S8E5: How Postscript and Adam Turner Help E-Commerce Businesses Build Stronger Customer Relationships

4 hours later, we had a Zoom call with the entire co-founding team and there was a handshake that night. So it was like 12 hours between the first meeting and the handshake. And that was incredibly important to us. Like they were listening to what we needed. It was the fastest check I think they've ever written.

Welcome back to Season 8. Claude, how we doing?

So well, can't believe it's 8 seasons of The Room Podcast.

It feels like just yesterday we were getting started in the middle of COVID and had this vision for sharing the future of founding stories to let other founders be in the room where it happened. And so much has changed for us since August 2020 when we first had this inception. You're now a founder and co-CEO of Priv, which is a startup unlocking and disrupting recurring revenue for e-commerce brands.

And Madison, you're crushing it in venture. You're now a partner overseeing investments at DefyVC, an early-stage venture firm in the Bay Area, and of course, an investor in Pryve. We're just two women navigating our careers and asking the people who inspire us to shed light on their stories. Unlocking Access starts with a conversation context, and as a reminder, we open the door to moments in technology history that traditionally happen behind closed doors. With our guests, we unpack the experiences that led to their success and look towards the future in their verticals.

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Welcome back to another episode of The Room Podcast. Today we're excited to share our conversation as we sit down with co-founder and CEO of Postscript, Adam Turner. Postscript is revolutionizing the e-commerce industry one text message at a time. If you've ever gotten a text from a brand, most likely it's powered by Postscript. Postscript provides the ultimate SMS marketing tools to help companies build strong customer relationships across the entire buying experience and unlock more more sales. To date, Postscript has raised over $106 million in funding from the iconic likes of Greylock, OpenView, and YC. In today's episode, we discuss key themes such as the importance of building strong customer relationships and engaging with customers through personalized messaging, how Postscript is helping businesses maximize their ROI and drive revenue growth, and the future of direct-to-consumer e-commerce. Let's open the door. Adam, thank you so much for being on the podcast today. We're excited to sit down and chat.

Thanks for having me. Excited to chat as well.

Before we dive into the incredible founding story of Postscript and all that you've been up to, we'd love to start at the beginning with our guests. Tell us a little bit more about where you grew up and how that really informed your view of the world.

I grew up in Phoenix, Arizona, had two older brothers, youngest of three. And grew up in interesting household, a mix of entrepreneurship and, and also my mom was a violinist as well, violin teacher. So my dad was an entrepreneur and he started probably like 4 or 5, 6 companies maybe, and really was only successful massively in the last one when he was probably like in his mid or late 40s. Uh, and we were still like in high school and growing up. And he really was great at being a stoic in the face of just massive amounts of risk. In turmoil. So I remember at one point, I didn't know it at the time. Even my mom didn't know it at the time, but my dad had like taken out a second mortgage on the house to like fund his business that like wasn't quite making money yet. And I asked him down the road, I was like, hey, that was pretty risky. What were you thinking when you did that? And he said, oh, I just figured if it didn't go up, we could just live in a trailer home. And he was dead serious. He was just totally okay with that being the future and even having 3 kids, that was totally cool with him. And so that has like taught me a lot about risk management, mental management, and that type of thing. But he started a for-profit higher education company called Bridgepoint Education, which competed with University of Phoenix and those types of companies as well.

Certainly an entrepreneurial family, to say the least. In that vein of early identity, did you ever think you were going to become a founder?

I actually didn't at all. I didn't really know what I wanted to do for quite a while. I would say that in high school, I was like a mischievous kid, got suspended, all that type of stuff, and found that I needed a track. And a buddy of mine came from a Navy family and he was wanting to go to the Naval Academy. And I was like, oh, I am interested in like flying jets. Maybe I'll go to the Air Force Academy. The path to become a fighter pilot is actually pretty straightforward. You go to the Air Force Academy, you do well. And most of my friends from there are actually like fighter pilots now. It's pretty cool. And so that was something I gravitated to early. My brother, on the other hand, who's one of my co-founders, from when he was in middle school, he was like, he was hustling. He was slanging Beanie Babies on eBay, trying to just make it happen in the early internet. And he knew for sure that he wanted to do this. But for me, it was a much longer journey. You know, I went to the Air Force Academy for a year. They told me I couldn't fly planes. I transferred out to USC and still didn't know what I wanted to do. And really didn't know it until I started working at startups. And I think all of us can probably relate, like getting addicted to the problems that show up in startups and the amount of learning that happens in such a short period of time. That was really what turned me on into the startup ecosystem.

I'd love to dive into that a little bit deeper. So you were at USC, you were studying quantum mechanics, and you started dabbling your feet in the tech ecosystem. Tell us a little bit more around this early journey and how that eventually got you more into the commerce enablement space.

