This episode of startup project is brought to you by b&o tax made no tax compared to all your crypto transactions and makes it easy for you to find your taxes. Check out Bedore tax that is b r TX dot x. Hey, Richard, welcome to the show. Super excited to have you here.
Thanks for having me excited to be here.
So when I was, you know, looking at what you did before, fellow media, one of the things obviously you did is user voice, your last company, and this sort of a good roundabout moment for me because in one of the products I was working on being used, user wise as the customer feedback system in Microsoft
Ok very cool! The startup world is smaller than I ever imagined. I think it's also what I've learned too. So yeah, I think he says a lot. But yeah, we had a we had a great footprint and Microsoft user voice, great customer. So
So I thought a good place to start this conversation was just to talk about, you know, your experience with starting user voice? And what are some of the key pivotal moments that shaped the user voice as a company experience? And where is it now?
Yeah, I mean, it's interesting, because I started that company 12 years ago, now, maybe 12 13 years ago, and then started Fathom last year, and it's studying, like, they're very different, right? It's very different, I think doing your first startup. And obviously, the startup world is very different than it was 13 to 14 years ago. You know, it's I think I'm pretty unique amongst my peers, and other smart people. I know, they started kind of mid 2000s. And then I stuck with that company for about 12 years, I think most of my friends did three or four startups in that time period. But UserVoice itself was kind of three or four different companies within it. Right. I think that's sometimes not a typical for startups, where you start with a certain business model, a certain target buyer, and it shifts and, frankly, we did every model under the sun, right? If you're not familiar user voice, a platform for product feedback, originally started almost like a rigid ish kind of muscle, your Reddit for customer feedback. And I think our original claim to fame was, we kind of invented it, when you see like the feedback tabs on the side websites, like we were the first people to do that. Lesson learned, you know, if you're gonna build something, think about which things you actually could be like, you know, like IP, you can't make IP of putting a button on the side of the side of a web page because we did. So yeah, we started off it was very organic, very scrappy, really, like, you know, that companies rough beginnings, right. It's like hard to find co founders hard to find developers hard to find investors. Yeah, I was like, actually slept on a couch. I was couch surfing for like, eight months of the first year, we were working on that company. We found one investor believed in us to put money in. And then we kind of went from there. But it went from a completely free product to a freemium product to a more top down sales, like sales model. On the way yep, scaled that thing from zero to just shy of 10 million Rev. And a team of like, 40 50, folks, so it was a it was a good run. But it's it's so funny. It's it's night and day compared to fathom where like I started with like, the top engineers, we raised money and like, yeah, the first like, week of yeah, having the company up and running. I didn't capture if at all, but Airbnb surf putting catchers, but all the Yeah, it's it's taught me a lot.
So what's the state of right now? It's its own company. And now, you know, you moved on to fathom, but it still exists, right?
Yeah, it SEO still exists. Our, the, our former VP of engineering, basically ascended to being the CEO. And I meet with him on a regular basis. And it's, it's great, because I think after, honestly, about after about 12 years, you know, I'm, I like to run through walls, and probably one of my strengths, probably perseverance, but even I was like, Okay, we need fresh ideas in here. And we need some fresh blood and, and it just so happened that the idea for Fathom kind of came up around the same time, from some of the work I was doing user voice. And so talking natural time delay, great, I can go take this thing. And tickets zero to one and User Voice is in good hands.
So let's talk about five minute video. Right? So how did while you're actually thinking about what should I do next? And wherever evaluating different ideas, or how do you know go about this idea of making zoom? Calls more productive?
