Michael Zuercher - Prismatic

Prismatic: Unlocking PMF with a Clear Value Proposition – with Michael Zuercher [402]

Prismatic: Unlocking PMF with a Clear Value Proposition

Michael Zuercher is 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. Over the years, his team built over 600 different integrations.

In 2019, after selling his first company, Michael co-founded Prismatic with two former colleagues.

Their goal was to create an embedded integration platform to help SaaS companies easily connect their products to other software their customers use.

The team spent the first 8-9 months validating the idea and building a prototype.

One of their biggest challenges in the early days was articulating how their product differed from existing integration platforms.

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.

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, but getting traction was hard when prospects weren't even aware a solution like theirs existed.

The team continually refined its product, messaging, and go-to-market strategies. Their persistence eventually paid off as they gained traction and found a product-market fit.

Today, Prismatic is a SaaS business generating multiple seven-figure ARR, serving over 200 customers with a team of 60 people.

In this episode, you'll learn:

  • How Michael identified and validated a persistent problem in his industry before starting Prismatic.
  • What strategies Prismatic used to overcome the challenges of creating a new product category.
  • How the company 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.
  • What approach Michael took to refine Prismatic's messaging and articulate their unique value proposition.

I hope you enjoy it!


Click to view transcript

This is a machine-generated transcript.

[00:00:00] Omer: Michael, welcome to the show.

[00:00:01] Michael: Thank you for having me.

[00:00:02] Omer: My pleasure. Do you have a favorite quote, something that inspires or motivates you that you can share with us?

[00:00:07] Michael: 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, well, talkers talk, builders build, and I, I don't know.

[00:00:19] I just, I, I loved that.

[00:00:21] Omer: 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?

[00:00:29] Michael: So Prismatic is a, is an embedded platform that helps SaaS companies connect their products to the other products that their customers use.

[00:00:37] 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 to handle that, but, but most of them are pretty complex and pretty.

[00:00:55] Time consuming, expensive, et cetera. And so Prismatic is a, a new way and an easier way to kind of make those connections, manage it at scale, et cetera.

[00:01:04] Omer: Great. And give us a sense of the size of the business. Where are you in terms of revenue, customers size of team?

[00:01:11] Michael: Yeah, so team's about 60 people. You know, from our ARR perspective, we are well into seven figures at this point.

[00:01:17] And well on our way to eight

[00:01:19] Omer: Great. And customers,

[00:01:20] Michael: North of a couple hundred.

[00:01:21] Omer: Okay, perfect. So let's, I mean, the business was founded in 2019. But I think the, the story starts probably back in 2003 when you were running a, a previous business and you started to experience some of these, these integration pains firsthand.

[00:01:39] So why don't we start there. Tell us about your, the first business you built and, and how that led you to, you know, eventually identifying this, this pain point that you were gonna go and solve.

[00:01:50] Michael: Yeah, so my first business goes all the way back to 2003, which seems forever ago in the software land. You know, it was, it was not a SaaS business.

[00:01:57] 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, we were a software comp 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.

[00:02:15] And we were kind of a, like ERP and the CRM and some other things of, 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 de decent sized market.

[00:02:31] Omer: 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?

[00:02:40] Michael: 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, 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.

[00:02:59] And had, I don't even recall, 2,500 or 3000 customers, something like that.

[00:03:05] Omer: Did you bootstrap the business? Did you raise money at any point?

[00:03:07] Michael: Yeah, we bootstrapped that business to about 10 million, and then we sold a, a chunk of it to, to growth equity or private equity and that would've been in 20.

[00:03:16] In 2015 and then obviously had the capital to accelerate growth for that next few years.

[00:03:23] Omer: 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, you were dealing with and.

[00:03:38] Why you felt that, you know, even after all these years of, of that pain and suffering firsthand, you decided that you wanted to, you know, spend even more time and start a new startup to solve that problem.

[00:03:50] Michael: 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.

[00:03:59] You know, it's a, 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. 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.

[00:04:19] 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 gonna 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.

[00:04:35] Or maybe it was a regional thing or whatever. So just the nature of that market meant that by the time we were a. Kind of full national coverage on a 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. And when left.

[00:04:54] People in our engineering organization and half of our R and D effort was building and maintaining integrations. 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?

[00:05:10] What can we do to move it faster? What can we do to, because I mean, it just affects so many things. And and so we beat our head against that wall for years. And you know, when I, I left that business in 2018 after you know, after being capital acquired it. And in that, in that process, I felt like integrations was kind of one of the unsolved pieces.

