June 15, 2023

Jafar Owainati, Founder of Loopio ($200M+ Raised) | How to Start your Second Startup

Jafar Owainati,  Founder of Loopio ($200M+ Raised) | How to Start your Second Startup

Starting your second startup should be much easier, right? Well, yes and no. 

Jafar was the founder and Chief Revenue Officer of Loopio, which went on to raise $200M+ and land thousands of customers.  He left to start Barley. This is the story of how he decided to leave, and what it was like to start over a second time.

On the one hand, some things, like fundraising, are much easier. On the other hand, the 0 to 1 journey is just as hard. Delivering value in a big market is no easy task, even if you've learnt from prior mistakes.

In this episode, he shares what skills transfer over and which ones don't. If you're a repeat founder, or a prior founder thinking of starting a new one, check this episode out.

Send me a message to let me know what you think!

01:46 - Early Days of Loopio

06:20 - The Catalyst

10:24 - Moving on from Loopio

15:18 - Closing a Chapter

20:38 - Zero to One Phase

25:47 - Some Things Don't Get Easier

30:33 - Beware The Polish

34:39 - Stay Scrappy

37:48 - Expanding Your TAM

41:52 - True Product Market Fit

42:50 - Recap

WEBVTT

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I think today, because people have access to so many tools in terms of designing a logo and deck templates and example pitch decks and all these other resources, I do think the bar has risen, but it's really easy to over-invest in those areas and not focus on what matters, which is actually delivering a solution that solves a very sharp pain.

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Welcome to the Product Market Fit Show, brought to you by Mistral, a seed-stage firm based in Canada.

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I'm Pablo.

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I'm a founder turned VC.

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My goal is to help early-stage founders like you find product market fit.

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So welcome to the Product Market Fit Show.

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Today we have Jafar, the founder of Loopio and today the founder of Barley.

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Loopio was a software platform that helps enterprises respond to RFPs.

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The company is based in Toronto.

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They have about 300 employees and have raised over$200 million.

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Since then, Jafar has gone on to start Barley, which is a compensation management platform, and also based in Toronto and currently a seed-stage company.

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With that said, Jafar, it's a pleasure to have you here on the show.

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Thanks so much for having me, Pablo.

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The topic of today's episode is a bit different and it is how to start your second startup.

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Really, the idea here is for all repeat founders or potential repeat founders, existing founders that are thinking, okay, maybe one day I will start a second one, to really get a feel for what that's really like, what's real, what's easier about it, what's actually potentially harder about it, surprisingly.

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Hopefully, we achieve that today.

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Maybe for starters, Jafar, if you could go back to the early days of Loopio and just get some context out there.

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How did everything get started?

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Yeah, the context of Loopio is really interesting because the formation of that company really went back all the way to my undergrad days when I was at Queens.

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Zak, who's currently the CEO and one of my co-founders at Loopio, we were in the same orientation group together at school.

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Back when we were 18 years old, we would always talk about, hey, one day maybe we'll start a company together.

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When we started getting deeper into our careers, those conversations started resurfacing.

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I think the primary note, and I think the theme is the same for Barley and Loopio, is that we didn't have an idea to then start a company.

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It was, we want to be entrepreneurs, we want to start something, we want to be our own owners, and we want to tackle difficult problems.

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Zak and I came together in 2013, we started brainstorming different business ideas.

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It was literally anything from consumer products to B2B software.

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We just kept landing on this“really boring” space that was RFPs, and when…

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Just a question on that, there's this conception that forcing yourself down the path, the Paul Graham thing of you should just explore things, have fun, and then you want this idea to come organically.

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You seem to have gone in it a different way where you started off you want to be a founder and then you force yourself, let's say, to come up with ideas.

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It worked, certainly at Loopio and it seems to be working at Barley.

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You have any thoughts on that, why it's looked down upon or thinking that it should just– the idea should just come to you instead of being able to make it happen?

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I mean, I think a lot of people, quite frankly, when they're looking to start a company do force it in some ways, but the story is through forcing it, they're doing something, they're having a customer conversation and then they have this a-ha moment.

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It's like, oh, and then we stumbled upon this really interesting thing and I was really passionate about it.

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I think, at the end of the day, ideas are ideas.

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They’re all out there.

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I think everything's been thought of in some shape or form.

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It really comes down to where you see there to be an opportunity and what actually drives you to want to build something.

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I think for Zak and I, and I should include Matt in the conversation, we were three founders, but as I was getting to the story Zak and Matt actually knew each other really well and worked together and were super close.

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Then when we found this idea of RFPs, we were– it was actually something that Zak and Matt had already started working on and started building, but we kept– Zak and I kept it on the side because it was like, oh, I don't know if it makes sense to do this.

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Because we started working on it with Matt and then Zak sent Matt a message and it was like, hey, let's all come together.

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I mean, even when you think about traditional teams, you always think about, oh, usually everybody knows each other really well.

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I didn't know Matt at all.

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In some ways, you could say it was a gamble, but I also trusted Zak's perspective and the friendships that he has and the relationship he had with Matt.

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Somehow there was just a really good gut feel of us coming together.

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Just going back to your thing of forcing the idea was really interesting, as we were going through these different concepts, Zak, Matt and I have all seen the world of requests for proposals in different ways.

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I was an engineer and actually part of my job was issuing them to purchase engineering equipment from big mines.

