How to identify the Right Growth Vectors at the Right Time with Podium Co-Founder, Dennis Steele

Alright, let's go ahead and kick off. We've got 30 minutes with a lot of content that Dennis is going to walk through. So really excited to have Dennis Steele, the co founder of Podium. He's going to be talking through finding next level growth and how to find the right growth factors at the right times. Before I kick it over to him, just going to run through a couple housekeeping things and some reminders first. This is an interactive 30 minute session so we hope to involve the audience and attendees, you guys as much as possible. So so feel free to turn your videos on if you're comfortable with it so we can see you and hear you and you will keep your audio muted. You have the option to unmute yourself so Dennis has plenty of time for questions at the end. So when we do open it up to Q and A, feel free to unmute yourself so you can ask live or drop it into the chat. You can also join the conversation by raising your hand using the Zoom option if you'd like. So you've got three different ways that you can ask questions and interact and engage with Dental Dennis. Lastly to other reminders. These sessions are being recorded so if you missed something while you're writing something down or taking notes, be sure to watch Sasters YouTube channel and Sasters slideshare accounts so you can see both the recordings and the slides and then be sure to register for one on one meetings. Umbrella I'm going to drop the link in the chat right now. This is curated networking opportunities so you have the ability to log in to search by name, by role, by company and look like minded people that you might want to network with and easily start a conversation in the platform. So highly suggest you check it out. After Dennis's session we're going to welcome Dennis. Dennis, I'm going to pass it over to you. Take it away.

Awesome. Thank you. Thanks for having me. Actually really excited to share this talk with you guys today. I've actually been following Saster for a really long time. About six years ago when my co founder and I started the company, I remember us, we were kind of sending each other back and forth Jason Lemkin articles of how to get to a million dollars in ARR and so it's fun to now be in the position I am now with a big company and luckily a lot of revenue and be able to share with you guys some of the stories along the way and contribute back to the content. So as mentioned my name is Dennis Steele, I'm co founder of Podium and excited to to kind of share this content. So I'll actually start out with saying that I actually think now is the best time in our history ever to start a SaaS company. It sounds a little crazy with everything going on in 2020, but we've seen some massive societal behavior shifts in the world, right? And we've seen that between consumers and businesses. And with those behavior changes, it's presented a ton of opportunity. So that's for startups. For current companies. Podium has seen a huge acceleration and our message about the tools and the platform that we have today is more relevant than ever with what we've seen going on. And it's really just accelerated that. And I actually want to start out with a quote. It's a quote from Sam Altman and my co founder and I use. We've. We've used this quote for a really long time. And that is. He talks about a formula for the success of a startup and he describes it like this. It's basically this formula comes down to idea times, product times, execution times, team times, luck, where luck is actually a number between 0 and 10,000. And so I'm definitely a believer in this quote. We all know luck plays a big part sometimes. You either have it or you don't. But the other cool thing about that formula is there's a ton of factors that actually you do have control over. And if you ask any business that's passed 100 million in ARR, they will look back and say there were key decision points, especially around expansion and growth that they were able to make, whether it was about expanding to a new market, expanding their product into a new geography, new market segments, all of these types of decisions. They will look back on those decisions and say not only the way that they executed on taking advantage of those opportunities, but the timing of them is super important. And so the whole point of today, I'll share some stories, hopefully some entertaining ones. I'll share a few learnings that we've had along the way of how we identified those growth factors, how we leaned into them, and sometimes how we use constraint as well to get to where we are today. And hopefully there's a few things that can relate to you guys and we can take away from it and apply to your own business. So I'm actually going to start out with the early days of Podium. Something that you have to have in the early days is a laser focus on the feedback loop. And this is pretty, this is easy with, you know, in the early days when it's just you and your co Founder because you have your product, you're selling it and you're getting feedback from the customers right away. And so I'm actually just going to tell you guys how Podium got formed and how we found product market fit so quickly. So this all starts six years ago. My co founder and I were actually started the business in a spare bedroom of an apartment. We shared a standing desk together. That's all we had. And at the time we were familiar with pretty familiar with local businesses. So these are small local businesses like tire shops and small car dealerships. My co founder's dad actually had a tire shop up in Canada and he was begging him, hey, can you help me with this and that? And I was working with local businesses through a marketing firm, helping them with online presence. So we saw so much opportunity to go help local business. And really what we compared it to were some of the software tools that you had for even a small e commerce site like them being able to use Shopify versus the tools that a local business had, a physical local business with maybe millions in revenue. There was a massive gap in functionality from a software perspective. So we saw this opportunity and at the time there was one problem that was standing out more than any other problem and that was helping these businesses have a reflection of their in store experience actually show online. And mostly this was happening through online reviews, right? So Amazon had been doing their thing with reviews. Believe it or not, there was a time when there wasn't Google reviews determining everybody's decision on where they would go. And this was the time that was launching when we were starting podium. And so we focused in on solving just that single problem, helping businesses get reviews online. Not the most sexy or exciting, but we were at least doing it via text messaging, which was the first time anybody had done that. And we were getting a bunch of engagement. So we started selling it door to door. And you can picture us walking