Launch and Learn

This is the fourth chapter of Kommon: A Startup Story, a set of key lessons for first-time founders told through the story of the successes and failures of my business.  

I have been told that putting these lessons within the full narrative of an early-stage startup, including real customer data and product feedback, has meant they really resonate for first-time-founders in helping them navigate their own startup journeys. ‍The introduction to the series with further details on why I wrote it can be found here.

Introduction

By June, we were ready to launch.  

This chapter is the story of how once we got our product in the hands of customers, we came to realise we’d made a critical mistake.  

Over six months of trials with more than sixty managers in over thirty companies it became clear that managers were our users but not our customers.  

Managers were happy to try our product but to adopt it fully they felt they had to just ‘check it with HR’. It was a crucial difference in software adoption practice compared to task management and project management software which teams seemed happier to adopt without central approval. We had anticipated this would happen with a minority of users, but the minority was becoming a majority and adoption of our product was getting stuck in enterprise procurement.  

I remember knowing for sure in October that we’d got this wrong, and having to face up to the implications. All our product and marketing had been focussed on the wrong customer. It was gut-wrenching, and Kommon’s lowest point.  Without the right customer, we didn’t have a company.

By the end of the year, it felt like we had slithered back to the bottom of the mountain. We had to decide whether we wanted to try and begin the climb again with a new customer.

Initial Reception

Launch day was a good day.  We knew how important it was to get our product in front of users and we had reached that milestone.

Although our waitlist numbers were lower than we had hoped, I was confident that we had enough potential users to give us the initial signals we needed to iterate the product, convert some paying customers, and build the business from there.

From July, we began to onboard our waitlist.  I personally emailed each of our users offering them either a self-service option or a dedicated onboarding session with me.  This also meant they had me as a point of contact for any questions as they started using the product. 

Here’s some of the initial feedback we received:

• Manager, Global Bank: ‘This feels all fairly intuitive. There's clearly a lot of thought has gone into this.’

• Manager, Professional Services: ‘I really see the benefit… I was also really surprised by your blog, it’s so much more fully formed than other resources’

• Manager, Publishing SME: ‘First impressions are really great. I like how clear and uncomplicated it is…  I would love to be able to pitch it to my boss and to have it across the company, because I know that it's not just me.’

• Manager, Professional Services: ‘Absolutely I would use it’ 

• Manager, Professional Services: ‘It’s great to have all of someone's development, performance planning, monitoring everything in one location.’

• Head of Product, Series A startup: ‘I am already recommending your product.’

• Manager, Professional Services: ‘I know we have signed up to be a Kommon client, and I’m really excited, as I think it’s great! I used lots of other apps in previous roles but most of them I didn’t enjoy, whereas I love the clean, simple UX of yours.’ 

I include these comments here to illustrate why we felt we had got off to a good start.

Reality Kicks In

As little as one month into our launch, we saw that the use of Kommon wasn’t matching the warm words we had been receiving.

Our data showed that managers were dropping off in larger numbers than we hoped after they had initially tried the product, and at an early stage.  In many cases, they stopped using the product before they had even invited a team member. This was a problem because we knew this was the moment they would start seeing the most value.

Product development

We moved quickly to address user drop-off in the product in two ways:

• Smarter onboarding: we identified that the key drop off point was when we asked managers to invite a team member and worked on removing friction at that point.  We created a new onboarding funnel which generated a virtual team member based on some details the manager submitted, and then gave them the option to invite them to the platform, enabling the user to see the value before asking them to take an action.  

• E-mail updates: for the MVP, we hadn’t built any integrations yet with other workplace tools (Slack, Teams, etc) and were just using a standalone web app.  Getting professionals to integrate a new standalone app into their workflow is always a challenge, and we were struggling with this friction point.  We created a weekly email digest for managers called ‘The Week Ahead’ to highlight the status of their team and upcoming 1:1s that week.  This both added value as a feature but also served to remind managers about the product. 

