A Year of Wrong Words Then SaaS Positioning Clicked

Omer Khan [00:00:09]:
Welcome to another episode of the SaaS podcast. I'm your host Omer Khan and this is a show where I interview proven founders and industry experts who share their stories, strategies and insights to help you build, launch and grow your SaaS business. In this episode, I talk to Michael Zuercher, the co founder and CEO of Prismatic, an embedded integration platform that helps SaaS companies build faster integrations for their customers. In 2003, Michael founded his first software company which he ran for 15 years. During that time, he faced significant challenges integrating with other software products.

Omer Khan [00:00:49]:
Over the years, his team built over 600 different integrations. In 2009, after selling his first company, Michael co founded Prismatic with two former colleagues. Their goal was to create an embedded integration platform that would help SaaS companies easily connect their products to other software their customers use. The team spent the first eight or nine months validating the idea and building a prototype. One of their biggest challenges in the early days was articulating how their product was different from existing integration platforms.

Omer Khan [00:01:24]:
It took the founders about a year to figure out their messaging and how to clearly communicate their unique value proposition to prospective customers. Building a production ready version of their product also took over a year. During this time, they had to use an early prototype to sell their idea to prospects. And creating a new product category also proved to be a significant challenge. With no established market to tap into, they had to get creative with their growth strategies. Eventually, SEO and paid ads became their go to growth channels.

Omer Khan [00:01:59]:
But getting traction was hard when prospects weren't even aware a solution like theirs existed. The team continually refined their product, their messaging and their go to market strategies. And their persistence eventually paid off as they gained traction and found product market fit. Today, Prismatic is a SaaS business generating multiple seven figures in arrival, serving over 200 customers with a team of about 60 people. In this episode, you'll learn how Michael identified and validated a persistent problem in his industry before starting Prismatic.

Omer Khan [00:02:35]:
What strategies Prismatic used to overcome the challenges of creating a new product category how the founders navigated the long product development cycle for their complex B2B SaaS product. Why focusing on both product and engineering Personas was crucial for Prismatic's growth and what approach Michael took to refine their messaging and articulate their unique value proposition. So I hope you enjoy it. Michael, welcome to the show.

Michael Zuercher [00:03:06]:
Thank you for having me.

Omer Khan [00:03:07]:
My pleasure. Do you have a favorite quote? Something that inspires or motivates you that you can share with us?

Michael Zuercher [00:03:12]:
So I almost hesitate to say this because it comes from an ad of all things. But back in the day, AWS used to use in their ad copy of a quote that has stuck with me, which is while talkers talk, builders build. And I don't know, I just, I loved that.

Omer Khan [00:03:27]:
Yeah. Yeah, me too. So tell us about Prismatic. What does the business do or product do? Who's it for, and what's the main problem you're helping to solve?

Michael Zuercher [00:03:35]:
Yeah, so Prismatic is an embedded platform that helps SaaS companies connect their products to the other products that their customers use. So, you know, if you're a SaaS company, almost certainly as part of your value proposition, you need to connect your product to something else. It's different in different industries and different use cases, but usually there's some part of the value prop that requires that. There are a lot of ways to handle that, but most of them are pretty complex and pretty time consuming, expensive, et cetera.

Michael Zuercher [00:04:05]:
And so Prismatic is a new way and an easier way to kind of make those connections, manage it at scale, et cetera. Great.

Omer Khan [00:04:12]:
And give us a sense of the size of the business. Where are you in terms of revenue, customers, size of team.

Michael Zuercher [00:04:19]:
Yeah, so team's about 60 people. You know, from our ARR perspective, we are well into seven figures at this point and well on our way to 8. Great. And customers north of a couple hundred.

Omer Khan [00:04:31]:
Okay, perfect. So let's, I mean, the business was founded in 2019, but I think the story starts probably back in 2003 when you were running a previous business and you started to experience some of these integration pains firsthand. So why don't we start there? Tell us about the first business you built and how that led you to eventually identifying this pain point that you were going to go and solve.

Michael Zuercher [00:05:00]:
Yeah, so my first business goes all the way back to 2003, which seems forever ago in the software land. It was not a SaaS business. It was kind of pre SaaS in a lot of ways or I guess at the very, very beginning of that probably. And so we were a software, software product that was used by public safety. So that's law enforcement, police, fire departments, 911 centers in North America or emergency response centers.

Michael Zuercher [00:05:26]:
And so we were kind of the, we were kind of the, like ERP and the CRM and some other things of those agencies. And it was this like really weird niche market that's actually a pretty good sized market. It's more than a billion a year in revenue just in the United States. So decent sized market.

Omer Khan [00:05:43]:
Okay, great. So you, you, you, you built that Business, I think you for what, like 12, 13 years before you ended up selling it?

Michael Zuercher [00:05:52]:
I think I was maybe actually there for 15 years total. The first few years was very slow growing. I was actually in college at that time and so kind of did both and wasn't fully focused on the business. But, you know, at some point we kind of turned the corner and really got. Got rolling. And over that 15 years, we got to about 50 million in revenue or so and had, I don't even recall, 2500 or 3000 customers, something like that.

Omer Khan [00:06:19]:
Did you bootstrap the business? Did you raise money at any point?

Michael Zuercher [00:06:21]:
Yeah, we bootstrapped that business to about 10 million and then we sold a chunk of it to growth equity or private equity. And that would have been in 20. That have been in 2015, and then obviously had the capital to accelerate growth for that next few years.