into these small shops, sitting down and talking with these business owners at the time. And when we told them what our product could do, a lot of times they didn't even know what Google reviews were, but they would just light up. And so we got this early validation of this product could be a game changer. In fact, I remember one of the first people we sold, we went in and told them about it. And he said, if you guys can pull this off, just this piece with reviews, if you can pull this off, every single business in America is going to want your product. And so here we are, we're like a year out of college. We had no money. And we played it cool in the moment, but we went around the corner and we were like freaking out. Right? Is your kind of moment of man, we're onto something. And so we were so excited with this. But at the same time we had business owners sitting down and also asking us to do more, right? They're like, oh, if you could help me with reviews, can you help me with like leads or communication? And we started seeing all these things that we could start building. And so we actually started building some of them. We only had a couple engineers, but we started like testing out these other products and we realized there was like a whole platform to build, so we needed to go make a tough decision. So we took our small team, there's like five of us, we went to an off site to make this big decision and we said basically, should we, should we stick with just this review product? A single feature almost didn't even seem like a real, like you could build a company off of it, make that thing like the best in class, best product we possibly could. Or should we start building out all these other features that are apparent opportunities and like build out a platform? And so we started doing an assessment of like, if we should do that. And we basically came to the conclusion like, we don't have the resources. We had like two engineers, right? We don't have the resources to do these other things well, so let's just stick reviews and try to nail that. And we learned something in this process. And that was this really simple process, four steps, which is test, validate, assess your resources and then go all in, right? And it was obviously with this example, we didn't have the resources, right? We wanted to nail reviews and so we stuck with that. But this was like the first time we had really strong internal pressure to expand. When the time wasn't right. Our customers were telling us like we could see the value in these new products. Even the ones we were testing had good signals and the whole team wanted to build more. But this was a time where we said, okay, it's not the right time. We have to exercise some constraint. So that's an example of internal pressure expanding too early. And next I want to talk about external factors and external pressure of expanding too early. And really there's a really good story to illustrate this. So we stuck with reviews, we started building it out. We got close to about a million dollars in ARR and we started to look at all the world changing tech companies and a lot of them had gone through Y Combinator. We had followed YC from the beginning, a lot of their content. And we decided to apply. And I don't know if we took it seriously when we applied because it had only happened to one Utah company at the time. But shockingly, we were invited to fly out to Mountain View and interview for Y Combinator. So we fly out there and we're nervous. You know, it's just me and my co founder were sitting there in the waiting room, and there were a couple teams there waiting for their interviews as well. So we asked the team to the right of us, we say, hey, so what do you guys do? And they were basically, they were from MIT and they were building robotic farming to solve world hunger. So. Okay, yeah, that's pretty impressive. It's amazing. And we asked the team to our left like, oh, what do you guys do? And they were like, from the MIT of Russia and they were building some super complex AI platform. Okay. Yeah, that's awesome. And, you know, here we are feeling a little insecure, and they say, what are you guys doing? We're like, well, we're from Utah and we help local businesses get reviews online. Yeah, that's it. We were thinking a couple things in that moment. One, do we even belong here in this waiting room? And two, maybe we should start doing something with like, AI or chatbots or something with our product to, like, actually, you know, be a little sexier or something. Well, anyways, luckily we. We got into yc, but what we did is the first two weeks of Y Combinator, we spent all of our time coming up with this plan of how we would change our product to incorporate artificial intelligence and these chatbots. And we, you know, probably were like, really concerned about not getting some kind of TechCrunch article or something about us, but that's what we were focused on. So we build this plan, we go in to talk to one of the YC advisors, and he sits us down and he lets us have it. He basically says, are you guys insane? You guys are like one of the only companies in the entire batch that has product market fit. Like, you're the fastest growing company in the whole batch. Like, you're worried about AI and chatbots. Don't worry about that at all. Don't get cute. You have something here. Don't mess it up, right? Just focus on it. And it was a great moment for us to kind of step back and understand what was going on. It seemed obvious, right? But it was crazy to think, even with all of the stuff we had going for us at the time, and as Fast as we were growing, there were these real external pressures that were trying to have us completely change our business. And if we would have tried to go after AI or chatbots at the time, I don't know what would have happened to the business, but it would have been really tough. And we still hadn't nailed reviews yet. And so we doubled down, we kept selling, we kept growing. We ended up graduating YC at the time with the most revenue that any company has ever graduated YC from at that time. And so that was, you know, that was the right call. So I guess maybe the advice here is don't nail something first, right? And that might be getting past even 10 million ARR. That might be getting to 25 million ARR. And with this simple reviews product, this single feature, we became $100 million plus value company with that one feature. But what we learned was that by doing that, actually nailing that product, that's what actually earned the trust of investors, right? Because we earned the right to say, hey, we've nailed the product here in the SMB space. We've had the growth. There's so many other things we can do. And they believe that. So we got Excel and YC and Google Ventures to back us because we had proved that right, we had nailed something second. You earn the trust of your customers, and so you earn this right from your customers to offer them a new product and for them to say, hey, you did so well with reviews. I think you