Yes, it's interesting, I think, when I was at UserVoice, every year, I asked myself two questions at the end of the year. Am I uniquely qualified to like run this company? And is this company giving me like differentiated, like learning like is it's like something you might yearning, something unique? And so for a lot of times, I've generally saying yes to both those things. So it wasn't really thinking about other ideas. In fact, I kind of like firewalled my brain often I think about other startup ideas as like, let's say focus on the mission of the user voice. But we were actually we'd actually started the process of diversifying user voice and I actually taken a small team inside of user voice when we were building out or not really, but as much as prototyping and testing new products that user was could build and sell to his existing audience. Like product managers, that's kind of our target buyer. And in the process of doing that I did just a ton of like customer research kind of early last year. I think I did like 300 Zoom calls in the first like, five, six weeks of 2020. And you know, just back to back to back every day. And you know that that experience is what kind of led to Fathom because I would be on these calls. Yeah, like 15 20 minutes. I love these interviews, I love kind of like, it's like a, it's like a it's like a lightning round Sherlock Holmes thing, right? Where you're trying to like with the right questions, unlock some interesting pain point or some interesting insight that maybe it wasn't surface level obvious. And I'll have the conversation. What I hated was I'm trying to talk to someone and trying to pull this information out of them. And I'm like, rapidly trying to type out like, Oh, crap, here's what they're saying, right. And then I had like a limited window once the call ended, where I had to clean up those notes and make them make sense, because they literally were like random words on a Google Doc. And you know, that combined with once I take those notes and share them with my team, or even I told them two weeks later, I'm like, I don't remember this call, which call was this? Again, I you know, doing tons of these and I share with my team, I have amazing moments on these calls that have like, do we get really excited about something I mentioned to them are really confused. And I'd like to share my bullet point notes with my team. And they'd be like, Okay, we don't get the big deal, right, it was like, and that was when it hit me. It's like, oh, my gosh, we're losing so much fidelity here between, you know, the nuance, the tone, the face, everything of having these conversations, and then all that shows up is a couple bullet points in a Google Doc. And I thought about I ran out, as mentioned, ran a bunch of parts of our user voice at different times. And I remember I ran our sales team. And or when I ran our sales team, I had the opposite problem, my sales team people on the calls, and I would look in our CRM and see you mentioned notes. And I'm like, note quality vary wildly. But no matter how good the notes were, I was always worth being like, what did you actually say when they push back on price or when they objected? Or the bronze competitor? And so that was the aha moment for fathoms like, this is ridiculous that we are like, trying to like play a game of telephone with bullet points and trying to be you know, court reporters while having conversations with Phil Knapp, that just real time records, transcribes and gives you almost like a soundboard to highlight those moments. And then your call actually becomes that living artifact of the conversation. No one wants to rewatch entire call. So like what TV the way to send some it some slacks and your shear and sort of shutter. And so it worked out very well. Like it just kind of like fell into my lap in some ways and shake. Yeah, this is something a pain point as acutely feeling. And I was like, we prototyped a few ideas. And then we kind of, I was like, Okay, there's something here, I'm gonna go start a company built around solving this problem.
So, when you found this idea, and was thinking, we're thinking about, you know, creating a new company, how did you estimate the opportunity here? Because if you look at just the productivity space today, even entry mode, like there's so many products, right? I mean, the Zoom does teams and slack and they're like different ecosystems about productivity. And if you're a remote knowledge worker, right now, your cognitive ability is trenched in across multiple products, so how did you think that you know, whether there are, you know, there, there are obviously other transcribing products as well out there in the market. Right? So how'd you think about you know, is this company that could actually you know, be a company on its own or is it just a product or a feature like how did you make that call?
Yeah, I mean, I think it was that person should pretty easy because as soon as Don Ross like this can be bigger than just, you know, product research, like sales, customer success, maybe even recruiting you know, there's other analog potential dicots right. So I was very familiar with chorus and Gong, which are kind of the the you know, top two heavyweights in kind of the sales coaching recording space. And in both of those I think are gorgeous, got bought by Gong was raising at multi billion dollar valuations. And so my my company and trialed that product, and I, you know, before we even got into this percentage was like when interviewed like 100, Gong users and course users and ask them what do you like, what do you not like? Because I was like, I think this already exists. And I went and dug in and found Okay, no, there's no like serious gaps or like windows of opportunity, both product wise, and that is what can say, like, these guys are still relatively new. They're now at multi billion dollar valuations. And they're only focused on like sales and they're only focused now on like Midmark enterprise sales are pretty expensive product. So it kind of like that's kind of an honest like the you know, later on we got into Y Combinator, we had to do all this like, Tam defense, like analysis, and now there's 11 million sales and CS people in the US alone and to charge them 25 bucks a month, like, but honestly, in the beginning, it was just simple as, okay, well, who would we be competing with? And how big are they and how, you know, how well saturated are they right? Like they're still pretty early in their journey, but they're already multibillion dollar valuation and I think we can, you know, take them on and and we can do a much bigger market then. So back the envelope math, just like this could be a really huge opportunity.
I think. I mean, just not quantitatively, but qualitatively, time expanded from, you know, say sales to almost everyone, right? Because of the big right. Yeah, how much of our meetings are now fully on Zoom? And resume sort of also became a household name because of that. Right? So it's sort of qualitative gut sense. Is that okay, Thomas are extremely large.
Yeah, does it now. I mean, the other thing we looked at is, you know, look at, how did those companies get started? And how is the world shifted since those companies got started. And, you know, when those companies got started, they had to build integrations with like, 10 different video conferencing providers, because there was no runaway leader. And we our research said on that, now, there's a runaway leader, right, and that's soon. And so that obviously helps to rouse you to like reduce the scope, right? Okay, we can just focus on one Video Conferencing Provider, and do and hit 75% The market. So there's there another other factor shows like one will count, total addressable market, but also going to looking at what has changed in the technological landscape, that makes now a good time to do this. And we'll get that with the rise of zoom. We also looked at the commodification of transcription. You know, transcription is still a thing that's not it's good, but not great. And one of the things we lean on, versus there a lot of tools that will transcribe the thing for you. I don't think it's enough. Because if you read a transcript, it's not the same as like hearing the clip, it just, there's something about it that just doesn't convey the knowledge show, we always knew that we want to share clips, as opposed to sharing transcripts. But we knew transcription is something people want, it's an important output of that. And we looked at and said, you know, these guys five years ago, when they started going course, had to build their own transcription. And now there's a ton of transcription providers, and we can do a bake off and the price compete them and stuff like that. And so that also is what led to us thinking there's a, there's an opportunity here, to not only build a big business, but also build a big freemium business, because the costs are, are getting lower every day.