Omer Khan [00:06:39]:
Got it. So I know that the, the pain that Prismatic solves is something that you experienced firsthand while you were building that first business. Give us a sense of like, some of the challenges you were dealing with and why you felt that, you know, even after all these years of, of that pain and suffering firsthand, you decided that you wanted to spend even more time and start a new startup to solve that problem.

Michael Zuercher [00:07:06]:
Yeah. So, I mean, that's an interesting space because in the United States, law enforcement is more different from state to state than most people realize. Every state has their own government. Law enforcement is largely at the state level in the United States. And so you have fundamentally different ways that those agencies operate. Well, what that means is the product has to be pretty different from state to state.

Michael Zuercher [00:07:28]:
And so as we grew to a national company and ended up in 40 some states, we had to support all of the different ways that business was done in different states in law enforcement. Well, a big part of that was a set of integrations in each state. So if we were going to suddenly start working in Florida, there were 15 or 20 or whatever integrations to other solutions that we had to have that Florida used and nobody else used, or maybe it was a regional thing or whatever.

Michael Zuercher [00:07:54]:
So just the nature of that market meant that by the time we were a full, kind of full national coverage and of decent scale, we had built 600 integrations as part of our product. And that was painful in all the ways that you would expect that to be painful. And I think when I left, we had something like 100 people in our engineering organization, and half of our R and D effort was building and maintaining integrations.

Michael Zuercher [00:08:18]:
So unsurprisingly every quarter or every year or every time we had any kind of strategic conversation, one of the things always on the whiteboard was, what can we do to make integrations more effective? What can we do to move it faster? What can we do to. Because, I mean, it just affects so many things. And so we beat our head against that wall for years.

Michael Zuercher [00:08:36]:
And, you know, when I left that business in 2018, after, you know, after Bain Capital acquired it, and in that, in that process, I felt like integrations was kind of one of the unsolved pieces. It worked. We just threw. Threw money at it, basically, and built them. And it worked. It was the right answer at the time, but we always wanted to buy some kind of platform to make it easier, and we even tried. We looked at players out there and it's just nobody was really solving the problem that we had.

Michael Zuercher [00:09:05]:
And so I think, you know, I knew I was going to go do something else. I was too young to. Too young to hang it up. And so I got the opportunity to work with a couple of really key people from my previous business. And so the three of us started this company as co founders, Justin and Beth. And we were just pretty stuck on, like, well, it's something we hated, but we sure know it well. And, you know, and it felt like an unsolved thing.

Michael Zuercher [00:09:28]:
It was maybe a little cathartic to go do something about it, but you're exactly right. Like, it was not a fun thing that we thought back on fondly and in some ways, in some ways was kind of throwing ourselves back into the pain.

Omer Khan [00:09:41]:
Yeah, yeah, And I think that's an interesting perspective there. You know, we often hear this advice that if you're going to go and build something, you should do something that you're passionate about and you're going to get excited to work on every day. But I think equally as important is just a problem that you almost are just so determined to solve that you just can't stop thinking about it is equally a driving force.

Michael Zuercher [00:10:09]:
Yeah, I think fixation on a problem is a huge part of making the early stage work. I don't know of another way to succeed other than just be so drilled into something you can't think about anything else. And that doesn't always mean that you have to enjoy every bit of it. In my view, that's maybe a little bit dark, but, like, I mean, you can be pretty fixated on something that's driving you crazy instead of fixated on something where, like, every minute of it is great fun.

Michael Zuercher [00:10:35]:
Anybody who says that every minute of something is fun, hasn't done it long enough would be my argument.

Omer Khan [00:10:41]:
I agree. All right, so you work with Justin and Beth for some time. You guys decide that you're going to go and start prismatic in 2019. Was it just the three of you kind of in the first year?

Michael Zuercher [00:10:59]:
Yeah, it would have been like the first eight months or something. I think was just the three of us and we were just spending our time, I mean, honestly trying to figure out what we would even call this thing. The category which is now called embedded iPass or embedded integration as a service, that that name didn't really exist back then. So, you know, we spent a bunch of time vetting the idea, trying to understand how we'd think about it, standing up.

Michael Zuercher [00:11:24]:
Some of the things that you stand up really early on, like a really early teaser website and all that kind of stuff. And, and, and, and did some, we did some building as well. You know, Justin is a very technical co founder and was the head of engineering here until pretty recently. And so he did a lot of building. I did a tiny bit of building. And we got convicted enough, I guess, to hire a team.

Michael Zuercher [00:11:45]:
And I think that was pretty important to us, was like, let's spend some of our own time here getting really convicted that this is the right thing. And sure, then we'll hire a team and start accelerating.

Omer Khan [00:11:57]:
So in those eight months or so when you were trying to get to that point where you felt convicted, what did you do?

Michael Zuercher [00:12:06]:
Yeah, so we did as much conversation with, I won't even say prospects because we didn't have a product. But just like people that could eventually be the icp, the ideal customer profile, we had a bunch of those conversations. I had some connections just due to my previous business that allowed us to have some conversations with, I guess, kind of leaders in tech businesses related to this space that gave us advice, even though a lot of it we ended up ignoring, but gave us advice about, you know, whether there was a place for this segment.

