How to Build the Right Solution | Carol Leaman, Founder of Axonify

Carol (Guest) 0:00 Really, the key is having that champion in place at your first customer location, and not just assuming that your thing is so great, your idea so great, and you've got this person who believes in it, that you're just going to run off and do your thing, and it's going to work. Stay as close as you can to that individual every step of the way. Intro 0:25 Welcome to the Product Market Fit Show brought to you by Mistral, a seed stage firm based in Canada. I'm Pablo, I'm a founder turned VC. My goal is to help early- stage founders like you find product-market fit. Pablo (Host) 0:41 Today we have Carol, the CEO of Axonify, a training platform for frontline employees. Axonify is based in Waterloo, and they have about 200 employees. The company was recently partially acquired by a private equity firm for $350 million. Carol, it's great to have you here today. Carol (Guest) 0:57 Thanks, Pablo. I'm really excited to be here. Pablo (Host) 1:00 The topic of today's episode is how to come up with a solution. Let's maybe start at the beginning. Just prior to Axonify, you had another company, I believe it was called PostRank, and you sold that company to Google, kind of mid-2011. Then as I understand it, you met a husband and wife team who had a training platform, and you decided to buy, and that's kind of how Axonify was born. Origin Story Carol (Guest) 1:22 One of the things I do and love to do in my spare time is mentor early-stage entrepreneurs. And I was introduced to John and Rebecca Short, who had a marketing business. They had many clients, one of whom was a large retailer, and they were struggling to keep that client because they were doing training material for them in a really traditional way. And the client said, "We aren't going to use this anymore. We're not going to take written material or poster campaigns from you. They don't work to change behaviour and attack the business problems that we have in a way that training should. So, we're not going to buy this stuff from you anymore," which was a meaningful part of their business. And so, I said, "Okay, I'll help you try to figure that out." And they had already gone partway down on the train of building something using a couple of outsource developers, using this really unique idea that John, the husband, had come up with. So, it was the grains of that that got me engaged with John and Rebecca, and ultimately led to me buying this really basic technology that they had outsourced to solve that problem one of their customers had. Pablo (Host) 2:48 Mentoring a lot of founders, you've seen a lot of different things. In this case, you have somebody who, if anything, is about to lose a customer, not necessarily a positive thing and ensure they have, maybe they start playing with this technology that Discovering the Problem Pablo (Host) 3:01 seems exciting. But what did you see that made you spend all your time and energy on this problem? Carol (Guest) 3:07 It was really interesting. Of course, we've all been through some kind of corporate training, which is boring, it's hard to stay, keep your attention span and stay engaged through a long training session. And we also all know that those training sessions don't work very well to actually get anybody to remember what they need to know to do their jobs well. But, the problem is, historically, companies have had no variety of ways to train people. A lot of i t's classes, which evolve to long online modules. And what intrigued me was that John's initial idea was, we need to make this fast, fun, engaging for the individual and also highly targeted to what they need to know to do their jobs well. Pablo (Host) 4:02 There's a whole business already here when you bought it, did you shut everything else down and kind of go all in on just this corporate training problem? Or how did you handle it? Carol (Guest) 4:09 I did. So, I turned all of my attention to taking this little piece of code and figuring out how to build a real business out of it. All of my time and attention got focused on what needs to be done from a product point of view, to add value and extend the product value horizontally that could attack the problems that were articulated by that one customer really clearly, and then essentially rebuilt the team using that one customer as the initial use case for how we could extend that value and build the product. Pablo (Host) 4:49 You understand the problem. You have this one client who understands Customer Discovery Pablo (Host) 4:51 the problem. Did you go out and do more customer discovery and talk to a bunch of different, let's say, retailers or other potential clients to understand what their corporate training needs were like? Carol (Guest) 5:01 Absolutely, this particular customer, the very first one, was able to clearly articulate what the problem was they were trying to solve. And in the retail world, it essentially boiled down to two things. They had tens of thousands of associates, many of whom were stealing product day in and day out off the shelves, and doing it via things like organized crime, getting together with their co-workers and figuring out how to circumvent things like RFID tags and stuff like that. The second one was, another loss prevention topic that is about accidents and injuries in stores and distribution centres. Unbeknownst to me, retailers experience literally, in some cases, tens of millions to hundreds of millions of dollars a year in accident costs in their stores and distribution centres. I had no idea that was that astronomical. And so, this particular retailer was looking to get the associates to remember how they needed to put a ladder up properly, so they didn't fall off the ladder, how they needed to wipe up a spill on the floor appropriately so they, or somebody else, didn't slip if they dropped something, and it broke glass, how do you do that appropriately? 