Summary of Episode
#17: Devon Copley joins Annaka and Ethan to share his story founding Avatour, a VR platform that allows users to bring clients, coworkers, and inspectors on site with 360 degree support so others can feel like they are sharing the same space with you. Devon shares his insights on finding a cofounder, using feedback to direct a company’s focus, and redefining what it means to be successful.
About the Guest:
Devon Copley is the founder and CEO of Avatour, a company working to share real places in real time without the need for travel. While at Nokia, Devon worked on a similar product bringing VR technology to cameras. However, Nokia ended up scrapping the project and making cuts to the team. Devon, having had experience working at a variety of startups, chose to continue pursuing his vision for VR technology and created Avatour.
Podcast Episode Notes
Finding the right cofounder to partner with can be essential to success [4:11]
A clear division of responsibilities is key to an effective partnership [10:15]
From prototyping a VR product to building a business [13:22]
VR and spacial communicators allow Avatour users to feel like they are physically present in the space, which can be useful for audits and inspections [16:47]
Listening to customers to better understand feedback and uncover use cases. Avatour’s main use cases include presenting “show” and investigating “look” [21:31]
Working with multiple verticles and finding the balance between going broad and going deep with customer discovery [25:28]
Following the customers’ needs and desires to keep up with current demand [30:46]
Marketing to adapt to shifting landscapes, develop leads, and establish the brand [34:44]
Focusing on the problem in order to build awareness, showcase the solution, and generate traction [39:11]
The startup survivor bias — startups that receive press are those that survived, and we rarely hear from startups that failed [48:16]
There are opportunities to grow your business and succeed, but it’s important to define success and remind yourself that your own self worth is not tied to your business’s success [53:21]
You don’t necessarily have to get VC backing to grow an enterprise [57:12]
Develop a strategy and be able to clearly and succinctly explain your company [1:02:14]
Devon’s philosophy on creating an efficient management structure: he provides the goal and removes blockers that the team encounters [1:03:01]
How to pay bills and survive during the initial phase of a startup? [1:05:18]
Devon’s advice — “If you’re looking to get rich, there are much better ways to get rich than starting a startup” [1:09:41]
Full Interview Transcript
Annaka: Hey everyone and welcome to Startup Savants. I'm Annaka.
Ethan: And I'm Ethan.
Annaka: If you're a returning listener, welcome back. If you're new, this podcast is about the stories behind startups, the founders who run them and the problems they're solving today. This episode we’re joined by Devon Copley of Avatour, a VR startup that takes site visits to the next level, allowing site visitors to thoroughly tour spaces from real estate to manufacturing plants from anywhere in the world. Devin had a lot of great things to say but I loved discussing his insights into whittling down the target audience aka not “boiling the ocean” and how the founder’s role has changed into being more of a problem solver.
Ethan: Absolutely, and to add to that, he talked about the importance of focus. Focus of the audience, focus of the product, and focus of the work. So, if you ever find that you or your business is getting lost in the haze this is the right episode for you. Let’s just jump in!
Annaka: We are very excited to talk to you today and get a more in-depth look at what y'all do. Can you tell us a little bit about the history behind Avatour, its mission and how you got started?
Devon Copley: Sure thing. Avatour is the remote collaboration platform for site meetings. We've essentially created a new version of video conferencing that's really optimized for the kinds of meetings that don't happen in conference rooms. That happen on site, where the context of the real world location is part of the meeting. I think the company started with this idea that new technologies, immersive technologies, like 360 capture VR headsets, these sorts of things, would enable a new kind of communication.
My co-founder Prasad and I had some experience with this technology at Nokia and admittedly, it was a hunch. We didn't have the specific product in our minds. We knew the technology really well. It was a bit of a pattern recognition sort of thing, where every time there's a new technology that appears, there's a killer app that's around communication, around connecting people in real time. I think that was the key insight is that we knew there was a set of new technologies that were creating new opportunities and we knew that communication was a valuable application.
So the question was how do we apply these technologies to a communication problem? From there, it was two years of trial and error and of trying a bunch of prototypes and going to random trade shows and trying to put things in people's hands and trying to see who was interested. We bootstrapped that entire process, which got, I don't mind admitting a little stressful eventually, because we weren't really making-
Annaka: I can imagine.
Ethan: I believe that.
Devon Copley: Yeah, we didn't really have a product in the market. We were doing occasional consulting gigs or one off prototype demonstrations for trade shows, these sorts of things. But by the end of 2019, we had a working prototype. We had a few people who were evaluating it, but we didn't have anybody really signing on the dotted line. Then we launched the product commercially for sale on March 14th, 2020. It turned out that was the same day that they closed the NBA, and Tom Hanks got COVID, and the stock market dropped 2000 points or something. So, our PR releases didn't really make much of a splash, but suddenly the phone started ringing. We were fortunate. Timing is always the biggest thing that you really can't control in a startup, especially a technology focused startup. We just had the good fortune to have the right product for the right moment.
Ethan: That's really great. We're going to talk a lot more about your tech and your product, but first I want to jump in on something that you briefly mentioned, your co-founder. It seems to be that we are interviewing more and more startups that have a team, a founding team, as opposed to just being a single founder team. Can you tell us about your co-founder relationship, and how you determined that this was the right person to partner with?
Devon Copley: Yeah, that's really important. For folks who are thinking about starting a company, for me it started with knowing myself and knowing my own personality. I think that's where anybody should start. I've historically been most successful in partnerships. Again, I would make that distinction between there's a solo, there's a two person partnership, and then there's a team. The dynamics change at various points across those three different categories. For whatever reason, I love partnerships because I love having somebody to bounce ideas off of. I love having somebody who reels me in when I do stupid things and honestly, emotional support.