Michael Zuercher [00:12:41]:
Because obviously integration platforms have existed essentially forever, you know, all the way back at least to the 70s, probably before. And so, you know, it's kind of a, kind of a scary thing to say. This thing that we really think needs to exist doesn't exist until now. If it doesn't exist until now, you have to ask yourself, does it, does it really need to exist? Or is this like a, is this a solution in search of a problem? And so we had a lot of those kinds of conversations.

Michael Zuercher [00:13:06]:
I think that was one of my big Worries was sure we experienced this, but we were a sample size of 1 and we were in a pretty weird niche industry. And maybe this isn't as universal as we thought. And so we spent a lot of time, I think, trying to get comfortable with that.

Omer Khan [00:13:20]:
What were some of the big takeaways by the end of that eight or nine months? Like, you obviously got to the point where you felt that you weren't the only ones who experienced this pain, that there were other companies out there who had similar pains. What else did you learn about your. Like who your potential ICP or target market was during that time?

Michael Zuercher [00:13:45]:
Yeah. So to be honest, I don't remember exactly when we figured all these things out, but I think in that first eight months we almost certainly identified that, you know, we were really building a product and a sales process for two pretty distinct Personas. You had kind of product leaders or product minded people and then you had engineers and those overlap and there's a lot of blurry lines and it gets cut different ways in different companies. But there's a difference between thinking about something from the product perspective versus the I'm going to build it perspective.

Michael Zuercher [00:14:14]:
And we needed to speak to both, we needed to serve both, we needed to really have an offering for both. And I think it's always a challenge when you're trying to build something that kind of equally serves two Personas like that. So we did a lot of work early on in the like, how would you. How would you build something that was compelling to both of those Personas? Especially when you have limited resources. Like I almost. I don't care how much you raise in the early days, you've got limited resources somehow or another.

Michael Zuercher [00:14:40]:
And how can you build something really compelling to. It's hard enough to build something compelling for one Persona. How do you do it for two? And I think we spent a lot of time thinking about that and trying to kind of navigate that. And that's a. That's a problem we think about to this day.

Omer Khan [00:14:54]:
Yeah. I'm curious, like, why did you end up with two Personas? It kind of feels like the easier thing to have done would be to say we'll just pick one of them and figure the other one out later. But there was something that you guys saw that you felt that that wasn't the right way to go.

Michael Zuercher [00:15:15]:
Yeah. You know, I think we identified partially probably due to our own experience, but I think we identified that they were both necessary but not sufficient alone. Where if you're going to make a so prismatic is an Embedded platform, you embed us in your SaaS product. Right. If you're going to make a bet like that and you're going to make your product dependent upon a third party like Prismatic or Auth0 or AWS for that matter, that's a big decision, right?

Michael Zuercher [00:15:42]:
Like that's a big product or strategy or in early stage startups like founder level, CEO level decision. And so you have to have the product mind, you have to have the product Persona, but then at the same time, it's the engineers who are going to do the embedding. And if they hate using it, you're not going to get very far. And so I think we identified that neither one of those alone was going to actually get us the traction we were going to need.

Michael Zuercher [00:16:06]:
Neither one of them was going to get us to a million of ARR. And that was not the simple path because you're 100% right, it would have been much easier to carve that down. Um, in hindsight, I think what we did was probably the right thing, but it was definitely a scary thing at the time.

Omer Khan [00:16:20]:
Okay. The other thing that strikes me about a platform like Prismatic is this doesn't seem like the kind of thing that you build an MVP over the weekend and then go and show somebody on Monday. This sounds like something that takes a long time to, to build something that's credible that you can go and take to show these customers. So how long did it take to build that, that, you know, that sort of, that first version of the product that you could get in front of customers?

Michael Zuercher [00:16:52]:
Yeah, I mean, that's a, that's a great question. And your intuition is exactly right. This is not something where you spend a couple of months and suddenly have a thing and, and it only does one really small part of the value prop. But you prove it. I mean, like, if it does a small part of the value prop, they're not going to use it. And so we did everything we could to build the product. In those early days, we always talked about it as a prop.

Michael Zuercher [00:17:13]:
It was a prop for conversations like, this isn't something anybody is going to put into production anytime soon. Because like, if you're gonna, if you're a product and therefore your customers are going to depend on it, MVP is not what those people are going to depend on. But what we needed was something to show the vision well enough to get people kind of aligned with us and on the journey with us so that we can go build a real V1, a real version one that you could put into production.

Michael Zuercher [00:17:38]:
And so, you know, that, that process did take the first. You know, we probably had a prop after, I don't know, nine months or a year or something like that that was like fairly compelling. But it was, it was more than a year before we had our first customer in production. And you know, we got a lot of questions, I get questions to this day about that. Like, how did you do the MVP thing? You know, did you follow the four epiphanies of or the four stages of the epiphany or whatever book that is?

Michael Zuercher [00:18:05]:
We kind of ignored some of that advice because I just, I don't know how we could have applied it to this space. And maybe that's my own small mindedness. But we kind of knew what we needed to build and we went and built a V1 and then shipped a V1 and kind of did it the old fashioned way in some ways, isn't to say we didn't have feedback along the way. We of course didn't do it in a vacuum. But you're right, we had to get a long way before anybody was very interested.

Omer Khan [00:18:30]:
Okay. And then so the other challenge you've got is you're basically creating a new category. As you said, iPass didn't exist back then. People didn't know what to call it.

