If you want to succeed in building a successful startup, it’s crucial that you to understand where you are and where you are going. While having a vision of what you want to create and a product roadmap is great, it is not enough. In addition, you must internalize where your company falls in the startup maturation process. Doing so will enable you to make better decisions and secure the proper support for your company. That’s where today’s guest comes in. Justin is the CEO & Founder Thinktiv, a company that has helped over 200 startups launch and grow. During our discussion, Justin breaks down the four phases he sees startup go through and shares with you the problems that are faced in each phase, how startups are successful in transitioning from one phase to the next phase, and so much more. If you’re serious about succeeding, listen to the interview with Justin Petro to get the insider-knowledge and strategies to startup success.
Have comments, questions, ideas, or feedback? I want to hear it. Tweet me at william_griggs.
Topics Covered In This Episode
- Phase 1: Born Winner
- Phase 2: Amplifier
- Phase 3: Market Leap
- Phase 4: Colonization
William Griggs: If you wanna succeed at building a successful startup, it’s crucial that you understand where you are, and more importantly, where you’re going. Not understanding this will cause you to waste time and force you to burn through your precious resources. While having a vision for what you wanna create and a product roadmap is great, it’s actually not enough. In addition, you must internalize where your company falls in the startup maturation process. Doing so will enable you to make better decisions and secure the proper support for your company.That’s where Justin Petro comes in. Justin is a CEO and cofounder of Thinktiv, a company that has helped over 200 startups launch and grow. During our discussion, Justin breaks down the four phases he sees startups go through and shares with you the problems that are faced in each phase, how startups are successful in transitioning from one phase to the next, and so much more.
If you’re serious about succeeding in your startup, listen to this interview with Justin to get insider knowledge and strategies that you can use today. All right, Justin, thanks for joining us today.
Justin Petro: Well, William, thanks for having me here on Startup Slingshot.
William Griggs: Yeah. Really appreciate your time. Glad you could come on and share some awesome knowledge nuggets with our audience.
Justin Petro: I’m gonna do my best. Congratulations for you for putting together such a great resource for all your listeners. Well, I can definitely say I’m in great company here. Definitely humbled a little bit. So I’ll try to do my best David versus Goliath impersonation here and keep up with these heavyweights ‘til the end of the show.
William Griggs: Yeah, very good. I know from your background you’ve got plenty to share. We’ve got – just to take a quick step back, we’ve got a lot of entrepreneurs in the audience that feel like they’re drowning in problems. They feel like they’re fighting just to keep their head above water. And we’ve all been there. We all feel that pain that they feel at the moment, whether it’s something – maybe it was last week, maybe it was yesterday, maybe you’re in it today. All the viewers, all the listeners, you, me, we all feel that pain.
In our time together, I want you to help our audience kind of lift their heads up out of that pain so they can see basically what’s on the horizon or what’s over the horizon, so they can better prepare themselves and better equip themselves. It’s one of those things that seems like if they continue to be heads down, they’re not preparing for those next steps. So they’re not really gonna ever get out of that cycle of just heads down, nail – head against the wall type of process.
So to do this, I wanna dig into your experience and share/unpack some of the different stages our startups go through. But before we do that, can you tell the audience a little bit about your background, what you’re doing at Thinktiv, so they know that you’re the right person to listen to, and they keep listening and they don’t shut off this podcast?
Justin Petro: Absolutely. Well, I can certainly tell you that both myself as a founder, and every day that we deal with our own entrepreneurs here, is that everyone feels this pressure. And everyone is up against myriad walls, whether they’re around fundraising, around growth, around customer success, or around what’s next for the company. So no matter what stage or scale of the business, I think what’s – certainly what’s great around what’s happening here and what you’re doing is that we’re all empathetic. So we’re all somebody that people can turn to, listen to, and feel that we understand what’s going on.
William Griggs: Right. Yeah. They’re not alone. This is to be expected, and they can get through it.
Justin Petro: That’s right. And I think that’s also, for us in particular, one of the most unique aspects around Thinktiv is that we see such a large range of businesses, from the earliest of early-stage folks, honestly the single founder walking in here who’s got his or her next big idea, to larger mid-market companies who are looking to transform where they’re at because they’ve hit a plateau, and then even up to the occasional Fortune 500 client who’s looking to reach down and tap into a world of startup innovation. So I can certainly say that we see it all over the place.
William Griggs: Got ya. Yeah. Let’s just start. Let’s dig into kind of the phases. I know basically on Thinktiv’s website, you talk about the four different phases of a startup as they try to mature through – I think the first phase is called The Born Winner.
Justin Petro: Um-hum.
William Griggs: Could we just hop right in and start to talk about The Born Winner phase?
