Trying to create a bike startup, repeat founder Tivan Amour builds a texting tool that quickly outgrows the original business and is then launched as an independent company. Listen to the founding story of Tone and how it’s allowing brands to speak directly to customers.
A great chat with one of my favorite founders.
Highlights include:
Sal Daher Introduces Tivan Amour, Founder of Tone
How Tone / Save My Sales Was Born Out of Fortified Bike
The Story of Kyle the Super Bike Salesman
Kyle Stumbles Upon the Idea of Texting Bike Clients Who Don’t Complete the Sale
Texting Proves Out as a Massive Driver of Sales
“…so, we turned that potential lost sale that would have been $750 into an actual conversion within a couple of days that was worth 50% more, right?”
Friends in e-Commerce Urged Tivan to Turn the Texting Platform into a Business
“In Techstars, one of the mantras that I think was drilled into us was to sort of be open to serendipity and do things that don't scale…”
“Lo and behold, in the first month we started getting our first couple thousand-dollar paychecks from brands that we were making tens of thousands of dollars for.”
The Texting Platform Starts Becoming More Scalable
Tivan Decides to Sell the Still-Growing and Profitable Bike Business and Focus Just on the Texting Platform
“…from those initial 50 beta customers to about 10x, so we have just under 600 customers that we do this for.”
“You have to have customers who tend to like being texted, which from what we can tell seems to be most brands that we've talked to. There's very few where customers don't enjoy the instant communication.”
“We figured out how to automate our first 25% of all messages in the platform in our first version of AI, and that was in 2019.”
“Almost 50% of the interactions are now being done by AI and the other 50% by a human agent.”
“We think that the key component here is that there's always a human readily available to make sure that the authenticity is still there…”
“…if anyone ever feels like they're talking to a chatbot with us, we missed the mark.”
“We believe that people buy from people they know, and by combining humans and the right tech, we can create that experience for every business.”
Tone’s VC Raise
“Over the last 15 years, a lot of it has become automated, so messages that you're getting from businesses are kind of preprogrammed and when you fall into a certain segment of customer, you'll just get that message.”
“What we're actually doing is creating conversations with these customers, and it feels very different than getting that marketing automation email from a business or even a marketing automation text message…”
Tone Allows for Two-Way Conversation Between the Brand and the Buyer
“Customers are going to decide how they want to engage with you, and it's up to you to leave every door and window open…”
“There's text message marketing and that's everyone, and then there's text message relationship automation, which is what we do.”
How Tivan Navigated Taking a New Business Out of an Existing Business
“…so when people call me and say, "Hey, I'm thinking about starting this hardware company or this eCommerce brand, here's the knick-knack that we sell. I know that you did a lot of manufacturing in China and would love your ideas on it." My first question is, can you think of a technology startup that you'd rather start?”
“…the biggest learning for us was how hard cash flow is in consumer brands. For us, for every $1 million that we wanted to make, we had to sink $300,000 at least in inventory, and then sit on it for six to eight months before we even got to payback.”
“We weren't necessarily the ones that should have been running a business like that, and it's great to be kind of in a supporting role that I think better fits us.”
Transcript of Tivan Amour, “Text Like a Human”
Sal Daher Introduces Tivan Amour, Founder of Tone
Sal Daher: Welcome to the Angel Invest Boston podcast. I'm Sal Daher, an angel investor who delights in then technology companies being built in Boston's singular startup ecosystem. You see, Boston is a place that's just loaded with universities and full of ideas, and as such it exports ideas and imports capital. It's an idea rich capital, poor environment, which allows me as an early stage investor the opportunity to invest in really intriguing companies. We're going to be talking to the founder of one of these companies today, and he's been in the podcast before. His name is Tivan Amour. Welcome, Tivan.
Tivan Amour: Hey, Sal. Thanks for having me back.
Sal Daher: Excellent. I originally invested in Tivan’s company that was called Fortified Bike, and at the time that I did the interview, discussed Fortified Bike and we did a biography. If you look for the episode titled, Tivan Amour - Growth Rider, you will hear some very interesting material on Tivan's tremendous interesting background. In building Fortified Bike, Tivan and stumbled upon a clever idea, which he then developed and became a different company, which is called Tone, and tonemessaging.com is the domain name. People who were investors in that company had the choice to stay or take additional stakes in the new company, and the original company was sold. Those of us who wanted to participate further did do so as I did, and so now I want Tivan tell us the Tone story. Tivan, tell us the story.
