Angel Invest Boston is sponsored by Peter Fasse, top life science patent attorney.
Founder and revenue consultant Nick Zeckets and I discussed his first startup and what he learned from it. Then we talked about the best ways for startups to build revenues. Instructive and inspiring.
Click here for full episode transcript
Highlights include:
Sal Introduces Nick Zeckets, Founder & Revenue Consultant
What Quadwrangle Does
"What is already out there that I can make better? I don't want to replace it, at least not on day one."
“…first and foremost, and I heard it 1,000 times and I never really got it, but it was to fall in love with the problem and not the solution.”
“The sales process was there… the product wasn't ready.”
“Oftentimes, it's just like any good advisor, it's just asking some really concrete questions.”
“Because everything's a referral economy at this point.”
“Her trick was that she was the most methodical person you could imagine… Bottom line was that she had a sales process.”
“…the founder's out there doing the selling. The founder is the one picking up the cash. And it is almost impossible… to templatize that passion.”
“…remarkably common amongst startups is a real... In small companies in general, is a lack of belief in their own value.”
“there's a lot of this stuff that between software and freelancers and on-demand services, you can look like an absolute marketing juggernaut.”
“And otherwise, these on-demand services are incredible. It just doesn't cost that much, and so I love modeling that out for companies.”
“…I was a fairly prolific hustler in high school, and even in elementary school.”
“…if we shine a light on the bad stuff as soon as we can identify that we've got bad stuff, it's going to kill that mold.”
“Follow the process.”
“Again, it's the truth will set you free in all things.”
Transcript of, “Growing Revenue”
GUEST: FOUNDER AND REVENUE CONSULTANT, NICK ZECKETS
Sal Introduces Nick Zeckets, Founder & Revenue Consultant
Sal Daher: Welcome to Angel Invest Boston, conversations with Boston's most exciting founders and angel investors. And today, I have the privilege of speaking with Nick Zeckets, founder and revenue consultant. Welcome, Nick.
Nick Zeckets: Thank you, Sal. Thank you very much for having me.
Sal Daher: Nick, founded a startup, gave it his very, very best. Put together a team, raised a bunch of money, gave it his best shot, and the outcome was not the outcome that everybody had hoped for. He ended up giving some money back to the investors, like 50%, and after a very tough trial. And we're going to talk a little bit about the story of Quadwrangle today with a view to learn what it is that Nick and team did right, and what they did wrong. This is a really valuable opportunity to learn from somebody who tried very, very hard, raised money, but ultimately, the company didn't get to where he and the investors wanted it to go. And then we'll talk about how Nick came about this. And then we'll talk about what he's doing now. But anyway, so Nick, can you tell us what it is that Quadwrangle does? Because Quadwrangle still exists in its new incarnation.
Nick Zeckets: It does.
What Quadwrangle Does
Sal Daher: What was the problem that Quadwrangle was solving?
Nick Zeckets: Yep. That's a great question. So most simply, we found that higher education, education in general, but higher ed in particular, was having a really hard time making meaningful connections with their constituents. And they had a broad many of them and a lot of diversity amongst the people that they were talking to. Yes, they had in common that they had gone to the university of whatever or the college of what have you, but unlike, say, Nike, where everybody genuinely cares about sports, and sportswear is a first layer of the conversation, in higher ed the diversity is remarkably broad, remarkably diverse, which makes them really interesting institutions, but makes the mandate for connectivity really tough to level up to limited resources. So, we built up a vertical-specific martech platform, really built around the idea of personalizing what was coming from an institution to any of its constituents.
Sal Daher: In more concrete terms, the idea was look at the social media of people who are alumni of the school, who follow the school somehow, and see what their interests are, and then look at the kinds of content that the school is creating, and try to serve up to that audience the content that the school is creating, in the hope that when the person sees their school creating content, doing things in an area that is of their interest, it will draw the alumnus into the school, closer to the school and therefore make it easier for the school to raise money for the school to keep its constituency of alumni.
Nick Zeckets: Spot on.
Sal Daher: And so, what was the original idea, original thesis that you had?
Nick Zeckets: Yep. So interestingly, we started only as a mobile community app. And quite frankly, mobile seemed interesting because you were able to gather so much more information about people, it was far more common for people to use social login at the time, which allowed apps to scrape an incredible wealth of data, and social login and websites was very nascent at the time. And we thought that with mobile being so popular, and everybody kind of clamoring for mobile apps, that there would be a reasonable demand both within our addressable market and amongst their own constituents.
I think as many people have recognized that multiendemic mobile app community building approach is I don't want to say impossible, but highly unlikely, and certainly site to site, lots of variability in how well a school might be equipped to actually market the app to begin with. And so by being a mobile app first, we really obfuscated a lot of our core value, and frankly, burdened our customers.
Sal Daher: Having to download the app and so forth, instead of just interacting with them directly.