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Zak was a sales engineer and was responding to them when it came to technical requirements.

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Then Matt as an engineering manager and then later VP of engineering, he was the subject matter expert.

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It was just– it was really cohesive from that standpoint.

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Then honestly, when looking up the market, it was so fragmented.

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There was a bunch of RFP solutions.

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It wasn't something no one has solved this before it was solved.

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It was solved.

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There was incumbent, legacy solutions.

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There was a ton of them and none of them were really that big.

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As you can imagine, any VC conversation we had early on was like, there's no fricking market here.

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Don't even bother, but as we started doing some early market research and talking to prospective customers, it was just clear to us the pain was so sharp and just we had this blind confidence that just no one else knew how to do this right.

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What was really Step 1 once you discovered that this was an opportunity you wanted to tackle?

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Yeah, so I was actually working full-time in management consulting in the US in Chicago.

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I just, at one point, knew this was the thing to do.

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I was the first to leave my job.

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I became the catalyst.

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The first thing was, since I was the non-technical person, so my background is in mechanical engineering, but I went to business school and worked in consulting.

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I did all the early selling.

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I was selling before we had anything.

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We started getting really great interest and traction and Zak and Matt were coding part-time as they were doing their full-time jobs and there was a trickle.

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Matt one day just quit and then he ended up coming full-time.

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Zak was like, holy crap, I guess I got to figure my stuff out.

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Then Zak ended up joining.

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As I mentioned, the initial reaction from a few VCs was that, hey, there may not necessarily be a market here.

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We didn't really need funding.

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We were in a certain different stage in our lives and Zak and Matt are both amazing developers.

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They were building the platform.

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It was 2014.

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It was a very different time, obviously, than we are today.

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We just came together every single day, built and we bootstrapped the company for the first four years or so and got to a few million in ARR, had 30 employees at that point in time.

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Through the traction and customers that we had in the market, some of our customers included Slack and DocuSign and Dropbox, actually a ton of VCs started to hear their own portfolio companies using the Loopio platform.

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That's when we started getting a ton of inbound interest.

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I think at one point we had more than 50 different VC conversations actively moving, then we just had one meeting in Boston with OpenView.

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We love that team so much.

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They came in with a term sheet and were like, let's do it.

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We then shifted from being bootstraps to a venture backed company and really put the pedal to the floor and continued to build and scale the team.

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That next stage worked– sometimes, one of the challenges of bootstrap companies is they're growing at a certain rate and there's this idea that, oh, if we only– if we raise money, we could lean into this, lean into that, and all of a sudden, growth would come out the other side.

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Sometimes that's the case and sometimes it's not, and you find out, actually, we just grow at whatever rate that was.

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Maybe it’s 50%, maybe it's a 100% per year.

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More money doesn't really lead to more growth.

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What happened in your case after that first round?

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I mean, I think that the biggest thing that helped us drive growth is Zak, Matt, and I became bottlenecks for the business.

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When we raised our series A with OpenView, we had zero VPs.

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I think we had maybe one director and a relatively junior director.

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It was really the three of us that were the executives and we were limiting the business from going any faster.

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Quite frankly, most of the initial time was really building out a senior leadership team and building out the pillars of the business to make it more scalable.

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I think that getting that injection of funding allowed us to not only further build our employer brand, but obviously have the capital to invest in those right people to bring on board with the company.

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I really think that helped us propel forward.

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I think if we didn't raise the money, we would've hit a bit of a wall and had some challenges.

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Because when you're bootstrapping, it's almost like– I think about a dolphin.

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You invest, so you're diving in and you're letting the money spend, but at some point you pause spending and you would need to watch the cash accumulate a little bit before you dive in again.

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This stop and go really hinders your ability to grow effectively.

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I think that the funding definitely helped us.

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All that said, we were still extremely capital efficient as a business.

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When did you start thinking about leaving Loopio and starting something new?

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Yeah, the idea never crossed my mind up until quite frankly COVID hit and we were all, all of a sudden, working from home.

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As you're sitting in your own thoughts at times and thinking about what excites you about coming to work every day, because even as a founder, you're still an employee at some point in time, you're still pursuing some form of a career.

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I actually had an executive coach that I worked with really closely.

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A lot of it was working on my leadership skills, how I can continue to inspire the team and just general development areas, but even through those conversations, I started exposing what gets me up and excited every single day.

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At that point I was seven years into my Loopio journey and I had a little bit of an edge and a recognition that the incubation of a company, that stage was something that was most exciting to me.

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I was still doing amazing work at Loopio.

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It was really engaging.

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At that point, I was chief revenue officer.

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I had really an amazing revenue team between marketing, revenue ops, sales and customer experience.

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What I found my day-to-day to be was enabling those leaders, but I wasn't really rolling up my sleeves.

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I was helping to guide them, but they were, quite frankly, extremely competent themselves to drive everything and very established leaders.

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I think that's the moment where I was thinking about starting something.

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I would want to prove to myself that I can do this more than once.

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The other thing that happened was– and I think a lot of companies, when it comes to founding them, start this way.

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I mentioned to you that for Loopio I was the catalyst.

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I quit my job.

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Then Matt came into the equation just a little bit later in terms of even coming together with Zak and I because I didn't know Matt.

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In my case with Barley, my really good friend Billy, who I've known for a super long time, we also went to undergrad together, was an experienced product leader.

