January 2022 Month In Review

January 2022 Month In Review

This is is part of my live-learning series! I will be updating this post as I continue through my journey. I apologize for any grammatical errors or incoherent thoughts. This is a practice to help me share things that are valuable without falling apart from the pressure of perfection. 

What am I grateful for?

My partner Monika.

My dog Teja.

Healthy family and friends.

Renewed focus.

Less emotion and self-worth tied to my business.

An increased free trial to paid conversion rate.

Growing organic search engine presence personally and professionally.

A foundation of a business with no need to start from scratch at the start of the year.

Sunny winter walks with Monika and Teja.

Continued strives in the perfection of chai making.

What am I struggling with?

The fundraising journey and even if I want to anymore.

Since I first started sharing I wanted to open a funding round a lot has changed.

First of all, our company, our metrics, our pitch and our focus have gotten better. But, in retrospect, I burned through some of my closest and most supportive network to get there. On the way, I showed uncertainty, lack of focus, a misunderstanding of fundraising and a shaky vision of the future. Because of that, people I thought would support our team have opted not to. 

I’m now left to reach out to a completely new network of investors to try and complete a fundraising round. Good relationships are complex, time-consuming and difficult to create. From recent experiences, we don’t quite have the “it” factor to turn a cold outreach into an investor in a quick turnaround time. Meaning, unless I make dramatic improvements in the pitch, our metrics, or perception of value, I will continue to burn through networks with ramifications for Speak Ai and my own personal career.

Considering the effort put in without success, I am left questioning if I should proceed with a fundraising process. Instead, I’m thinking that I should get back to business building and product development. If I do a good job on that then investors will want to invest. That is much better than what feels like the desperate chase I am currently on. At the moment, I am not in a position of power and leverage. I need to change that and the current strategy is obviously not creating the necessary power dynamic or demand. 

Fundraising, like any market dynamic, is a function of demand. Speech recognition and natural language processing is a hot sector with many entrants and because there are both behemoth companies and already quickly growing startups with repeat founders packed full of talent we are not in demand. 

Lack of product-market fit.

This leads to a point that has been made clear many times over conversations with investors and supporters. It seems that we have not found the killer use case. One that keeps people coming back every single day. Now, I would argue we have found some indicators that we have or at least that we are on the right path, however, we are seeing this play out in several different industries and company stages which creates challenges. 

Embeddable Recorder

For clarity, and somewhat surprisingly to us, the embeddable recorder which we consider still in an infantile state with much room for improvement is enabling companies to capture audio and video recordings on an ongoing basis with automatic organization, transcription and analysis.  

Even with that in mind, there is skepticism from an outside view and in my own eyes. We’re seeing several companies like Voiceform, VideoAsk and Phonic embrace the open web RTC library to enable this with a more pinpoint focus. I both love what they are doing but am not sufficiently passionate about just one capability within Speak to cut everything else out. However, I can definitively say that I have watched their focus drive growth with admiration and insight that it is a fantastic way to build a business.

2021 Growth

In 2021, we grew 153% in revenue. Our software monthly recurring revenue grew by almost 1,200%.  At a top level that all sounds great.

But, as you dive deeper into the numbers you realize there are problems. A lot of the total revenue increase came from leveraging my reputation as a talented marketer with the skill of implementing refined analytics. There was a significant relationship built-in 2021 that enabled outsized gains with unique circumstances that will unlikely be repeated in 2022. This revenue sometimes has the ability to shoehorn Speak into it but often not with real adoption or engagement created from the platform itself.

Looking at software specifically, there is a risk because one customer is a huge holder of the growing software MRR. I’d like to add that this is growing company still commercializing its business that is not really pushing our platform to the edge. While it looks like there is a low risk of churn because of the deep technical implementation, it is a red signal to me as a business owner and would definitely be as an investor. 

Additionally, on review of 2021, we have been able to grow our customer base, but it is still considerably small. Right now, out of around 3,000 people that have signed up for Speak since it’s launch only a bit above 30 are active paying subscribers. If we break that down further, there are personal relationships involved in many of those subscriptions. A lot of the users may only log in once or twice a month. The subscriptions range in size with quite a bit of personalization and come from all different industries, company sizes and use cases. While this could be a signal of a valuable product with many uses, it stops us from refining the product down to create true value for a specific ideal customer. Well, we can, but most likely, we will alienate a core audience and customer base that is using the platform today. That may be necessary but is not fun.