Justin Petro: Yeah, sure. So The Born Winner, really, is that case where you look at something, and you’re like, “You know what? It’s a no-brainer. We have to go do this.” Now, if you’re familiar with – I know there’s a lot of capital-factory folks in the – who have been in the podcast. A really great example of that over there is a company called Aceable. And the CEO over there is by the name of Blake Garrett. That’s a perfect example of someone looking at taking a new mobile technology, in this case using the iPhone and Android platforms, to deliver training, specifically driver’s ed. And so that’s a no-brainer. No one else out there’s doing it. Why? People are laggard. They’re just not interested in it.
And so when we look at that idea of a Born Winner, it’s that first initial foray in the market that just seems like something that everyone should go do. So it’s the quote-unquote, makes too much sense not to be doing it.
William Griggs: Um-hum. Got it. So you kinda have that idea. That person walks into your company looking for help, and they kinda have that, “Ah! Why didn’t I think of that?” You might have that, “Why didn’t I think of that?” response once they tell you their business idea.
Justin Petro: That’s right. And another great example, honestly, there’s a company that we work with called Bloodbuy. They’re in the –they’re actually really fascinating space. They’re democratizing the blood markets between hospitals and blood centers. And it’s one of those super-niche things that you never would think about, even though the blood market itself is a $17 billion market. And so every once in awhile, we get these great entrepreneurs who walk in here and just totally blow our minds with these opportunities that are out there.
William Griggs: Got ya. So it sounds like as you’re looking at these opportunities, you’re thinking through – actually, you tell me what you’re thinking through when you hear about Aceable or you hear about the blood company that you’re talking about?
Justin Petro: Uh-hum. For the most part, we’re looking at two things during The Born Winner sort of stage of life. And from a round perspective, if it helps people, realistically that’s from a seed all the way up until a Series A. That’s kind of where that sweet spot is for us.
And we’re looking at a couple different things, one of which is do the entrepreneurs or the teams that are coming in here have some really interesting domain expertise? So in the case of Chris at Bloodbuy, he basically lived the experience of living between hospitals and blood centers and creating the actual agreements between them and helping negotiate them for hospitals for two years prior to thinking about building a piece of technology. So he had this really rich background around the market itself to understand how to actually mechanically make it happen.
William Griggs: Yeah, that’s really interesting.
Justin Petro: Outside of that domain expertise, we look for distribution advantages. And those may be through partnerships, or they may be inherently in that entrepreneur’s network. So someone, for example, coming in from a vast sales and marketing background in the SAS 250 might have a really unique advantage of bringing another SAS company to those same customers.
William Griggs: Got it. Are there any others besides domain expertise and distribution advantage?
Justin Petro: Well, certainly the personality in The Born Winner phase to go and take the risk should not be taken too lightly.
William Griggs: Right. Yeah. Very cool. So you kinda have that born – that appetite for risk. You have someone that thinks through, based on their past history of work experience. They kind of had the domain expertise to really see an opportunity, but then – see the opportunity, and then the risk, the appetite for risk, to actually take advantage of it. And like you said, the distribution advantages. Maybe they’re someone known. Maybe they have experience in distribution, selling to a very certain subset of customers that the next company’s gonna sub – or sell to, rather.
What else about this phase should listeners think about, right? They’re thinking about their business idea. They’re thinking about how they get it off the ground. What else do they need to be thinking about in this Born Winner phase?
Justin Petro: Well, one of the big things we talk about in this phase is the idea of trajectory setting. It’s not so much what the company’s doing today or tomorrow, but where does it wanna be? And how do we make sure that when we lay out the chessboard for the market, we’re actually able to get to where we wanna go?
And I think that’s – one of the biggest hurdles there around that trajectory setting, especially in The Born Winner phase, is the express need to fill the talent gap within those companies. And so what you’ll hear a lot about in Lean Startup, or any of the early stages, that people are searching here for product/market fit. And for us, it’s not only about that, although it’s obviously super important. But it’s also about the talent to market fit of can this entrepreneur put the right people in place to get that hypothesis to market?
William Griggs: Got ya. So can you give us an example of maybe an entrepreneur that you’ve seen do that really well, be able to kind of bridge that gap between – they have the product/market fit or they’re getting it there or they’re trying to validate it, but they need that talents?
Justin Petro: Well, I like to say, maybe not too humbly, most of our folks in our portfolio have done a really good job of that who are in The Born Winner category. And not too shyly, they leverage us to do a lot of that talent filling. Blake’s certainly a great example over there at Aceable, where we’ve helped him a lot on the strategy and the creative side. And in Chris’ case at Bloodbuy, he essentially outsourced his entire organization to Thinktiv for the first nine months of its life. So he was the CEO, and we were essentially everything else for him.
And yeah, that – our model’s certainly different than most in that regard. But for certain companies, it works really, really well, as they can focus on all the things that they’re really good at, and they’re not focused on the things that either they’re gonna struggle with or they just don’t wanna do.
