Building an 8-Figure SaaS by Focusing on One Market
Dave MacLeod is the co-founder and CEO of ThoughtExchange, an enterprise tool that helps leaders quickly gain critical insights and make better decisions.
In just over 10 years, Dave and his co-founder Jim have grown ThoughtExchange into a $20M annual business with 200 employees, and $45M in funding.
But there was a time when no one was interested in buying their product.
They built the product first and then tried to find people who had a problem that they could solve. It wasn't a smart way to go about building a business.
So it was hardly surprising that they struggled to find customers.
They kept hearing the same feedback i.e. it's an interesting idea, but it's not a product we'd ever use in our organization.
But eventually, they did find a customer in an unlikely place. It turned out that a school superintendent had exactly the problem their product could solve.
And at that point, the founders made a very smart decision – although they didn't fully realize it at the right. They decided to go all-in and focus on school districts.
For almost 5 years, they focused almost exclusively on that one market instead of going out and trying to sell their product to everyone.
Today, half their business comes from enterprise customers. But their success was originally built by focusing on one target market and one customer for years.
Whether you're trying to find your first 10 customers or your first $100M in annual revenue, having focus is critical. And that's what we dig deeper into in this interview.
I hope you enjoy it.
Click to view transcript
[00:00:00] Omer Khan: Welcome to another episode of The SaaS Podcast. I'm your host Omer Khan. And this is the 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. In this episode, I talked to Dave MacLeod the co-founder and CEO of Thought Exchange and enterprise tool that helps lead as quickly gain critical insights and make better decisions in just over 10 years, Dave and his co-founder Jim have grown ThoughtExchange into a $20 million annual with 200 employees and $45 million in funding, but there was a time when no one was interested in buying their product. They built the product first and then tried to find people who had a problem that they could solve. It wasn't a smart way to go about building. So it was hardly surprising that they struggled to find customers.
[00:01:03] They kept hearing the same feedback. People tell them it's an interesting idea, but it's not a product with ever use in our organization, but eventually they did find a customer in an unlikely place. It turned out that a school superintendent had the exact problem their product could solve. And at that point, the founders made a very smart decision, although they didn't fully realize it at the time they decided to go all in and focus on school districts.
[00:01:30] For almost five years, they focused almost exclusively on that one market instead of going out and trying to sell their product to everyone. Today, half their business comes from enterprise customers, but their success was originally built by focusing on one target market and one customer for years, whether you're trying to find your first 10 customers or get to your first a hundred million dollars in ARR focus is just as critical. And that's what we dig deeper into in this interview. So I hope you'll enjoy it.
[00:02:05] Dave, welcome to the show.
[00:02:07] Dave MacLeod: Hey, it's good to be here.
[00:02:08] Omer Khan: So do you have a quote, something that inspires or motivates you, that you can share with us?
[00:02:13] Dave MacLeod: The one that comes to mind right off the top is that “A good judgment comes from experience and experience while that generally comes from bad judgment.”
[00:02:23] That's, that's my favorite. There's a versions, all sorts of different versions of the same quote, but it sort of talks about the fact that the crucible of good judgment is the fact that you screw up.
[00:02:33] Omer Khan: Love it. So tell us about ThoughtExchange. What, what does the product do? Who's it for? And what's the main problem that you're helping to solve?
[00:02:40] Dave MacLeod: Yeah, so ThoughtExchange is a discussion management platform. It's a way to have a conversation with a large group of people, large meaning 10 to a hundred thousand in a way that removes bias and surfaces important thoughts rather than just frequent thoughts. So. We are now a company that's used by a growing number of the fortune 100, actually. And as well as lots of public organizations, sort of across north America to have large conversations with their constituents.
[00:03:11] Omer Khan: Okay. So the company was founded in 2010. Tell us a little bit about what you were doing before you founded thought exchange and how you came up with the idea for this business.
[00:03:23] Dave MacLeod: Yeah. So I went to four different colleges and got zero degrees and I was an outdoor guide. I was. I want to be musician and a writer. And I took photography and math and political science, and that really prepared me to be an entrepreneur and a consultant. And so I was actually, I founded my own businesses doing leadership training and consulting and developing workshops and courses and things like that.
[00:03:49] And. Along the way I had devised a way of hearing back from a group of people, totally analog, no technology involved to, you know, hear from a hundred people to help set an agenda for a meeting where you just get everyone to write down their idea on a recipe card, and then you shuffle it around the room and everyone scores those recipe cards five or 10 times.
[00:04:10] And then you figure out which, which of those ideas is most important to that group. It sounds like a pretty simple thing, but people just loved it. Cause it, actually did a lot of things. It removed people's names from the process. They could share their ideas freely. And there was a good process. I'd say that story because at the same time, there was another guy by the name of Jim Firstbrook,, who is a principal engineer, a physicist, and a product manager at a company called Creo that had just been sold to Kodak you know, a nice billion dollar exit sort of thing.