I was studying physics with focus in quantum mechanics. Really the point of that, and this has been a theme in my whole life, and I've really only been leaning into it more, and I haven't even read this book, but the idea of the infinite game and really just trying to optimize for the most amount of learning that you can do in a period within a thing. Like you're not trying to win by getting the major in physics. You're not trying to win by like getting the highest salary when you first come out of college. You try and win on an infinite timescale. And so when you think of not trying to win any particular thing, like getting the highest GPA or anything anything like that, and I didn't have the highest GPA. But when you're not trying to do that, you're really just trying to optimize for learning. And so I chose physics because it was the hardest thing I could do for a very expensive school. And if I'm going to be paying for this school, I should try and learn the hardest thing or do the hardest thing that they have to offer because it would really be making the most out of the experience. And then frankly, I started getting pretty antsy within school. I wasn't finding it as fulfilling, wanted to do more. And so I started reaching out to companies for internships, that type of thing, and landed a job at Bitium, which was an early single sign-on company, an Okta competitor. And I went there and they had like 15, 20, 25 people. They sat me in seat, they gave me the entire Salesforce instance and said, hey, you're our Salesforce admin. Can you figure this out? When you're just out of college, you don't even know how the real world works. It's just a total guessing game. And so I immediately called up my brother and I was like, hey, you're a Salesforce admin. How do I actually do this? And so I kind of cheated early on by asking him all the questions. Eventually I got to know it, became good at it, and really that early learning got me interested in entrepreneurship. Then my brother, who had been working in the market for quite a while, wanted to start Wiblitz, which was a consumer gaming company. What he wanted to do was like build community through games. It was like HQ trivia, if you remember that, but for minigames. So like everybody all at once would receive a link to a game you'd play. And you could even think of it as like building community within work. If I get a ping in half an hour about a game that I can play against all my BDRs, I'd be like super excited to play that game because it's like a mini competitive thing that you can do with your team. And so it was along those lines, but we found that consumer gaming wasn't it. We couldn't monetize the customers fast enough. It's just iOS gaming is a really tough market. We grinded that out, but that's when I just got more addicted to this thing, right? I started learning how to code more. I didn't know how to code. I started writing the frontend React application, doing data engineering, learning SQL, all that different type of stuff. And so when we eventually needed to shutter the doors to that experience, I asked people within my network for a job and one of the old engineering leaders at Bitium was working on a company called StackCommerce and he took another chance on me to come to StackCommerce and that's really where I entered the e-commerce space and I wanted to work somewhere with e-commerce. I was applying to kind of like that and Amazon and a few other places because you probably know this is one of the fastest growing markets. It's going to continue to be one of the fastest growing markets. It's also for me a callback to one of the most important things about value creation and communities and civilization is the idea that like you create something, barter with other people, and then you can give them that thing that you created. The Shopify ecosystem, Etsy, and all these e-commerce players within the space have really accelerated that. And it's just something that's really close to my heart. At Stack Commerce, we ran white-labeled e-commerce stores for publishers. So like the CNN store. Or the Mashable store. And we ran the tech, we ran the fulfillment, we ran the marketing, all of that. And so I got a lot of exposure to every different part of the funnel. And really there is the beginning of my e-commerce journey. And I saw all of the opportunities and challenges and trouble with the space, but it was fun.

Thank you for that very in-depth and awesome bird's eye view of your career essentially, and how you got to the moment of starting Postscript in 2018, what were some of the insights that you had at Stack Commerce that then eventually led you maybe a couple of months before starting Postscript?

Even outside of Stack, one of the insights after Wiblitz was a rubric that Colin, my brother, and I created for starting another company. We did not love how we did it before, right? With Wiblitz, we were working out of a kitchen. Eating Costco corn dogs and bean and cheese burritos, like not venture funded. There was just so much pressure in making it happen in such a small period of time. And so we were like, okay, the next thing that we're going to work on, we're going to build it ourselves, not have to rely on engineers to do it. We're going to do it while we have jobs in the early hours of the morning and on the weekends and different things like that. And we're going to sell to businesses. We want it to be recurring revenue because then you don't have to think about it as much. And so we built that rubric outside of the jobs that we had because we were like, okay, we don't want to make the same mistakes that we had. And I think that's incredibly important. I show that rubric to every single onboarding class within the company because I know that we have a lot of entrepreneurial folks in the company. And, uh, I think that like de-risking entrepreneurial journeys is incredibly important because it allows you to be as creative as possible without having to worry about paying the bills, especially if you have a family or you're further along in your career, like the more you can de-risk it. The better. But it's going to take some like major sacrifice. Like I lost a lot of friends because like I was spending my entire weekend building things and that's some of the sacrifices that, that, that come with the job. And so there was that framework through which we were looking at different ideas, right? And another thing was that we didn't want to spend sales or marketing dollars before we started the company to get initial customers. And so we were looking at ecosystems, the Zendesk ecosystem, the Shopify App Store. Or, uh, with Salesforce because we had Salesforce backgrounds, we built a Salesforce app to begin with. And I soon realized as I was talking with potential customers and showing them the application, they were like, hey, this is cool, but I can't install this on my Salesforce instance until you show me some like security certifications. And I was like, oh, that's like an ick for me. Like, I'm not doing that. Like we built that thing up and it was an MVP. And then we like got rid of it because I was like, I'm allergic to that much work before even being able to prove out an MVP. So we scrapped that. And then at the same time I was working at Stack, we saw that email performance was decreasing and we were trying to look for new channels through which to send out retention marketing information, that type of thing. And then a buddy of mine ran a Shopify store and I went out to lunch with him and I said, hey, what sucks? What can I fix for you? And he said, why can't I text my customers? And I said, it's a good question. If I build that, will you pay me $50 a month? And he was like, yeah. And so that was the second idea. And we didn't have any expectations. I was like, I'll at least have $50 a month if I build this. It was like my thinking. And along the way, I'll have a ton of experience, right? I had zero expectations for where this is going to go. And before we even launched, we had people signing up on our waitlist. We had people putting in their credit card to like a broken credit card page trying to pay us. And that's a fantastic sign of early product market fit is people trying to pay you even though everything's broken. And that's when we knew that we were at least going to be able to pay our bills with the product.

