דריה: היי כולם, אני דריה ורטהיים ואתם הגעתם ל- Startup for Startup ורגע לפני שנתחיל אני רוצה לתת הקדמה קצרה לפרק שאתם עומדים לשמוע. אז לפני שלושה שבועות נסענו צוות של Startup for Startup p לכנס של- SaaStr  בלונדון ופגשנו שם  המון יזמים ויזמות ומשקיעים משקיעות מהאקו סיסטם הגלובלי והרגשנו שאנחנו חייבים להביא כמה מהסיפורים והקולות ששמענו שם. אז בשבועות הקרובים אתם תשמעו פרקים שהם קצת אחרים, שחלקם יביאו את נקודת המבט העולמית על המשבר שהתעשייה חווה היום, ואיך סטארט-אפים יכולים להתמודד איתו, וחלקם גם נוגעים עמוק בתוך הקשיים האישיים שחווים יזמים, ואיך אפשר לצלוח אותם. על סיפור כזה אתם עומדים לשמוע היום מג'ו תומס, שהוא הפאונדר והמנכ'ל של LOOM, ואני מקווה שתהנו. ודיסקליימר קטן, הפרק באנגלית. האזנה נעימה.

[Starting 00:59]

Darya: Hi everyone! I'm Darya Wertheim, and you've reached Startup for Startup. And today we'll be discussing pivots and more accurately, going from almost closing down the company into building a billion dollar company only by using a pivot. So with me here to share his story is Joe Thomas. 

Hi Joe!

Joe: Hi, Darya! 

Darya: The co-founder and CEO of Loom. And just in a sentence, I'll tell a little bit about the company to those of you who don't know it. So Loom provides video communication software for work, and since you started in 2015, you've raised $200 million. And currently, according to Forbes, you are valued at one and a half billion dollars. Am I right?

Joe: That is correct.

Darya: Okay, amazing. So today we'll talk about how you went from being two weeks before your runway ends into building a successful company that keeps growing. And what are the lessons that you've learned along the way? Shall we begin?

Joe: Let's do it.

Darya: Startup for startup. [Music] 

So let's start at the beginning, like we said that you started at 2015. What was your initial idea?

Joe: The initial idea was there was three of us, co-founders, Shahid, Vinay, myself. We had a good distribution of skills, design, engineering, and I was a product manager. And we felt like we should start building together. So we said we needed to show up one Sunday because we still had full time jobs, do a whiteboard. It was actually virtual. And we each needed to bring three ideas to the table. And they were like, very different ideas. 

The one idea that I was the most passionate about was I felt like there was a lot of food waste in the world, that there's technologies that should enable the ability to take food leftovers at restaurants, deliver it to a food pantry. And the reason why restaurants would do that is they get a tax write off and we could just use Uber's API to have the infrastructure in place. 

But we ended up being a little bit smarter about it, is what I'd say. And we wanted to do two things. We wanted to build for the workplace because we didn't think we were cool enough for consumer, and consumer is much, much harder to build. And then the other part is we wanted to build in something that we collectively were personally passionate about, which was video. 

We were using Snapchat to communicate all day, every day, and that was visual in nature. It was like primarily short form video and that we would show up to work each day. And there was no video at work. There was barely even video conferencing back in 2014, 2015. And we felt like video in the consumer landscape was so large that we wanted to start building for video products at the workplace. 

Now, I can get into the actual idea, which was a not so good idea, but only learned in retrospect, is that we thought we should build a video communication layer for a two sided marketplace. So essentially, you could pair up product experts like designers, engineers, product managers, whomever, with companies on the other side who wanted external feedback for things that they were working on, whether it's a design file or whether it was like a product requirement doc, whether it was like a live product offering. It was actually a majority of recordings that were done, and you would set up microtransactions. So we had to handle the payment layer, too, of like, you get paid $100 for 30 minutes of your time to record.

Darya: So it wasn't even a SaaS solution at first place.

Joe: Well, the SaaS solution, you could say, was that we built the video layer, so we made it really easy for people and experts to record, and then that got delivered to the folks on the other side. And so that was the software as a service part. But we were also thinking that there needed to be economics to incentivize the experts to actually do it. And so SaaS plus is what you could say.