This is a roller coaster and anything that you really care about that you're really plunging your own sort of self image and identity into is inherently a very emotional experience. Sometimes things go wrong and you get really bummed out. It's really, really helpful to have somebody there at your side in the fox hole and especially Prasad. Prasad and I have worked together for seven years. We had the good fortune of really being in our current roles at Nokia. I ran the product team, he ran the R&D team.
So when that project got shut down and we went out for a beer, paid for by our severance checks, we kind of just wanted to keep working together. I don't mean to speak for him, but I think we both felt that way. That we had a good thing going as a productive relationship where we compliment each other. So I was very fortunate in that case. I didn't have to go looking for somebody. It wasn't like, "Oh, I want to start a company. Who am I going to do it with?" it was like, look, I want to work with Prasad, and he wanted to work with me.
Then it was like, okay, well, what company are we going to make together? That's the best way to start I think. I think it's very, very hard to find yourself a partner who you don't have some track record or background with, because that level of trust and the level of sort of foresight, knowing what it's going to be like to work with somebody. It's very hard to know. You got to date before you get married. It's very much like that and I'm not being glib. It's really an important relationship. You can't get into it in a hurry.
Annaka: I was just going to say it's like there are services now that'll connect you with founders or with co-founders. It's like, man, this is very similar to all of the apps and things like that, to find a romantic partner. It's like wow.
Ethan: Yeah. A lot of those apps are called founder dating apps.
Devon Copley: Right. But I see people go too quickly from the first date to okay, we're going to split the equity 50/50. Here's what we're going to do together. Don't do that. If anything, go do a hackathon together. Seriously, try out what that working relationship is going to be like before you make commitments to what is this corporate entity going to be like, and who's going to have what equity split and these sorts of things. Because those are very hard to unwind.
Annaka: Yeah, and a huge decision.
Devon Copley: Yeah. Huge decision. One other thought on that point. One of the beautiful things about my partnership with Prasad is that it really is that we're bringing equal commitment and equal effort and equal skill sets on different skill sets, but equal value to the entity. So it made for a very simple conversation about how we split equity and these sorts of things. It's just 50/50. That was obvious. I think again, I was very fortunate to be in that sort of situation, but obvious things are sturdy. 50/50 is sturdy.
It's something that can stand up to repeated assaults from the outside world and all the challenges you're going to have over years of working together. Whereas if you've got some crazy complicated situation that's, oh, if this guy quits his job and then if we reach a certain revenue turn around, it's much better to find somebody you trust and establish basic simple rules of working together.
Annaka: Yeah. Well, and it's good when you started with that foundation from a previous position. So you knew each other's strengths, you knew each other's weaknesses. You knew when like, "Okay, now I have to tamp this down and/or go fix this, or take care of you in this way." Because I can see the stress of the launch or whatever is getting to you kind of thing. It goes a lot further than just maybe technical knowledge or how someone runs a business. I would be with you wanting someone else to be an equal partner to me and supporting me through all the insanity.
Devon Copley: Yeah.
Annaka: That would be totally me.
Devon Copley: I think it's the best option for most people. I think it's a rare person. I know solo founders as well, and I admire them for their sort of fortitude, but I think it's just so much easier to be in the foxhole with somebody else.
Ethan: So, you mentioned that a 50/50 partnership can withstand a lot of pressure from the outside. But there is a quote out there I will give it to Dave Ramsey, although he may not have been the first person to say it. “That the only ship that doesn't sail is a partnership.” I think what his idea or the kind of thought behind that is that maybe you can withstand those pressures from outside, but that maybe if there's no clear decider, that maybe you'll have some different pressure coming from the inside. Have you experienced anything like that?
Devon Copley: That's a crucial point. I think again, Prasad and I were quite fortunate in that we have a very clear division of responsibilities. While we aspire to do everything by consensus and essentially any hard decision in one of our domains, we'll talk about. But I had some background on the tech side, but I went to business school and I've been on the business sales partnership side for a decade so quite clearly I'm responsible for the finances. I'm responsible for fundraising. I'm responsible for sales and marketing, and Prasad is the CTO. He's got two master's degrees in engineering. He's been building real time media systems for 20 years.
He clearly has responsibility for the technical decisions in the technical team. We have a clear division of responsibility and that I think is one of the things that makes partnership effective. Now, there are areas where we don't have a clear... the main area where we share responsibility is product. Because that does combine the technical aspects. Here, fortunately I have enough of a technical background to understand technical constraints. I don't just say things like, "Oh, but why can't you do that?" Because I know why you can't do that. It's hard or impossible.
But we often have disagreements based on the fog of the future. We don't know who's going to use our product exactly. We have our ideas. That's where I think the policy or the approach that we like to take is we really do try to find consensus. If we don't have consensus, then we don't act. Then we keep talking, we keep looking for more data. If one of us can't convince the other, then something's wrong. Because there's nothing in the way of us convincing each other. We don't have pride about these things. That again, comes from a relationship where we trust each other. I think without that trust it is very hard to move forward in situations like that.
Annaka: Yeah. I want y'all to adopt me now because that was a perfect answer. So, swinging back to the evolution of Avatour, it was previously a product of Imeve, correct?
Devon Copley: Yeah. So, let me talk through that journey a little bit. So as I said, for the first couple years we were trying a bunch of prototypes and we had some ideas for what the thing might be that we would sell. But for the most part, we were sort of putting the technology together in different ways. We were trying a few different things. We were trying social consumption of video content in VR. We were trying various combinations of hardware that you could use to capture locations. We were trying out different use cases. Maybe it's a one too many kind of use case, like a, what do you call it? Not Slack. Oh, forget it. There's an example I always use. Twitch, of course Twitch. Like Twitch, where it's sort of a one to many, but there's a limited back channel.