And so you took the plunge. So that was about 2018 when you guys said, hey, there's something here, we need to do this. This is you and Colin, your brother. And I actually started at Gap in 2018. So some fun synergies here where we were launching our first way of reaching customers via SMS too. My use case was less on the marketing side and more on post-purchase communication, but we saw a 42% opt-in rate. Which beat our expectations almost 6x because we were benchmarking it off of what our email opt-in rate was, which was incredibly low. And so I was seeing this firsthand at the scale of a Gap in this same era of something is happening with SMS communication. I'm curious your take. Why then, why in the late 2010s did SMS really start to overtake email as a comms channel?

I think in a lot of ways it's been a long time coming and even 2018 wasn't even the inflection point. I might even say it's just a constant buildup. And then people started realizing that people wanted to be contacted on their phone. I think was the main thing. Like back in 2018, if you asked, hey, are you doing SMS marketing? People would say no, nobody would ever sign up for that. And I think that something that we noticed, one of the key insights that we had that investors always ask about, like what's the key insight? And it was that For Shopify, they had an optional email or phone. And for some of the brands that we were on early on, it was more than 50% people putting in their phone because they thought they would receive those transactional messages. And Shopify didn't really send those out. We send those out now, but that was an early indicator that people were opting in and saying, I want to be contacted that way. As to why, you know, email inbox getting too crowded, Gmail promotions tab, all those different types of things, but really. At the end of the day, people were shopping a lot more online. People cared a lot about the delivery experience. And like, I want to know when something gets delivered because I don't want it hanging outside my house. Right? That's like a visceral experience that I think everybody goes through. And for that reason, I think people are willing to give their phone number, at least for transactional. But then we realized, oh wait, these customers are actually in love with the brands that they're buying from and they want to hear promotional messages and they want to hear when there's a sale and they want to hear if they can get a deal or if they can talk with customer support or do any of these different types of use cases. And I think from there, just like with every market, there's early adopters and then there's people who are waiting for it to become mainstream and everything like that. And early on, a lot of people said, no, it's going to bother my customers. And we said, hey, it's opt-in only. We're going to make sure that people can opt out whenever they want. But I think you'll be surprised to see, and really one of the early indicators was that someone came on, they onboarded, they sent to their phone number list, and they made like $5,000 in 5 minutes. That was to me a unique insight where I was like, oh, I know what that feels like at the e-commerce brand. They're watching their Google Analytics and they're like seeing the real-time users spike, and this is making a real difference for them. And that's when I knew that this was actually going to be huge because if every e-commerce merchant understood that impact, then they would probably onboard to it.

And it's cool to hear you share a similar opt-in rate with Shopify brands, which I think we all really consider to be more Gen Z, up-and-coming younger shoppers versus frankly a Gap is a little bit more the mom category. So to have a similar range of opt-in just shows how prolific this opt-in marketing strategy is. It was then and definitely is still today. And today you really are with Postscript, one of the leading mobile messaging platforms for e-commerce stores. But talking about that person who said, I'm willing to pay $50 for this, what was the duct tape version of the first product for Postscript?