Darya: Okay, so you had this initial idea and what happened with it.

Joe: So we ended up building that over the course of two months, and we thought we were doing all the right things along the way to get the feedback that we needed, that this was a worthy idea. Mistake number one was that we were going to our friends and asking them what they thought about it, because a lot of our friends were the product experts that we would want to be on the platform initially. So we were kind of like warming up that side of the network, and everybody was like, yeah, I want to get paid for my time, and I got a bunch of time that I could give, and it's leaning right into my expertise. 

But the other side of the network was the more important one that was harder to get at, which was, like, organizations who would be willing to pay for those sorts of services. And so our thinking was that, well, we just needed to create some of the supply side from an expertise perspective. And then once we had built the software in between for video, that we could actually just go to the organizations via things like Product Hunt and that we'll get the feedback then. 

Darya: Like if you'll have enough users on the builder side then the enterprise will come, you have enough to offer, then they will want to use the product.

Joe: Yeah, that we would do the initial distribution through Product Hunt, but that we would then do call it more traditional pipeline generation through. I had my Gmail spam filter turned on because I was sending so many emails on a daily basis.

Darya: Wow. Just like cold emails?

Joe: Cold emails to organizations. We looked at Crunchbase, we saw which organizations has raised at least a Series A, so that way we knew that they had money to potentially spend on services like that, and that it felt like we didn't want to go to public companies because we had no idea. None of us had worked at one of those, and we didn't know how to speak their language to some degree. So that was the initial offering.

Darya: So I think what you're describing right now is such a classic situation of pretty much, I don't know, so many SaaS startups that are just starting out and don't necessarily have relevant connections in large organizations or even totally a plus startups and they turn the only solution they have is like sending cold messages either email or LinkedIn. And the odds of succeeding here are very small. So what did you do at that point? Like you said, you were spamming people.

Joe: Yeah, I mean, our whole thing, we were not smart. It's like the simple thing. We thought we would launch on Product Hunt, and once we did that, that would be the demand side of the marketplace being the organizations. And then from there, we thought that it's a two sided marketplace. So do experts start telling their own organizations and other organizations about open test is what we called it. And would organizations end up telling? We thought that the flywheels would start going his life a naive assumption.

Darya: Yeah, you were counting on starting strong at product Hunt and then going like by word of mouth…

Joe: By the word of mouth.

Darya: Just like recommendations.

Joe: But we very quickly realized that post Product Hunt launch, 12 hours is like, we got a bunch of sign ups and then the next day we got a handful so the network did not start going. And that's when we started sending the emails. We had set KPIs for ourself. Send 150 a day.

Darya: Wow.

Joe: And it was a grind because we had one engineer and CTO co-founder, Vinay, and then there was two of us who are nontechnical product manager and designer. And if he's building things that we thought would make the platform better and help it spread itself that was his job. Shahid and mine was like, get the customers, get the network effect going. And so that was our goal. 

We scraped Crunchbase. We would straight up ask friends, like, can you send us over email lists for your company? And that's technically illegal, but we did whatever we possibly could. But the thing was, that only lasted for two weeks. Right? We knew that was unsustainable. It got much, much harder to find those 100 emails a day. And again, we were hitting the spam filter. That's hard to come back from. What is the next distribution strategy? It was a big question mark. 

But we had started getting enough feedback from folks that we were ready to actually change the idea because essentially within it was two months to kind of build that and warm it up. But it was only two weeks to realize that that wasn't going to work.

Darya: Two or three more lessons that I take from this part of the story is, first, the understanding that you are looking for a product that people will recommend to others. Right? So it didn't happen this time, but you were actually building on it. You really wanted it to happen. And when it didn't happen, it made things way, way harder. So that's the first thing. And the second is learn quickly. You already mentioned that you started to receive feedback from initial users, and you used it to understand that this is not what you're supposed to build and you need to change an idea.