Tivan Amour: Sure. Where should I start? Where did we leave off last?
Sal Daher: Well, why don't you tell us a little bit about what Fortified Bike was doing and then how you stumbled onto the idea.
How Tone / Save My Sales Was Born Out of Fortified Bike
Tivan Amour: Sure. I'll start from the beginning. To start where we left off last time, we spoke a couple of years ago, Fortifies had just over 30,000 customers worldwide, riding our bikes, using our theft resistant lights and other accessories. We'd done that by running three or four successful kick-starters at that point. We'd raised money from a bunch of local angel investors. We did about 85% of our revenue online, and then about 15% through a storefront downtown in Boston that we had for about three years. A weird thing happened to me in about 2015, end of 2015, beginning of 2016. I kept getting emails and calls from this guy named Kyle. It was right around the time we were starting to ramp up our sales through this new bike shop that we'd opened up. The emails went something like this.
Tivan Amour: They were like, "Hey, I currently worked for this bike startup in DC, and I'm really good at making bikes and I'm really good at selling bikes. I'm doing all of our ads and I'm basically just the main operations guy at this company, but things aren't really going in the right direction. I've been watching you guys for a long time, and I want to come and sell for you and do anything I can to be part of this cool startup." At first, I kind of dismissed it because I said we're not really hiring. We don't really need anyone. We've got it covered, but this guy was persistent. A couple of days later, I got an email and a call and then he started texting me. It just so happened that my girlfriend at the time, now my wife was living in DC kind of nearby-
Sal Daher: Congratulations!
Tivan Amour: Thank you. I guess that has changed.
Sal Daher: The last time I saw you face-to-face, you were just like gaga crazy about her. You said, "Sal, you wouldn't believe what's happening."
Tivan Amour: Is that right?
Sal Daher: Yeah.
Tivan Amour: Do you have that on record? Did I say that on the podcast?
Sal Daher: No, not on the podcast, but when we met face-to-face. If you want, we can take that out.
Tivan Amour: That's great, no, no.
Sal Daher: Your tough hombre image is going to be destroyed by that.
The Story of Kyle the Super Bike Salesman
Tivan Amour: Oh, it's shattered, shattered. Yes, I was dating my future wife and I just started visiting her in DC, and it just so happened that right around the time Kyle had called me for the nth time I was on my way to DC to see her. I made a point to stop by the shop that Kyle was selling it, and this was the most amazing thing I'd ever seen. I'm in a small guest bedroom right now recording this, and the shop that I walked into was about the size of this guest bedroom. I mean, you can fit a bed in here and two side tables and that's it. Kyle had sort of built this out for the company. It had some nice salvaged wood on the walls kind of a cool startupy feel, and he just had one bike stand in the middle of the room and this electric bike that was their namesake and this new thing, right?
Tivan Amour: They had kickstarted this electric bike. That a company at the time was called Ride. Nobody in the company knew how to build the bikes, Kyle basically taken their idea and turned it into an actual business, so he was building the bikes. He was running Facebook ads to get people to walk into the store. Then he was getting them to test ride them, and then he was selling them. He was maintaining a warehouse a couple of blocks away where he was building all the bikes and then shipping all their eCommerce orders. I was just really impressed, not as much with the bike itself, but just with what he was able to do as a one man band. I said, "All right. We didn't really necessarily need a salesperson or a mechanic, but you've definitely got some sort of magic with you, so we're just going to take a chance on you."
Kyle Stumbles Upon the Idea of Texting Bike Clients Who Don’t Complete the Sale
Tivan Amour: We ended up hiring Kyle about a month later or something, and he just moves to Boston on a whim and things go really well that next three months or so. We're getting right into the summer, and Kyle sells hundreds of bikes out of our store over that summer. He's doing exactly what he was doing at the other store, just at a higher volume. He was running all of our ads. He was building most of our bikes. He was doing maintenance on all the bikes he had sold. Then as the summer started to die down and bike sales started to go slower, Kyle being the hustler that he was came to me and said, "Hey, so we need to find other ways to get people to buy it because the ads aren't performing as well and I just need to keep this volume up."