Nick Zeckets: That's right.
Sal Daher: It was kind of like a fourth screen.
Nick Zeckets: Yeah, that right.
Sal Daher: An additional screen for them to go to.
Nick Zeckets: That's right. We introduced a new problem in order to solve an existing one.
Sal Daher: So, you founded the company in 2000?
Nick Zeckets: 11.
Sal Daher: 11. Okay. So at that time, building a mobile app was an expensive thing.
Nick Zeckets: It was.
Sal Daher: Because of talent, of the people who worked with the software packages used for building mobile apps were very scarce.
Nick Zeckets: That's right.
Sal Daher: So, a mobile app was very expensive. Hadn't really created web apps yet, but there were other ways of addressing this that might have worked better eventually. So then you discovered that the mobile app wasn't the way to go.
Nick Zeckets: That’s right.
Sal Daher: So, you were creating a problem for the user to solve a problem for the user, a problem that the user didn't know he had, or she had, right?
Nick Zeckets: That's right.
Sal Daher: I mean, it's a problem that the school had.
Nick Zeckets: That's right.
Sal Daher: So, what was your next iteration?
Nick Zeckets: As we started to go through, honestly, we got exposed to the marketing technology options that most higher ed institutions had at their disposal to market the existence of the app to begin with. So we started kind of getting our hands dirty and saying, "Hey, can we help out? Can we help build a strategy to help you market the app?" Which at the time seemed like the right thing to do, and we really were trying to do it in earnest and thinking about our customers first. The problem was that the view on that was wrong. We should have stepped back and said, "Wow, how do we solve this problem a little bit more directly, and stop making it about getting this app out there?"
But in trying to do that, we got to know the email marketing systems that they were using, we got to know the website and content management vendors that they were using. We started to poke around and find out directly from our customers that they were pretty unhappy with the tools that they were using to try to market this other stuff. And it dawned on us that the problem, duh, wasn't that they didn't have a mobile app to engage with their constituents in that new-fangled medium, but the problem was that their fundamental tools really shackled them and made it incredibly difficult for them to be successful at their jobs. It set them up for failure by and large.
Very, very, very few schools had even had a Salesforce Marketing Cloud Rep visit campus at that point. HubSpot hadn't started talking to higher ed in any way, shape, or form. So we had some very kind of older software vendors that were in there, and it was pretty homogenous. There were only two or three folks that... Businesses that were really kind of doing most of that work. They hadn't really updated their software to modern frameworks in ages. So, we looked around and we said, "Well, it sounds like you're unhappy with your email system and with events management and your web experience. What would that look like? What would the one that you want look like?"
And so, we heard a lot of pain points and a lot of demands. And as we went from institution to institution, regardless of size, regardless of complexity, regardless of the kind of teams that they had, they all started saying the same things. "This is why this is hard. This is why this doesn't work." And the good news was the personalization stuff that we had built using machine learning for the mobile app was incredibly extensible. It was absolutely reusable. It was a framework that wasn't mobile-specific in any way. So we said, "Well, what if we built you those features, but the delivery could be personalized on the fly?" And the responses were really positive.
Now two really ridiculous problems were introduced at that time, and a third one that it took us a long time to realize that we had tripped on. So the two ridiculous problems were that getting to our punch list of features that would give us the ability to say, "Hey, let's replace the thing you're mad at," was very, very long, and remarkably expensive to reach that volume and breadth of functionality. And as a result, frankly, we didn't have enough people doing product management. And what ended up happening is that we would get in, and what we thought was an incredibly exhaustive punch list was about 40% of what the actual punch list was according to our customers.
And we did a terribly bad job of saying no, or hey, let's step back and not do this right now and talk to our investors and talk to our community and say, "All right, what should we do next? Should we shut down shop and start over? Should we raise money to do this and reenter the world in a year?" We never had that conversation with our teams. And that really, ultimately, at the end of the day, was the thing that forced us into an exit that didn't look the way that we had all intended for it to look.
Sal Daher: I guess what you're looking for in an early stage, trying to create product/market fit is you're looking for a set of features that you can create that will be of value to a reasonable number of clients.
Nick Zeckets: That's right.
Sal Daher: Unfortunately, the features that they wanted were extremely varied, and you didn't have the resources to prepare to have a full-blown product-
Nick Zeckets: That's right.
Sal Daher: That would suit all the different potential users. So the product was never satisfying the customers as much as is, and that's why you had very high churn, you guys would sell, do a lot of selling, but then there wouldn't be a lot of adoption. You weren't able to zero in on the users and to bring to bear critical mass of features to keep those users engaged. A very tough thing. When you have a false start with the app, you guys put a lot of energy into perfecting the app, building the app, at a time when it was very expensive. You spent a bit of money doing that. And then the app wasn't useful. The mode of delivery became email.
