[ Interview ] GSoft Co-Founder Simon De Baene on Scaling Product Innovation From $0 to $100M ARR

A few weeks back, I spoke to Simon De Baene for The Lean B2B Podcast. We talked about consulting, growth, product innovation, multi-product strategies, and customer development.

You can watch the full interview below, or access it on iTunes, Google, or Spotify.

Interview Transcript

Simon De Baene on Product Innovation at Scale

Etienne Garbugli: My guest today is Simon De Baene. Simon is a co-founder of GSoft, the software company behind ShareGate, Officevibe, and Softstart, a new employee experience platform. GSoft has its roots in consulting, and through many twists and turns, the company was able to launch multiple products and sign more than 15,000 customers around the world. GSoft is one of the fastest-growing companies in Canada.

Simon, welcome to the podcast.

Simon De Baene: Pleasure to be here today.

Etienne Garbugli: I understood that GSoft was started when you were in school with your business partners. At that time, could you tell me what were the objectives of GSoft? Were you planning to do consulting? Was it to create products? What were you guys trying to achieve?

Simon De Baene: Back in 2006, at the time, I was working in a big tech company in Quebec and actually in the world. It’s called CGI. I was working in the technical support team and I was finishing my CEGEP [school level in Quebec] at the time and I then started at ETS, which is an engineering school in Montreal.

I just felt like the tech industry in Quebec felt a little bit too great, in my opinion. You know right now when we talk about tech it’s like there’s a momentum and everyone wants to start a company now. We all talk about tech, tech, tech, all the time, but 15 years ago, it felt like there were some services companies around Quebec and it was very traditional. And not too far from here in Silicon Valley, it felt like there was a completely different momentum.

So, from our 20 years of life and our first year at ETS, we just decided that we wanted to bring some fresh air into the tech industry in Quebec and we decided to start a company. We felt like building a company was a nice way to express what we had in mind and what we wanted to do in life.

At the time, I didn’t know much about what it’s like to build a company. You’re 20 years old; you don’t know much. You actually know nothing at 20 years old. A big influence for me was my father. When I was young, I just knew that he had a company. I didn’t know what it meant really, but I just knew that starting a company was a thing. At the same time, when I started GSoft, I think two months earlier, he started another company. I just said, “If he can do it, I can do it.” And I just decided to start GSoft at the time.

Etienne Garbugli: Okay. So, an entrepreneurial family. What kind of business was your father involved in?

Simon De Baene: A technology company providing services mostly in the finance industry. They were acquired by CGI around the year 2000 and then he had to work there for a few years. You know when you get acquired and you’re locked in.

Then a few years after that, he decided to start again a company with mostly the same partners. They just started again together. What was the question?

Etienne Garbugli: Did that set your model for what the business was going to be? You wanted to be an entrepreneur. You said, “Okay, let’s start a business.” But were you going after a similar model? Where are you going like, “Okay, my father has this type of business, that seems like the right type of business. Let’s get into that model.”?

Simon De Baene: Right now when you’re looking at companies that are starting, they usually have a very clear idea of what they’re trying to do. But in 2006, when we started GSoft, we had an idea in mind. We just wanted to bring some fresh air to the tech industry in Quebec, but it wasn’t very tangible.

At the time, when we went to the accounting person and had our incorporation traded and he gave us the minutes book, I didn’t know what it was. I just took that home with my partners and we were like, “Okay. Now we have a company, so what should we do?” And because we were kind of good at programming, we decided to take our expertise in building software and just provide services for whoever wanted our services.

What’s crazy is that if you’re 20 years old and you have a babyface, it’s pretty hard to get contracts from different companies. They just don’t take you very seriously. At some point, someone decided to trust us and gave us our first project. We did a good job and from that project, went to another project, and then went to another project.

At some point, we had a portfolio to sell our services more easily. From there, we just became a boutique service company. We were a small team but very strong in building software— a lot of websites, a lot of intranets, a lot of custom-made solutions for different purposes.

From 2006 to 2009/2010, we were a 100% service company. And at some point, Sébastien, one of the co-founders, went to a training or a conference and came back to the office with an idea that was like–

Back in the day, we were working mostly with a platform called SharePoint. It’s a very popular platform built by Microsoft that became Office 365 that we know much more now. Back then, SharePoint was the on-premise version of Office 365, and companies building software on SharePoint had to maintain a development environment, QA environment, and production environment. The challenge was to move stuff around those environments.

There was a lot of click that needed to happen to make sure that everything was maintained correctly and synchronized. So, he came back to the office with the idea of building a software that would make that much simpler. That was enough to start building ShareGate, which is the first product that we built at GSoft.

It was a total disaster. The first version, after two years, we had four customers. Two of them were friends of ours that purchased the product just because we were friends. So, a big disaster. The product didn’t work very well. It was more like a big technology trip that we had and didn’t listen to the customer much.

When you’re used to providing service, like you’re a service company, to switch from a service company to a product company, you feel like it’s the same, but when you’re doing it, you realize that it’s completely different. The expectation is not the same. The way you build your software is not the same. When you’re building software for a large audience, it’s not the same as building software for a very narrow, specific-need product project for a company.

So, we learned a lot. It was two years of just learning, learning, learning, and a lot of hope when there was nothing at the time. After two years, we decided to do a complete pivot of the product.

We went to Tremblant, in a little house there for a week, and decided to launch the pivot there. The big difference between the two versions is that the first version was the kind of product where you tried to do everything. There were a lot of buttons. We were providing a lot of features but half-baked features. The difference with the other version is that we decided to provide one or two features, but we were doing it very well.

The difference is because you’re not providing a lot of features, you’re not going to sell your product to a lot of people. It’s going to sell to a smaller audience. From there, we kept adding features and slowly but surely growing the audience. And at some point, ShareGate became a massive success for GSoft.

It’s a crazy story because we almost decided to not pivot the product and just jump to another product or try something else.

Etienne Garbugli: What was the trigger then? What convinced you guys to say, “There’s potential here. There’s something to do with what we’ve put together or what we think this could be.”? What convinced you guys to stick with this and just decide, “Let’s make this happen.”?

Simon De Baene: I thought about it and I’m really not sure. I think this is the case of just good instinct and naiveté of when you’re young. For me, it felt like there was still something to do with that product even after 20 years of absolutely no arguments to keep going.

Looking at the numbers, looking at the product, looking at everything, someone with the right mind would have never launched a pivot of that product. There was just nothing to hope for. We wanted to build our first successful product, we wanted to become a product company. That was my dream. At some point, it was like, “I think there’s still something there. I think we should give it a try.”

We did it. We went for the Christmas break and came back in January, rented a place in Mont Tremblant [mountain town near Montreal], went there for a week, worked on that new shape of the product with clear guidelines—no copy-paste of the old product. It’s just like we’re starting from scratch. We keep the same logo, the same name, and we keep the same essence in some ways, but we’re approaching the problem in a different way, in a much simpler way. We’re not trying to do everything. We’re just trying to do a few things but very well.

After three months, we launched the product back in the market. And after a month, someone purchased 10 licenses in one deal and it went crazy from there. No. It didn’t go crazy. Well, when I think about it, that first month, 10 licenses, the second month, maybe a second customer, and three months after that, three customers.

It was slow at the beginning, and at some point, we just started to see some momentum. SharePoint became much bigger at the time. It became Office 365. It became like the cloud productivity platform of Microsoft which is a massive market.

We became the go-to product when you’re trying to maintain your environment or when you’re trying to move stuff around. If you’re trying to keep control of the mess that is happening in the platform when everyone is working hard on it like creating documents there, creating sites there, the library there, these platforms, like Office 365, are where people work.

There are so many things happening there that, at some point, you get to a point where it becomes a mess. The stuff we’re building is keeping that chaos in control and helping companies keep their information organized and keep people working on the platform in a clean environment.

Etienne Garbugli: Do you think there might be a big timing component in that case? You guys suddenly launched a new version out in the market and it starts growing, but at the same time, at that point, you had that Office 365 really picking up. That might have been the force and the initial momentum?

Simon De Baene: Yeah, clearly. That’s the thing you don’t control when you’re building a product. Most success around building products, the luck aspect is very important. We didn’t know that Office 365 was coming in the next few years when we started ShareGate. Sometimes life gives you some gift.

At the same time, you create your luck. We worked really hard on that product and it just happened that we did a big bet on Microsoft. Microsoft is a strong company and the chance that Microsoft goes away is very low. Microsoft has proven in the past that they can come up with new stuff. I think it was a good bet from our side to work with Microsoft and trying to build stuff, helping those products to be better.

It just felt right for us and we were passionate about it and then everything was in the right alignment to be successful. It became ShareGate. It’s still a very successful product. I think we’re now more than 150 people working on ShareGate still to this day. There’s still so much stuff to build on there.

Etienne Garbugli: We’ll get to that afterwards for sure. At that point, between version one and version two, there was still the sense of the same business problem that you guys were solving. In spite of not having a ton of clients initially, how did you guys either reconvince yourself that this was a problem or there was a specific problem? How did you narrow in on like, “That’s the problem” when you guys were brainstorming on the next version?

Simon De Baene: The most convincing argument was the fact that there were competitors out there—very successful competitors. We knew that there were a lot of customers purchasing their products and they were doing what we were trying to achieve.

The big difference with our approach is that their approach was more traditional, like big enterprise software requiring servers. And we went for a three-MEG install; click, click, click, next, and it’s sitting on your computer, and you do pretty much what those big products are doing. It was so much cost just to get started.

We were very proud of trying to build the simplest product to migrate with SharePoint and keep your environment healthy. I think that was the most convincing argument. We felt it in our guts. We had the instinct for it, but at the same time, we knew that there was a market there. We knew that there were some successful companies out there.

We knew that if we were able to execute an approach where you can only click, click, click, install, and you’re up and running, we could change the market. That’s what we did.

The big difference with the competitors is that they were selling their products for 100,000, 50,000. They were charging based on what they felt the customer could pay—a very old-school approach. No price on the website. You need to call a salesperson. He’s probably looking at your company like, “Are they able to pay?” Then they will send you the biggest invoice they can.

In our case, we went for the– at the time, I don’t even know if it was called that way, but now we call it the product-led growth approach. I feel like we were very early because we were selling a desktop app in a subscription-based approach. Adobe came much later with a similar approach because they needed the power of the machine to make their software work.

The cloud was there but for the kind of problem that we were solving, using the computer power was the way to go for us, and we went for a price that was very low. The goal for us was; we know that there are thousands of customers using SharePoint, hundreds of thousands, what could we do to get all of them? We went for a volume approach. We wanted a lot of customers with less features, so less maintenance, less support at the same time.

It was also a way to build a customer base and then build a great product with them. We wanted to have the burden on us to get them a low entry price and make them so addicted to the product that they would renew every year and keep paying. At some point, they would pay the same as they would pay for the competitors as a one-time fee and 15% maintenance every year.

That’s the old approach and we went for the– Right now, I feel like it’s just the way to go. Think about it like 10 years ago.

Etienne Garbugli: Yeah, very different.

Simon De Baene: A very different world and it worked. A lot of people told us, “You guys are leaving money on the table.” It’s crazy to do this.” But now, you’re looking at the market and there are not many competitors left. We’re pretty much two big players in the market. We’re still here to this day and keep growing.

It’s crazy because a lot of those decisions, now that we think about it, make a lot of sense, but when you’re in the moment, it’s a very different feeling. It just felt right. It’s the reason why when I’m giving conferences to students, I’m always like, “Be careful with experience because the experience will make you not do things because you feel like your experience told you to not do those things.”

When you’re young, you just do things. You don’t know much in life and so you just go in directions that most people wouldn’t go. Sometimes you hit a wall and sometimes you discover amazing places and it’s like, “Damn.” I think that there was a lot of that in the success.

I miss the old days of being young, but that’s fine. I’m happy now to mix experience with keeping that enthusiasm, to allow you to go in directions that most people would tell you to not go. Sometimes I think you can find amazing things.

Etienne Garbugli: I definitely think there’s something there. I don’t know if you know the founder of a Nomad List?