I think, just for the audience sake, can you discover what Khan does?
Yeah, so So Gong is probably the first big company that was built around, you know, recording all your sales calls. And rather than I don't think they lean much on, like helping you take notes, they have some facilities, right, sharing portions of the call, but they really lean on more of, we're recording the call, so that we can tell the manager how the team is doing, oh, they're talking too much. And talking too fast. They say I'm too much, you know, they they start wait and wait, that sort of stuff. It's more coaching. And so but yeah, so that's a subset of what we do. But like, we found, like, oh, there's a big opportunity here just actually helped them run better calls, right? As example, you know, when things going does, like tells you your talk time, oh, you talk too much on school, but doesn't tell you to after the call is over? Like Well, I want to know was on the call that I'm running my mouth too much. So that's what they do. And they're, you know, they're a fantastic company, it's, you know, they've got a great brand. They've got a loyal following. And so in some ways, it was one of the things where a lot of people thought we were crazy to go in the space, because he did walk it going again, it's not an old company. It's not like you're competing with a 20 year old dinosaur. It's relatively modern company with good branding, good marketing. But that's what I think made it such an opportunity, because no one wanted to go up against it. Right. Yeah. And people actively went around it.
iAnd also the thing that going back to the TAM concept of what pandemic did, like, it changed, who's the customer, right, from, you know, companies, to managers to sales folks to pretty much anyone who's in knowledge economy now has, you know, zoom or Zoom like to, and they want all the services productive?
Yeah. And then also just the delivery mechanism to be able to go bottom up, I'm gonna, I'm gonna give you rather than you sign a five figure six figure contract, wait a month from patient? Yeah, two minutes in, cool, you got access product, you can get value from it. I think that I think any industry where you will get and you see a dominant player that has a top down model, if there's a way to do bottom up model plg motion, it's, you know, I think it's, you know, there's probably some opportunity there, right? And that's what we were kind of seeing.
I n terms of like the actualproduct right, right. Now you can, you know, we have action items, bookmarks, insights, pain points and feedback and regular feedback and obviously transcription of zoom call. When I look at the, you know, the fathom that video as a product. As an outsider, I can just think of, you know, different interactions because you're almost at the center of productivity or your own productivity starting or all the workflows for productivity are starting right then that means if I create action items now, I already have these action item tools from Microsoft products to Google products to Asana and you know, all the other competitors out there already. JIRA. And similarly, for other feedback, you have user wise and users like companies, right? How are you thinking about just product, that agenda? And I felt that Okay, from here on, you can just start exploring and expanding the product portfolio to integrate into different sort of things. And how are you in general thinking about this? Because I think to truly make a zoom call productive now, you have to also think about the end to end workflow from where are the users going from here to actually make themselves productive? So I would like to get a sense of where, how are you thinking about prioritizing? And, you know, coming up with ideas in this direction?
Yeah, you know, I think one of our core product tests from the beginning has been, you know, integration, right? Like, I think in this day and age, no one wants it, everyone has enough SAS tools, right? No one wants to pick up something that doesn't work with everything else they already have. And you're right, that Zoom meetings are kind of like this, like, it's almost like this, you know, one of those gift boxes, you get in the mail a bunch of random stuff, it's like, you're gonna have some stuff, you're gonna have some technical questions, you need to go a technical resource, you might have some product feedback needs good product team, you've got action items you need follow up on, you've got, you know, objection that your sales manager might want to see. And so there's all this work afterwards to like, get all these things to the right places. And I think, you know, that's another place where we looked at what existing solutions were doing. And they were just kind of like, here's your recording in a box, and you've got to go still do all the work to get it that last mile. And we sold that early on to or we, you know, we built everything. But these integrations appear at this pretty good. And then we built up the CRM integration that would like, you know, automatically log your call auto generate the call summary. Put your task in your CRM, and people like, this is amazing, right? And it's like a classic, like jobs to be done type concept, right? Where it's, you got to think about this thing more longitudinally, and like, what is what is done for my user? And, you know, can I get, I get the nine tenths of the way there. It's almost like it's like playing American football, it's like, that's not a touchdown. Like, you're just you're it's a turnover on downs. Right, you got to get to the ends, and you got to get to the goal state. And so, you know, we've had folks dedicated, you know, CRM integrations, product management integrations, obviously slack, right. It's communication. Oh, yeah, that stuff, I think, is killer. I mean, you will get companies more and more easy that this is like a key part 10 of all of successful companies. I mean, the one that comes to mind now is like, click up, right, who is kind of crushing it out, there's they from day one just built a raft of integrations, and integration, but really good integrations to that was everything we knew we was like, these need to be five star integrations, this isn't, you know, used to be like a, you build this crappy integration, that doesn't really work, then you can kind of check the box and say, we've got this integration to close the deal. And that works. Maybe in a top down sales model. When the plg motion, you get exposed very quickly, if your integration is actually good, right, because people just turn out because they're not stuck in an annual contract. So it's been a huge boon. And I think also, it's great from a partnership angle, you can do cool marketing around it. And so yeah, we yeah, we probably spend a third of our time on coretec. Right now, like corporate bi, we spend about a third of our time or recently on onboarding, we spend a third of our time on integrations.