Michael Zuercher [00:18:39]:
Embedded. I pass. Didn't exist.

Omer Khan [00:18:41]:
Yeah, embedded IPAs. So what did you discover when you started sort of go to market, you're trying to sell this thing. And how big of a problem was this in terms of articulating what the platform did and why people needed it?

Michael Zuercher [00:19:03]:
Yeah, so I spent a lot of those early days feeling really dumb and feeling like a really bad communicator because we would get on the phone with people who should be in our profile. You get on a call with them, you're talking them through what they're doing. Maybe they're an industry expert or Maybe they're a SaaS company themselves or whatever. And it was really hard for me to find the words to convince people that this was like, this was different than traditional iPass.

Michael Zuercher [00:19:33]:
This was different than the integration platforms like Zapier and Mulesoft and everything in between. It was different than those. In some way that was important, but it was also like a repeatable enough problem across companies that it isn't something that should just be built by those companies every time. Like you're kind of walking a fine line there where you're saying, well, it's not like Mulesoft, but it's also not something you should build as part of a software company, it's this, like, other thing in between.

Michael Zuercher [00:20:01]:
And as dumb as it sounds, it took us a long time to discover the phrase, like, help. Help our customers connect their products to the other products their customers use. Because people always think of traditional ipasses like mulesoft. They always think of that as, like, sure. I mean, if I need to connect NetSuite to Salesforce, I buy Mulesoft, I wire them together, and everything's great. Or I use Zapier or, like, choose your tool in that whole spectrum, right?

Michael Zuercher [00:20:25]:
But the problem is when you're a SaaS company and you're doing that not for yourself, but for your customers, into your customer's ecosystem, that is a different set of problems. And it took us a long time to figure out how to, you know, I think just, like, enunciate well, how that's a different enough problem, and it's just a completely different thing. And it made total sense to us. We'd experienced it, but, man, it took me a long time to figure out how to explain it. And that's one of my.

Michael Zuercher [00:20:52]:
You know, honestly, like, I think I wish that had gone faster in the really early days. And I. I don't know that I have any particular lessons learned, but, like, I very much feel like I should have been faster at finding that.

Omer Khan [00:21:06]:
How long did it take, like, roughly?

Michael Zuercher [00:21:08]:
Oh, I mean, probably we spent a lot of that first year, I think, doing that. And then as we started selling the product into. Into kind of the second year, you know, you'd have some large percentage of the people that you'd get on a call with where, like, you could just. You could see there just wasn't that, like, spark in their eye where they just got it. And I think it was probably actually around a million error point when, like, the way I described it at the time, I just remember feeling this.

Michael Zuercher [00:21:36]:
I was doing all the sales myself at the time, and I just. With one other person who was doing sales engineering with me.

Omer Khan [00:21:43]:
We.

Michael Zuercher [00:21:44]:
We just, like, suddenly the conversation just got easier. Like, it was just this. The molasses that we had been wading through got thinner or something, and it was. It's hard to put your finger on, but, like, it just felt different. People. People would just. You'd see it in their eye faster and more often. And at that point, that's actually when. That's when I felt like we had, you know, what I always call, like, really early product market fit, where, like, we. We found an ICP that will pay money for this and is interesting.

Michael Zuercher [00:22:12]:
There's always the advice that like you can get to around a million ARR. You've kind of proven maybe that there's enough of a market that you could go think about doing something interesting in it. That was part of it for us. But honestly another part of it was I just, I just felt it change, I felt the tone change. And I think some of that's the product got better. I think some of it's that we got better at explaining it and everything else. But I remember that really, really viscerally.

Omer Khan [00:22:33]:
Yeah, I mean, I guess there's the let's go away and have a strategy off site or something and figure out how to get our messaging right. Or there's banging your head against the wall repeatedly, customer after customer who keep asking you these questions. Eventually once you've been asked the question so many times, you figure out that

Michael Zuercher [00:23:02]:
answer right, it's like, yeah, that's exactly right. Like you say the wrong thing enough times that you eventually iterate to the right thing. You know, we talk a lot about, you know, training, training AI models. I to some extent felt like I got trained for that year by just like getting negative and positive reinforcement over and over and navigating toward what worked.

Michael Zuercher [00:23:20]:
And as a result, I'm a huge believer that founders, some, some member of the founding team needs to be the one out there doing the early sales because that is just the front lines of where you're going to get feedback on message and whether there's fit and all of those things. I don't know how else to do that. And once you know what you're doing, of course you have to systematize the sales process, but that have been a disaster for us if we'd have done it very early.

Omer Khan [00:23:46]:
Now one side of the equation is articulating what the product does so people can easily understand it and so on. I think the other possible side of the equation here is convincing them that they actually need it. And especially if you're talking to engineering folks who are like, we can build this ourselves. Was that a common objection you'd hear when you were talking to customers?

Michael Zuercher [00:24:16]:
Absolutely. And I think probably forever will be for anybody selling tools to engineers. Right. And we went in kind of assuming that our biggest competitor would always be chose to build in house. And I think that will probably continue to be true for a long time. I think that as the product has gotten bigger and more sophisticated, I think it is easier for people to understand the breadth of what they'd be taking on to try to build some of it.

Michael Zuercher [00:24:47]:
It's one of those problems, like so many problems in software land, where from any distance at all it seems really simple. But then as you get up close to it, there's like 10x the complexity that you saw from any distance. And I think we've gotten better at explaining that and I think we've gotten better at demonstrating that. And that has eased the build versus buy scale a fair amount.