Simon De Baene: No.

Etienne Garbugli: It’s the same thing. He started really young, didn’t have any formal training in business, but all the solutions that he discovered are super interesting because they’re different but they also work. He’s just basically doing what feels right to him as opposed to what people tell him should be the way to do this and comes up with creative solutions that create even bigger success.

Simon De Baene: I think it’s just to find the right balance. I’m happy now that we have the experience to mix with that young crazy spirit. I think that finding the right balance allows you to create amazing products and avoid stuff that is just obvious. There are a lot of things we could add.

We probably wasted a lot of time on many things, but what can I say? We’re here today and it works. If we can repeat that, I think we could do it much faster. That’s the power of taking your experience and keeping that craziness.

Etienne Garbugli: So, what convinced you guys to go with a multi-product approach? A few years after that, you guys decided to add a second product. What was the driving force behind saying, “Okay, one product is great; maybe two products is even better.”?

Simon De Baene: We just can’t stop. I talk about it in the last two years and it’s like, “How did we manage to create two successful products?” A lot of companies have a hard time creating one product and we have two no. We’re trying a third one now and it just feels right.

What happened is that we met some people, we discovered stuff. There’s a lot of stuff that you don’t control that happens that just makes you crave something. In our case, to dedicate people to a new product innovation at that time, I think it was based on the fact that ShareGate was still very young. ShareGate was not yet a successful product.

If you think about it, ShareGate, the pivot, was done in 2011. Officevibe was created around 2013. So, there’s two, three years. And we felt that ShareGate was becoming a success but we weren’t at the point where we were like, “We have to dedicate everything we have to that product.” There was still some room for a new product to grow inside GSoft.

I think that if we were in 2015 or 2016, it would have been a very different story. We were lucky that both products had the room to grow inside GSoft. At some point, everything was around those two products.

This is a new challenge that we have as a business. Once you get one or two successful products that get to a point of a good scale, everything is around those products. There’s no room left to build new stuff because it takes so much just to maintain that success. It takes everything you have. I’m not inventing that; it’s a big challenge for a bigger company to innovate because they’re too busy working on their existing products.

So, we were lucky that those two products were done very early, pretty much at the same time, and it happened that both products found a market fit and they became what they are today.

Now we’re trying to build Softstart. I’m working full-time on that product. I strongly believe in what we’re trying to achieve, but we have a very different mindset now. We’re aware of that necessity of creating enough room for product innovation to happen. That’s why we have the lab at GSoft that is dedicated to building new products, and we’re willing to invest money there and we’re willing to lose money there. It’s part of the deal.

So, it’s the duality between exploitation and exploration within the same company. I love stuff around that. In the last few years, it’s like, “I want to be able to support both.” It’s just that exploitation and exploration require different things. So it’s hard to make it happen within the same company.

Etienne Garbugli: Well, let’s contrast those. So, they start at a very different point, probably different start points. How would you compare how the three different ideas or the three different geneses of products came to be based on where you guys were at? The approach certainly evolved over the years and now you have a lab. But, initially, it seemed it was very organic. How would you compare the three different experiences?

Simon De Baene: ShareGate was definitely the learning experience at the moment where GSoft was trying to become something. So you have that “you have nothing to lose” mentality. It’s like, “We have nothing.”

At the time, we had a great small service company, which could be enough. We could have been that forever. There are amazing service companies out there doing exactly that, but for us, it was like, “We want to build products.” It’s so fun to build products.

So, learning experience, nothing to lose, and we were so bad at it. It’s your first time building a product so you make pretty much every mistake. Every mistake possible, you’re doing all of them.

Officevibe was like, “Okay, we have the experience with ShareGate. We feel like we have the right tools to build products and we have the right experience.” And what ultimately happened with Officevibe is that we repeated the same thing—did a complete pivot of the product a year and a half after the launch. And instead of having four customers, we had like16 customers and most of them were not really using the product because it was nice for the first few weeks, but the product was requiring too much from people just for it to work.

It was more like a reality check. You think you’re good because you built one product, but building products is a never-ending learning experience. Even if you think you, “I did it in the past, I have the experience,” the context, the market, society, everything changed in a way that building products—there are some foundations, there are some basic stuff, but it’s never the same—you’re never going to get the same alignment and the same momentum. You’re never going to repeat the same story.

We have to accept the fact that it’s going to be a struggle every time we start a product. And that’s pretty much what’s happening with Softstart now. The big difference is that we have the financial resources. But even with all the finance, it doesn’t change the fact that building products is extremely difficult.

I think that doing it with the “nothing to lose” mentality also is something that is hard to emulate because when you actually have nothing to lose, there’s a mindset that comes with that. When you’re comfortable; if you’ve got a paycheck every two weeks where the existing products are doing very well, it’s like, how can we bring that excitement, that feeling of it’s do or die? That’s the big challenge. And that’s why it’s important to build the right team to build those products.

I think I have more fun doing it now because I can appreciate every step of doing it. I mean, we were improvising most of what we were doing back in the days. Now it’s like I know what we have to do, but I know that there’s still going to be some unknowns and the market is not going to give us a free pass. I’m more aware of that and I can appreciate it much more. And I’m surrounded by amazing people. It’s just fun building products now.

Etienne Garbugli: In that sense, you have a new baby this year, Softstart, that you’re putting together. How did you guys identify the opportunity for that new product specifically?

Simon De Baene: That’s one of the big benefits of having a successful product is that now you can build stuff around the customers that you already have. We’re lucky we went for volume. We have thousands of customers; I think it’s around 17,000 and they are active customers.

So exploring the opportunities with those customers is much easier. It’s like they’re screaming opportunities all the time, like, “Why don’t you guys build this?” We get a lot of feedback from users that use Officevibe. We get a lot of feedback from people and ShareGate. We have access to those people. We can call them, talk with them, we can test stuff with them. That’s the biggest benefit of doing exploration inside of successful companies that you have access to resources that weren’t there before.

What we’re doing with Softstart feels like a natural extension of what we’re doing right now if you think about the stuff we’re doing in Officevibe. It’s a platform around employee engagement. Engagement used to be the buzzword for a few years, and now the new buzzword is around employee experience. And employee experience starts from recruitment, onboarding…

So, we’re navigating in that world already. And for us, onboarding with the rise of remote work, with the post-pandemic reality, it was just enough products to focus on. What used to be like, “Welcome to GSoft,” at 9:00 AM at the front door of the office has changed to where you’re now welcoming companies in the digital world, which is a completely different approach.

You still need to connect with people. How do you immerse in a company when you’re at home in your office and you don’t have access to the physical world? So, for us, it became an obvious opportunity and it feels right. There’s a market for it. People want it. So it’s like, “Let’s build the greatest product for onboarding employees.”

Etienne Garbugli: So, there’s a bottom-up component where you guys see the signals based on your existing customer base, and there’s a top-down where you’re looking at macro trends where it’s like, “Okay, we know that remote work is picking up. This is working, this is going in that direction.” You’re kind of connecting both and saying, “There seems to be an opportunity there.”

How are you guys making sure that the product matches with the market need, at this point? It gets on the market, the product exists; how do you guys make sure that it fits the market?

Simon De Baene: That’s a good summary; what you said just before. It’s having access to customers so we have a lot of signals. And, yes, we’re very passionate and interested in the trends that are happening around us, and we need to understand them if we want to keep going.

But how do we test the product? We know the minimum viable product and building MVPs. I don’t think we all have the same definition of what an MVP is and there’s a lot of talk around that. I’ll say it in my own words. I think it’s more the fact that it’s very aligned with the kind of products we’re building at GSoft, products around simplicity.

We’re never in the feature world. We’re not trying to outpace our competitors with the features. We’re just trying to build the most important features and make them just dead simple. That approach allows us to be able to build products at a pace that makes sense and that allows us to be in the market quickly.

So, it doesn’t require massive investment to just test the market. And because we have access to customers, we can call them and do a live session with them and show them what we’re doing. And they like that. They’re part of building a product there. They feel connected with us, the same way we feel connected with them. I think that’s the power of being able to build products with your existing customer base and just keep building around them.

I think that once you get a good customer base, that’s gold. They are people on the field, experiencing the problems in their day-to-day, and you can talk with them and they can share their experience with you. You just need to be good at listening to them and be good at being creative in the solution you want to provide to them.

I think with the customers we have, we’re going to be able to build amazing products for the next 10, 15, 20 years. And it’s not the kind of thing that I realized early in the business because we were too busy trying to make it. But now that we have existing products that are successful and we have a lot of customers out there, how can we build a long-lasting company?

For me, it’s obvious. It’s like, “Let’s work with them. Let’s build products for the people we’re already serving.” Then we just need to be good at finding the right method of doing it, but I think that the broad concept is to build with your customers.

That’s only something you can do once you have those customers. So we’re in a different phase than a startup would have. When you start from nothing, it’s a very different approach.

Etienne Garbugli: When you guys have a new product concept, a new product idea, or a new product comes out, what do you think gets these first customers to want to take part? Is it because of the goodwill that you’ve built with having the other products? What gets them to say, “Oh, they have a new product! I’m going to check it out, I’m going to share my feedback and help them build a great product.”? What convinces these people early on?

Simon De Baene: First, you have to solve a problem. That’s the obvious one. They’re not going to buy your product because they like you, and I don’t want them to buy a product just because they like us. If they only do this for that reason, once they get to use the product, if they don’t like it, it’s not good for business.

So, solve a problem; be passionate about the problem. Solve it so well that people are going to have a good reason to use it. Then I think what helps is the credibility. We already helped you with another problem and we solved it very well. So, it’s trust.

You have to build trust with your customers. Once you build that trust, just keep maintaining that trust and just bring the other stuff. And don’t try to be too pushy about it. Solve a real problem.

And now that you have access to those customers, if you find a good way to introduce the product to their reality, you’ll see if there’s a fit. But because we know the way they use our product and the way they talk to us, the feedback they give us, we know that they need it.

Now, it’s a question of; how can we introduce it? How can we build a nice ecosystem of products that can promote each other without becoming too pushy like, “Hey, just buy all our products.”?

It’s a fine line. I don’t have the solution yet, but the more we’re growing as a company, the more the products are converging in a very subtle way, and the more they’re connecting to each other in an indirect and direct way, the better we’re going to make it happen and the better we’re going to be able to keep growing as a company.

Because if I can use my ShareGate customers, and I can find a way to introduce them to what we do on Officevibe, that’s amazing. If I can do the same thing with Softstart, it allows a new product to emerge, and then the next product can benefit from that.

That’s one of the reasons why we’re trying to evolve the family of products around the existing products. We’re not trying to go completely left field. It’s like cousins. They’re not too far. Then we keep extending.

And I think it’s easy to say that, but it’s the third product. To be honest with you, in the last 15 years, we’ve probably launched 25 products and they all failed. Some of them were very small experiments. We actually invested massively in products that we decided to pull the plug on and it’s still very difficult.

My wish is to build a family of products. I think now we’re in a better place. We have the right mindset. We have the financial resources, we have the expertise, the right people. We have everything in place to make it happen. Now is the time to execute and make it happen.

We were so busy in the last few years just to make sure Officevibe was successful. We’ve never been that motivated at growing the family of products in the company.

Etienne Garbugli: As a company that started as a consulting company, what’s the role of services in all this? Are you guys still offering services on top of the software? Is it still related to the other? Did the role of services evolve over time? Is that something that’s mandatory for a B2B company to grow to where you guys are?

Simon De Baene: To your question, if we still provide services? No. In 2017, we did a full transition to a 100% product company. I think that the services, at the beginning, helped us learn about the market. We were very young; let’s keep that in mind. GSoft is pretty much my first job. I mean, I worked at CGI before, but it was more like a job when I was in school.

The service side of the company helped us learn, get to know people, build a relationship, and get exposed to problems happening in companies. We’re fully dedicated to B2B products so we have to understand how companies operate.

That was our first taste of how companies work. And it didn’t taste very well. It made us realize that there’s so much stuff to fix. There’s so much legacy in companies, more than we think.