6:10 And then on the theft side, how do you identify if you're not somebody who's going to steal? How do you identify and then properly report co-workers that you may suspect of stealing? And so, we really focused in on those two problems. And as we asked, went about to other retailers, figuring out whether they had those exact same issues. And it turns out all of them do. They're very, very common and traditional means of attacking them, our poster campaigns, initial upfront learning for the associates, telling them all the reasons why they should or shouldn't do something. Unfortunately, none of those things actually got ingrained and turned into action or behaviour on the part of the associate. So, we kind of had this intuition that the way in which we were training was much more effective at getting the behaviour change and the business outcome that came from that. That was our intuition. We validated it with a number of perspective clients and, sure enough, were then able to prove it out as we acquired new clients trying to achieve exactly the same thing. Conversations with potential customers Pablo (Host) 7:42 Walk me through the details of those conversations you had with those prospective clients, both on the customer discovery and maybe more validation. What questions were you asking you at the time? Carol (Guest) 7:51 Yes, you're right. We backed it way up to , fundamentally, how do you train, if you train your associates? One of the other fundamental issues in retail, for example, we discovered was because of the nature of the job and the fact that it's so high turnover, many stores have 200% turnover in a year, meaning that each position on average turns over twice in one year. So, their ability to get the benefit of training is minimal, which means they put minimal effort into training people. We did a lot of discovery around methods to train , the amount of training they did , what they focus that training on, did they do it in classroom, did they do it with , online modules, and would they be open to allowing an associate to do it at their own impetus whenever they had a few minutes a shift. And allow them to do it on any device, for example, not just a corporate sanctioned kiosk in a break room or , in a classroom with a laptop. We really decomposed, how did they train, how frequently did they train, what that they focus the content on, were they able to measure business outcomes? Really, what were the problems they were trying to solve? And I'll tell you, 10 years ago, it was hard. It was really hard to get a retailer to a) want to invest more in the associate that they knew it was only going to stick around for a short time, and b) think about doing it differently than just in a classroom or on a laptop. Pablo (Host) 9:49 When we think about startups, often the advice is make sure you're finding problems that are already kind of hair on fire problems, and don't get into anything that involves too much education because you just don't have the time or the money. Did you feel you had to educate and convince them on the ROI of training, especially with the turnover being... I could see a lot of retailers saying, "Maybe we don't do a good job training, but frankly, I don't care." And you have to flip them to you should care. Was that the dynamics? Carol (Guest) 10:21 We did a lot of evangelizing in the early years, and I would say though, we launched Axonify at a really unique time in history, which was the rise of millennials in the workforce who are digital natives and who simply expect you to provide them ongoing information through their mobile device. So, the rise of millennials in the workforce, the growth of the use of mobile for everything were two key things that really helped us push this whole idea and this notion of the old way is not going to be the most effective way for new workers in the workforce. Pablo (Host) 11:11 At that time, 2011-2012, we're talking, I don't know, iPhone 3, it really is the emergence of the current generation of mobile, and the trend of millennials in the workforce. Were you aware of those trends at the time? And it was an explicit, here are the trends, we're going to ride these trends, or did the timing just happened to work? And now looking back, you recognize that those trends were, a big piece of it? Carol (Guest) 11:37 We did identify it early on and right from day one, when we rearchitected that very initial solution that I bought, we made it mobile first. So , back in 2012, we were architecting around a mobile device, and at the time it was , Android, iOS, and Blackberry, all three. Identifying the trends Pablo (Host) 12:03 The question that still keeps coming to my mind is back then you have to do so much evangelizing, it all makes sense, but you have to do a lot of evangelizing. You do have, as you say, large retailers, they don't move that quickly and yet, you decided to do it anyway, and to take that risk of, "I'm betting that this is the future". Not only that, I'm betting that I can convince these players that this is the future, and that they'll move at a pace where, as a startup, I'll survive. What signs did you see, not in the market, but from your customers that, yes, this is a risk worth taking, and this will become a number one priority for these customers? Carol (Guest) 12:41 I would say it's the curse of the