[00:05:29] Like it worked. We just threw, threw money at it, basically, and, 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.

[00:05:45] And so I think you know, I knew I was gonna 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, 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. 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.

[00:06:15] In some ways was kind of throwing ourselves back into the pain.

[00:06:17] Omer: Yeah, yeah. And, and I think that's an interesting perspective there. You know, we, we often hear this advice that if you're gonna go and build something, you know you should do something that you're passionate about and you're gonna get excited to work on every day.

[00:06:31] But I think equally as important is just a problem that you almost, I just. So determined to solve that you just can't stop thinking about it is equally, you know, as, as a sort of a driving force.

[00:06:45] Michael: Yeah, I think fixation on a problem is a huge part of making the early stage work. There's, there's no, I don't know of another way to succeed other than just be so drilled into something you can't think about anything else.

[00:06:57] 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. Any anybody who says that every minute of something is fun hasn't done it long enough, would be my argument.

[00:07:16] Omer: I agree. Alright. So you, you've, you've worked with, with Justin and Beth for, for some time. You, you guys decide that you're gonna go. And start Prismatic in 2019. Was it just the three of you in in kind of the first year?

[00:07:34] Michael: Yeah, in the first, it would've been like the first eight months or something, I think was just the three of us.

[00:07:38] And we, we were just spending our time. I mean to honestly trying to figure out what we would even call this thing the category, which is now called embedded iPASS or embedded, embedded integration platform 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 that we think about it, standing up some of the things that you stand up really early on, like a really early teaser website and all that kind of stuff.

[00:08:02] And, and, and did some, we did some building as well. You know, Justin is a, a very technical co-founder and, 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, it got convicted enough, I guess, to hire a team. And I think that was pretty important to us, was like, let's, let's spend some of our own time here getting really convicted that this is the right thing.

[00:08:23] And sure, then we'll hire a team you know, and, and start accelerating.

[00:08:28] Omer: So in those eight months or so when you, you were trying to get to that point where you, you felt convicted, what did you do?

[00:08:37] Michael: Yeah, so we, we did as much conversation with, I wouldn'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.

[00:08:47] We, we had a bunch of those conversations. I had some connections just due to my previous you know, 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.

[00:09:10] Because obviously integration platforms have existed essentially forever you know, all the way back, at least to the seventies, probably before. And so, you know, it's, 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?

[00:09:29] 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. I think that was one of my big worries was, sure we experienced this, but we were, we're a sample size of one. You know, when 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.

[00:09:47] Omer: What were some of the big take takeaways by the end of that, that 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?

[00:10:12] Michael: Yeah, so to be honest, I don't remember exactly when we figured all these things out, but I think in the, 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.

[00:10:35] But, but there's a difference between thinking about something from the product perspective versus the I'm gonna build it perspective. And, and we needed to, we needed to speak to both. We needed to serve both, we needed to you know, really have a, have an offering for both. I think it's always a challenge when you're trying to build something that kind of equally serves two personas like that.

[00:10:52] And 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.

[00:11:06] 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, 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.

[00:11:19] Omer: Yeah. I, I'm curious, like, why, why did you end up with two personas? Like, it kind of feels like the easier thing to, 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 felt, you felt that that wasn't the right way to go.

[00:11:39] Michael: Yeah. You know, I think we identified partially, probably due to our own experience, but I think we identified that they were, they were both necessary but not sufficient alone. Where, you know, if you're gonna make a, so Prismatic is an embedded platform. You embed us in your SaaS product, right? If you're gonna make a bet like that and you're gonna, you're gonna make your product dependent upon a third party like Prismatic or Auto Zero or AWS for that matter.

[00:12:04] That's a, that's a big decision, right? Like that's a big product or strategy or in early stage startups, like founder level, CEO level decision. And so like, you have to have the product mind, you have to have the, the, the product persona. But then at the same time, it's the engineers who are going to do the embedding and you know, if they, if they hate using it, you're not gonna get very far.

[00:12:23] And so I think we identified that like neither one of those alone was gonna, was gonna actually get us the traction we were gonna need. Neither one of was gonna get us to a million. That was not the simple path 'cause you're a hundred percent right. I, it would've been much easier to carve that down. In hindsight, I think what we did was probably the right thing, but it was definitely a scary thing at the time.

[00:12:42] Omer: Okay. The other thing that strikes me about it 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.

[00:13:07] 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?