Tivan Amour: I had this idea. A lot of the people who don't buy from me right away, what I'll do is I'll get them to give me their cell phone numbers so that we can text, and then over the course of a few days, I'll convince them to buy a bike, or if they're waiting for inventory to come in, I'll text them as soon as it comes in. He's like, "I think this text message thing could be big. What if I started texting people that were also shopping online?" We've got all these people who are abandoning their order when they get really far into the funnel. They'll take a $700 bike, a helmet, lights. They'll put all this stuff in a cart, and so it's very clear they have an intention to buy, but then for whatever reason when they get to the payment page, they just leave and they're leaving their cell phone numbers.
Tivan Amour: What if we started letting them opt in to be texted and then I could text them. I said, "Okay. Well, I don't know if it's going to work. My gut says that people are going to be kind of annoyed by this, but let's just try it." We set up a little test. We went to our little checkout page on the Shopify store that we had, and we made it so that you could opt in to put your number in the phone field, like put your number in here, if you want our sales team to get in touch with you kind of thing. What Kyle would do is every couple hours, he would go into all the people that were coming through our store, and he would find the people who had opted in to receive messages and who hadn't ordered yet, and he would just start texting with them.
Texting Proves Out as a Massive Driver of Sales
Tivan Amour: The first message would say something like, "Hey Sarah, it's Kyle from Fortified. I see you're looking at our single-speed, great choice. Do you have any questions or do you want me to see if I can get you a discount?" Three to four sentences like that, and sure enough, the first message that Kyle sent was actually to a woman named Suzanne. I remember really clearly it was on a Friday. She had a $750 bike in her cart, and it was a medium bike. We had small, medium and large. When Kyle texted her, she responded right away. Kyle told me like, "Hey, that first text which I sent out, I'm talking to her right now." I said, "Oh, cool. Let me know how it goes."
Tivan Amour: That was Friday. On Sunday night, I see an $1,100 order come through. I noticed that the name matches, right? It's Suzanne. I sent Kyle a message, I'm like, "Is that the person?" He's like, "Yeah." I'm like, "Show me the conversation." It was like four or five messages that Kyle had to send, and the reason that she had abandoned was not because she forgot, but instead it was because she was actually quite small. I think she was 5'5” or 5'6” maybe, and she wasn't sure if she needed a medium or a small bike. She didn't have the time to kind of go look around and see whether or not it was the right bike for her, so she kind of just let it sit. Then when Kyle reached out, her first question was, "Hey, which size should I get?" Kyle answered that.
“…so, we turned that potential lost sale that would have been $750 into an actual conversion within a couple of days that was worth 50% more, right?”
Tivan Amour: Then Kyle being the consummate business person that he is said, "By the way, where are you going to be riding this? Are you going to be riding every day in the rain? Do you have a helmet already? Are you going to be riding at night?" All the qualifying questions ended up helping her find all of the extra accessories that she needed, so we turned that potential lost sale that would have been $750 into an actual conversion within a couple of days that was worth 50% more, right? That was the aha moment for us. We felt like we might be onto something here. We might be onto a secret, so let's just keep going. Let's try this again. Sure enough, Kyle was closing one of these deals every other day, and these were deals that were just disappearing for us prior to that.
Tivan Amour: Over the course of about two months, we said, let's run an actual test to see what the impact is on our business and let's start automating some of this for Kyle. Let's make that initial message become an automated message. Let's give Kyle some templates so that it's easier for him to do this. Let's give him an interface, so he can do this on his computer, instead of just on his phone. We basically built like a whole little system for ourselves just to do this and make an extra five figures of revenue every month because of course that was worth it to us.