[00:04:36] And he had just read the wisdom of crowds. And was trying to crack software to be able to, to solve for how do you get a crowd to come up with an answer to a question and a common friend of ours named Lee White, that both has an outdoor guiding background said, Hey, you guys got to meet you and famously Lee came to me and said, Hey, you really got to meet Jim he's trying to basically do what you're doing in software. He's trying to build collective intelligence software. And I was kinda like, eh, no, thank you. Not, not interested, not really my thing. And he then went to Jim, his friend, well said, Hey, Dave, you know, is this guy who uses recipe cards and drives around to all sorts of places and puts on meetings and all sorts of things.
[00:05:19] And Jim sort of famously was like, yeah, not interested. And so despite that Lee was very persistent and I managed to be persuaded to go to the very first alpha look from the first group of developers that brought the alpha of Thought Stream at the time. Out and I, I saw it and I was like, wow, infinite recipe cards. That's basically what occurred to me. That's kind of a big idea. And so Jim and I had gotten our first argument within, you know, three or four hours of meeting each other. And the rest is kind of history from that point.
[00:05:51] Omer Khan: Love it. So give us a sense of the size of the business in terms of revenue, employees, how much money you've raised so far?
[00:05:58] Dave MacLeod: Yeah, so we're sort of just, just under a few hundred employees. We're just, just this year, we just passed a 20 million in ARR and, and growing pretty strong. We're in very strong, actually we've raised just over $40 million so far as an organization. Those are some general things as of right now.
[00:06:16] Omer Khan: Awesome. Okay. So you and Jim get into an argument in the first few hours, sounds like a match made in heaven. How did you guys move forward on this idea? Like when you mentioned Thought Stream, is that what kind of like the first version of this product? Is that where it all started?
[00:06:33] Dave MacLeod: Yeah, well, it was actually called Sophia, I think at first and then Thought Stream was the first thing that came to market. And yeah, it was sort of, you know, I came from having built a career around doing this sort of work with, with paper.
[00:06:46] I had an instinct for what, what it could do and the technical team was taking a different approach, which was like, what's possible given building software to solve for a problem. And I will note that, you know, I just talked to a CEO who just exited their business for around a billion dollars and they had a very specific corporate business problem that they solved and built software for.
[00:07:08] And I have to say that I, I very famously we didn't do that. We actually did the classic mistake of, we actually were like, wow, you can build software to have a conversation with 10,000 people. That's great. Let's, let's really create that solution. And then we'll go on around the world trying to find people who have a problem that we could solve, which is a terrible way to really go about building a company.
[00:07:30] And you got to think about it. And so I really it's one of those things, you know, do what I say. Don't do what I do because it was a terribly dangerous and risky way to create a whole category and define a software category based on a capability that people, it wasn't really clear anybody actually wanted to do such a thing. If that makes sense.
[00:07:49] Omer Khan: Yeah. Yeah. So, I mean, that was one of the questions I was going to ask you is like, how did you go about like validating the idea? It sounds like you didn't.
[00:07:56] Dave MacLeod: Well, really. I mean, we, we did that in a way where we took it out to all sorts of people. We took it out to corporate leaders and business leaders and government leaders and school district leaders and the first nations health authority.
[00:08:09] And like, we took it to everybody and, and sort of like, Hey, we've got, we built this capability. What do you think?. And again, this is in the spirit of advice. This is I don't advice this 20, 20 hindsight, however, it's what we did. And we went to, to validate, and we actually heard some really interesting feedback.
[00:08:25] This was 10 years ago and we were sort of like, Hey, you can talk to people. You can talk to a thousand people. They all get to see the thoughts of one another and rate them, and then you get to figure out what matters to them when you can learn all sorts of fascinating things. And we sort of, we heard over and over again.
[00:08:39] Well, frankly, there's two major problems. One. We don't really want to hear from everybody. I don't know why we would, and two this idea of everyone seeing each other's thoughts totally openly, like this is way too open and vulnerable for our organization like that will never fly big problems. So, interesting idea but A I don't want it and B we'd never allow it. So thank you for the time we heard a whole lot of that and we're like, but it works, you know, don't you want to. So we sort of, I feel like we kind of created the Zune. It was very early great capability, but nobody really wanted it. And yet we, we kept fighting.
[00:09:17] We kept fighting with, somebody must want this. And we were very fortunate to find that a disproportionately, a school superintendent of all personas has a very specific problem where they have a very decentralized group of constituents. And it ranges from staff members to, to voters, to parents, to community members and then students themselves.
[00:09:39] And they were like, wow, a tool where I can talk to thousands of people and help solve my problem of trying to fund my school district and, and hear from people and understand what I should put in elections and figure out how to reshape boundaries and things like that, they were like, this is a perfect tool for that. And so we were like, wow, really? Okay, great.
[00:09:57] We are a educational leadership tool that helps superintendents make amazing decisions by involving thousands of their constituents. So we were like, okay, great. Let's do that. That's that sounds like a buyer they're interested. We can create value there. They want us, they love us. So let's become an education company.
[00:10:16] Omer Khan: How long did it take you to get that first customer?
[00:10:18] Dave MacLeod: You know, it was actually sort of, we, we had our first five, very random customers, sort of within six months or so of bringing the product out. Like, and then the next six months after that, we sort of were able to get paying customers, start to see a pattern of five or six paying customers that had a similar business problem, and the next sort of six months after.
