Build quick vs build slow and disrupt? Some truly disruptive innovations take time, and on this episode we look at what it takes to build a truly cutting edge pscholinguistic technology, and why most conversational applications of technology to psychology are ineffective.
Hi. My name is Matthew Todd, and welcome to Inside the scale up. This is the podcast for founders, executives in tech, looking to make an impact and learn from their peers within the tech business, we lift the lid on tech businesses, interview leaders and following their journey from startup to scale up and beyond covering everything from developing product market fit, funding and fundraising models to value proposition structure and growth marketing. We learn from their journey so that you can understand how they really work, the failures, the success the lessons along the way, so that you can take their learnings and apply them within your own startup or scale up and join the ever growing list of high growth UK SAS businesses.
Hey, and welcome back to the podcast. I’m here today with Neil Fogarty. As always on that Neil introduced himself and his company shortly, but I want to say I think there’s gonna be a lot of interesting conversation today. A lot of things I think, entrepreneurs, CEOs founders need to hear, especially with a lot of the kind of US media bias. And that’s really what I’m trying to tackle with this podcast is to show people different approaches to building tech businesses. So yeah, welcome, Neal. Great to have you here.
Hi, thanks, man. Thanks very much. So yeah, my name is Neil Fogarty. I’m co founder and CEO of a company called leaf the group. And Letha is a pre revenue, deep technology, product lead enterprise specializing in psycholinguistic, artificial intelligence. And to date, we’ve revisioned psychology, psychotherapy, and conversation agents, eg chatbots.
We’ve been building highly efficient functional components, bit like smart Lego, where we can plug and play them into a variety of platform as a service and software as a service applications.
We’re at a stage now where a lot of the science has been completed with past proof of concept and prototyping. And as of today, we’re in the final stages of migrating our virtual colleague technology into an architecture supporting the internet of things.
And that first revolutionary product is called Brudar, which is the Irish and Scottish Gaelic for Dream.
Awesome, who will dig into exactly what a psycho linguistic AI actually means shortly. But just to give some context, how long have you been been working on on this idea?
We were in the research stage for about a decade. And then we then progressed in 2018, into what we would call the development and prototyping stage. So there’s a lot of revisiting and deconstructing what what we felt to be dysfunctional in those three key markets. And it’s three years of DEV for prototyping.
And that brings us into where we are now in 2022, where we’re now at the point of piloting the technology into what we would consider some good marquee brands.
Yeah, and I guess the the question is kind of why. Why has the journey been that long? You know, we see a lot of startups and rushing to get out there to disrupt the world in as short a time as possible. I’m not saying you were slow, but one of why. Why was that approach important to you?
Well, there’s two things there. One, I think, it’s Be careful of the investor BS, really, that if you haven’t done it rapidly, if you haven’t gone to market rapidly, then you obviously haven’t gotten momentum, you’re not committed to your idea, therefore, it’s not going to succeed, therefore, we won’t invest.
And that’s just yeah, that’s just tripe. That’s just lazy investment. The reason why it’s taken us this long, is, it was meant it’s many fold.
One is, if you’re going to do psychotherapy, you’re gonna put a psychotherapy product on the market to help improve the lives of people with anxiety, stress, depression, loneliness, addiction. If you’re going to do that, you don’t just lob a product out.
And this is one of the differences between what you would call deep tech and shallow tech. So let’s take the shallow tech approach to psychotherapy.
They go on to GitHub, you find some robot code that’s on there, you buy yourself, use a UX UI template off invito. Put the two together, get it on a store, put it to market. Now there are 10 to 20,000 mental health apps out there at the moment on the stores tend to 20,000 Wow.
And there’s only two that take up 90% of that market, and that’s headspace and calm. So whereas the other 10 to 20,000 minus two, and what happens is I’ve gone through that process of going for style, rather than content, throwing out a CBT solution, because it’s the easiest one to get to market, people download it, try it, hate it, ditch it.
And then that app fades away. And that startup fades away.
Neil FogartyWe went the other way, we went for the high hanging fruit of finding the really, really, really difficult things to do, and then doing them exceptionally well.
So that took a lot of research. We dismantled the psychometrics market, identified where it was falling down, eg for lack of context, eg bundling in all these false fake badges of consultants and certifications of almost alienating the use of themselves away from the assessment, making the assessment overly complicated.
So we had to dismantle that and using a lot of solid research and solid science that’s accredited and recognized in the market. That’s what we use to build our psychology platform. So that was quite a few years in itself. Yeah, then the other issue that we had was simply the technology out there couldn’t give us what we wanted.
So in some cases, we’ve almost been marking time waiting for things to come on. So as an example, we did work at one point where we use a lot of Python within what’s called a LAMP stack. And we used a conversational AI framework called Raza, which is heavily invested by a 16 said, and, and what we found was that Raza actually couldn’t do the things we wanted it to do, we were at the very forefront of pushing the capability of Raza so much so that we were having to hack a lot of our code to get it to do things that Raza couldn’t deliver.