While both these initiatives improved engagement, we had a bigger problem.

Customer feedback

Alongside evolving the product, we worked hard to get on the phone with our initial users to get detailed feedback.  We managed to get comments from over thirty users and some concerning themes emerged:

• ‘Going rogue’: a key part of our product hypothesis was that managers were ready to adopt software like ours in the way that teams had started using apps like Slack, Trello, and Asana.  We thought they would start using the freemium version and ask for forgiveness later from their superiors, rather than asking permission up front.  However, our customer discovery had failed to identify a significant psychological difference between adopting project management or communication software (like Slack and Trello) and manager software.  Multiple managers at the point of wanting to use our software with their teams felt they ‘just had to ask HR’.  They felt they would be ‘going rogue’ (a phrase we heard multiple times) adopting a solution like this on their own initiative. This was stalling adoption as it meant we were getting tangled up in discussions about enterprise use with People/HR departments just to get Kommon working in a single team.

• Not painful enough: We knew that every manager had different challenges.  By putting together a suite of features, we hoped to give managers a toolkit to solve whichever problem they had - whether it be organizing 1:1 meetings, setting goals, or recording feedback - and introduce them to other tools to help manage their teams.  In practice, we came across various managers who had a challenge, but it wasn’t painful enough to procure dedicated software to solve (especially if it meant rubbing HR up the wrong way).  They were content to organise their goals in Notion or Asana, or record 1:1 meeting notes in Google docs.  These solutions were ‘good enough’ and the switching costs to using Kommon were too high relative to the pain of the problem. 

• The new manager paradox: we knew from our customer discovery that managers with less experience were likely to be the ones who got most value from our product.  However, given their lack of experience, they were less likely to know they needed our product.  Given their junior status, they were also less likely to be able to advocate for our product internally, even if they wanted to.  We loved working with new managers, but they were poor customers.

We had had some initial traction and positive feedback, but we had converted few paying users and we were beginning to see signs that we had fundamentally misjudged our customer base.

That feeling

Various pieces of startup advice will tell you that you’ll know when you’ve got product market fit. You’ll just see it happening.  You’ll feel you don’t even have to push your product, because there’ll be such pull from your customers and the market.

If that is true, the opposite is too.  Because the PMF signals are so clear, if this isn’t happening, it’s safe to assume you don’t have it.

But what if you’ve never had PMF before? How will you know? This is the tricky liminal space which leads to founders misinterpreting the wrong customer signals as PMF. 

Based on the Kommon experience of one unsuccessful product and one successful product, it’s clear as day when you have PMF. So if you’re unsure, you haven’t got it.

A couple of months into our launch, we hadn’t got it.  We had to face up to what that meant for the company.

The Low Point

I still remember the worst day.

Ernest Hemingway has a famous quote about bankruptcy happening in two ways - ‘gradually and then suddenly.’  My experience of poor mental health is similar. I have a general awareness that things aren’t great, but the very worst of it can still take me by surprise.  This day in October 2021 was like that.

It hadn’t been a particularly eventful day.  But then as I was walking home that afternoon, I became aware that I was suddenly, devastatingly, irredeemably miserable.  At that moment, it felt like there was nothing good in the world.  All I could feel was pressure. I couldn’t conceive of a single thing that would make me happy.  

Now, you might think that sounds a bit dramatic for someone who’s missed a few conversion metrics.  On the one hand, you would be right.  But mental health is unpredictable.  I have marvelled at the capacity of my brain to create unhappiness in spite of the many good things in my life. It doesn’t make sense, but it happened, and it was terrible.

I mention this because if this record is meant to be an account of Kommon and its most formative parts, then this was one of them. Hopefully this is also a small contribution to normalising founders talking about the mental health challenges of the role and how they worked through them. 

So in that spirit, what caused what happened that day?