William Griggs: Very interesting. Are there other main issues that entrepreneurs in kinda that Born Winner state kinda have to battle with in addition to talent, in addition to product/market fit, that we needed to cover?
Justin Petro: Well, I think one of the – the couple big mistakes that we see folks make is they are tech driven and not market driven. So we see a lot of people overinvest in building technology, not companies. And where that manifests itself is acquiring a absolute large amount of technical debt that they can’t get their way out of. And so the sort of quip I often use for people is, “You know what? You can build anything you want for $1.00. What you don’t realize is it’s gonna take $1,000.00 to get rid of once you build it.
William Griggs: Right.
Justin Petro: And so that’s really one of the biggest things we try to counsel people away from. Honestly, the next bid in the early stage we see a lot of is people hiring ahead of the curve for roles they don’t have yet. So this happens an awful lot on the ops side of the world, where a first-time entrepreneur might come in and say, “Man, I need someone to go do X, Y, and Z.” That might be on the sales side, it might be on the finance side, or the ops side. And our take on that is, you haven’t earned that yet. You’re not there yet.
William Griggs: Got ya. So just to take a step back, thinking about technical debt – and defining that for the audience would be very helpful – as well as the decisions that they will possibly make or maybe already have made that lead to that technical debt, how they can maybe reverse those or avoid them altogether.
Justin Petro: So the way I often describe The Born Winner lifecycle and stage to people is, at the end of the day, your hypothesis has nothing to do with technology or what you can code. It’s about human behavior change, and are you able to solve an innate human need, put that in market, and prove that people will do the thing you’re asking them to do?
Where technical debt comes into play is that they obfuscate that question with a widget that’s bright and shiny and they can point to, which isn’t about solving that innate need for a massive amount of people, or even a sizable amount of people.
William Griggs: Got ya. So is that basically starting to build things just to feel like they’re making progress versus really going out into the market, seeing what needs to be built, and having those maybe awkward, maybe tough conversations?
Justin Petro: That’s right. And I think that’s one of the gotchas for any entrepreneur who hasn’t been through the path before, which is if you read things like Lean Startup and you talk about iteration, iteration is good, as long as it’s on a forward-looking curve. It’s not good when it’s a point and you keep going around it. If you imagine yourself just drawing a broad stroke on a whiteboard, that puts you in motion, right? And it moves you from Point A to Point B. Now, hopefully, that’s up and to the right in some sort of hockey stick.
Where entrepreneurs get themselves caught up sometimes is every entrepreneur has the background and sort of mental kind of ingenuity around creation. Like, that’s why they’re an entrepreneur in the first place. They like making stuff. And so a lot of times they get caught up in that product cycle of let’s just build, let’s just build, let’s just build. If we just build enough, we’ll get it right.
And so when we talk about iteration, even with iteration, going out to customers and getting that whole lifecycle together, we wanna make sure that we’re moving on that first broad stroke, and we’re moving from lower left to upper right. And we’ve – the iteration is along a line that actually is what the business requires, as opposed to being in our own little echo chamber listening to people who may not be representative of the market at large, or just not sort of getting out of our own way in order to move forward.
William Griggs: That’s really interesting. So as the audience has been listening, we’ve covered a lot. We’ve covered what a Born Winner is. We’ve covered what makes a Born Winner. We talked about the problems they’re facing. We’ve talked about the talent, the talent gap, the product/market fit, the technical debt. Is there anything else we need to cover in kind of this segment before we hop over to the second phase?
Justin Petro: No, I think the things that we often look for to sort of bridge that next stage is this idea of traction and engagement. And so again, if I go back to this idea that The Born Winner hypothesis is really around that human behavior change, the idea that you’re actually getting people to do that and engage with that change is really what matters to then move you up the stair step, and hopefully get you into a situation where now you can start to amplify that.
William Griggs: Got ya. So if we’re thinking through, let’s say, a marketplace, or we’re thinking through a mobile app, we’re looking at the usage patterns, we’re looking at how sticky this is so – as a way of determining whether we do have product/market fit and whether we need to start ramping up product to build other things? Is that how you’re thinking through that?
Justin Petro: It is. And I often talk about it in the ability for an entrepreneur or a company to earn the right to do something else. And so once you’ve gotten to a situation where that traction and engagement is repeatable, you can then make the choice of, I can either build some more stuff that I believe will make it exponentially more addictive or more viral or what have you; or I can now go broaden my market base and try to convince more people of this in terms of marketing and outward-bound communication.
William Griggs: Got ya. So as the entrepreneur that’s listening to this is thinking through, they’re thinking through, okay, what is my idea? They’re thinking through what kind of unique experience or background do I have that fits in with this idea that makes it that Born Winner? Then we’re thinking through being market driven, thinking Lean Startup, we’re thinking product/market fit.