And then four months after we’d done that hacking of our code, Raza roller, a new iteration, and there it is, and we got fed up with waiting. So not only did we focus on moving away from lamp into what’s called a myrn stack, where it’s all Java scripts driven, so that the calculations and activity takes place more in the browser.
But we also took a look at all the third party tech that we were using, and started to create our own versions. So we’d stopped relying on these other organizations. But some of you don’t know that you’re about 12 to 13 years in. So that’s, that’s why it came about.
No, absolutely. And I think I love the phrase, high hanging fruit. Because you know, so many people are looking to kind of live by that mantra of that low hanging fruit in his house, you say it’s that investor, model, or pretty common model that you see out there of getting the minimal thing out to market as quickly as possible. But the minimal thing doesn’t mean it’s the best thing, it doesn’t mean it’s the most appropriate thing for the problem you’re trying to solve.
If you take a look at your pitch deck, on your pitch deck, you’re told to have your tam Samsung in your target achievable market, the obtainable market and the serviceable obtainable market. So what they’re interested in is what is the minimum, you can make your some part, then it’s a minimal viable product that goes out there.
And it’s get a letter of intent, which means nothing, because he’s just basically saying that, yes, they’ll give it a go. But there’s no commitment from us that we have to buy it in the end. So everything is always run to quote the minimum. And this is what your investors telling you to go for. Whereas our approach was, make it simple, make it beautiful, make it powerful. And that doesn’t necessarily mean make it cheap, and make it simplistic.
Yeah, I think that’s a good message, especially within a field like this, where you’re you’re impacting people’s mental health and well being but even outside of that, you know, why would anyone wants to drive a minimum viable car? I don’t think they would.
Would you? Would you like to go to a fancy restaurant pay through the nose for it, and they say, we’ve partly cooked to the fish. And while you eat it, we’ll see if we need to cook it any more.
Indeed, or, or perhaps take a flight on a minimum viable plane. We didn’t have the engines.
Bring your own engines. Because, because yeah, we’re still we’re going to lean and we’re going to pivot and we’re going to all that kind of rubbish. Rather than actually give you a product that you want.
Yeah, no, absolutely, completely. Agree. So I guess taking a step back before we kind of get into more of the detail about what you’re what you’re doing now for what, what led to, you know, kind of dedicating so much time to solving solving these problems, what were some of the motivators that kind of led you to this point.
The first thing that we were working on was, there was internally we called it pink is a praise of psychometric killer. And that’s because if you take a look at all the psychometric products that are out there that are out there They are almost entirely driven by originally what was called the psychological lexicon of words.
And it was 18,000 words and phrases that was used to describe the human condition. And this has gone back about 100 years. So it’s not something we’ve just like rattled off recently.
But people then started to focus on 4000 of these words, which are related to personality. And then over time, they got reduced down to 16 words 16 pF, then that got reduced down to five words, which is known as the acronym canoe or ocean. And there’s even a push to try to drive the definition of the human condition down to just one word, which is neuroticism.
So there’s this massive reductionism that’s gone on. And what you’re finding is these organizations are trying to shoehorn the human brain into effectively Excel spreadsheets. And then they would use these Likert scale questions have extremely at the one end to minimally at the usually on a scale of one to five.
I hate it when it rains, you know, I strongly agree or strongly disagree. Well, take a look at the human condition. Whether it’s done overtly, or if it’s done subconsciously, in your head, every question you are asked, you will predicate with two words.
And that’s what kills the entire psychometric industry, which is about a billion plus dollar industry, and it kills it. The two words are, it depends. If you say, are you happy when it rains? It depends. Am I in a drought? Am I with a loved 1am I dancing? Is it freezing cold? Is it in Warsaw? You know, just where I’m from, which is why Philip can say that these are the eight depends.
And so what you have you have a library of non contextual questions given to you in this assessment that from the from the service provider, then they’re using factor analysis. And the factor analysis basically says, the first eight people who answered the question, I’m happy when it rains, I said that was extremely, strongly agree.
Therefore, we can assume that the next two will say the same thing. So it’s now it’s now forecasting people’s responses based on the first data. As you may know, with any of these kinds of organizations that do research into creating those kinds of questions, sets, they get hold of university students. And they asked the university students the questions, and these are, you know, ranging probably from earnest to drunk. But that is not representative of an entire global community. And yet we take that small sample university students, the undergrads there, and we then forecast it into into how we will describe everybody.
And so we said, well, that’s just that’s just hokum. You know, this is just, it’s just, it’s just not a valid way to do it. So we went the other way, we created our own lexicon, which is now around about 110,000 words and phrases. And within our heavily IP psychology engine underneath, what we’re able to do, is you could write 100 to 200 words about specific circumstance, let’s say, I’m going to the park, you could write 200 words about that.