I have thought about it a lot, and I believe it to have been a combination of the following:

• The weight of failure: the straightforward answer.  Before you’ve had time to come to terms with events, in the short term it feels like shit to know beyond doubt that you tried something and couldn’t get it done. In particular, I felt the weight of making such a fundamental mistake and all the time we had lost orientating our product and marketing towards a customer that couldn’t support our business. I knew that if we wanted to continue we would need a new customer and we would be starting almost from square one.  I hate wasting time and effort, and the thought of putting the last 18 months of my working life in the bin made me want to throw up.

• Life becoming work: I always thought I was good at maintaining work-life balance.  However over the previous six months, mainly because of the pandemic, various social activities fell away and work oozed in to fill the gaps. Without really noticing, work had become a significant portion of my life. So when work failed, life failed. I didn’t have recent happy memories to take comfort in, or exciting future events to distract me. When I looked at my life, all I could see was the wreckage of Kommon, and it wasn’t a pretty sight.

• Success felt binary:  I had made enormous progress over the previous two years.  From starting the company on my own, to recruiting a co-founder and getting a product to market. However, I only ever judged myself on creating a successful company.  When I realised the software was going to fail, I felt like the whole of Kommon was a failure.  I still think the criteria against which I judged myself was correct and kept me driven, but I should have been more generous with celebrating the milestones along the way. To use a rock-climbing analogy, I think it would have meant that when I came off the rockface, I got caught by the next piton down rather than falling all the way to the bottom. 

Things got better over the next few days.  Everyone deals with these things differently.  In my case, I know that I’m a doer.  I derive satisfaction from fixing things.  And if in doing so I can alleviate what’s causing me pain, then all the better. 

I forced myself to create a plan for Kommon which acknowledged the hole we were in and how to fix it, and also how to rebalance my life and where I spent my time.  As I began to make small steps in the right direction, everything started to feel better.

Scrambling for Purchase

Nevertheless the next two months felt odd. 

We knew in our guts that there was a problem with our customer hypothesis. This was backed up by usage data in the product but we were still receiving some positive signals.  For example, we had just kicked off our largest enterprise trial with a People team and several managers in a $40m revenue company.  

We were in the awkward position of knowing that we needed to move on from the current iteration of our software, but not being ready to let go.  In this mindset, we wanted some positive signals which would help our decision-making.  Ideally, against all the data we’d collected so far, we wanted a signal which would tell us we’d been right all along.  Ideally, that would be a signal we could collect quickly. 

Ads

I’ll admit it, we bought some ads. 

I mention this because this is not a good process by which to start buying ads.  Particularly if you are a two person startup with no revenue.  But I imagine there are many other founders out there who at some point have also thrown a hail mary and spent some money on Google/Facebook/LinkedIn hoping to find a magic buying signal and customer acquisition stategy.

Needless to say, it did not work.  

You can only acquire customers effectively through ads if you already have a clear vision of who your customer is and can target them appropriately.  This was the key problem we had yet to solve.  Our ad copy and landing pages were inevitably ineffective. 

If anything, the one thing we did learn was that through targeting our ads at managers and getting little response, that individual managers were unlikely to be our target customer.  But we knew that anyway at this point and didn’t need to spend $500 confirming it. 

Cold E-Mailing

As our hunch began to grow that managers weren’t our target audience, and we needed to be selling at the enterprise level, we threw a cold e-mailing campaign at the customer profile that was emerging from our data - People Teams/COOs at SMEs of less than 200 people. 

This hail mary was built on more solid foundations than our ads campaign, but not by much.  We had identified a more worthwhile customer (more on that in a moment), but we didn’t know what they cared about and whether they wanted our product.  Without that information, any sales campaign is bound to fail.

Sure enough, ours did.

Again, I mention this not because I’m proud of it (I’m not) but because this episode illustrates the kind of loose, unconstructive practices you can fall into when:

1. Your product isn’t selling and your desperate for something to work
2. The alternative is that you have a serious product problem and the solution is an enormous amount of work to retest foundational assumptions about your business.