Gong

Just to cement this a bit further, I’d like to highlight the company Gong. Gong has a similar technology stack to ours but in the same way, is almost like an anti-Speak. Instead of building a general-purpose platform, they focused specifically on sales. That allowed them to identify highly-specific and valuable pain points and prioritize product development better to create insane growth. As just one quick example, they connected with the most popular CRM platforms. This allowed them to run the analysis of their calls with included sales data to provide incredibly valuable insights that help teams close deals, increase deal size, shorten sales cycle length and more. Speak, with its scattered product focus, is unable to pull in objective data like that to automatically drive insight for its users.

Recently, we launched a “Personalize your own plan” campaign that we shared with the almost 2,500 active email subscribers of Speak. We thought this was an incredible offer and when I put myself in the shoes of a consumer of a platform I like, something I would take up. That is of course if I found value in the platform. 

SEMrush

One that harkens to me is SEMrush. At it’s core, I in a way find it to be too expensive. However, it’s so valuable that I continue to pay for it. But, if they came to me and said “Tyler, we know our standard plans can be pricey for some but we’d love to you onboard, so we’re letting you completely customize your plan and we’ll give you a ridiculous discount with lifetime access” I would say “holy shit yea”. 

However, when we did that with the users who have signed up to our platform, the response can be wholly described as “meh”. Several people submitted the form to personalize the plan and then followed up with questions that made it unfeasible. Many others hit “unsubscribe” on the email list and chose to never hear from us again.

In the beginning, I took that response as okay it was a good experiment and we tried and we learned. But, as I type this out, I think “those are three years of people who have had at least some interest in Speak and when we gave our best offer they basically just said fuck off.”

That’s compounded even more so when we reduced our transcription and analysis cost by over 60% still with little change.

I can now say with conviction that because of the mistakes we made when starting Speak Ai, we are finding a problem to fit the solution we’ve built. Three years in, that is not a fun place to be. While I said that it is nice to have a foundation to start the year with, in a way, we are starting from scratch. There is a mountain of work ahead if we want to make this successful.

If I made the right choice being an entrepreneur.

Growing up, I wanted to be a hip-hop artist. But, I had this intense fear I would fail.

So, instead, I decided that I would learn how to start and build a business so I could generate money. Once I learned how to generate money I would invest in my career, make high-quality music, market successfully and fulfill my dreams.

As you may have guessed, that is not what has happened. It has been years of grinding to figure out how to set up a business for success and although I have gotten infinitely better at it, it is a lifelong pursuit where the conditions change radically and force a complete investment in it.

Along the way, I have sacrificed not only the pursuit of creating music, but time with family and friends, time to take care of my own physical and mental health, and the time to just enjoy life.

Instead, I’ve been immersed in years of what I would describe as a majority of suffering with moments of fulfillment sprinkled in. Those moments have kept me going. If they didn’t, there is no doubt I would have given up and stopped.

As I look back and reflect on 7+ years, I see the people who vanquished their fear, accepted they might fail, realize they only have one life, and decided to try to live out their dreams. 

A few people stick out to me: Jack Harlow, Marc Rebillet, J Cole, Drake, Dua Lipa, Ari Lennox. 

Now, there is extreme bias in picking these data points because there are a countless number of people grinding forced to work several jobs and asking themselves why did I decide to become an artist, or a designer, or a musician. 

Either way, the struggle is real. And these people we hold up struggled to get there. Their lives are not perfect. The grass is greener.

However, what I do admire and want to do a better job of is being the truest version of myself. Often, I am trying to be someone I am not. In some ways, that is a good thing. But in other ways, it jeopardizes the execution of the 

Recruiting talented people.

When I am stressed, I often just want to be alone.

Yet, depending on the path forward, growing a successful business requires constantly increasing your team capacity with talented people.

I recently talked with a CEO of a company that has raised over 20 million dollars for its quickly growing startup. She said that she is spending 30% of all her time on recruiting. She is an engineer by trade and has not been able to touch a line of code. When she shared that I perceived that is difficult.

At the core, I feel like I am a creator. I always have been. Whether it’s been writing, music, development, analytics reports, data visualizations, the most enjoyment I get is creating. 

When you’re a talented engineer I believe this is undoubtedly true. Of course, people are forced to become developers because of their parents and societal pressure, but along the way, the majority must find some love in the ability to create.

