S4E18 – Learnings from a SaaS founder with 25+ years of entrepreneur experience With David Baum

Learnings from a SaaS founder with 25+ years of entrepreneur experience.

In entrepreneurship, the path is full of ups and downs, with both triumphs and challenges. David Baum CEO & Co-founder @ Relato, a veteran entrepreneur with 25 years of experience, has navigated this journey, building and scaling several businesses. In a recent podcast episode on the Grow Your B2B SaaS Podcast hosted by Joran, David shared important lessons from his experiences, emphasizing perseverance, problem-solving, and engaging with the community. This episode is full of his key insights, providing valuable guidance for both new and experienced entrepreneurs.

Why Building in Public is Beneficial

David discusses the benefits of building a business in public. He believes that instant feedback, even with its challenges, is crucial. According to David, initial struggles are part of the journey and help entrepreneurs grow.

Starting Relato: A New Venture

David founded Relato in January of this year. The company is currently in its early stages—pre-revenue, pre-funding, and pre-customers—but boasts a globally distributed team of four, including three co-founders.

What Relato Does: Mission and Value

Relato is a content operations platform for B2B marketing teams. Its mission is to help businesses scale through effective content strategies. David is enthusiastic about the positive feedback Relato has received so far.

David’s Entrepreneurial Path

David began his entrepreneurial journey by dropping out of college in the late ’90s. He has co-founded many businesses but is particularly known for being the founder and CEO of three successful ventures.

Despite holding various roles, David prefers to have ownership stakes in his ventures. He values having a stake in the success and outcome of his work.

David’s Drive and Passion

David is driven by problem-solving and deep understanding. He finds motivation in his work, even acknowledging that setbacks are part of the entrepreneurial process.

The Origin of Relato’s Concept

David conceived the idea for Relato over a decade ago. His experience as head of strategy at a large digital agency highlighted gaps in content operations, inspiring him to create a streamlined platform.

Current Stage of Relato: Closed Alpha

Relato is now in its closed alpha phase, working with a select group of teams. David has focused on building an audience and customer base from the start, emphasizing founder-led marketing and sales.

Relato’s Go-to-Market Strategy

David’s strategy involves engaging with the community and providing valuable content. He values building in public to gain immediate feedback and reduce risks.

Overcoming Challenges: David’s Insights

David shares that every entrepreneurial journey has its challenges. He stresses the importance of perseverance and patience, noting that outcomes often take longer but can be more significant.

Using AI in Relato

Relato incorporates AI to enhance various processes like customer profile enrichment, content creation, and inventory management. AI helps build a comprehensive content library and improves management.

David’s Rock Bottom Moments

David reflects on difficult periods, including the pandemic’s impact on his investment fund and the dot-com bubble burst. He highlights the importance of having a strong support network during tough times.

Handling Company Challenges

David talks about overcoming challenges faced by his investments, particularly during the pandemic. Despite setbacks, his company Waved managed to survive and is now thriving.

Tips for SaaS Founders

David offers advice for SaaS founders at different stages. For those aiming for $10K MRR, he suggests focusing on a few customers and keeping them satisfied. For those targeting $10 million ARR, he advises focusing on product-market fit, building scalable processes, and being patient with team growth.

David Baum’s experiences and insights provide valuable lessons for SaaS founders. His approach to building in public, leveraging community feedback, and practicing patience offers practical advice for successful entrepreneurship. Connect with David on LinkedIn or through Relato’s website for more insights and opportunities for collaboration.

Key Timecodes

• (00:55) – Introduction of David Baum
• (01:49) – David’s Background and Starting Relato
• (02:15) – Relato’s Mission and Current Status
• (03:05) – David’s Entrepreneurial Journey
• (05:43) – Motivation and Challenges in Entrepreneurship
• (07:02) – The Origin of Relato
• (11:46) – David’s Programming Experience
• (14:08) – Relato’s Development and Market Strategy
• (21:53) – Using AI in Relato
• (26:50) – Overcoming Challenges and Rock Bottom Moments
• (31:02) – Company Challenges and Funding Issues
• (35:59) – Lessons from Past Ventures for Relato
• (40:07) – Advice for Early-Stage SaaS Founders
• (43:10) – Advice for Scaling to 10 Million ARR
• (44:28) – Episode Summary and Closing

Transcription

[00:00:00.000] – David

I think then the best way is to actually build in public because it gives you so many advantages to reduce the risk of doing the wrong thing. You get hit in the face a few times, but that immediate feedback loop has just been so valuable. You have to get used to being hit in the face so many times that you start to enjoy it or at least reflect over the different ways you can get hit in the face. There is no real reward without some pain that comes before it. And I suppose you learn to thrive in that. Sometimes you start a business with a clear idea of how long that journey will last. It could be due to many things. Sometimes you know who you are yourself and you know what you’re good at. Not all founders are good at every stage in the journey of developing a business, or most aren’t. Sometimes there’s an opportunity that exists and you want to grasp that opportunity and there will be an exit.