[00:13:15] Michael: 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.

[00:13:25] I mean, like, if it does a small part of the value prop, they're not gonna use it. And and so we. We did everything we could to build the product. In those early days, we always talked about it as a prop. 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.

[00:13:48] But what we needed was something to, 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 you could put into production. 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.

[00:14:08] That was like fairly compelling. But it was, it was more than a year before we had our first customer in production and I, we got a lot of questions. I, 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?

[00:14:25] We kind of ignored some of that advice because I, 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, and we, we went and built a V1 and then shipped a V1 and kind of did it the old fashioned way in some, some ways, isn't to say we didn't have feedback along the way.

[00:14:43] We of course didn't do it in a, but you're right. We had to get a long way before anybody was very interested.

[00:14:50] Omer: Okay. And then so the other challenge you've got is you're basically, you know, creating a new category. As you said, you know, IPA didn't exist back then or people didn't know what to call it.

[00:14:59] Michael: Embedded IPA didn't exist. Yeah.

[00:15:01] Omer: Embedded IPA. Yeah. Yeah. So. What did you discover when you started, you know, 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?

[00:15:23] Michael: Yeah, so, you know, I spent a lot of those early days.

[00:15:28] Dumb and feeling like a really bad communicator because, you know, we would get on the phone with people who should be in our profile. You know, you get on a call with them, you're talking 'em through what they're doing. Maybe they're an industry expert or maybe they're a, a SaaS company themselves or whatever.

[00:15:43] And it was really hard for me to find the words to, to, to convince people that this was like, this was different than traditional IPAs. 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.

[00:16:10] 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. 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.

[00:16:29] Because people always think of, of traditional, I passes 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 'em together and everything's great or I use Zapier. Like choose your tool in that, in that, in that whole spectrum. Right?

[00:16:44] 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, I think just like enunciate well. How that's a different enough problem.

[00:17:01] It is 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, you know, honestly, like, I, I think I wish that had gone faster in the really early days. And I, I don't know that I have any particular.

[00:17:18] Lessons learned. Learned, but like I very much feel like I should have been faster at finding that.

[00:17:23] Omer: How long did it take? Like roughly?

[00:17:25] Michael: 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.

[00:17:43] And I. It was probably actually around a million ARR point when, like the way I described it at the time. And I just remember feeling this. I was doing all the sales myself at the time, and I just with one other person who was doing sales engineering with me, we, we just, like, suddenly the conversation just got easier.

[00:18:01] Like it was just this, the molasses that we had been wading through got thinner or something, and it was, it's, 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.

[00:18:17] 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. 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.

[00:18:33] 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.

[00:18:47] Omer: Yeah, I mean, I, I, I guess there's the, let's, let's go away and, and have a, you know, a strategy offsite or something and figure out how to, you know, get our messaging right or there's, I banging your head against the wall repeatedly. Customer after customer who keep asking you these questions. Eventually, like once you've been asked the question so many times, you, you, you figure out that answer, right? It's like …

[00:19:16] Michael: That, that's exactly right. Like you say the wrong thing enough times that you eventually iterate to the right thing.

[00:19:21] 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, and navigating toward what worked 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.

[00:19:41] 'cause that is just the front lines of where you're gonna get feedback on message and whether there's fit and all of those things. I don't, I, I don't know how else to do that and I, you know what you're doing, of course, you have to systematize the sales. That'd have been a disaster for us if we'd done it very early.

[00:19:57] Omer: Now, one side of the, the, 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 are talking to engineering folks who are like we can build this ourselves.

[00:20:21] Did you, did you, was that, was that a common objection you'd, you'd hear when you were talking to customers?

[00:20:26] Michael: Absolutely. And, and I think probably forever will be for anybody selling tools to engineers. Right. And we went in kind of assuming that that would be our, that our biggest competitor would always be chose to build in-house.

[00:20:38] And, and I think that would probably continue to be true for a long time. I think the. We, we, as the product has gotten bigger and more sophisticated, I think it is, it is easier for people to understand the breadth of what they'd be taking on to try to build some of it. 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 10 x the complexity that you saw from any distance.

[00:21:06] And and I think we've gotten better at explaining that, and I think we've gotten better at demonstrating that. That that has eased, eased the build versus buy scale a fair amount.

[00:21:16] Omer: You're focused on B2B SaaS as your target market. When you started out, I mean we talked a little bit about, you know, the ICP and target market.

[00:21:25] Like how, what, what was 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?