So we’re not getting into technical debt, and we’re not hiring ahead. But once we basically see the direction we’re setting, we’re starting to build the product, we have our KPIs, we’re starting to see the traction, it seems like the traction and engagement, a lot of the stuff you’re talking about, is kind of a – something that solves a lot of problems. It seems like it solves problems around potentially getting funding if your market is large enough. It solves problems around deciding if what you’re doing is working or not. Is that how you all think about those kind of steps?
Justin Petro: Yeah, absolutely. And I think the – to the point of people getting ahead of themselves, there’s an honesty component with any of – at any point in any of our plays, where the entrepreneur, the entrepreneur’s team, needs to be honest around what is working and what’s not and the proverbial kind of call a spade a spade. If things are going the wrong direction, then the strategy and trajectory needs to change.
William Griggs: Got ya. So you have the KPIs; you’re looking at the market. You’re looking at the feedback, the interaction, the engagement, the traction that you’re receiving. If everything’s going well, you’re on to that next Amplifier stage. If everything’s not going well, you’re back to square one, thinking through the market, thinking through the problem, building a solution that obviously, hopefully, solves a real problem.
Justin Petro: That’s right. And the last thing I would say on The Born Winner is, although Austin tends to focus a lot on building technology and traction, traction is different in a lot of different markets. And so again, we tend to, in Austin, put technology in space there. But a really great salesperson that shows traction, as Chris’ example I gave around going to hospitals and actually saying, “Look, I’ll go be the equivalent of a technology platform for you because I’ll go get you better deals on blood products,” is a fantastic Born Winner MVP.
William Griggs: Yeah, that’s very interesting. It definitely worked with companies before. One hung their hat on this fact, where they were able to actually generate $1 million worth of sales with a very big vision and zero funding, right? So they had some product work that was going there. The product wasn’t at the vision level yet, but they were able to get out in front of that, sell it, confirm that there was the demand for it, and then, like you said, kinda go on to that next phase of the business.
Very cool. So if we talk about the next phase, which is – or the next playbook, which is The Amplifier, if we’re going – if we’re transitioning from The Born Winner to The Amplifier, what does that typically look like?
Justin Petro: So let’s assume that our company has proven that they can attract people at a basic level to the concept they’re talking about, they’re solving that need, and people enjoy using that product. The Amplifier program is now meant to increase the volume, right, kind of as the name suggests. And that is really expand their reach through using all of the modern technologies that we have today in terms of both outbound and inbound communications, both on the sales and marketing front.
William Griggs: Got ya. And is this – are they thinking through specifically take what’s working and extrapolate from there? And if inside sales is working, let’s not just have two inside sales people, let’s have ten? Is that how we’re thinking about this?
Justin Petro: It’s really comes down to a company-by-company basis because everyone’s market is slightly different. And although there are obviously some best practices to be deployed, we really have to understand what’s going on in particular channels and with particular constituents in those channels. And so a lot of the times, what we find in the folks who come and talk to us about Amplifier programs, these tend to be companies who are a little bit older. So they might be now in a later round from a funding perspective, so in a B or kind of B to C range. They’ve been successful in bringing that first or maybe even second product to work, into market. And now they’re – they’ve plateaued for some reason.
The most often thing that we find is that the reason they’ve plateaued is not because the products are necessarily bad, but they’ve really kind of gone sideways about how they talk about themselves and how they talk about the value that they create in the market. If you think about Born Winners being around the product, think about Amplifiers really being around the marketing side of the world. So in this case, it’s really about recasting and reenergizing that company, who may have a great technical asset, and putting it into market such that now the people who are interested in that asset can find it.
William Griggs: Can you walk us a little bit through maybe one example? You can name the company, you can not name the company, whatever you decide. But can you walk us through an actual example and how they were dealing with this?
Justin Petro: A good one that we’re still working with is a company called Shopatron. So these guys are a later, mid-market stage company. They make some pretty kick-ass backend technology. One of the things that they allow is for anyone who’s ever purchased something online and then picked it up in the store; Shopatron’s a company that helps put those pipes together to make that possible.
Before Shopatron had come to us, they had a – essentially think about it as 100 or 1,000 points of light problem for any vendor coming in and evaluating them from a technology perspective. So they had hundreds and thousands of pages of case study material reports. The brand had become stale and laggard. They really weren’t communicating their value prop anymore.
And so what we were able to do is really focus them in on a repeatable engine that they could distribute their core-value prop to their customers and get them attracted into sales cycles.
William Griggs: Got ya. So we’re thinking through repeatable processes. You’re – are we talking through rebranding the company as we’re thinking through this process? Or is really just refocusing it, making it simpler for the prospect to understand?