If you ever feel like you’re in a similar situation, try and rip the band-aid off as early as possible.

Losing Conviction

As all these activities played out, we were losing that other invaluable currency in an early-stage startup: conviction.  For most founders, starting a company is an act of irrationality in the face of the low odds of success (90% failure rate or so they say) and the impact on your life (diminished salary, work-life balance, mental health).  I kept going in the face of these challenges because I had complete conviction that my idea would ultimately succeed.  

The events of the second half of 2021 had chipped away at the foundations of that conviction. While the signals from those events were what we needed to reorientate our business, working without absolute conviction made the everyday effort of working on Kommon so much harder.  I knew that if we couldn’t find a way to regain that certainty in our mission, we’d be finished.

Fundraising

A quick note on fundraising.  You might remember way back in the mists of time that I said we had aspirations to raise VC funding if we saw encouraging signals from our product launch.

I had zero experience of this and so from mid-2021 onwards, I started speaking to those in my network who had raised funding about the likely process and how to go about it (a big thank you to you all).

Needless to say, given how our launch went, a lot of this advice wasn’t needed.  The exception was this.

I spoke to several founders who had raised pre-seed or seed rounds.  They all spoke about the power of storytelling.  At this stage in building your company, so much is uncertain that investors are committing based on:

1. The power of the story you can tell about the future of your company 
2. The strength of your team to deliver that future

We had lost more than conviction in our customer.  We had lost the ability to tell a convincing story about what Kommon could become.  Without that, we shelved fundraising until we had a new story to tell.

A New Customer

By December 2021, we’d got 34 companies to trial Kommon. From this, we had 1 paying enterprise customer, 2 customers on freemium plans and 1 major ongoing trial. 

While we were proud of our persistence and we had got over the hurdle of getting initial paying customers, we knew we hadn’t got PMF and that individual managers could not be the foundation for Kommon. 

We had gathered enough data to invalidate our original hypothesis.  Now we needed a new one.  We needed a new customer.

The most obvious answer was who we kept being referred to during our trials: People teams.

A Lack of Understanding

We knew we would end up speaking to People teams at some point.  We just hoped it wouldn’t be this soon.

As detailed in Chapter 2, our plan was to sign up managers as early adopters and use them as a foundation for discussions with their companies about enterprise use (which was always likely to go through People Teams/COOs).  We had now learned that in most cases we would have to speak to People teams first before most teams would start using our product seriously.

We had several warm referrals into these teams from managers who had tried our product but we were aware that not all referrals are created equally.

When a manager referred us and said ‘I like Kommon but the People Team are the ones you should speak to about this’, that could mean a few different things.  It could mean: 

1. ‘I know the People Team, they’re looking for a solution like this, they’ll be really interested, here’s their details.’

But it could also mean:

2. ‘The People Team deals with everything related to manager training. Your product is in that area so you need to see what they think.’

The two are very different.

In the first scenario, the potential customer is already convinced they need our solution, and it becomes more of a sales call.  In the second scenario, we don’t know what the customer wants, and we need to interrogate that before trying to pitch Kommon.  

We decided to operate on the second assumption.  Our internal notes from our 2021 Q4 strategy discussion are brutally honest about how we saw our position:

• We do not understand this customer from a product perspective. Kommon’s customer discovery was built on managers, and we don’t have a clear understanding of the pain points these individuals in SMBs face in implementing management/performance processes and whether Kommon solves them. We don’t know if we have a good product.
• We do not market to this customer, nor do we currently know that many of them. We have been orientated for a year towards managers. We would need a new marketing/sales approach to focus on these customers.
• This is a congested market. HR/Performance Management software is an established category with lots of participants, and we do not know enough about our customer yet to know what would give us a competitive advantage.
• In short, we are in very risky territory and starting from a low base. If we re-orientate Kommon towards this customer (even in an iterative, experimental way) we would likely only see paying customers in 3-6 months (even if we got everything right and with a big slice of luck).