If I can talk for us; we’re a tech company, we’re using the latest, best software, best of the breed, but this is not the case for most people. Most companies are still using that old-school legacy product that they feel like they’re stuck with and they’re still using a lot of paper.

The service side helped us understand that. And because of the service side, we started to build a lot of stuff on SharePoint, and ShareGate came right after that. It helped us understand the platform. So, no service, ShareGate. That’s for sure.

And then Officevibe happened at the moment where the GSoft culture was something we were very proud of and wanted to share more than ever. It just made sense to share that belief around creating a more human environment and respecting people. So, it just made sense.

Now I think that what the service was doing, at first, was replaced by the fact that we’re having customers. We have access to the knowledge that we use to grasp by being on the field. So it was replaced. I think I prefer to have access to customers and being on the field because now we have much more clarity and more diverse customers from around the world experiencing so many different things. So there’s so much to learn from them. And after that, it’s our job to build the right stuff for them.

So, a lot of learning. I would say that service is one thing we didn’t talk about, but GSoft is a bootstrap company. We have no debt; never got any funding. So we’re 100% owner of GSoft. And why? Because the service side became a way to raise capital.

Back in the day, we weren’t paid a lot as partners. I had the smallest salary in the company and we were taking the money and trying to reach milestones in terms of how much we had. And at some point, we took that capital and just invested in ShareGate and then Officevibe.

And because of that, now we’re 100% owners. We were profitable since day one, never raised any capital, and we’re 100% owners of the company. It’s crazy. Now that we’re approaching a hundred million AR, sometimes I have to pinch myself because there are not a lot of relatable stories in the market. I can think of MailChimp. They just sold for 12 billion. Two owners, 50/50. That’s crazy.

So, the service side of GSoft brought us a lot. I’m happy that we went through that phase. To be honest with you, when I was 20 years old, I didn’t know what I wanted to do exactly. I just knew that I wanted to be that fresh air, just to be part of creating something that would be from Montreal and Quebec. I just wanted to create something nice around here.

I didn’t have a clear product idea to build. And if someone had given me millions of dollars when I was 20 years old, I don’t think I was ready to invest that much. I was not ready to have that kind of money in my hands. I’m happy that it took a longer time and now it’s a different story.

Etienne Garbugli: There’s a nice, organic evolution as a company and probably as a person, I would assume, as well. Thanks a lot for your time. Where can people go to learn more about your work and your company’s work?

Simon De Baene: We just launched a new website. I’m very proud of it. There’s a lot of good stuff in there. Officevibe has its website, ShareGate also. These are full-blown SaaS products with so many people working around all of these products.

Everything is there. I think people can reach me if they want or if they have any questions. I try to answer as much as I can to people when they have questions. I’m pretty available and trying to help people.

I’m here today. I think we have a great story and I’m always very proud to share it. When we started GSoft, it felt in our mind that reaching 10 employees was the biggest success ever. For us, it was everything. We didn’t think big at the time. We didn’t feel that we deserved it. It didn’t happen around us.

We were not from that world at all. I knew that my father built something, so I’m always very proud to show that it’s possible. There are a lot of companies that fell for sure. The only reason that some are successful is that they allow them to believe it’s possible. And it’s a mindset at some point.

It’s more like; it’s possible, in Montreal and Quebec, to build amazing companies. It’s a matter of giving it a shot to allow yourself to believe that you hold that up. It’s possible. It just happened here.

I know that we have a very special story. Maybe it’s special because it’s my own story, but I feel like the probability that it happened was very low, but we weren’t impatient. It’s been 15 years. We’re almost dinosaurs in the tech world.

We’re promoting a lot of stories around build fast and companies that sold after two years. These are amazing stories, but there are also amazing stories of older companies that were patient and waited a long time to reach some great milestones. And that’s fine if you have passion in what you do.

I know that you’re doing a lot of things around B2B. I think that B2B is still very underrated. A lot of people don’t understand how many things need to be fixed in companies to make them more successful. There are a lot of products to build to help companies.

The difference with consumer products is that companies are willing to pay for those products. You get a check. That’s amazing. They have budgets for that.

Etienne Garbugli: Yeah. It’s amazing. Thank you very much. I really appreciate it.

Simon De Baene: Thank you very much.

More on Product Innovation

[ Interview ] B2B Product Positioning Expert Nkiruka Nwasokwa on Creating Value Propositions That Sell

A few weeks back, I spoke to Nkiruka Nwasokwa for The Lean B2B Podcast. We talked about sales, disruptive innovation, value proposition design, B2B product positioning, and customer development.

You can watch the full interview below, or access it on iTunes, Google, or Spotify.

Interview Transcript


Nkiruka Nwasokwa – B2B Product Positioning Expert

Etienne Garbugli: My guest today is Nkiruka Nwasokwa. Nkiruka helps technical founders with great but complicated technologies explain and sell their products with a really interesting framework that she developed. Nkiruka is a math major. She has 20 years of experience working in marketing and advertising with the last four focused on clarity and explainability of abstract concepts here.

Nkiruka, welcome to the podcast.

Nkiruka Nwasokwa: Glad to be here.

Etienne Garbugli: So maybe as a first question, can you maybe talk about your background and what got you interested in disruptive innovation?

Nkiruka Nwasokwa: I’ve always been interested in innovation and original ideas. It’s kind of a long backstory, but I had been writing since I was very young, but I also have an analytical side. So I have both the creative and the analytical. And after college, as you mentioned in the intro, I got involved in advertising, marketing, but I found that I was actually drawn towards ideas that were really innovative.

And when I went out on my own and started doing freelance work, I started getting clients who were more on the creative, cutting-edge side. And I had a client who actually had a very innovative process. I refer to everything as a product, whether it’s a process, a system, a physical product. Just anything that solves a problem for someone, I refer to it as a Product, Solution, or Technology.

His product was actually very innovative, very cutting edge for his market. But it was unlike anything that they had ever seen or heard of before. So he was having trouble explaining it. And I found that that level of innovation was really fascinating to me.

And so that’s how I got into the work that I’ve been doing. But I’m always drawn to ideas that break the status quo and are different because I think that’s how we move things forward and that’s how you get those insights that move people and society and things forward.

Etienne Garbugli: That’s great. In our previous discussion, you had mentioned that you did a deep dive into how successful innovations were brought to market. What are some of the key things that you learned?

Nkiruka Nwasokwa: Specifically, I was looking at how the creators of those innovations explained them or described them to their market. So really looking at how those ideas were shaped in the minds of the target customers. And the main thing that I discovered is that when you innovate; when you create any kind of product or service, you don’t just create the product once. You actually have to build it twice.

You build it once as a thing that you create. Let’s just say it’s physical technology. So you actually engineer the thing. But then, you actually also have to build it in your customer’s mind so that they can see the value and see the impact of the thing you built. Because we’ve built this incredible technology, but they misunderstand it or they think it’s something else, or they think it does something else.

And whatever it is that they think it is or does has less value than the thing you’ve actually built. Then you don’t actually have an innovative product because what matters is the customer’s understanding of your product. So you can imagine you have the original thing, but the only thing that matters is that hologram or that image, or that idea, or understanding in your customer’s mind, and that’s what you have to engineer.

So your work isn’t done. You have to also re-engineer it again. And that’s what a lot of people miss because they’re struggling to get people to see the incredible thing that they’ve built. But there are some nuances to that that can actually hurt that process or slow things down in terms of people having the right thing built in their minds. And so that’s what I’ve come to observe.

So, with your questions specifically, some innovations that were brought to market, I noticed that they all had one thing in common, which is that there was a contradiction at the heart of how these products were described. And explaining that the product as a logical contradiction immediately snaps the customer’s mind into an understanding of what the product can do.

An example is the first iPod that was created in 2001. Steve Jobs didn’t come out and market it as a five-gigabit music player that stores songs at a 160-kilobit rate because, yes, that actually was what it does, and that is groundbreaking, but that’s not the right understanding for the target customer. The right understanding for the target customer — which is just general music users or music lovers and it’s not about dumbing it down because everybody is intelligent — that’s my basic premise.

Everybody is intelligent. Everybody has enough background to understand whatever it is you’ve created. The right way of describing that product was 1,000 songs in your pocket. And that’s a contradiction that communicates to the customer something that actually sounds impossible to them.

So it’s a device that holds 1,000 songs, which is an astronomical amount of music for that time period, but it fits in your pocket, which actually sounds impossible for that time period because people at that time only understood Walkmans and CD players, none of which held a 1,000 songs. I think they held at most 15 or 20 and they didn’t fit in your pocket.

So this was a groundbreaking idea. It was literally unheard of. And so that contradiction communicates to the market exactly how it’s making their lives faster or easier — hold lots of songs, carry them around easily — but in a way that’s never been done before. And that never-been-done-before aspect is what people really have to get in order to grasp the value of your product.

So, again, Steve Jobs engineered his product, the five-gigabit music player. That’s the technology. But then he has to re-engineer it again in a customer’s mind and as this contradiction, 1,000 songs in your pocket.

And so that phrase isn’t amazing because it’s short or because it’s snappy. It’s actually amazing because it’s actually a contradiction and it’s a unique contradiction for that specific market. So that contradiction has to be unique to your product and unique to the market. Meaning they’ve never heard it before and it doesn’t actually sound possible to them. And that’s what snaps them awake.

And there are other examples of this. Another successful innovation, just to throw another one out there, is the Dyson vacuum cleaner. When he launched, he was doing this really cool commercial where he was just sitting there with this crazy-looking vacuum cleaner. And he says, “The only vacuum that doesn’t lose suction.”

Now, that’s also kind of a contradiction. Well, every vacuum cleaner eventually loses suction because it has a bag and the apparatus and the machinery eventually get run down. And he says, “No, it never loses suction.” So he contradicts that.

So immediately you hear this, you’re like, “So it’s basically almost a vacuum cleaner that runs forever?” He’s built this product, but he doesn’t tell you, well, he does eventually, but he doesn’t lead with the dual cyclone and technology. When he really wants to shape it in the customer’s mind, the takeaway is “the only vacuum cleaner that doesn’t lose suction”. Immediately, you get it.

And then all the details about the engineering and the design; that’s the how of how that’s being done. And so a lot of innovations follow this pattern of that contradiction and then drawing people in, rebuilding it in their mind as this as a breakthrough. The contradiction is how people see the breakthrough. The two that I mentioned did pretty well. They’re products that did pretty well.

Etienne Garbugli: We know about both of them at least. But I’m also getting from what you’re mentioning that there’s a really important aspect of understanding the points of reference of these people. Like, at the time, you were talking about 15 songs was the standard; now you’re comparing to that or you’re creating that gap. At the same time, it fits in my pocket. So, is it an essential part to really grasp what the reference points of your customers are?

Nkiruka Nwasokwa: That’s essential. That’s actually the first step because if you have a contradiction that isn’t relevant to your target market, then your product isn’t relevant. And I actually have a story. I spoke with someone who had a technology that reduced a process from I think it was like seven minutes down to three milliseconds, which is pretty incredible for that timeframe. It turns out his customers didn’t care.

So your contradiction has to be improving on something that they care about. And so the first step is to understand what their status quo is. And typically, if you were to break it down, every technology solves a problem or presents an opportunity. So you want to look at how your technology makes life for your customer faster or easier than what they’re currently doing. And it better be a lot faster and a lot easier.

Then you want to look at, well, what’s that basic benefit that is making it faster or easier. And then you want to look at how your technology delivers that benefit in that contradictory way. How does it contradict the status quo? How is it delivering that benefit without sort of the normal ingredients that come with delivering that benefit?

An example is the Ring video doorbell. That’s another product everyone probably knows about. It’s kind of hard to imagine now, but remember when in life there were no video doorbells, surveillance was just for the super-rich or the police or the CIA or whatever. People didn’t have that.

Then someone comes along and invents this product that lets you get the basic benefit of answering the door without being home. And that’s a contradiction because as far as most people know, you have to be home to physically answer the door. And he says, “Well, no, you don’t have to be home anymore.”

