39;s quantity of reviews. And the reality is, if all of you listening right now, left reviews, we would have thousands of reviews. So please take literally a minute, even if you&#39;re just writing like, great podcast, or I love this podcast, whatever it is, just write a few words. Obviously the longer the better, the more detailed the better. But write anything, leave five stars and you&#39;ll be helping me. But most importantly, many other founders just like you, discover the show. Thank you.