Friends in e-Commerce Urged Tivan to Turn the Texting Platform into a Business
Tivan Amour: Then we happened to brag about it to a couple of our investors like you and a couple of friends who are also running eCommerce businesses, and of course, you know what the investors said. They said, "You got to start this as a company." Our friends said something interesting, so we thought we could just show our friends how to do this and sort of just be consultants of theirs and just help them. We weren't really trying to make any money or anything, but we kept getting the same thing from our friends. They said, "We thought about text message, but we don't really have the resources to do it right now." For some of my friends, I said, "You don't understand. This is going to make you a quarter million dollars a year. You got to do this."
Tivan Amour: They said, "Okay. Well, we like what you're doing with the whole conversation that Kyle's having, but there's no way our customer service agents could do that. They're already overwhelmed. It takes them hours to get back to customers and they're not really salespeople. They're just kind of answering questions." They said, "Look, if you really think this is going to make us a lot of money and you think it's worth it, we want you to do it all. We want you to set up the text message system, and then we want Kyle to be our sales guy." My first response was no way, right? We've got a bike business to run, but then I remembered a mantra that I think we learned early on in Techstars, which we did in 2014. I think we might have mentioned that in our last call.
Sal Daher: Yes. In the podcast recorded in studio. It wasn't a call.
Tivan Amour: Oh, that's right. That's right. It's been so long since I've been outside and everything is now a call.
Sal Daher: Yeah.
“In Techstars, one of the mantras that I think was drilled into us was to sort of be open to serendipity and do things that don't scale…”
Tivan Amour: In Techstars, one of the mantras that I think was drilled into us was to sort of be open to serendipity and do things that don't scale, right? Some of the best businesses were started sort of in the ashes of other business or unknowingly while running another business as you start to sort of discover pains.
Sal Daher: Right, right, or try stuff that doesn't scale initially.
Tivan Amour: Exactly.
Sal Daher: Right.
“Lo and behold, in the first month we started getting our first couple thousand-dollar paychecks from brands that we were making tens of thousands of dollars for.”
Tivan Amour: In this case, we said somebody is offering us money to do something. It seems like it's not something we'd be able to scale, but if there's one of these companies that wants to offer us this, we know that there are millions of companies like this in the US alone, so maybe we should just follow our noses here and see what happens. We said, "Sure. Kyle can be your sales guy." For the first couple companies that we did this for, it wasn't very much volume. He would have to send a few text messages a day maybe. Manageable, and it was worth an hour of his time. Lo and behold, in the first month we started getting our first couple thousand dollar paychecks from brands that we were making tens of thousands of dollars for.
Tivan Amour: We said there's something here, and it took us about a month or two to realize this is a thing. It should probably be its own company soon, but the bike business was still growing about 40 or 50% year over year, so the decision we had to make was do we just scrap four years of work and start working on this very nascent texting or do we keep growing this bike business, which has been a labor of love and people are still really happy with?
Sal Daher: Yeah. I mean, you had a valuable business, a few thousand dollars a month. The same time, the bike business was growing 40% a year, and then you have to kind of figure out what to do.
Tivan Amour: Yeah. The first step was we kind of just let things snowball themselves to prove that there was actually opportunity here. Kyle was doing some sales for a couple of businesses just in the background. Then at a certain point we realized Kyle can't do this himself once we had our first five brands, and this is just from our network, just people who heard about us. Then we said let's see if we can hire a salesperson to do this, so we start looking for customer support contractors that also have a sales lane, and we started testing them. Got our first one, and then of course we scale to our next 10 brands that are coming in. We've got a little rinky dink website up that allows you to start texting with one of our sales agents just to see what it feels like. Then by the end of the year, two things have happened. One, we realized we need a bunch of salespeople, and there's kind of a predictable growth trajectory to how many sales people we need.
Sal Daher: You found Kyle's limit, ultimate limit.
Tivan Amour: Yeah. We found people who were better at this than Kyle.
Sal Daher: Oh wow.
The Texting Platform Starts Becoming More Scalable
Tivan Amour: Perhaps not in the sales strategy, but Kyle then just starts building a team of people and managing them and teaching them how to sell, but these are people who are faster typers, have better grammar, are used to doing this, have specialized in some sort of online customer support or sales. We actually ended up being able to make it more scalable. At the same time, we start building a dashboard that allows these people to actually do this with the strength 10 or 20 people, as opposed to just manually typing things. Those are kind of the two things that are happening in unison. We're adding more sales people and we're actually building a platform for them to use. Then by the end of the year, we say this is a real business for sure.