[00:10:44] So not a gloriously ripping fast timeline that exploded users overnight. That's for sure. More like a painful one-on-one conversation process to find people that really had a problem that we could help them solve.
[00:10:56] Omer Khan: Do you remember how much you were charging for the product then?
[00:11:00] Dave MacLeod: Yeah, well, jeez. So we, in the spirit of talking to most founders we have ranged from $39.99 a month to, well over a million dollars over the course of a lifespan of ThoughtEexchange. Meaning we were like, well, maybe the low end of the market where people just, we need a visa way of being able to run a very simple exchange that has none of the features, none of the analytics and then have the software and support and things like that. And we tested that and we sort of had to, we worked through all sorts of different pricing and packaging and service and support modules to be able to figure out how can we actually solve the business problem that we're out to solve.
[00:11:38] And then eventually landed you know, a school district might bias for between 20 and $40,000 software and some services and a corporation might bias from between a hundred thousand to a million dollars.
[00:11:49] Omer Khan: And then how did it play out once you've, you've got first school district as a customer, you focus on that market. What happened next?
[00:12:00] Dave MacLeod: Yeah. So ThoughtExchange, you know, six or seven years ago, the website would literally hit you with a bus, like you would get there. And it would be like, there was a, there was a video of us and it would like hit you as you came to our site. And then there'd be a picture of superintendents who loved us. And we were helping solve problems, helping here from their unheard majority, helping them understand things. And we would, we should, we showcase all 25 of them would be on our front webpage. And we were like, we are the solution for doing large-scale constituent engagement for school districts.
[00:12:34] And we just built that we actually, at first it was like, let's do 50%. And then I was like, how about let's do 70? And then Jim actually. I was like, you know what? Let's do 90, 95% until we actually can build out the product properly and get some scale inside our services and our technology and make it a bit more mature.
[00:12:53] We're creating a ton of value here. Why would we do anything else? It's a huge market. Let's just say, let's just stay put here until we get the product really baked. And that was probably the smartest thing we ever did is stop, stop, trying to sell to the whole world and just really focusing on one persona that we really knew would speak on our behalf would go and tell all their friends that they definitely should buy ThoughtExchange, et cetera.
[00:13:16] So, yeah, there was a period of, we went extremely wide talking to anyone in the world, buying ads. Taking sales conversations with insurance companies, anybody that talked to us to a world where if you weren't a school superintendent, we wouldn't talk to you period. And that was really instrumental for our, our early stage growth, sort of between 500,000 and 5 million in ARR.
[00:13:38] Omer Khan: So from what I understand, the early days, you mentioned you were buying ads and you were kind of doing outbound talking to anybody who would listen to you. And you, weren't getting a lot of positive feedback at all, actually from, from how you described it. So what kept you guys going?
[00:14:02] Dave MacLeod: Yeah, that's a good question.
[00:14:04] Cause I actually think there's kind of two it's oversimplification I'm sure. But I think there's kind of two things, two ways to really bring something out to market. One is to just say, we have a capability. We want to build a software, we want to solve a problem that we see out there. I'm going to say, we're going to solve that in any way, shape or form, where we actually had a different, we actually had a vision, which was, you know what people have the right to be heard and businesses are going to be better. If you can hear from people and remove the identity and remove bias from hearing from people. We know this has value. The market might not be ready for it, but we stayed pretty resolute, but the idea of scaling conversation and removing bias in any organization is going to be super valuable, whether it's recognized now or not. We have to find a way to wait until define our market and then let the market catch up. And sure enough, you know, five or six years later after we built it out far enough, we went back to the corporate sector and people were like, wait a sec, you have a way to talk to a thousand people without bias?
[00:14:59] Sounds like exactly what we want. Right in the values of our, you know, our right from the top or strategic plan is inclusion and hearing the voice of people and honoring what people think and say, and what an amazing tool for such a thing. And it was like, yeah, well, yes, it's the I thought. You know, we happened to also have created a zune a few years ago.
[00:15:15] Let's forget about that. And now it all, all of a sudden the market aligned with our product, but that's not without a five-year gap of a hell of a lot of no, not interested wrong time. And so we were only just stubborn with our vision of like, this thing has value we're it just has value. You can't dispute the fact that hearing from 2000 people and knowing what matters to them has value.
[00:15:38] So we just had to say mission, mission, critical eyes on the prize. Our vision has to get to the other side, which I think is only right once in awhile, because I think oftentimes with products, you should just listen to exactly what your customer says and solve their problem. Near-term not have a vision for what you think is possible. If that makes any sense.
[00:15:56] Omer Khan: Yeah. How much were you in, in terms of revenue, are you generating in those first few years? When you were focusing on school districts.
[00:16:04] Dave MacLeod: I mean, we were, we were doubling and tripling our revenue on small numbers. So, you know, when, when your first year revenue is $10,000, that's not so hard.