It should comfort for you to know that I've had Adam Martel of Gravyty on the podcast. His startup is similar space, addressing a lot of the same people. They're doing a slightly different thing, basically helping them raise money, and yours is basically trying to get engagement. But they fell into the same trap, they had the same fourth screen problem. They were expecting that the fundraisers for the universities to go to a website and to look up opportunities of people to talk to. And they came to the conclusion that they just weren't getting the traction. And they were lucky enough, basically, they switched to having their artificial intelligence go and look for things that are going on with major potential donors.
And let's say, donor XYZ had an exit sale of his company or something, or her company, and then that would trigger an email that would be sent to the fundraiser saying, "Hey, so and so had an event. It makes sense for you to address that person, and here's a suggested text." And the nice thing about it is that they actually edited. As the fundraiser edited the text, their machine learning was learning what they should serve up next time. That wasn't there at the beginning, but eventually they got there. So they were lucky that they managed to latch on, to discover something that they could provide that was within the reach of what they could produce. And it's very much a luck of the draw.
Nick Zeckets: Well, I mean, you got to give Adam and that squad credit. I mean, I think what they figured out, and soon enough before it became a problem was the modality of value delivery. And it's interesting, doing the revenue stuff, you get approached a lot by companies that are in different spaces and trying to do different things.
Sal Daher: Let me translate that. Doing the revenue stuff means meaning, doing the consulting work that you're doing now, helping companies get their bottom… and their top line revenue-
Nick Zeckets: That's right.
Sal Daher: Really. I must say, Nick, I could never have faulted you for getting revenue. You were always, always chugging along, and bringing in new opportunities and so forth. The problem was the product creation, it wasn't the selling of the product or trying to... At least from my perspective. But what I saw was that you were always selling, you always had a lot of prospects, you had a huge funnel, but the problem is that the product just wasn't ready for that funnel.
Nick Zeckets: Yeah, it really wasn't. And it wasn't in such a way that we would sell in and not know what we didn't know. There were so many assumptions on our customer's side, because they had become accustomed to other solutions that were in the market, and they just figured, "Oh, of course, anything that we'd be pitching into the same space would have features A through Z, Z, Z."
Sal Daher: Very high expectations.
Nick Zeckets: That's right. That's right. And we would come in, and there would always be some kind of a gap, and everybody would say, "Well, this is the thing that my whole workflow, the way my world works is dependent upon feature X." And we would often come back and say, "If you work differently over here, because we made this work better, you don't need this thing [crosstalk 00:14:23]."
Sal Daher: Oh, yeah, yeah.
Nick Zeckets: And gosh, that never worked. Never. Not once.
Sal Daher: That is so hard. So anyway, finish your thought on Adam Martel.
"What is already out there that I can make better? I don't want to replace it, at least not on day one."
Nick Zeckets: Adam did what I think the best companies now are doing. And they're saying, "Look, what already has scale? Can I either..." It's essentially, "What is already out there that I can make better? I don't want to replace it, at least not on day one." I think an out of the gate strategy to replace anything unless you're talking about a tiny, kind of a single feature type of a software space. And there's lots of those, right? Everybody uses one piece of software to do search engine optimization research, right?
Sal Daher: To have the ambition to change people's workflow, not even Slack could do it. I mean, Slack did it to a certain point.
Nick Zeckets: That's right.
Sal Daher: And then they ran out of steam when Microsoft stepped in, so-
Nick Zeckets: I totally agree.
Sal Daher: You're saying that Adam was wise enough to use the mode of delivery, which is the email, which has massive adoptions.
Nick Zeckets: That's right. That's right.
Sal Daher: No friction. And so just come in through that-
Nick Zeckets: That's right.
Sal Daher: And deliver your value via that, instead of creating a channel for delivery?
Nick Zeckets: That's right. And you talk to email newsletter publishers that are making millions of dollars a year, and the people who receive those emails absolutely love them, right? And you look at that and you go, "Sss!" It's because email is such a phenomenal modality, right? And this is the thing. This is the thing. I had somebody come to me last week, and they had something that they feel is a real B2C type of a mobile app experience. And I gotta tell you that the UX was amazing, it really was incredibly fun. And I said, "Can this just go over here to this set of software vendors, and just be a bolt on feature for now? You can get to the B2C stuff later, but I think you've got millions of dollars of enterprise revenue that's just screaming to be picked up. And no one else knows how to pick it up the way that you could. And let's start out trying to make somebody else better." And that really was the mistake.
And I think looking back on it, a couple people pushed back and said, "Well, how do you partner with these big guys?" I said, "You don't. We're going to kill them. We're going to murder them all, and take them down and burn these dinosaurs down to the ground and use their bodies for fossil fuel." And what ended up happening was we really closed ourselves off to the idea that 90% of what we built was a waste of time, it was sunk cost, move along and take the 10% that was real, and figure out a way to help these other guys be better, right?