At the end of that we would know your psychology with respect to go into the park. So it’s contextual psychology. So did that across an organization? How many different times in a day will somebody be worrying about an event, an interaction with a person or circumstance, each time, they can talk their own AI psychologist, put their one to 200 words in, they’ll be asked one or two questions by the AI coaching module within it.
And then it will give them some insights and thoughts as to how they may want to choose to address that piece of psychology. So it’s a psychology builder, rather than just a mere hokum metric. So that was the first product. And we were doing some work at I think it was University of Dundee. And a psychometric company in Scotland actually tried to get our research closed down and get us kicked off the course. And while that’s when we knew we were on the right track,
yeah. When you kind of put it Yeah, scaring the people who have a vested interest in the old model.
Exactly, exactly. So let me take it on to on to psychotherapy, same thing, the vested interest there is cognitive behavioral therapy. Lots of CBT therapists CBT therapist said their national health service has spent over 4 billion on their AI App Service and yet the National Audit Office when it was allowed to audit I apt said it could no find no evidence of value for money. So while gunning for them and upsetting them And then when you get into chatbots, and I mean, where to begin there? But yes, we’re irritating people in the chat bot community as well.
Yeah. So very much looking to challenge that existing model. So I guess, you know, given that research that you were then doing kind of what were the the kind of the steps from start that privatization process from from that point.
To start with. One of the co founders is 40 years as a psychologist. So some of this has been my job as CEO, to do two things, one, to get that information out of Ian’s head. And to turn it into something so a couple with him. And then two is keep clearing the way like a minesweeper.
So find the money, when we need the money, find a client to talk to when we need the client, find a partner X mindset. So I’m kind of clearing the way for the talent, I don’t see the CEO of the business as, quote, The talent.
And this comes back then to the investor myth is most VCs will expect to see the CEO in the room during those investment conversations from the presentation, from the pitch, that q&a, all that kind of stuff, they expect the CEO to be there, the CEO is not the talent, the CEOs job is to clear the way and make sure that talent can do their job.
And so So that’s been my particular task. And so in terms of moving it from research into something that is, it’s caught this use the word commercial for that.
And to do that, I’m bringing more commercial skills and more commercial understanding. Now, I set up my first Sass company in 1997. And we didn’t call it Sass then because it wasn’t a surprise. Yeah, so I’ve been used to the concept of productizing products and services for 20 to 30 years. So when a man says, I’ve got something that can do this, we then spitball it around and say, Well, who would buy it? How would they use it?
Then I’d go and talk to organizations who are deliberately pessimistic, I feel, because I want people to say that sucks. And here’s why. Now, if you’ve ever read six hats by De Bono, he talks about having mindsets, aligned mindsets, in meetings. And one of the hats you wear is the black hat. And the black hat, and specifically is only there to look for the disk benefit of what you’re suggesting.
And that’s the people we went to. Every time I went out the door, I specifically looked for people who would tell me that our ideas sucked. And I’d say brilliant. Can you tell me why? And I go back to NSA, right? General consensus is, whilst we’ve got something that’s super and shiny, it needs to do this and this and this for the client value, otherwise, no one’s going to buy
it. Yeah, I see. I think that’s a really valuable approach that I think a lot of founders are probably too scared to do, because they don’t like negative feedback. They like that confirmation that they’re on the right track. So they probably will, you know, whether it’s consciously or subconsciously, but they will lean into the conversations that make them feel good and probably shy away from, you know, seeking out those kinds of conversations. Certainly.
Absolutely. I mean, one of my favorite bands is Jesus and Mary Chain. And Jesus and Mary Chain have built their entire record discography on the use of feedback, I think feedback is brilliant. And yeah, if you’re gonna go out there, and people are just going to be nice to you all the time, those nice people won’t buy what you’re offering. You know, not until it is compelling.
And it is compelling when it covers off all the negative people as well. So so why waste your time going out there and getting those nice, pretty testimonials? Again, part of your investment pack. This client says it’s lovely. This one says his little while get those Why not say this client said it’s sucked for the following six reasons. And here’s evidence that we’ve fixed those six, fix those six issues and gone back to the client. And now they say it’s lovely.
Yeah, that gives you good reason to go back to them and be challenged again and challenge them, I guess. Absolutely. Absolutely. Yeah. So you kind of mentioned you know, some of the challenges with problems with existing mental health services, you mentioned AI apps, and it being proven not to add any value. I guess with that, in in mind, you know how you mentioned the kind of the deep technology, the high hanging fruit but kind of how kind of widespread. Do you see your technology being? Where do you see it being applied in what is the vision for this?
Coming back to our pitch deck here is that you’re told, look for one problem, offer the solution and then give your market analysis. No, nothing in the world ever acts in isolation. So to say that we can fix one problem with one solution just seems to me to be the most insane thing. I read an article that suggested that on the average corporate desktop, outside of your Microsoft Office license, the most employees now have got 350 pounds worth of SAS per month, SAS products running on their desktop, on top of Outlook.