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I mean, even right out of school, he was a producer at Electronic Arts on FIFA and Need for Speed.

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He's been in tech for his whole career.

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Actually, when I was at Loopio and we were raising, I would be calling him and asking him for advice because he had been through it as a founder himself.

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He actually was having a little bit of a career dilemma himself and was like, hey, I can go into product at a fang company as an example or I can give this entrepreneurship another go.

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The two of us had talked about building businesses.

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When I think about people I’d start companies with, it's Zak and Matt, and Billy.

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Those are the only people in my mind.

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The idea of building something with Billy, quite frankly, initially wasn't really possible.

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At least we didn't think it was possible because he's based in Vancouver.

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I'm based in Toronto.

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Pre-pandemic, both of us, our mindsets were very much you build a company in person.

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We were very office presence oriented.

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Loopio didn't have a work from home policy at all.

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It was everyone would come to the office every single day.

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I think that the shift to work from home really opened up that opportunity to explore the potential of collaborating across time zones.

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Then we just started exploring ideas and seeing what it would be like to build a business together.

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Although we'd known each other for so long, we went through the co-founding dating exercise from scratch.

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First round has a great 50 question co-founder dating format that you can use.

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We literally went through every single question and saw where our overlaps, where our interests are, what kind of company we want to build.

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That really opened things up, but quite frankly, I wasn't sure about this idea of leaving the startup that I'm building at Loopio.

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Having great executive coaches, I would say in some ways, not only are they great coaches, they could also become some form of therapists in some way, too, when you're going through these conversations, but I was really challenged by my executive coach.

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I should say coaches because at the point when I was making my decision, I was moving from one coach to another.

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I actually had an overlap where all of a sudden I had two different coaches with different perspectives talking through this big decision that I had lingering in my mind.

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Mechanically, how did you set that up?

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It's one thing to sell a company and then maybe you go through a golden handcuff period and then you're free to go.

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In your case, Loopio is still operating.

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How did you handle that transition?

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I think that the first thing for me was I wanted to make sure that, in leading a company, I wanted to first make sure that my co-founders were good and on board, two, that I was leaving on a high note.

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Never about running away from something that was necessarily not doing well.

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It would be stepping away from something and closing a chapter of something that I'm proud of.

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In the beginning of COVID, we actually got hit really hard as a business.

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Pipeline dried up, like many businesses.

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Then the mandate in the shift was how do we turn this around and evolve our strategy?

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Zak, Matt, and I, along with our senior leadership team, we put forth a whole new strategy for the business during COVID and we were on a mission to make sure that we would get through that initial hurdle and really make sure the business thrives.

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I'll fast forward to that in a little bit in terms of what ended up happening with that strategy, but the first thing for me was having a conversation with my co-founders.

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Zak, Matt, and I would do a co-founder retreat every once in a while.

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We ended up doing a virtual one and outlined a bunch of topics.

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Zak always does a great job of leading those kinds of initiatives.

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One of the topics was, what do we want to do in terms of at Loopio or beyond.

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We always ask ourselves questions like, what do we actually want to do long term personally?

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Are we still in it?

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Where's our head at?

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I think it’s a really healthy dialogue.

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When it got to that question of what do we want to do, I brought up that, hey, I'm thinking about starting something new from scratch.

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At the end of the day, it was extremely supportive and collaborative from both of them.

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There was also a question, actually, my executive coach asked me.

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I think this is a really tough one.

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He said to me it's a lot easier to start something than to finish something.

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I think this is something that is pretty prominent when you think about VCs of how long are you in it kind of thing.

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My reaction to that is what does it mean to finish something?

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Is finishing something doing a PE buyout?

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Is finishing something an IPO?

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Okay, so when you IPO, then don't you need to keep running the business and keep growing it?

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If you do a private equity deal, don't you need to keep driving the business forward so your PE sponsor can then flip the business or IPO it from there?

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When do your obligations as a founder start and end?

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I don't think there is really the idea of a finish.

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I think it's more when is the right time for you to do something else?

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I think as long as you're not necessarily running away from something but running towards something, I think that is an important consideration.

00:19:06.809 --> 00:19:07.608
I think that's totally right.

00:19:07.609 --> 00:19:14.368
There's countless examples of one person getting the company from A to B, another one from B to C, and another one from C to D.

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There's nothing wrong with it as long as there's milestones in between and it's not jumping ship like, oh, this thing's boring, I'm out, or this thing's not working, I'm out and you guys deal with it.

00:19:24.290 --> 00:19:25.368
I totally agree with that.

00:19:25.369 --> 00:19:27.970
Maybe fast forwarding a bit, you set it all up.

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One of the questions I have is around expectations versus reality.

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I think humans are just prone to this no matter what, but once you've dealt with it, and okay, this is actually happening, everybody's on board with it to one extent or another, so this is real.

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What are you thinking it's going to be like?

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Maybe just to back up a second, I started my first company was this tutoring services company.

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It helped me out, but it was a totally different beast from Gymtrack, a VC company.

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That was a five-year journey, many different iterations, learned a ton.

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When I came out of that and my Number 1 thing before being a VC was going to start another company, I had a lot of expectations about what that would be like.

00:20:05.851 --> 00:20:10.650
Just having learned so much about going from zero to one and all the mistakes I would make and all these sorts of things.