Because they were scared of us. They were scared. They were hearing a lot about us, like you said, we were out there, we were marketing, we were selling. I mean, we were hustling. I mean, there were lots of people who thought our team was 50, 60 people and there were four of us. But so we had scared people with our proposition, and our proposition really was personalization. And what we should have done is figured out a way to just do that.
Sal Daher: To deliver that, to deliver that personalization.
Nick Zeckets: That's right.
Sal Daher: Yeah, that is very tough. We're talking to Nick Zeckets, founder of Quadwrangle, and a consultant and advisor on growing the revenue of your company, which is something he knows a whole lot about. Nick, let's synthesize what lessons you drew. Do you want to talk more about what lessons you drew from your experience at Quadwrangle?
Nick Zeckets: Yeah.
Sal Daher: You had several successful fundraises. You did a lot of stuff, and you built a lot of software. I mean, from 2011 until 2018, was it seven years you talked to a gazillion schools? An amazing operation. What kind of lessons would you like to transmit to our listeners?
“…first and foremost, and I heard it 1,000 times and I never really got it, but it was to fall in love with the problem and not the solution.”
Nick Zeckets: Yeah, I mean, first and foremost, and I heard it 1,000 times and I never really got it, but it was to fall in love with the problem and not the solution. And boy, we were just, we really got precious. Like I was saying, we really got precious about how we were going to solve the problem, not about the problem. And that really can explain a lot. And I think some of that hubris extended to a lot of how I in particular as a CEO of that business operated. There were times Sal, you were so kind to come in and sit down and say, "Hey, let's crank and work on some stuff." And I would have this great meeting with you, and then I'd walk out and then I wouldn't talk to anybody again for six months, and I'd just keep my head down.
“…we had such an incredible army of really experienced experts in a range of different things who were either investors or advisors to our business, and we just didn't ask anything of them.”
And I had a really, really hard time communicating. I had a really hard time communicating with all of our stakeholders. And I also had a really hard time, frankly, relinquishing control. We were very small for a very long time, and I gotta tell you, we had such an incredible army of really experienced experts in a range of different things who were either investors or advisors to our business, and we just didn't ask anything of them. Not because we didn't think they could do it, but because frankly, I was too proud and I didn't know how to.
Sal Daher: People don't realize that founding a company is just really the hardest thing there is to do in business. It really is so tough. It's a lonely job. It's an exhausting, tiring job. It's exhilarating. It's wonderful. And one of the common mistakes that people make is that they don't use the resources that are available to them. They're afraid of their investors, they think, "Oh, my investors are going to be this or that. They're going to be ticked off at me." No, no, no investors are in your corner.
Nick Zeckets: That's right.
Sal Daher: By and large, most investors, and I mean, there are pathological investors, I have found a few. But most investors are reasonable people, and if you ask them for help, they will be very glad to help. And there will be a handful of them who might be really helpful to you in terms of helping you craft metrics and so forth. How many investors did you ultimately have in your cap table?
Nick Zeckets: Gosh, there were probably close two dozen folks on our cap table by the time we exited.
Sal Daher: Yeah, so 20 something people, 24 people on the cap table. A lot of talent. I know some of the other investors are hugely talented people.
Nick Zeckets: Superstars.
“The sales process was there… the product wasn't ready.”
Sal Daher: Yeah, superstars. And we all believed in what you're doing, and we were awfully impressed by how capable you were to look for clients, to close clients. You closed a lot of clients, but the problem was the product just wasn't there. The sales process was there, everything else, the product wasn't ready.
Nick Zeckets: Yeah.
Sal Daher: Well, let's talk about the business you're in now. So basically, you had a company where you built a software product and then you sold them to a lot of universities, a lot of schools all across the country. Product wasn't ready but the sales effort was stellar. You were very, very, very good at finding the right people for whom this might pique their interest. Getting them to sign contracts with you, where they're paying you pretty nice sums and you were generating revenue. So you were good at creating revenue. If you're a startup that has a developed product, and you want to scale, I think your skill set is extremely valuable. So tell us what it is that you do for startups that are now in that situation?
“Oftentimes, it's just like any good advisor, it's just asking some really concrete questions.”
Nick Zeckets: Yeah. Oftentimes, it's just like any good advisor, it's just asking some really concrete questions. I think that there are a lot of founders who just don't have marketing or sales experience. And like anything, people who are of those functions and backgrounds are somewhat insular about their nomenclature and their acronyms, and they make it all sound so hard and difficult and foreign and "Oh, you could never possibly, blah, blah, blah." And it's garbage. It's absolute garbage.