So how has the growth been? Because the idea is very much friendlier towards sort of helping the pandemic effects and post pandemic effects and new started the company in between the pandemic. And you know, we've gone through the ups and downs of the pandemic cycle. Have you seen any change in terms of adoption or growth during this applying those cycles of pandemic? And how do you see the post pandemic growth being even for like, let's say, last couple of months?
You know, I think most of our, you know, we've only been out we launched really August one of this year. So we had a very long internal beta process like, like private beta period. And we launched with the new zoom Apps platform that came out July 21, but really, probably about first of August. So you know, we're here in December, so it's been about five months here. So it's not enough time for us to see any particular trends. I do think that, you know, a lot of our use cases, external calls, right, like someone meeting with a customer, and even pre pandemic that was already shifting, or in most cases, a lot of cases was already 90% on some sort of video conferencing solution. I think the pandemic's pulling some of those like Field Sales things to permanently remote tele sales. You know, I think we haven't seen any effect stuff like a pullback on like, internal usage, because, honestly, we can't tell because we're just growing so fast that I don't think we would notice if people there's some slight pullback in that. But mostly, that's why we also focused on we think customer calls are where it's, you know, you can't get customer back on the line. If you miss something. It's really gone. And that's where the stakes are the highest. And that's what we've really focused on. Internal calls. Yeah, we have Chile's internal calls. But I also think there's other things that are undermine internal meetings. You know, we focus a lot on asynchronous communication, right. I send wombs and in lieu of meetings often so there's a use case there, but I don't think it's as strong as the customer call use case.
shifting a little bit towards fundraising. And you've raised funds for yours user voice and you have done fundraising for Fathom not video. And obviously, the whole ecosystem is now night and day from last 15 years. Right? Yeah. What was the, like, experience that you had with fundraising back then? And when you see, you know, even right now, how did the experience change for you?
I mean, I think, you know, it's funny, we went through last winters YC batch, and, you know, fun trivia fact of me actually, was an employee for a YC company in the first batch of yc. Back in, like, 2006. And so I've seen both ends of the book and right. Yeah, it's a great climate to be fun to be a founder. You know, ice, I was joking. Some folks are YC batch, you know, you'd show up to a VC meeting 10 years ago, and people will be like, Who the hell are you? Right, and they'll be on their phone within 10 minutes, right? If you didn't, if you didn't put them in now, I think there's much more competition for for deals. And so you know, just frankly, many more investors are founder friendly, many more investors are ex founders themselves, right, like 10 years ago, they were ones getting the crappy PC experience, we've done something kind of unique, and we haven't, I can't go into too many details, because we haven't really announcing our funding. But, you know, with user voice, we, you know, had a seed round, and it was, you know, one firm to the entire, you know, the entire allocation. And this time, we've almost raised money, every four months, every time we've hit a milestone, we've raised more money. And, you know, we've raised, you know, a couple million dollars, I won't say much, but our average check size is like 50 60k. And so we've been very intentional about getting lots of small checks. And that's kind of my theory of like, you know, this partially because of the market, there's a lot of people want to read small checks, but part of it also is I've just, you know, as it's been my second time around, I'm I less need like one really loud voice, like one like early stage VC that could really show me around and what I really want more now as a multitude, a diversity of smaller voices, right? I send an investor update to 70 people, and I get back, you know, a whole different set of networks, perspectives, connections, etc. That I think is really, really helpful. I think it's also one of these things, too, where it's really hard as a founder to assess which investors will be the most helpful. And also, helpfulness isn't really well as correlated with check sizes, I think you would think it would be often the person writing it 10k Check even out of their own money, and it's one of five investments we'll do this year is, you know, way more invested in your success than that early stage VC that's writing on a $300 million fund, and, you know, they drop 10k On the floor for lunch, right? So, you know, I, we've actually optimized for I optimized for like, angels, and also I love like new funds, someone starting a new fund, they really care because they're trying to make a name for themselves, right. So there's good alignment versus the, you can tell when you get to meeting with someone where they've already made their brand. And they're kind of like, yeah, I don't care whether your company makes it or not, I'm already on the Midas West type thing, right. And so I think that, that process is a little bit different, right? It's also de risked, because rather than you have to take 20 meetings and hope one of them works, or two of them work, I'm kind of just slowly getting checks as we go. Again, that has its own risks to and you know, if you're a first time founder, and you may not have the network to do it, and in or it may just be better to just get one big check and go back to work. But our case, I think it's been really beneficial.