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Part of it was true and part of it is just imagination.

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Some things don't get that much easier sort of thing.

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It's like maybe writing a second book or producing a second movie.

00:20:19.451 --> 00:20:24.210
If you learned a lot, you have a lot of contacts, etc., etc., it’s still hard work.

00:20:24.211 --> 00:20:25.329
What was your mindset like?

00:20:25.608 --> 00:20:25.730
I'm curious.

00:20:25.930 --> 00:20:28.410
Which parts ultimately proved to be true and which parts did you under or overestimate?

00:20:38.358 --> 00:20:50.319
Yeah, I think what you end up overestimating is how the experiences that you've built in scaling your company are going to translate specifically on the zero to one phase.

00:20:50.320 --> 00:20:54.039
I think the zero to one phase is more art than science.

00:20:54.040 --> 00:21:02.039
I think it's really difficult to replicate the things you learned during that phase in your first startup and bringing that into your second startup.

00:21:02.040 --> 00:21:07.680
I think where my horsepower is really going to come in is in the growth stage of the business.

00:21:07.681 --> 00:21:17.118
I think that's the reality that sometimes gets neglected is the hardest part of starting a company is zero to one.

00:21:17.618 --> 00:21:19.440
Scaling it is actually more repeatable.

00:21:19.441 --> 00:21:20.319
There's more playbooks.

00:21:20.320 --> 00:21:36.539
There's more things that you've learned that you can apply in terms of the kind of people that you hire, in terms of executives, frameworks that you use for selling, even operationalizing your business, everything from bill subscription billing and board meetings, all that stuff.

00:21:41.220 --> 00:21:46.140
You can bring that, but the zero to one phase I think is unique in each journey.

00:21:46.200 --> 00:21:54.420
The only time that I think you can really get a real advantage is if you're building something in the same space that you were initially building it.

00:21:54.421 --> 00:22:07.049
I think when you look at, you mentioned writing a story or making a movie as an example, I think a lot of second-time founders will do what I consider a sequel.

00:22:07.050 --> 00:22:14.250
They would start a company, let's just use, I said subscription billing as an issue earlier, but let's say subscription billing.

00:22:14.250 --> 00:22:15.809
They'll start a subscription billing platform.

00:22:16.130 --> 00:22:17.289
They may exit that company.

00:22:17.470 --> 00:22:30.608
Then from there, they've learned so much in that space and the mistakes they made when they first formed that business, and then they'll start another subscription billing platform or something that's pretty close to what they did before.

00:22:31.108 --> 00:22:37.490
People that may have worked at companies and built a ton of domain expertise and then jump and doing a jumping off point.

00:22:37.490 --> 00:22:40.130
I think in my case, I'm not building a sequel.

00:22:40.131 --> 00:22:42.849
It's not another version of an RFP software that's competing with Loopio.

00:22:43.089 --> 00:22:44.569
It's a completely different space.

00:22:44.570 --> 00:22:51.329
I'm writing a whole new novel in a completely different category with different characters and different storyline.

00:22:51.330 --> 00:22:56.769
It is more difficult to do that from zero to one.

00:23:10.890 --> 00:23:13.500
What is it– from your perspective, what's the objective?

00:23:13.500 --> 00:23:23.140
What are you trying to accomplish in zero to one and what about that objective makes it so hard, so unique, so much more art than science?

00:23:24.329 --> 00:23:30.140
Yeah, I think the zero to one is first identifying that first MVP that you're going to be building.

00:23:30.259 --> 00:23:34.358
Many companies don't get that first MVP right.

00:23:34.740 --> 00:23:43.000
You end up having to shift your idea over time as you're doing more discovery and evolving the solution that you actually want to initially bring to market.

00:23:43.160 --> 00:23:45.630
You're trying to do it in the most capital efficient way possible.

00:23:45.631 --> 00:23:48.720
I'd say for Loopio, the pain point was extremely clear.

00:23:48.839 --> 00:23:56.720
It was, I need to find answers to questions easily because I'm responding to these questionnaires and RFPs.

00:23:57.230 --> 00:24:02.240
I need a better library and I need a better way to search that library.

00:24:02.240 --> 00:24:02.839
That was crystal clear.

00:24:03.079 --> 00:24:12.809
For some reason, there was no other solutions that were doing that library and search in a way that was really simple and modern, especially in 2014.

00:24:12.990 --> 00:24:17.650
I think a lot of the companies that were tackling that space even were on premise.

00:24:17.730 --> 00:24:22.990
Fast forward to the 2020s, this idea of moving to the cloud is no longer a thing.

00:24:23.309 --> 00:24:28.069
There's also a huge amount of injection of capital and many different ideas and companies that are...

00:24:36.769 --> 00:24:43.190
You just mentioned something that– this is what I really think, which is delivering meaningful value is no joke.

00:24:43.329 --> 00:24:44.230
We are in a competitive world.

00:24:44.230 --> 00:24:51.150
There's a lot of businesses, players building and thinking about a lot of things, like you said earlier, almost every idea's been thought of.

00:24:51.151 --> 00:25:03.789
Finding an idea that is real enough but also not being solved enough such that you can come in and ultimately build eight, nine figures of ARR in that space, that's no joke.

00:25:03.790 --> 00:25:13.509
I mention that because I remember, just off the cuff here, I was talking to a friend of mine who was first-time founder, had landed on this idea through real hard work, but ultimately some form of luck is always involved in this.