Justin Petro: So in many cases, this does come with some level of touch on the brand. It really depends on essentially how unbalanced the company is when they come to us. Again, on the technical debt side, often people come very heavily technical, and so they haven’t spent a lot of time on things like user interface or branding or marketing. So we need to think about The Amplifier as really being a balance of those assets, to promote what’s great about their technical innovation, but make that consumable by the market who cares about it.
William Griggs: And are the problems still the same around the people that are facing in The Amplifier – I’m trying to understand if you’re going from that first phase or first play to the second one, what are the mistakes, but then how do people kind of avoid those mistakes?
Justin Petro: So the biggest mistake we see in The Amplifier side of the world is people who are selling what the customers want versus what they have to sell. And so what you find a lot of that is a lot of sales velocity that the product can’t support. And what that ends up producing is a lot of customer churn, a lot of customer service getting involved, instead of focusing in on innately what they do really well, and just hammering that home.
William Griggs: Got ya. So are you saying that at this point, the company’s getting very large, there’s a misalignment, it sounds like, with market demands and what they’re selling, but that the salespeople sound like they’re most aligned potentially with what the market demands, and that’s kind of that disconnect that you’re talking about?
Justin Petro: Um-hum. That’s right.
William Griggs: And so therefore they’re selling it, the customer’s not receiving what they thought they were buying, and therefore the churn occurs because there’s kind of that disconnect between the value proposition and what the reality was.
Justin Petro: And that’s an organic process that happens almost in every company because salespeople, as wonderful as they are, they’re a little bit of a strange human. They are wonderful, and their job is to sell. They are fantastic at it. And sometimes, they just sell things that get misaligned. And so that’s a natural thing that happens all over the place. It’s never necessarily a mistake on the salespeople’s front as much as it is – just as people grow, and especially if they grow fast, people wanna expand, they wanna talk about new, different thing. It’s almost inevitable that you eventually get some of this lack of alignment within a company and a brand.
William Griggs: And are we saying that – if the entrepreneurs at home are trying to think through how do they avoid this problem, do they think product team and I should align ourselves more with sales because if they’re able to sell this, then maybe this is what the product wants? Or are we trying to go back and say, “No, this is the vision for the company. It’s validated in this other way,” and then we need to get the salespeople aligned with that?
Justin Petro: So it’s a little bit more the latter than the former. And in fact, the former is what we’ll probably talk about next, which is really in our Market Leap, which is where the market’s telling you something that you could be doing, but you’re not.
William Griggs: Got ya. And so as far as The Amplifier stage, we talked a little bit about some of the problems they face. We talked about this being a B-realmed type of company. The company’s kinda matured a little bit past the seed, past the A; we’re on to the B. We touched some of the problems that the entrepreneurs are facing and how they could tackle those. So is there any other thing we need to kinda cover in this kind of second phase?
Justin Petro: Well, at the end of the day, this Amplifier program is really around getting sustained growth in the core business. And so that really comes down to how many people are willing to do the things that you want them to do their way, and how much are they willing to pay for it?
William Griggs: Can you go through that one more time?
Justin Petro: Um-hum. The big thing is around repeatability in the sales cycle and the marketing cycle.
William Griggs: So we’re seeing this common need, we’ve identified it with two or three specific prospects, and then we’ve confirmed it because we’ve been able to repeat similar sales with 40, 50, 1,000, depending on the business model.
Justin Petro: Um-hum. That’s right.
William Griggs: Got it. And that’s the main thing. So as far as – you’re thinking through, back to Born Winner, you have this idea. You’re trying to validate the product/market fit. And then as you’re validating that, it sounds like an Amplifier’s scaling the business. You’re amplifying a lot around the brand and how you’re bringing that to market. But then you’re also making sure that you can scale the sales – or however you’re selling, or however you’re gathering the value for the company – you can scale that in a way that makes sense.
Justin Petro: That’s right. Another way to think about it in an analogy is, think about it like an engine. All of the cylinders have to be working together, as opposed to at odds with each other. And so really in amplification we’re looking at, if we pour more fuel on the fire, can we go faster? If we don’t have alignment, or we don’t have repeatability, or we have a weak link, this is the time to adjust that and fix it.
William Griggs: Pouring more gasoline on the fire might be raising another round. Is that something you see as people leap from Phase 2 to Phase 3, into The Market Leap segment?
Justin Petro: It’s certainly one of the key motivators to be able to go and secure that route. And so when we look at those two, if someone has a core product, a core vertical that they have gone and become masters of their own domain, if you will, now they can begin to look and see if that same idea or that same process can then extend over into a new market. Or they can take a existing processes in their company and move that to another platform, like a technology or a productization effort.
William Griggs: Got it. So let’s go on to Market Leap and talk through what entrepreneurs kind of can expect to face in that phase.