I, I like the fact that now founders are trying to raise money from a lot more people than just having one or two funds or investors on their cap table. And when I talk to, for some of the founders, especially first time founders, I don't think they don't really get the value of why it's important to have more investors on the capital, not like 1000s. But you know, you want to have or de risk how many investors are on your cap table and whom you can reach out for different sorts of you know, things, almost see that that comes with experience, a lot of the second time founders often have this idea of, you know, positive sum game better than for STEM founders, because they realize that this is a long term effort. And, you know, you have to say sustainable and if, let's say you have one investor, and if you as a company, it's not exciting for them in their portfolio, then for the rest of the you know, time you have to find another investor who you can make rice, a devotee of vision and company.
Yeah, it's like this unspoken kind of thing, where it's like, you know, when you're when a VC invest in you, they're excited when you first invest in you. Fast forward a year, two years later, if you're not in the top, they're gonna make their money on the top 10% of the portfolio, maybe there's 5% If you're not in that bucket, they're not gonna, you know, they're gonna not help you, but they're certainly not going to be as helpful as they would to that. And so I think that's something that I think first time founders aren't aware of But also I think brands right? I think it's easy to get seduced by the big brand VCs that you hear a lot about. But the end of the day, it's about who you're working with the partner working with. And you know, you can have a, I've heard plenty of stories from like named VCs that still did weren't the most helpful at the best case, or were kind of shady at the worst case. Right? So I think in general, it's just nice to de risk that because again, last thing I want to do is spend a bunch of time doing a shotgun wedding with someone who has 10 15%. My company, I'm much easier to do it when I'm talking about giving up half percentages here, there and everywhere, right?
So the infrastructure behind fundraising is also so much improved right now, because 10 years back to now, it's so much easier to take smaller checks without the hassle of founders, right?
Doing things work between like safe notes and things like poli and Carta and querque annoncer stuff like, yeah, it used to be also like everyone be worried about the headache of Okasha can have 20 pestering cap table, that'd be a nightmare. Who cares? It's the Rosetta spreadsheet, right? It's so Gabby, we're actually even doing we're doing some crazy stuff, we're actually like even making like, we're doing the same sort of strategy for advisors to where we used to have, you know, you'd have two or three big named advisors. Now we're gonna, we're gonna have a pool of a couple 100 advisors, and a lot of them are going to be for a lot of our early users who are giving us great feedback. And I think about the effect of that of like, okay, now I'm arming hundreds people out in the world are having less interest in my in our success, and they're telling their friends, yeah, you know, social media has made it a word of mouth world once again, and I think there's a lot of a lot of opportunities to hack that the people are today. Yeah.
In one of the previous episodes, I was talking to Eric from auto IRA. And there is a large round from traditional VC firms. But what they also did was do an equity crowdfunding round for a very small amount, like a million dollars or $2 million, compared to a minute smaller compared to the larger round that they're raising. But it's important for them. And when I asked, Eric, why are you doing this, then? It's almost like, and I had this notion about equity crowdfunding as well, because the difference between Kickstarter and equity crowdfunding is now you have real interest for the customers to actually promote your product. Right? If there is a concrete competitor, who is entering into the market with same those same products, maybe even better, sometimes you're predicted by your network, who's, you know, incentivized to promote your product? And you're like this army of people talking about it, without doing any marketing campaign? In fact, that's what I call negative track. Negative customer acquisition costs for, you know, a big marketing campaign.
Yeah. So it's a lot of it's such a crowded space now that, like, every vertical is crowded, right? And so you have to find some way to get an edge, you know, and even when you have a great user, you got to do something that surprises and wild people and this is still something you can do to do that. Were think about the same thing. I think the crowdfunding thing is so exciting. I also think it's great in general, I just, it's always frustrated me when, you know, the accreditation, you know, rules walk so many everyday folks from getting involved. Again, I kind of get why they're there. But I think, you know, once you have products are in the wild, and you're using yourself and you know, it's great. You want to be able to you want to be able to participate outside of that.
Yeah. What are your thoughts on valuations? Because one things that happened in the last couple of years is, every round valuations are extremely crazy. What are your thoughts on that?