00:25:13.510 --> 00:25:14.470
It hit everything, right?

00:25:19.910 --> 00:25:20.630
It was a big market.

00:25:20.690 --> 00:25:22.829
It was a clear pain point, solution fit.

00:25:23.099 --> 00:25:24.750
Competitive market was in his favor.

00:25:24.750 --> 00:25:27.910
He was saying– I'm like, you should go get more aggressive, you should raise more money, etc., etc.

00:25:27.911 --> 00:25:28.868
He's like, well, whatever happens, happens.

00:25:28.869 --> 00:25:32.509
Maybe we sell it a little earlier than expected, but look, I now have all this money.

00:25:32.529 --> 00:25:34.349
I would've had all this money at that point.

00:25:34.351 --> 00:25:35.230
I've learned all these things.

00:25:35.230 --> 00:25:36.108
I'll just do it again.

00:25:36.109 --> 00:25:38.910
My point is you don't realize what you have when you find something like that.

00:25:38.911 --> 00:25:40.470
It's not that easy to duplicate.

00:25:47.769 --> 00:25:48.549
That's huge.

00:25:48.740 --> 00:25:53.230
I think there's a lot of first-time founders, myself guilty of this as well, that have that mentality.

00:25:53.618 --> 00:26:00.710
It's like, let me get the first one done and then I'm going to use the second one as like my real one.

00:26:00.769 --> 00:26:03.630
We used to talk about Loopio like that early on.

00:26:03.631 --> 00:26:14.390
As we started seeing just how well we were gaining traction, I think the big thing with Loopio, that pain was so narrow and so sharp and the solution was so simple.

00:26:14.769 --> 00:26:18.390
That's the reason why we were able to bootstrap, quite frankly.

00:26:18.769 --> 00:26:19.470
That was special.

00:26:19.529 --> 00:26:26.230
It's like, if you get a lottery ticket and you win, you don't rip up the ticket and then say, I'll get it next time, right?

00:26:26.849 --> 00:26:42.069
I think that whole zero to one and the idea of art, part of it is, quite frankly, a little bit of luck and luck being that you are in the right place, the right time.

00:26:42.309 --> 00:26:44.400
At the end of the day, it's all about waves.

00:26:44.401 --> 00:26:50.799
I think, you want to make sure that you are catching that wave at the right time and sometimes ahead of the wave.

00:26:51.160 --> 00:26:51.720
That's okay.

00:26:51.880 --> 00:26:54.599
That's where you look at the adoption curve and get those early adopters.

00:26:54.601 --> 00:27:04.079
I think what's unique or different in our space at Barley is compensation and the pain point is something that touches every single company.

00:27:04.240 --> 00:27:15.960
With the pandemic, the pain points of compensation have really risen with things like pay transparency legislation, remote work, and people trying to figure out location-based pay, pay equity legislation as well.

00:27:21.960 --> 00:27:28.640
That's actually caused a lot of attention in this space, but when you think about compensation, it's relatively broad.

00:27:28.641 --> 00:27:30.400
There's so many parts of comp.

00:27:30.680 --> 00:27:34.880
There's sales commission and there's a whole category on sales performance management.

00:27:34.881 --> 00:27:37.640
Then you can look at communicating compensation.

00:27:38.480 --> 00:27:42.680
How do I make a more compelling offer, explain the value of equity compensation?

00:27:42.700 --> 00:27:45.240
Then there's things like benchmarking.

00:27:45.240 --> 00:27:46.559
What do I pay?

00:27:46.589 --> 00:27:59.650
Then of course, there's workflows that today are riddled across a bunch of different spreadsheets, which is how do I run my merit cycle or promotion cycle in a very efficient way that's secure and empowering my managers with the right context?

00:27:59.651 --> 00:28:05.579
As we look at even the last year, the pain points in compensation were different in different periods.

00:28:05.608 --> 00:28:17.099
With the talent wars, it was, I need better benchmarking, especially for earlier stage companies that don't have a lot of compensation structure.

00:28:24.480 --> 00:28:28.858
It's really easy to get distracted in such a big market because it's like, oh, let's run towards benchmarking.

00:28:28.859 --> 00:28:30.779
Oh, no, let's run towards workflow.

00:28:30.780 --> 00:28:38.059
Oh, maybe we should figure out how to do these visual offers because they can help recruiters win because everyone's trying to compete against talent.

00:28:38.060 --> 00:28:58.099
It was, to your point on the art, but it's also discipline on how to make sure that you choose a path and validate it and say this is the MVP, otherwise you're going to just keep jumping and be really a jack of all trades and a master of none and that's not the right way to build an MVP, but it is really difficult.

00:29:01.200 --> 00:29:08.500
The other thing I want to touch on, and I think it's really related, so it's a good segue, is this idea of almost knowing too much.

00:29:08.500 --> 00:29:09.220
That's a broad concept.

00:29:09.221 --> 00:29:10.420
It touches a lot of things.

00:29:10.519 --> 00:29:13.940
One of the things it touches– I'll rant for a bit and then just get your perspective on it.

00:29:13.941 --> 00:29:24.019
One of the things it touches is what you're just saying, which is you know what solving a real problem should feel like and you know what a real product should be like.

00:29:24.020 --> 00:29:24.980
Maybe you overdo it.