[00:16:12] But so we went from like tens to hundreds, to several million over the course, but it took us, you know, doubling or tripling. And at first years tripling our revenue meant going from a hundred to 300 and then over a million and then getting over two and 3 million within three or four years. So it wasn't sort of rocket ship growth from an overall, you know, jump up to 500 million in, in ARR point of view, but it was very steady growth, very good growth for a company that's doing better than doubling every year, but it was just sort of staying, staying humble and knowing that doubling 500,000 to a million is a great thing to do or to 1.5 million.
[00:16:49] I can't remember the exact specifics, but we were always within sort of doubling or tripling on those small numbers.
[00:16:54] Omer Khan: And then in those first few years you stayed focused on school districts as you're target market?
[00:17:00] Dave MacLeod: Hundred percent. I mean, if there's, this is my that's why I gave you the quote, good judgment comes from experience.
[00:17:06] And our bad judgment was that, you know, we, we missed at one point, we're like, you know what, let's expand. Let's really get out there and start selling to a whole bunch of people and let's buy all sorts of ads and get some marketing people and get salespeople and SDRs. That'll just really knock this open and we missed our year end, you know, dramatically with this stance because we were so unfocused. We didn't have a group of referenceable customers, our ability for them to actually understand similar people with similar problems, all the money we're spending on random marketing for all sorts of things. This was very ill-advised.
[00:17:41] But yeah, it's something that we certainly did and that we have this capability, which is like, of course we can solve your problems for ThoughtExchange. Which was sort of overly arrogant and not very wise. And all of a sudden, now we seem smart, but that wasn't without a lot of living our wounds and making a lot of bad choices along the way.
[00:17:58] Omer Khan: What did you do in terms of funding? We were you initially bootstrapping the business? What point did you raise money?
[00:18:05] Dave MacLeod: So we, we raised money from some excellent angels. So an Angel investment, actually the CEO is of Creo Amos Michelson. He was Jim's former CEO and he, he really invested in this group of people to say, okay, I'm not entirely sure what this product does, but actually really believe in this group of people.
[00:18:26] And so I'm going to give some money and have some faith that they're going to talk to enough people, and they're going to figure out what it is that they're going to do. And that, that is, you know, the truest form of angel investing. I think. It occurs like angel investing when we're, you're not totally sure on your vision, you're not totally sure on your market yet.
[00:18:43] You have people that'll back you with some millions of dollars to support your, your growth and development in the early days when you sort of have no right to be able to do such a thing. So, yeah, we had some really great angels that came along and supported us and attain that sort of tumultuous time of finding our first target market that allowed us to then get to a proper Series A, VC round, et cetera, some years later.
[00:19:05] Omer Khan: Tell me a little bit about selling to, to the school districts. What, what did that, that sort of sales and marketing process looked like?
[00:19:13] Dave MacLeod: Right? So the here's the, the good judgment. The, at first we sort of read all the books and, and hire people and did all sorts of stuff to build, you know, pay ads and SEO and all sorts things.
[00:19:27] But then when we found our target market and found a problem that we were solving for them, it became a lot more obvious about what we needed to do, and that there are places where our customers gathered. There are publications that they read. There are specific events that they go to. There are trusted people that they see as leaders. There are associations. And we started to put all of our marketing advertising dollars to working with those organizations and help them solve problems with our product as well. And getting our product inside the whole realm of the people that we're trying to serve. And with that focus, so we, we range, we would still buy ads and things like that, but it was ads to come to round tables, to meet with other superintendents and talk about business problems.
[00:20:10] And we started sponsoring associations related to our superintendents, and we started going to events where they would be gathering all of this really specific focus on our persona. Allowed us to all of a sudden have a really great conversion rate. And our CAC started coming down dramatically and our speed of revenue started increasing and our ARR started jumping up properly.
[00:20:32] But that all came with focus, not not the opposite and all it's actually sort of going, going wide and being very clever about we had great, great SEO. We had lots of people visiting our website. And it just wasn't good at converting to deals that were allowing us to grow. But we had a period that we were a very interesting company and we had all sorts of people interested in us.
[00:20:53] But yeah, I think there's a real interesting lesson in there of like, find your, like how granular can you get, I guess would be my, a lot of people have asked me if as far as the lesson learned what I would do differently, you know, we went down to 90% after a year of selling superintendents. We should have gone to a hundred percent in the first day.
[00:21:10] As soon as we figured out that we were creating the amount of value we are creating for that customer, we should have just quadrupled down or all in on that customer so that we could marketing became so much easier once we knew exactly the problem we're solving and who we were solving for.
[00:21:26] Omer Khan: So that's a pretty common thing with, with a lot of early stage founders where there's this reluctance to really niched down. Yeah. I've got a product. It can help everybody. Or even if you pick a particular market or a persona often, it's still really broad. And so your messaging, your marketing, everything is still kind of really diluted. And I think it can be really hard to, to kind of jump in with both feet and say, this is where we're going to plant our flag.
[00:22:02] This is where we're going to focus. What advice would you give somebody who's kind of going through that right now, because it sounds like your, your experience may, maybe all the nos you got from all the other kind of prospects you talk to maybe helped you to get to that point, maybe in an easier way, because, okay, well we've got one customer they're paying, there's definitely some value here let's just focus on them. But yeah, there's, there's often there's this real reluctance to do that.