So a basic benefit is answering the door and the contradiction is without physically being home. And that was the paradigm shift. And it was relevant as you can see it’s quite a lucrative market. And Ring was sold to Amazon for, I think it was a billion dollars or something like that. But that was a contradiction at the heart of the product; answer the door from anywhere, answer the door without being home. It contradicted the status quo and moved things forward.

Etienne Garbugli: Do you have any idea or any questions that maybe founders or innovators can ask themselves or their users to understand what the right contradiction might be for their technology?

Nkiruka Nwasokwa: Yeah. It’s really what I said before. The most important question is how does my product, how does my technology make things faster or easier for the customer? And then ask yourself, what is making it faster or easier for the customer to do or to get?

So, if we look at Ring, I’ll see if I didn’t do this on the fly. Well, the first question is, is it making things faster or easier? The answer actually for any product is probably both, but you just pick one. So with Ring, let’s just say it’s easier. You just get a sense of it. It’s making things easier.

And then you ask yourself, well, what does it make easier? Well, it’s easier to check who’s at the door or monitor the front door. And then you say, okay, so answering the front door. And then you look at well, in the way that it’s doing that, in the mechanism that it’s doing that, how is it contradicting the normal way of answering the front door? Because there’s a way that people already do it. How does your product do that in a way that contradicts that?

And that’s the key to every breakthrough innovation. I think it’s at the heart of every innovation, but let’s just play with breakthrough innovations for the time being. And you want to look at how it contradicts the way that people normally do that.

And so, with Ring, you can answer the door without being home. And that’s the contradiction concept. That concept is inherent in the notion of answering the door. With most people at that time, okay, I’m going to answer the door. I’m probably sitting on the couch and I hear the doorbell ring or I’m in someplace in my house and I hear the doorbell ring. I run downstairs and answer the door. But now, Ring is saying, “We’re going to contradict that.” That’s what the technology does.

Now, you can answer the door and you’re not at home. So we just contradicted that whole concept. And that’s what you have to dig to find out. That contradiction concept is actually an inherent part of the benefit. So you have to actually look at the benefit and say, “Well, what does it mean to answer the door?” Okay, well, I get up. I’m home. I touch the doorknob.

Just look at all the things and then ask yourself, “Well, which of these concepts or ideas is my product actually removing from the equation” Once you find that, you’ve got your contradiction, “answer the door without being home”.

So there’s always a core benefit and then a contradiction concept. So you take it from inside the benefit and say, “Well, we don’t do this piece of it anymore.” And you’ll know that you have the right idea if it kind of sounds weird. Like, how can you do that? Even when you say it to yourself or you imagine your target customer hearing it, you should be able to imagine them saying, “Well, how is that even possible?”

And that’s the point. It should sound like magic because technology is kind of like magic. I think Arthur C. Clarke said, “Any sufficiently advanced technology is indistinguishable from magic.” So the contradiction bridges that gap and it directly tells people what the magic of your product is without you having to explain all the details of what it does and how it works and forcing them to piece together why it’s incredible. You can just directly tell them and you do that with a contradiction. And it blows their mind, too.

Etienne Garbugli: Are there any guidelines in terms of how you express it? Like the ones you mentioned were fairly short. Can I have a longer one or what kind of words should I be using? Are there things that are guidelines in terms of how I express my contradiction?

Nkiruka Nwasokwa: Yeah. The contradiction itself is actually a very simple statement and it’s a short statement. Again, not because people are dumb and not because you’re trying to be catchy but because that’s the fastest way. And that’s actually the most powerful way for people to understand the concept.

The other thing is they have no adjectives or adverbs or any kind of descriptive language or anything that remotely sounds like you’re trying to convince someone. So you would never say, “A more efficient way of doing…” because efficient is a judgment. It’s an adjective.

And the reason we don’t use adjectives is because adjectives are you drawing a conclusion for your customer and feeding it to them about how they should think about your product. When you say it’s a more efficient way to do this, then it hits the customer’s mind as, “Oh, they want me to perceive it that way.” But then, maybe even subconsciously, it’s like, “Well, I’ll be the judge of that.” And then people want to maybe push back. People don’t really trust the judgments or the descriptions that you give them about your own product because, of course, you’re going to tell them that it’s amazing.

What’s better is to keep it completely objective and make it a statement that when people hear it, all they need to know is that, if what you’ve just said is true, then this product is amazing. And they themselves would judge it to be efficient, fast, better than all the other options that are out there.

And you don’t have to convince them at all that. As soon as it feels like they’re being convinced, if you throw in an adjective, even the way the words are put together, if it sounds like a marketing statement, then immediately, people’s guard goes up. It sounds like a tagline. It sounds like a slogan. It sounds like you’re trying to… and we’re inundated with that.

But if you hear something like “The texting app that works without internet.” There are no adjectives in that statement. But for most people who are not familiar with Bluetooth mesh network technology, that statement is mind-blowing. “Wait, how can I send text messages if I don’t have internet and if I’m not connected to Wi-Fi? How does that work?” Pure contradiction. Send a message using your phone without internet.

They don’t need to tell you that it’s faster than searching for Wi-Fi. They don’t need to tell you that it’s easier. Those are both adjectives. They’re both judgments and they become judgments if you use them in this statement. They can be objectively true, but the moment you tell someone that they’re true; you’re trying to convince them to want your product.

So what you do is you just give them the facts. It’s almost like they’re a jury in a trial. Just give them the facts and let them be the judge of whether it’s amazing, worthwhile, and incredible so “1,000 songs in your pocket”.

And technically, numbers are adjectives, but not in the sense that we’re talking about. “1,000 songs in your pocket”; he didn’t say the most incredible MP3 player. He didn’t say cutting-edge. He didn’t say groundbreaking. He didn’t say any of the things people want to say about their product. And the industry is riddled with adjectives and overblown language and slogans. And for some people, that works.

And for some, it doesn’t.

But for a breakthrough technology, it can actually cover up the innovation because all people hear is the fact that you’re trying to sell it. They don’t actually see the power of the technology that you’ve created. And when you get to the essence of it, and you just put that in front of people, it just burns through all those layers of skepticism and dismissiveness, and it’s just like, “Whoa! What? How do you make apps work without internet? How does this happen?

Etienne Garbugli: Well, it’s interesting because it’s like showing restraint helps make it more believable. Whereas a lot of entrepreneurs or marketers will think that adding these objectives or anything that helps clarify or make it even more impressive or making more feel like it’s magical will make it more believable to people when it’s really, from what I’m understanding from what you’re saying is by just removing all the luster or all the fireworks or anything like that, just making it core and make the idea clear helps make it more believable.

Nkiruka Nwasokwa: Yes. And it’s good that you mentioned believable. The next piece of this is when you find the contradiction; you also have to make sure that it’s a certain kind of claim.

So we removed the adjectives so that people don’t feel like you’re trying to sell them something. Because if you use an adjective immediately, people hear that you’re trying to sell them because adjectives sell. Take out the adjectives so it doesn’t sound like you’re trying to sell them anything.

So they don’t even know that you’re giving a pitch. So we take out all the adjectives. Now, you look at your statement, you look at your contradiction and you want to make sure that it’s a statement that is what I call obviously believable.

So if we look at, “Answer the door without being home”, that statement is what I call, obviously, believable because the statement actually tells you how you could prove it false if I’m lying. You know exactly how to prove it false. You’re going to get the Ring doorbell and you’re going to say, “Does it let me answer the door and can I do it without being home?” Are you going to grab an iPod and say, “Does it hold 1,000 songs? Does it fit in my pocket?” The statement tells you how to prove it false if it’s not true.

Now, the cool thing is when you hear a statement like this, you immediately know how to prove it false. And you know that it’s that transparent that it’s telling you what to check. It tells you what to check so those things are obvious and those things are easy to check. So they have to be things that can be checked immediately. That’s why we don’t want it to be a statement like “Save 30% off your budget in one year.” Yeah, it’s obvious what to check, but those things aren’t easy to check. I mean, even 30%, there’s a little math you’ve got to do to figure out, well, is it 30% less than what it was? And then you got to wait an entire year to see if it actually happened. That’s not easy to check. There’s already a lot involved there. There’s time and then there’s comparisons.

So it has to be something that is obvious and it has to be immediate. So “1,000 songs in your pocket”, if we’re talking about a product, it’s immediate because you know, theoretically, hypothetically, I could just get it and see how many songs does it hold? Does it fit in my pocket?

Now, in the moment, you don’t actually have to go run and get an iPod. Just knowing that you could confirm it and prove it false lets you know that the statement has to be true because Steve Jobs wouldn’t make such a crazy statement that tells you how to prove it false, unless it were actually true. Therefore, it has to be true. So it sounds true because it’s such a clean statement.

But if you said it’s cutting edge technology; well, there’s no way to prove cutting edge because that means different things to different people, but 1,000 songs in your pocket. Well, either it holds 1,000 songs or it doesn’t. So that’s a binary value for that piece of it. And either it fits in your pocket or it doesn’t. Again, binary value. So each piece of the contradiction has to have a value of either true or false. And that’s where objectivity comes in. It has to be an objective statement.

So the way it then hits your customer’s mind is it just sounds like an objective statement of fact. So they immediately believe it. It’s inherently trustworthy because, again, they know they could prove it false, so why would you be lying? And then it’s also saying something incredible, something amazing. And so it sounds impossible and it sounds true at the same time. And that combination is what makes it mind-blowing.

Very few people do this. Very few products have statements like this. But when you do, you tend to get that effect that people will say, “Well, how does it do that?” And that’s exactly where you want them to be because that means they believe you. But now they have to know how it works. And that now you get to explain the five-gigabit hard drive and they will listen to every word.

Etienne Garbugli: So you have this great framework called invisibility. And I’m going to refer to the contradiction with your service, which is helping tech founders win deals without pitching, which does seem unbelievable to say. Not unbelievable, but it seems like a contradiction. You mentioned believability needs to have a contradiction. What are the other elements of your framework?

Nkiruka Nwasokwa: The “win deals without pitching” is kind of an umbrella to capture what we’re really doing. So most people, when they think of selling something innovative and new, they want to pitch it because it’s so incredible. They want people to know like, “This is amazing!” And then they want to tell you why it’s amazing, but everyone feels like that about their product all the time.

And so people, investors, customers, and buyers, whatever; they’re hearing this all day, every day. So almost everything sounds like a pitch and that’s why we don’t use adjectives.

Because the moment you use even one adjective, “It’s a more efficient software.” Boom, you’re selling. It’s done. So what we want to do is we want to win deals, we want to win people over. We want to convince them without pitching them.

And so I actually call this whole principle invisibility. And what it means is that you’re talking about your products in a subtle way that causes your customer to immediately convince themselves that they need it and that nothing else can do what it does. So a deal, and I use that term loosely, happens sooner and quite easily. Meaning they’re interested; they want to hear more, “I got to hear how this whole thing works.”

This actually happened with my first client where we found this contradiction. People started having that reaction immediately to what he does, and he sells an IT service. It’s not intuitively the sexiest, most amazing thing, but it’s brilliant. What he does is brilliant. And for his target customers who are CIOs large organizations, he can help them do this incredible thing.

So getting back to invisibility; it’s all your product. Yes, you are pitching it, but you’re also not pitching it. And so what invisibility does is it enables you to pitch your technology to a potential customer any time for as long as it takes to convince them because they never know you’re giving a pitch. And what that means is you never actually need to get their permission. You never need to steal them for a moment to throw all your adjectives at them. It’s invisible in its style because it doesn’t remotely smell like a pitch.

Let’s look at our examples: “Answer the door from anywhere.” So, it’s like, “Etienne, what does your product do? I hear you have this thing called Ring? What does it do?” You say, “Oh, it lets you answer the door from anywhere.” That’s not a pitch, but it is because to that customer that doesn’t sound like a pitch. It just sounds like a description of what it does.

The problem is it’s the most incredible, amazing thing they’ve ever heard because it’s a contradiction. So it doesn’t smell like a pitch because you didn’t use any adjectives. So it’s invisible in its style. It’s also invisible in its length. “Answer the door from anywhere,” you can say that in about 3.5 seconds.