00:29:25.299 --> 00:29:29.460
Early on, first time, you don't know what you don't know, you build what it is, it sticks, it doesn’t, you fix this thing.

00:29:29.461 --> 00:29:30.180
It's very iterative, right?

00:29:30.181 --> 00:29:31.099
That's one side of it.

00:29:31.101 --> 00:29:47.000
The other thing I think is you learn, especially having been at scale, what it's like to get things done right at every single level, true polish, right?

00:29:47.089 --> 00:29:54.799
What a data room should look like, what a deck should look like, a logo, all these, what I would say, are on the periphery because it's not the core.

00:29:54.800 --> 00:29:57.589
I mention it because it's something I see.

00:29:57.590 --> 00:30:09.299
Repeat founders are known to, say statistically, are known to have a higher odd of, especially successful ones, at producing outsize returns, unicorns, and so on, but one of the problems I see is effectively over polish.

00:30:09.300 --> 00:30:16.619
The scrappiness that they had at the first time, now they see that as almost a problem to solve.

00:30:17.200 --> 00:30:20.660
It's like, okay, how do we look more sophisticated than we are?

00:30:20.690 --> 00:30:21.619
Did you do that?

00:30:21.621 --> 00:30:27.579
Did you find those either temptations or did you do it at Barley and see the cost of doing that?

00:30:33.369 --> 00:30:45.740
Yeah, I do think that you move into that direction a little bit, but I also think that we've been inundated with messaging expectations of what a newly incubated company should look like.

00:30:45.910 --> 00:30:57.259
I think the expectations of the market of a new startup, whether it's VCs or actually your buyers today, are much higher than they were eight, nine years ago.

00:30:57.289 --> 00:31:08.220
When I look at the initial Loopio platform, it was built on what was called– we used Bootstrap as a front end framework and we used Vanilla Bootstrap and it looked so basic.

00:31:08.380 --> 00:31:18.220
If we were to launch that today, people were like, this software looks like crap, but relative to what other people were using, it was like, wow, this thing looks like Facebook.

00:31:18.221 --> 00:31:19.980
We'd get comments like that.

00:31:19.980 --> 00:31:23.779
We actually lost a deal once because they said the product looked too simple.

00:31:28.039 --> 00:31:49.539
I think today, because people have access to so many tools in terms of designing a logo and deck templates and example pitch decks and all these other resources, I do think the bar has risen, but it's really easy to overinvest in those areas and not focus on what matters, which is actually delivering a solution that solves a very sharp pain.

00:31:49.599 --> 00:31:55.059
I do think that at Barley we were a bit guilty of that, thinking about the polish and how we present ourselves.

00:31:55.060 --> 00:31:58.220
The expectations on you are higher as a second-time founder.

00:31:58.279 --> 00:32:05.619
When you're an unknown entity, especially for Loopio when we were bootstrapped as well, we had no friends and family money either.

00:32:05.621 --> 00:32:11.460
Literally it was just the three of us on the cap table in the early days as well as our employees who are stock option holders.

00:32:15.509 --> 00:32:22.759
There was zero pressure, and not just from VCs but also from peers, our networks, whatever.

00:32:23.500 --> 00:32:30.559
Being a little bit rougher around the edges and even having typos in the app itself and stuff like that, it didn't matter.

00:32:30.560 --> 00:32:33.170
We didn't feel like it mattered.

00:32:33.171 --> 00:32:35.250
We didn't feel like there was really oversight on us.

00:32:35.250 --> 00:32:39.009
With Barley, we actually ended up raising around with just a pitch deck.

00:32:39.059 --> 00:32:42.980
It was like, hey, we are seeing these changes in the market.

00:32:42.980 --> 00:32:47.900
We want to build a solution in the comp space and we proactively raised a pre-seed.

00:32:48.099 --> 00:32:58.140
Part of that was because we were second-time founders and also the market conditions at the time were really great for people to be able to get that early capital.

00:32:58.141 --> 00:33:08.140
When you have the money in the bank as well and you have a VC that you want to make sure that you deliver value for your investors.

00:33:08.141 --> 00:33:09.500
You talk to people in your network.

00:33:09.500 --> 00:33:14.220
When we were validating the idea for Loopio, it was friends and other people we get introduced to.

00:33:14.319 --> 00:33:20.220
Now for Barley, when we were doing customer discovery, it was like, hey, you know me, I co-founded Loopio.

00:33:20.221 --> 00:33:32.180
Now that their expectations are like, oh, you co-founded Loopio, so therefore I'm expecting this bar on what you're going to be diving into and what you're going to show me when it comes to Barley.

00:33:43.680 --> 00:33:56.650
I think that makes total sense in terms expectations being different, both in terms of the market has evolved and for second-time founders specifically, but how do you keep the scrappiness that is endemic to first-time founders because there is no alternative.

00:33:56.849 --> 00:34:11.690
I was speaking to a first-time founder the other day who said, when I was starting the startup, I got into a car accident and I didn't even have time to chase the insurance for the other driver because I just had to get my product out and shipped, but I'm happy I did that, right?

00:34:11.690 --> 00:34:24.449
That idea that I think when you're fighting for survival, so to speak, you're bootstrapped, it’s just, well, this is the only thing, these are the list of things that get done and these are the only two things that we're going to do because we don’t have time for all of this stuff.