Omer Khan [00:25:09]:
You're focused on B2B SaaS as your target market. When you started out, I mean, we talked a little bit about the ICP and target market. How, what, what were some of the other kind of areas that you were looking at? And then how did you get to a point where you felt that this is where we need to focus?

Michael Zuercher [00:25:29]:
So we said from the beginning that we, we saw our market as software companies, period. And we were very focused from almost day one, maybe actually day one, that we, we couldn't let that market get much more narrow or you ended up with a small enough total addressable market that it didn't end up being like, even in success, it wouldn't end up being as interesting as we wanted it to be.

Michael Zuercher [00:25:51]:
And so we were really cautious in those early days not to narrow our market to, for example, SaaS companies that are selling sales and marketing software, or SaaS companies that are selling manufacturing software. That would have been a really obvious way to narrow down the icp. The problem with that is you end up building a product that serves that vertical market and make a bunch of decisions accidentally along the way that don't end up then transferring to the broader software market.

Michael Zuercher [00:26:18]:
And we've seen some other companies that, that are in kind of neighboring spaces to us or in our same space where that's exactly what they do. They start with, you know, CRM or they start with something like that and they get pretty good at that. And then, and then they suddenly step back and say, okay, well now we're going to do it for, for 17 different vertical markets inside software. Well, you know, you've spent so much time getting really good at the one that it doesn't always translate. And that's a real challenge.

Michael Zuercher [00:26:43]:
And so we always kind of said our ICP needs to stay broadly across software. Like software is already narrow enough. And so then we narrowed it. But you can't go sell the 30,000 SaaS companies all at the same time, obviously. And so then we narrowed it down. We said we're looking for companies that are big enough to have these problems for real.

Michael Zuercher [00:27:02]:
Like they've gotten to enough scale that it's not like, well, we're a two person company that's going to stand up our first integration and there just isn't enough complexity to really see a lot of value in a platform like Prismatic. But then small enough, big enough for that, but small enough that they can actually do something about it. You get to some size of company and it's pretty hard to steer the ship. It's pretty hard to talk about bringing in a tool like Prismatic.

Michael Zuercher [00:27:25]:
And so we focused on that middle market pretty early on and that was the way that we kind of narrowed our addressable market down to an ICP was small to midsize companies kind of leaning on the midsize a little bit that are in complex enough vertical markets across all the verticals, are in complex enough vertical markets that they have real integration challenges and that ended up working fairly well.

Omer Khan [00:27:52]:
Okay. One other thing that just hit me was like, you know, we talked about the messaging convincing them that they need this thing and I'm guessing it's not so much of a challenge today. But when you're trying to land that first or second customer there and it's this embedded solution, they're taking a pretty big risk, a pretty big gamble on an unknown startup. Basically what were you doing or how were you able to build credibility with these customers?

Michael Zuercher [00:28:31]:
I am still eternally grateful to our first, I mean probably 50 customers or something who took a bet on us in those early days when to your point, we didn't really have any credibility, we didn't have longevity, we didn't have, you know, huge resources, etc.

Michael Zuercher [00:28:46]:
I think we built a fair amount of credibility by thinking really hard for a long time about this problem both before starting this company and after and being able to, being able to go tell people what they like, being able to go enunciate to people what they maybe were thinking internally but couldn't put words to. Like I think we pretty quickly got to where we could get on calls with people and, and just say things that like just made sense to them. And we had a couple of pretty early, very early customers first.

Michael Zuercher [00:29:17]:
You know, within that first 10 that were decent sized companies, one was a Fortune 500 company, one was a couple thousand person private equity backed company. And in, in both those cases plus some others, you know what they, what they told us was basically like you just, you told us things that made sense to us about where this should go and maybe the product isn't like as mature as we would like it to be and maybe the company's a little scary, but, but you've got, you've got a vision that resonates really well.

Michael Zuercher [00:29:46]:
And, and I think, I think that plus you know, the truth is as a second time founder, I probably got a little bit of, you know, a little bit of a, of of a credibility advantage with that as well. That like, you know, people take, I think, a little bit of faith in the fact that you've done this before and you're not likely to do something completely insane in the early days just because you've seen some stuff.

Omer Khan [00:30:08]:
Yeah, I think the fact, I agree with you, I think the fact that you're a second time founder definitely gives you more credibility.

Omer Khan [00:30:15]:
But it also underscores the point you made earlier about founders doing some of that initial selling because you in many ways are the ambassador, you represent the company and if you can build credibility with your buyers, even though the startup may be very early on, I think you can just by you as an individual, I think you can build a ton of credibility that people are willing to make a bet, like, I trust this guy.

Michael Zuercher [00:30:49]:
Yeah, I think that's right. And you know, we always talk about thought leadership as a kind of like top of funnel activity with content marketing and all of those things. There's a place for like, I don't know what you should call it, but basically one on one thought leadership as well. Like you get somebody into the funnel in those very early days and you don't have enough success stories for them to just believe.

Michael Zuercher [00:31:09]:
But if you can like convince them that you're the one who has thought really hard about this problem and has a really like interesting vision that goes a really long way. And I don't know what to call it other than thought leadership. Like, you know, and I think, I think that was really important. And I'm not saying that was just me, it was the company at large, but I was often the one delivering that message, of course, as the one doing the early sales.