Justin Petro: Well, as you might sort of seen by now, we’re kind of back to this idea of, now we’re talking about product again. So we started in product in The Born Winner, we moved into marketing in Amplifier, and now we’re back focusing on product.
In this case, for Market Leap, we’re really looking at, well, where can we go next? What have we learned over the first two phases that now can allow us to establish a new foothold in a new part of the market? This happens quite often in businesses who start with a really rich services background and eventually grow into wanting to productize part of their service offering.
So a good example in our portfolio, happens to be a local customer, is Bulldog Solutions who work in the marketing automation space. They came to us and had devised some logic around the front end of the marketing funnel from a planning perspective. And they would do it mostly all manually, with some help from Excel. And they believed that their clients got a lot of value in this and their salespeople would also push the signals by saying, “Hey, people keep asking for this. Is there a chance that we can build a product out of it?” And so it’s a good example of using that – again, that core background and expertise in distribution to then look for a new way or a new product to bring to market.
William Griggs: Got ya. And so for the actual entrepreneurs in the audience as they’re thinking about this, let’s say that they’re in this current phase or they’re prepping for this phase. What all are they doing to kinda try to identify this? You talked a little bit about productization of a service that they’re currently offering. We talked previously about sales reps and their feedback coming back from customers. What else should they be doing or looking at or thinking through that helps kind of unlock these new market opportunities?
Justin Petro: Well, certainly the connection always back to the end customer is critical. And that’s where great salespeople, great marketers, great user experience folks, can help bring those ideas kind of up the food chain into a CEO or an executive team’s view. Because a lot of the time, what is the top-line trajectory is different from the longer-term chessboard, if you will, to the right hand side or the left hand side. I think certainly being plugged in to those signals that are coming up through the other ancillary channels is important.
The next thing, quite honestly, is whether or not the organization can be turned to offer this other product or this other service. So if you think about it in a very verticalized sense, it you’re doing – if you’re only serving a very specific niche, like for example tennis shoes, and you wanna go sell kayaks, those two things are gonna be very different. And what you’re doing may or may not be able to transfer itself over into this new space.
So what the executives and entrepreneurs have to be really thinking about is not just can we go build that platform or, again, put technology into it, but can we actually change our internal organization to go serve those other markets? And quite frankly, sometimes the answer there is that you can’t.
William Griggs: Yeah. So it seems like there’s kinda two phases, right, or two steps to this process. It’s having those kind of sources of new inspiration, whether it’s the sales guys, whether it’s looking at what’s already working and how do we productize that, or maybe it’s an advisory board. And that second piece is, like you said, kind of filtering out what doesn’t make sense or what would be too far of a stretch for customers or for the brand to kinda take hold of in terms of what direction to go.
Is the goal in The Market Leap to just blow it out in terms of revenue? Are we trying to double or triple our revenue? Are we looking for massive growth like that?
Justin Petro: Well, it’s certainly – again, that’s definitely a case-by-case basis for different companies. Certainly if you look at the example I gave around moving from a services organization to a product organization, the multiples that can be earned, both from a cash contribution perspective and evaluation perspective, are obviously going to be way more favorable on the product side of the world. You can only scale a services business so far. And from a valuation perspective, they are only ever going to be valued at kind of 1 X whatever the revenue is.
So when you talk about that viewpoint of is this a sign of growth, it certainly can be. Now, it may also be the same type of rationale if you’re taking an existing product – and especially from an engine perspective – and you’re able to apply it to another market. And those are – that’s another opportunity to get – for revenue growth and sort of systematic taking over of the chessboard.
William Griggs: You’re able to think through this, as the entrepreneurs, they’re able to think through this stuff because they’ve gone through the first two phases. They have a cash flow that they can leverage. They have investors that they – because the business is in good shape, they have investors that they can draw capital from, raise capital from, that would allow them to make these bets, right? It sounds like – the Bulldog Solutions case sounds like they have probably a very good client base that they’re working with for identifying solutions that they could potentially automate. But they’re able to do that because of that initial client base, that initial product/market fit, that initial success.
Justin Petro: That’s right. And you don’t get to these – especially the – realistically, the second, third, and fourth of our playbook take a long time. They’re very rare that you’ll see a company move through these in months, right? These are years, and in some – in a lot of cases – decades before they’re – before companies are big enough to even contemplate looking outside their square on the chessboard.
William Griggs: Yeah. So that’s something that definitely our audience has to take into account as they’re thinking through this. Again, the goal of the interview is to understand what’s on the horizon, what’s possible, whether they’re thinking through their own business, helping a friend with their business, that type of stuff.
So let’s wrap up this Market Leap section. Do you have any other tidbits that we need to cover? Or did we cover everything at a pretty good level?