[00:22:33] Dave MacLeod: I hear it. And I felt it too. And there's a lot of pressure from the investment community as well to say, you know what, what's your target market? What's the total size of the opportunity here. And there's this fear, which is if I can't show that I can serve a global market with this, how can I actually attract investment dollars? And so therefore I think it would be very wise to have one sale in 50 verticals to show just how amazing this product could be at the end of the day. And that that's a deadly trap, I think, honestly, because Yeah, you need people to love your product and to go out and speak the whole net promoter thing is, is true.
[00:23:15] And so, you know, more invested what investors want is an amazing product and amazing team and the basic ability to execute against a vision, not so much proof that you could technically sell to a hundred different verticals. So yeah, that temptation is real. And so the advice that. Like until you have customers that are willing to like go on stage and take calls for you and be references and help you sign up other customers, because they're just so in love with your product, you're not in the right vertical yet. You're not talking to the right customer and you're not solving the right problem. And as soon as you find that, like this problem has been solved in a way that only you can solve. And there's nothing like this on earth, it's solving that problem and you get that feedback 10 times. And it's like, okay, this let's just stay here for a while and let's really build a company around this. And until you get there, you know, find it and then double down on it versus well, great we did that once now let's still go see if we can do that. 25 more times. I think it's a dangerous way, a very expensive way. And actually I've talked to some amazing, I've had the privilege of speaking to some amazing presidents and CEOs of organizations with hundreds of millions of dollars of revenue. And one of the best advice I got from one particular president was, you know, we, we got to where we're at now with nearly a billion dollars in annual revenue by doing 80% less.
[00:24:32] So it's no less true for us now at our stage than it is for you and your stage to have focus because our, our product can also do all sorts of things for all sorts of buyers across all sorts of verticals. And so as a company, that's just got over a billion dollars in revenue, annual revenue, we have the same advice, focus, focus, focus, and.
[00:24:53] Omer Khan: Yeah. Yeah. I, and, and did you get any pushback from maybe like investors in, in terms of focusing on some district?
[00:25:02] Yeah, because
[00:25:02] Dave MacLeod: there's a you know, it's, it's this market size thing, and I think it's pretty agnostic as to which market you focused on. If you focus only on left-handed Frisbee playing. Then, you know, the investors will be able to go, what is the total size of left-handed Frisbee market?
[00:25:17] And you're like, well, actually, you know, it's, it's pretty big if we can crack this market, it's the rest of the planet, but there is a overall near-term pushback. But what I found is that was especially true for short-sighted investors, which we don't have any in our company, but we definitely got a lot of nos from people that were like, you know, This market, I don't effectively, it came down to, I don't see how we're going to sort of flip this company in a few years based on this market and this trajectory.
[00:25:45] Whereas the investors that did come in and double down were like, well, I see how this could become a global phenomenon. If we can really keep cracking things in the right order here and follow crossing the chasm. And, and so yes, it scared off some investors to say, well, I don't know, education, mark it is you know, 10,000 school districts that are sort of large and that's not the most sexy place to put capital right now. The ed tech world is, you know, some investors love it. And some investors really don't. It takes a particular investor to understand. You know, we're now working with some of the fortune 50 on seven figure deals and solving enormous problems.
[00:26:22] And they're like, yep. That's what I saw in the early days. But that doesn't that was not true across all investors. Absolutely. There's a lot of fear that your target market's just too small and we would try very hard to say, well, it's about focus and scale and getting it right. And building the team.
[00:26:37] And then we're going to be able to go out and go to get to where we are now as a company, but that was not obvious in many attempts to raise money that didn't resolve in terms sheets.
[00:26:47] Omer Khan: Yeah. I, I remember talking to the founder of Go Guardian, which is a content filtering solution for like K-12 schools.
[00:26:56] And he said something similar where a number of investors were, were just, they were getting rejected because they were just told that you know, K-12 market just doesn't have money and you're, you've got the wrong strategy here. And then that company, you know, when, when I last spoke, I think they were doing over north of like 50 million ARR.
[00:27:16] So again, it goes back down to if you focus then, you know, even if the market size may not be huge, it gives you a way to very clearly solve a problem for a very clear customer and your messaging becomes super sharp.
[00:27:37] Dave MacLeod: Yep. And, and I mean there is, there's a lot of, you know, I would say a lot of questions you need to keep asking yourself through that.
[00:27:44] Are you developing product features, capabilities that are at least a little bit vertical agnostic, meaning would this have value across, or is this something that we're building only for a very specific user, you do have to sort of think of those things as you're going through and you're building out the product so that your.
[00:28:01] You know, making the product that would never work for anyone else because you're only focused on one target market. I think that's an interesting balance, but that's also pretty product specific. And I also, I always like to point, I mean, Qualtrics has made a lot of news in the recent times and I'm pretty sure when Ryan's dad was making software for universities and went, if he was to have taken that idea to investors and say, I have a, you know, a research tool that we're selling predominantly to universities. I don't imagine many investors were like, well, that sounds like a behemoth company that's going to get bought by SAP and then IPO and the worst billions and billions and billions of dollars.