Joe: Yes. We didn't definitively know that none of us wanted to do the sales side of it going into the initial build phase. My dad was a salesman. My grandpa on my mom's side was a salesman. We generally have a family of salespeople. So I was like, I can do it. But after two weeks of doing, we weren't booked end to end, but maybe we had like, two to three calls a day of companies that we're looking to kind of purchase some of the expert network. I was like, man, this is energy taking. It's not something that I want to do. It certainly wasn't going to be Vinay because he's the only one that could build software. 

And then, Shahid, do you want to do it? And he's like, no. And so we kind of had that realization after three months that we needed to build something that was viral in nature, that it did end up growing itself. And so that was a component of something that we thought about in the next couple pivots that we ended up doing is like, nobody's going to be a salesperson.

Darya: Yeah. So it also affects the product that you're going to build. So with that realization, what's the next stage?

Joe: So the interesting thing was that you could build out an incredible supply side of network with experts. But if there's no demands for the supply side, who cares? So we really focused all of our time and energy on the demand side, which is like talking to organizations, trying to get to what is essentially a kernel of truth that we felt like was worth building against. 

And so the thing that we got was all the companies that had enough funds to potentially pay for the expert network had said, this video feedback is really interesting. It's screen recording has a camera bubble, but we don't want that from experts. We have those people full time in house. I don't want to pay for more expertise.

Darya: Right.

Joe: But we do want this sort of video feedback from our customers and from our users. And when we talk to them, we're like, well, there's something called UserTesting.com. Have you used that? And they're like, well, yeah, but that's also a network that's not actually our users. What's missing in the market generally is that we want it from real time users. We want it from people on our website right now, and enough companies that we hadn't planted that seed. It really is actually a relatively small number of independent pieces of feedback that you need in order to understand that it's like a bigger opportunity. 

Darya: Yeah. That you keep hearing it again and again.

Joe: Yeah. I mean, we only had call it like 20 calls, and there was about five or six of them that mentioned they wanted this sort of video feedback from real time users. And so I think this is what that's when we kind of looked at each other and we had known that enough customers had said that, and it's like, is this the next thing that we want to build together? Is this interesting to all of us? 

It still is video at work, and it's actually much, much harder to be clear because it's real time users. You're not paying somebody to record a video. So what is the volume of people that you need to request in real time in order to get how many videos? So it's like a totally unknown question and answer, but we felt like it was interesting technology enough that it was still video at work, that we're like.

Darya: You want to go for it?

Joe: Yeah, let's do it.

Darya: Yeah. And then the cycle begins again. You launch its product hunt and you get feedbacks?

Joe: Yes, it was another call it. This was a little bit more complex from a technology perspective because we needed the individual to be able to record on the website in real time. And we also needed what is the mechanism that you request that feedback from? Because a company isn't going to build that themselves. We needed to handle it end to end for them. 

So we ended up building a JavaScript widget that was like you could think of it as a more friendly ENPs score. It had a smiley face, a neutral face, and a sad face, and it would pop up on certain websites at certain times. So there's complexity in terms of when does this widget show up? And then from there, we needed to incentivize users, which is like, hey, if you end up recording this video feedback, what do I get in return? Soyland was actually a company that implemented it, and they offered a 40% discount to users on their checkout order if they recorded a video. Right?

Darya: You already managed to book, like, to close a partnership that helped you incentivize the users.

Joe: Well, you could think of it as, like, design partners, right? Where we had an idea and we had the six companies who said that they'd be interested in this. And we got three of the six of them to sign up to be doing regular calls with us in order to be like, are we building the right thing? Will you implement this on the website once it's done? And so we had three that we were working with, with Soyland being one of them.

Darya: So you were actually building it together with them?

Joe: Essentially, yeah. 

Darya: That's also a really good tip. Again, not just trying to invent anything from scratch, but understanding that there is a real need here and you need to build it specifically for the companies who will use it.

Joe: Yeah. And I think that it's really, really hard to get design partners at companies that you feel like are representative of the companies that you want to sell into that are willing to spend real cycles with you all. You could think of them as like informal advisors, you know?

Darya: Right.

Joe: And I think that the way that we were able to essentially get there was that, well, we had shown that we could build and ship something. Right? And so there was companies that were willing to be design partners with us as a result of being like, okay, I trust that they can build and ship. I think that don't discount having to sell essentially yourselves for design partners because….

