If you’re an OG Obvious Startup Advice reader, you’ve heard the name Rebric before. Even if you haven’t been reading for long, I can guarantee you’ve seen me use them in examples (even if not by name). As a board member and investor, I have been personally involved in their company for the past several years, and I can tell you it hasn’t been an easy road. With multiple pivots already under their belt, it felt like they had finally hit their stride earlier this year.
Then COVID hit and everything slammed to a halt. There was even a board meeting where Chris Oltyan, Rebric’s co-founder, considered mothballing the entire company until the pandemic was over. But after some inspiration from another board member and myself (aka, a verbal ass-kicking), something truly magical happened. This is the anatomy of a successful pivot.
For context, Rebric started out first as a Machine Learning and Artificial Intelligence platform for hiring. When that didn’t work, they pivoted into a recruiting platform, using the their own platform to help hiring managers find diverse and qualified candidates while removing unconscious biases from the process. After two years and just a single paying customer, they morphed into an anti-money laundering compliance software company and secured several LOIs from large financial institutions. But even with a bunch of LOIs and a successful pre-seed raise, they still didn’t have the mojo. It turned out no one cared about OFAC compliance in the middle of a global pandemic. This is the point where Chris was ready to crawl into a hole in his basement and hide for the next few months.
But instead, Chris and his co-founder Richard Grote took the first step towards an effective pivot and recognized that not only was what they were doing not working, it was never going to work in a way that mattered to them. They were simply not interested when the best case scenario was nine-month sales cycles. Upon realizing their current strategy was doomed to fail, they were willing to scrap everything and start over.
Quite literally, because step two was a white-board meeting with all seven employees. Together, they threw out 17 different industries they thought were growing fast enough that there might be emerging problems for which people might be willing to pay for a solution.
Each team member was required to take three verticals and perform some basic research about market size and potential growth, as well as find ten people in that vertical worth talking to. The team member then reached out over LinkedIn and tried to get a response. Within a week they narrowed the list of 17 down to six, based primarily on how many people responded. Chris and Rich figured that if it were hard to get their attention when asking questions, it would be virtually impossible when they were trying to sell.
With those six verticals in mind, the customer discovery began.
Chris and Rich estimate that over the course of the few months they spent looking for their next opportunity, they sent 30,000 emails to potential customers and stakeholders in those six verticals. In the process, their growth hacker was banned from LinkedIn on four separate occasions, and he had to reset his email several times to circumvent spam filters. Using the LinkedIn plug-in Dux-Soup and brute force, he would connect with a single person at a company they wanted access to, determine the employer’s email naming conventions, then send emails to dozens of other people at that same company.
It helped them narrow their list of potential verticals down even further using a metric you might not expect: email open rates. They figured people in growing industries likely experience more problems and are more likely to open emails from teams looking for problems to solve. Turns out those people not only open emails at a higher rate, they also agree to phone conversations, and while on the phone, they are likely to spill their guts about interesting opportunities in their field. More than that, they will use magic phrases that seem almost too good to be true.
Chris and Rich experienced this on their first phone call with one of the largest companies in the vertical that eventually became their focus — online sports betting. Because the call was with the compliance officer of one of the country’s largest sports books, Chris and Rich felt like they should take the opportunity to pitch an idea, rather than just ask questions and listen as they had before with smaller companies. After hearing their idea about software that would identify coaches and players then keep them from betting, the compliance officer quickly told them she wasn’t interested.
But the conversation didn’t stop there. For the next hour, she told Chris and Rich how frustrating compliance issues surrounding licensing were for her, and how it would only get worse in the future. “If you can solve this problem for me, I will throw money at you,” they remember her saying. Magic prase #1. She also said, “I’ve considered building this startup myself, and I’ve been trying to convince other people to build it for me.” Magic phrase #2. And, in her last bit of magic, she explained to them exactly what she needed to get the job done, with precise examples of how these problems were solved in her previous vertical, the mortgage industry. In one phone call, she had basically provided them with a business plan.
Even still, Chris wasn’t sold. After years of pivots, he’d learned his lesson that one person does not a market make, and set about to find more people like her. A lot more people like her.
It ended up being easier than he thought. Every person they talked to, including the first one, offered to introduce them to others in the industry with the same problem. Chris and Rich soon focused their outreach to people who had been on panels (remember those?) or gave keynotes at major sports betting conferences. And everyone was willing to talk — always a good sign for your ability to sell a future product.
It wasn’t long before Chris and Rich did a demo presentation in front of that first big sports book’s leadership team. With six people on the call, they walked them through one of the most simple demos Rebric had ever created — known affectionately in the office as the “PDF filler-outer.”
And what did they hear? More magic words. “How much can we pay you not to work with our competitors?” “Can we have the first right of refusal if anyone ever tries to buy you?” All this, for a PDF filler-outer from a company that previously specialized in machine learning and AI.
Chris now considers himself an expert in the world of online sports betting licenses, with no question he can’t answer (or quickly find the answer to). He’s realized that while he thought he knew his customers previous to this last pivot, he knew jack shit about the hiring or financial services industry.
He just flat out hadn’t talked to enough people, and he assumed the problem one person had was a problem all of them had. It meant he built great software no one cared about. Now, he’ll happily tell you he has basic fucking software, but everyone loves it. And they’re working on making the software better every day, with the revenue from the not-too-great MVP. All because he took the time to get to know his customers.
They launched their first paid pilot the day before Thanksgiving, and Chris estimates they spoke with more than 200 people in the industry, many of them multiple times, before they wrote a line of code. Ask yourself, how many customers have I spoken with? And then, ask yourself, should I really be writing code yet?
I am so fucking proud of Chris Oltyan. The dude has completely leveled up his founder game and I’m glad to be on the journey with him, having a front-row seat for the journey. I’d walk through fire for that man. If I can walk through fire for you, please reach out to eric@marcoullier.com or visit my coaching site.