[00:28:37] You know, the university market is far too small, so it's not always easy to spot an enormous successful juggernaut kind of company. And so also as a founder, It's probably good for you to spot it yourself and know what you have and know what you're building and be resolute about that so that investors can either be right along with you or they can realize later that they missed it, which is, I think that's an important attitude to have.
[00:29:02] Omer Khan: Yeah. So I want to talk about kind of the process you went through to make the shift and, and expand beyond school districts. But before we do that, tell us about TechCrunch,
[00:29:16] Dave MacLeod: Which part? The part we were talking about earlier. Yeah, well, I will just before the, we started recording, I was saying that when I was sorting the one to $5 million mark there was a point in my life that I actually you know, every day I would open TechCrunch and read it in the morning.
[00:29:33] And there was some other funding announcement of some company that was doing better than. And I found it like, I eventually I deleted it. I was so pissed off every day at like all these other companies that seem to be doing always better than me, more successful and finding better capital and better traction.
[00:29:50] And the whole thing that eventually I was like, you know what, screw this, delete. I can't read this anymore. I just can't wake up every day feeling like I am somehow less than all these other amazing founders that are better than me. So I was like, I gotta focus on my business. So I like stopped reading TechCrunch for a while, because I just did not want to hear about the success of other founders because I found it a bit disheartening when I was trying to build a great company and we weren't, you know, being successful in that moment, getting term sheets, et cetera, et cetera. So, yeah. I don't know if that's the story you wanted me to tell.
[00:30:20] Omer Khan: Yeah. Yeah. And I, and I think, you know, I had somebody tell me once, like you shouldn't compare your insides with other people's outsides and that's so true in terms of you, everything looks perfect when you look out in the market and what other people are doing. And you're like, oh crap, I'm dealing with this and this doesn't work. This is a struggle. And yeah, I think it's good to sort of put those things into perspective.
[00:30:43] Dave MacLeod: Yeah. And, you know, on that note, Eventually then all of a sudden, then you go and you raise money and then you feel a bit more successful and you reinstall TechCrunch. And if you're able to actually talk with many of those founders that had great outcomes and things like that, and you're right.
[00:30:57] Sometimes an outcome is like, well, yeah, you know, we exited because actually we stopped growing or maybe we raised money because we ran out of money or there's all sorts of reasons why, and sometimes it's just massive success and they're crushing it and let's give kudos where kudos are deserved, but yeah, often you don't know the story.
[00:31:13] And so that was definitely, I resonate with what you just said. Cause sometimes I realized that I was totally comparing myself with something that I just didn't understand that well, the goal of the company is not to raise capital. Right. The goal is to create value in the world and try to ask for some of that value back. That's the goal of our company.
[00:31:30] Omer Khan: Totally. All right. So let's talk about how you are, you sort of expanded beyond school districts, so things that things that seem to be going nicely. You're you're getting more and more customers. Revenue is growing. At what point did you decide that you were going to move into other areas and other markets.
[00:31:50] Dave MacLeod: Yeah. So, you know I kind of see it as a bit of a tri-factorof things that happened. So, so one thing that happened is, you know, starting, starting three, four years ago, we came back to the, to the corporate sector and said, Hey, like we're ThoughtExchange and very, we actually had the world's most advanced platform for hearing back from thousands of people.
[00:32:09] Just curious if this is now valuable effectively, and that said in different ways, and the message has changed. Like I alluded to people like, wow, this seems fascinating. What do you do? And, oh, this is a very complete platform with complete capabilities. And this sounds like I may have tons of value and tons of interests.
[00:32:26] And well, that was good. There was also sort of a one on one by one showing process because people weren't going in and Googling, you know, hybrid work solutions and bias technology and unconscious bias removal, and a new leadership paradigm. This wasn't something that was really anybody who was looking for it three or four years ago.
[00:32:45] But when they saw it. now and it was like, this is a really interesting product to go talk to my sales team or to help with a new leader that just got onboarded to hear back from a hundred or a thousand people that are working for them. So there was like residents, all of a sudden, except we were still a bit of a disruption.
[00:33:02] Cause we were like, Hey, you can talk to a thousand salespeople instead of flying them all to Orlando. And then they're like, oh, that sounds great. Except we already sort of have, you know, tickets for universal studios. So I'm not really sure if we want to cancel our Orlando trip, just. The reason I tell that story is because now the market was ready and people were talking about, or they're very accepting.
[00:33:21] We got some great early adopter customers and lots of use cases and success stories and things like that. But then what happened is that as that started to grow, then COVID happened. And all of a sudden people were like, wow, we actually now ThoughtExchange wasn't a disruption that was saying, Hey, we want to disrupt the way you're thinking and the way that you're doing work and the way you're talking to people.
[00:33:43] All of a sudden work had been disrupted and Thoughtexchange was a solution. So at one point in the early days of the pandemic, we were a thousand percent year over year from a user growth perspective on the platform because people were like, we need to talk to these people and we have no sort of way to fly them together.
[00:34:00] And all of our analog ways of gathering people are gone and then add on top of that black lives matter, anti-racism the whole push to actually drive towards removing bias and people finally waking up to the value of diversity, equity and inclusion. And saying, we're going to actually operationalize this and put some budget behind it.