Omer Khan [00:31:30]:
So earlier I asked you before we started recording, how did you get to the first million in ARR? And you told me SEO and paid ads were the two main channels that helped you get to the first seven figures. Now when you're dealing with category creation, I'm guessing there weren't a lot of people searching for embedded iPass out there. Right. So how are you getting in front of your target customers? What were you doing with SEO and paid ads?

Michael Zuercher [00:32:04]:
So I think we identified at some point in that first year or two, we identified that People, people were looking for a solution like this, but they didn't, they didn't know what to, to your point, they didn't know what to search for. They didn't know what to call it. They didn't know. They just, they didn't know how to go find it.

Michael Zuercher [00:32:23]:
And so what we identified was like, well, but if I was looking for something like this, and this is literally true of me at my last company, Justin, my co founder at Prismatic and my head of engineering at my last company, he and I went and we searched for integration platforms and we found mulesoft and we found Boomi and we found, you know, whatever else, I don't remember anymore, but we found a bunch of those and we evaluated them and like I said, we eventually realized they were solving a different problem than the one we had.

Michael Zuercher [00:32:50]:
But we did go find them. And so we found ways to kind of piggyback on some of that search activity and some of that, you know, those search terms and names and things like that. And I'm not going to say we found a silver bullet anywhere in there, but I think we were able to kind of like start the flywheel in the really early days by picking off the people who were clearly, you know, trying to find a thing like this but didn't know what to call it.

Michael Zuercher [00:33:15]:
And that was really lossy, huge signal to noise problem because some of them actually, or many of them were actually looking for Mulesoft or, you know, and I don't want to spend a bunch of time on the phone with somebody who really should go buy mulesoft, Zapier or somebody in between. And so that was a pretty lossy process at the time, but it was kind of the only thing we had in those early days.

Omer Khan [00:33:36]:
Yeah, I'm trying to like, you know, you describe these conversations that you were having and explaining to people where we're like this but not like this, and that's a one on one conversation. And then it's like, how do you translate that to a web page where somebody's just done some random search for integration platforms and then now you're trying to tell them in text that we're like this but not like this and whatever.

Michael Zuercher [00:33:59]:
Right.

Omer Khan [00:34:00]:
Is that the kind of challenge you were having to deal with?

Michael Zuercher [00:34:02]:
Yeah, absolutely. Yeah, yeah, yeah, absolutely. And the number of times that I heard from both, like, from everybody, from investors to industry insiders to actual prospects, the number of times that I heard, like, I just don't understand how you're different than mulesoft. Yeah, I Mean, I heard that infinity times, and we hear it basically not at all anymore because, well, for one thing, the categories evolved, and for another thing, we've just gotten much better at explaining ourselves. But. But, like, that.

Michael Zuercher [00:34:29]:
That was a very big problem is like, how do we say, well, we're mulesoft, but. But, like. But kind of to solve this other part of the problem. Oh, so you're like mulesoft embedded. And then they get all kinds of weird ideas about what that would be. And it was a. It was a. It was a journey.

Omer Khan [00:34:44]:
It's so hard. And I think some people listening to this might not really appreciate how difficult it is. But, you know, I've been in similar situations where you. You know exactly what the difference is, but for some reason, the right words don't come out of your mouth. And it's just this constant frustration in terms of what is it that is in these people's heads that I need to kind of almost reprogram by what are those magic words I need to tell them.

Omer Khan [00:35:21]:
And, you know, I think you got to a point where you were pretty crisp about it, or I think you're pretty crisp about it now. But just discovering those words was a journey.

Michael Zuercher [00:35:33]:
It was so frustrating. And like I said, I'd come from a previous industry that was very established, and we could say, well, we're like these other guys, but modern in this particular way or whatever. Modern or cheaper or faster, whatever. Right. You can't do that in a new category. And I had. I had dramatically underestimated how complex it was to be part of creating a category. And I guess hindsight's 20 20, but. Oh, man, that was. Oh, man, that was a pain.

Omer Khan [00:36:04]:
How long did it take to get to that first million in ARR?

Michael Zuercher [00:36:09]:
I believe it would have been like two years. Two or two or two and a half.

Omer Khan [00:36:15]:
Got it. And so it was kind of like. It sounds like an iterative process where you're getting some SEO traffic, you're getting some clicks through paid ads, Maybe it's not converting as well as you would like. Then you're having more conversations, and your messaging is getting a little clearer, and then clicks turn into more conversions and so on. So it wasn't like you just woke up one day and it was like these campaigns were just all dialed up.

Michael Zuercher [00:36:46]:
Nothing just happened. It was kind of pulling teeth the whole way, or at least that's what it feels like looking back on it. But, yeah, I think it was very iterative. We had a number of those first 10 or 20 customers that kind of half evaluated us for a year almost, you know, because they would find us and they would believe the vision and they would probably get to where they liked what we were doing and liked us or whatever.

Michael Zuercher [00:37:13]:
But to your point, they're not ready to pull the trigger and just say, like, well, I guess we're going to depend on these guys. And so, you know, it was, it was, it wasn't really a sales process that whole time because, like, there's nothing. It's not like we were advancing it along the way, but we had a bunch of these deals that were just kind of stuck in this, in this waiting room that we would just keep showing new things as it came along. And fortunately, we have paying customers along the way as well.