[00:21:35] Michael: So we said from the, 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.

[00:21:58] And so we, 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've 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, and make a bunch of decisions accidentally along the way that don't end up then transferring to the broader software market.

[00:22:23] And, and we've seen some other companies that. That are in kind of neighboring spaces to us, or, or, 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 gonna do it for, for 17 different vertical markets inside software.

[00:22:42] Well, I. You know, you've, you've spent so much time getting really good at the one that it doesn't always translate, and that, and that's a real challenge. And so we always kind of said our ICP needs to stay broadly across software. Like software is already narrow enough. And so, you know, then we'd narrowed it.

[00:22:58] But, but you can't go sell to 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, that are big enough to have these problems for real. Like they've gotten to enough scale that it's not like. You know, well we're, we're a two person company that's gonna stand up our first integration, and, 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, they can actually do something about it.

[00:23:25] 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. And so we focused on that middle market pretty early on, and, and that was the way that we kind of narrowed our, our addressable market down to an ICP was. You know, small to mid-size companies kind of leaning on the mid-size a little bit, that are, you know, that are in complex enough vertical markets across all the verticals are in complex enough vertical markets that they have real integration challenges.

[00:23:53] And and that ended up, that ended up working fairly well.

[00:23:56] Omer: Okay. One other thing that just hit me was like, you know, we talked about the, the, the, the, 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, they're, and it's this embedded, you know, solution, they're taking a pretty big risk, a pretty big gamble on, on an unknown startup, basically.

[00:24:30] What were you doing or how were you able to build credibility with, with these customers?

[00:24:35] Michael: I am still eternally grateful to our first, I mean, probably 50 customers or something who took a bet on us, you know, in those, in those early days when, to your point, like we didn't really have any credibility. We didn't have longevity, we didn't have, you know, huge resources, et cetera.

[00:24:50] 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 may be we're 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 'em.

[00:25:18] And we had a couple of pretty early, very early customers first, 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.

[00:25:44] But you've, you've got a vision that resonates really well. 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, 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, in the early days, just because you've seen some stuff.

[00:26:09] Omer: Yeah. I, I think the fact, I agree with you, I think the fact that you're, you're a second time founder, de definitely, you know, gives you more credibility, 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, the ad, you know, the, you represent the company.

[00:26:32] And if you can build credibility with your buyers, even though the startup may be very early on, I think you, you, you can just, just by, you know, you as an individual, I think you can build a ton of credibility that, that, you know, people are willing to make a bet. Like, I trust this guy.

[00:26:50] Michael: Yeah, I think that's right.

[00:26:52] 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.

[00:27:09] But if you convince them that you are 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, I don't know what to call it other than thought leadership, like, you know, and I, and I, and I think, I think that was really important.

[00:27:23] And I'm not saying that was just me, it was the company as a, at large, but I was often the one, you know, delivering that message, of course, as, as the one doing the early sales.

[00:27:30] Omer: So, earlier I asked you before we started recording, like how did you get to the first million in ARR, and, and you told me, you know, SEO and paid ads were the two main channels that 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 IPAs out there, right? So how are you, how are you getting in front of your target customers? What were you doing with SEO and and paid ads?

[00:28:04] Michael: So I think, you know, 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.

[00:28:23] 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, 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.

[00:28:41] But we found a bunch of those and we evaluated them and, and like I said, we eventually realized they were solving a different problem than the one we had, 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, those search terms and names and things like that.

[00:29:00] And I'm not gonna say we found a silver bullet anywhere in there, but I think we were able to kind of 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. 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, and I don't wanna spend a bunch of time on the phone with somebody who really should go buy MuleSoft, Zapier or somebody in between.

[00:29:27] 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.

[00:29:33] Omer: Yeah. I'm, I'm trying to like, you know, you describe these conversations that you were having and, and explaining to people where we're like this, but not like this. And, and, and that's a one-on-one conversation, and then it's like, how do you translate that to a webpage where somebody's just done some random search for integration platforms and then now you're trying to tell them in text that we are like this, but not like this and, and whatever. Right. Is that, is that the kind of challenge you have to deal with?

[00:29:59] Michael: Yeah. Absolutely. Yeah. Yeah, yeah. Absolutely.

[00:30:01] And, and the number of times that I heard, I. From, 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, I mean that, I heard that infinity times and we hear it basically not at all anymore because, well, for one thing, the category's evolved and for another thing we've just gotten much better at, at explaining ourselves, but, but like that, 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.