[00:00:55.020] – Joran

In today’s episode, my guest is David Baum. David is the CEO and co-founder of Relato. Relato is a platform that helps B2B marketing teams, skill content operations. David has 25 years of experience as an entrepreneur. He’s co-founded, skilled, and exited multiple businesses across different industries. His previous roles are too many to list all, but to name a few, he’s still involved at Stonehaven Ventures as he’s the founder and CEO, where he does early stage investments, and he will help other startups to grow as a board member or advisor. Therefore, he’s still a board member, a board director at Waved, Effective and atelier. When I asked ChatGPT to tell me something about David, it came back with, David Baum is highly regarding in his field for his practical approach to solve a complex organizational problems and his ability to bring about meaningful lasting change in organizations he works with. I’m really happy to have you on the show. Welcome, David.

[00:01:49.830] – David

Thank you. Excited to be here.

[00:01:52.020] – Joran

Nice. Let’s get to know you besides ChatGPT, but let’s first start off with Relato. It is Relato, right? It’s not relato.

[00:02:00.130] – David

So meito, tomato. It’s actually inspired by the Spanish word relato, which is also used in Portuguese and Italian. It means story or report. It’s commonly used in both journalism, reporting and literature. Nice.

[00:02:15.540] – Joran

That’s cool. When did you start it, Renato?

[00:02:19.980] – David

The company was started in January this year, so we’re seven months in.

[00:02:24.370] – Joran

Yeah. Can I already ask around any revenue numbers?

[00:02:28.520] – David

No revenue. We’re pre-revenue, pre-funding, pre-customers, pre-everything.

[00:02:33.820] – Joran

Pre-everything. Okay, cool. How many employees do you guys have right now?

[00:02:38.680] – David

Currently, one. We’re a team of four, a globally distributed team, but only one employee.

[00:02:45.330] – Joran

Yeah, so treat cofounders then.

[00:02:47.240] – David

Yes.

[00:02:48.090] – Joran

Got you. In one sentence or two sentences, what does Relato do?

[00:02:52.100] – David

Relato is a content operations platform for B2B marketing teams. We help clients scale business with content.

[00:03:01.110] – Joran

Let’s dive into yourself and a bit of your journey. May I ask how old are you?

[00:03:05.700] – David

Yeah, I’m 49. So I’ve been at it for a while.

[00:03:10.110] – Joran

Yeah, exactly. Because we normally, I typically ask, Is this your first startup? In your case, I already know it isn’t. How many businesses did you have before?

[00:03:19.410] – David

It depends how you count. But I dropped out of college in the late ’90s to start a business, and I’ve just kept going since. And so I’ve been a co founder of more businesses than I care to remember, but most notably as a founder and CEO, three businesses.

[00:03:37.270] – Joran

Because you dropped out of college to start a business, does it mean you’re unhirable, as some people call themselves? I guess you always have to work for yourself?

[00:03:47.260] – David

I’ve actually managed to be hired a number of times. But an important condition for me has been, since I’ve always been either a founder, co founder or a partner, it’s always been a clear condition for me that I’m in the ownership. I want to own the outcome of my work, and I want to take part in value creation as an owner as well. It’s been many years since I had an employment that wasn’t ownership as well.

[00:04:13.310] – Joran

Yeah. So you’ve answered the next question already because you always then wanted to be an entrepreneur.

[00:04:18.330] – David

I’ve actually always considered myself an entrepreneur to the extent that I really haven’t thought much about it. It’s only the recent half a decade or so that being an entrepreneur has become a buzzword, of course, the explosion of the solopreneur and creators. I guess I’ve always been one, but it’s not an important word for me, really.

[00:04:39.380] – Joran

When we look at Relato, it’s really early stage, but you grew and scaled many businesses before. Do you already have an end goal defined with it?

[00:04:49.410] – David

Sometimes you start a business with a clear idea of how long that journey will last. It could be due to many things. Sometimes you know who you are yourself and you know what you’re are good at. Not all founders are good at every stage in the journey of developing a business, or most aren’t. Sometimes there’s an opportunity that exists and you want to grasp that opportunity and there will be an exit. But in this case, I just thoroughly enjoy working in this industry. I love the idea of great marketing, and there’s so many nice and inspiring people, and I’ve got so much awesome feedback from people in the community so far that this looks like a journey that might stick. We’ll see. You have to be critical of your own contribution, especially if you’re an owner in a company. I’m never going to take for granted that I’ll be the helm forever, but I really enjoy building a Rolato, and I think I’ll be working on this for many years to come.

[00:05:43.370] – Joran

Nice. This is not your first rodeo, right? What keeps you motivated? What keeps you going to keep going at it again?

[00:05:51.360] – David

That’s a difficult question to answer. To be frank, I find that if you dig into any subject, I really find it interesting motivating to work with. At a basic level, I’m motivated by solving problems. If you understand something deeply, you find so many interesting problems to solve. So I’m thinking back, I’ve actually never been in a situation where I wasn’t motivated. I’ve quit jobs because of frustrating conditions or where you find yourself in a context where you can’t do what you want to. But that’s more often than not, it’s actually been the opposite of demotivated. I’ve had so much motivation that I want to create something somewhere else. I’m hyperactive in that sense. I’ve really never been unmotivated.

[00:06:37.660] – Joran

No. If you’re an entrepreneur and you love solving problems, then I think you found the right job.