Justin Petro: No, I think just to reiterate, in the Market Leap side of the world, you’re very much in a situation where you’re effectively spitting up a new company again. And in many ways, part of the conversation that always happens here is, is this new initiative within our company, or should it be outside? And so you have to get back to your same kind of roots around The Born Winner play, which is are your insights going to transfer into a new market? Can our organization make that jump? And are we going to be able to see the traction and engagement to make it worthwhile?
William Griggs: Got it. And so once they go through that process, like you said, kind of going back, internally going back to that Born Winner phase, thinking through that, then they’re thinking through, does this make sense? Is this alignment the vision of the organization with the investors, with the company bought into it? Or should it be, like you said, a separate venture?
And then the next step is The Colonization. Can you give us an example of a company that has reached this phase?
Justin Petro: Sure. There’s two that are in our portfolio that I think are super exciting and we’ve been very lucky to work with. The first one is TrueCar, which everyone, if they’ve watched TV in the past nine months, should surely recognize. They help people get a really great and transparent view into car pricing. And so Thinktiv worked with Scott Painter, who is the CEO there, in the very early stages of that company as he was spitting it out of another company called Zagg at the time.
And then a great local example here is a company called VASS, which most people may not know about. They kind of fly under the radar. But VASS is a big data business. And they can actually say that because they actually do deal with massive amounts of data and put a ton of science on top of that data in order to help people. Now, they also work in the automotive space. And they help people – essentially, think about it as applying big data for big purchases. They power a lot of the car marketplaces that you might be shopping for a used car or a new car on as well as some home searches and some travel sites.
William Griggs: Got it. So you gave an example of TrueCar and VASS. What make those perfect examples for The Colonization phase?
Justin Petro: So in VASS’s case, they have a – as I sort of mentioned, they’re really focused in the big data and big science side of the world. And so under the covers, they’ve got a lot of really unique engine properties that allow them to take in a lot of these variables from industries like housing or cars and be able to generate some really exciting logic for consumers on the frontend of the process.
So instead of sort of the massive amounts of data you might find in a typical car review, VASS is able to tell you insights about those cars, both from a consumer perspective and a dealer perspective. Because they’ve gone through this idea of productizing all of this engine work, they can then begin to apply it to different squares on the chessboard. So any time you might find yourself in this situation where you’re this – contemplating a big purchase, VASS’s big data and big sciences on the backend can really help inform that, make sure you get the best deal, and instead of searching for everything, actually get promoted and discover the actual right answer for you, based on your search habits or other data, what’s a great fit and match.
William Griggs: And so in the VASS example, we’ve talked about them going through the first phase, the second phase, the third phase. And they’ve kind of earned this right or this place in The Colonization phase. Are they placed in The Colonization phase because of the fact that their technology is now productized and now can be applied to multiple markets? Or do they just focus on the auto space?
Justin Petro: No. Now they’re able to utilize that same technology in different verticals across our proverbial chessboard here.
William Griggs: Got ya.
Justin Petro: So you can utilize their same logic around homes. You can do it around flights and travel, and again, any other kind of big, considered purchase.
William Griggs: Right. And so in this Colonization phase, it goes from we need to be laser focused – we talked about in the last phase, be more focused on the brand, on the messaging, be more in tune with the market. And now it sounds like as we’re going to colonization, we’re starting to create, instead of just one really strong focused beam of light, we may have four different ones. And with that, the organization grows, the structure grows, the complexity grows.
Justin Petro: And the – we’re back here to the idea of now needing to market again, right? So the other complexity is talking to all these different constituents. What happens in the domain knowledge in the auto industry is vastly different than the real estate industry, even though the underlying technology can be the same. And so now we’re making sure that everyone understands the nuances that are available with our technology and how we can apply it to their specific needs.
William Griggs: And it seems like as you’re going through these different phases, for the entrepreneurs listening to this, as they’re going these different phases, once they get to colonization, like you’ve said again and again, they kind of earn the right to diversity the business, right? It seems like lots of entrepreneurs out there want to have multiple revenue streams. They want to have multiple types of customers. And really, for lots of companies, that’s not feasible due to the limited knowledge inside the company, but also the limited resources.
So it seems like, again, this is this one of those things that you have to earn to get to this, where yes, you’ve figured – you’ve earned the right in terms of resources to allow you to play the game this way. But also, you’ve earned the right based on what you’ve actually built to play the game and go about colonizing the world.
Justin Petro: That’s right. And in many cases, it goes – I’ll go back to kind of the basic rules around The Born Winner play – is a couple of things hold true here, even at this massive scale, right? It’s are you extending too far or too fast without permission of your audience? Are you in the shiny object technical world, where you’re back into the, well, can we just build more? If we just build this, people will come.
And so at every phase, it’s still a gut check around that, and going back to the consumers and really understanding, do they want this? Will that actually make the experience better for them? Just because we perceive it to be better, or we know technically we can do it, it doesn’t mean we’re gonna change human behavior if we go do it.