To me, with the data background, everything started with the data layer. And so I was saying, hey, the reason the product that we build is going to be better than any existing SMS product is because we're going to have the data layer fully integrated with the Shopify data. And so the early version actually, like for the first few months, we built like the entire Shopify data sync and customer lifecycle so that we could build automations that trigger when someone abandons their cart or filter the automations by what's in the cart or collect opt-ins on checkout or on the popup or anything like that. And the early version of the product. Had basically campaigns and automations and keywords to sign up. Basically within the flow, you need to be able to do a few different things. You need to collect a phone number, segment that phone number from the other phone numbers based on the data that they have. And then you want to be able to send to that. Everything early on, and I'll just say for any founders struggling out there, like everything is terrible early on. Like a good example, people would send a campaign, we would have maybe 100 customers and only 2 campaigns could send at the same time because of some weird hardcoded things that I'd done. You can imagine on Black Friday, everybody's sending at the same time. What if someone has a much larger list than someone else? Everything broke. Everything was constantly breaking. So stressful. I was the most stressed, but so like the early product was probably engineered poorly, but I think the idea of following the data layer and that merchants would want the most integration with Shopify was probably the thing that helped us out the most. It made us the best for quite a while.

And you're saying us, you alluded to this earlier, but you're building this company with your brother, Colin. What's it like working with your brother on building a business?

It's with Colin and Alex Beller who worked with me at Stack Commerce. He runs all of go-to-market, but with Colin, I was doing the backend. He was building the frontend. We were building the tech. We were remote first in 2018. I was in LA and he was in Phoenix and we were building this thing. Early on, it's just a total cheat code. You have the exact same mental model of the world. It's a total cheat code. You almost don't need to communicate about things because you're already on the same page. And especially for that reason, when you're coding and you're doing frontend backend code, It just makes things a lot faster. It's like someone you've been working with your entire life. As folks grow, especially like as co-founders grow, you specialize in different areas. I focus on product design and engineering and finance and fundraising and that type of thing. And Colin focuses on operations and strategy and he's actually building one of our new products that we're launching in May as well. And I would say that just like with any co-founding group, I think in YC, the number one reason companies don't succeed is because the co-founding group breaks up. That's like the most common thing to happen. And so I would say that for people looking for a co-founder, one, it's incredibly important to start a business with a co-founder. It just makes it very difficult if you're on your own. You can always create those support networks for yourself, but if you have a co-founder, you especially want them to have complementary skill sets, right? I focus on the tech side of things. Alex Ballard focuses on the go-to-market side of things. Playing to your strengths and using co-founders just to load balance is incredibly important. And then really like, it's not always rainbows, even though things are hard. We have a co-founding executive coach that we all three of us go together, and that's been incredibly helpful for us to work on how we are thinking about running the business as we've gone from like 1 to 5 to 50+ million in revenue.

That's incredible. I know Claudia and I have said many times on even just building this podcast, which is small in comparison from a business standpoint, we couldn't do it without each other. We hold each other accountable, and whenever one of us is having a bad day, the other one's there to pick you up. And I just think that come wrong. Lottery is so powerful. Well, today you've raised over $106 million from the types of YC, which you mentioned, Accomplice, Greylock, OpenView, and more. First of all, congratulations. No small feat and really cool to see. Besides your founding team, who was the first person to say yes to investing in Postscript?

The YC experience was great. We got to have Michael Seibel and Tim Brady and Kevin Hale as our group partners. And I wouldn't change that for the world. They're just fantastic operators. And I really got to see the ceiling of just where like operators can go in terms of just their brain capacity. It's really incredible to be around people like that. I'd say that the first investor coming out of YC was 1984 VC, uh, Ramya Deep came in and was the first check-in. We were over a million dollars of ARR. We hadn't spent a single dollar. Of even the YC money yet. We were one of the fastest growing companies in the batch. And so we had our pick. And so what really I was optimizing for was speed because I didn't want to stop focusing on the business. We had customers calling every single hour of the day. We had to get down to business. And so I had an in-person meeting with Rami and Aaron. Then 4 hours later, we had a Zoom call with the entire co-founding team. And there was a handshake that night. So it was like 12 hours between the first meeting and the handshake. And that was incredibly important to us. Like they were listening to what we needed. It was the fastest check I think they've ever written. But that was just so much fun. Like that's when I was like, oh, fundraising can be okay. Like it can be good.

So you had a great time fundraising, but obviously the entrepreneurial journey is not always up and to the right. We always love to talk about moments in a journey where things might not have gone as planned. Could you share one that stands out?

There's like so many.

Um, for what it's worth, every single guest, the very first thing that they say to answer this question is always, there is so many.