And yet, when you take a look at them, a lot of them are very closely aligned, because all Corporate Solutions sat on these desktops, therefore there must have some commonality. So why is somebody saying oh, well, I can fix this very specific one thing, when you should be saying, I can fix four or five things at a stroke here. So, so that frustrates me. And a common discussion I’ve had with people internally as well as, as well as people who want to be advisors or non exec directors to our business, is that our expertise is horizontal, we’re talking about psycholinguistic data.
Now, that doesn’t matter, then what the vertical is plugging into it. Our particular expertise is the horizontal. So whilst we have set ourselves up to specifically approach blue light plus organizations, so fire, police, search and rescue, but also NHS military, so you know, anybody who’s helping people does got high stress and high employee numbers. That’s our own proactive sales push.
However, yeah, because we are product lead, therefore, it’s about getting the product into the hands of the users as quickly as possible. We’re getting contacts from people in the private sector, outside of the UK, all those kind of left field things that we are not focusing on ourselves, the PL G is getting these approaches. Yeah. So it may be that as part of our strategy that if we want to stick to our blue light plus focus, is that if other organizations want to partner with us to go into their particular sectors and use our technology, that that’s the way we may go, because we want to maintain this focus of our sales message going specifically to this one, one particular vertical.
I see. So you’re not afraid to see where that technology could be applied to different sectors, also b2c as well?
Well, I mean, as I say, I mean, we’ve done this smart Lego approach. So we developed components. And then what we do is you bring those components together to create a product. So if you take a look at Bruadar, that’s about 2425 of the components that we’ve built, that we’ve plugged together with a specific orientation.
But we always maintain that the application of our technology is only limited by the ambition and the imagination of the client. So we’ve been approached by one organization that have asked us the question, could we do a psychometric understanding of our entire supply chain? So that’s every individual, in every team in every organization that feeds into the supply chain, the supply chain, as we’ll see might have for the production of a piece of piece of manufacturing, you might have 20 organizations in the supply chain.
They want to know, are they not just the best commercially, but can they work together? Nicely as supply chain integrity is a massive thing. And it’s like, well, actually, yes, we can do that. Because it is psychometric, it is relationships, its emotions, all the things that we’re working on, if you’re gonna apply it and that way, yes, it can be done, we plug the blocks together in a different way.
And you’re letting the clients drive that, which I think is the interesting thing.
Yeah, we are in the background of the three founders is that we all come from a background of facilitation. So Ian has got a very strong psychology background, my background is business consulting, Michelle’s background is in areas of compliance, but also in in training and, and regulatory environments. It’s all facilitation. So when you go and see the client, you know, it’s you don’t go down that whole rubbish route of you know, so what’s keeping you awake at night, etc.
Some of it is future forecasting. If I understand the client, I was reading about x in the paper this morning, or I was thinking about you on the way in and I wondered to myself, what are you going to do in two years time if, if the Earth does go open external point five of the degree, you just let them talk. And what you do is the same as our technology, you ask the questions, they orient themselves into a new understanding. And when they orient themselves into the new understanding, they then determine their own need. And when they say, can use technology to do that the answer is going to be yes.
Yeah, there’s no point doing the hard sell with it. We know what we’ve got is unique in the market. And it is entirely unique in the market. In preparation for the conversation with you today, I thought I’d take a quick look on on our good old friends at LinkedIn.
And as a conversational AI hashtag. And I went on there and had a read through. And every organization on there went talking about conversational AI, chatbot, building, no code, chat bots, etc. They’re all talking about how they’ve done such a great amount of work with NLP. And the tech can understand the human. None of them have said, we understand the psychology of the user in that conversation.
So we know we have something entirely unique and that makes, it changes your attitude. When you go into an organization as a startup, we go in there knowing that they need what we have. Yeah. And so the way we deport ourselves in those conversations is probably different to somebody who’s produced one of the 20 20,000, mental health apps, I mean, they are, they’re whistling into a very old, strong hurricane there.
We don’t need to do that. And so we have a different we have a different attitude. And we’re going to make us arrogant, it makes us comfortable. And I think as a startup, when you’re going into these organizations, you have to if you’re going in there saying I want you to tell me what you don’t like about what we do that completely shifts the conversation.
Because most people like to complain and like to what’s the word that they’re just like to not have gotten a knock and say, insult, but I love to do your product down? I have to critique it. Yeah, so in the end to do that, but then say, Okay, well, I’m in, I’m not here to sell you anything.
Because obviously, as you’ve just told me, there are seven things that you think of Florida that when I’ve done those seven, I’ll come back, and we’ll have another chat. And that is it. You know, it’s just a different attitude that you have, you don’t have to beg them for the business, you’re gonna make a product that’s so compelling that they’ll come to you.
Yeah, and I think that’s the difference between trying to make that quick sale, and probably not going into those conversations with confidence, with genuine kind of knowledge that you can actually help them or the technology can actually help them.