[00:34:21] And now all of a sudden we're out with these amazing customers, talking to sales organizations and being launched by CMOs and CEOs and all sorts of super exciting stuff. And it seems like it's been obvious all along. It's like a overnight success kind of thing. And of course we're a great fit and lots of people are evaluating the tool, et cetera, but that's actually, it actually took sort of three different miracles of the corporate world waking up to the importance of diversity.
[00:34:46] Mixed with hybrid work being sort of forced on people, mixed with people, suddenly valuing the, the aspects of inclusion and realizing that this is going to be the thing that we need to focus on to compete in the marketplace. Those three things happening together. And I was like, wow, this tool really has value.
[00:35:03] So I think every company needs a minimum, one miracle to happen. And I don't like to characterize COVID as a miracle, God forbid, but I don't want that as a misrepresentation. What I do want to say though, is that hybrid work is really important. We've been distributed for, for 10 years, you know, and we don't actually believe people need to commute to work.
[00:35:24] And fly all over the place in order to run a business. And so I think one of the positive things coming out of, of COVID and all the terrible things that are associated with it is that people are actually able to have a better balanced, hybrid work environment for their organizations and thought exchange helps with that. Sorry that was super long answer to a short question, but sometimes I ramble.
[00:35:45] Omer Khan: Yeah, no, no, that's good, that's good, good, good, good stuff in there. You know, one of the things that I've seen people struggle with is when they've gone all in with one market, like you did with the 25 superintendents on your website, talking about being the solution for superintendents and then school districts, and then you go out into a different market.
[00:36:06] You kind of have this weird period where. You might be talking to people and they go look at your website and it's like, oh, and, and so as you sort of expanded, how did you, how did you deal with that in terms of how you thought about expanding your marketing and your messaging to, to appeal, to, you know, additional market.
[00:36:30] Dave MacLeod: Yeah, that's a really good question. And I think the key there is to not underestimate the value of early adopters and people willing to take a risk and people who actually disproportionately liked doing that as a key component to their persona, like I and finding, so we were very fortunate to be able to get a group of people from sort of the global 2000 and up many of them in thecertain, Fortune 50 leaders inside these companies that were like, yeah, we believe in a new way of doing things and they didn't require a whole bunch of, in fact, it's actually better for them to not to be first, to not have to try this tool that obviously works so well in a different sector.
[00:37:09] And to be the first one to try it. And corporations resonated disproportionately with a group of people. And so it was making sure in that case, the good experience from bad judgment is like, don't, don't try to sell to laggards when you know, you need early adopters. If they're super risk averse, if they're super, they need to talk to five other.
[00:37:30] In order to work with you and you don't have them, you just have to say, okay, great. Actually, why don't we talk to you in a year? I need someone who actually doesn't need that right now and just gets the value and can understand it and is willing to take a bit of a risk. And so the answer was finding, you know, 15 or 20 of those customers so that they wouldn't be successful and then suddenly turning it on and our website and our marketing to say, Hey, we're working with many of the greatest brands in the word.
[00:37:52] But that wasn't without sort of hard-fought conversations to find early adopters that were like, oh, I love it. That I'm first. It's fantastic. I don't, I don't need the reference market. In fact, if you did, I probably wouldn't buy. So I think that that might be the secret from that. Again, we learned the hard way too, by talking to a lot of people and trying to find a way to give them five references when we didn't have them.
[00:38:14] You know, what can have, you can talk to the superintendent. I don't know if that's going to, well, we can, you know, we can try to get you in front of some people that were like very business savvy superintendents. But what I didn't realize in that is like just the fact that they needed to talk to referenceable people in that should have just disqualified them.
[00:38:31] Nevermind. Let me find someone who actually just wants to go ahead and, and do a pilot with us that doesn't need to have that total reference around them, which is just the later in the adoption.
[00:38:41] Omer Khan: Yeah. Yeah. I love that because I think what I basically heard was if you're making that shift into different market before you have customers or referenceable customers, don't pretend you're already in that space.
[00:38:54] Don't waste a bunch of time trying to, you know, redo your website, but go out and have those conversations. Find people who want to be those early adopters, who, who kind of understand the process that you're going through. And that's probably going to get you better results than, you know, spending weeks, figuring out how to improve your website.
[00:39:15] Dave MacLeod: That's right. Yeah. I mean, many of those people, we met through different events or through different networks and things like that. And I learned something very, you know, which doesn't absolutely doesn't apply right now. It's like, no, your stage. But when you're in that fighting for early adopter stage, we talked to them afterwards and be like, you know, have you been to our website?
[00:39:30] And they'd be like, yeah, I think so. I don't know. Yeah, pretty sure I did at some point along the way, but it was like, oh yeah. Well then probably we shouldn't put a bunch of effort into the website, early adopters haven't even read the damn thing. And so let's not lie to ourselves and imagine that, you know, that sort of marketing is really important for that cohort of customers.
[00:39:50] Whereas now of course it's absolutely instrumental and critical, et cetera the early adopter stage, they didn't care. In fact, they prefer not. And they were not website reading people. They were just like, I got the capability, we met them in advance or something like that. Many of them were, were product qualified.