Yeah, it's the entire thing. I was just musing about this on LinkedIn, but the entire thing is in the face of challenge showing up and having a good attitude. That's the entire founding job. It's just like, okay, what's going to happen? A good example would be you lose key people in the early days from your team, or you have to let folks go because they can't like grow as quickly with the company. As you originally thought they could, or you're just in a different stage and like people like to play in different stages. And there's that. I would say that there's a few that come to mind. One of them is we deal a lot with carriers. We're one of the second largest sender of MMS in the country and we deal a lot with carriers. And I think one of the carriers two months before Black Friday said that we had to migrate all of our numbers off of the shared shortcodes that we have and migrate them to dedicated shortcodes. And it was one of the most difficult things the entire team had faced, but it's also like one of the most memorable for the team. And so everybody understood that there was a strict deadline set by things that were totally out of our control, that we just needed to get it done. And so there was less like, oh, this is such an awful thing to do. But everybody was like immediately, okay, we have to do this. It's existential to the business. And so we're just going to get it done. And I saw a lot of people come together in that way and rally around it. I would say the second example that I could think of most recently is the SVB situation. We had 100% exposure within the SVB situation, had to figure out how we were going to make payroll for the team. And the team like kicked it into high gear, worked the entire weekend, and like everybody was paid a day early. That is a crucible moment for the entire company. Entire company's watching. We talked to them on Friday. We said, hey, we don't know much, but here's what we know. So like the transparency crucible moment where if you had a meeting Monday, that was good, but people were like stressing the entire weekend. Right? So having the meeting Friday was incredible crucible moment. And then the whole team is watching about what's going to happen. And for them to get paid a day early after all of that was like, okay, A players recognize A players. And they were like, I'm so glad to have the people in finance team that we have at Postscript because I was worried, but I loved the transparency. And when I was paid a day early, I knew that this team was just crushing it. And I knew that they had my back and everything like that. So I'd say like those types of crucible moments, it's not just important to get through them and like grind through them. It's an opportunity to show how good your team is to the rest of the team. And that further builds morale in these really tough times.

Totally. Those not up into the right moments are the ones that really test the foundations of your team and company. And ultimately, The team is the most important piece. There's always a silver lining to going through those hardships. I'd love to shift gears a little bit and talk through Postgrip's early go-to-market. You mentioned you got to a million in revenue before you even started touching your YC money, which is insane because I feel like a lot of early stage startups, it's a slog to get to that first million. Walk us through Postgrip's early go-to-market strategy and how that's evolved over the past few years, especially in such a unique market as selling into consumer brands.

When we were looking at different ideas, we wanted to make sure that there were platforms attached to those ideas. And when I say platforms or distribution channels, what I mean are like app stores. The Shopify app store, when we started, had less than 1,000 applications. They had one other SMS application that had all right reviews. And when we launched, I knew that there was going to be some organic search within that. Reviews were important to that search. And so when we launched, we had a few people trickle in. And what we did is anytime someone would write into our Drift widget or like Intercom widget, it would call all of our cell phones. And so we would wake up at any moment in the middle of the night and onboard customers through the chat widget. And then at the end, we'd ask them for a review. And so I knew that would boost our App Store SEO for those early customers. And so that got our first 100 customers. We didn't have to pick up the phone and call anybody. It was mostly just through the Shopify App Store. Right now, I would not recommend that for folks that are starting. Shopify App Store has like 10,000 applications, they're constantly messing with the algorithm. It's actually really hard to tell how you're going to get in front of folks. And so I would say if I were starting a company today, I would look at new areas like the Notion API and like things that are built on Notion. But Notion might even be more crowded. I would look for something like a little bit more stodgy, a more enterprise technology that's just starting their app store, something like that. Like Zoom has an app store, right? Different things like that. ChatGPT, I don't know, that's super crowded. It's going to be tough to get visibility there, that sort of thing. But I think if you look for companies that are growing, that are starting app stores where there's very little competition, it's probably like a good recipe for that. And so that motion was like very much PLG, product-led growth. What that means is they would find us organically. They would be able to onboard themselves and pay for it without talking to anyone. And that was super important to us because we actually had jobs during the day. And so we didn't want to have to touch the business at all. Also, that's just how you're going to get. A good amount of growth with just 3 people within the company. Since then, we have moved further upmarket. We are much more active in the Shopify Plus ecosystem. What that means is that we have more tech partnerships, more integrations, just way more infrastructure to support the sales process. And we have AEs and we have BDRs, we have CSMs. And really that's important because SMS is still so new that the vast majority of businesses don't know how to use it yet. And that takes a lot of hands-on work and strategy and explanation to get folks to properly use the product. If we had them all self-serve because we're a usage-based business, actually our revenue wouldn't reflect the type of business that we were.

Absolutely. Thank you for sharing that. I think similarly to my business in the subscription space, we started very early on with just having people install on self-serve and realizing how that was just not going to work because you're not attracting businesses with enough GMV if you're taking a usage-based charge or a transaction fee. And working with stores, it's so interesting. Like there are some stores that are a team of 3 people and they're doing $20 million a year in revenue and others that are very complex organizations to navigate and get a ton of buy-in to in order to onboard.

Yeah. And they could have lower revenue. It's wild.

It's such a unique corner of the world. And so I'm curious, the e-commerce enablement space has really blown up and has become very competitive, similar to how Klaviyo and Attentive exist in the SMS space. I'm personally coming head to head with Recharge every day. How have you navigated competition and differentiation as the space heats up? And what advice might you have for me?