Darya: How do you convince them when you don't have a product yet?

Joe: Well, one thing was that we had already built and shipped something. Right? So that was the initial thing.

Darya: Right.

Joe: And we were able to point to that to be like some of our product building ethos. You could just tell from looking at what it was that we built here and then it's like, well, what length of time did it take us to build that? Well, it took us essentially two months. This is a little bit more complex, but we think it'll take us about three months. And you'll have a weekly check in with us. We'll talk to you all the time about it. And so that way you make sure that you know that you're going to get value out of that time.

 But I do think that proof of work, like proof of value was like foot in the door. From there, it was a clear understanding of their pain point and continuing to reflect that back to them of being like, so am I understanding this correctly? If you were to have this, it would solve this pain point that you are experiencing today?

Darya: Like constant communication.

Joe: Yeah, for sure. And intentional communication. I think that is really important, that to get design partners, you can't impose your view of the worlds on them. You have to absorb their view of the worlds and then map your offering to that view to the best of your ability.

Darya: Building a new product, how does that go?

Joe: Yeah, this one was interesting because we did have three companies that went live with it. Soyland was one, Edmunds was another one, which is like a car sales auction website. And then the third one was a smaller, relatively unknown startup. It's called Brain FM.

Darya: So also, like, really different companies.

Joe: Really different companies.

Darya: Yeah.

Joe: But I think that the thing about user research and feedback is like, anybody who has a website needs that. So even if it's different categories or industries, generally, collecting video from real time users is what we thought. And the reason why we wanted to build on it in the first place is because we thought our total addressable market was every website on the Internet. Yeah, very, very different companies, but still they all went live with it. 

And I think that what was interesting for us at the time was that there was like, Soyland and Edmund specifically, they actually collected hundreds of videos from users. They had enough website traffic that it made sense. We realized that our conversion rate of unique viewers on a page to widget to recording a video, and that being successful in submitting to the platform was essentially like 0.1%.

Darya: Wow.

Joe: And this is on not their most traffic parts of their website. Like, for Soyland, it was like on their checkout page.

Darya: Wow. So they needed a huge amount of users for it to actually work.

Joe: Yes. And I think that that was one of the big realizations that we had, was that they need a lot of users and traffic. But then on the other side of it, there is like a whole roadmap on making sense of the videos that are recorded. Right? Like, imagine that you're the researcher and you have 200 videos that are approximately three minutes in length and you don't know which ones are… 

Darya: Valuable. 

Joe: Useful or not.

Darya: Yeah.

Joe: You don't know which ones map to certain user archetypes. And so there's a whole roadmap not just on making the volume game work, it's like, can you move it from 0.1% to 1%? That's 10X, which means that you can serve a much larger addressable market with websites that have smaller traffic. But if you want to serve the companies that have the 0.1% conversion rate, there's a whole roadmap over here of making sense of the videos that you collect.

Darya: Yeah.

Joe: And so there was a complexity problem right away in terms of where do we focus and why? And then where's the payout? Where's the payoff in terms of actually building a revenue generating product? Sure, we could do it by transaction volume, but we are actually getting right back to the sales that we would need to do of, okay, we got these three up and live, but we got to scrape 100 emails per day and start sending them out again.

Darya: You need to start again with the cold emails and.

Joe: Totally.

Darya: The wheel is not moving itself.

Joe: Our thinking was that by having a JavaScript widget that said powered by open tests on it in the bottom left hand corner of a website, that that would be enough to kind of, like, create virality.

Darya: Virality. Yeah.

Joe: Like the chat bubbles that were in the bottom right hand corner, we were in the bottom left. That was actually where the bottom left came from, is that if we were going to be on at the same time as a chat bubble, that we needed to be in the bottom left.

Darya: And that's something that still remains in Loom to this day. Wow.

Joe: Bottom left is where the camera bubble starts.

Darya: Just like, to stand out from everyone else.

Joe: Yeah. The widget needed to not intersect with other widgets that were on the website. And the bottom right was very crowded and we were like, nobody does the bottom left. We'll do it there.

Darya: Cool. So that stayed. But actually you understood that currently with the current product you were building, it's still not getting any virality.