[00:06:42.740] – David

Yeah, it isn’t always pleasant, though. You have to get used to being hit in the face so many times that you start to enjoy it or at least reflect over the different ways you can get hit in the face. But it’s part of the game. The pain, there is no real reward without some pain that comes before it. I suppose you learn to thrive in that environment.

[00:07:02.620] – Joran

Let’s go all the way back to, I guess earlier this year, maybe late last year. How did you came up with the idea of Relato? You know what?

[00:07:11.160] – David

It’s actually been an idea that’s been mulling around in my head for more than one and a half decades. In about the time HubSpot coined the term inbound marketing, I was head of strategy in one of the largest digital agencies in the Nordics. One of the services we developed there and had great success with was content and content operations, where we managed, developed, managed and distributed content for large international brands in 15 different languages. And the team was quite large. So managing the operations there was a real challenge for the company. And that’s where I first became aware of the gap in process understanding and maturity and engineering a good process between marketing on the one hand and engineering on the other. So my first job was as a software engineer, and I still program today. But most people in marketing don’t have that background. Most people in marketing, I’ve met at least recently, they have typically a liberal arts degree. Many dreamt of working in journalism or publishing, but ended up in B2B SaaS. Now, not that’s a bad thing. Many people really love the industry and enjoy working there. But it’s a genetic makeup and a competence that doesn’t, at least not often, go hand in hand with the tinkering and building processes and systems.

[00:08:32.220] – David

And I think in an engineering environment, you get the complete opposite, where everyone is really interested in systematizing and some building systems, which is, of course, is the job. So that was the contrast that struck me then. As I’ve assisted many B2B SaaS’s recently, the last three or four years, after a number of exits where I’ve worked on my own investments, I’ve met the same problems, but in a different scale. And to my astonishment, no one has solved those problems yet. So the idea came after many conversations with content marketers where I started digging in and said, hasn’t anyone really built a good content operations platform for content marketing? I found a couple of old and clunky enterprise solutions. It’s a couple of decades old software. It feels a bit like SAP in the ’80s. Really bad user experience, and you hardly get anything done if you ask the people who use these tools. But they’re really good at stopping content. Approvals and checks and balances and sign offs and that thing. There’s work there. They’re usually a bolt on to digital asset management platforms. But if you start looking at the toolset that content marketers actually use today, it’s crazy.

[00:09:42.580] – David

Salespeople, they have the CRM. If you speak to your finance department, they have their accounting platform that they log in to and work on every day. And the same goes for every single group of experts in modern business. There’s one tool. Designers, they open Figma every morning and so on and so forth. Content marketers, They have what we call the Frankenstack, and it consists of 5-7 general purpose point solutions. They weren’t better if you connect them, integrate them, automate some stuff with Zapier, but you end up with Asana or ClickUp for productivity content management. If they don’t have a good Kanban board, you use Trello in addition to that. Maybe you manage your inventory and Airtable, you integrate that with Zapier, you connect your Gmail account to generate emails, and suddenly you have 5-7 different tools that are both expensive and quite hard to use, and that’s what we call the Frankenstack. So my idea is to collapse that stack. There’s fundamentally two ways you can do a business. One is to bundle and build something, or you can re-bundle. Rebundling has been the norm for the last two decades, and that’s why there are thousands and thousands of really good SaaS solutions that solve a slim problem.

[00:11:00.250] – David

But I think we’re coming to a point now in GTM where GTM teams have been bloated because of a lot of free money and a lot of investments have been flowing in, especially into tech. But as the post-pandemic downturn hit, and it’s just become way too expensive. You can’t have these massive teams with an expert for every field, and every expert has their own tools. So I think many teams now, they’re looking for a single tool that is both more efficient and more cost-effective to solve more problems. And that’s the opportunity we’re addressing.

[00:11:34.230] – Joran

One thing you actually mentioned, you mentioned, of course, a lot of things, but the programming part, I missed that while investigating or doing my research. When did you learn that? Is it on school or did you teach you to yourself?

[00:11:46.190] – David

I have the unhappy makeup in my intellect that the subjects I’m really good at aren’t really the ones I’m most passionate about. So I started university by studying English literature and I just love the subject, but I don’t have the makeup to work in publishing or literature. I’m certainly not an author. I try to write a bit, but that’s not my best talent. I also love the social sciences, study sociology, social methodology, and so on. But that really wasn’t my talent. The subjects I found really easy are computer science, mathematical, logical stuff. So I did a bit of that, but quickly found out that it was much more fun building software and businesses than learning more algorithms and data structures. I’m actually formerly I was well trained in the programming language of Java and Simula, which were big object-oriented languages a long time ago. During the dot com bubble, I worked as a software engineer, and I was lucky enough to ride that dot com bubble wave all the way up, but also all the way down. And along the way, you pick up other programming languages. So today, I can… Most programming is done in JavaScript, both on the front end and the back end, but I also program in Python.

[00:12:55.740] – David

Python is a language I taught myself in 2002. It’s developed quite a lot since then, but it turned out to be really useful in working with AI services, AI tools, because Python is the de facto language of machine learning and AI. So it enables me to… When I build prototypes, I don’t it in PowerPoint or keynotes and draw drawings, I actually program and test things. So it means I can work full stack. I can also do the PowerPoint stuff, of course, but I enjoy programming far more, and it’s a much more efficient way to test ideas.