We experimented with all these kinds of different models. So in a sense, there wasn't really a product yet. Then once we got a prototype together, then we were like, "Okay, this is a product. It needs a name." We came up with a name for the product and we were like, "Wait a minute, that's a way better name than the one we got." So we really just rebranded the existing company and focused on that, when we launched that product. That kind of all came together to just sort of throw away the old name and all the other things we experimented with and focus on this thing that was working. So in a sense, it was sort of a breadth-first search. That we sort of went broad to try a bunch of different options and a bunch of different things and then found something that we thought was working and then gave it a name, committed to it, which I think is a good general approach.
Annaka: Yeah. So that was like your moment to pivot into making this its own thing?
Devon Copley: Yeah. It was less of a pivot and more of a focus I think. I think our original concept was real time immersive technology, which was a much more general idea. Then we found this specific use case of collaboration for site meetings, which was something that resonated in the marketplace. It was something that made sense to buyers, brought value to our customers. Since then, we've just been running at that, like very, very clear understanding of what we're doing.
Ethan: Yeah. It's really nice to find focus. It gives you the freedom. Yeah, the freedom, that's the best word to really focus on the product. The focus gives you the freedom to focus. Wow. Look at that. We're nailing it.
Devon Copley: Okay. Well, you know the best thing about it is actually that it frees me up from having to really manage. Because we have a team now. After we raised our first round, our only round, we were able to hire one finally, a bunch of people where we weren't doing everything, me and Prasad and a couple other folks. To have a clear understanding of what our product does, who it's for and what it doesn't do and who it's not for. We can just explain that once everybody gets it, then that guides and shapes the efforts of people on the marketing team or the sales team or the dev team. They can make decisions using their own brains rather than having to come ask, "Oh, what do I do now?" We all know what we're trying to do. We all know where we're trying to get to and that is so crucial.
Ethan: Yeah. It's pretty nice when people can think for themselves. So, most of the video, the popular video conferencing products out there don't have any VR capabilities, but there are a few VR-centric companies that do offer some kind of business type conferencing features. I don't think that there's been a wide adoption of those, but Avatour, it's different. It's not just let's create a virtual meeting room and then put a bunch of avatars in it. But it seems to kind of split the middle between those two ideas of video conferencing and VR with video conferencing attached. What does having VR and kind of more spatial capabilities accomplish for users and why is it important?
Devon Copley: That's a complex question, and I'll try not to have a complex answer. I'll do my best. So maybe telling the story is maybe the best way to explain this. So Prasad and I came from a VR project. Came from a 360 camera that was built to make content for VR. We honestly had, not to say blinders, but we had sort of a preconceived idea that the VR experience, the fully immersive experience was the value proposition. That was the USP as they said. It was like you put on the VR headset and you're really there. You can talk to the people who are on the site and you can look around and you can see how light falls, you can see how traffic flows, all these kinds of things that you really can't get on a flat screen. That was our premise. The thing that we did right, I think, was that we learned from our customers. We listened to our customers and what we heard was not just that VR headsets are a pain in the ass, because they are, let's be honest.
Ethan: A pound of plastic hanging off your face.
Devon Copley: Right. More precisely, they create a big hurdle for the person who's going to use the product, because you’ve got to buy the device. You got to learn how to use it. You got to install the app. You can't just click on something. So it's a huge hurdle. So the value you provide has to be really huge to make up for that hurdle. But that we kind of knew already. What we learned that we didn't know was that providing that same 360 capability in the browser window was super valuable as it turns out. That the emotional impact of immersion was one thing that was useful for some use cases.
But the sheer information of being able to look around everywhere at a given place was valuable all in and of itself. It was way easier to access. With Avatour, you can literally just click on a link and then you're there. It's like a real time Google Street view. We didn't think that would be of any use to anybody. When we first sort of put it in the browser and people were like, "Yeah, give me this. This is what I want." So, we're like, "Oh, wait a minute. So, actually VR is cool and all, but it's only useful or interesting for a subset of our customers, and 80% of our customers never put on a headset. Because what they're about is ease of use, instant access, that full 360 content. It's largely for not the hind brain activities, like understanding the space or getting the emotional impact of something.
It's forebrain activities like inspections, audits. I want to see every inch of this room and I want to examine it in a systematic way. I want to do that at my desktop with access to my other tools so that I can go back and forth between windows. It was a classic example of like, we were almost there, but you have to get a prototype in market and then listen to the people who are using it and then react. I think we did that pretty well.
Ethan: Absolutely. Yeah. Getting that customer feedback and being able to take your hands off your ears long enough to actually do something about it, that's huge.
Devon Copley: And, it's something we always have to relearn. I think it's always so easy to just go with what your vision of how things are going to be. You can always be talking to customers more and I'm as guilty of that as anybody. I have to keep reminding myself, just call them up. Just look over their shoulder. Just do any way you can to get more of that feedback is going to help the product.
Ethan: Absolutely. So what are the primary use cases for this technology? Because it seems like there would be several markets that could benefit from this specialized hardware and software. Have you found a niche market that views your product as a painkiller over a vitamin?
Devon Copley: Right. So first of all, let me make this clear. We use off the shelf hardware. We are a software product exclusively. So we have sort of a hardware component, but these are commodity devices. So this device or this device. You can buy the Insta360 cameras at Best Buy and they plug into our system. Just so that's clear. There is this dependency, but it's not our hardware for better or worse, mostly better I think. But as far as use cases go, I think that... let me talk specifics and then I'll generalize.
So specifically, we see them as comprising two different categories of use case. Actually, let me take a further step back. We are currently focused on business applications only. We are quite deliberately leaving consumer applications aside for now. We have a plan for how we're going to handle them in the future. But for now, the audience is still small and they're still other challenges. So, focusing on business is just the sweet spot for us right now. Within the enterprise universe, we can theoretically provide value to any company that creates value at locations. So that's such a broad range. It's manufacturing, it's retail, it's supply chain and logistics. It's utilities, it's maritime, it's franchise restaurants. We have customers that fit all of those categories, each of those categories.
