We're building Avocode for tens of thousands designers and front-end developers. We know that in order to improve various workflows we have to understand various businesses. That's why we created the Lesson Learned series where we investigate 3 things:
Our second guest is David Cherrie, Aussie guy from Melbourne who co-founded Arcade, an end-to-end SaaS solution for measuring, increasing, and retaining retail employee engagement.
“I used to work in retail sales, but I didn't feel engaged enough. I felt like the company didn't really care about the people on the shop floor. In short: I felt like I didn't matter. But you know what? People - whatever they do - they always want to matter and feel appreciated. So instead of making up some new retail sales model that would add more bureaucracy and would be really hard to spread, I came up with the idea of a game. A game, in general, is easy to learn, can be easily shared and most importantly - is fun to play.”
“I never wanted to be a cog in the wheel, a brick in the wall. I studied engineering and robotics; however, I soon realized if I was to go into that industry I would become a glorified maintenance man rather than someone who could create and challenge - which is what I always wanted to do.
I not only want that but I'm willing to suffer for it.”
“It wasn't a conscious decision to become an entrepreneur, but more a conscious decision to change or fix a problem that I saw. The main thing in this process was that I found Anthony, my initial co-founder who complemented my skill sets, because prior to that I had a lot of ideas and a lot of “pseudo-businesses” but never actually thought it through. Before I met him I would never try to execute and take the risk. At first we took some baby steps. Then we put in more and more time, increased our focus, and started to take risks.”
Entrepreneurship is a journey you really have no idea about, because you've never done it before.”
“Suddenly you get to a point when you drop out of university, you resign from your job, and go in full time. It was really the next logical step.”
We don’t have many success stories yet, but boy do we have a lot of hustle stories.”
“We've got an invite to an incubator in Australia called AngelCube. That in itself was a miracle. We didn't get in because we had a business model or even a good business sense. To this day I think we got in because the investors saw something that was driving us that they could get behind. A part of the deal was we committed full time. To me, that was just a no brainer at that point.”
“Yes, I had an initial co-founder who is not with us anymore. We're still good friends, and he still wants the best for the business. Things like that are all part of the journey. A condition for the accelerator was that as a technological company we needed a tech co-founder. So James joined our team as our CTO, and we’ve been together ever since.
Then we went through a year of a lot of ups and downs and ups again.”
More downs than ups.”
“I got to a point where I had invested in all of my personal money and then gone into a decent amount of debt. Over that tough year it was hard to keep the passion for the business. We weren't seeing many wins and it seemed like every step we took, we took two steps back. But when you really believe in the problem you’re trying to solve, you always find a way to keep pushing on.”
“I think that was a year after the accelerator, when we were so indebted, completely out of money and we ended up losing the one opportunity we were working so hard to get.”
We've pretty much put all of our eggs into the same basket, and all of those eggs broke. And the basket got stolen.”
“We were driving home from a meeting where we were let down massively and we made the decision to not pivot the product, but to pivot our approach. There was this approach that we thought from the very start would fail. So we discounted it without any testing. The approach was quite simple: to all users to enter the data in themselves instead of requiring integrations. We tried this approach and in just two weeks we had our first paying customer and then expanded quickly over the next few months.
At this stage it was still a MVP, not a fully fledged product by any means. But at least we had users and some data coming through that we could build on. Also we had paying users to show a bit of value in what we were working so hard on to achieve to that point.
Our MVP was a shell of an app. It didn't really work, but we made it work manually in the backend.”
The 'automated' backend was actually us working every minute of the day to deliver what our users expected.”
So when it came to our first PR, we were doing radio interviews with our laptops in the studio, because we simply couldn't let go of our computer. Everything our users thought was automated, was really just us hacking away in the backend.
Obviously we had to automate most of this stuff as soon as possible. The summer of 2015 was really just about listening to feedback and iterating and trying to find the product market fit. So we had the users who believed in the vision but we certainly by no means had a product that fit the market and fit their needs.
We didn't have the bandwidth to make it everything everybody wanted, a part of it was finding the balance between what are the users asking for and what they really want - and that's a big difference.
But back then we didn't know that, so we were consistently building what people were asking for and the product just consistently had problems.”
At that point we were really make or break.”
“So we were ran out of money, trying to pay down the debt using credit cards. James, our co-founder was the builder and I was the guy on the ground getting the customer feedback. I worked really hard to build a strong relationship with our users.”
Relationship in the early stages of your company is the most important thing. Your product is never really there - you're a start-up.”
“Especially when you don't have many resources, you really rely on the relationships you have with your users. Your customers are buying into you and the vision and they will put up with the frustration that the product causes sometimes. They will also participate in the development process.