[00:13:29.980] – Joran

Yeah, really interesting. Because I think a lot of founders, at least business founders, don’t know how to program. So I think it’s always-Yeah, you need the commercial side, too.

[00:13:38.530] – David

But I always say it’s for a software engineer to learn finance or marketing is much more likely and easy than for us, an SDR, to learn to be a good programmer in Python. It very rarely happens. Now, some AI services are mitigating that chasm, but I think, while wildly They are exaggerated the benefits of that.

[00:14:03.170] – Joran

If we go back to Rilato, where you guys are now in beta, right?

[00:14:08.210] – David

We’re not quite there. We have a really active and buzzing early access list of people who have signed up to join the early Access, which would be the beta, but we’re not quite ready to launch that yet. We’re actually working with a very small group of people, content teams, for a closed alpha. Now, a closed alpha release is usually something you do internally in an organization, but there really is no other people outside of product development in Relato than me, and I’m all over that as well. So I just reached out to our community and asked, Would any of you like to commit to joining a really early Access closed alpha release? And lots of people raised their hands. Now we have a small list of teams that will be onboarding actually within a few weeks to our closed alpha. That’ll be the first real test of a functioning platform. We’ve come really far with building the platform, but we’ve done hand in hand with the community, and lots of people have given us input and feedback along the way. So pretty excited for that. We hope to have a better release sometime in the fall.

[00:15:10.600] – Joran

Because when we talk then next steps indeed, so next release in the fall, do you already have in mind what your go-to-market strategy is going to be?

[00:15:18.830] – David

Yeah, we do. We’ve thought a lot about that. And contrary to what many people, I think, struggle with is building a lot before you start marketing a product. I’ve been building our audience and customer base, at least we hope, prospect base since day one. Our first approach has been the typical founder-led marketing. I work intensely on creating helpful, useful, and valuable content. We work with a small team of freelancers to do that, where we publish on the Relato blog, and we also do a lot of work on LinkedIn. And that has really been an incredibly rewarding and interesting journey. I think founder-led marketing currently is the primary pillar of our GTM strategy, and it’s going to be the same with sales. So all of our communications, all of the activity from Relato on the Internet is run by me with a couple of freelancers we collaborate with, and that’s how we’re going to go forward. I think one of the hottest topics online now, and especially on LinkedIn, is inbound led outbound. If we use the term of our times. For me, that’s just an obvious way of working. So we run our B2B on our website.

[00:16:27.670] – David

I have instrumented our whole stack for analytics. We gather tons and tons of data every time a customer interacts with us. So we have a pretty good foundation to work on that inbound led outbound motion. And that’s where we’re going to continue. First and foremost, we have or I have a really good dialog with lots of really great content folks that I hope will enjoy their first experience on the platform. They won’t. It’s going to be buggy as hell. But I hope they see the value and are willing to stick with us as we improve what we have to offer.

[00:17:01.710] – Joran

I think the approach you have, the community-led or at least where you build it together with the community, if you’re founder-led, so you’re really out there, so people see exactly what you’re doing, probably you’re going to share the mistakes you guys are making, so people are more willing to stay with you because they actually interact with a human and not just a company which is trying to sell them something.

[00:17:20.230] – David

Absolutely. Even though I founded and built many companies, every time I start a new, I think it takes a few years to build something of value. So time does pass. And every time you start something new, I feel really insecure of what is the best way forward. And I think that is actually quite productive because it means that I’m not very bold. So many people maybe think I come across as confident, but I lie awake all night, fretting about whether or not we’re doing the right thing, whether or not my messaging is correct, if I have the right approach, methodology, and so on. So I’ve been really intensely worried about how we should do this, and that means that I’ve more or less reinvented every the way I work when it comes to developing audience, writing, sharing online, building in public, and so on and so forth. So the previous startup I run, we didn’t do that. Communication online was more about pushing out some PR activities. In 2016, ’17, you didn’t do founder-led on LinkedIn. Linkedin was a catalog of CV. So times have changed, and my approach is, I think we’re pretty thoroughly updated, but I’m still not sure what we should do.

[00:18:29.680] – David

But I think then the best way is to actually build in public because it gives you so many advantages to reduce the risk of doing the wrong thing. You get hit in the face a few times, but that immediate feedback loop has just been so valuable. And I tell you what, it’s not just about building the audience, because when you do that, you’ve built relationships with people who are presumably potential customers. And those relationships get really good really quickly if you invest in meeting people and understanding them. And every Every time I meet someone new, they all get an invite for more in-depth conversation with me, which fees directly back into the team and product development. Every single recording from a chat, be it a 30-minute chat online, is shared with the team. We analyze all of our conversations. We relate that to our roadmap, and we inform what we do next and how we build the product. There’s really nothing we’ve built so far that isn’t, I wouldn’t maybe verify it as a bit too strong a word, but isn’t strongly informed by actual… You can source it directly back to actual stuff that people have said that are within our ICP.