Joe: Yeah. The widget powered by OpenTest was not generating enough buzz.

Darya: How long were you building this product?

Joe: That was three months.

Darya: So you were already, like, five months into trying to build something, but you couldn't generate any traction.

Joe: Yeah. This time we actually tried a little bit harder than we did the previous time because there was more technology that went into this. There was actually customers that were using it and getting real value out of it and giving us feedback on their own. We weren't having to pull from them. They were proactively sending us feedback once it was working. And we were like, that's super. 

Okay, like, Shahid and I will go off and we'll try and send as many emails as we can and book as many meetings as we can. And we did that for call it like, I think it was a month and a half. And just like the funnel that I was talking about on the widget side, like 0.1%, there was plenty of companies that expressed interest in implementing the widget. They're like, that's actually really interesting, but we have to get it on our roadmap because it is putting a new widget on our website. It has to go through certain committees, call it to implement something new, and.

Darya: And then you're dependent on other companies…

Joe: On other companies. 

Darya: Roadmap grow your product.

Joe: They're like, hey, we really want to do this, but it can't go on the roadmap now. So we'll reach back out to you in like a month. So the sales cycle for this is much, much longer than what we needed in order to continue to kind of fund this business because it was still all out of pocket on a personal level.

Darya: Yeah. And generally as a startup, usually you don't have time for long sales processes.

Joe: No.

Darya: Unless you raise a lot of money. And in today's market, the ODS of doing it are not very high.

Joe: Not very high. No

Darya:  So you knew that you had something here, but this realization made you change it?

Joe: Okay, so it was two months for the first product. And then two weeks after that, that was three months of builds and then like a month, six weeks after. Yeah, a month four to six weeks after that that we were having a bunch of customer conversations. And by that point, we had actually had enough, again, proof of work across two different products, doing it in a compressed amount of time. And here's some progress that we actually raised $25,000 from two different angels. 

And I had set thresholds because I was still living in Los Angeles at the time, and Shahid and Vinay were up in San Francisco. I was like, if we can raise at least 25K, is when I'll quit my job and I'll move up to San Francisco. And we had like $25,000 on the mark. I got to be a man in my word. 

Darya: Wow.

Joe: And so in March of 2016 is when I packed everything up and I moved up to San Francisco and we were all living and working out of the same apartment. It was a three bedroom, but they had a third roommate. And so it was four of us in a three bedroom. And this is where we were really grinding it out, trying to make this work. But again, you kind of start to get to a threshold of feedback that you think is like, oh, this is really interesting. 

And it was starting to be that people were watching these videos or they would experience the recording experience, which the technology is built on a Chrome extension. And they're like, I actually just want this Chrome extension to be able to record my own videos. It has this nice camera bubble. And if I can just superimpose a camera bubble on top of a screen recording, that would be amazing. I would use it for like, XYZ use cases. And we actually heard that from a bunch of different folks that was like, can I break apart the video recording from the NPS JavaScript widget?

Darya: At what point do you know that you need to stop and listen to what the few clients you have are saying? Or you say, I have three promising clients that are already working with me. Maybe I should put everything I have into developing this product. How do you know which way to go?

Joe: So I do think a big part of it that is really important from a product prioritization perspective is that especially in the early days, there's kind of like strategy and impact. There's confidence, there's reach, and then there's effort, right? And so you add up the first three scores and then you divide it by amount of effort. And what ends up happening in that prioritization formula is that level of effort is the most important variable of all of them. Right? 

If you have something that's a two to work on relative to an eight or a ten, it's like, well, it's going to end up being the two is at the top of the prioritization. And so when it comes to when we went to Vinay, it was like, hey, look, people are telling us that they want this video recording capability and they want it separate from the Widget. What would it take for us to break this apart? And he was like, this is by far the easiest thing that you've asked me to like, I've built the chrome extension, I've built a recorder. I've built the camera bubble. 

The only thing that we needed to build was like, two things. One was a video library that essentially, if you've recorded it shows up someplace and you have your own individual account that you're recording and it ships it off to. And then the second thing is the individual video page that is more shareable in nature because the previous ones was like total utilitarian, just click play. Whereas this new video page, we wanted to be a little bit nicer, something that you would feel okay sending off to others. 