00:34:24.451 --> 00:34:26.849
All of a sudden, you’re out of the gate, you have a few million bucks.

00:34:26.969 --> 00:34:33.139
The upside is you have a few million bucks, obviously awesome, but how do you keep that scrappiness that I think is so important early on?

00:34:39.690 --> 00:34:43.579
Yeah, I think a lot of it comes down to your DNA and how you build a company.

00:34:43.719 --> 00:34:50.380
For me, something that I think is really unique is that I have this DNA of being a bootstrap founder.

00:34:50.380 --> 00:35:02.699
I think a lot about efficiency, how I run my operating model, how I think about growth, how I think about dollar spend versus dollar out, both in investments in ops and also on go to market, also on product.

00:35:02.701 --> 00:35:21.980
I think that's something that is really healthy to have, and quite frankly, what ends up being really also helpful is Billy ends up being my counterpart who challenges me on that, because if you go a little bit too scrappy when you have money in the bank, it's also not healthy.

00:35:29.960 --> 00:35:38.960
I think to this idea of like survival, I think it's this survival instinct is really healthy when you're an early-stage founder who's just trying to get to their first round of funding.

00:35:38.960 --> 00:35:40.239
You need that hustle.

00:35:40.260 --> 00:35:41.800
You need to prove yourself.

00:35:41.800 --> 00:35:42.599
Every minute counts.

00:35:42.601 --> 00:35:44.280
Every dollar you spend counts.

00:35:44.380 --> 00:35:54.929
I think that's important, but at the same time, you shouldn't undermine the benefits of being a second-time founder and the benefits of having money in the bank so that you can put money to work.

00:35:54.931 --> 00:36:03.590
In some ways may not be as efficient, but are going to help you get to market faster or build a better product or attract a better team.

00:36:03.610 --> 00:36:12.949
You need to take advantage of those benefits that you have as well and not put it in your mind that you need to be a first-time founder.

00:36:16.929 --> 00:36:20.349
You have to think about how you are going to run your business differently.

00:36:20.351 --> 00:36:30.389
I think there's a lot that's sensationalized about the first-time founder and the story and the struggle, and oh, I got in a car accident, I couldn't pay my insurance, but I got my product out.

00:36:30.391 --> 00:36:31.789
People love those stories.

00:36:31.809 --> 00:36:38.090
I think they're amazing and it just shows the grit and hustle that people have, but that doesn't have to be the case.

00:36:38.090 --> 00:36:52.980
If you have advantages in being a second-time founder, leverage those advantages and think about how you can reallocate that time that you didn't have before and invest it in other areas where you can provide more lift.

00:36:53.139 --> 00:36:55.059
I think that to me is what's critical.

00:36:59.449 --> 00:37:00.369
I think that makes total sense.

00:37:00.429 --> 00:37:03.730
Let me ask one more question and then the final one, which we always end with.

00:37:03.731 --> 00:37:06.900
I was speaking with another founder as well, also second-time founder.

00:37:07.139 --> 00:37:14.500
What he remarked on was the first time around, and I think it's the same as Loopio, you don't worry about market size specifically, right?

00:37:14.659 --> 00:37:18.789
You go out, you find a product, it's interesting enough, you start building it.

00:37:18.791 --> 00:37:26.269
In fact, you mentioned with Loopio, VCs told you it was too small, niche, these sort of things, not exciting enough, but you're like, well, people pay me so I'm going to do it.

00:37:26.271 --> 00:37:28.269
It turned out everybody else was wrong.

00:37:28.510 --> 00:37:37.619
Is that something at Barley you try to keep in the back of your mind or do you find yourself truly analyzing because now you really get TAM and you know what VCs bought and all these sorts of things.

00:37:37.621 --> 00:37:38.699
What's that dynamic like?

00:37:48.110 --> 00:37:51.880
Yeah, it's interesting as I think the compensation space, the TAM is massive.

00:37:52.429 --> 00:37:56.039
Whether you like it or not, there's TAM to be found.

00:37:56.041 --> 00:38:00.880
You can just add an ancillary– because we talked a little bit about all the different pain points in compensation.

00:38:00.880 --> 00:38:10.760
As you evolve as a company and a product, you can always introduce those new products, add-ons, modules, whatever you want to call them, and expand your TAM over time.

00:38:10.840 --> 00:38:18.320
I think that's something that I've always believed in is you don't take your TAM from your first pitch deck and this is the market size.

00:38:18.320 --> 00:38:20.559
You can grow it at any point in time.

00:38:20.561 --> 00:38:30.719
I think there's value in having a smaller TAM early on in terms of how much market share you want to capture from that market and then how you want to evolve it over time.

00:38:35.840 --> 00:38:42.480
I think to your point for Loopio, there was a question I would get asked is, who's the biggest player in the space?

00:38:42.481 --> 00:38:44.880
How long have they been in market?

00:38:44.880 --> 00:38:47.809
What do you think their market penetration is?

00:38:47.811 --> 00:38:56.849
That's a big debatable question because if you looked at a Gartner report around RFP software, which there was one in terms of a hype cycle, it would say that proposal/RFP software had 70% penetration.

00:38:57.429 --> 00:39:06.289
Then it would also– you'd also know that the incumbent at the time was making maybe 20 million in ARR.

00:39:06.389 --> 00:39:11.400
Immediately the VC reaction is this is$100 million,$200 million market at most.