[00:19:41.170] – David

Now, we can still make lots of mistakes. We could have the wrong ICP. We could have the wrong approach to selling to a market. A characteristic of content marketing today is that all teams have been reduced in the tech sector due to the downturn. And as growth picks up again, teams aren’t building back the way They’re not adding headcount. They’re not building big organizations. They’re working with fractionals and freelancers. Same in many as a business, but especially in marketing. For the finance geeks, it’s great just to have all your costs above the line, but it’s actually a a key model not only for the brands, but also for freelancers and fractionals. Because many people got laid off, and the first wave was involuntary. But then all of the smarter people started jumping ship before they got laid off, and they’re building really good freelance businesses or as solopreneurs. Some of them are building agencies, but the volume is in, solopreneurs. People are really enjoying that work-life balance or the freedom to live wherever they want, the freedom to say no to clients they don’t want to work with, and And might I add, the freedom not to attend all those internal boring meetings where you just have to show up to see and bese.

[00:20:52.230] – David

So I think it’s really a sticky model for both sides of the market. And that means that going forward, you have to understand that setting if you’re building software, because you can’t have strong authentication and authorisation based on everyone working in the same organization. For example, you have to manage the transparency and sharing across organizational boundaries over time, which is a new challenge, which is typical of this industry, but not many others. There’s so many new things that have shown up and that we can take into account just working really strongly with the audience and understanding what’s happening both at a macro level, but also individually, what customers feel, what they need, and what problems they’re trying to solve.

[00:21:32.690] – Joran

Yeah, I really always enjoy if people talk a lot with their clients, talk a lot with the community. As you mentioned, as long as it’s the right ICP, then you know you’re building the right thing. I actually get a lot of feedback on it. One question regarding the product, how are you currently leveraging, I’m not going to say new technologies, but not the new anymore, AI, machine learning?

[00:21:53.910] – David

Yeah, all across the board. I use AI in most of the processes I run, be customer profile enrichment with clay. You can use AI for self-editing when you create and create content. I love using Claude 3.5 in perplexity for research. Source discovery, I think is just amazing. But when it comes to product development, we’ve used a number of AI tools to analyze and summarize customer insight, and based on that, let humans make better informed decisions. We, of course, use AI. If Grammarly is considered AI, I guess It is that you use that all the time. But we also use a number of AI tools in our design and programming processes. We’ve actually stopped using GitHub Copilot when it comes to coding. That is because if you’re a really experienced programmer, AI isn’t good enough to help you that much, actually. You spend more time checking that something isn’t wrong than just actually writing this stuff yourself. We found out that we can actually move much faster in several respects than without AI than with just because we’re a really experienced team. Whereas if you have a couple of years experience, maybe AI is much more valuable for you.

[00:23:09.190] – David

Now, with the current rate of improvement in AI models and the software and services you build around that, I don’t think that’s going to be the case for the foreseeable future. But currently, I think when it comes to content, I love using AI to help fill a black page. Play a ball when it comes to idea development, but I certainly not do any of the creation for me. That stuff I do myself. When it comes to the platform, we use AI in a number of different ways, but it’s all based on the concrete needs of customers that we’ve spoken to. But I can give you a couple of examples. One of the great One of the challenges in content marketing is actually managing it all. There’s just so much valuable information spread across drives and Dropboxes, files and folders, and different SaaS tools. Keeping a good inventory of your content, managing that, and knowing when stuff needs an update, when you should remove things, and also finding all the opportunities for reuse, repurposing, and redistribution is really hard because it’s scattered across all of these different tools. So one of the problems we solve is building a single platform where everything is available.

[00:24:20.170] – David

 And of course, the idea of a platform is that you can connect both people, processes, data sources in different ways in different workflows. And that is exactly That’s exactly what we’re doing. But one feature that I think is going to be really valuable is the library. Now, a library is, it could just be a catalog system where you have files, but AI offers immense opportunities there to actually help in searching and retrieving information. Imagine all of the content that was previously scattered across different services and storage devices now collected in a single place, integrated, where everything, as soon as it’s added or updated, it gets added to the library and everything gets embedded in a vector database, which means you can do deep semantic search. You can locate things that are related, but that you had no way of finding out. You’d have to have 17 tabs open and do all the searching yourself. That is an incredibly powerful use of AI. And once you have that data, that data availability, you can build software services on top of that and build concepts for reuse, redistribution, sharing. One scenario which I think is going to be really valuable is creating collections with the help of AI to assist sales teams in their work.

[00:25:41.670] – David

Every sales team, they want the most updated and useful information, be it a presentation for a client, be it a battle card that fleshes out the differences between us and the competition, or recent and useful blog posts and stuff you can share with prospects that is just helpful and relevant. And And I think that is where that feature is going to be really valuable.

[00:26:03.400] – Joran

Nice. Getting insight from a lot of different places, a lot of different content that’s going to be really useful.

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[00:26:30.620] – Joran

If we look at your journey, just 25 years experience of being an entrepreneur or at least working, I’m not sure if it’s all entrepreneur, you probably had a lot of rock bottom moments, either financially, personally, where you were just at a rock bottom. Can you share one of those moments and how did you get out of it?