And so those were the two things that we needed to do. And Vinay was like, this is the easiest thing that you've asked me to do. So that was how we kind of thought about it. We had heard from enough individuals independently of the same thing. We thought it was felt the nicest. I don't know if you can think about how things feel and be like, does this feel better than what it is that we're doing now which is really complex? And this one would be really simple. Not just technology, but product wise. And so we decided that, yeah, let's break it apart. We'll keep maintaining this other one, but now we'll have a separate product that we will build and ship.

Darya: So you were also managing the risks. Like, you're still maintaining the first product. Your users can still use it, but you're also trying something that will be pretty easy to build.

Joe: Exactly.

Darya: And also, like, you and I, just before the recording, we were talking about intuition, and you said that a lot of founders are asking you about, I feel like I should go for something. Should I do it or should I not? Then it kind of takes me to these places that you said it felt like something you should do.

Joe: Yeah. You're never, ever going to have perfect information. And if you want that, you shouldn't be a founder because that is one of the few constants, is that you'll never have perfect information for really important decisions. And you just got to take leaps of faith sometime. And I think that that's where to me, when we started, at that point, it doesn't sound like a long amount of time, but when you are living together, when you're working together, when it's 16 hours, days, like seven days a week, you build a collective intuition too. Right? 

It's not just any one individual. It was a conversation between the three of us. And you start to have. Mind melds a little like we're each looking at it through different lenses like Shahid with design and can we make this simple? Can we make it something that people want to share with others? For me I'm like man this makes so much sense. 

If we can get people to record videos and send it to like that's our growth mechanism, you know and Vinay from an engineering perspective he's like this is relatively easy to build compared to everything else. I also think I have a few tricks up my sleeves that would make it even better for creators because I'm going to make the videos render instantly so there is no loading time. I know I can do this based off of building the previous two versions of the product. I've been thinking about how to make videos render instantly but it didn't make sense in those contexts. It does here. And so you all come together and you have this collective intuition and you're like yeah, let's go do it.

Darya: Yeah. And it's more than intuition. You were thinking of the lessons that you learned the previous time. Like it all connects. So you're thinking about something that will be easy to share, something that will be not much of an effort to build so you can learn faster. And also you're building on feedback that you already got from your current users.

Joe: Yes, exactly.

Darya: This time it worked. 

Joe: And this time it worked. It's funny to look back at some of our precede decks when we had launched what was called Openvid at the time. So we still has the Open part of the Open test branding but like Open Vid as it was a separate product. We launched that on Product Hun and it was the number one for the day. You had a bunch of people who were sharing it on Twitter just being like hey, check this out. 

Not just like check out the product but people were sharing video links that they had recorded on so actually showing the product and that was on Thursday at midnight was like the product hunt game is that you launched at 12:01. So it was technically Friday morning and that entire day Friday we were just like answering comments on products hunt. 

We were answering things on Twitter, we were responding to email inbox. It was like just three of us and it was exhausting because you had also been up the entire week before getting ready for the launch itself and the previous two were like up and down, you didn't really have that much work and so we were like let's just get it out there. It was like no, no, it was like inboxes were full all day the entire day and I was at a friend's wedding that weekend and I couldn't skip it even though we were like running out of money because I knew I would regret it for the rest of my life. 

It's like a childhood best friend and so I went to it and that Saturday morning I woke up and the first thing that I did was open my laptop, open the analytics dashboards, and for the same kind of like hour window, which would be up until 08:00 a.m. on that Saturday. 

So midnight to 08:00 a.m., we had the first kind of like day over day overlap. And it was like how many videos were being recorded from midnight to 08:00 a.m. on Friday versus midnight to 08:00 a.m. on Saturday, and we had more videos that were being recorded on the Saturday. And so I turned to my wife at the time, or girlfriend now wife at the time, and I said, I don't know what we did, but we did it.

Darya: You suddenly saw that things are working.

Joe: It was spreading like people were recording. It was all over Twitter. It was the number one Product Hunt product of the day. It was like, we're going to be able to raise money.