Our spaces are very similarly competitive. Early on, when we were in YC, we had about $1 million of ARR. And we, all 3 of us, go up to Michael Seibel. It's 2019 at this point. Klaviyo just said that they're going to start doing SMS. Like, they're this huge company. What are we supposed to do? What's your advice on this? And he was like, have they taken any customers from you all? Or like, is the product even live? What do you know about this thing? And we were like, we don't know, but they're going to do it. And he's just like, okay, so just like keep building and ignore that. And there are times where you need to take specific, maybe tactical approaches within a sales conversation to go up against a competitor. But when it comes to like the advice that I would have for other founders within this space, I would say that make sure that you talk with your customers more than they're talking with their customers. That will be the advantage that helps you build the differentiation that other folks in the space have been ignoring for years. It's actually a massive advantage to go up against incumbents who have had maybe a more cushy time growing and they have to adjust to a new market. I would say that talking with customers and doing whatever it takes to serve those customers, where that pays off is that for us, we were competing with a large SMS company that had raised $1 billion or something like that. And they would constantly give their product away for free for like 1 to 2 years. And the question is how do you compete with that? Even if your product is better, merchants care a lot about how much they're spending. If they're given hundreds of thousands of dollars for free, I would take it. Who cares what the product is? Just take it. And that works when money is flowing very freely, when you have 0% interest rates, and when you can continue to raise rounds and use that momentum. But when the tides go out and you can no longer give your product away for free, then all of a sudden we've been grinding, developing. The playbooks to like win customers under all that pressure. And when that pressure releases, all of a sudden we realize how strong we are. We see win rates doubling in these new types of environments and that sort of thing. And so I would say that like the pressure actually does make you stronger. No particular competitive set will stay the same forever and it's going to evolve. And the best thing that you can do, I wouldn't say even keep your head down. I would say just like try and find the areas where they're falling short, fill those gaps. And trust that the market that you're in is going to be large enough and that your team is going to be able to build the right product.

Totally. That's incredible insight. You mentioned the shifting market and how companies need to get a little bit more efficient and you're not just being able to pay infinitely for growth. In light of shifting VC viewpoints towards direct-to-consumer specifically, have you observed any changes in D2C companies' marketing spending habits?

The change is actually happening a lot slower than I would have expected. You saw the tech shift start mid-year last year, and it's hitting the more mature companies now. But for D2C e-com, I would say that after a review of their 2022 financials, they're realizing that they need to change. A good example is I was talking with a brand who said that in 2022, their top line was up 30% and their EBITDA was up 1%. To them, that was a huge red flag. It was just like, oh, we need to continue to focus on efficiency. And so every single conversation that I'm having with customers today is about efficiency. What that means is gross margin, contribution margin, EBITDA. And for us, our mission is to make SMS the number one revenue channel. And so also how we're thinking about that is how do we make that revenue super profitable and super ROI positive for these brands? Because that's exactly what they're looking at. They're saying, where are we spending? SMS is a pretty big line item for them. and so we need to come up with the products that boost that revenue at high margins for them. That's just our role. I think that we're seeing probably the first quartile of movement there, and I think we're going to continue to see more.

So the overall economy is obviously changing, but there's also a lot of changes in underlying foundational tech that's being built these days. Obviously with the current buzz around AI, is Postscript considering incorporating AI into its product?

I'd say that philosophically, the way that I'm thinking about this, is in a few different ways. When I think about external product, in terms of products that we build that customers end up using, I want to build it like the Postscript way. And what that means is there are things that we could get out the door tomorrow that are doing things like, oh, generate AI copy for an SMS. That seems easy. Customers don't have any pain in doing that today. That's not what they want to see. It doesn't actually help them. Maybe what they're interested in is AI sending times, right? For each subscriber, what is the best time to send to them? That's something that ChatGPT can't solve. You have to build those models in-house or like use those models and give them your own data and fine tune them for your own data. But that's a little bit different. And so I would say that these are technologies within the conversational use case, in the text-oriented use case, it definitely makes sense. We will continue to build products within this space. But I would say that I want to see people build really high quality products that use these things that are actually tailored toward customer needs and delivering customer value. Than just like, oh, like we'll generate copy for you. I think that you should really talk with your customers before you start building AI. I would say secondly, the vast majority of the impact that I see is going to be internally within companies. If one of my best engineers tells me that she usually would write a script and it would take 5 minutes to write, and she uses ChatGPT and takes 1 minute to write, that's a 5x improvement in her productivity. Obviously that doesn't happen all throughout the day. but if that's my best engineer, then that might be like a 20-minute script for someone else and you're getting a 20x improvement. I think that change is actually on the same level as the internet or the industrial revolution. I really do think that that's where the massive gains are going to be. There's going to be some AI products that are really fantastic, but I think that the way that companies work internally and how AI changes that is actually going to be far more of where we see a lot of the disruption. And in a year from now, it's going to be required that everybody has this as a skill set, whether that's sales or marketing or operations or anything like that, not just engineering. And so I think people should be absolutely ready for that. I'm thinking about ways that I can internally train teams so we can help them in their careers, because I think this is going to be such a fundamental part of how we work.