The other hallmark of the pitch is that it’s kind of long. You feel like you got to sit and everybody really would see that. When you use a contradiction and you’ve distilled what your technology does down to that three to five seconds statement, you can just give it to someone, state it to someone. They won’t even know that they’ve been sold.

If you’re talking to the right customer and you know that your product makes life faster or easier for them in a way that’s truly meaningful, and you’ve identified that contradiction concept within the benefit, and you’ve pulled it out, and you say it to a homeowner who cares about home security, “Yeah, this lets you answer the door from anywhere,” you’ve got their attention. And it was so short, they didn’t even know what hit them. It’s not even an elevator pitch.

So what do we have? Number one, it’s invisible in its style. It doesn’t smell like a pitch because you don’t have any adjectives. It’s invisible in its length. It’s so short, people don’t even realize they’ve been pitched. And it’s also invisible in its content. And we’ve covered that as well. It’s saying something so incredible that it doesn’t sound like a pitch.

Most pitches sound like you’ve got something kind of cool and now I’m trying to convince you. I’m trying to convince you that this thing I just told you really is as cool as I believe it to be. And that’s a pitch. You’re trying to bridge that gap. Like, “I’ve got this good thing and I want you to also believe that it’s good. So now I’m going to explain to you why you should think that the thing I just told you about is really good if you don’t already think it’s good.”

It’s kind of weird, right? But with this invisible pitch, you tell them and they’re immediately like, “Whoa, that’s amazing!” “How do you do that?” “How can I text without internet?”

“How do I answer the door if I’m not home?” They can’t figure it out because they live in their world, their status quo, and they weren’t there when you built the product. Your product is literally on the edge of what’s possible.

So that when you tell them, when you land on earth, then you tell them, “I’ve got this amazing thing,” they’re like, “Whoa, how did you do that?” And for you, it’s nothing because you’ve built it, but it will blow their mind. And it should. When people hear what your incredible technology does, it should blow their mind. It should make them say, “How the hell did you do that?”

Etienne Garbugli: Is it how you test it in that case? Is it you’re trying to get that reaction so you’re just coming up with that new statement and you would try to see what kind of reaction you’re getting from people? So when you’re working with a client, for example, how do you know that it works? How do you know that it attracts or creates that reaction?

Nkiruka Nwasokwa: Yeah. Perfect. You actually test it. When I work with clients, we go through that whole process of identifying the benefit. Is it faster, easier, cool? What benefit is it making faster or easier? Find a contradiction concept. Boom. We’ve got the contradiction.

Then I say, “Okay. Now you have to go test it.” And testing it is really easy and very fun. All you do is however you currently bump into customers, interact with customers, interact with buyers. And my process is specifically for people who are selling B2B. Typically, their product is $50,000 or more per month or per client. It’s that level because the stakes are really high. It’s a really high-ticket offering. So it’s like enterprise level.

The way that it’s tested is you take the contradiction and it’s an iterative process. Let’s say we have a contradiction we think will work. You go and use that in your networking conversations, your chats, and your meetings with people. And you use it at what I call the explanation point. So the very first moment where you’re going to explain the product for the first time to a potential customer, that’s where you use it. And you don’t tell them you’re going to use it. You don’t say, “Hey, I’m testing some messaging. Let me know what you think of this.” You do not do that.

You just use it in explaining your product. So let’s say you meet someone at a networking event. The client I mentioned works in IT. He did a lot of networking. So this is ideal. If we’re meeting in person or over Zoom and people say, “So, what do you do?” And you say, “Oh I have a process that lets you spend less on software without buying less software.” And you shut up.

And if that is an amazing contradiction to this target customer… we have to assume you’re talking to the right person. That’s an absolute must. You must have a way to find the right people, get in front of them, and get into conversation with them so you can actually use your statement. If you’re talking to the right person, their immediate reaction will be, “How?” Immediately because, again, you’ve told them something where it’s obvious to them how to check it. They know how to check it, how to verify it. Those things are easy to verify and it sounds completely amazing. In fact, it sounds impossible because that’s what a contradiction is. It literally sounds impossible to them. They can’t figure out how you do that.

So now their curiosity is so high. Their interest is so high because it’s also something they want, it’s a problem they have, or it’s something they want. They’re going to ask you how because, to them, it will sound like a magic trick. And I like to say that it’s the verbal equivalent of a magic trick. “Well, how do you do this? How do I spend less on software if I’m not buying less of it? That doesn’t really make sense.”

And that’s exactly what my client does. People started asking him, “How do you do this?”

And he was actually able to go from averaging like one interested buyer over four months. And it was a struggle because he was constantly hustling and networking and trying to explain what he does and explain the process, how it works, why it saves them hundreds of thousands of dollars, why they should really invest in this thing that he does.

Etienne Garbugli: So big pitch.

Nkiruka Nwasokwa: Yeah. And people would kind of fall asleep with their eyes open because he was explaining the details of this thing and they don’t even know why they should be listening or what the value is. But when he found the contradiction, he found the thing that they value, the benefit; how was he delivering that benefit in a way that contradicts everything they know?

And it has to be a literal contradiction. It can’t just be like a pain point, like, “Spend less on software without the hassle of blah, blah, blah, blah, blah.” Without getting too technical because this is a very sophisticated framework, but words like “hassle”. Hassle is not an adjective, but it is a judgment and it’s subjective. So when you say, “…without the hassle of…” well, hassle means different things to different people. And also sounds like they’re trying to convince you of something. I’m trying to tell you that this is a hassle for you and I solved it. Therefore, you should like this thing that I built. That’s not very attractive.

So we don’t use the words hassle or difficulty, or we’re not trying to tell them what their problem is. If they have a problem, your contradiction will wake them up in the moment. And they’ll say, “Whoa, how do you do that?” That’s what happened to this client.

He started telling people, “I help you spend less on software without buying less software.” And he had some funny stories of the reactions he started getting. He was at a breakfast networking event and one woman talked to him for so long. She was so amazed that their coffee and their food got cold. Other people started inviting him to speak, inviting him to share. He started getting referrals up the food chain to decision-makers at his target organizations. Really incredible things started happening and I think he went from just getting one interested buyer in like four months to getting six of them in six weeks. And his product or service is $75,000 for a six-month engagement.

So the value of his sales pipeline went from $75,000 over four months to $450,000. And these were people who were really interested, lined up, ready to go. $450,000 over six weeks, which is about one and a half months. So it kind of exploded things for him. And that’s because he went invisible. He made the pitch invisible because nobody cares about your pitch.

They want to hear how your thing is life-changing for them. And you can’t tell them it’s life-changing. You can only tell them what it does in a way that will have them see for themselves that it’s life-changing and that’s what he did. And so his pipeline just kind of blew up. And that was just before COVID hit. So he did better in the year when COVID started.

Etienne Garbugli: In this case, you were testing by going through networking, meeting people. So once it starts connecting, what do you recommend entrepreneurs do once they’ve come up with the right contradiction that attracts the right people, hopefully? And how should you start using it? Should you start using it in sales pitches? Should you start reaching out to customers?

Nkiruka Nwasokwa: Use it everywhere? Yeah. “1000 songs in your pocket”, that is your product. You built it in your lab, in your garage, wherever, and then you build it again in your customer’s mind. So an iPod is “1000 songs in your pocket”. That’s what it is. And so you use that everywhere because that is your product in the customer’s mind.

In this case, you would use it as the headline. If you have no other copies, use it as you use it as a one-liner copy on your website. And there are other pieces to it. You always want to follow it up with what I call a “with or by” statement. So you’re saying this impossible thing and you’re getting people to believe it. And it makes them ask how. And they’re asking how because psychologically, the statement is telling them how to prove it or disprove it.

So now they’re trying to figure out how to do that, but the only way they know is to ask you, “Well, how does it hold 1000 songs and also fit in my pocket? How does it let me answer the door and also not be at home?” Your “with or by” statement will answer each piece of the contradiction.

So in the case of the Ring doorbell, “Answer the door without being home,” well, it’s a Wi-Fi-enabled mobile device that gives you access to video of your front door, no matter where you are in the world. So I’ve answered both pieces. And it lets you speak. It’s got audio as well. So it lets you answer the door; we just told them how it lets you do that. But it’s Wi-Fi-enabled and it’s on your phone. So now you know why you don’t have to be home.

And so that’s an example of a “with or by” statement. It has to answer each piece of the contradiction to satisfy your customer’s burning curiosity. And it also completes the loop because now they know how it works and they can see, “Wow, this is the real deal. It really does do the thing you said that it does.”

So you always have the statement.

And I think you mentioned this, but I call it a viral proposition, not a value proposition. A value proposition is flat. It’s just like, “My amazing product makes things more efficient, more efficient software, better way, blah, blah, blah.” Nobody is listening to that really. When you have a viral proposition that follows a framework that we’ve discussed: it’s a contradiction, it’s short.

We didn’t talk too much about that, but it’s going to be eight words long; eight words, or less. And the reason is that you want it to be no more than five seconds to say because that’s the optimal for comprehension. And it’s a contradiction, so it’s saying something that sounds amazing, but also impossible.

Once you have that, you use that everywhere. You make that the main line in your website, for example, and then you have your “with or by” statement to explain it. And now people understand exactly what your product does and how it works. If we’re just doing it in a running conversation, like you say, “Kiki, what does your thing do?” I say, “It lets you answer the door from anywhere, without being home.” And it’s like, “Without being home? Well, how does it do that?” And I say, “Well, it does…” And I give you the “with or by” statement.

Now it clicks and they’re like, “Oh, that’s interesting.” And if you have that problem, you’ve just been sold. Now you want to know maybe some more details. “So, how do I hook it up?” “How long does it take?” This is all the kind of stuff that would be in your body copy in your bullet points if it’s on a website. Or in a conversation, then you’re like, “Oh yeah, well, it’s very easy to set up. You can do it in like 15 minutes and this is how it works.”

And then they just keep asking you questions. They’re like, “Well, can I buy it?” if they have the problem or if they have the interest, and the sale kind of happens naturally because it was invisible. You didn’t say, “I’ve got this great product. It lets you do your home security without having to actually be present. It lets you do 24/7 surveillance.” Then they’re trying to figure out like, “Is this hype? Why are you trying to sell it so hard? Why are you throwing all these adjectives and concepts at me? I don’t know if I believe you.” But if you just tell them what it does and it’s very clear and it’s very amazing, and they get to judge that for themselves, then they say, “Whoa, that’s incredible. It really does that? That’s amazing.”

Another thing that I love is that I saw somewhere. It was something like, “When you say it, it’s selling. When they say it, you’re closing.” And the “it” is how amazing or incredible your product is. So let’s say you’re saying, “This is the most efficient, dynamic, cutting-edge way to…” If you are saying that, you’re selling. If they are saying that after what you’ve just said, you’re closing.

So you say something they’re like, “Whoa, this is the most efficient, dynamic way.” “I mean, this is a breakthrough. This is a miracle.” If they’re the one saying it, then you’ve sold.

Etienne Garbugli: Then you know it’s getting viral?

Nkiruka Nwasokwa: Yeah. Then you know that you’ve converted them and that’s because you didn’t try to push that on them. And yes, that’s what makes this a statement that is viral. It has that aspect. So it’s short enough to understand; eight words, which is about three to five seconds. Incredible enough to want; that’s important. That’s why it has to sound impossible and specifically be that contradiction.

So now, it’s amazing, but it’s also like, how is that possible? And then it has to be precise enough to believe. And that’s why it has to have obvious believability. Each element has to be obvious what to prove, as to tell you what am I proving? Okay. Answer the door, I’m not at home. And those things have to be easy to check. And you get that from that precision. So short, incredible, and precise is another quick shorthand for thinking about it.

Etienne Garbugli: It’s great. I think it’s super valuable. Maybe as the last question, kind of flipping it around, do you think there’s a way for entrepreneurs to start thinking about creating an IP based on this model, where you could guide your innovation early on, where you’re thinking through, “Okay. So what would be the contradiction that we’re enabling and how can we use that to guide what the value we’re bringing to market?”?