So within those verticals, there are typically two kinds of use cases. One is what we call Show, which is typically a top line application where you're trying to sell a facility or service or capability as typified by maybe a contract manufacturing company. Where you want to show off all the great capabilities of your manufacturing facility. It's as simple as tourist close deals. They really do. They always have, but it's hard to get somebody to show up in Singapore or wherever your facility happens to be so that's a great use case.
Then the other use case is what we call a Look use case where it's a bottom line situation, where there's some sort of required quality assurance or inspection or walkthrough or training, which requires access to the facility. It's just expensive to get everybody there. Direct costs and indirect costs. Often you're interrupting the operations at the facility in order to do whatever it is you want to do, whether it's a method transfer or safety training or whatever. So Avatour makes that both lower costs for the people who are traveling and for the people who are on site.
Now, the challenge is that we're trying to sell two very different classes of use cases. One of which is top line, one of which is bottom line to different buyers. Top line is selling to sales and marketing. Bottom line is selling to quality and supply chain and these kinds of folks. Those are different silos within any given org all the way up to the CEO typically. There's no one buyer across those two groups. Then, we're also trying to sell across these a dozen, two dozen different verticals, or we could potentially be selling into them.
So, I think for us from the start, the biggest challenge has been that go broad or go deep. Our vision is horizontal, but we're 20 people. We can't really be experts in every vertical. We can't speak to the specific concerns of every vertical. So we're trying to break it down, focus on a couple key verticals where we have existing traction and kind of be opportunistic for the other sectors.
Ethan: That's a good idea. I think taking the wide route and then finding one that works as long as you can continue to operate when you're going wide. Because it sounds like just what happened when you were in your initial company and then we're able to find the one product to focus on. I feel like you're playing kind of that same game, where your focus is broad, but I'm assuming that when you, and maybe you've already done this it sounds like, when you find that one market or those two markets or these specific types of companies that you can say, okay, everybody that's working on these other things that we're kind of scratching the surface of, cool off for a minute and come over here and let's really tackle this one market and crush it.
Devon Copley: That is what they taught me to do in business school. I would not say that's quite exactly what we're doing. We're probably quite a bit broader than a typical strategy might advise. But as I said, we're being opportunistic. It's because we have demand from a bunch of different verticals and we don't want to turn them away. So while we have focused our marketing on a couple of different verticals, our actual customer base is still quite broad. That is a challenge. Because is it a challenge? It's a challenge. It's an opportunity.
Our vision is to build a broadly horizontal product. That is our vision. When you ask what's the right vertical for Zoom? All of them. We see site meetings as not quite as universal, but still extremely horizontal across a wide variety of industries. We're trying to build the category defining product for that category. That is our goal that has been from the moment that we created this first prototype and it will remain our goal for some time to come.
Ethan: Is this a path that you would recommend other startup founders take?
Devon Copley: Broadly speaking, yes. I think the whole horizontal vertical thing is challenging, but the idea of creating a category that is kind of standard advice. I think one of the things I took away from business school was the idea that you don't want to be in a red ocean. You don't want to add... a red ocean, meaning a market where there's already a bunch of competitors that are all fighting over the same fish. That's a crappy market to be in, your margins are always going to get hurt. You always have to say why you're better than something else. What you want to do is resegment that market, create a new definition of a market that only you can serve well. That strategy is really fundamentally sound. That's what we've done and it was guided quite deliberately by those strategic considerations.
Annaka: You had mentioned when we were talking about focusing your scope that your target audience was difficult to nail down, and you used the phrase “boil the ocean” in your company profile, hint end. It's available on startupsavant.com. Can you talk more about expanding that, and sort of how you narrowed things down?
Yeah. I guess I would caveat this by saying that we're always learning and I think we're still learning new things. Especially these last two years with COVID. The environment has been changing significantly and rapidly much more so than it has in the past, especially for our product, which is directly impacted by all these COVID things. So it's only kind of in retrospect that we're able to understand some of the signals that we got from the market and which of them were transient and which of them are deep signals that continue.
Just to give an example, I was going to answer this question by saying, well, we listen to the customers. But in fact, what the customers themselves are saying has changed a lot over the last couple of years. Where the interest has come from has changed a lot and it’s a function of, when COVID first hit, some industries, retail restaurants, real estate basically went into hibernation instantly for three months or longer. Other industries, notably pharma, went into overdrive, and suddenly had piles of money and enormous amount of work to do, but enormous constraints on what they could do. So we had initially, a lot of demand from the pharma sector, and we still have demand from the pharma sector, but the proportion has changed quite significantly. We now see, over the course of the last year, we're seeing interest from retail and from franchise restaurants for example, they were off the radar until now.
Those two different use cases I had talked about, the show use case versus the look use case. One being more about marketing and sales and the other one being more about inspections and audits. We were overweight, it turns out in retrospect inspections and audits, because we were listening to the market and that's what the market was telling us. That's what we emphasized. But now after doing some analysis, we discovered that we were closing 20% of our opportunities in inspections and audits, but 40% of our opportunities in tours. Even though we weren't emphasizing the tour use case in our marketing, we weren't zooming in on that.
We thought our business was 80% in inspections and 20% tours, because that was what the demand looked like in those first few months of COVID. But in fact, it's more like 50/50, and it might even be, as things continue, more tours than inspection. We don't know. The market might be much bigger than we anticipate. So I guess what's the takeaway? It's look at your data, listen to your market. As soon as you have enough information to run analyses, do it. In 2020, we didn't really have enough data, but by the middle of 2021, we went back and ran our data on close rates versus use case. We were like, "Oh, that's interesting. We need to act on this." So I don't know, pay attention to your data. That's the takeaway. I guess that's the takeaway.