[00:26:50.820] – David

Yeah, but just to be clear, I think of all the positions I’ve held, only two of them have not been as a founder or co founder. I’ve almost managed to stay true. But I was invited to build up and manage a large investment fund for a group of banks a few years ago, and that was just such an interesting opportunity that I couldn’t let it pass. But I suppose I could have bought shares in the bank at the stock exchange, but I chose not to. But that’s the most recent journey that wasn’t as a founder and co founder. And incidentally, that was also one of, I wouldn’t say rock bottom, but one of the journeys that I found personally disappointing in the sense that I didn’t have the opportunity to take it as far as I could. And that was really due to the pandemic. And as the pandemic hit, it coincided with a precipitous drop in the oil price, which is really important in a small oil dependent country like Norway. And The largest bank who was an LP in that fund is also the primary oil services bank in the country. And they, of course, cut a lot of the opportunity, both funding and opportunities that we had there, which meant that the job description really changed so much that I chose to quit.

[00:28:02.150] – David

For me, that was really disappointing that I couldn’t take all of that opportunity to fruition, but it was due to situations I had really no control over. But I remember sitting there in January, February. We had planned a trip to China as the COVID pandemic started to unfold. The whole team was going to visit several businesses in China. We were acutely aware of the problem and managed to pack things up in a pretty okay way. But it ended up with me just ending that relationship. Coincidentally, it did mean I had a lot of time to work on my own investment portfolio and invested in a number of new businesses through the pandemic, A few of which have turned out really well. But I’d say that was maybe the come up with. But I remember for two and a half decades ago when the dot com bubble burst. So that was the first time I was co-founder in a business that really became quite large. I managed engineering team at a bank, and we were building internet banking solutions. We were one of a few teams in the company that actually generated substantial revenue. This was a consulting business.

[00:29:11.480] – David

Our owners, they wanted to shut us down, or they actually did just shut us down. We were a group of employees who was really disgruntled by that. We ended up starting a new consulting business. We managed to convince those valuable clients to continue with us and built an amazing business. Where I continued to work there for a millennia years as a co founder and manager of half of the operations. And that was just such a wonderful journey that I really never looked back. I just wanted to continue that way of working. But it was pretty rock bottom at the back end of the dot combo burst. But it did. That, too, did pass.

[00:29:52.560] – Joran

Yeah. It’s almost the Dutch famous guy, Johan Kruijf, always says every disadvantage has its advantages. So if something bad happens, maybe something good will come out of it as well, which happened in your case.

[00:30:04.740] – David

True. But it’s certainly an advantage to be surrounded by good people. Because if you’re on your own when something like that hits, it can be really disastrous. Sometimes it’s really hard to pull yourself out of an admirer. But I’ve always been lucky to be a co founder with other great people. I consider myself privileged that so many people I really respect and admire still want to work with me. I think that has been the single best advantage that when disaster strikes, there’s actually other people who are hit by the same train. You can comfort each other, but ultimately, you have to start something new. It has been the single greatest advantage for me.

[00:30:48.800] – Joran

When we look at more company challenges, is there in one of the businesses you co-founded, something which happened, a big company challenge, and how did you face that one?

[00:31:02.000] – David

Recently, it’s all been all about funding or financial markets that have dried up for early stage. One of the companies that I’ve invested in several rounds, and I also chair the board called Waved, they work with sound technology for the restaurant and hotel industry. And we launched our service as the pandemic was unfolding, and every single restaurant and hotel was closed down by the government. And it wasn’t just the one incident. It happened several times, as everyone remembers. And to have recently invested and support a young team with amazing technology that really revolutionizes the way you can create a unique ambiance in a restaurant, but all of your prospective customers are just closed. It was just so challenging. And of course, that problem spills over into traction, meaning that when you need funding, no one really has anything to show because you don’t have traction, because your market is closed. But we actually managed to keep that going. And that The company is now thriving three, four years later because we managed to get through that. But oh, my gosh, it’s been a couple of painful bridge rounds. But where the team has managed to land, both new investors and coax existing investors to continue.

[00:32:17.480] – David

But that has been the most painful theme of trial and tribulation is working with investors early stage in the European ecosystem, which is so much less mature than the American. There’s so so much, so many fewer large players and so much less money. I think that’s a problem that still exists, even though I think the market is changing and the funds are flowing into venture again, but Europe is still underdeveloped.

[00:32:43.180] – Joran

Yeah. Because do you think a lot more European VCs look at traction, as you mentioned? They want to see a lot more numbers where US VCs look about the potential, they look more into the future, what is possible versus Europe. I talked to some Dutch VCs in the past, and they all want to see numbers. What have you been doing so far? Where in my idea, it’s like US just looks at the potential rather than what you’re currently doing.

[00:33:10.330] – David

I think there’s… Try to unpack that a bit. There’s lots of different themes, but One, of course, is the market size. There is a reason that 60% of all B2B SaaS are in the US, about 32,000 of them globally, depending on how you count. But of course, there are just so many more businesses to sell to. Of course, the same when it comes to consumer services and products. Europe, even though there are many people in Europe, the market is very fragmented. It’s not straightforward to do cross-state selling of products and services in US either, but there are platforms and services that help you manage all that. In Europe, it’s a bit more difficult because of the language barriers. So that’s one thing. But the sheer maturity, so how many really mature good funds are there in the US compared to Europe? I think I don’t have the members top of mind. But the experience is that in the US, you can meet tens, if not hundreds of really good teams on the investment side who understand how you build a company from pre-seed to Series A to Series B. Whereas in Europe, there are only a few that are really good.