Tivan Decides to Sell the Still-Growing and Profitable Bike Business and Focus Just on the Texting Platform
Tivan Amour: We've got 10, 20, 30, 40 companies that are using it over the course of the last six months, and everyone's sticking with us and we're making them increasingly more money, but the bike business was still growing at 40% year over year. Then of course this business was accelerating really fast, so we decided we were going to split the two businesses, raise money for this new business and then keep Fortified growing. Then over the course of the next year, Fortified hit profitability and we ended up selling it to a small private equity firm in 2019, and then we were able to fully focus on this new text messaging business. Then in the beginning of 2018, we raised our first pre-seed round for this business, which at the time we called it a very, very punny name, just because it was the first thing that came to our minds as we were building our first invoice. We called it, SMS, Save My Sales.
Sal Daher: It was at hand. The name was at hand.
“…from those initial 50 beta customers to about 10x, so we have just under 600 customers that we do this for.”
Tivan Amour: I mean, we were forced by the fact that we needed to write an invoice, so we just came up with the name on the spot. Since then we've grown from those initial 50 beta customers to about 10x, so we have just under 600 customers that we do this for. I'm all still in eCommerce. We text with hundreds of thousands of shoppers every single month, and we produce millions upon millions every month for these brands for whom we basically become the voice of the brand. We are still that Kyle at Fortified that you texted with whenever you have a question or whenever you're looking to buy something or whatever. You just kind of need a friend at the brand to talk to you.
Sal Daher: Oh, pretty cool. Are you still just at Shopify or have you gone in other directions?
“You have to have customers who tend to like being texted, which from what we can tell seems to be most brands that we've talked to. There's very few where customers don't enjoy the instant communication.”
Tivan Amour: Now we have an integration with Magento as well, and then we also are able to integrate with pretty much any eCommerce platform, like a general integration as well. We're pretty much agnostic. The only thing that matters is that as a brand, you have to want to conversationally engage your customers. You have to have customers who tend to like being texted, which from what we can tell seems to be most brands that we've talked to. There's very few where customers don't enjoy the instant communication.
Sal Daher: Yeah. Would you feel comfortable talking about the extent to which you've brought AI into this?
Tivan Amour: Absolutely. If you recall the version one of this was one Kyle texting for one brand.
Sal Daher: Right, right.
“We figured out how to automate our first 25% of all messages in the platform in our first version of AI, and that was in 2019.”
Tivan Amour: It's pretty easy to see how that works. By the time we got to our first few brands, we needed at least one extra sales person to keep up with the demand. By the time we got to our first 50 to 100, we needed several people, and we were getting more and more efficient by creating the right sort of dashboard and templates for these people. Then when we got to our first few hundred, we realized there's a lot of automation that can save people time with templates that are being used often, answers that we give very, very often and are pretty easy to predict when a human doesn't necessarily need to put their eyes on it. We figured out how to automate our first 25% of all messages in the platform in our first version of AI, and that was in 2019.
Sal Daher: Yeah. That's about the time that I saw you at Tatte's in Harvard Square.
Tivan Amour: That call we had in Tatte's?
Sal Daher: No, it was a face-to-face meeting.
Tivan Amour: I don't know what you're talking about. I don't understand.
Sal Daher: Yeah, exactly. Oh yeah, we used to meet face-to-face. They used to be this whole thing about face-to-face meetings in the old era before COVID-19. At that time was 25%, and where are we today?
Tivan Amour: Now, we are close to double that. It depends on a daily basis, depending on what kind of volume we're doing, but we've rapidly increased the percentage of which we use AI for.
“Almost 50% of the interactions are now being done by AI and the other 50% by a human agent.”
Sal Daher: Almost 50% of the interactions are now being done by AI and the other 50% by a human agent.
“We think that the key component here is that there's always a human readily available to make sure that the authenticity is still there…”
Tivan Amour: That's right. We think that the key component here is that there's always a human readily available to make sure that the authenticity is still there, right? We use humans to make sure that it's always authentic, and we use AI to make sure that we can actually scale this so that every business in the world can use it.