I think I'm very grateful every day for all the crypto projects out there, because they make all the valuations and SAS seem very, very reasonable. Even if they don't seem reasonable by historical SAS perspectives. You know, I, it is a certainly much better market was, yeah, 10 years ago, you know, very attentive 10 years ago. But it's also like, you know, public stock market is crazy to right, like everything is we're, I don't know everything kind of reaching this kind of tipping point where we get to inflection points faster, you know, things ramp up quicker, therefore, valuations ramp up quicker. Also, though, at the end of day, like I don't, I think it's important not to get wrapped up in the valuation game, you know, at the end of the day, it's, I I actually push back a lot on people who like over optimize for ownership stake, right? Like, yeah, you don't want to give away the farm right in your first round. But at the end of the day, like it's all about growing the pie more than anything. And, you know, especially if you go this route, I'm having a much smaller investors. No one's going to, you know, board seats, you should worry about like, you don't want to, like lose board control and stuff like that. But, you know, in terms of from an equity perspective, you don't have to be so tight get the right people get the money you need get back to work. This is like one of those. As mentioned before, this, like we just did this, like Product Hunt, launch, like we are product of the day, it was like the startup mini game, right? It's kind of like slightly orthogonal or to the main quest wine, and I feel like fundraising is that too, right? And so though, you know, scraped evaluations, right? But at the end of day, it's like, find the valuation where no one says no, because evaluation and Google just get your money and get back to work.
Yeah, I mean, one of the negative things about because there's not of over valuing. And what I see is second time founders are a little bit hesitant about that. But first, and founders are, you know, going ahead and valuing it at the higher side of what they could value. But I see a little bit of it as a negative because most of the startup exists at acquisitions. Alright, when it comes down to product acquisitions, and voters acquiring is looking to get higher return on investment. So the overvaluations if you're ovulating, your company very early on very high, I feel like you're almost taking your company out of the m&a game.
Yeah, you might, you might like, you know, I think every valuation wrong, right? Every time you add a zero, right, or add an extra digit to the valuation, you, you lose, you lose with the exits, right? What more murders are just not going to be open. So that's, that's a really good point. I think the other thing is, you know, it's easy to ramp this, like, we've ramped valuation last year, every four months, we went on a ramp, we've we've increased valuation. And that allows us to find, you know, there's certain really strategic folks you might want to get in, in the beginning, right. And then, you know, like, we got a bunch of folks that were that really understood the Zoom ecosystem really early. And that was super valuable. And you know, what they've come in at the current valuation? I'm not sure, right, because I think some of the more well connected, you know, folks are somewhat valuation more valuation sensitive. So, but, you know, again, I think at the end of the day, there's really no wrong way to play it necessarily. They're all trade offs, right, like open equity equals options. But I think you made a good point, which is, I'm not sure everyone knows that. The trade offs they're making. Yeah, right. By by choosing different valuations.
I think because fundraising has become a milestone instead of, you know, you have to just think about it as one of the things you need to do to, you know, actually build a company. Right. And there's also a lot of perceiving fundraising as, as a milestone itself, like the concert itself as the goal.
Yeah. Especially if you're a first timer or your first timer. Like I remember, I just like obsessed with it. I was like, Oh, my gosh, what if we like raised money, like, you know, like, it's this thing, it's like this huge validation point. And like, you should totally like, it is a validation point. And you should be proud when you reach that milestone, but I think as you get to do it, you're like, This is a side quest with money in the bank, it really had no impact on not knowing that, but it had no impact on it. I still have to execute the business, right. And so I think it's also one of these funny things like, no one's ever excited, generally, by the time the money's in the bank. Because you know, 20 things, right? You think you're gonna excited, but by time you get there, you've gone through so many steps, the process that you're just worried something's gonna go wrong, right? You've already priced in, in your mind that, yeah, we're gonna have, you know, a billion dollars in the bank come tomorrow, and we'll hit save right? Yep. Cool. Back to work. Right. So it's also one of the frustrating things. It's just never, it's never like, obviously, you have like one call close next day you wake up and you're surprised by there's a billion dollars in the bank. So don't over optimize for it.
Yeah. So talking about investors, one of the companies to raise funds with Zoom, zoom invested in padam. How did you think about making that decision? Like? I mean, obviously, it's a it's very well lined, because you're on Zoom. But did you have concerns about okay, if in future, we want to expand it out of zoom? Like, did you have to have this conversation internally or with Zoom? Team? Or was it just like a regular any other investor?
No, I think, you know, before even the investment and the investment, in some ways was the cherry on top of our a very strong relationship between us and zoom. Right. And like, we, we were already in, like the zoom apps program, you know, as a start up, which was kind of rare, because it was mainly, like, bigger companies that were in this, we had a bunch of connections with, like, the product UI. And so, you know, it was more of a consecrating the marriage, if you will, like, okay, like as it you know, honestly, I don't know, that really changed relationship much at all or anything, but it was more of like a, again, a symbol that were very tightly aligned here. Again, it's also not big, no, because we didn't raise no one is a significant portion of our cap table. It's not like there's any leverage here that they could exert on our business and they want to, right, I think, more important is we understood their motivations for these investments. You know, sometimes people are making investments to get information, sometimes they're getting to like steer people in certain direction. It was very clear from zoom, that they recognize that they have a pole position in the market. And the best way to create that pole position is to foster a healthy ecosystem around it. And this is their way of doing that. And so we felt like okay, well, that's, you know, we would have all ROI if it was already there. We've done all the same things if he didn't invest in us, but it's nice to be able to tell the world like, Hey, we got married, right like they invest in us. It's a strong relationship.