William Griggs: Got ya. And is there a specific goal in this phase? Or if you’re in the phase, are you trying to go for an IPO? Or are you just trying to build a huge business?
Justin Petro: Well, certainly in TrueCar’s case, that was their – the end of the long road. And there’s some great pieces out there on Scott’s journey through what I believe was probably around 15 years from the start of early businesses in Zagg, all the way up to the IPO True Car, which happened last year.
Now there’s certainly – at this point, you’ve got a lot of option. And you can begin to really decide on where’s the future of the company, and then what is that going to require? And in some cases these days, the IPO is required to ensure that as these companies come up and look to finally get to a place where they’re revenue positive and can grow on their own, they need that IPO cash infusion to do that.
In other cases, it’s – they’re acquisition targets or merger targets in the later stage.
William Griggs: Got it. So it sounds like the goal might not be an IPO. It depends on the situation. But it sounds like really, you’re maximizing the business opportunity at hand. You’ve earned the right to do that. You’ve gone through the trials and tribulations of the first three stages. You’re still using those foundational understandings and the things that have gotten you there. You’re still using those inside the business. But you’ve really earned the right to kind of blow it out, to go multiple markets, to go multiple product lines, all that good stuff.
Justin Petro: That’s right.
William Griggs: Very cool. So we’ve definitely covered a lot. Justin, this is – as we’ve had this conversation, you could tell I got it sometimes; I didn’t get it other times. We’ve dug in really deep. I hope the audience really enjoys this conversation. I’m sure they will because it’s definitely a unique perspective. It’s – you have a unique perspective based on your experience working with a lot of different startups and seeing a bunch of trends coming from that. So I definitely appreciate your time. We definitely covered a lot. There’s a lot for them to take in. Is there anything you wanna kinda summarize and really drive home before they start listening to this interview again?
Justin Petro: Yeah, you bet you. I mean, this is our day-to-day, and we love talking about it here. And so I certainly love talking about all different stages of companies, regardless if they’re a young entrepreneur or someone who’s in the later stages and thinking about acquisition or some other big end goal.
I think the big four points to kind of reiterate as they kinda follow our playbook is, the first thing is, behavior change has nothing to do with code or technology. It’s simply are you solving an innate human need? And never get past that in your vetting of ideas or what should you be focusing on.
In any stage, balance is critical. And we view that as balancing human experience with technology with what the market is asking for. Frankly, this goes for every stage and every entrepreneur, is honesty is always the best policy. Can you and your team really do what you’re putting on the roadmap? Are they interested in doing it? Are they excited to do it? And can they get it to market?
And then finally, although it should really go without saying, it’s all about 100 percent customer success. The only way that you achieve massive value in the market, like someone like a TrueCar, is if your customers win. Otherwise, you’re just renting them for the time being.
William Griggs: Yeah, now, those are good – those are four good pieces of advice to drive home. Really appreciate your time.
If people wanna learn more about your company or connect with you, how can they do that?
Justin Petro: You can find us anytime online at www.thinktiv.com. It’s T-H-I-N-K-T-I-V dot com. You can follow me on Twitter @JustinPetro. And everybody’s welcome to e-mail me at JPetro@thinktiv.com.
William Griggs: Very cool. I’ll put the links to those different sites in the show notes. Again Justin, thanks for joining us today.
Justin Petro: Thanks a lot, William. Really appreciate the opportunity.
Justin Petro’s Bio
Justin founded Thinktiv with Paul Burke to rapidly develop and capitalize on innovative business ideas by providing strategic product design and brand services. He has a passion for launching new products to new markets and is building Thinktiv’s services practice with people and processes dedicated to aggressive, entrepreneurial pursuits.
Prior to founding Thinktiv, Justin worked as the Director of User Experience for Design Edge —an internationally renowned product design firm. While there, Justin assembled an award-winning team of User Experience specialists. His team tackled problems ranging from the brand strategy, mobile devices, the eldercare market, software design, visual product strategy and positioning, and new-market ethnographic research. Prior to Design Edge, Justin worked in e-commerce for Trilogy Software —where he helped found Leadership.com. In his 15 year career, he has worked for a number of large recognized brands, including: Merrill Lynch, SICE,Siemens/Cerberus, SC Johnson, Microsoft, ADT, Darpa, Dell, AMD, Trilogy,LG, and Tricon.
Justin holds a BFA from Carnegie Mellon University in Industrial Design with a concentration in Visual Interaction Design and Cultural Studies. He sits on the board of the Austin Center for Design, has lectured at the Savannah School of Art and Design and at the University of Texas. He is a published author in both AIGA and Core77as well as a contributing author to “Thoughts on Interaction Design” by Jon Kolko.