Annaka: Yeah. Listen to your customers. I love that you come back to that, because that's crucial everywhere. As your target audience is kind of evolving and you're learning more, how does your marketing strategy change based on who you're talking to in that moment?
Devon Copley: Marketing is, for me, it's the area of the business I know the least about. I have been a CTO before, I have been ahead of sales before. I've been ahead of customer success before. I've been a product manager before. I'm very fortunate to have had that rather peripatetic career path that has prepared me to be a CEO, but I never ran a marketing function. The closest I got was coding Facebook games back in like 19 or in 2006 or something at which point I was like, "Wait a minute. I can copy all the profile information from everybody who signs up for my stupid New Year's Eve game. Something's wrong with this." Little ahead of my time. But anyway, long story short, I went so deep into my parenthesis, I've lost the thread. What was the question?
Annaka: How your marketing strategy changed depending on your audience.
Devon Copley: Marketing and why I don't know anything about marketing. So it has changed. I've been very dependent on some of the terrific folks that we brought on board to lead marketing. Jenna and Rick and Gabrielle have been leading our marketing efforts for the last 18 months. Jenna Long before that. The biggest challenge for us, I think has been the shifting landscape. I think this is something I didn't understand. I thought that once you had dialed in a marketing message, you could kind of just throw more money at it and make more leads.
Turns out, that's not how it works. Turns out that, again, I think maybe a function of COVID, we saw search terms that worked really great for us in 2020. Completely failed in 2021. We saw new terms that didn't used to work, are working. I would say it's still very much a work in progress. One thing that we had been very heavily depending on paid search. I think we're doing our best to move away from paid search. Not to say we're not doing paid search anymore, but trying to develop longer term strategies for developing leads.
We are also thinking about the broad brand and how we can continue to seed the core themes of the brand. We probably could stand to devote more time to that, but we haven't ignored that in the hustle trying to get more leads this month and everything. I think we've come up with kind of aspirational framing for the product that it's not just about saving money. It's about redefining your operations. It's about bringing innovation to your firm. It's about leading the way in your industry. I think those are effective, but they take a long time. The payback is very hard to measure on those kinds of activities. So there is a bit of a leap of faith and that's one of the things I'm still trying to wrap my mind around. I think as somebody who's tended to be either a code driven engineer or a coin driven salesperson, that's my background. There's much less of a cause effect relationship to a lot of marketing activities. That's something I'm trying to wrap my mind around.
Ethan: So for paid, your profile mentioned that, especially in the beginning years of the company, you did a lot of paid and that was kind of one of the big focuses of your marketing. What you're saying is that you're kind of trying to get away from that. Is it kind of what got you here isn't the thing that's going to get you there type of mindset or is it just something that isn't working as well as you would've wanted it to from the beginning?
Devon Copley: Neither. What it really is is that there's a certain amount of search volume that is directly related to our product. Virtual inspection, virtual tour, things like this. That volume spiked after the beginning months of COVID. We were able to benefit from that spike in volume, but it's since receded. The baseline is higher than it was before. It wasn't just a simple slope either. It reacted, as it turns out, to all the different variants and all the different... it was different by region and all this stuff. But overall, COVID was a tailwind of uncertain velocity and duration. Which made it very difficult.
But nonetheless, there was a limit to it. You could only spend so much money there was only so much volume to buy in the first place. It wasn't like buying grocery shopping or something. Where there's infinite volume. You can buy as many leads as you want as long as you're willing to pay for them. For us, we're constrained by the search value. Why? Because we're a new product category. This is, I think, an inherent, not flaw, but it's a downside of the blue ocean strategy. Is that people don't know that this product exists. We've created a new product category that barely even has a name and that people don't know, they don't know to look for it.
So, we have to meet people where they are and that's a lot harder than looking for intent. We're looking for search intent. So, we have to dig deeper into what is the problem the customer's trying to solve and how do we find search terms that are around that problem, not around our solution. Because people don't know about our solution. That's why we're shifting towards putting more of our budget, more of our efforts towards these top of funnel activities awareness. Doing more targeted social and LinkedIn against the industries that we want to hit. Doing more PR. We're investing in PR and getting placements in industry magazines. Just talking about the problem and, oh, here's a solution you might not have heard of. Those things take a while to pay off. You're building this gradual increase and awareness that there is this new solution. I think that's the bulk of the change is that we've topped out on that. Just pay for upfront intent because it's not a category people know to search for.
Ethan: All right. I'm going to ask you one more question about marketing and then we can go back to the fun stuff after that.
Devon Copley: Yeah.
Ethan: You mentioned, again, in the profile inbound thought leadership, and that was maybe a more, a newer marketing strategy. What the heck is inbound thought leadership and why is it a strategy that you're moving to?
Devon Copley: This is a great follow up to what I was just saying. So, the idea is to build awareness by trying to expose people to a solution they didn't know existed. You do that by creating content that speaks to their problem. So it has to be industry specific. It has to use language they're familiar with, whether it's pharma or food or logistics. A lot of it's not that big a difference. If it's pharma you're talking about, labs and if it's logistics you're talking about, warehouses and you're just using that word. But it signifies that you have some idea of what they're doing. You talk not about the product, but about the problem.
I need to do tours of my warehouse in order to sell my logistics capabilities, but it's hard to get people to show up and it's really disruptive to the operations and the operations guys don't want to let me take over the floor for two hours a day. That's an example, but the idea is to write articles that reach people where they are, and then help them find those articles. Whether that means social posts or placements in industry magazines, or just blog posts that we use SEO. So that we're hitting different, more focused search terms that, again, are less about the solution and more about the problem.