So let's talk about how Fathom is actually making money, right? What is the current business model like?
So we don't actually monetize yet. We're planning to do that sometime next year. But I actually think that trying to monetize it, same time you're trying to figure out growth is, like, means you do both of those things somewhat poorly. And so we've kind of taken the approach of, you know, we're gonna just start with figuring out I did this with user voice to for user voice was completely free for the first year and a half. And, you know, the trick is, you have to just be ready to write off like, those users will forever be free. Right? And we're fine with that. And yeah, that's a good trade off for someone taking a risk on early product and dealing with the inevitable, like, you know, issues that come up and in variable bugs and stuff like that. So yeah, I think that's I think so far, that's borne out well, especially in a market where, you know, there is a decent mount of money floating around to invest in things that people believe in. And, you know, we could tell a good story about the TAM. And we can now tell a pretty good story around growth, especially the last couple months. So I think that's, you know, and I think if we had to at same time, I think the amount of effort we spent on monetization, and sorry, wrong decision on onboarding in the last year just to get it really dialed in. And I think if we had to also split time between trying to figure out how to charge money for the same time, I think we'd be in a worse place that we already know.
So one of the things that's happening right now, is this conflict between marketplaces, app stores and the apps, right, we've seen this battle between epic and apple and that was Google producing their take rate in the marketplaces. How are you seeing zoom app as a marketplace concern? You're one of the top category apps in the Marketplace right now? And what are the dynamics are going to be like? Is there any idea from zoom from your communication with them or interaction with them? Or how do you in general see this zoom app marketplace grow?
Yeah, it's, I mean, wait stage marketplaces are very different than like, early stage marketplaces. Right. And, you know, if you look back over the last 1520 years, every new kind of marketplace opportunity or new kind of integration opportunity usually has spawned a handful of big businesses, right, you think about Zynga back on the Facebook platform. You know, you think about it, even some of the Google AdWords stuff early on, right. So I, you know, I think that we looked at this simply as gosh, yeah, very rarely do you get an opportunity, you know, distribution at this point, is more important, almost in product. Right? It's like, there's so many companies out there, you know, and we didn't think about this huge voice. This is one thing I would say I've learned differently. But user voice, I was like, we built the product, we found a team to help me work on the product. And then we figure out how to get it to the market. And this way, we actually went like, what's the market? How are we going to get some market? Great, let's find the team Great, let's dabble the product together. And, you know, thinking that starting with that kind of distribution, first mindset. And so we had some plans, it was actually one of the biggest concerns we had early days of fathom. And then we learned about this, this new app store experiences and marketplaces do its put together, right, that is such a like a, you know, talking about a greenfield opportunity to be able to get in there early. Yeah, there's challenges early platforms to Zynga had some of Facebook's Like, here, you're kind of riding, you know, they're figuring things out, you're figuring things out, you're both flying the plane and building at the same time. But if you can do that, and if you can kind of, you know, ride that bowl, and not get thrown to huge opportunity. You know, and shirt maybe a couple years now there's there will be no hobby, a hobby, or your friends zoom about, like their take rate or something like that. But we're a long way off from that. And so right now, it's just been all kind of all upside, and, you know, fantastic people to work with.
But do you see zoom marketplaces? Because it's going to be a significant sizable marketplace? Or because to me, it's for me, it's hard to imagine, I can see this category of, you know, transcription and thought of workflow integration, sort of in the area where, you know, you're building products. But do you see that there's a larger marketplace opportunity for this room here. Because I, it's hard for me to visualize that. This is going to be as big as, you know, Google App Store or any other app store.