We're equally excited for all the different ways in which technology such as AI is going to continue to underpin how we work and play and interact with each other. And SMS is just one of these areas that is continued to be a dominant way in which we all communicate. And Claudia and I are incredibly bullish on it too, and I'm grateful for Postscript's role in the ecosystem and having worked on the integration side of SMS for a brand myself. I am kind of a nerd about the integration space, and so I am a little bit curious to chat a bit of an integration level question for you on how Postscript has thought about working with Twilio and their API. I know you guys have partnered with Twilio and they consistently provide great scaled access to carriers and sending these messages back and forth, but I'm hearing more kind of chatter in the market around people getting flagged by carriers for sending mass emails. You mentioned short codes earlier. I'm just curious, as someone who has scaled and built an SMS-first business who has partnered with Twilio, How are you guys thinking about the rails to scale and power your ecosystem for customers? And then what does that mean for other founders who might be thinking about using Twilio?

Yeah, that's a fantastic question. You're right, Twilio, we're deeply partnered with them. They were an investor in our Series C. We work with them quite a lot. There are a lot of shifts within the SMS landscape as it relates to 10DLC and toll-free and short codes, and I won't drone on about all of that stuff. But the way that I talk about SMS is that it's been my own personal hellscape. And that's a good thing. That's the moat is that our goal is that merchants don't have to think about this at all. And that's not just SMS deliverability, which is one part of it, but that's like compliance. This is a very litigious space. People get sued all of the time. And for them to have a partner that has everything ready so that when they receive a demand letter about something and we send them back all of the overwhelming evidence about how this person opted in. And they actually wanted to be sent. The law firm like recoils in embarrassment that tried to sue the brand. That's a huge win for us, right? That is the service and part of the product that we provide for our customers is that they should never even have to think about this. And in terms of the way that things are changing, right? I think that there used to be a lot of spam. Now there's even weirder spam where people are like, hey, Josie, did you get my like cats today or something like that? And then like trying to start weird conversation. I don't know if you get those texts as well, but like, That's going to be an interesting development. Where this goes is more towards consolidation of players within the space. And the reason for that is because the carriers are being berated by legislators about the fact that they need to get this under control. The carriers then yell at Twilio and those aggregators to get it under control. And so that means that Twilio can't just let anyone onto the platform to send because this is the exact problem that they're trying to solve. And so then Twilio goes to people like us and they say, hey, Postscript, you have all of this technology in place that stops marijuana messages from going out, that stops alcohol messages from going out unless they're approved, that has all this infrastructure. And so Twilio says, okay, carriers, we've got Postscript. We know that Postscript is good. They have these different things in place. And so we trust anyone that they bring on. That results in consolidation within the space because one, we're a large-scale player. And so we already have the pricing power and the economies of scale that come with that. But also we have the technology that other people would have to build to even enter the space. And then when you look at people who are trying to do this as like a add-on to their platform, I won't say, but maybe like email service providers that are trying to add on SMS, it makes it much harder because the zero to one for them actually includes all of this product around compliance. And none of that is written down anywhere. And so what happens is they let a bunch of people onto their SMS product. They start sending messages that the carriers don't like, and then they get blacklisted. And so holding the gold standard of compliance in these products actually mean that the incumbents win. And as like a business builder inside the space that's building all these things, like, that's good for us.

This is just like so incredibly important because frankly, I'm seeing a lot of companies have issues conceivably with Twilio, but actually, as you're alluding to, it's really the carriers and maybe it's really even the lawmakers on the other side of that. And when we think about these infrastructure plays like a Stripe, which has highly regulated people on the other side of the table, same with Twilio. If I'm a builder and all I care about is getting my APIs up and running and I have this existential risk, how can I play nice with Twilio? How can I play nice with people who are actually helping me provide my end service for my users and customers?

If I were starting today, I would say that you have to understand the incentives all the way up the stack. Before, you might have been able to move fast and break things, or like do things that don't scale. You just have to do much more of that work upfront. You have to do your research to understand what types of messages are going to be flagged, which types of SMS routes are going to have certain types of deliverability and how you get access to those. A good example would be like when we started, everything was on shared shortcodes. We had multiple shortcodes. We had this system called Operator so that there wasn't any crosstalk in any of the shortcodes. And we thought it was great, but like That immediately got struck down. And so people need dedicated shortcodes now. If a builder were asking me, I would say that you have to do a lot more upfront work if you want to be on these channels. I would probably look for other channels that don't require as much upfront work if I were building today, like a WhatsApp or something like that. But I would look for where people aren't playing and that's less regulated. and try and do that because like I'm a natural rule breaker, just like when I heard about the Salesforce application and they were asking about security stuff, I just tuned out. If I'm building today, it might not even be on SMS as like a core thing. Also, like diversifying your channels is probably a great thing to do there where you don't rely on any particular channel would be something I'd recommend.