[00:30:38] Omer: It's so hard and I think some people listening to this might not really appreciate how difficult it is.

[00:30:47] But, you know, I, 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?

[00:31:14] And you know, you, I think you got to a point where you, you were pretty crisp about it, or I think you're pretty crisp about it now, but just discovering those words was, was a journey, you know.

[00:31:27] Michael: It was so frustrating and, feel, like I said, I, 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 or what, whatever, right?

[00:31:41] You, you can't do that in a new category. And I, I had, I had dramatically underestimated how complex it was to be part of creating a category. And I guess hindsight's 2020, but oh man, that was, oh man, that was a pain.

[00:31:54] Omer: How long did it take to get to that first million in ARR?

[00:31:59] Michael: I believe it would've been, I, like two years. Two, two or two and a half.

[00:32:05] Omer: Got it. And so it, it, it was, I it was kind of like a, 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 and then, you know, clicks, clicks, turn into more con, you know, conversions and so on. So it wasn't like you just woke up one day and, and it was like, you know, these campaigns were just stored, dialed up and.

[00:32:33] Michael: Oh no, nothing was, nothing just happened. You know, it was it was it was kind of pulling teeth the whole way.

[00:32:40] Or at least that's what it feels like looking back on it. But yeah, I think it was, it was very iterative. We had a number of those first kind of 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.

[00:32:58] But to your point, they're not ready to pull the trigger and just say like, well, I guess we're gonna depend on these guys. And so, you know, it was, it was, it wasn't really a sales process that whole time. 'cause 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.

[00:33:16] That we would just keep showing new things as it came along. And fortunately we had paying customers along the way as well, but some of those bigger customers just kind of hung out and, and when they started falling or you know, or like coming on board obviously that was a big part of the acceleration.

[00:33:32] Omer: Let's talk a little bit about outbound. So you, you, you, 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?

[00:34:03] 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. 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?

[00:34:21] But what happened?

[00:34:22] Michael: 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.

[00:34:38] And you know, 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. 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, and I just think all of that has been moving so fast that you.

[00:35:03] There almost isn't such a thing as like finding what works for outbound and then doing it for a while you know, you, 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, I almost feel like we're just constantly reinventing outbound and I, 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 a, it's just such a moving landscape.

[00:35:32] So I think we experienced that. I think we still experienced that to this day. I think it also took us a little while to figure out you know, exactly what universe you're gonna send those emails into. You know, you, you, you can only email so many people in a day, so how do you, you know, how do you decide who the, you know, who the best, the best prospects are, or the best possible accounts or, or whatever.

[00:35:51] And I think we've gotten a lot more dialed in with that. And, it's just a, it's a complex environment to an outbound.

[00:35:58] Omer: Yeah. I mean, I, I, you know, these days on LinkedIn I see people who are just posting every day about cold email and, and do's and don'ts and stuff like that. And one thing I agree with you, like, it just, it, 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 there, people are able to create so much content about it.

[00:36:18] Right.

[00:36:18] Michael: 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.

[00:36:27] Omer: So, okay, so SEO paid ads cold email eventually. What else did you do that didn't work?

[00:36:32] Michael: I. You know, we tried various ad channels. Like for example, we've had basically no success with Google display ads.

[00:36:39] I, I, 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, it wasn't a silver bullet for us and I, 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, you know, haven't, haven't leaned a lot into.

[00:37:14] We've kind of tried everything and we'll continue to.

[00:37:16] Omer: So are you still doing so SEO and, and paid ads? Absolutely. It makes sense. 'cause at least in those, you, you're, you're dealing. With kind of more inbound people actually searching for problems and solutions as opposed to, you know, finding somebody on LinkedIn who's just, you know, drinking coffee and passing the time or something.

[00:37:36] Michael: Yeah, exactly. It's, you know, 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, it's, 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, when it's a big enough pain to actually think about a solution like Prismatic.

[00:37:59] It's not a, it's not a, I mean I, I, I hate to say it, but it's, it's not something you just like implement in four hours and move on with your day. It's a, you know, it's a, it's a product decision you're making and so I think that makes some things like LinkedIn probably less attractive.

[00:38:13] Omer: We should, we should wrap up we'll get into the lightning round in a second.

[00:38:16] I just had one quick question for you was that from what I recall. When you guys basically got to the point where you, you know, you, you act in that first year of getting to the point where you felt that, yeah, we, 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?