Some of the best moments in my life are when I get to put headphones on, light some incense and lose myself to a task where I am creating something. No distractions. 

As you grow a business, especially a funded one with expectations, it is a requirement you aggressively pursue and hire talent. In today’s world, between Google-like big company compensation packages and competitive well-funded startups competing for talent, this is increasingly more difficult and expensive.

I want to work with great people. But, I cannot afford great people. And truthfully, I do not want to be one of the sole responsibility holders of this part of the business.

Now, I do know it is important to delegate, hire human relations and get recruitment firms, but at this stage, we don’t have the capacity.

We’re not a money printing machine

In fact, we are the opposite.

If it wasn’t for government grants, subsidies, tax credits, and COVID relief, we wouldn’t be here.

We’re not a business. We’re a charity case. Paid for by Canadian taxpayers in the hopes that we will grow and return the investment back in the capital. While we have continued to grow and hire, I don’t think the scales have been balanced. 

To succeed moving forward there are really only a few options:

Raise Money

This has been discussed ad nausea on this post and others. 

While equity financing is still possible, the truth is with the market conditions and our numbers these will not be at good terms. We’ve already seen that in a few term sheets that have come our way.

Debt financing is also a possibility, but with everything else stated and my new responsibility as a house owner (alongside Speak Ai’s co-founder), that is not a path we want to take. At this stage in the business, any debt financing will either have very high-interest rates and poor terms or will use personal assets as a way to guarantee the loan. 

Grants are available but we have tapped quite a few of them already and besides SR&ED, that well will most likely run dry and is showing signs it is as we mature past 2 years of operation. 

Cut Expenses

The business classic. As our latest grant comes to an end, we will be left with a high burn. To decrease pressure and extend our odds of success, we will need to cut expenses and increase runway. There are sad consequences to this: you can lose valuable team members, have to cut important technology, exhibit weakness, decrease trust and limit capacity to execute on product development, marketing and other valuable opportunities. 

In the past, these decisions have been existentially painful and heartbreaking to me, often leaving me curled up in a ball of stress with sleepless nights. Now, I look at these decisions with a calculated financial model and lack of emotion. Some would say this makes me a good business owner. I’d say it’s not why I got into this. 

Increase Revenue

Lastly, and often the best answer to all of this is to increase revenue. That means ruthlessly prioritizing time, qualifying leads, acquiring new customers, and upselling current ones. 

In our current pricing model and positioning, I find this to be difficult in the short timeline that is necessary. It would take a lot of $99.99 USD plans to hit the revenue we need and almost certainly we won’t get enough qualified, sales-ready eyeballs on our offerings without a significant amount of capital invested in untested channels that will only serve to shorten our runway further. 

Current outreach efforts are showing some positive signals but also show negative ones and time for prospect’s understanding and needs to mature to sales-readiness. We can work hard to grow the top-level funnel and accelerate the sales cycle but that will take several series of experiments over time that just does not exist. 

A Combination Of All

A valid option. It’s not like we’re burning hundreds of thousands of dollars a month here. One thing we’ve consistently heard from investors is their happiness with how capital efficient we are. A few angels could keep this small train running full of talented people and all the software we need to run these experiments and grow. One of the questions I ask myself is do I have enough conviction that we can execute on those so that I can have the ethical acceptance I feel compelled to have to take money.

What did I learn?

Your priorities change.

As I’ve been lucky enough to find an amazing partner, become a dog-dad, buy my first house and reflect on the journey to date, many of the priorities I had when I first began all of this in my mid-twenties after a mental health crisis has changed a lot. 

When I started my first business SixFive, I both felt incapable of working a normal job and wanted to prove to the world I was capable of something. During that period, I often struggled with depression, hopelessness, feelings of no purpose, the regret of my decisions, existential angst and crippling panic attacks I often felt was literally shortening my life. 

Even with what you may perceive from this post, that is a stark contrast to how I am today. This morning I woke up beside Monika and my dog cuddled up and I felt a wave of gratefulness fall over me. 

You should have 18 months of runway.

This came directly from Jason Calacanis on This Week in Startups

This is difficult when you are primarily bootstrapping. 

Adding the current market conditions in for us has an impact on this.

Vision doesn’t equal execution.