I think most founders are natural rule breakers. That's how they get to where they are. And so I just, I do think that POV resonates with the listener base we have here and with me as well, trying to figure out how to build and scale and make real change. And so speaking of that and just how brands and the ecosystem around e-commerce enablement does continue to grow and scale and build and is a space that all three of us on this call, I think I can collectively say, are quite bullish on. Postscript is partnered, of course, with the Prives of the world. Who else are you seeing your customers building alongside you in the e-com enablement stack?

Some trends that I'm seeing generally, I would say that one, customers are saying we need to be more efficient. We need to have higher gross margins and contribution margins and higher EBITDA. Where that shows up is in efficiency in where you're spending the most, right? By far, number one channel for everyone is going to be paid social. Facebook, TikTok, Snapchat, Instagram, anything like that. One theme I'm seeing is within the attribution and like data analytics space, I would say triple-whale in companies like that. Are seeing massive explosion because the high-level need for efficiency is solved by their products. Another thing that I'm seeing is within a revisitation of practices that once worked that maybe need a little bit of iteration on. A good example would be Fondue. Fondue is like a cashback application where instead of giving a coupon, when you sign up for SMS, you give cashback. So maybe you had a 10% coupon. Maybe you can give 20% cash back when they order. That means that you only pay when someone orders. You are likely giving them store credit or cash. So that means they're more likely to come back and increases LTV and fewer people redeem compared to the redemption of coupons. And so actually it boosts profit margins a ton because you're not having to give away an arm and a leg on that first purchase with a coupon, but you're paying that CAC on the back end on like the second purchase and those things. We've seen that increase profitability pretty significantly for merchants. The name of the game is efficiency, and those are the themes that we're seeing in the space.

Thank you, Adam, for sharing what's going on in the world of Postscript and the ecosystem more broadly. But as we close out on our time today, I'd love to shift gears a little bit and ask what's next for you, Adam, personally?

Spring's coming around. I love spring and summer where I live in Colorado. It's amazing. I would say that professionally, it's all about playing the infinite game. I think that Right now, whether it's the SVB situation or hiring an executive or any of that, all of that goes into like experience that I require to become a better entrepreneur. And for me to optimize the outcome of the last company that I create, or like the nth company that I create, that is actually like the most valuable. I think that for entrepreneurs, it's, there's a lot of like ego tied up in companies. There's a lot of fear tied up in outcome of companies. And I think that actually people operate the best, they have the best attitudes, they show up better for their team when really they're just like there to make use of the learning opportunity and try and be the best person in that moment so that in the next moment they can be a better person. We can talk about exit plans and postscript and anything like that, but really what it comes down to is like, how am I going to be optimizing my day-to-day for learning as much as possible, being as good to my team as possible, and building like a legacy within that team that can have longevity even outside of myself as an operator. That's incredibly important to me that like I continue to, to face these challenges with a good attitude and show up well for my team. And that's what I'm here to do.

That's awesome. Thank you for sharing that. We have our final question of the podcast, and it's a question we ask all of our guests. It's our hero question. Who is a woman in your life that has had a profound impact on you and your career? Wow.

It's a great question. I would say that the person that I mentioned before, Maddie, who's one of our staff engineers, one of the first people in Postscript, totally non-traditional background. She came in when she was very young. We thought maybe she might just build internal tools or products for us. And she's one of the smartest people I've ever met. She's changed the course of the Postscript business as just an engineer within the business. She has an incredible product mindset. She can talk with customers. She can work on products without working with a product manager because she just knows intuitively and by talking with us customers. And she's taught me a lot. There's nothing like being in the trenches with Maddie. You're just bouncing ideas off. She just has these amazing ideas and you're just learning as much as possible. And so I would say that I've learned a ton from her. I've had an incredible time working with her. She's like 3+ years into Postscript and I've got a meeting with her in an hour and I can't wait for it because she's going to teach me even more.

We'll have to tag Maddie when we post this episode on socials. Adam, thank you so much for taking the time, sitting down, chatting with us today. It's been such a pleasure to have you on The Room.

It's been great. Thank you for all the great questions. Appreciate it.

Thank you so much for joining us at The Room Podcast. If you want more from The Room every week, subscribe to our newsletter at theroompodcast.com/newsletter. We'll be back next week with a new episode Tuesday, 10 AM Eastern, 7 AM Pacific. See you in the room.

All opinions expressed by Claudia Madison and podcast guests are solely their own opinions and do not reflect the opinions of the 5EC. This podcast is for informational purposes only and should not be relied upon as a basis for investment decisions.