[00:40:06] They'd seen our product in another venue. Maybe they're a parent, a school district. That's a corporate leader that said, Hey, I, you could, I could use you over here. And we'd say, great, we chased that down. Early adopter is self identified. How can we help you solve a business problem and expand from that to excitement?
[00:40:24] Omer Khan: Yeah, I love it. Okay. W what we're going to have to wrap up go into the lightning round before we do that. Just one quick question, roughly what percentage of your customer base is now superintendents?
[00:40:34] Dave MacLeod: So we're sort of getting up past on track to be 50, 50, sort of been a the next three or four quarters. So our corporate is catching up dramatically, but our, our education continues to grow pretty quick right now.
[00:40:48] Omer Khan: Got it. Great. Yeah. And that, that run is one I think is really valuable. It's just the less than that, just because you pick one market and you plant your flag, that doesn't mean you're stuck there forever. And you know, you can expand out when the time is right and make sense.
[00:41:02] Dave MacLeod: A hundred percent. Yeah. I mean, and for us, our corporate business is sort of, it's dramatically different growth numbers, and that's, that can happen once you have, once you have the right leaders in place.
[00:41:13] But yeah, I don't want to have a moment where they delete this podcast because that made it sound too easy. Sure as it is.
[00:41:20] Omer Khan: Allright. Let's get into the lightning round. So I've got seven quick fire questions for you. Just try to ask them as quickly as you can. Alright. What's the best piece of business advice you've ever received?
[00:41:30] Dave MacLeod: Best piece of business basis is don't listen to business advice and ask people to tell you stories. And also don't give advice, tell stories. So if someone's like, you know what, you should do this, you should ask them. Well, why, why do you think that? And what experience do you have that makes you think that, and the story is way better than the, than the advice.
[00:41:49] Omer Khan: What book would you recommend to our audience and why?
[00:41:51] Dave MacLeod: My book, I wrote a book. I have to say my own book. I wrote a book called Scaling Conversations that got published by Wiley. So there's a fear of moment to plug my own book.
[00:42:00] Omer Khan: Great, we'll include a link in the show notes to that book. What's one attribute or characteristic in your mind of a successful founder?
[00:42:08] Dave MacLeod: Some mixture of, of empathy and empathy envision like being able to, that's not one, but it's like, I think, great, great founders are like, they deeply empathize with the problems that their customers are facing and they actually have to deeply want to solve them for their customer's reasons, not for their own reasons.
[00:42:26] But that has to blend with why do I want to help them solve that problem? And you better have an answer to that, but I would say empathy plus envision.
[00:42:32] Omer Khan: What's your favorite personal productivity tool or habit?
[00:42:35] Dave MacLeod: Yeah, productivity tool would be jumping in the lake as many times a day as possible.
[00:42:39] And when not near lake go biking and we're not nearest biking place go skiing for at least an hour.
[00:42:46] Omer Khan: What's a new, crazy business idea. You'd look to pursue if you had the extra time?
[00:42:50] Dave MacLeod: Of course, very related to the discussion managing space is I think that non-alcoholic drinks could actually be super sexy and interesting.
[00:42:58] They just are so boring right now. And it could help solve a lot of problems. And, you know, if it became as exciting as like fancy pickles and mustard and have like a really awesome cleansing, whatever non-alcoholic something or other, you could solve a lot of interesting problems and save a lot of marriages.
[00:43:13] Omer Khan: I like it. What's an interesting little fun fact about you that most people don't know?
[00:43:19] Dave MacLeod: I'm a wannabe musician. I just, I just recorded an album last week with my old friends and bandmates from from years ago. I took PTO and vacation time and actually a decked out of place and recorded a rock and roll album was cause I despite my CEO don't mind, I'm still a wannabe rockstar.
[00:43:38] Omer Khan: Awesome. And finally, what's one of your most important passions is outside of your work?
[00:43:41] Dave MacLeod: You know what? I would be remiss if I didn't say being a dad, I have three kids, three boys, and I have an amazing wife. My mom. So I'd say, yeah, I think all of this has to be for for something. And so I'm hoping that I'm pulling through as as a good dad with all this work.
[00:43:59] Omer Khan: Awesome. All right. If people want to find out more about ThoughtExchange, they can go to thoughtexchange.com. The book is called Scaling Conversations, we'll include the link in the show notes to that. And if folks want to get in touch with you, what's the best way for them to do?
[00:44:12] Dave MacLeod: LinkedIn, Twitter.
[00:44:15] Omer Khan: Great. We'll include, we'll include those links as well. Awesome, Dave, thank you so much. It's been a pleasure. Thank you for sharing your story and condensing down what's happened in the last 11 years or so. Appreciate that.
[00:44:27] Dave MacLeod: That was a valiant attempt on my behalf to try to convince somebody down. I hope it provides.
[00:44:31] Omer Khan: And you'll, you'll have to send me a link once you have your album published or whatever it is you gotta to do. And all right, well, thanks so much. Wish you and the team the best of success.
[00:44:41] Dave MacLeod: Awesome.
[00:44:42] Omer Khan: Cheers.
The Show Notes