And I think that then probably leads to sales cycles that I see with a lot of, you know, startup founders going in without that confidence, whether almost, they see it as a numbers game, they’re only expecting to close a certain percentage, and they just move on from the clients that, you know, aren’t a good fit at that time.
Yeah, and you’re asked the questions by the investors, what’s your sales cycle? I mean, yeah, it’s not our sales cycle. It’s the clients buying cycle. So when you’re asking me the question, what’s your clock and say, Oh, it’s three months ago. That’s great. That means What’s your revenue point to x?
The reality of it is, is that we’re talking to a client at the moment in a very complicated procurement process. And they’ve told us because we’re the only ones doing this, they’ll skip part of the process for us. So yeah, if I was to go based on on the formal off the rack rate, it’s going to be nine months.
But the reality of it is, it could be nine weeks, it could be nine days. And with a PL G model, where we’re putting it into the hands of the consumer, the corporate PLGA model means that we get, we get paid straightaway. It’d be small users, but that gets paid straightaway.
So so it’s just some of these old formulaic questions you’ve been asked are not suitable for the New World, and that will be one of them. And the other one is, as a tech startup, if in doubt, discount and that’s wrong. You know, in doubt, work on your product, work on your messaging, truly understand the client’s pain and make it compelling, because if they’ve got a big enough pain, they’ll pay the money.
Yes, absolutely. And I think a lot of people that struggle with marketing with getting the word out there, they don’t know their customer at a deep enough level. And I love what you’re saying about don’t ask me what my selling cycle is. You should be asking what my customers buying cyclists. And that I think is the right perspective to take you. You can’t think it’s all about you and your startup and your product. You’ve got to bear in mind it Does that add value to your customers?
Absolutely. It’s, it’s it should. A sale is a product of change and causes change. So no sale is ever in isolation. So when you’re asking me how long the cycle is going to be, well, if I sell this product into an organization that’s got 15, Mental Health First Aiders and two occupational psychologists, then there straightaway, I’ve got the user buying influence that may delay the delay in my sale.
So while I think financially, it’s compelling, and the CEO thinks strategically, it’s great. And you’ve got a whole bunch of employees who are desperate to talk to the tech, you’ve now got our cadre of people who will block it. So unless you actually mapping every single sales strategically to understand the buyer, and that can go into the b2c context as well. I mean, you’re right, B to C, if you’re selling to the husband, or the wife, there is somebody who’s got a 50% saying that what what that sale is?
Yeah, so you know, so even that has got its got its sales cycles. In terms of b2c, our technology, the the AI psychotherapist, is being made for free to everybody in the world forever. Well, everybody will have access to better mental health, and it will be a psychotherapist in your pocket. And that is for free. So our b2c approach is that, that we’re not there to rip the consumers, you know, we’re there to add value to the corporates and so that the consumer is going for nothing.
No, I think that’s a great value based model, you know, purely from the business perspective, but I think, ethically as well, for such an important topic and area of of change, I think it’s important to make this accessible in the right way. And I think we’ve genuine ly disruptive technology, genuinely kind of deep technology, as you’ve described it, I think you don’t have to kind of play that game of, of trying to monetize early, as we’ve talked about a minute ago, and, you know, almost just push it out there to kind of prove a particular type of demand, what to investors, whilst you know, that curve is likely going to drop off a cliff very shortly.
Yeah, and you’re also it’s part of that crapshoot for the for the founder, is find where each VCs in their funding cycle find, you know, and what’s, what’s their portfolio, we had one person contact us from a VC, who’d seen a pitch we did, we were awarded in 2020, we were socially we were the regional social enterprise of the year with the Barclays Bank, because of our work in democratizing access to psychotherapy.
And part of that you were then invited to a pitch event, it was one of these awful lockdown, blind zoom pitch events that we all did. And so I did the pitch. And then I was pitching because we want to know, if we’ve got our messaging, right. And the critique that we can get from those kind of blind events is very useful for us for our messaging. So did this blind pitching event got contacted by one of the VCs that was there, so very keen to talk to you very interested in your, in your work in the psychology and linguistics? Let’s talk, please send me the pitch deck that you showed on the day. The pitch deck, got in touch with them.
You know, just as a courtesy, courtesy, because I think it’s courteous when you’re having a conversation with somebody as a courtesy or foreigner mob? To ask them, you know, do you want to have a chat about it? Or no, now we’ve invested in another conversational AI company, and I couldn’t possibly invest in yours. I was just curious what you were doing. And this is a, this is a renowned UK, VC.
That’s just wasting my time. Look, I mean, you can see stuff on a pitch deck. And if you can, if you can work out what the various pictures of dogs and brioche is on my pitch deck, then, you know, fill your boots, but it’s just disrespect of my time. And one of the things that you’ll find as a tech founder is you will get a lot of people from a lot of VCs asking for a chat with you and other researchers, and their job, their KPI is to fill their diary. That is it.