I've seen people who were on the autism spectrum be remarkable sales people, because they followed process. And it was straightforward and defined, and they knew it, and they did it and they crushed their quotas. And I saw freewheeling, silver foxes out there, who were great on the golf course and always seemed like their clients, their customers loved them, and they couldn't sell a thing. So I think there's this undue mystery around how money comes into businesses, and it really is helping an organization figure out who wants this the most? Whereas our friction the lowest? And how do we optimize for limited friction against our first set of goals?
“Because everything's a referral economy at this point.”
And our goals might not necessarily be rapid revenue growth, our goals might be 20 diverse happy customers. Our goals might be people just using the darn thing and being ecstatic, which might mean that we should lean less into sales and marketing and more into our customer experience. So what is it that really matters right now? Because everything's a referral economy at this point. So I think a lot of the folks that are out there thinking about the revenue stuff, everybody has fun doing marketing, marketing is fun, just straight up. It's a great time, get lots of exposure and you get eyeballs. People lean into press and they go, "Wow, we got covered in whatever, TechCrunch." No one cares. No one has ever cared, frankly. It's a little logo with the bottom of a long landing page and it says, "Oh, they got covered in TechCrunch. I guess they have a decent PR [crosstalk 00:24:41]."
Sal Daher: Your mama cares. Your mama cares.
Nick Zeckets: Yeah.
Sal Daher: Your mama cares.
Nick Zeckets: I got the article framed behind me on the wall.
Sal Daher: But at the end of the day, what sells is the functionality, the product/market fit for a particular client and then bringing that product to all the other clients for whom there's a fit.
Nick Zeckets: That's right.
Sal Daher: Finding those people brings me back to the days when I was in the emerging market bond business. And we had a desk that spent all the time buying bonds that nobody knew what to do with, we had buyers for them. So my partner and I would figure out where to put these bonds. And we would hire people to be on the desk to be looking to buy these crazy bonds that were sitting on people's books and they were just completely, completely useless. They were dead securities, dead bonds. And they didn't pay anything, but we knew what to do with them.
“Her trick was that she was the most methodical person you could imagine… Bottom line was that she had a sales process.”
We hired people to bird-dog them and to bring them in, and then we would buy and we'd sell them. And that was the business that I did for 24 years. It was a very successful business. We made a lot of money doing that. The most successful salesperson on the desk. But it's funny, she was in the business of buying the bonds. She was selling our money and buying bonds at advantageous prices. Her trick was that she was the most methodical person you could imagine. She was very good at going through the lists and identifying who were the holders. A lot of the holders in Europe, she loved talking to European men, especially Nordic men. She was a married lady but I used to tease her all the time, "Get off the phone with your Vikings."
And she was just, I mean, she wouldn't talk too long with the Viking. Maybe she'd give three minutes with this Viking, three minutes with that Viking. And she was just very disciplined. We used to start very early talking to Europe, and she had her list down, she knew exactly who to talk to. And she raised around... I mean, it was like 80% of the business of the desk was coming from her. The 20% of this business was coming from the four other people who were there.
Nick Zeckets: Ah, it's crazy.
Sal Daher: Unbelievable. Bottom line was that she had a sales process. It kind of like crystallized for me, duh, you need a process, you need to know how to create a process that works. Can you give me generic cases of who are the clients that you had, companies that have found your services to be helpful?
Nick Zeckets: Yeah. So some of it has been founder-led growth businesses, and well, the founders have incredible passion for what it is that they do.
Sal Daher: What is it that you mean by founder-led growth?
“…the founder's out there doing the selling. The founder is the one picking up the cash. And it is almost impossible… to templatize that passion.”
Nick Zeckets: So, the founder's out there doing the selling. The founder is the one picking up the cash. And it is almost impossible, not quite impossible, but close to impossible to templatize that passion. So, you find a lot of these founders are starting to build their revenue operations, and they might have brought in an A round of funding, they got a couple million bucks, they have a mandate to start to build a revenue machine that has some dependability and scale. And you go, "You don't scale, Jenny, Sam, whatever. You just don't, you can't, and your job is going to be different now. What are you going to do? What have you been doing?"
And the thing that I find really interesting about a lot of this work, the product world has had these people called UX designers for ages. And then the customer world started to have this thing called customer experience, CX, which was just a child derivation. No one is calling anything in the revenue world, RX, but there absolutely is one. It's an absolute mandate, and people aren't behaving that way, and you want to design the experience. And what's interesting is the product has to come back here. And the best way to kind of relate how that's happening and the companies that are doing it best, it's the Freemium SaaS model.
Freemium says, I'm going to pull the product into marketing, and I'm going to have this whole experience is going to come along, and people are going to be able to go in and they're going to get to experience and we're going to follow up with emails, and we're going to train them, and we're going to make sure that we know whether or not they've hit a point of success or things that are predictive of conversion. And then on and on and on and on and on. And the thing that's wonderful about all of that when you start to break it down that way, the best founders are particularly good at this. It's math and experimentation. And the experiments there just aren't that many of them, right? There's half a dozen at any stage that are really going to make a difference. Subject line, CTA language, whatever.