Then they come to you and let you educate them about your product. That's the theory. I think it's very much at the early stages of that addition to our strategy. Again, it's very hard to trace some of the results. If they do come to a blog post on your website, then at least you can drop a cookie and track them and figure out when they eventually come back and ask for a demo. But if they came across that on a third party website, or they maybe saw it on social, and then later on typed the name in somewhere, it's often hard to attribute that stuff. It's kind of a cloud. But again, I'm learning to live with that uncertainty.
Ethan: Yeah. It's getting harder as well with all the attribution stuff. I want to-
Devon Copley: The tracking, yeah, for sure. Believe me, I'm okay with that.
Ethan: Yeah. Me too. From the consumer side, it's kind of a breath of fresh air, but from the business side, we're feeling that too. Looking to other solutions for a problem that we did not see. Not necessarily that we didn't see it coming, because it's kind of been telegraphed for a long time that companies like Apple are kind of cracking down on this tracking stuff. But we're just having to think outside the box for these sorts of things. It sounds like you are too, which is great. Jumping around a little bit.
I want to ask one question about your hardware or maybe lack of hardware, which is fine. One of the selling points on your website is that they can utilize their own 360 camera or use the Avatour camera, which I believe is also an off the shelf camera. Why did you make the decision to use third party hardware as opposed to creating your own, and has that created a headache for your development teams to keep up with other companies' software updates and that sort of stuff?
Devon Copley: Yeah. It's a damned if you do damned if you don't kind of decision, whether when you have what I would say is sort of a hardware mediated software platform, or a software that has a hardware key sometimes described. Whether you want to build it yourself or whether exploit third party devices, I think for our part, the decision was a little bit overdetermined. Because A, Prasad and I don't have any direct hardware experience so that would've been a heavy lift for us. We would've had to bring in somebody with that kind of experience. B, we just didn't have the money. We started this bootstrapped. We only raised our first external funding almost two years into the project.
We just did not have the funds to do hardware from scratch, but on the plus side, the 360 camera space is one that's relatively healthy and competitive on the one hand. But it's also not huge, which means that our demand, even as a relatively small startup, is big enough to move the needle for many of these manufacturers. Many, there aren't even that many. There's probably six manufacturers, which is a good number. It's not one. The number of units that we're selling is enough to be interesting. So with at least a couple of the developers or of the manufacturers, we do have some input into their product roadmap and what they're designing.
We're looking to have closer relationships moving forward. So in that sense, it's kind of the best of both worlds for us. We're fortunate again, because we have enough influence over the manufacturer to influence the roadmap so that it converges with our needs as a complete solution. But we are not taking on the risk and responsibility of developing them ourselves. We also have competition in the market so that if we don't have a vendor lock in where we've got somebody who exerts sort of market control over us, because we can only use their hardware.
I think we made the right choice, but I will admit constantly, we'd sometimes dream about if we could design our perfect piece of hardware exactly for our product, what would it be and how much better would our product be as a result? Maybe after our Series C, we'll think about it, but for now this is a pretty good solution.
Annaka: Yeah. Well, then I think it speaks to you and Prasad making a decision based on your strengths, and really honing in on that. We are good at this and we can deliver this, and this is what we're good at. It's something that you can approach with confidence. Whereas if you threw the hardware in there, it'd be like, "Oh, crap." So, I agree. I think you made the best move at the time. If we could, I just want to say that you are the king of these phrases that I'm going to just start using in my life every day. Like “boil the ocean” was one. The one that I want to talk about now is the “survivor bias to startup stories.” Which all of us kind of immediately latched onto, because we're like, this is it. This is what we want to talk about. So can you tell me more about what that means and what that means for potential founders?
Devon Copley: Yeah. So survivor bias as a concept is something people often talk about in the context of analysis of the returns or of the results of several years of performance. Often when you're analyzing returns, say of a portfolio or a bunch of portfolio managers, you're only picking the people who survived at the end of that five year period. You've left out all of the firms or managers who simply failed.
As a result, your analysis is faulty. Your data is all wrong, because you've got the wrong number in the denominator and that's survivor bias. You're only counting the survivors. You're not counting the people who started the journey. I think that's very much the case if you're looking at the startup world from the outside in, and you're trying to ascertain what are the right decisions? What are the kinds of people who or are companies that... What am I trying to say? What is a startup like? Because you only tend to hear the stories of the big successes. Not even just the people who survive, but you only tend to read about the people who are wildly successful, because they're the ones who get in the press.
I would say certainly that is a subset of the startup story. But if you draw your conclusions based on only those people talking, then you will probably draw erroneous conclusions. Because there's a lot of other outcomes in between that don't make it to the startup story.
Annaka: Then here comes this podcast to talk to all the little guys.
Devon Copley: Well, no, no, it's great. It's great. Because I think you guys are focusing on folks earlier in the cycle than a lot of Forbes does or whatever. I think that's salutatory if I could say. It's good to hear from these folks. I think the other aspect of it is that there's almost a psychological thing about, there is in fact a psychological thing, that people who succeed tend to retroactively revise the conditions that brought about their success.
You get the sense sometimes of people who are post IPO or they sold their company for $300 million, that there's the sense of inevitability to their eventual triumph and self confidence goes a long way. But I don't think that triumphalism is necessarily a reflection of what it's like day to day to be building a startup in those days when you never know if you're going to make payroll. That is a reality. That is the reality of nearly a hundred percent of startups for usually the first couple years or more. Where it's touch and go unless you're, again, a repeat startup, a repeat founder who has the backing of the same investors who made a ton of money off you last time. That's a very different story from most of us who are coming in and starting from scratch. It's harder than you think.