So I would start every time I was approached by these people across the logs of LinkedIn. I’d say we’re pre revenue, we haven’t got client validation, and I’m busy. And that’s, that’s fine. That’s fine. It’s only 20 to 30 minutes and then shivian Chase and shivian Chase and because no meeting is ever a bad meeting you say yes to them. Start with an Then what you find is as you go through that conversation, and at the NSA yet
The problem is he sees that you’re pre revenue, and you’ve got client validation. So you’re a bit early for us at the moment. What the thing I told you at the start? Yeah, so so it’s just a disrespect that they have they think, again, is coming back to this, being comfortable in yourself.
And having that kind of confidence in yourself, is that these people are chasing you to waste your time. And so, always, always be asking yourself the question, is what I’m about to do next gonna add value or get me to that goal that I set, if I’ve got a product launch date of December, the first, will this next meeting for 30 minutes, get me there or not? And if it doesn’t suck them off, and if they keep persisting, then they aren’t listening, and they will never be the right kind of organization for you to work with.
Yeah, no, I agree completely. And I think a lot of founders, and I think largely due to kind of a lot of the tech media, they seem to think that getting a VC getting into that, you know, fundraising, kind of multi level approach. And system, if you’d like is the only way that their startup can a be externally validated, but also be sustainable. They I don’t think most founders are willing to put in the work and say, what, if we don’t get this funding, we’re still going to be here next year. And the year after. And the year after that. I
was the conversations that peters out at the moment, because we’re waiting to get the next product stream running. But I had lengthy conversations with a corporation, he was just he was to pitch the tech to them. They’ve got somewhere around about half a million employees worldwide.
So you know, it’s kind of a sweet spot for us in terms of high stress, multi board and multi site and high employee numbers. And as I got talking to them, I said, Did you did you know we’ve got a corporate VC team? I said, No, I didn’t very interesting. So got talking to them. And they would provide funding into your tech business.
Because it aligns to what they were looking to achieve through the ESG commitments, environmental, societal and governance. So comply to that they’re very interested, but then they would introduce us to their 110,000 clients worldwide. So that’s, that saves me a lot of work. Yeah. So I falter talking to a few people in those investment circles in advisors who are meant to be independent and objective, and there’s an ROI. You don’t want to go with a corporate VC because VCs don’t like investing in you. If you’ve got a corporate VC, I thought, well, if I’ve had a corporate VC put money into my business and introduce me to 110,000 clients worldwide, what do I need a VC for?
Yeah, and it’s just so much like this kind of like a like a lazy arrogance with them that, you know, this is the way you should do it. The reason why we did Python work to start with, is because we were advised to buy Python developers, the Reliance operators, we will do that ourselves.
And you’ve got people out there who want to want to profit from you. So just be mindful of the advice you’re given. Because in all what it seems,
no and I think people profiting from you, you’ve got to remember that is as you said, that’s what they are in it for. So the direction they want to take you in what that next fundraiser is or isn’t the markets they may want to take you in the product direction could be entirely different to to your vision and to what you want to do. And you may give up that control if you’re not careful.
Yeah, again, you’ve got it after about 11 years of bootstrapping. And that was probably about 1.51 point 6 million pounds that we bootstrapped up till 2090 even to a one point where Michelle the my wife and a co founder, she was hustling and selling furniture out of our house to keep us going wow. And He was trips to the food banks. In fact, I’ve still got in the cupboard opposite mat here.
I’ve still got a tin, because they do them a tin of sprouts, which is never gonna get opened. But that tin of sprouts came from from a food bank. And that is there to remind me that every time I say I’ve had a bad guy, no, no, no, we had some really bad days, because we had to, we had a tin of sprouts in front of us.
So we worked hard on bootstrapping it. And in 2019, as we suddenly started to get into extra costs, things like, I’m having to look into the legals and the IP, things that you don’t really consider when you’re when you’re doing your tech startup side of it, as we’re edging away from the research and more into the depth, those costs. And so we we got ourselves an angel, and they put in some money, but they’re disproportionately we’re trying to influence what the business was doing.
You need to have these as your account, and you should talk to these about doing work. And it was always you should, and actually, you shouldn’t, because it’s still your business. So you go down the route of working with the angels, that friends, families, collection of people, just remember, it’s still your business, they’re investing in your business, because of what you’ve done to date. They shouldn’t be coming in and on unfairly influencing what you’re doing with your own invention.
No, absolutely, I think it’s important to retain control your day to day, but also, you know, strategically, you know, what the next year looks like, but also what that long term vision looks like as Lolly I’ve seen so many companies get derailed. And, you know, they’ll get they’ll get, you know, a significant round of funding, they’ll, you know, be steered how they should be investing this, whether it’s, you know, a massive development team or an outbound sales team account based or whatever it is.