Sal Daher: Are you familiar with Groucho Marx's version of the Turing Test?
Tivan Amour: No.
Sal Daher: Authenticity is everything. If you can fake that, you've got it made.
Tivan Amour: That's great.
Sal Daher: If can’t tell it's a machine, then it's for real. You've met the Turing Test.
“…if anyone ever feels like they're talking to a chatbot with us, we missed the mark.”
Tivan Amour: Our philosophy on AI and chatbots in general was if anyone ever feels like they're talking to a chatbot with us, we missed the mark. This really needs to feel like you've walked into your local retail store and you're talking to Kyle at the local bike shop. Kyle isn't just there to answer your questions, he knows you from the last time that you guys spoke and he's got this relationship with you that surpasses the normal kind of relationship that we're used to when we go to a website, we have the chatbot popup, or maybe it's a live agent popup, but it's not like you... I mean, you probably have been on a website recently and chatted with somebody in support through a chat.
Sal Daher: Yeah.
Tivan Amour: What was the name of the last person that you chatted with on a site?
Sal Daher: It was not Kyle.
Tivan Amour: Do you know the name?
Sal Daher: No.
Tivan Amour: You don't remember it?
Sal Daher: No.
Tivan Amour: Have you talked to them since?
Sal Daher: No.
“We believe that people buy from people they know, and by combining humans and the right tech, we can create that experience for every business.”
Tivan Amour: That's kind of the antithesis of the future that we're trying to build here, right? We believe that everybody should have a few Kyles in their pocket, right? With all their favorite brands, you should have Kyle at Fortified Bike, you should have Sarah at Usual Ones, you should have Jenny at some other place. Within a couple of minutes, every time you text them, they've got exactly what you need. We believe that people buy from people they know, and by combining humans and the right tech, we can create that experience for every business.
Sal Daher: Sounds very promising. Very promising.
Tivan Amour: We think so.
Tone’s VC Raise
Sal Daher: That is really cool. I've been looking forward to this. Basically, it was more than a year ago last time I saw you, and you've been extremely busy. You did a VC raise since then, and now you're off to the races. Do you want to talk about your funding at all?
Tivan Amour: Today, we've raised $3 million in seed money led by Bling Capital in SF, and One Way Ventures here in Boston led by Semyon, our managing director from Techstars back in the day.
Sal Daher: Oh great. He saw the good horse flesh. Good. That's very good. What do you see Tone doing in five years? Where do you expect to be?
Tivan Amour: Right now, we've got our first several hundred companies that we're doing this for. The next few years are really dedicated to just making sure that we can create this experience in as many places as possible. Certainly, there's a lot of growth to do in eCommerce with the three million eCommerce businesses that we could serve right here in the US. We also have plenty of other businesses that come to us and say, "Hey, we've got really high-intent customers that we just can't follow up with quickly enough. All of them gladly gave their cell phone numbers, but we just don't have the tech or the HR power to actually follow up with these people." Really, I mean, if you think about generally speaking, businesses have been adopting this concept of marketing automation for a long time.
“Over the last 15 years, a lot of it has become automated, so messages that you're getting from businesses are kind of preprogrammed and when you fall into a certain segment of customer, you'll just get that message.”
Tivan Amour: It used to be that 10, 15 years ago, any email you received from a business was likely initiated by human. Over the last 15 years, a lot of it has become automated, so messages that you're getting from businesses are kind of preprogrammed and when you fall into a certain segment of customer, you'll just get that message.
Sal Daher: Thanks to HubSpot, yeah.
Tivan Amour: Thanks to HubSpot, Salesforce, Mailchimp for SMB businesses. What's interesting is that's now become the status quo, but what we're seeing happening is certainly customers are really, really responding positively to when they get a text message that's ostensibly from a human and when they have that human connection. We, for a long time, have thought we have to add some marketing automation features to our feature set to make sure that this is scalable and that we can kind of do what businesses expect to do in terms of outreach to customers.