[00:34:19.540] – David

And of course, their attention is a competition. If you don’t manage to get a warm intro, then you won’t have a conversation with them. And you end up speaking to local or regional investors, which can be good or really bad. And the worst case scenario is the young management team of a medium-sized fund with family offices, for example, as LPs who view this as a private equity community, and a young team with only financial training and no actual founder experience who invest early stage, but expect reporting in progress as if this company was a mature growth stage company, where you have a team that is desperately seeking product market fit and are demanded to report some Excel docs every second week and say, How is the progress with regards to revenue going? Which is just so impossibly embarrassing and stupid, but I’ve been in so many board meetings where that is the exact problem, where you take the investors you get, and to a certain extent, you get the ones you deserve, but where the solution would be to start the company in a different country or actually just move. And That’s certainly the problem in the Nordics.

[00:35:31.290] – David

I think the Swedish ecosystem is maybe the most mature. Denmark is okay. Norway is Stone Age’s, with a few exceptions. But many other European countries have the same. I have an example. Yeah, nice.

[00:35:43.160] – Joran

You already said it. You’ve been in so many board meetings, so many different companies. So you’ve seen a lot, right? So this is one of the learnings I think you took out of it. Are there any other learnings you took out of being part of so many different companies that you’re now taking to Rolato?

[00:35:59.540] – David

I’ve certainly I met myself in the door several times when it comes to the expectations of progress and how much time it takes to actually get somewhere and build something and get the feedback and iterate. And it’s been exactly the same this time around. The company was incorporated, we’ve been working in a productive way since the beginning of January. But my expectation back then was that we’d be launching a beta around June. And that’s three months ago and we’re still far off. So the experience is that everything takes more time than you think, but the impact can be bigger than you expect it. So I think perseverance to just keep on keeping on is perhaps the main learning, and that there’s going to be ups and downs, but you have to learn to recognize that feeling and just push through and be patient with your team. Most engineering teams, they experience that the founders and management are incredibly impatient. And there’s always the discussion of, should we reduce technical debt now or just hammer out something that will… And all of those discussions are necessary to have in a productive manner with patients, and you have to analyze the situation every time.

[00:37:11.440] – David

There can be an intuition, but problems are different, and solutions have to address concrete problems. I think that is one of the main experiences. You just have to accept that even though you’ve been through this many times before, the team hasn’t done that with you unless it’s exactly the same team. Now, luckily, I work with a few people I’ve worked with before, but it’s on a different problem. It’s a different domain, different users, different GTM and so on. We just have to do everything diligently. You can certainly speed some of that up, but some things just take time to mature.

[00:37:44.530] – Joran

It is interesting. As a first-time founder, I definitely experience myself where things take a lot longer, but I guess it always remains the same, I guess, where you still think things are going to go quicker, but you end up with new problems, new challenges. Things will take You know what’s not helpful is all of the AI boys and AI investors have created the expectation that you can build a valuable business in days or weeks and run it as a solopreneur.

[00:38:13.340] – David

Now, there are really good examples of solopreneurs who manage stuff. But if you look at the contractors that these single solopreneurs use, it’s just a modern way of building a team. There’s even been some really good examples on your podcast as well of amazing founders who manage several businesses, and they’re just one person, but they aren’t. There is people. To say that you can just write a one-line prompt and get an AI to generate a full SaaS platform just isn’t true. An AI still works as a demo to do something quickly, but you certainly can’t build something that’s scalable and globally distributed and actually works and manages hundreds of thousands of customers in that way. Product development has speeded up because of great tooling and more modern languages, but a lot of the same challenges still exist. I think a lot of AI companies really haven’t done the startup ecosystem any favors with those expectations. Certainly, if you’re starting an AI company yourself, you have to live up to the same expectations of growth that the former generation have created It’s almost impossible to achieve those expectations. Certainly, many of the successful AI-first businesses that are running today, they’re desperately pivoting into more productive customer segments or Everyone is moving up to enterprise, of course.

[00:39:32.450] – David

A lot of the promise actually hasn’t been realized. I’m just really looking forward to we need a couple more downturns to get over the frottiness of the heights of inflated expectations and fall a bit more, and then we can start on a nice trajectory of growth and productivity. That’s really what I’m looking forward to.

[00:39:50.770] – Joran

We’re going to start wrapping up things a little bit. We’re going to dive into the famous last two questions. Real practical advice at certain review stages. To start off with, what advice would you give a SaaS founder who’s just starting out and trying to grow to 10K monthly recurring revenue?