Eversince then we're telling our users, “hey, based on this problem you had - this is what we've developed.” I call it the feedback loop.”
“With this approach, listening to our customers and not sleeping much we started growing, but we didn't really know how to grow faster.”
“Well, in a way. In the winter 2015/2016 our product transformed and it grew by about 5x. Halfway through that I contacted 500 Startups and told them exactly where we were at. Obviously at that time we were too early.
The essential part was to start the conversation, because if we were successful in those next three months we would show clear business results, get more contracts and we would be ready to actually scale the business.
Also our primary market has always been the U.S. so our goal was to get here as soon as we have proven product market fit (PMF)… or some degree of it.
At the end of March we had all of our customers who were in pilot phase sign annual contracts, indicating to us that we’d reached PMF. So in April we applied for 500 Startups. We took it as an opportunity to have some infrastructure and guidance in a market we didn't know. And that's what we got here. Also 500 gave us this filter through all of the noise of the Silicon Valley so people actually started to listen to us.”
A part of the business battle is to fight though the noise and get people listen to you.”
“We wanted to datafy our company a lot more and understand what we need to do to make our product successful, what metrics we should focus on, and datafy our actual growth as well. Prior to that we had no idea why we got our customers, it was just pure hustle.”
We didn't really playbook any of the sales processes.”
“Obviously there were correlations between our customers and how we got them but didn't really put any kind of metrics to that. When we came to the States we wanted to build a scalable sales process, so we had to figure this out.
Another thing we wanted was to test our product in the U.S. market and to gain access to new customers.
We found that 500 Startups gave us growth guidance and connections with investors, but when it came to accessing new customers, that one was up to us.”
“That's a good question.”
It's quite hard to distinguish between personal and business, since I feel like sometimes my whole life is business.”
“Up to this point, my dream was to be in the Silicon Valley. I remember the feeling that I had when I was considering to move the company to the US -- how much I wanted it. Coming here I've learned that what you think will make you happy actually doesn't anymore. You just end up focusing on the next thing. Trying to figure my own way in a completely new country wasn't as easy and romantic as I would have imagined. To sum up, I've learned a lot about being grateful but never comfortable.”
“Oh man, incredibly. It has improved 100%. It’s developed into a wholesome enterprise solution that is more accessible to our potential customers and far more robust and ready for the wider market.”
“First thing is that I had to move to the States and communicate with the rest of the team back in Australia. We also had to learn a lot about working in timezones, since our customers live on 4 different continents. We've also grown our team to 7 people (from 2) and are now in the stage of moving the entire business to the U.S.
“We've proven there is a problem in the market, in the past 3 months we have prepared for this market and we're starting to infiltrate it.
Our sales cycle is very long, but our pipeline to the end of this year has increased by 50x just in the States. And that's conservative numbers, that's signed off contracts that are now in the pilot or already behind it. Our experience with pilots has been great so far. The actual growth opportunity is really exciting.”
“Robert Nievert helped us plenty with contract negotiation. Because of one of his techniques, we've managed to increase the size of one contract by 40%.
I'd like to thank Yumi Hosaka Clark, a product mentor who helped us in some of the areas we were lacking in the product. Her suggestions to our product demo helped us get in the door with some sizeable contracts.
One more would be Mike Whitaker, an investor unrelated to 500 Startups who helped me understand how to approach sales here in the States. He helped me plan and prepare for one of the biggest meetings I’ve ever had.
I felt rock solid prepared, but the meeting didn’t go as planned. Everything - according to the Murphy's law - went wrong - my phone, the printer didn't work, our product didn't connect… I even had to use a clients computer to finish the demo.”
In the middle of the meeting I was trying to connect to the wi-fi while I was subtly messaging my co-founder in Australia - where it was like 4am in the morning - trying to troubleshoot and screenshotting error images, all as I tried to entertain small talk.”
“In the end it was Mike's advice that helped me navigate a 40 minute delay with the corporate executives of the company, change rooms and switch laptops. But eventually we got the demo happening and they really loved it.”
“Execution. We have a very deliberate business plan. We've come out of 500 Startups with a very clear vision and strategy, so now it’s all about executing on that.”
“We have 5 people involved in that process. To make our product better, first we hired a new design team and then we've actually made this team more efficient with Avocode, especially with its integration into Slack. We use Illustrator and Photoshop, so our PSDs are turned to code in Avocode and until Avocode can parse Illustrator we’re coding those designs manually.”
“I always make sure that each person in our team is achieving their own personal goals alongside our company goals. This means that we’re working to be successful together. Life’s too short to be wasting time, and too long to be stuck somewhere that’s not challenging you to grow.”