Ethan: Right. I think something else that we all need to do, and we can't. I think as founders and as people that kind of live in this startup space, I feel like there's this feeling of you're only a success if you become a unicorn, or you are only a success if you have a hundred million round A or round B or whatever. But I really feel like we each need to define success for ourselves, because if everyone's standard of success is becoming a unicorn company, then startups must just be a game for insane people. Do you feel our standard of success is too narrow or too lofty?
Devon Copley: Oh, that is a whole new topic and it's a very, very important one. There's a couple of great books on this topic. There's The Meritocracy Trap, which came out recently. There's a great book called Status Anxiety that I read some time ago. This is a psychological disease that capitalism imposes on all of us who are playing it. The idea is that, well, anybody can be as successful as they want. It's capitalism. The flip side of that, and there's some truth to that. It's a beautiful thing about America is that you can. You can really start something out of nowhere and you can be wildly successful by any metric.
But the downside of that sort of open opportunity is that people have that sense that if I don't accomplish that, then I'm somehow not good. I'm a failure. Then beyond that, there's the sort of legislation or the sort of codification of that sort of thing. That if you’re poor, you're poor because you didn't work hard enough. Which is the really dark side of the capitalist sort of story. So anyway, that's a big topic. I would highly recommend those books to folks. You need to come to terms with that. You need to understand that your own self worth is not based on those metrics, and that you need to find your own definition for what success is. Absolutely.
More prosaically, I think the reality is that startup rhetoric or startup stories are heavily overweight to the VC backed success stories. You have to keep in mind that first of all, even within the relatively small universe of VC backed companies, there is a very small universe of ones that are wildly successful. The fact that the vast majority of the press and other coverage of founders is based on that tiny sliver is really giving short shrift to both the rest of VC backed companies of whom many failed. I will say this, many of them took perfectly nice companies and then drove them into the ground because they took VC money.
Then the much larger group, something like 80% of startups that don't take VC money, and that grow organically off of their customers' money. A much potentially lower risk, sorry, potentially lower growth path, but much lower risk. So I don't know. I could say a lot on all of those topics, but I think the practical impact of that question about what is the definition of success that you have to think of as a founder is closely tied up with where do I take my money from? This is a really important thing that founders don't think about enough, especially if they don't really understand how VC works or what VC is about versus other ways to fund your business.
There are a lot of other ways to fund your business. One of my best friends runs an iPad accessories company. He does hardware or iPhone accessories, and he owns a hundred percent of his company. He built it brick by brick, and he does things like get FHA loans, not FHA, but small business loans, SBA loans. He got an SBA loan to buy a building in San Francisco for his warehouse. Now, he's probably going to make more off that real estate than he will off of a couple years worth of profits from his company. But these are the things you can do. You don't have to go to VC, and in a lot of cases, you shouldn't. That is really distorted in the current sort of discourse around startups, because there's so much focus on that tiny sliver of VC backed unicorns.
Ethan: Preach it, brother.
Annaka: So, the VC backing is one thing within the startup sphere. Let's talk about roles. I know that many startup founders, they are CEOs. Some of them are CTOs. However, whatever their background is in, and people have different views on what that role entails. Yours, I believe and correct me if I'm wrong, you focused it more as a problem solving role rather than a dictating role.
Devon Copley: That's a great prompt.
Annaka: I didn't really-
Devon Copley: Yeah, no, it's great. My role has changed quite significantly over the course of the company's development, but mostly it changed all at once after we raised our Seed Round and had the opportunity to hire. Because prior to April of 2021, we were almost entirely self-funded, funding off of our revenues. We were really going hand to mouth, and we just did not have the luxury to hire. So we basically had a dev team of like three people plus Prasad. Then me, and I had a couple of sales folks that we brought on towards the end of 2020. So prior to that, I was doing all the sales. I was doing all the marketing. I was hiring freelancers to create our logo. There's nobody running design. We had no post-sale personnel. We had no support. We had no customer success.
That is the reality of the early days of a startup, where you don't have a sugar daddy giving $5 million to start. You got to do everything. Somebody's gotta do it, and you look around, there's nobody else here. It's you. That was my first role. I think that comes very naturally to me. I always have been kind of a roll up my sleeves. I don't care whether I've got the expertise or not. I'm just going to figure it out as I go. Because I'm smart. I can figure this out.
Once we got some funding, $3 million, for the first time we were able to hire a team. We just about doubled the size of our dev team. I was able to hire a sales leader, a marketing leader. Well, Jenna had been with us earlier and a customer success leader, and some more people. That was the fundamental kind of break point, where I needed to stop doing this work directly and start empowering others as I was saying before. Give them the understanding of the goals and then let them figure out how to achieve them. That is very much a management philosophy that I've come to... I don't like micromanaging. Frankly, I'm just not cut out for it. I'm not organized enough to be a micromanager.
I'm very good with understanding a strategic landscape and being able to say how we fit and be able to decide and determine goals weigh the various factors. But as far as executing a day to day, I'm actually not that great at that. Most of the people I've hired are better at it than I am anyway. So, that to some degree, is the only management style that's open to me.
Annaka: Yeah. I believe in your profile or other research that we did, you used the phrase “block clearer.” Which is extremely hard to say quickly, but do you have any advice or thoughts for founders or CEOs that are having trouble changing their perspective? From the kind of micromanaging, get in there, do everything yourself into enabling your team and helping your team succeed in their day to day lives?
Devon Copley: Yeah. It's a very fundamental change and I think there's a couple of aspects to it. I think first you have to prepare the ground with what we talked about earlier. Which is very clear strategy, very clear understanding of what your product is, what it does, who you sell it to. Without devolving that to your management team. You can't expect them to take ownership and to be able to accomplish stuff. So, that's I think the first step. It's really important to make it as simple as you can.