And then they’ll get to the end of that, and then they’ll need to demonstrate, you know, particular group growth in order to actually still be able to retain that team to get the even bigger next level of investment in this like this kind of pyramid scheme, you’re just forever climbing until you get the exit
say pyramid and Ponzi go well together don’t know there is there is that it’s almost like some kind of mystical magical miracle around that they persuade you that you should be on that you should be getting your startup your seed, your your your your, your be your see that you should be getting these things and that you shouldn’t be getting these things.
Take a look at our organization, we say we’re welcome to facilitative leadership basis. And what that means is I tell all my stakeholders what I want to achieve in the future. And I invite them to tell me how they can get there. So it’s not a dictatorial approach that says, This is what we’re going to do. And this is how we’re all going to do it. It’s this is what I want to achieve you all my advisors, your my aides your mic, when they start to get a point of view on my employees. You tell me how we’re going to get there. And you tell me what you are going to do in that process. So if you look at the OKR model, for objectives and key results, that’s basically what it is is facilitative leadership.
So I’ve said to everybody, I want us to be turning over x in 2025 26. Yeah, and I want the business to be valued at this in 2025 26. Tell me how I can get that valuation. And then you leave it to your IP people, and your partnership people and your salespeople and your tech dev people to tell you what they’re going to do to contribute to where you want to get to. Yeah, now at no point have I said, I hope a VC can help me do this.
There’s also another thing as well, is that you can stock your guts out, you may own you may own let’s say as a founder, you may have 30% of your business as a founder. And you’ve hit 10 million. And you’ve got an investor saying well, you got to slug it. stogie. Good said also I’ll buy a bit more equity off your here slightly good set a bit more. And I’ll get you to X million plus a couple of more percent.
You may be struggling your guts out for not much more money. Yeah. So just just remember that, you know, most people have a limited life and they have a limited amount of money they can spend this mad desire to be a unicorn. What’s it worth? I mean, do you want to be Uber? Do you want to be Airbnb? Do you want to be Tesla? Do you want to be where you work? Because to me, there are ethical issues with those businesses that far outweigh my desire to be called a unicorn, a fictional magical creature or a hippo which is possible be more likely.
So, just strip just remember all times, what are you doing it for? We’re not doing it so that we can, the measurement of our success isn’t going to be the size of our bank account. The measurement of our success is that we have seriously upset Sartre, psychometric company says the irritation factor in there. I want to be able to go into London with my kids, and my son sees a sign on the side of a bus talking about therapy for all and it’s our company, I want to go to a party where somebody said, a friend or a relative of mine, use your technology. And it actually helped them step back from thinking about suicide.
They’re your successes. Not Oh, look, I’m they’re worth an extra 100,000 Even though I haven’t seen my family for a month.
No, absolutely. And I think that comes down to kind of what you started talking about, which is going for that high hanging fruit, it is genuinely solving that problem in a very different way.
Yeah. And it irritates people, we are referred to subversives rather than disruptors. And I’m more than happy with that.
Yeah, no, I think it’s a good word. And I think so many companies, you know, seek to be disruptive or self described themselves as disruptive but I don’t think it’s something you can self describe. I think it’s something that is evident by the reactions you get from the customers and from the incumbents, the people that are there in the moment.
Yeah, this. This is probably the only the ever time I would refer to this person. But there’s a quote by Alan Sugar, where he said, if you have to be described as an entrepreneur, you have to describe yourself as an entrepreneur, you’re not an entrepreneur. Yeah.
Same with anybody who says that technology is disruptive is naive. Because we’re in a world where Unique Selling Point rarely occurs anymore. Because if it’s a good idea, someone’s going to copy it.
Like I say, somebody thought that it was good to have CBT therapy apps, and robots got theirs on GitHub, and so everybody’s doing it. So it’s not disruptive. You know, disruptive might be if SAP or Oracle said that we’re gonna give away all of our software for free forever, to every every company in the world. That’s disruptive. There’s no one’s going to emulate that one. But this doesn’t get done.
So it’s a bit of a it’s what again, it’s one of those Bs words that, you know, can be used to be investor friendly. But even investors now are kind of wise to the fact that they it’s just, it’s just a nothing word. But, but we had somebody within the military referred to us as subversive. And I thought, yeah, I love that. If he could do that, as a LinkedIn testimonial for me, I’ll be quite happy.
Absolutely, they’re certainly happy to do that. So um, yeah, I guess in terms of the business now, then you’ve obviously mentioned, you know, kind of launch plans, you know, coming up pretty pretty soon, you know, what is the kind of the next steps look like for the business and the product or sell the products?
Yeah, I mean, there’s a lot of stuff that I can’t tell you about, because it’s, it’s highly sensitive. And dare I say subversive? Yeah, the the key areas are working on obviously, it’s the power of the psychologists, the therapists and the conversation are there the three core areas, but underpinning a lot of that is also the the, the men’s capability have within the area of psycho linguistic data analytics. So, so as a very broad example, let’s say you’re having a conversation with somebody in a call center online.