[00:38:39] Michael: Yeah, so we, I think we hired our first team. Gosh, I, I lose timeline here, but it was less than six months before the pandemic. So yeah, we were, 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, in South Dakota.

[00:38:57] And I don't think everybody was here at that point, but most of us were and suddenly that wasn't a thing anymore.

[00:39:03] Omer: And then are you guys still a fully remote team?

[00:39:05] Michael: Yeah. So we are fully remote at this point and had really leaned into it. I think, in my view. I don't know. I have no idea how to make hybrid work. I think, I think in person can work really well.

[00:39:13] 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. And so when we, when it became clear that we weren't gonna be just in person, which is partially to the pandemic and partially 'cause 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.

[00:39:35] But, but that was the accelerator. At that point we said, okay, we're all in. We're gonna do this remote thing. We're the best at it. You know, real energy into it. And that, I think, has proven to be a very good decision.

[00:39:48] Omer: And on that note, we will let's wrap up. Let's get onto the lightning round, and I've got seven quick-fire questions for you.

[00:39:54] What's one of the best pieces of business advice you've received?

[00:39:58] Michael: It was, it was demonstrated to me rather than said to me in words but I, I worked with a CEO who was very, very good at letting, just letting fire smolder where he needed to. That allowed him to focus on the three things that were actually the most important.

[00:40:13] That was really hard for me earlier in my career and I've gotten much better at that. And that's been really good.

[00:40:18] Omer: Selective firefighting.

[00:40:20] Michael: Yes. Like you can't fix everything and sometimes you're gonna let fires burn that are uncomfortable, but it is what it is and you just as well it acknowledge that and make explicit decisions.

[00:40:29] Omer: That's a good one. I haven't heard that one before. What book would you recommend to our audience and why?

[00:40:32] Michael: 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.

[00:40:41] 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.

[00:40:49] Omer: Okay, great. That's what's one attribute or characteristic in your mind of a successful founder?

[00:40:54] Michael: Monomaniacal

[00:40:55] Omer: Monomaniacal. What's your favorite personal productivity tool or habit?

[00:40:59] Michael: I'm a big believer in what Paul Graham wrote a decade or so ago about maker time versus manager time. And, 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, whether it's right or whatever you know, I think just blocking time to think.

[00:41:16] Be in a different mindset is really important to me.

[00:41:18] Omer: What's a new or crazy business idea you'd love to pursue if you had the time?

[00:41:21] Michael: 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 of what 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 gonna see a huge transformation there. I think we're already seeing it. I would love to work on that problem in any of the bajillion ways you could work on it. But obviously I'm mono manically focused on Prismatic right now, so.

[00:41:49] Omer: That's that's very interesting actually.

[00:41:51] I'd never thought about the kind of, the pendulum swinging back with, with AI and manufacturing. Yeah. Who knows.

[00:41:57] Michael: Cheap labor may not matter anymore and that's a really interesting. That's a really interesting thing.

[00:42:02] Omer: What's an interesting or fun fact about you that most people don't know?

[00:42:05] Michael: So I'm a, 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, you know, like a work year and a half or something if you did it 40 hours a week.

[00:42:15] So I've done a lot of flying

[00:42:17] Omer: That's like a little mortgage just for the plane.

[00:42:21] Michael: Yeah. It was almost all for work, so that makes it easier.

[00:42:24] Omer: Right. And finally, what's one of your most important passions outside of your work?

[00:42:28] Michael: 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, I have that isn't, isn't focused on the business right now.

[00:42:36] So that's definitely where a lot of my mind is when I'm not here.

[00:42:38] Omer: Love it. Great. Well, Michael, thank you so much for joining me. It's been a pleasure. Thanks for unpacking the, the story and the journey with Prismatic so far. If people want to. Learn more about Prismatic. They go to prismatic.io

[00:42:53] Michael: Dot IO Yep. Prismatic.io.

[00:42:55] Omer: Great. And if folks wanna get in touch with you, what's the best way for them to do that?

[00:42:59] Michael: Yes. You can find either Prismatic or me on LinkedIn. Or like you said, our website @prismatic.io.

[00:43:04] Omer: Great. We'll include all the links in the show notes, so make it easier for people to, to say hello.

[00:43:09] Great. Well, thank you so much. It's been an absolute pleasure. Congratulations on everything that you, you've done so far, and I wish you and the team the best of success.

[00:43:17] Michael: It's been a pleasure, pleasure being on your show. I appreciate very much.

[00:43:20] Omer: My pleasure. Cheers.

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