Sal Daher: CTA, call to action.
Nick Zeckets: It stays right.
Sal Daher: A subject line is the subject line of the email. You've got to sweat the details on that to make sure that it's.
Nick Zeckets: It stays right.
Sal Daher: Sort of perfecting your methodology for creating those things sustainably because it's a process, it's not a one-time thing. One of the things I like to say, I have a trick question. Do you know who Stephen Hawking was?
Nick Zeckets: Of course.
Sal Daher: Brilliant physicist. And then do you know who Willy Loman was? He was a mediocre salesman from Death of a Salesman or whatever.
Nick Zeckets: Oh, yeah. I'm setting the context to scientists. I'm like, "I don't know."
Sal Daher: Willy Loman, or Loman, he was a mediocre sales guy at the end of his rope. And ultimately to kind of stake his side of the business he gets an insurance policy and he kills himself to leave money for his son. The point I always like to make is that if I had to put my money on who would be a better fundraiser or who would be a better salesperson, I would put my money on Willy Loman who was a mediocre sales person, because he had a sales process and so forth. Then on Stephen Hawking, who was a brilliant physicist, but it was somebody who couldn't take rejection. When you're somebody who is so feted, who's so celebrated, it is very hard for you to be told no. And rejection is a staple of salesmanship. And you counter rejection by having a sales process.
Nick Zeckets: That's right.
Sal Daher: It takes away that pain of selling and makes it into a game. It's gamification of sales. And this to me, calls to mind the importance. And I'm always telling founders who are raising money. Because the founders that I'm involved with, nowadays, I'm focusing more and more on just companies that are startups that are doing biotech, life science, so there's no marketing involved. Yeah, I mean, they basically they have to find a strategic partnership with a big player. So to that extent there's some marketing, but very little. But still, the most important job of selling is raising money, and they have to have a sales process.
Would you like to talk about some cases where your approach made a big difference for the startup?
“…remarkably common amongst startups is a real... In small companies in general, is a lack of belief in their own value.”
Nick Zeckets: Yeah. So, there was a recent example, spent some time... Sometimes it's the low hanging fruit, Sal. And one of the things that I find is remarkably common amongst startups is a real... In small companies in general, is a lack of belief in their own value. And I think that a lot of pricing is very, very, very weak.
Sal Daher: Yes, it's a common place that startups underprice their product.
Nick Zeckets: Dramatically, dramatically. So we went into a place, had a handful of customer calls and said, "What does this do for you? And you've been a customer for two or three years, and what do you think? And what does it mean? What's the impact? How do you measure it? Et cetera, et cetera." And then I would come back two weeks later, and I'd say, "I know that you've been paying X. My guess is you would renew it four X. What if I told you that you couldn't unless it was four X?" And you start to get these responses of actually, of them surprised by how ridiculously cheap this is over time. I actually get questions about how valid this investment is.
Sal Daher: What is wrong with this?
Nick Zeckets: Because it's so low, it's unbelievable. But literally, if you don't price yourself high enough, you actually look like a joke, you get relegated to junior level staff who are doing a $50 a month credit card transaction. And look, if you can do $50 a month, a million times a month, okay, whatever, congratulations, you've got a blockbuster, that's great. But frankly, a lot of the work that I do is in the enterprise space, that just ain't going to fly. Unless you've got a pathway to get to a solid five figures with growth opportunity, preferably to six if you're an enterprise, you don't have anything. And if you can't get there, you should get out as fast as you can, you definitely shouldn't raise because it's not a thing.
So, or it could be that you've got products coming or whatever, but I really think that if you think your product is so low in value that it can't get above 50, 100 bucks a month, you've got to really rethink where you're at. And luckily, I went in and saw that, and with renewals alone ended up watching that company see about 100% growth in month over month revenue, just because the renewals are happening month in and month out. And in some other scenarios, it's a lot about, I think there's an assumption particularly at the A stage or the real beefy seed stage raise.
“there's a lot of this stuff that between software and freelancers and on-demand services, you can look like an absolute marketing juggernaut.”
If you've raised a couple million dollars, there's this archetype of a revenue operation that a lot of people think that they need. They've got somebody fairly senior, they've got some heavy hitter sales people, they've got a marketing department, it's got a content team. And you got this person over there and you got a social person. I gotta tell you, there's a lot of this stuff that between software and freelancers and on-demand services, you can look like an absolute marketing juggernaut. Absolute marketing juggernaut. There are interns out there who could pump out a world class white paper for you, every week or two. Kids, 15 bucks an hour. They're writing for a living right now, right?
Sal Daher: Yap.
Nick Zeckets: Get them, use them. And so I think there's this-
Sal Daher: Without adding to the overhead.