[00:40:07.640] – David

Yeah. Really interesting question, interesting problem to solve. First, what is your price point? How much will you get per customer. So if you’re looking for 10K and you’re selling it to $2.49 a month, that’s 40 customers. That’s really not that many customers. It’s certainly as many customers as you can manage to find in in your extended network of the people you speak to during a month or two. So the first thing is to realize that you don’t need that many, and they are all within an arm’s reach. So certainly do stuff that doesn’t scale. Meet up at the physical events. That’s actually worth it, because if you can get three customers by attending a conference, even though you had hundreds of conversations, that is almost 10% of that 10K a month. You only need one and you have four. So it’s building step by step and understanding that if you’re under 10K, your primary goal is still, you’re still working on product market fit. When you have onboarded a customer and you’ll have to hand… The primary goal then is to focus on retention and keeping them happy and adapting to what they need. Actually speaking with them as often as you possibly can, getting their feedback and demonstrating that you take that feedback into account and you roll out improvements or changes and alterations and you just make them happy.

[00:41:31.080] – David

The base case here is if you can get one customer and make them really happy, then there’s likely going to be others. You can do the same. The goal really should be first to build one, two, or three good, happy customer relationships and then create success stories out of that. And that is really what propels you forward. I’d say one of the things we think a lot about is how we can create a a growth flywheel and how building a platform like we do, where we’re serving teams, but the team has that characteristic that many or most don’t work in the same organization. How can you get that to spread in a productive way? How can we work deeply with the various different roles? Every advisor to startups, they say, You should have only one ICP, and you should address just one slim segment of the market. Our problem is that we have three ICPs, which are the team. And without those three, then you really can’t get much done. I suppose I could build a platform only for for freelancers or for solopreneurs or something. But I think the price point there means that it’s not the place you want to start.

[00:42:37.950] – David

You can serve tens of millions of Indian solopreneurs or freelance content copywriter, but I don’t think that’s the attractive end of the market to start. So working with more mature teams that you can actually solve their problem in that distributed context is one of the things we’re thinking about. Based on all that, of course, founder-led marketing and sales is where your focus It should be.

[00:43:00.280] – Joran

Yeah. Nice. Let’s say assume we reach 10K MRR and we’re going to make a huge jump all the way to 10 million ARR, what advice would you give SaaS founders here?

[00:43:10.540] – David

First, to the start of that journey, if you’re going to have a chance of reaching 10 million ARR, well, in Europe, that’s quite a big number. In the States, maybe not so much. You have to have found product market fit. You have to come to a state where customers, where your GTM works, where there is a steady inflow of opportunities, where you can build repeatable processes around that. And before you experience all the indications of PMF, you should still focus on PMF. Otherwise, you won’t get there. But as you get those indications, the feeling of pull where customers say, I want this, please, and you start to get inbound, and the inbound actually succeeds in becoming or signing up an onboarding, then you have to build system. Some really wise person said that you never achieve success by rising up to your expectations or your hopes of a really successful future. Success is falling down to the level of the systems and processes you’ve built. You won’t achieve that dream. If you focus on that dream, you will achieve what you have built systems and processes to support. So that is where your focus should be in order to go from 10K a month to 10 million.

[00:44:28.530] – Joran

Nice. Let me see Let me see if I can try to summarize the episode in, let’s say, 30 seconds. So David dropped out of college. He started a business right from college. He’s added for 25 years right now. He loves solving problems, which is also his motivation driver. Being able to program will help you to build real prototypes, which is going to be super helpful. If you look at your go-to-market, building an audience, either being founder-led, will help you to get a lot of early clients in. So even before doing an MVP, you can have a closed alpha as he’s doing right now, really getting all the clients in from his community, building along with the community, which helps you to also build deep relationships. If you are going to experience rock bottom moments, which everybody will, surround yourself with great people because they’re going to be a lot more easy to navigate. Us is still way more mature when it comes down to investors. Everything takes more time than you think, but the impact can be bigger than expected. So definitely be patient with your team. When we are trying to grow to 10K MR, pricing will be important.

[00:45:31.860] – Joran

Do stuff that doesn’t scale, keep your clients happy in receiving feedback, and keep improving your product. 10 million, focus on product-market fit, build repeatable processes. And to quote an author, Success is falling down on the system and processes you have built. Well done. Thank you. If people want to get in contact with you, David, how can they do?

[00:45:51.530] – David

Yeah, the easiest way is to find me on LinkedIn. I’m LinkedIn/dabildbound. I’m also an expert, but not as much lately. I think it’s become a disturbing place. But please check out relato. Com, and you can reach me at david@relato. Com if you want to get in touch directly.

[00:46:09.990] – Joran

Perfect. Both of them will be linked in the show notes everywhere so people can find and click the profiles and the website easily. For people listening, make sure you leave us a review and answer the poll we’re going to add to this podcast, especially on Spotify. So always looking for your feedback. Thanks again for coming on, David.

[00:46:29.580] – David

Thank you.

[00:46:30.250] – Joran

Thank you for watching this show of the Grow Your B2B SaaS podcast. You made it till the end, so I think we can assume you like this content. If you did, give us a thumbs up, subscribe to the channel. If you like this content, feel free to reach out if you want to sponsor the show. If you have a specific guest in mind, if you have a specific topic you want us to cover, reach out to me on LinkedIn. More than happy to take a look at it. If you want to know more about Reditus, feel free to reach out as well. But for now, have a great day and good luck growing your growing your B2B SaaS.