In short, we didn’t know what made People Teams tick.  Even though we were desperate to sell our product, it was vital we discovered this before trying to sell anything.

A Cautionary Tale

In terms of the importance of knowing the priorities of your customer, there’s no better example than the largest enterprise trial we did at Kommon.  In late 2021, we began a structured trial of Kommon with 8 managers at a 250 person, $40m revenue company.  We had a warm introduction both at senior level and with the People Team who led on the trial.  

We put everything into a white-glove experience for this customer.  Every manager got personalised onboarding for them and their teams. At the end of the exercise we did feedback interviews to give the customer insights not only into the trial but also their employees’ management challenges and presented a formal deck of this data.  When asked if they would like to use Kommon in future, 94% of those managers interviewed said yes.

The trial fizzled and died. Once we presented our findings to the company on their management challenges and employees’ enthusiasm for Kommon, it never went any further. Procuring a solution like Kommon just wasn’t a critical priority for the customer.  

In terms of the referrals I mentioned above, they were the classic second scenario.  We got a warm introduction and after a promising intro call, we didn’t spend enough time interrogating their management challenges and whether they wanted to dedicate budget to solving them with software in the first place. 

Talking to People Teams

Given this context, our mission for early 2022 was learning about the key challenges of People Teams to see if we could spot an opportunity to pivot.

Of course, we hoped that everyone would tell us they really needed software for their managers to help them lead their teams, but we had a hunch that wouldn’t be the case.

We mined our network for anyone who either worked in a People team or Ops function, or was a founder of a company of 30-300 people, and managed to have a series of conversations.

We approached every discussion with humbleness and curiosity, leaving our biases and preconceptions at the door.  All the things we tried previously when we spoke to managers, but had failed to do.

We learned a lot but as a very brief summary, these were the various challenges they discussed and how often they were mentioned:

Even in this crude table, you can see the problem which was seen as by far the most pressing.  As an aside, ‘Executive Team Alignment’ and ‘Career Development Pathways’ also came up consistently with customers in the ensuing months and I think there are good businesses to be built solving those issues. 

But back to the first priority. Almost all growing companies reach a point where they need to promote staff into management positions for the first time.  Although some prescribe the ‘sink or swim’ or ‘figure it out’ curriculum to first-time managers, many companies recognise the value of preparing people for the role.  When we discussed new manager development with these customers it was noticeable how much more engaged those conversations were than when we had been discussing the Kommon app. 

We came away from these conversations with conviction on two points:

1. We had the right problem: manager development was important and companies were willing to put good budgets towards getting it right.  But...

2. We had the wrong solution: the People Teams we spoke to did not see software as the best way to meet this challenge. They wanted training.  Partly because they thought that was the best way of solving their problem, but also because it was easier from a procurement perspective.  For many of the People Teams we spoke to, getting a budget for software solutions beyond their HRIS system and ATS was difficult.  We even heard multiple stories of People Teams only getting the performance management system they wanted because they snuck it in as part of an OKR system their founders wanted. 

If we were going to proceed with this customer, the evidence suggested that the most likely path to success was for us to focus on training first-time managers.  

When I say ‘the evidence’, just in the process of these conversations, we had already been offered a paid opportunity to run a training workshop for a customer when we didn’t even have a formal product.  Being paid in advance for a product which doesn’t exist yet is a classic signal of a promising startup opportunity.

At the same time, customers were still trickling in for the Kommon app.  We kept being reminded we had built a good piece of software.  Here’s one customer review from February 2022 from a manager at a 200-person startup:

‘I found out about your product from the Rands Leadership Slack channel. I just started kicking the tires this weekend. Looking great so far.’

If we were to pivot to training, it also felt like we were abandoning the scalable software company we wanted to build.

We had a decision to make, which is the story of the next chapter.