Big, big, big from this perspective of the startup or big from the perspective of zoom, from the perspective of zoom. I mean, I think the, you know, the perspective of zoom is, we have the dominant Tech, we have the best tech for having a video conference. But there's like, as we talked about earlier, that call is the beginning of a lot of different workflows. Right? And if there's an air gap between us in this workflow, so there's no integrations and all those workflows, there's no things and there's nothing that stops Yeah, something else coming out a month from now with better tech and everyone moving over, right? There's, you know, if you if you swapped out my Zoom link tomorrow is something that was better, I may just move over to it. And so I think They recognize you one of maybe it's kind of like Salesforce, right? Like the Salesforce marketplace isn't as big as the apple marketplace necessarily. But it's provide a ton of value for Salesforce in that it's almost given that product pay more longevity than it probably would have on its own because everyone doesn't like work in Salesforce. But they do it because the ecosystem, right, and so, you know, it's unclear. It's unclear whether the Zoom marketplace, Zoom marketplace, every place is probably at worst Salesforce. And at best, you know, halfway to Android or halfway, you know, halfway to Apple, it's probably not Apple, maybe it can be either one of those are really good outcomes for zoom. And even the worst case outcome is a phenomenal outcome from startup perspective, right? Like, that's still 1,000x More distribution than I would have gotten on my own. So from our perspective, it's, it's yeah, it's it's very easy. So
yeah, I think, you know, first time founders are always thinking about the product. And the second time founders are always thinking about distribution. Right? Yeah. But I think you made a really good point about Salesforce marketplace, I think, for certain products, I think you still do need to have a marketplace, even though you're not going to be as big as Apple or Google App Stores. Because it's just Foster's integration and sort of ancillary products that you want to exist in the world. But it's not a large opportunity for you as a 50 plus billion dollar company. And you want that integrations to be done by someone else. And instead of you doing it, you can have a marketplace. And that's a good way for them to actually monetize their own product as well, because it's only driving more consumers more product integration, and more community and distribution for them as well.
100%. Yeah. And you want to like, you know, in the beginning, you're doing what we're doing, which is we build all the integrations into someone else, right? We do all the legwork. And that's you, hopefully, you get big enough, and that you want everyone to keep pulling into you to keep maintaining your weed, you don't want to do is not to have that. And then you've got no integrations with the new upcoming tools. And now you've got a surface area that someone else can exploit. Right?
Yeah, I mean, for other zoom competitors who are is entering or trying to build this, they have to foster an entire ecosystem, which will also you know, the most important thing is time, and it will take a couple of years for them to do anything close to what autism is. And this is onResume is doing. So one of the things are other things I want to ask is what is the future? For fathom? How do you think about future, let's say, five years down the line? Ready See, future? You know, what is the vision down the line for
father? I mean, I think, you know, I think it's, it's one of those things where like, once you, you know, it seems normal that yeah, when I opened my CRM, and I'm again, like, when I'm asking my team, how are customers doing? It seems natural that I'm just reading a bunch of bullet points that are sharing, when you take a step back, it's insane to me, right? It's like, we have hours of conversation with a customer. And all that shows up in my CRM is a couple bullet points don't make don't really mean anything to the person that was on the call. And so I think there's a real opportunity for us to, on one dimension become kind of a de facto tool that anyone who's a Power Zoom user, right, doing a couple calls a week, which is a lot of us these days, right? That, you know, doesn't want the stress of trying to remember everything that happened, especially back to backs. So I think one, there's a, there's a huge market there for us, right? And we want to go become like ubiquitous tool, which is why we built the product to be somewhat horizontal. That's why we've done the pricing model can make it completely free, we'll continue to make it free. But then I think there's a T shaped business here where you've kind of zoom actually, right? Like Zoom is used by people around the world, they've got a lot of free users. In fact, they get a lot of flack for how many freezers they have. But then they have this very deep kind of like business user, and even that down down enterprise user where they make significant amount of money. And I think that's kind of our model to where there's a, there's a kind of a T shaped business that we can build here, similar to zoom.
So one, as we are ending the conversation, one final thing I want to ask you about is you are basically been an entrepreneur for now, I think 10 plus years after user was now he started fathom. How did you think about your carrier back then? And how it changed right now? I'm
good question. I mean, I just like building things. You know, I think, you know, I think with user voice there were times where it's like, I've got to make this thing work. But there's all sounds like we had to zig and zag. We were probably Yeah, well, you said different companies within it. I think more recently, sometimes you you build up your company, very quickly, you get to like, you know, 20 people, 30 people, whatever. And now you're not on the front lines. And you're now a manager of people. Which can be awesome because those people when done right, it's like putting on this like Iron Man suit. Nikes you think about going right? All of a sudden what Google stuff has been built. But I really love the zero to one phase. I really love to be any of this. And I'm excited to grow up this company too. But I just like building products that we put in people's hands And they send me back emails and say, This thing is awesome, for whatever reason. That's what fills up my soul cup every day. And so, you know, Walter, my aspirations to get more into things I think are at a macro level more impactful, like climate change and stuff like that. But in the meantime, like, I'm pretty good at building web widgets. So I'm just gonna keep building little web widgets until that it's no longer a good business anymore.
Thanks for taking time, Richard. This has been a fun conversation and looking forward to using Fathom on my Zoom calls.
Yeah, and if anyone else was in this wants to check it out, that video search pod, we have about 80,000 people, maybe not 85,000 people on the waitlist. If you go to that link, you will skip directly over the waitlist to get primary access. And I'm on LinkedIn. So if you have any feedback for me, or thoughts or questions about anything we talked about today, or fathom, you name it. I'm very, not much of a Twitter person. But if you message me on LinkedIn, I'd be happy to chat. Thanks for Thanks. Thanks for having me.
