Tips for a First Time Founder | Parsable CEO Lawrence Whittle

products is because the market wasn't big enough to support the investment that needed to go into the product. So biggest thing I learned throughout my career, and Posada was a really important one, where we clearly had a really interesting product, a really, really deep analytical engine, with in theory a very big market, which was digital marketing. But it was figuring out what part of digital marketing we needed to go in. So this product-to-market fit together is important, but actually you've got to separate the first part.

So, Tim, tell me, or maybe tell us all, what's the journey all the way from Model N to Persado to Parseable? And kind of why Parseable? How did you end up here? Give us the arc of the story.

Yeah, so maybe if I sort of go back, way back when. So my dirty secret is I'm a CPA. So I'm a finance person by background. Studied that through school in the UK. And sort of dating myself a little bit, but in the '90s, there was an emergence of, for the first time ever, of enterprise software. Enterprise software at that stage historically was in-house developed applications. And there was a company called SAP that started to emerge in the mid-'90s. And as people started to realize they needed a different type of person in the tech space to sell solutions, a lot of enterprise software companies were emerging, actually identified people with the CPA background as potential good people to bring into technology. So I didn't study computer science, although I did part of that with my CPI, was actually a finance person. Stumbled into a technology company called Marcam, which was venture funded out of Boston. And this is one of my pieces of advice I give. I got connected with a group of network people around the Boston area. And that's a common thread through most of my career. Most of my investors have been in the early stages were out of the Boston area. And the reason I say that is that the one thing that I've learned over the years and right through to my last few companies is that your network is probably your most important asset, particularly if you're raising money, because raising money is also a random process. If you know Silicon Valley, there's a road called Sand Hill Road. You can go up and down that road and—

It's called doing the Sand Hill shuffle.

Yeah, the first investor will say, that's fantastic. The next one will say, that's not very good. The third one will say, that's not very good. Fourth one will say— so it's a little bit of a random process. So the more you can actually raise money through your network. So bringing it right up to the last few years. So I got introduced to a very, very successful entrepreneur in 2013 called Zak Rinnart, who, serial entrepreneur, if you actually look at it, he's made several hundred million. And he was in a company with an investor that I knew very, very well. And it struggled a little bit. It was not so much that they hadn't been a successful business, but one of the challenges of taking a company public is you need certain types of metrics. And so to cut a long story short, I saw a very interesting market. They were focused on the life sciences space, were pre-IPO, and really had an established product-market fit but hadn't actually established a sales engine. So to cut a long story short, I saw a great opportunity to do an IPO. It was my second IPO. The first one is a story of Silicon Valley, a company called Centra Software. We actually IPO'd in February 2000. It was the first cloud company I got involved in. It was an early web conferencing solution. We actually IPO'd with $4 million of trailing revenue. So you could do that back in 2000. February 2000, we're all celebrating on the NASDAQ. And then in May of that year, the markets crashed. Luckily, we were a real company. So we did actually make some money. But to cut a long story short, Model M was an opportunity to take a company that was relatively established, use a lot of my experiences I got through 3 early-stage companies to see if I could actually take it public. And we got public, and it's actually doing pretty well, still a public company. But I'm really an early-stage guy. So once that company had got established and basically been public, I had the itch to go back and do an early-stage company. And this is where my network really comes into play. Most of my career has been associated with a very good investor called Bain Capital out of Boston. And Bain had— we're doing some due diligence on a company called Posado that was in the— wasn't called AI back then. It was actually— it had a machine learning engine around around speech. So it runs algorithms on language. So you can actually have a language model around emotions to then dynamically use algorithms to create language that will entice people to react to marketing. So one of the most powerful marketing emotions you can use is gratitude, for example. So they figured out a model. And my background before I became a CPO, I'm a math guy, and I believe that math is really, really important in all all aspects. So I saw a really interesting opportunity. And they were looking to invest in the company. It was actually out of Europe. Again, I'm originally from Europe. They were bringing it to the US. And I was really intrigued by the math part of this business. And we grew that business pretty well. It's over $50 million now.

Just as you guys grew, it would be really interesting to hear what were the things you had to develop or the skills you had to build that maybe you didn't have coming in, but you found you really had to use pretty constantly by the end?

Yeah, so I mean, if you look at pretty much everything, I saw a lot of things on the board about product-market fit. I always say to people, separate those 2 and make sure you've got a market first, because sometimes there's a product that looks pretty interesting, but actually it might not be a market. And one of the biggest issues in Silicon Valley actually is you overestimate the size of the market. If you look at many companies that have failed, it's actually not products, it's because the market wasn't big enough to support the investment that needed to go into the product. So Biggest thing I learned throughout my career, and Posada was a really important one where we clearly had a really interesting product, a really, really deep analytical engine, with in theory a very big market, which was digital marketing. But it was figuring out what part of digital marketing we needed to go in. So this product to market fit together is important, but actually you've got to separate them first of all.