“What we're actually doing is creating conversations with these customers, and it feels very different than getting that marketing automation email from a business or even a marketing automation text message…”
Tivan Amour: What we're actually doing is creating conversations with these customers, and it feels very different than getting that marketing automation email from a business or even a marketing automation text message because that message might say, to use the Kyle example with Fortified again, it might say, "Hey, Sarah, I hope you're enjoying that bike that you bought from us a couple of months ago. By the way, we just got some new lights in stock. Do you want me to show them to you?" Very different that like, "Buy, buy, buy. Here's the link."
Sal Daher: I see the potential. I mean, email is for asynchronous communication, text allows for synchronous communication. Sort of people replying immediately if they're available, and it also allows for asynchronous communication. You have the advantage of the immediacy, therefore you can actually have a conversation using text.
Tivan Amour: Yeah.
Sal Daher: How many companies do you expect to be servicing in five years?
Tivan Amour: Tens of thousands, for sure.
Sal Daher: Tens of thousands, for sure.
Tivan Amour: Yeah.
Sal Daher: Do you want to talk about revenue at all?
Tone Allows for Two-Way Conversation Between the Brand and the Buyer
Tivan Amour: Let me just go back to this marketing automation point because I think it's really crucial to what motivates us here. That moment where you get a text message that is actually automated, but it's coming from Kyle and it allows you to respond and then you can have a conversation with Kyle, we see that as kind of the beginning of what we're calling customer relationship automation. Very different than you are this data point, and based on what characteristics you have, you're just going to get a series of one way messages from a brand. Instead, you are a human being that has a profile that the brand comes to know and it actually interacts with you in a two way fashion based on that. The result is it makes you feel special and it makes you more loyal to the brand and makes you buy more from them for longer.
Sal Daher: Okay. How would you set yourself apart from texts or chatbots that exist from a drift or from less exalted ones, privy or... Everybody has a chat bot, so how are you setting yourself apart from that?
“Customers are going to decide how they want to engage with you, and it's up to you to leave every door and window open…”
Tivan Amour: We get this question from customers all the time as we're onboarding new ones. The first question specifically for a live chat or for a chat bot is like, "Okay. Do I have to turn my Drift off or do I have to turn my Facebook Messenger off because I'm using you guys?" Our first answer is always definitively no. Customers are going to decide how they want to engage with you, and it's up to you to leave every door and window open because you're going have customers that want to talk to you on live chat, you're going to have customers that want to send you an email, you're going to have customers that want to give you a call. We happen to be a novel channel where increasingly more people want to engage because it fits more with their lifestyle.
Tivan Amour: Over 70% of shoppers are mobile, so it just makes sense for them to be using a mobile application like SMS, and people are really, really busy and they have a limited attention span. To expect them to stay on a website to have a conversation is less and less likely, so there's no reason for us to try and get people to artificially stop doing what they're doing. We just believe so wholeheartedly in the relationship that we are able to deliver over a long period of time with two-way messaging. That's the first thing I'll say. Second thing I'll say is anyone else who is doing text message marketing for eCommerce brand specifically right now is out of the box creating a one way text message experience. They are saying, "Hey, you know all that stuff you're able to do with email, how you can set up campaigns and start blasting people, you can do that now with texts with our platform."
Sal Daher: It's just one-way communication. It's not a conversation. It's not conversational.
“There's text message marketing and that's everyone, and then there's text message relationship automation, which is what we do.”
Tivan Amour: Yup. There's text message marketing and that's everyone, and then there's text message relationship automation, which is what we do.
How Tivan Navigated Taking a New Business Out of an Existing Business
Sal Daher: Very good. Very good. Great. Would you care to explain to people how you navigated, jumping from... I mean, this is quite a daring feat, jumping from one bicycle that's moving into another bicycle. Would you care to elucidate that? You discover a business, a new business within your existing business, how do you navigate that? I think that is certainly a question for you.
Tivan Amour: Hindsight 20/20, it's really easy to say that it came really naturally and that this was an easy process and it was all easy to read, but the truth of the matter is I waffled a lot as I was-
Sal Daher: You just stumbled through the process until you've had to figure it out. What is it that worked?
“…so when people call me and say, "Hey, I'm thinking about starting this hardware company or this eCommerce brand, here's the knick-knack that we sell. I know that you did a lot of manufacturing in China and would love your ideas on it." My first question is, can you think of a technology startup that you'd rather start?”