Michael Zuercher [00:37:37]:
But some of those bigger customers just kind of hung out and when they started falling or coming on board, obviously that was a big part of the acceleration.

Omer Khan [00:37:47]:
Let's talk a little bit about Outbound cold email. So you eventually got SEO paid ads working, get to seven figures, and then you started doing cold email. And it's worked to some degree, but it sounds like that was an even longer process in terms of, you know, making that work. So what, what was the, the biggest challenge there? I mean, you've got to a point now where you're at seven figures, you know who your ICP is. You probably had a bunch of conversations already, so you know what their pains and problems are.

Omer Khan [00:38:32]:
It kind of feels like you're in a good place to be able to send those emails that are relevant and resonate and all that stuff. Right. But what happened?

Michael Zuercher [00:38:40]:
You know, I think Outbound is. I'm definitely not an outbound expert, although I've learned a fair amount about it in the last few years. I think Outbound is one of those. It's one of those things that just. It changes so fast that as soon as you get something that works two months later or four months later or whatever, it will be different all over again. And you know, any. Anybody who's done a lot of Outbound in the last couple years will say basically the same thing that, like, it's just evolving so rapidly.

Michael Zuercher [00:39:06]:
Everything from the way the email providers detect spam and do all of that, everything from that to obviously we all got just completely overwhelmed with our inboxes and that changed the way that you have to message and get noticed.

Michael Zuercher [00:39:19]:
And I just think all of that has been moving so fast that you there almost isn't such a thing as, like, finding what works for outbound and then doing it for a While, you know, you do your best for that, but you're constantly, you're constantly looking for something that is, is trickling off in some way where you need to pivot or you need to change. And so I almost feel like we're just constantly reinventing outbound.

Michael Zuercher [00:39:42]:
And I've talked to a lot of people who do outbound really well in completely, you know, other companies in completely different spaces, and they all basically say that same thing, that it's just such a moving landscape. So I think we experienced that. I think we still experience that to this day. I think it also took us a little while to figure out exactly what universe you're going to send those emails into.

Michael Zuercher [00:40:05]:
You can only email so many people in a day, so how do you decide who the best prospects are or the best possible accounts or whatever? And I think we've gotten a lot more dialed in with that. And it's just a, it's a complex environment. Doing outbound.

Omer Khan [00:40:23]:
Yeah. I mean, these days on LinkedIn, I see people who are just posting every day about cold email and do's and don'ts and stuff like that. And one thing I agree with you, like, it just, it feels like it keeps changing all the time. But also, I didn't know there was so much to tell people about cold email that people are able to create so much content about it.

Michael Zuercher [00:40:43]:
Right, yeah. Well, you have to remember that these are, these are outbound email people who are creating content like they're, they're pretty good at spewing out content.

Omer Khan [00:40:52]:
So. Okay, so SEO, paid ads, cold email, eventually. What else did you do that didn't work?

Michael Zuercher [00:40:59]:
You know, we tried various ad channels. Like, for example, we've had basically no success with Google display ads. I think a lot of people would probably say the same thing. But you know, we've experimented with just about everything you can think of. The ones that work, we lean into. The ones that don't, we lean out of. There's, there's been a lot of that. You know, LinkedIn is another example where we've had some success on LinkedIn, but like, it wasn't a silver bullet for us.

Michael Zuercher [00:41:25]:
And I think, I think it's, it's probably another forum that has kind of gotten noisy enough that it's pretty hard to get a message through in any way that reaches anybody in a significant way, at least in our Personas. And so, yeah, that was another thing that we've kind of haven't leaned a lot into. We've kind of tried everything and we'll Continue to.

Omer Khan [00:41:48]:
So are you still doing SEO and paid ads?

Michael Zuercher [00:41:51]:
Absolutely.

Omer Khan [00:41:52]:
It makes sense because at least in those, you're dealing with kind of more inbound people actually searching for problems and solutions, as opposed to finding somebody on LinkedIn who's just drinking coffee and passing the time or something.

Michael Zuercher [00:42:08]:
Yeah, exactly. To some extent, a solution like ours isn't something where you, like, you see it on LinkedIn and think, oh, I'll give that a try. Right. Like, it's not that kind of decision. And so, like, you're right. You have to find people at the part of their product journey when it's a big enough pain to actually think about a solution like Prismatic, because it's not. It's not a. I mean, I hate to say it, but it's not something you just, like, implement in four hours and move on with your day. It's a.

Michael Zuercher [00:42:39]:
You know, it's a product decision you're making. And so I think that makes some things like LinkedIn probably less attractive. We should.

Omer Khan [00:42:48]:
We should wrap up. We'll get into the lightning round in a second. I just had one quick question for you. Was that, from what I recall, when you guys basically got to the point where, in that first year of getting to the point where you felt that, yeah, this is something we want to do, you start to hire a team and sort of get going, it sounds like. I mean, that was like a few months before the pandemic hit, right?

Michael Zuercher [00:43:14]:
Yeah. So we. I think we hired our first team. Gosh, I lose timeline here. But it was less than six months before the pandemic, and so, yeah, we were kind of just getting going and just getting a team gelled and everything. And then, of course, everybody. Everybody went home. We had an office here where I live in South Dakota. And I don't think everybody was here at that point, but most of us were. And suddenly that wasn't the thing anymore.