Nkiruka Nwasokwa: Absolutely. You want to think in terms of building a contradiction. So you might have a sense of the problem that you want to solve or the opportunity you want to make available to your target customers. Again, we go back to, is it going to make things faster or easier for the customer? You get a sense, and then you say, “Okay. What is it making faster or easier? What is the space I want to plan?” You get a sense of what that is.

So with my client, “Spend less on software. I want a way to help people spend less on software.” Then what you do is you look inside the concept. So we have this concept of spending less on software. You say, “Well, what does that mean?” Right now, if my customer in their own mind, their own logic, were going to spend less on something, what would they do? Well, they’d buy less of it or they’d get coupons or something or whatever.

You want to find that core concept that’s actually almost equivalent to the benefit. So yeah, it would be that they would buy less of it. And then that’s the thing you contradict.

Is there a way they can spend less on it without buying less of it? Then you set about to see, “Well, how would I do that?” How can I create technology or a solution where they’re decreasing the amount they’re spending on something, but they’re not buying less of it? They’re buying the same amount of it. That’s an innovation, and that’s what my client did.

And to get to the heart of what that means because I realize I haven’t explained exactly what he does, and, again, the “with or by” statements. So I’m sure some people are like, “Well, how the hell does he do that?” So yeah, it’s magic. And it sounds like magic to people. So he works in IT asset management.

And so we discovered that he helps people spend less on software without buying less software because he knows something that they don’t know. There’s a secret he knows about software and hardware and spending that most companies aren’t even aware of.

And it’s the fact that a lot of these companies, when they buy software licenses and they buy it for their employees, often they’re left with duplicate licenses. If someone leaves, they’re still paying for that license. Or someone may have a personal license for use at their own computer and a public license if they use a more general computer terminal so the company is paying for that license twice. I didn’t explain it well, but there’s duplication in the license. They’re paying for it twice.

Or if someone leaves and they’re still paying and they didn’t track, “That person left. We should close out their account.” They’re still paying for that. So there are all these unused duplicate licenses that they’re still paying for that they don’t realize they’re paying for.

So they’re actually leaking money every month, hundreds of thousands of dollars, depending on the size of the organization.

My client does this. He knows that this is a rampant problem in the industry that most people don’t realize is happening. He has an innovative way to identify all the areas where they’re leaking money in terms of these forgotten licenses that they don’t even know they’re still paying for, plugging up those holes, and immediately rescuing that money back into their budget.

So in essence, they are now spending less on software without buying lists software because they’re still using the same amount of software. They’re just not paying these extra costs from the leakages. But now, think of everything I’ve just explained about how this thing worked. If I walked up to you and said, “Yeah, most companies have these duplicate licenses and they’re paying all this money. They don’t realize they’re doing it. He helps him recover that money back into the budget.” That doesn’t sound very groundbreaking. That doesn’t sound amazing.

But when I tell you that the value is that he’s helping them spend less on software without buying less software, that contradiction, you get it. And then you want to know how, and then I explain it. But I don’t lead with the explanation, which is what most people do, and that’s what a pitch is.

A pitch is when you lead with the “with or by” statement. It’s when you lead with the explanation of how it works rather than with the statement of the breakthrough that it’s bringing for the customer. Sorry, I went off on a tangent there but that’s how it works.

Etienne Garbugli: It’s super interesting. So thanks for taking the time. Where can people go to learn more about your work?

Nkiruka Nwasokwa: You can just find me on LinkedIn at my name.

Etienne Garbugli: Thank you.

Nkiruka Nwasokwa: Thanks.

More on Product Positioning

[ Interview ] Superpowered Co-Founder Patrick Vlaskovits on the Importance of Focus and Anti-Personas in B2B

A few weeks back, I spoke to Patrick Vlaskovits for The Lean B2B Podcast. We talked about bootstrapping a business, niche markets, anti-personas, and go-to-market strategies for B2B startups.

You can watch the full interview below, or access it on iTunes, Google, or Spotify.

Interview Transcript

 

Patrick Vlaskovits – Anti-Personas

Etienne Garbugli: My guest today is Patrick Vlaskovits. Patrick is the CEO and co-founder of Superpowered, a company that was acquired just last year by Splice. Patrick is also a three-time author, including two New York Times bestsellers, The Lean Entrepreneur and Hustle, and one of the first books that I’ve read and loved on customer development, The Entrepreneur’s Guide to Customer Development.

Patrick, welcome to the podcast.

Patrick Vlaskovits: Thanks for having me.

Etienne Garbugli: I’ve been following the progress of Superpowered for years. I think it’s a really interesting company, really interesting technology. Maybe we can start there.

So what was the origin there for the company and how did Superpowered come together?

Patrick Vlaskovits: The origin of the idea actually was my co-founder Gabor Szanto. Gabor is a Hungarian; he lives near Budapest. I’m American, but my parents are Hungarian and I speak the language. So every summer, not every summer, but usually every summer, we go back to visit relatives and have fun.

About seven years ago, Gabor and I were introduced by a VC in Hungary. I was sort of between projects, Gabor had been talking to some of these VCs about some of the technology he had been working on, and they’d said, “We know this guy is technically very capable. He’s a hacker; we needed a hustler.”

So Gabor and I met at a Starbucks in Budapest, and then he kind of described to me what he felt or what he sensed. And basically, it was that there was a big shift happening in the audio space where all sorts of tools and apps that had been available on laptops, so desktop-grade processors, were now moving to mobile. This is back in 2013 and the iPhone was about five years old at this time.

He said, “Look, most of the audio algorithm, most of the audio processing infrastructure was designed for the desktop environment.” Meaning that the assumption is that there’s an x86 processor, there’s always power, ergo it doesn’t need to be that resource-efficient. Whereas if you look at the mobile devices, they’re all on processors, much more resource-efficient, and, of course, power is always an issue when it comes to mobile devices.

Gabor had basically been experimenting and building with a new way to derive audio algorithms and very computationally-intensive audio algorithms for our processor. And he had figured out a lot. And I also agreed with him. I saw what he was talking about and we took his vision for creating sort of a new library for audio transformations processing, all the typical audio stuff, and bringing it to ARM.

We generalized a solution that he had come up with and then brought it to market. And then seven years later, we were required.

Etienne Garbugli: That’s awesome. What initially attracted you personally to the project? What convinced you that this had potential?

Patrick Vlaskovits: Good question. Two things: one is Gabor is a really special guy, really talented guy. And when we spoke, we spoke both Hungarian and English to each other. Then I asked them, “Where did you learn your English?” And he goes, “Well, I learned it by watching Friends and YouTube.” At the time, he couldn’t afford English lessons, but he knew that there was a lot of technical information locked up in English language white papers at Stanford and MIT.

So he’d download them, kind of figure out some of the math on them, but couldn’t read them. So he taught himself English so he could download technical papers to get his own technology better. I thought that was really compelling in terms of a guy who was a hustler and was trying to push forward and not give up. So I thought that was pretty cool.

I liked the fact that we were in a very technical space. I thought that was very interesting and kind of a moat.

In retrospect, well, we made many mistakes, but one mistake we made because audio space is a tiny space, our TAM was really small in a lot of ways. So one mistake I think we made is, early on, we should have expanded the library to image processing as well because you can use some of the same algorithms from audio processing to image processing. We should’ve done that earlier.

We actually never did that, but we should have done that and we should’ve done it earlier. So now I think it was a mistake because our small TAM really limited us in a lot of ways.

Etienne Garbugli: You’re saying that Friends actually taught someone to read technical papers? That’s awesome. How did you go about figuring out whom, specifically, the technology would be best for, initially, and what the core value was?

Patrick Vlaskovits: This is a really interesting story. Initially, it was better performance. And better performance, in this case, meaning lower latency and less power. What’s interesting about that story, our market positioning and that story, why we think that’s important, for the first three, four years, people saw it. They got it and they’d go, “Cool. I get it.” But they weren’t really thinking about this at the time.

So we were actually a little bit too ahead of the market, which is very painful because you meet with customers. They go, “Cool.” They nod, but they don’t really sign up. So that’s very difficult, but then around year three, four, five, people started coming to us and going, “Hey, do you guys have low power, resource-efficient technology that runs well on ARM?” And we’re like, “Well, yes we do.”

So the gap between where we were and where the market was actually started closing. And then we also figured out that a large part of the value, too, was that a lot of developers were building cross-platform apps; so deploying apps to Android, iOS, even sometimes windows, et cetera. And our value is really about if you’re going to build cross-platform apps and you want one audio code base from which to work, we’re a really good choice. There are other cross-platform audio engines, but we are cross-platform and we’re very performance, which is very rare. So that was a big one. On sales calls, I always tell people, “Look, if you’re just going to do an iOS app and you don’t need anything special, just use the native iOS APIs that are free. You’re better off that way. But if you’re doing iOS and Android, then there’s certainly value. If you’re doing anything else, then you should definitely use us.

So, being able to, again, not just be cross-platform, but be very high performing in all those, and especially Android. Android is quite frankly a mess when it comes to audio; that was a big value proposition for us.

Etienne Garbugli: But if you’re saying you were ahead of the market, and for the first three years, not everybody got it, how did you guys know that this was the right positioning and the right value to put forward?

Patrick Vlaskovits: I think in some senses, we were wrong. I’m not sure what we would have done differently because if you compare it to the current offerings, our positioning is that we were designed for ARM and we were much better. But it’s really hard to sell a performance.

One thing we learned, though, is positioning around Android. We knew Android was a mess as we started selling, but Android is even worse than we had even imagined. So that part of positioning worked well. We actually released a lot of content around Android and audio latency.

In fact, one thing that we did that worked really well is we named a problem. So there’s this audio latency problem in Android and a lot of developers felt this problem. So they were trying to make low-latency apps, interactive apps, and their bosses said, “Hey, this latency’s not low enough. What’s going on here?” And they couldn’t figure out why they couldn’t make it work on Android.

And then we investigated and figured out what was wrong with the Android subsystems. And we wrote this long post about why this is happening, why it’s important, how we would fix it, and we called the Android’s 10 Millisecond Problem.

Now, the phrase “Android’s 10 Millisecond Problem” is now used. Like I’ve heard complete strangers tell me about Android’s 10 Millisecond Problem.

So in terms of a little marketing trick, if you could find an unfelt or unfulfilled need in a space that your company can help solve, even naming the problem can be of tremendous value. They feel this nebulous thing, like, “Android has this thing.” And you say, “No, no, no. It’s called Android’s 10 Millisecond Problem. Here’s why it exists, ABCDE, and here’s how to solve it.”

I think more and more startups especially should take advantage of the ability to articulate and name a problem that customers have and build credibility and quite frankly, build revenue that way.

Etienne Garbugli: At the time, how conscious was that effort of trying to name it and trying to own the…?

Patrick Vlaskovits: It was conscious. It was definitely conscious because I’m a writer. There’s tons of writers that have done this for other things outside of standards. Like you know Malcolm Gladwell’s 10,000-hour rule, and there’s a bunch of these little phrases that get associated with writers. It was certainly conscious and it worked well. It doesn’t always work, but when it works, it works well.

Etienne Garbugli: So in a way you were selling the problem to some extent, or at least articulating it in a way that people could relate to, “Yeah, I know what that is. That’s the problem.” And then you put this solution in relation to the…?

Patrick Vlaskovits: The basis of all storytelling and humor is that there is some problem that needs to be examined. So you’ve got to start front-load it with the problems typically first, and then the solution is after. And that’s how people tell stories and jokes.

I think successful content marketing is also very similar, especially for us where we’re doing a lot of low volume searches, but very high intent. So if you were Googling Android audio latency or terms around it, you should definitely be looking at our stuff and you probably should get on the phone with us. Does it make sense?

Etienne Garbugli: Yeah, for sure. How did you go about figuring out how to bring Superpowered to market? You have this technology, it works, you have an idea of what the value is, how do you figure out the next step?