can help me with leads, right? And I think you can help me with feedback. And so we started building some of these out. We built a feedback product and we built a leads product to help them with leads and more communication and messaging, built out a whole messaging platform. And now we're even helping businesses with their payments via messaging. And we've 10x the business from that, obviously that series a point. And so what's really cool now is something that we were worrying so much about of not being like sexy in the early days or something like that, or, you know, grabbing headlines with something kind of simple. But when you look at podium today, we're known more as a communication platform and a payments platform than we are for reviews. And so, you know, there's a lot of validation in how we approach that. Okay, next, you know, I just gave two examples of how not to expand too early and use some constraint there. But since it is Saster scale, I'll go into like two examples of how we actually pushed on the gas and scaled in different areas. And one of those is how we did that from a market perspective and getting into different industries and then how we did that into new geographies, going international. So first, after we had built out the product vision a little bit, in the early days, we were super heavy in just like two main verticals, automotive and healthcare. And even at that time, we couldn't even hire salespeople fast enough to satisfy like the demand in these markets. But we knew the product could apply to more areas, but we didn't want to invest where it didn't make sense. And so we came up with a really simple process. It's similar to the product process. And that was we would take two salespeople and we'd send them to an industry event, a new industry that we were kind of pioneering. And I remember when we did this with like what we called the retail sector, it was a furniture expo. And we just sent two salespeople to the furniture expo and we had no idea what was going to come from it. But three days on the expo floor and they closed over 100,000 in contracts. And so huge validation. We were able to take that data, go back and then start funding that team with more salespeople. And now today, retail rivals automotive and healthcare as our biggest verticals within the business. And we repeated that six times. So we have six different industries that we validated and proved out with that exact same process. And there were some that we failed at. Right, like food and beverage. It makes restaurants make a lot of sense. It looks good on paper. We would talk to customers, it would look good. But every time we would try to go validate that and test that, it just wouldn't fit the product. There were a couple things we would have had to have built to just serve that market that would have distracted us from the roadmap. And we just couldn't complete that small four step process of validation. And so we still haven't gone into that despite all of the pressure. Even investors wanted us to go into that vertical and we haven't done it. Okay, next, going into, into new geographies. So the tough thing about this, especially as you guys, as you're doing like high level analysis of how to grow into markets and geographies, is sometimes it can look perfect on paper and it can all make sense. But you need that validation before going all in, right? Or you're putting a lot on the line, right? You can only make a few of those bets that don't pan out. And so for us, going international was something that, you know, was kind of a looming Question for us. And so what we ended up doing was just taking again two salespeople. We had them started, we started them working Australia hours. We start in the afternoon, go late tonight and they just started cold calling. It was a little rough for the first few weeks, but they signed up some customers and we needed to support those. So we had support people start working in Australia and then we ended up sending a couple people down for an industry show and it was retail all over again. Right. Huge signal of demand and it was just enough for us to justify, okay, let's send a team down or manager down and try to build this out down there. That was a couple years ago and we've gone from two to over 50 people in Australia and you know, a big international office and that was like a blueprint now to go into new geographies when we're ready. And so again developing these processes with small test examples can give you a playbook to run within your business that you can replicate. So we replicated that on the market side and we're going to replicate that on going into new, new geographies. And so it's, it's really awesome to see that those growth factors that we leaned into, we follow the same principles as the product side, right? Test, validate, assess your resources and then go all in. Right. So kind of in closing here as we, as we look to wrap things up, this process never changes. We're still looking to do this process and it's not really earth shattering, it's not rocket science. What I've shared so far today, I think what's counterintuitive is when people see high growth companies they think, oh it must be gas all the time, right? High funding, just laying on the gas and expanding as quickly as possible. But I would say that the secret to sustainable hyper growth is actually using the discipline of constraints, knowing when to push on the gas and when to push on the brake and say no, we're not ready for that. And there would have been countless times in those examples where if we would have just gassed it, we would have been burning way more cash and using up our resources and probably not have made it through the next phase. And the last point to make there is when you're an early startup, you're making huge risks for return because you don't have much to lose, right? You're putting everything on the line to get high growth. As you get bigger, you have to be putting proportional bets on the table to the size of your company. So for podium, we're past 120 million in ARR. But we want to be a world changing company. That means 10 billion, 50 billion plus. Right. Sky's the limit. So to be able to get those multiples and returns back, we have to be putting the bets and risks on the table. To actually get that return. It becomes even higher stakes and higher risks. But that's what we have on the table today. We have huge product bets on the table that are super complex and require a ton of resources and it's risky and we got to execute. And the key for us in executing and winning in these is to go back to that simple process from the very beginning. Just test it, validate it, assess your resources and then go all in. And we're still putting that in practice today. And I think it will be the foundation of us having the next level of success. So that's the content for today. Hopefully there was enough in there for you guys to relate to. Happy to open up for questions here in the last few minutes and kind of discuss it with you guys. Awesome.