entrepreneur to see a problem, a potential solution, and just simply believe that people are going to see what you see, and it will be successful. The other thing, that initial use case absolutely convinced me there was something there, just the success of that use case. And the feedback from the executive of that customer about, "This is like transformational for us" really was impactful to me in terms of understanding the benefit to an organization, the potential benefit, and the fact that retail as a segment is the single largest employment segment in North America. If you're looking for TAM, and what's the size of your TAM, we had this one success story in the largest TAM in North America, and could see huge green field and white space in the rest of that market. That was another element. The third element was, we also in that first year were able to acquire a couple of other customers in very different industries. But there were some commonalities in the use case or the type of learner. They were hourly paid, they were widely geographically dispersed, so in many different locations, but doing the same job, and often poorly trained. We looked at the characteristics in these other industries and went, "Okay, there's some commonality here". And at the core of what we do, we make learning a desirable experience that never ends. And in doing that, you can get people to remember something. And if they remember, and they know what they're doing it on the job, they feel good about themselves, they feel good about their employer, they do everything better and faster. So, the company benefits, but the individual benefits also. Pablo (Host) 14:51 One of the clichés that came out there that seemed to be real is early on you want to be very, very important, and maybe to whoever, but even if it's a small set of customers, they need to absolutely love it and think that it's the next big thing, big believers. And that you did have, even though many might have been skeptics. If you think about the life cycle, you really had some early adopters that were all in on it. Then the bet is, there will be more of this, of these types of customers in the future. What do you decide to build first, and how do you set up the iterations? So, you don't build too much before you show it, and you're, I assume, keeping the customer in that product development cycle. How do you set up all that? Carol (Guest) 15:39 In the early days, it was just, take our own ideas, marry them with those few customers we had and their priorities, then balance net news stuff nobody was talking about it that, we felt, was trending, or would trend, mobile, for example, being one of those, and building what a customer was specifically asking for. And it's a balance, and a tricky balance sometimes. But that's how we started. Getting end user adoption Pablo (Host) 16:11 So, how did you think about... One of the issues that is pretty common, especially as a startup, you master the B2B sale part of it for your first few contracts, and you build a good enough product that gets you through that door, then you forget about onboarding, and you forget about end user adoption, and end user engagement. How did you think about... and it's really, at some point you figured out a playbook and how to roll products out and all these sorts of things, but your first engagement, you don't have that, how did you do it? How did you think about it? Did you release to a subset of users at first? What was the communication like? Can you just talk about that side of it? Carol (Guest) 16:53 Yeah. It was really customer-dependent, I can tell you because rolling out a solution to somebody who has thousands or tens of thousands of people in a thousand locations is very different than rolling out a solution to somebody with 500 employees in two locations. What we learned very quickly was - we learned many lessons, I can tell you - but the larger the organization, the more subjected to individual location issues you become. For example, we found with retailers that the engagement and the motivation of the store manager was highly dependent on... or we were highly dependent on that store manager to drive the daily adoption and then ongoing participation of the people in that particular store. Pablo (Host) 17:59 And with that first client with 20-25,000 employees, how did you set up the rollout? Did you do a pilot in one location first? Did you go to all locations? If you started with a subset, what were you monitoring to figure out, okay, now let's expand to more and more? Carol (Guest) 18:16 So, really interesting, we did have a very, very strong executive champion there who was highly incented to make it successful. We did start with a pilot, and the pilot was to run for 90 days in, I believe it was, 20 of 700 plus stores. And what happened was, the 20 stores rolled it out. They did a really great job, with this executive support, rolling it out, and they made it available on the point of sale terminal in the stores. It was very easily accessible by the associate whenever they had three to five minutes a day or shift, and there was a customer not present and where they had to serve the customer. That pilot resulted in 95% daily participation of those associates in those 20 stores. And the message got out, started to creep out to other regions and other stores about this new way of training that was going on. And the VP who was in charge of it said, literally, they had to unleash the gates and roll it out quickly to the entire network of stores. And everybody, across the entire group of 700 plus stores, very quickly got up to 95% daily voluntary participation on the