Patrick Vlaskovits: I had done a lot of digital marketing before and I was pretty good at it. I mean, next up natural SEO and content marketing, a very natural next step is where you have developers searching for solutions. So building not content that ranks, but actually, that solves problems — we did quite a bit of that — is very powerful. And people would tell us on sales calls, they’re like, “I’ve read every page on your blog.”

In fact, one time we outranked Android in Google for certain terms, I’m not kidding you. I don’t know if we still do, but there was a time when we were getting a good amount of traffic on Android-related audio terms. We were getting a lot of links and a lot of people writing about us and we were outranking Android itself. It was great.

Etienne Garbugli: So how did you know that content wouldn’t be the right way?

Patrick Vlaskovits: Because developers are always Googling for answers for stuff. They’re always looking for code snippets or how to think about something. Developers are always looking for answers to their problems, especially the more specific.

I remember seeing a startup I helped consult with. They looked at their search and they figured out that they were getting a lot of traffic on a very specific error code that only their software was throwing things. They were getting like 1,000 searches a month on that, and it really wasn’t leading the way.

So we told them, “You should build a page, optimized for this search that helps either the developers answer the question or lead them into a funnel or both.” So, the same thing for Superpowered. So, SEO and content market was very strong for us.

Etienne Garbugli: To figure out what questions people were asking and then creating landing pages/content pieces that help drive…?

Patrick Vlaskovits: I’ll give you one really good way and I don’t know why people don’t do this more often. In fact, I advised this to a company that was just acquired by a friend of mine; your support tickets have so much fucking information in them. And if you take them out, clean them up, you could build reams of good content at relatively low cost because you have a question or questions and then your support person has, typically, already answered the question.

So, generally speaking, you can just export it, depersonalize it, make a few tweaks, generalize it a bit, and you have this whole realm of high quality, very specific content that you can basically publish for very low cost as a knowledge base, or even as blog posts. Another thing I’ve talked about in marketing lectures is based on the questions asked, I can tell a lot about that person who’s asking the question, whether they have a budget or they don’t have the budget or things that they’re not even telling to us. So I think it’s always important to keep your finger on the pulse and support.

And early on, if you’re the CEO or if you’re the product, don’t just leave support. Don’t just go, “Okay. There’s a support function that’s siloed.” Make sure you’re in there understanding what people are asking for and why, and it can be a channel to not only derive new product features, et cetera but also to cross-sell into. There’s a ton of data there.

Etienne Garbugli: Yeah. It’s crazy how many people use support as a cost center when there’s so much stuff you could do with support content itself.

Patrick Vlaskovits: Oh, 100%. It just takes a little time to build that, but 100%. It is a cost center depending on how you’re set-up, but you definitely should be doubling down and figuring out what’s going on.

Again, there’s one company that was just acquired that I advised. Their support was a complete silo. It had nothing to do with product engineering and nothing to do with marketing. And there was just so much good data in there that they could have exploited and used, but they hadn’t made up their mind to do that.

Etienne Garbugli: So, once you guys figure out, this is the model, so we’re using content to drive people in and we’re trying to get them to buy two-user SDKs so that they use either cross-platform or for one specific. How much focus did you guys put on that specific model itself? How long did you guys remain focused on that portion itself before trying to expand as you were talking about?

Patrick Vlaskovits: I’ll kind of indirectly answer this question. One challenge with us was that the de facto competition, there was a lot of open-source stuff that’s “free”. It’s not actually free because it takes longer to use. It’s not nearly as good. Yeah, it’s free. You don’t pay for it, but most open source stuff out there is terrible. And I know that’s not very popular to say, and I’m not saying there isn’t good open-source software. There certainly is.

Most of the open-source audio stuff out there is terrible. It’s not supported, but you still have this sort of free thing. So, people go, “Well, so-and-so is free. Why should we pay you?” So you have to walk them through into, “Well, we are a going concern. We’re living, breathing, we continue to upgrade. We’re doing this, this, and this on the roadmap and we have support. And if you actually did the math, yeah, you wouldn’t lay out as much cash for the open-source stuff, but your time spent trying to figure it out and trying to support it would be a lot higher.”

So understanding how to sell there, and then also figuring out pricing where a lot of people were doing these perpetual licenses. And we did a few of those in the beginning where you pay us a few grand and you use it forever. And then it didn’t work. It just wasn’t working and we tried a bunch of different things. Like, okay well, can we scale with users? And the people said, “Hey, you want to do rev shares with us.” And none of them really worked, to be honest with you.

The rev share doesn’t work because anybody who offers you rev share, typically, isn’t making money at that point. And then there’s this whole audit requirement and people don’t want to do that. It can be really tough. That didn’t really work.

The user stuff didn’t work because people felt like they were being punished for success. So, we just had to make a decision to say, “Look, we’re going to do this tiered pricing where it’s a fixed price per year. It’s annually, recurrent SaaS. It lets us continue to invest into the software and any of our clients get the benefit of it, and let us grow the company.”

And that actually was sort of a minor innovation in and of itself because the audio processing software was not being sold like that at the time. There was a lot of open-source stuff. There’s a lot of perpetual licensed stuff.

Then also, we positioned ourselves as a premium product because that’s what we are. The biggest thing also, I think, is we learned how to identify people. So when I sell, I always look for a fit between our solution, their problem, and their company and their budget. And one thing that I tell anyone who’s doing early-stage company, the sooner you figure out who you cannot serve and then learn how to identify them in your funnel, and then help them find another solution, the better you are.

I call those people the anti segments. The anti-segments or anti-personas are fucking deadly. They waste your time. They’re never happy. You literally cannot make them happy. It’s just a fundamental misfit. And even if they want your stuff, for example, for us one of our weaknesses was we didn’t have really good documentation. We knew we didn’t have great documentation.

We knew you had to be at a certain level of a developer to get a lot of value from us. For us, it was a resource constraint question. It was, well, if we have resources, do we develop more cool software or do we develop documentation? And 99% of the time, we said we’re going to do more software.

This is, admittedly, a weakness, and this is something I would even say on the calls. I’m like, “Look, our documentation is not great. If you have a development team that has heavy documentation requirements, we’re probably not a good fit for you.”

It’s not that we didn’t have any, but we didn’t have any long-form narrative type. So, early on, we made the mistake of selling to people who needed a lot of handholding, and then you gave them the hand-holding, and they still messed up. They just weren’t happy.

So now, part of the sales process and this has been going on for awhile, and I think any good sales person will tell you this is. You identify them. You figure out if there’s a fit, if there’s not a fit, you gently push them out and say, “Hey, I don’t think we’re a good fit for you. Here’s why. I think you should go here, here, and here.”

Gently and diplomatically push them away because if they get in there, they can make life hell for your team. They give you bad information. Not because they want to give you bad information, but just because they’re trying to fulfill their own personal needs, like anyone else. So, understanding who your anti segments or anti-personas are, who your segments are, who you can really help, the sooner you can do that — and it takes a while. You have to iterate a while — but the sooner you can do that, the more powerful your growth engine can become.

Etienne Garbugli: So, to that end, how do you differentiate what should be an anti-segment versus a growth or an expansion opportunity? The same thing you could have said, like we were going to improve and make it better.

Patrick Vlaskovits: One example is, like I said, you needed to be a decent developer to use our technology. And I’m not just saying this as a bragging point. We knew that we were living in ourselves because we did not have documentation. We understood this, but at the same time, you had to be a competent developer, and it just was really tough for beginners.

So identifying people early on, either the way they’re asking questions or how they’re asking them, and then literally saying, “Hey guys, we don’t think we’re a good solution for you. We think that this competitor over here is a better solution for you.” So that’s one. Budget was another one where we had a lot of people; a lot of really huge companies that you know and you’ve heard of, massive companies come to us.

We closed a number of deals that were very lucrative. That was great, too. But we also had big companies that were like, “Hey, we’re a huge company. We’re a monster in this space. Because we’re a huge company, we want your stuff free. Maybe we’ll let you talk about it.”

Initially, we were very flattered and it’s really flattering when you talk to the managing director at one of these big companies. They have a huge, massive budget and you’re like, “Wow, maybe I can get a deal done,” and learning how to say no to those guys, too.

And just saying, “If you don’t have a budget for us, that’s fine. But you’re not getting our stuff for free,” because it doesn’t make sense.

Sometimes, getting logos does make sense. But for our case, a lot of times they wanted to pull us into these projects, use our technology at scale, and have it supported, but not write us a check. And there are a few companies, I’m not going to name them, but there are a few companies that are famous for doing this — bullying young companies into helping them because they’re just massive.

Again, in the moment you’re like, “Wow, man. If those companies did use us, we would be in a hundred million devices overnight, and we can tell people that. It’s a famous device that everybody has in their homes.” But we just had to learn how to say no to those people.

And that’s another thing, too, I’d advise as well with any early-stage startup; figuring out how to say no, and not chase every opportunity. Don’t get me wrong. I chased a lot of opportunities and I don’t regret even the ones I didn’t get, but sometimes, these opportunities will sink you. They’re not really the opportunities.

Etienne Garbugli: So in a sense, you are always refining that idea of what the right customers are. Partly, what you were mentioning, support as well, that’s a good way to understand the patterns as well there.

Patrick Vlaskovits: 100%. If you understand those people, you can figure out if you’re fit and you’ll see patterns. For example, one of the things that we say now in sales calls, there’s these smart hobby guys, Joe in the garage. We’re a good fit technically for those guys, but we’re not necessarily a good fit when it comes to the budget. And I tell them straight up.

And a lot of times these are very artsy projects. Like one project was a set of flying drones that were to fly in unison and play music and do these interactive things. It was just an awesome robotics project some German team was putting together. They liked our software, but they’re like, “We have zero budget.” I’m like, “Well, I’m sorry.” It didn’t work out.

So if I sense there’s an artsy techno project, we’re not typically a good fit for those. But my takeaway, though, is to figure out who you’re a fit for. Make that fit, sell that fit, and provide that value. Figure out the people you aren’t and move those people aside, and help them find your competitor or another solution or whatever it is.

Etienne Garbugli: So just to get that focus?

Patrick Vlaskovits: 100%. You need to have the focus where there’s the three or four segments that you can identify, you can deliver value. They get it and they know they’re getting value. If there’s so much noise; you want to filter that noise out.

Etienne Garbugli: Okay. In that case, what were the triggers that led you guys to expand from audio to websites and apps to network libraries and to cryptographic libraries? When did you get the inflection point where you’re like, now is the right time, or we should do this?

Patrick Vlaskovits: Well, one thing we saw is that we had people taking our SDK and then integrating it with third-party networking tools like OpenSSL and things like that. And then they had some trouble and they said, “Look, we like your stuff, but OpenSSL is not really working.” Basically, it was a pretty simple adjacent feature where they need to encrypt some media and then just send it somewhere.

We actually built some cross-platform networking technology that basically did that. This was almost directly from user feedback where people kept saying, “Hey, help us do this thing. Otherwise, we have to pull in OpenSSL to do this and it’s a big pain in the ass.” And that was, looking back, a pretty apparent pattern pretty soon.

The stuff we do now is actually a little more out there. It’s really interesting, though. And I think it’s going to be tremendous. It’s a WebAssembly-based audio we’re doing. I don’t know how well you know it, but WebAssembly is a technology that’s being supported by the major browser vendors right now.

The idea is that you can compile code to run as if it were on a hardware device, meaning that you can have really interactive, low latency interactions; whether it’s a game, whether it’s a Photoshop tool, whether it’s some sort of musical device. Right now, the reason we use apps is basically there’s a better connection between an app and the hardware device than if you went through the browser. WebAssembly, in a sense, is changing that.

And if WebAssembly keeps being developed and being supported by the browser vendors, you’re going to have a lot of app developers move back to the web and there’s a number of reasons.

First and foremost is economic. I don’t know if you remember a few years ago, Fortnite launched an Android app, but not on Google Play. And someone asked the CEO of Fortnite, “Why did you do that?” He was like, “Well, there’s 50 million reasons why I did that.” They call it economic efficiency, but basically you make more money.

So think about it. If you had a franchise like Photoshop or what have you, and you had to send 30% to Apple every year, as soon as you could figure out a way to not do that, you would do that, right?