One of the things that we did at 500 Startups that was super instructive was an exercise of boiling down what your company does to five words. How can you say it in five words? That level of simplicity and clarity is, I think, a prerequisite for being able to devolve that authority to your management team. Because otherwise you wind up micromanaging because they don't know what it is that you want. They don't know what it is that the company's supposed to do. So the more clearly and succinctly you can describe that high level strategy and goals, the more effective, the more empowering you are to your management team. So that's one thing.
Then day to day, I don't think I have anything new to say about this. I think I strive to come up with hard metrics for every report everyone on the management team, because that takes those strategic goals and then gives you a measure of progress against those strategic goals. Again, I'm not a micromanager. I don't have the patience or the brain room to do it. So I have two, maybe three metrics for each person on my management team. They know what they are. At the beginning of each quarter, we look at what we did in the last quarter for these metrics and what we mutually agree we're going to do in this quarter.
I kind of stop there. Then within the quarter, once that goal's been assigned, it's up to them how they're going to accomplish it. In some cases, they have a budget as well. Here's your goal, here's your budget. If you've got questions, if you're not sure about a decision, come talk to me. I'll be a sounding board. If you have things that are getting in your way, that's why I was saying a blocker clearer, that's... In that, I picked up from the methodology of scrum. At the end of it, if you guys are familiar with scrum, it's a development methodology.
You have a standup and you say what you did yesterday, what you're going to do today and what are my blockers. My job is to get rid of the blockers. That's my job. It makes it very, very straightforward. My job is not to tell them what to do. My job is to tell them what the goal is. They figure out what to do, and they tell me if something's in their way. That is a very, again, simple and sturdy structure on which to build a management philosophy. I always look for those things that are simple and sturdy.
Ethan: Something I think a lot of founders would like to understand is how a person pays their bills when working full-time on a project and not bringing in any personal income. The answer is that there's probably not just one answer. I read out there that there was at least a two year period where you and your co-founder didn't take any salary from the business. How did you eat and pay your bills during that two year period?
Devon Copley: Yeah. We're married with kids, both of us, and we live in the Bay Area. So this is non-trivial. It wasn't easy. I feel very lucky and privileged that I had some savings that I spent down. We both got paid a pretty substantial severance from Nokia, because they shut down our division. So, the severance covered me for maybe six months. That was very lucky. Then after that, just as we were... as I was taking out my last cash advance on my credit card in February of 2020, COVID hit. I was able to benefit from a bunch of the federal programs. We took whatever was the money that they offered to companies to small businesses so that we could at least pay ourselves a little bit, pay our employees mostly. That was kind of what kept the employees paid.
I took a forbearance on my mortgage, because I was like, look, I can't pay myself. I was lucky again because of COVID that reduced our expenses. But no joke, there was more than one occasion when it was like, we can't go another month. Here's where if you're married, that's a challenge that hits your household and you need to be very open with your partner about it and make sure everybody's on board. I think I was reaching the point where it was going to be time to pull the plug. This is the other thing about my personal experience is that it's so contingent. There's so much luck involved. We happen to have the product that would've been early and we would've gone down in flames except for COVID came along and kind of saved our bacon and kind of moved the market forward by a couple years almost overnight. Without that, I wouldn't be on this show. I would've been one of those I am currently myself. One of those survivor biases because there's an alternate universe somewhere where COVID hit five months later and my company was out of business.
You got to be, pay your money, you take your chances. It is a gamble and it's a gamble that's very difficult for somebody to take. If they don't have a little bit of a nest egg, don't have the permission of their spouse. Don't have all the things lined up to put you in a position to take that risk. I did and even then, it was a near thing.
Annaka: I'm sure that was like getting by the skin of your teeth there, like, oh, gosh. Do you have any other advice for entrepreneurs that are looking to get started?
Devon Copley: Absolutely. I'd probably talk another hour on that topic, but there's a couple things that were in the written interview that I would highlight. I think also in keeping with this idea of survivor bias. Don't be a startup for the money. If you're looking to get rich, there are much better ways to get rich. The likelihood of you founding the next Twitter is incredibly low. I don't care who you are. I don't care how smart you are. I don't care how hard you work. I don't care who you know. It's still a huge gamble. If your goal is to get rich, go work for Goldman Sachs. Go put in your time, get a law degree and go work for a big law firm. Put in your time, work your ass off and you'll get rich.
There's a virtually 100% chance that you will as long as you're willing to stomach that environment. You become an entrepreneur because you can't stand working for other people. Because you have an idea of something that you really, really want to see in the world. That has to be what motivates you, because otherwise you won't make it through the challenges. So that would be my number one piece of advice. Don't do it for the money.
Ethan: I think that's very, very wise advice from what seems to be a very sage advisor.
Annaka: Agreed. Yes.
Ethan: This has been a lot of fun.
Devon Copley: I think he just called me old.
Ethan: Hey, I didn't have thesaurus open when I said that. So if I did, I'll take that. That's my bad. This has been a lot of fun. We really appreciate you coming on the show today. You really do have a lot of great advice and maybe we'll have to have you back for the just advice piece. We'll see what one of those looks like, but for now-
Devon Copley: It's been a great pleasure Ethan.
Ethan: Yeah. Thanks.
Devon Copley: Appreciate you guys having me on.
Ethan: Absolutely. That's going to be it for today's episode of the Startup Savants podcast. We truly appreciate you dear listener for hanging out with us today. Speaking of listeners, we want more people like you to become listeners. The best way for us to accomplish this task is to ask you to share the podcast with your friends. An Apple podcast rating would be pretty helpful too though. See, the beautiful symbiosis of the podcast relationship is we do everything we can to bring you the stories that you want to hear. Then you go and scream Startup Savants from the rooftops. Simple. But I digress.
For tools, guides, videos, startup stories, and so much more, head over to truic.com. That's truic.com T-R-U-I-C.com. See you everybody.
Annaka: Bye everyone.
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