Nick Zeckets: Yes, keep it cheap, and frankly, and don't put any of them on payroll. You don't have to. There's incredible services out there that market or hire, and Meyple, M-E-Y-P-L-E.com, and all these services where you've got people who will create blog posts, email onboarding processes, et cetera, et cetera, et cetera. And you can have them work for you for 10 to 15 hours a week for like 1,500 bucks a month. It's unbelievably inexpensive. I never thought that this would be possible.
But I tell you, just like stuff like AWS and the cloud has made it cheaper to build a product and deploy software, these services that are out there, if you recognize that the goal is not to write 47 freaking blog posts a day, the goal is to write one great 1,500-word article a week, because that's what's going to work for you to get SEO up. The amount of money that it costs to actually get a revenue operation with some dependability and some scale is a fraction of what it used to be even just a couple of years ago.
When I was at Quadwrangle, we used interns out the wazoo. I mean, if you came by Quadwrangle during the summer we had six kids running around in circles learning as much as I could possibly force them to learn and treating them like they were full time adult employees. And these kids would rise to the occasion more often than not. So I tell you, interns, pay them. The great ones want 15 bucks an hour or 20. Give it to them, that's cheaper than anything else you're going to find. They will kill for you.
“And otherwise, these on-demand services are incredible. It just doesn't cost that much, and so I love modeling that out for companies.”
And otherwise, these on-demand services are incredible. It just doesn't cost that much, and so I love modeling that out for companies. I love saying, "Okay, let's see what we could do with 50 grand, 100 grand, 400 grand based upon your next raise and what your revenue looks like." Because I'm also sensitive as a former founder who stared down that upcoming payroll, and how terrible it feels not knowing if you're going to make it and having to turn to your team, how small it might be and say, "Guys, I don't know if we're going to get a paycheck in a week or two." That's a horrible feeling. So I'm really sensitive to that. And the good news is you can be sensitive and grow like heck if you're really smart about where you're putting your dollars.
Sal Daher: Tremendous. Okay, let's talk a little bit about your background and how you came to start Quadwrangle. Where did you grow up? Hobbies, sports, any of those?
Nick Zeckets: So, grew up in Atlanta, Georgia. Bounced around after that. Grew up a swimmer. Swam in college, 2000 Olympic Trials qualifier, didn't go, shoulders blew. And the day that my shoulders blew was the first best day I ever had in college. I realized that college wasn't swimming, that college was actually a blast. And so did that, and then had an opportunity to bounce around a ton. Kentucky and Arizona and California and D.C. and Illinois, and then finally Boston. And along the way had a whole bunch of really, really kind of interesting fun jobs. Really interesting jobs, but it's been a journeyman, but now I'm a Bostonian 100%. I'm here, a home, a family, and all those kinds of things. So this is where my anchor has dropped.
Sal Daher: Where did it strike you that you wanted to have your own company, that you wanted to start your company?
“…I was a fairly prolific hustler in high school, and even in elementary school.”
Nick Zeckets: Oh, geez. Well, quite frankly, I was a fairly prolific hustler in high school, and even in elementary school. I remember we had this fundraiser that we would do every year for my swim team. And I would go home every night after swim practice, I would crack open the directory for my school and I would start at the As, and I would call every parent at the entire school every night. And when I got one on the phone, I'd mark them off. And they'd either told me they were going to send me some money or they weren't. I'd mark them off and then I'd move on. And I go back through when I got done and I call the ones that hadn't picked up the phone and I would go-
Sal Daher: Oh, my gosh.
Nick Zeckets: And I would go to school and these kids would say, "Dude, what are you doing? You called my parents today at 8:30 at night." And I said, "Your parents at 8:30 at night are watching Dallas on TV and I tell you what they're not doing, thinking about anything. They are thrilled that a nine-year-old is giving them a call and pitching them at 8:30 at night." And that lived with me forever. It was always a place of comfort, but I believed in what we were doing. I believed that me swimming was important to me and that the other kids should be able to do it.
Sal Daher: Absolutely, yeah. As a team.
Nick Zeckets: So then, kind of got out, had a number of jobs and was always given a good bit of latitude in doing the work that I was doing. And frankly was at South by Southwest one year for work. I was at a youth insights consultancy at the time. So we were-
Sal Daher: The job you were doing was mostly the outside sales, inside sales? What was sort of thing?
Nick Zeckets: So, it was I owned revenue. So we had marketing and sales in my team, customer experience in my team and then strategy.
Sal Daher: Marketing sales. So you were responsible for revenue?
Nick Zeckets: Yep. Yep. And a couple of new product introductions, which was exciting. And I was down in Austin, my eighth grade science teacher lived there, and said, "We should get a beer." And I said, "This is the weirdest fun thing I've done in a long time." We had a beer, and we started talking about stuff. And the juices from South by were kind of flowing through everybody, and we conceptualized this idea of an engagement tool for education, and it just, it seemed like it was worth doing, and just went from there.