Etienne Garbugli: There was a case this year with the Basecamp. They were complaining about that 30% they got up to management at Apple and all that stuff.

Patrick Vlaskovits: It happened for Basecamp because those guys were smart and loud, but that’s not going to happen for the average developer.

Etienne Garbugli: For sure, but there is a problem.

Patrick Vlaskovits: Yeah, exactly. The WebAssembly stuff was interesting so we actually built, things may have changed, but we were the first real-time, time stretching in the browser. Time stretching is actually a very computationally intensive audio algorithm. It takes a lot of CPU. And basically, you slow down or speed up the tempo of a song, and then you also can do pitch shifting where you maintain the pitch so it doesn’t sound weird. Mathematically, it’s actually very difficult and computationally intensive to do. And latency is critical. You have almost no latency. We brought our knowledge of the web to do this. And one of the reasons we were acquired was we showed this to the Splice guys and the Splice guys were like, “Oh shit. We thought this was like three years away.” Splice is building cross-platform products, basically. They want to be all available on every surface there is, so Native, Web, what have you, and then Superpowered technology allows them to do that.

I think Gabor told me, “Man, we should have launched it even earlier.” People are licensing it; people are using it. It’s still early days, but I think you’re going to see more and more people building progressive web apps or some stuff like that. I think you’re going to see more and more of that.

What’s going to be interesting is if Safari will continue to support WebAssembly. Right now it does, but if Safari endangers the app store, I think you’re going to see a situation like what Steve Jobs did to Flash, where they killed Flash on Safari. They said it was because of security, but I think it was because of the interactive features.

Etienne Garbugli: Yeah. Probably the same thing; they’ll find another reason to justify it. It’s super interesting. The reason why you guys went with that feature set or those specific feature sets for WebAssembly, is because that was one of the best ways to showcase the value that you guys provide? Or is there another set of criteria you guys were looking at for that?

Patrick Vlaskovits: That’s a great question. We wanted to show that the big promise of our technology is how efficient it is and how little power it uses. And anybody in the audio algorithm industry understands that time stretching is really hard. So unlike Reverb or Echo, those aren’t particularly interesting and they’re not particularly computationally intensive. In time stretching, you’re basically saying we can do everything related to audio on the web.

When I talk about audio, it should be clear to the audience, I’m not just talking about play audio, pause audio, what have you. We’ve done interactive audio, where if you’re a DJ, you’re listening to the music, and then you’re changing the music in real time. Or let’s say you’re playing a musical instrument. If there’s a delay between hearing the instrument or even like a Skype call or a Zoom call we’re on right now, if the delay were too high, then it would be hard for you and I to converse.

And that’s a common problem when you’re on a Skype call and you keep talking over each other because the latency is too high. So lowering that latency, at least on the client side, there’s not too much that we can do on the network side. Now there’s some latency on your computer. There’s probably some latency in your earbuds as well; probably not a lot. There’s some network latency and then there’s my computer and your computer latency.

And probably the greatest latency right now is in the network. There’s nothing that Superpowered can do about the network per se, but we can certainly drive down latency on the client side.

Etienne Garbugli: That’s super interesting because, initially, that’s what you guys saw as the core value. And even a couple of years ago, you’re still using that core to figure out what are the other things you can do.

Patrick Vlaskovits: Well, to be fair, there’s only a few characteristics of audio that people care about. There’s the subjective audio experience of anything. But it’s well understood that audio has to be interactive and low latency or interactive audio has to be low latency. And then it’s bit depth and things like that. There’s only really a handful of characteristics that are used to describe audio technology in terms of when you give it to a developer.

So bit depth, I guess power consumption matters to some people. Then the subjective, for example, Gabor tuned our time stretcher to have a musicality to it. That’s a subjective thing. Some people might say that’s great. Some people might say it doesn’t sound good.

People actually think our time stretcher sounds really good, but there’s a fair degree of subjectivity to that too.

The point I’m trying to make is in audio, you can’t really innovate too much on how it’s judged or the parameters in terms of people are always going to look at the same parameters and compare it to their solutions. We innovated on pricing; also, ease of use another one.

Etienne Garbugli: It’s super interesting. I used to work at LANDR. Think you guys were involved with them at some point. And we would get feedback on the mastering and you would get the same mastering, same quality; some people would think it’s amazing. Other people would think it’s not amazing. And you would get that gradient of quality perception to some extent, which, just like you’re mentioning, it’s subjective.

Patrick Vlaskovits: Yeah, a lot of it is and that can be tough. And then learning how to filter that out and proceed is important as well.

Etienne Garbugli: You mentioned in an interview from many years ago that a startup is an exercise in resource constraints. I thought that was really interesting even today. I think that’s still probably true. How do you recommend entrepreneurs factor in their own constraints?

Patrick Vlaskovits: I don’t know if I have a thought-out recommendation, but I think 100% it’s an exercise in resource constraints. You only have so many hours; you only have so much energy. You only have so many developers. You only have so much money. You only have stuff that you’re good at and you just got to figure out how to make progress with what you have.

A few years ago, there’s a lady professor, I think, in Virginia, she talked about effectuation and that was her big idea. And part of what was really interesting is entrepreneurs make do with what they have at hand. I think that’s a part of it too.

In my case, Gabor is like a 100X developer, and I’m not just saying this to exaggerate. He is more productive than like 10 dudes put together and he’s obsessed about audio. He also knows chip design and hardware and audio acoustics and API design. So, a lot of times, I would literally go, “Well, do we hire someone to write documentation? Do we have Gabor write documentation? Do I try to write some of it?”

Basically, what you come to is like, “Well, there’s only one Gabor and it’s just better if he produces awesome technology super fast. And then we’ll figure out the documentation stuff.” So we knew we weren’t perfect, but we had owned what we couldn’t really fix. And time and time again, we’d take a break like, “Man, we really need documentation.” And we couldn’t find anyone that we trusted at a reasonable rate to write it for us at the time.

I’m not saying that we don’t have any, but the point, coming back to research constraints, is it would just be silly for us to have tasked Gabor and our other developers to write a lot of documentation when, in the same amount of time, we can have improvements on existing features, or even build new features.

Etienne Garbugli: No, that’s a great point.

Patrick Vlaskovits: It’s a really tough part of being a CEO or a founder.

Etienne Garbugli: Yeah, making that first determination that this is a competitive edge that we have. We have this super great developer or whatever else and we’re able to do this is already something people don’t seem to think about oftentimes.

So having been through the eyes and loads of startups several times, talked about startup, wrote books about it, worked with a lot of entrepreneurs; what are some of the signs and signals that you feel typically indicate the need for a pivot or a change of strategy?

Sorry, big question.

Patrick Vlaskovits: It’s tough to think of easy ones. I think we would’ve done better had we pivoted slightly and gone into image processing. I think it’d have opened up a considerably larger market for us. I couldn’t convince Gabor. This is also a resource allocation question.

It was tough for me to convince Gabor that that would be a smart move. This is a tough question. I’m trying to see if there’s something generalizable about our experience that would make sense to the listeners of this.

Etienne Garbugli: You mentioned a few times during the interview how in hindsight or you’re mentioning it as having done that would have been better. Are your negative instances where you’re like, “We spent way too much time at that stage waiting for X or waiting for Y.”?

Patrick Vlaskovits: We developed a solution for OEMs to solve the Android latency problem. And we actually demoed it successfully. But we couldn’t convince any large OEMs to license it from us. And had I known how tough it would have been to sell into an OEM without a champion… I don’t know if that was the smartest move. I mean, it was a hot topic audio space of time.

We had very large companies, OEMs, come to us and ask for a demo. They wanted to see that we could prove our claim. We actually got down quite a way with a Chinese OEM actually until they pivoted radically one day. And then showed this solution to other OEMs, and we spent a lot of time on not only the solution, but actually trying to sell that solution and we couldn’t do it.

I don’t know if that was us tilting at windmills or we just couldn’t sell it or I couldn’t sell it, but that was one where, looking back, it was like, “Maybe we shouldn’t have wasted time with this.”

Etienne Garbugli: Yeah. That fits what you were mentioning before about finding these anti-segments or whatever.

Patrick Vlaskovits: Yeah, exactly.

Etienne Garbugli: Is there a way for founders to quickly figure out what those should be?

Patrick Vlaskovits: I think it comes down to the problem. I think the biggest thing when we were selling to these OEMs; it was basically OEMs that are producing inexpensive Android phones that, at the end of the day, they didn’t perceive it to be as a problem like we did. Although one of them, we got pretty far down the way with them. So I guess the mistake was not verifying that the pain was really there. That was probably a mistake.

We demoed technology that would have been relatively easy to implement and you could have updated billions of Android phones overnight and they would be almost real time audio-capable. Basically, making them as capable as an iOS device.

There are multiple challenges there. One is, do they perceive that to be a problem? Two, if they do, does the team think they can do it themselves? We ran into an OEM that was like, “We can do this ourselves on the weekend if we wanted to,” which is completely incorrect. And that’s common when you’re selling to developers. Anyone who’s ever sold a development tool knows this. It’s tough selling to developers. It’s not easy.

Etienne Garbugli: Yeah. I think there’s a little bit of, I don’t know if arrogance is the right word, but there was a little bit of that reaction of, “I could have done that.” That’s super interesting. So, maybe more generally as the last question, as your perspective on starting businesses evolved over the years, how do you see B2B entrepreneurship evolving, moving forward?

Patrick Vlaskovits: If anything, I appreciate now what people have told us before, and I didn’t appreciate as much: have a big TAM, which is basic advice. It’s like 101 where people go, “Hey, make sure your fucking market is big enough.” And you go, “Yeah, yeah, yeah, yeah, whatever.” And now looking back, I’m like, “We should have listened a little bit better.”

We had a good outcome; we did fine. We had a good count. We got acquired. It was good. Everything’s fine, but just having enough surface area and having enough shots on goal I think would have been better. I think we could have grown faster and been more successful.

Etienne Garbugli: Yeah, for sure. Is there a way to look at it a little bit differently where you could say maybe this was your beachhead market; your entry point was that market?

Patrick Vlaskovits: Yeah, for sure. What I liked about it, initially, it was very niche. What I liked about it is it was so niche; it was easy to identify customers. It was relatively easy to identify customers and then market to them in terms of building content.

Etienne Garbugli: There’s definitely benefits to that, right?

Patrick Vlaskovits: Oh, tremendous. However, audio is just a weird market, too. If I knew what I do now, I don’t know if I’d ever do audio. Audio is just a really interesting, weird, strange market that has all sorts of idiosyncrasies. Every industry has its idiosyncrasies, but audio is especially weird and strange.

A lot of people that really love it are really fanatical about it and they are obsessed with it, and they’re great people, but it’s very different from the typical B2B, SaaS tool doing accounting or marketing or what have you.

Etienne Garbugli: Initially, four or five years ago, when I saw what you guys were working on, I was like, “Whoa, this is cool.” I wouldn’t be a customer of Superpowered, but I was like, “This is really cool. It’s a very focused play.'” It’s not something that you have 16,000 companies that are looking into it, which gives you the ability to gain ground on the market.

Patrick Vlaskovits: True, but then the other side of that is you also have a lot of open source stuff that’s not that good that draws people away. We’ve had multiple people say, “We need to go do the open source.” And then, I’m not kidding you, they came back six months later and they’re like, “Okay. We wasted six months on open source stuff. We found some budget. Can we make this work?” This happened multiple times. And I’m sure it happens in the generalized B2B world as well.

Etienne Garbugli: For sure. Thanks for taking the time. That’s really appreciated. Where can people go to, to learn more about your work, your company, and everything?

Patrick Vlaskovits: So superpowered.com is still up. Like I said, we are a part of Splice. You can find me on Twitter at @Pv. Then I’m on LinkedIn, Patrick Vlaskovits. If someone wants to send me an email; vlaskovits [ @ ] gmail.com, just my last name as it’s spelled.

Etienne Garbugli: I’ll add those links to the post and thank you for taking the time.

Patrick Vlaskovits: Cool. Thank you.

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