The vision that I first had around Speak Ai in many ways has come true. Just, not for me. It’s demonstrated in the awe-inspiring growth of speech recognition and natural language processing. More specifically, I could refer to the success of companies like Otter.ai, Fireflies, Descript, Headliner, and Hugging Face to Obsidian, Log Seq, Nvivo, and others. 

The exponential increase of unstructured data has seen the need for libraries, tools, software platforms, and teams to capture, analyze, visualize and derive insights from this information explode. Specifically, the previously and still notoriously difficult language data has reached new heights in terms of practical application. 

I’m glad that my vision is intact. But, seeing something is a long way away from making it a reality for yourself. 

It’s what boat you are on not how hard you work. 

This quote hit me hard although it was passed to me through a YouTube entrepreneur that in many ways I disregarded. 

The point is, who cares how hard I’ve worked on SixFive and now Speak Ai? If I had joined a company destined for success on a rocket trajectory I could have worked a lot less and found significantly more upside. 

You see this in high-growth startups that get acquired or reach a liquidation event like an IPO. Early employees who obviously worked hard to make it happen hold equity that becomes immensely valuable. 

We will see this if companies like Stripe IPO this year. I believe we will also see this happen with a company like Hugging Face which raised at a valuation of around $500 million last year and will cross a billion valuation this year. 

Vatsal and I have consistently dedicated 65+ hours a week to Speak Ai without most of the fruitfulness that others who have made their contribution while earning a good salary and balancing a good work-life balance on a rocketship or FAANG have. 

I thought starting a business was the only way to be a millionaire (which is not a good reason to start a business and obviously not my only goal) but I could achieve that through either method above or of course in Canada buying a house in 2013 when I should have with even a half-decent salary. 

A problem clearly stated is a problem half done.

A good, wise friend shared this the other day and it resonated.

This post may seem like jibberish to some, but it took a long time to generate. Some would say almost 30 years. I’d say at least a big portion of a Sunday that was only really split up by chai and walks with Teja. 

Articulating this problem as clearly as I hope to helps me share with others and figure out what needs to be done. I’ve always somehow slipped through by the skin of my teeth, and while I am sick of getting myself into situations where I need to, it is good to have the confidence it is at least possible. 

What do I need help with?

This is an important and clarifying question for myself that may help you if you are reading about this, care about me and want to help.

Motivation

This isn’t just applied to Speak Ai. Recently, as the cold has settled in, I’ve stopped my quite successful workout routine. I’ve gained some belly fat. 

Specifically, to Speak Ai, my ambition to reach out to investors and customers has dropped. The ongoing deafening silence from lead and customer outreach has had an impact. The flurry of “no’s”, “we like you but you’re too early for us”, “you’re space is too competitive for us”, “you need to niche down” has had its toll. 

I write this all without tears or even that much stress and sadness. It’s just a reality that crystalized for me over the last few years and more acutely in the last few months.

All of these things can combine and create a risk that I am in a temporary state of disillusion, but I’ve had enough of those in my life that I think I am now more in a state of acceptance. 

I plan on sharing these feelings with my team and the people I care about around me. As I do, I hope some motivation returns. I know I’ll find it myself eventually too. 

Positioning

On a more technical note, I need to better position both Speak Ai and myself better. With both, I have seen a pattern of leaving money on the table. 

Whether it’s offering pubic self-serve plans that then set a benchmark in terms of what the cost might be or trying to reduce the hourly rate or set of hours I quote to land contracts, I should be capable of generating a lot more money. 

I shared an email with a great customer this week that really helped me lay out how our team at Speak Ai and I would ideally like to engage (at least in the short term while we find better product-market fit and productize offerings):

1. Self-Serve

You use the software to search and find the insights you are looking for. We’ll continue to help out and guide you.

2. Collaboration

We collaborate together in an iterative process to expose meaningful information both with the app and with some custom reporting.

3. Custom Research Engagement

You’ve seen enough of these interviews so you give us some high-level insights/outcomes you’re looking for and we take care of the rest.

This needs to be reflected on the site to qualify leads. Realistically, with our current situation and capacity, we are unable to lift a finger until points 2 or 3 are scoped out with a committed budget that is paid upfront. 

I’m thinking we may need to move from a self-serve to:

Speak Ai is a technology-powered research firm that uses speech recognition and natural language processing to capture, analyze and generate interactive reports for small and medium-sized businesses.

As you can see it’s not perfect. So, I need some help. 

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