Darya: I want to ask about that because didn't you feel at some point that you just want to let everything go? Because you're describing here now, it sounds great and that the products succeeded, but you're describing a few months of trying to build something and trying to reach customers and not succeeding and sending hundreds of emails and not getting a lot of responses. I'm sure it's really hard and also like, $25,000 is not a lot of money. 

Joe: No. 

Darya: When is the point where you say, okay, I'm going to give it a few more months or maybe I should give up? How do you handle it?

Joe: Yeah, well, $25,000 is especially not that much when you're living in a Bay Area apartment, which is like incredibly expensive. And so we were truly on the ramen and split chipotle burritos into two to make it for lunch and dinner sort of diets, is that we were really intense because when you're living together, you can analyze everybody's every behavior and that's what we did to each other. We pushed each other really, really hard. 

But you're right in that I think that all of us, it was unsaid, but you could see it in each other's eyes that like, hey, three strikes and we're out nine months and running out of funding and begging friends and family to give us money just to keep us going. I mean, one story that I don't tell that often, but is true, is that we actually had because we were running out of money and a friend came to an industry event in the Bay Area and he stayed with us on the couch because he wanted to, like what's a startup feel know? 

And he slept on the couch and I was just telling him because he's one of my best friends, I was like, look, I think we're going to run out of money, but we have this new thing that we're working on and we're really excited about it. But we might just take overage charges on our credit cards and just try and survive for an extra 45 days. 

Darya: Wow. 

Joe: By not paying bills. And he was like, hey, here's 10K. Just give it back whenever you can.

Darya: Wow.

Joe: And so he gave us that float, which then actually bridged us to when we were able. It was truly like we were on the days margin. And so when you're doing things like that and you look at each other and we hadn't said it because we weren't ready to say it yet, but we were like, three strikes and you're out. If this thing doesn't work, then we got to pack it up and go back and get real jobs.

Darya: Yeah. Just because you need money.

Joe: Yeah. But we put everything on the line. I would have been 10K in debt to my friends if we didn't actually end up raising funds. I was thinking about paying student loans, and that back in parallel. It's like, I got to move back in with my parents after this.

Darya: Wow. So, first of all, a good thing that the third time worked.

Joe: Good thing the third time works. No doubt.

Darya: And then I'm thinking, you do already have existing customers, and you also want to raise probably like now you have traction, you want to raise more money. 

Joe: Yeah.

Darya: How do you communicate it both to current users now that you're switching, like deciding to pivot, what do you do with the existing users? And then also to investors, like, you didn't succeed the first few times. How do you communicate it? How do you convince them that now you're building the right thing?

Joe: So I think that this is one where we were actually sending weekly updates to a firm called 1517 Funds, which ended up being our precede lead investor. And we had been doing that for six weeks. And what they wanted to do was like, hey, look, we believe in you all. We think that you'll get there. But when you do precede investing, it's like so much about the founders that if you'd be willing, send us weekly updates about your progress. And we just want to see how you think about the world, and we want to see your pace of progress as well. 

And so we had been doing that for six weeks, and so that to me was like they came over for Chipotle Burritos. And this was the Monday after we had launched on Product Hun. And they were like, I mean, we weren't really expecting this, but we were leaning towards giving you all money. They were thinking like, 50K to one 100K. But they're like, since you launched this and this is like early traction, we want to do 250K. And they knew that we were running out of money, and so they actually wired the funds before we had signed the legal documents.

Darya: Wow.

Joe: Again, I feel like we got really lucky in a lot of ways with friends and precede investors. So that was one part of it, is that the first and most important check was handled through weekly updates, which is, like, not standard for raising the initial check. But then from there, in terms of customers and additional investors, it's interesting. The precede deck that we put together is like, we had this whole story around Open test, right?

And it's like this product and platform, and then we had a couple of slides dedicated to Openvid. I was like, this is our vision, and part of it is a video infrastructure play. And we also have this fun thing over here that's like, generating thousands of sign ups and has a bunch of videos. But that's a side venture we hadn't actually fully processed. That was the thing. 

Darya: Wow.