What about you as a leader? Like, what were the skills you had to develop as you managed bigger and bigger teams? And listen, I think this is a group of first-time founders, right? I was a first-time founder, and I had to learn a whole bunch of things I didn't know. So I'd love to know what were things you had to develop as a people manager?

Yeah, so I think, you know, the— as CEO today, I probably spend 30%, maybe even more of my time on people. So product-market fit is important, but actually motivating people, particularly in early-stage companies. The first $1 to $2 million in sales is where most companies fail. You get a huge amount of false positives, and even more false negatives. And so Figuring out how to motivate people is the single biggest thing that I learned. And today, I mean, it was something I learned with my first early-stage company, but today it's probably the most important thing in Silicon Valley because the market's very hot. There's lots of entrepreneurs with great ideas, and getting people into your company that are genuinely motivated and you can motivate them is really, really important. So I think motivation is the key.

Well, I think that leads to a good question too, which is a lot of the best CEOs who I know at least are really good recruiters. And you've been a great recruiter in your career. So I'd love to know some of the skills you built up as you were able to evangelize to people and get them involved too.

Yeah, so I have a few skills and also a few weaknesses. But one of the things that I fundamentally believe in is passion. And so the current company I'm in, you know, I've been fortunate to have some good outcomes in the last sort of 10, 15 years. It's expensive to live here. So I'm a capitalist, still want to continue earning money. But the reason I'm in possible, because I'm really passionate about what we do. We have a market which is 2.7 billion people, as evidenced by Emergence Capital, which is deskless workers, people who are executing work away from the desk. Most of Silicon Valley doesn't get that. These are people that are in manufacturing sites, they're in retail outlets, etc. And so passion is the single biggest thing I learned, which is if you can get— you can be genuinely passionate about what you have as a company, and you can actually hire people that share that passion, Knowing that the commercial outcome is random, if you have fun along the way and you can actually spread that passion, get people to join your company because they passionately believe in what you're doing, then I think that's how you recruit people today. Because there's many, many choices. There's huge— even in San Mateo now, there's a lot of early-stage companies here. They're not just in San Francisco. You've got to really be passionate and get people that share your passion.

And one thing Lawrence just alluded to is we've put out some research at Emergence showing how often the deskless workforce is overlooked by venture investors in particular. So I'd love to hear the experience both at Parsable and your career in general. How did you find raising money? How'd you run that process? I'm assuming it got hopefully easier over time as you did it again and again, but for folks who are doing it for the first time, what are some of the things they ought to know?

Yeah, so I think again, genuinely passion is important. If you think about raising money, the more that you are passionate about what you're offering, if you're not passionate about your business, you need to get someone in your business that actually can sell the passion, because investors want to know that irrespective of whether the product-market fit is good, that you're going to absolutely do everything possible to make that company successful. So raising money is not about just having a very, very good business model, and maybe a good idea, you've actually got to sell the passion. And then going back to this point about, you know, is it a market that is legitimate? And do you have a product that you can actually get to that market and then protect it. Because the interesting thing about this market that I'm in, which is massive, it's the last market that's available for SaaS companies. Salesforce have virtually dominated every other market in terms of the cloud. This group of users is the last biggest market, but you've got to figure out how you can grab part of that market and then retain it. Because what will happen is markets emerge, there's plenty of money around, other companies will come in. So you've got to sort of identify the market, Show that passion with the investor and then also tell them how you're going to actually defend it with some IP.

And something you've hit on a few times is this idea of false positives in early product market fit. We've seen that. I saw that in my company I started. We've seen it in companies we've invested in. How can you tell the difference between those early false positives, which look so alluring in so many cases, and actually having real product market fit that you can pour gasoline on?

Yeah, so I think a lot of you have seen the adoption curves. There's various books that have been written over the time around you know, early adopters, then you have the early majority, then you cross the chasm. You've really got to make sure that you don't just sell your products to people that actually like to try things out. There are many, many companies that will try one of everything just in case it's something that might be a result. So I think those false positives are where you get some early success, but that's just because they bought on the passion. They actually didn't then try to implement the solution. So what I really think about in terms of getting momentum is finding people that will really, really use whatever you're selling. People will buy the vision, and vision is what most companies— you know, you hear this term about fake it till you make it. I don't actually believe in that concept, but you can actually fake things. You can fake many things in life. You can't fake passion, actually. It's an interesting thing. It's one of the emotions you can't fake passion, but you've got to find to a point where people won't just buy the vision, they'll actually buy the product and help you learn it. And particularly in this space, the product market fit is not a point in time. It's a continuum. So you'll hear about, you know, V1, V2. It typically takes multiple user experiences before you actually have a product that really has product market fit.

Yeah, that makes a lot of sense. And just really tactically, you brought up a good point about the early majority versus the actual real adopters. I'll tell you one thing we see all the time that people run into problems with is if you start selling to those digital innovation units or digital transformation units, and you never can cross over into the real business units of the company themselves, you've basically resigned yourself to being sold to that early majority.