Tivan Amour: Yeah. Plenty of people around me from my wife to my colleagues to some of our investors can tell you, I had a lot of questions throughout and a lot of doubt as I was going about this stuff. I think now that we have a really fast growing technology business, I think my biggest learning is I feel like I do have a sense of sort of the relative value and potential of different types of businesses, so when people call me and say, "Hey, I'm thinking about starting this hardware company or this eCommerce brand, here's the knick-knack that we sell. I know that you did a lot of manufacturing in China and would love your ideas on it." My first question is, can you think of a technology startup that you'd rather start?
Sal Daher: It does involve logistics.
“…the biggest learning for us was how hard cash flow is in consumer brands. For us, for every $1 million that we wanted to make, we had to sink $300,000 at least in inventory, and then sit on it for six to eight months before we even got to payback.”
Tivan Amour: It certainly involves logistics. Even with this business, we've chosen a more difficult path in some ways from a logistical standpoint than just building the tech layer because we've got humans involved. Just looking at the financials of this business relative to the bicycle business, the biggest learning for us was how hard cash flow is in consumer brands. For us, for every $1 million that we wanted to make, we had to sink $300,000 at least in inventory, and then sit on it for six to eight months before we even got to payback.
Sal Daher: Yeah. A long weeks’ time, you have to put the order in, in Taiwan and wait for the ship to come and stuff to clear customs and all that stuff, and it has to tie in perfectly with this buying season. People don't buy bikes in the middle of winter. You were kind of unbound. I take my hat off to people who are capable of doing those kinds of businesses and thriving in them. They exist.
Tivan Amour: Yeah, for sure. A lot of them, almost all of them are our clients, right?
Sal Daher: Yeah.
“We weren't necessarily the ones that should have been running a business like that, and it's great to be kind of in a supporting role that I think better fits us.”
Tivan Amour: We went from knowing how hard it is to run one of these businesses and essentially running away from it to building something that served these people who were kind of going through the same challenges. Right now, at least once every two weeks, I'll have a call with the founder of one of our businesses to help them with cashflow management or fundraising or inventory management because it is something that we did for five years, and it's great to see so many of our client brands doing this more effectively than we did. In some ways, it's kind of a testament. We weren't necessarily the ones that should have been running a business like that, and it's great to be kind of in a supporting role that I think better fits us.
Sal Daher: How does a company like Thrasio play in your space? These are guys who roll up these independent Amazon vendors that have developed million dollar businesses. They'll give him $1 million check and take over their business and rationalize it, and still maintain. Whatever need they were meeting, they will continue to meet that, but the back office is much more efficient and they're able to grow without the constraints that the founder had. Do you interface with those people at all, have you run across companies that have gone in that direction?
Tivan Amour: No, because they're taking over Amazon businesses.
Sal Daher: Right, and you're not playing on the Amazon sandbox.
Tivan Amour: No. The main reason being that we're handling customer relationships for these brands.
Sal Daher: Part of the thing that someone like Thrasio takes over.
Tivan Amour: Exactly. Amazon handles the customer relationship for a brand and that's one of the benefits of building a business on Amazon is all you have to really focus on is the straight economics of the commodity business that you've got. You take the products, make sure you're making it at the right cost. You put it on there, it sells.
Sal Daher: Discovering the need that can be addressed economically, and then addressing it economically.
Tivan Amour: Right.
Sal Daher: Interesting. Very good. Tivan, I'm very grateful to you for getting into the small guest room and locking yourself in there and taking the time to talk to us and helping us catch up. I'm going to be talking to Martin tomorrow. He's going to be catching me up on his company and he'll be very glad to hear. I'm going to play a bootleg recording of this podcast for him because he's also an investor, and so he'll be very glad to hear.
Tivan Amour: Give him my best.
Sal Daher: Yeah. Martin will be very gratified to hear, and not that we don't get regular updates. Tivan, you're very good at sending us updates, but it's also nice to hear your voice and to hear that you're doing well.
Tivan Amour: Thank you. Appreciate it. Thanks so much for reaching out for this update.
Sal Daher: Excellent. Stay well. 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.