Joe: And what's interesting is there was a couple of investors where we had started. Each day that went on, we were appreciating more and more that we shouldn't do both, that the real opportunity is over here. It wasn't like this light bulb, we're going after this one. And part of what extended it was like, some investors are like, no, no, you should go after OpenTest. That's a huge opportunity. Cool that you built Openvid, but I'm not going to invest unless you tell me definitively that it'll be Open test and that the main thing won't be Openvid. 

Darya: Wow. Even though it had less users, less traction.

Joe: Yeah, because their perspective and fair at the time was that how big is the market for video recording and sharing at work? There's been plenty of screen recorders in the market. QuickTime has been on Mac for 20 years. It's like you don't see screen recordings at work ever. So what makes you think that that's going to be something that people are willing to pay for?

Darya: Yeah, you kind of needed to educate the market to use video all of a sudden.

Joe: And their activation metrics, like, if you looked at them in terms of number of sign ups and then how many of them actually recorded and how many of them shared a video, they were not good metrics. This was truly like an alpha product that we threw out there as quickly as possible because we were running out of time. 

But to us, we were slowly waking up to the fact that, oh, this is a way easier opportunity, is what you could say. And that this other thing is much harder and it's also growing faster. And so why wouldn't we go all in on this? So when that investor kind of came to us and was pressing us super hard on doing that, it forced our hands to make a decision, which is like, are we focusing on one or the other? And if so, which one is it? And again, when we talked about it as founders, we just realized that Openvid was the thing. But that took us a couple of weeks to come to. 

Darya: Yeah. To understand that the big opportunity was there. And also it sounded like also now it seems like you know the market and it's very clear that the market is big, but you didn't really know it by then.

Joe: No. And this is one of the things that I talked to other founders about too, is the fact that you don't need to have a huge white paper, solidified, CAGR like compounding annual growth rate. Like this is our tam. Because a lot of times you're going to go after a wedge that seems really small. Right? It may look like a toy and then it becomes a company. You're not going to have the huge opportunity in front of you. But what you will have is likely a unique perspective if you actually have an idea from the beginning or you've talked to users and what one of my friends says is like an earned secret. Right? And part of fundraising, though, is conveying that this is a massive opportunity. 

And so you do things like what we did, which is like, oh, telecommunications is like a 100 billion dollar market and if we get 0.1% of it, we're a $10 billion company. That's not right. But that's how it goes. I think that to me, what's more important, especially in the precede and seed stage, that you show crisp perspective around how this opportunity does grow over the course of time. 

And if you were to anchor yourself, you should do it on something that's a little bit more, quote unquote, real, which we didn't do for a while. But it's async video, which is essentially messaging, it's not video conferencing, which is what a lot of investors were like, well, how many video conferencing folks are there? It's like not it's async is very, very different from synchronous and it's like what is the biggest, most ubiquitous platform? It's email. And so we actually started anchoring the Loom opportunity, which is like, what if we only got 1% of a sub-segment of email, which is long form emails not like all emails.

Darya: Like replacing a specific form of emails. And then you can look at the email market as a whole and not the video market, not the video at work, which almost doesn't exist.

Joe: Exactly. Then we say that look at how fast video is growing in the consumer landscape. Look at how enterprise behavior tends to trail behind consumer behavior and look at email at work behavior in terms of raw volume. And then here's the sub-segments that we've looked at. And again, what if we only captured 1% of the messages that were being sent? So that would be 40 million daily creators sending 3 billion looms per day.

Darya: Wow.

Joe: Yeah. We don't have perspective on how exactly that monetizes, but do you think that there would be a business associated with that? I do for sure.

Darya: Yeah. And that's an amazing way to harness the VCs and the investors into your vision. Amazing. I know you have to go. I think I could ask you for another million questions, but we'll wrap it up here, so thank you very much, Joe.

Joe: This has been really, really fun. I haven't gone that deep on the first nine months of Loom in a very long time, so thanks for the unique interview.

Darya: I'm happy that we were able to give you this opportunity and thank you so much. And hopefully maybe we'll have another interview down the road.

Joe: 100%. Yeah, let's do it.

Darya: Thank you. And thank you for listening.

Joe: Thank you.

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