Sal Daher: Wow. That's a great story. That's a great story.
Nick Zeckets: Yeah.
Sal Daher: As we wrap up our interview, if you have any other thoughts that you want to leave to our audience of founders of startups, investors in startups, people who are thinking of starting a startup, what would you like to communicate to them?
Nick Zeckets: I would say that the word real has to exist at all times in all ways. If your customers are curious about how real your proposition is, you got to sit down and think about it. If your potential or current investors wonder how real your prospects are, you've got to sit down and really think about it. And then once you've thought about it, whether you hit a wall, or you figured it out, you got to talk about it. And I gotta tell you, I didn't understand it, I really didn't understand it. And I've got a new thing going now, another martech SaaS company. This time it has no vertical specificity, and it's informed by Quadwrangle with the idea that you got to make other stuff better.
“…if we shine a light on the bad stuff as soon as we can identify that we've got bad stuff, it's going to kill that mold.”
And there is a weekly newsletter that goes out to everybody who cares about what we're doing, which is a teeny tiny group right now, that is highly detailed, all the metrics that we've all agreed that we care about, discussions about what seems like it's breaking, what seems like it's working, the things to be happy about. Always with an upbeat, right? But hey, if we shine a light on the bad stuff as soon as we can identify that we've got bad stuff, it's going to kill that mold. And so that's really kind of our belief now. And I think anybody should be out there doing that.
And I think if an investor is interested in investing in a company, God, hey, can I get the last two investor updates? If the time between those two was really wide, if the width was way out here beyond the size of my screen capture here, you got a problem. I'd run.
Sal Daher: I second that entirely, everything that you said, it makes perfect sense. Maintaining that communication with your investor base. Funny, I had a founder tell me, "I'm not going to do updates, because only 50% of the emails get opened." I said, "50%, you have no idea." This someone in the life sciences. "50% open your email, and the other 50% are looking at your subject line to see if things are okay or not okay, whatever. So make sure you put in your subject line, summarize what you're saying in your subject, get your message across in the subject line."
Nick Zeckets: That's right.
Sal Daher: There's so much, that a little bit of marketing goes a long, long way.
Nick Zeckets: Long way.
Sal Daher: You don't have to be Nick Zeckets in sales, you can be Willy Loman and you can follow...
“Follow the process.”
Nick Zeckets: Follow the process. I gotta tell you, the COO for this new thing also happens to be my fiancé, she's phenomenally smart. And you might be having a whole other set of concerns about my own self-care about inviting that kind of friction into a relationship, we actually work really well together.
Sal Daher: Yeah, okay.
Nick Zeckets: And I said to her a couple of weeks ago. I said, "God, there's a couple of people on this teeny, tiny founding team who just aren't opening the weekly update emails." And she said, "Listen, worst case scenario, if no one opens that email for the next 10 weeks in a row, it is such a profoundly valuable exercise for the CEO to go through and look at the data and think about what's working and what's not working."
Sal Daher: This is a wise woman.
Nick Zeckets: "And identify it, talk about it." She is brilliant. I couldn't do this without her.
Sal Daher: That's the other half. The process, the discipline of presenting it. But Nick, a bit of advice for you. If you're raising money for your next venture, and your co-founder and you are intimate, put that upfront. Explain to everybody. Make that clear. Explain everybody, explain that. Because don't let it be a surprise later on, like two months after they invested, "Whoa, did you hear, Nick and his co-founder are a couple?"
Nick Zeckets: That's right. That's right. Yeah, I gotta tell you we're-
Sal Daher: I've had the experience. I've had the experience, and it's not a good thing.
“Again, it's the truth will set you free in all things.”
Nick Zeckets: No, no, no. Again, it's the truth will set you free in all things. And if anybody's uncomfortable-
Sal Daher: Exactly, yeah.
Nick Zeckets: I'd rather them not get on board. But I will say we're at a place where just our front end website hasn't even gone live and we're closing some five figure deals on something that we already know works, and having a lot of fun. So I don't suspect we're going to be out there raising anytime soon. And the numbers at the point that we ever would optimistically would be the type of thing where no one's going to care.
Sal Daher: It's a sad reality of investing that very often the best companies are never investable, privately successful. Anyway, Nick Zeckets, founder of Quadwrangle, maestro of generating revenue in a company. Thank you very much for making time to be on the Angel Invest Boston podcast.
Nick Zeckets: Thank you so much. It was an honor.
Sal Daher: Tremendous. This is Angel Invest Boston. I'm Sal Daher.
I'm glad you were able to join us. Our engineer is Raul Rosa. Our theme was composed by John McKusick. Our graphic design is by Katharine Woodman-Maynard. Our host is coached by Grace Daher.