Key Lessons

Product

• Don’t solve for multiple low-value pain points: building a consolidated solution where the value is aggregating features for multiple smaller pain points is risky.  Unless you’re absolutely sure it’s what customers want, and have the capital to build it, it may indicate that you’re not working on something customers care that much about.

• Talk to customers about how they will adopt your product: we asked managers how they could pay for our product (they could), but we didn’t ask about precisely how they would adopt it in their teams. This mistake was critical.  If we had, we would have learned before we built anything that a high percentage of managers felt they had to notify HR about product adoption, and we could have focussed on HR/People teams from the start.

• You can have the right problem but the wrong type of solution: you can be working on a valuable problem but still fail if your solution doesn’t deliver value how your customers want or expect.  Software is eating the world, but it’s not the answer to everything.  Some problems are best solved through services or content, rather than SaaS.  If you want to build software first and foremost, make sure you choose the type of problem that software excels at solving. 

• Learn when customers are lying to you: we received so many positive comments from people who said they would ‘definitely’ trial Kommon with their teams and then did nothing.  This isn’t to blame those individuals - people saying nice things to your face is human nature and a product/sales issue as old as time.  However, it was formative to see it in action. It pushed us harder to think about what signals represented true commitment/egnagement from customers, and how to measure them, rather than just wrapping ourselves in the comfort of warm words. 

• Beware of basing strategy on fading trends: Building a startup is already playing life in hard mode. One of the ways founders make it easier for themselves is to choose a sector with strong market demand. While we knew HR wasn’t necessarily a sector filled with hype, B2B SaaS valuations had been strong, the market was large, and various companies offering similar SaaS manager tools had recently raised. We felt we were at least swimming with the tide.  In hindsight, some of the companies that received funding in this space in 2019-2020 were probably experiencing the tail end of low interest rates and frothy SaaS valuations. As we learned, software for managers isn’t a great category, and I expect most of those that raised will eventually close, pivot, or be acquired at a discount. I expect if we had found the right advisor, they would have been able to give us this guidance rather than us learning it the hard way.

• Improve adoption by serving customers where they already are: Kommon should have been a Slack app, at least at first. Workplace adoption is such a significant hurdle to get over.  If you’re selling B2B, think hard about how you can make it as simple as possible for users.

• You’ll know if you have PMF.  You’ll also know if you haven’t: if you haven’t had PMF before, and are unsure if you have it for your product, assume you don’t.  You’ll know if you do.

• Conviction is everything: as soon as you start doubting your product and its value, you need to course correct to find your conviction again.  It’s one of the main things that will keep you going.

Sales & Marketing

• Pick a customer who knows they have a problem: educating a market about why they need your product is time and resource-intensive.  If you take this path, you’re playing on hard mode and will need the necessary runway to sustain you. Choose customers who already know they have a problem and are looking for a solution.  Through Kommon’s lens, new managers weren’t experienced enough to know they needed manager training but their bosses and their People teams were (mostly). 

• Don’t sell until you know what a customer wants (especially when you really want to sell): every conversation with a customer is an opportunity to learn something about their problems and how you can help. You should only jump into selling your solution when you’re sure it meets their needs.  If you sell too early, and get it wrong, all you’ll get is a ‘no’ and you’ll lose the opportunity to learn about how you could have got it right.

Operations

• Celebrate the milestones: the goal of any founder is to create a successful company.  It was my goal too.  But that can take years.  In the meantime, make sure to set milestones for your success along the way and genuinely celebrate them. It feels good to reflect on your progress.  As I found, if you don’t, when the hard times come it can make it difficult to feel like you’ve achieved anything which can have adverse effects on your mental health.  

• Know your story: every time you talk to someone about your company, whether potential customers, investors or employees, you’re selling yourself.  When you sell, people don’t remember products, they remember stories.  At all times in your company’s development, try to have a compelling story about why you’re doing what you’re doing and why you believe you’ll succeed.  People will remember you.