platform. It just went viral. It was so different. This was, back in 2010-2011, it was just so different for a retail associate to a) play a game at work, b) have this little fun thing to learn, c) get rewarded for actually learning. They had a really, really effective rewards program if you got on and did your learning every day. Those things in combination resulted in viral adoption, sustained participation, and huge success at the end of that first year. Pablo (Host) 20:33 That whole first rollout seems like a dream rollout. If an entrepreneur had to think about what does my first deployment look like, it's like that. It's a big customer, multi location, very incentivized champion, and then of course, not just because of that, but because of the product, great, great performance and results. I guess the question is, how important do you think... I just think starting on the wrong foot can have all these ripple effects and getting things going right on the first one means a case study, it means The first deployment is critical Pablo (Host) 21:09 referrals, it means all these things. How important is it for the first deployment to go well? And what advice do you have for founders in this kind of B2B to C, or even pure B2B world, to really set things up? So that that first deployment goes well. Carol (Guest) 21:27 It's a great question, and really, the key is having that champion in place at your first customer location, and not just assuming that your thing is so great, your idea so great, and you've got this person who believes in it, that you're just going to run off and do your thing, and it's going to work. Stay as close as you can to that individual every step of the way so that they are invested in how you're rolling it out, they're invested in how much is getting rolled out, they're invested in what the product looks like when you roll it out, what are the key things you're going to tackle first, and listen as you're going through that and getting feedback. Pablo (Host) 22:16 And how exactly did you do that with that champion at that first retailer? Is this weekly calls, is it showing them the wire frames ? How do you set up a process where you're keeping the champion in the loop and not going away? Because building a product, i t's time, you don't go away for months and then come back and say, "Here, we're done." How do you manage that? Carol (Guest) 22:37 Absolutely. Weekly is probably too much, but on a regular basis, have a cadence of contact where you are talking about what you're building, what you're doing, what it looks like, what the workflow is going to be for the user, all of those things, how it might have to be integrated with other technology, who else in the organization needs to be involved in this process to make sure you don't make a fatal error. It's not a big bang theory, it's the steady, agile, constant flow of information. Delivering meaningful ROI Pablo (Host) 23:23 How important is it to find a product, a solution, that really delivers meaningful, hard ROI that really moves the needle for your end customer? Carol (Guest) 23:34 Really depending on who your buyer is and the space that you're selling to, the vertical market. Those things can be extremely important or a little bit less important. And, what I would say is that we've certainly seen global competitiveness grow by orders of magnitude in the last decade. Companies now literally have to do so much more with less. The pace of business is just through the roof. What you need people to do and execute against and how quickly every person from the top to the bottom of the organization needs to work and execute against their job, it's unprecedented. And so, companies have become very particular, particularly when it comes to learning about what are we getting for all this money that we're spending. And there is a recognition that even in nebulous, things like learning, historically how you measured learning for the organization was the dollars you spent on it, how much is it costing us to train every person and then ask them at the end of the training, did they like it? And if you got 80% thumbs up, you were good, you just did it all again and again and again. And that was the extent of it. And it's the reason why learning in many organizations, to this day, is a cost centre and when cost-cutting needs to happen, they carve back on learning. So, it's particularly important for us to say, "We have a way for you to measure the benefit of this investment you're making in learning." So for us as an organization and the success of Axonify, it was extremely important to have those ROI proof points. Recap Pablo (Host) 25:32 Awesome. Thanks a lot, Carol. Well, we'll wrap it up then, maybe just to recap, you sold a company, you bought a company because you saw a problem that was just so big and so important that you needed to go in and try to solve it. You build a completely new corporate training platform that looked at things very differently and had an incredibly successful first launch with very, very high engagement levels and ROIs in the 10 X, a hundred X range, I'll let the audience guess how high it was, but it was high. And, you leveraged that to build what is now a 200-person organization, 10 years later, a partnership with the private equity firm. And yet, it's only the beginning. So thanks a lot, Carol, for sharing this story with us, really appreciate having you on the show. Carol (Guest) 26:19 Thanks, Pablo. It's been awesome. Pablo (Host) 26:22 Thank you so much for listening all the way through. It's been a pleasure having you here, make sure to subscribe, so you don't miss the next episode.