Omer Khan [00:43:40]:
And then. Are you guys still a fully remote team?

Michael Zuercher [00:43:42]:
Yeah, so we are fully remote at this point and have really leaned into it, I think, in my view. I don't know. I have no idea how to make Hybrid work. I think in person can work really well. I think we're proving that remote can work really well. And that's something Prismatic has spent a lot of time and energy on. I have no idea how you make Hybrid work without just having two cultures with two sets of people, basically.

Michael Zuercher [00:44:04]:
And so when it became clear that we weren't going to be just in person, which is partially due to the pandemic, and Partially because that was just the right way to go, attract the right talent for this business. I think we would end up remote even without the pandemic, probably, but. But that was the accelerator. At that point we said, okay, we're all in. We're going to do this remote thing. We're going to get the best at it. You know, we're going to put real energy into it.

Michael Zuercher [00:44:27]:
And that, I think, has proven to be a very good decision.

Omer Khan [00:44:30]:
And on that note, let's wrap up. Let's get onto the lightning round, and I've got seven quick fire questions for you. What's one of the best pieces of business advice you've received?

Michael Zuercher [00:44:41]:
It was demonstrated to me rather than said to me in words, but I worked with a CEO who was very, very good at letting, just letting fire smolder where he needed to, and that allowed him to focus on the three things that were actually the most important. That was really hard for me earlier in my career, and I've gotten much better at that, and that's been really good.

Omer Khan [00:45:01]:
Selective firefighting, yes.

Michael Zuercher [00:45:03]:
Like, you can't fix everything and sometimes you're going to let fires burn that are uncomfortable. But it is what it is, and you just as well acknowledge that and make explicit decisions. That's a good one.

Omer Khan [00:45:12]:
I haven't heard that one before. What book would you recommend to our audience and why?

Michael Zuercher [00:45:15]:
So I tried to pick one that's. That's different than normal. There's a book called the Strategy and Tactics of Pricing. It's almost a textbook, and it's in like its third or sixth or something edition. But it is a very, very good book on the theory of pricing. And that's a really, really deep subject. And this is just a very great treatise on it.

Omer Khan [00:45:33]:
Okay, great. What's one attribute or characteristic in your mind of a successful founder?

Michael Zuercher [00:45:39]:
Monomaniacal.

Omer Khan [00:45:41]:
Monomaniacal. What's your favorite personal productivity tool or habit?

Michael Zuercher [00:45:46]:
I'm a big believer in what Paul Graham wrote a decade or so ago about maker time versus manager time. And so, you know, obviously I spend almost all of my time in manager time at this point, but blocking off time to do maker things, whether it's right or whatever, you know, I think just blocking time to think be in a different mindset is really important to me.

Omer Khan [00:46:05]:
What's a new or crazy business idea you'd love to pursue if you had the time?

Michael Zuercher [00:46:08]:
I am fascinated by what artificial intelligence is going to do to manufacturing and how that gives the Western world. Obviously, I think a lot about the United States living here, but, like, give the United States a chance to bring manufacturing back to some extent in whatever form that ends up looking like. I think we're going to see a huge transformation there. I think we're already seeing it.

Michael Zuercher [00:46:30]:
I would love to work on that problem in any of the bajillion ways you could work on it, but obviously I'm monomaniacally focused on Prismatic right now, so that's very interesting.

Omer Khan [00:46:40]:
Actually. I never thought about the kind of the pendulum swinging back with AI and manufacturing. Who knows?

Michael Zuercher [00:46:46]:
Cheap labor may not matter anymore. And that's a really interesting. That's a really interesting thing.

Omer Khan [00:46:52]:
What's an interesting or fun fact about you that most people don't know?

Michael Zuercher [00:46:56]:
So I'm a pilot and I have almost 3,000 hours flying airplanes, which is. Which is, you know, a year and a half of work or like a work year and a half or something, if you did it 40 hours a week. So I've done a lot of flying.

Omer Khan [00:47:08]:
That's like a little mortgage just for the plane.

Michael Zuercher [00:47:12]:
It was almost all for work, so that makes it easier.

Omer Khan [00:47:16]:
And finally, what's one of your most important passions outside of your work?

Michael Zuercher [00:47:19]:
So I have a. I have a family. I have a wife and three little kids. And, you know, that obviously occupies whatever time I, you know, I have that isn't. Isn't focused on the business right now. So. So that's definitely where a lot of my mind is when I'm not here.

Omer Khan [00:47:31]:
Love it. Great. Well, Michael, thank you so much for joining me. It's been a pleasure. Thanks for unpacking the story and the journey with Prismatic so far. If people want to learn more about Prismatic, they go to Prismatic IO.

Michael Zuercher [00:47:48]:
Yep. Prismatic IO.

Omer Khan [00:47:49]:
Great. And if folks want to get in touch with you, what's the best way for them to do that?

Michael Zuercher [00:47:53]:
Yes, you can find either Prismatic or me on LinkedIn or like you said, our website @PRISMATICIO.

Omer Khan [00:47:59]:
Great. We'll include all the links in the show notes so make it easier for people to say hello. Great. Well, thank you so much. It's been an absolute pleasure. Congratulations on everything that you've done so far, and I wish you and the team the best of success.

Michael Zuercher [00:48:12]:
Thanks. It's been a pleasure being on your show. I appreciate it very much.

Omer Khan [00:48:16]:
My pleasure. Cheers.