Dennis, thanks so much. We want to go ahead and unshare your screen. I love hearing your story and a little bit more of the journey getting to where you guys are. So that's great. We've got some questions in the chat, so I'm gonna pass it back over to you to review and answer the ones you see as you see fit. We've got about seven minutes or so for questions.

Awesome. Okay, first question. How hard was it to get to a million in ARR? What was your price point at the time? How did you acquire new local businesses via telesales, field sales or pure svo? Pure SEO. Okay, so we got to a million. The goal actually for the first year was to get to zero to a million. That's what we want to do for year one. And we ended up hitting a million in September and then we were like, okay, let's try to get to 2. And we ended up getting the 1.8 the first year. So it was an awesome first year. Those first few months were brutal. So we were originally it was just my co founder and I walking into the businesses and selling it door to door. We realized that we needed to scale and sell over the phone. So we got brought on. A salesperson said, hey, we can't sell it really over the phone. We're better at in person. If you can figure it out, that would be awesome. He didn't sell anything for three months. So he thought, okay, this is not going to scale. And then we kind of figured out a process we got better at like getting supplying him with leads. He started everything started clicking, we started going to some trade shows and he started doing 100k a month in contracts and it started ramping from there. That's kind of, that kind of illustrates how we kind of built it. The price point at the time was about 2 to $300. What's crazy is it's still the base price for the product today. And we've put in hundreds of millions of dollars of investment into the product but we were still selling it for that kind of 2 to $300 range, which is right on like. And Jason Lemkin has an article about this. It's right on like the low end of even being able to support a sales team with that type of price point just because you really got to dial in the metrics and make it work. So hopefully that answered that question. Second question, can you clarify how you differentiate between the phase of test and validate?

So.

That'S a fine line. I think the biggest thing is getting an early version of your product in customers hands is invaluable. And this is tougher actually for us now today as a big company than it was for us early on. Right. We have so much capacity and resources to actually invest and get the product further along because we have so many engineers and we have a lot of resources before getting into the customer's hands. And that's a kind of a bad habit. The sooner you can get something to validate into the customer's hands, the better. And the validation really is in looking at the value props of that product. Right. Not just hey, does it get the job done, does it check the box. But do these value props translate to value for the. Is there a good value exchange there? And can we kind of move forward this and have this work into the vision? So that's how I describe kind of those two. There's testing where you're learning and then there's validating where you know, you're seeing the whole picture of how that plays into the value of the customer. Let's see if there's any other main questions here. So was Australia your first international market and why? If so, yeah, Australia was the first crack at it English, so we didn't have to deal with translation. And Australia is just like maybe a year like tech wise and sophistication wise, they seem to be just about a year and a half a little behind us. And so some of those timing factors that we felt pulled us into growth, we were feeling the same in Australia. Like, all the businesses were now adopting reviews and sometimes texting and messaging, and us was like a little bit ahead in the adoption there. So it was nice to kind of just do the playbooks over again in Australia. Now when we look at it, we actually did a deeper analysis, a better assessment than the first one. And we realized that all of our US markets and those industries that I talked about, automotive and healthcare and others, we have enough TAM to keep growing and hitting our milestones, those today. And so we don't have to go aggressively into other international markets right now. But Australia was an awesome first test environment. Can you share a time you've had to step on the brake? I would say mostly a time to step on the brake. Wow. You know, this year has been interesting with that, right? Like, we were super worried when it first hit. We had a huge chunk of our customers go on pause what was amazing. And we really did push on the brakes because we said, we don't know what's going to happen. Here is the first time our company had experienced any kind of like, real macro challenge and the coolest learning from that.