00:39:11.400 --> 00:39:22.920
Even OpenView over time, as they kept thinking about what is the potential of this business, was also challenged with like, hey, we don't know if this market is big enough, how do we expand it?

00:39:28.679 --> 00:39:32.360
We actually had a moment where we're like, oh, we're not an RFP software.

00:39:32.800 --> 00:39:40.429
All this knowledge that you're capturing with RFPs is so powerful for so many other use cases.

00:39:40.670 --> 00:39:41.949
We're now knowledge management software.

00:39:42.309 --> 00:39:45.150
Holy crap, is that a crowded market.

00:39:45.309 --> 00:39:47.909
It's huge, but it's confusing as well.

00:39:48.230 --> 00:39:52.909
We did that for maybe 6 months, 12 months, started going towards this path.

00:39:53.230 --> 00:39:58.789
Then at one point, we had a meeting where we’re like, scrap it, focus, there is a big enough market in RFPs.

00:39:58.909 --> 00:40:06.110
To this day, Loopio is about 300 people, well over a thousand customers in RFPs and security questionnaires all day every day.

00:40:06.690 --> 00:40:16.309
I think when it comes to TAM for Barley, I don't think we've ever been challenged on we don't know if there's a big enough TAM.

00:40:16.311 --> 00:40:18.429
I think for me, I personally don't worry about addressable market.

00:40:24.219 --> 00:40:25.869
If your market is$1 billion, forget it.

00:40:26.670 --> 00:40:27.760
It's fine.

00:40:27.760 --> 00:40:28.440
You're good.

00:40:28.440 --> 00:40:29.719
You're going to find it.

00:40:29.719 --> 00:40:30.800
You're going to figure it out.

00:40:30.800 --> 00:40:35.309
I think especially in the early days, it's like, who cares?

00:40:35.311 --> 00:40:39.289
Quite frankly, even if the initial market was$100 million, who cares?

00:40:39.349 --> 00:40:42.170
I need to start off by getting a million in ARR.

00:40:42.170 --> 00:40:45.869
Let me start there and we will pivot, adjust, add more solutions.

00:40:45.871 --> 00:40:53.869
We'll expand the TAM, whether it's geographic expansion, company size in terms of the type of company you're selling to.

00:40:53.871 --> 00:40:55.070
The pain points you're selling to.

00:40:55.409 --> 00:40:56.429
You can sell across departments.

00:40:56.449 --> 00:40:58.309
You can go so many different ways.

00:40:59.510 --> 00:41:02.650
My advice to people is don't handcuff yourself on TAM.

00:41:02.829 --> 00:41:10.889
Focus much more on solving a pain point that is– that you can already see is repeatable.

00:41:11.039 --> 00:41:21.929
If you are having 50 conversations and even 20 of those conversations, people are like, oh, my God, this would be amazing, then do it.

00:41:21.931 --> 00:41:22.730
That means there's a market.

00:41:28.960 --> 00:41:35.150
A hundred percent my biggest miss to date is because– and I have it in my notes.

00:41:35.150 --> 00:41:38.469
I just said, I think the TAM's too small and I was wrong.

00:41:38.550 --> 00:41:39.070
That's for sure.

00:41:39.289 --> 00:41:48.550
Maybe just the last question here, which we always end on, and let's do this for Loopio because the stage of it, but when you think back to Loopio, when did you feel like you had true product market fit?

00:41:48.550 --> 00:41:49.469
What was that like?

00:41:52.900 --> 00:41:56.949
Yeah, it's funny people say don't use a revenue marker for product market fit.

00:41:56.951 --> 00:42:09.469
I mean, I think a lot of people have different formulas on where you hit it, but quite frankly, hitting a million in ARR was when we were like– it was just– it was just such a meaningful milestone.

00:42:09.849 --> 00:42:20.340
I don't know if we would say that like, hey, we now have product market fit, but at that point in time, it was like– it just felt like we had hit some semblance of momentum and repeatability.

00:42:20.849 --> 00:42:26.300
I think a lot of it has to do with your deal size as well.

00:42:26.320 --> 00:42:31.699
Our average deal size when we hit a million was probably 5,000 or 6,000 in ARR per customer.

00:42:31.701 --> 00:42:39.099
There were a lot of ad bats and I think that's when we were just like, we really, really got something here.

00:42:39.239 --> 00:42:44.099
We have an opportunity to double down, but I feel like we probably had product market fit before that even.

00:42:49.809 --> 00:42:51.380
Perfect, we appreciate that.

00:42:51.380 --> 00:42:52.300
We'll end it here.

00:42:52.300 --> 00:43:06.179
Just to recap, you took us through the beginnings of Loopio, and just through that story, how you scaled up, ultimately deciding and figuring out how to wrap that story up with a meaningful milestone in transitioning to something new.

00:43:06.181 --> 00:43:15.179
I think we dealt with a lot of the core questions, expectations versus reality that come into being a repeat founder and starting the second one.

00:43:15.210 --> 00:43:17.300
I think there's tons of amazing content here.

00:43:17.300 --> 00:43:19.179
Thank you for sharing all that.

00:43:23.500 --> 00:43:24.300
Thanks so much for having me.

00:43:24.679 --> 00:43:26.059
Thanks so much for listening.

00:43:26.320 --> 00:43:29.059
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