On the screen, you’d actually have the sound wave of the conversation on the screen. Because all calls are recorded for training purposes, as we all know, that’s on the screen. But underneath, we’re able to show the points of anxiety, stress, depression, on declared once needs sentiments, emotions running underneath the conversation, even to the point of being able to flag that this is a time for actually to suggest my view, stop the call because the call is in distress. No, get off your script and have a more humane conversation with them.
The reality of it is that we have the ability to replace every conversation, every call center agent in the world with a piece of technology that can have unscripted, generative conversations that solve and also sell. So that’s something that’s on our mind, equally on our mind is the ability to remove every non sorry, every transactional middle manager in every organization that we If you if your skills are transactional rather than relationship based, then we don’t need you.
So some of the bigger the bigger fish that we have, and some very Goliath fish underneath that. But in terms of what we’re doing next, I mean, we’ve run this as a Lean Enterprise. So anything that’s non core, a non strategically critical, has been outsourced. And that is everything. So we’ve run the business on three people. And we’ve built this technology on three people, Ian is the CTO, and is in a very unique position as somebody who is psychologist, commercially minded, and has got the development skills.
So you know, that’s a band diagram is slap bang, in the middle of that. Not many people are that. So much like Apple did with the development of the iPhone, where they compartmentalize the development of key parts of that tech to such a point that the companies who manufactured it didn’t realize they’re actually helping to make an iPhone. That’s the approach we’ve taken with our code development. It’s all discrete CodeBlocks. And we assured them primarily India, obviously, but also into such places as Spain, Portugal, at one point, a couple of years back, and before sanctions came into place, that would have been in Moscow as well. So so we had a global approach to it, if you had the capability, then we didn’t really care where you were based.
But what we’re now doing for the next phase is in the resourcing plan, is that we’ll be building a development team with lethal Labs, which is, which is where it’s located in Edinburgh. And it’s a hybrid working model. So it’s either going to be working from the place in Edinburgh, or remote, it’s, it’s makes no particular order to us. And the Yeah, that Minesweeper thing I talked about a clear in the wife of the talent, which would be a cance, HR, product, customer expertise, experience, etc.
That can be based from Oxford. Okay, and we will be fully furnishing everybody’s home office, so that it is not just fully functional, but it’s also something that is comfortable and safe, etc. And that does include covering things like utilities and connectivity at a time when people are maybe a bit concerned about what the hell’s going on out there a big wide world. Yeah, and beyond that, we’ve got about 35 separate pieces of IP at the moment. So we’re doing quite well on our IP portfolio.
And that’s growing. So I tried trade secret protection system that we’ve got in place needs to be as robust and productive as the r&d function, because that will also influence any valuation on the business. It’s not just how many clients you’ve got. It’s, you know, when the when the founders sell and leave, what are they leaving behind? Yes, I’ve left behind an SLT that can run the business. But your crown jewels, the crown jewels is your IP?
Yeah, absolutely. So it’s good, it’s good to make sure you have you know, whatever IP protections, you you can, especially with something so on use the word disruptive for something that is going in, you know, at that deep level, as we we’ve talked about before, and isn’t just, you know, a lazy clone of what’s already out there.
Yeah, I mean, if you if you went to the 20,000, minus two of these mental health, health app organizations, and you said, so show me some of your algorithms that we’ve gotten. Yeah, it’s all style and no content that just aren’t gonna. And so yeah, it’s, it’s getting build your own IP, because that is your ultimate value. As a business, we’re probably still very much of an r&d business.
So we will probably end up being very much of a property company a prop Co. and then go into partnerships as a site for the verticals. Yeah, our our business is creating and protecting our intellectual property. That’s where we see a value. We had one investment advisor coming to us and said, I doubt you’ll ever make any profit, but you’ll be worth billions because look at Uber, as if that’s a good thing. And I said well, can’t me call me actually developed brilliant technology and then prove its capability by selling it to companies.
So we make profit and have good IP. I just don’t understand the the rationale that says you can not make a profit and you can be worth a fortune. I. I am so elderly that I remember the 90s tech bubble. And I saw how businesses can I read themselves during that time, and it was obscene. And it was wasteful. And like I said, I’m from Warsaw, you know, I come from an area full of factories.
And I’ve never seen any of these factories say, right, we’re going to sell equity in our factory. You know, they just keep on keeping on doing a good job making good stuff. And that is enough. And sometimes that should be all it is, that should be enough. So I mean, I’ve got you know, I’ve got lessons learned from my time, over the years, I guess, some of the key things would be that actively seek to be criticized.
See, seek it out. In those early days, you want critique, you want people to say that you suck, because then when you go back, and you’ve answered all their questions, you’ve shown them that you listened to them, and you did something about it. Which means that those people who criticize you from the get go, may end up be becoming some of your advocates and clients, you should be getting criticized by incumbents. If you aren’t, if you’re going into a new market, and you’re not getting criticized for something, you’re not doing it right. You are not annoying people enough.
And if you want to call yourself disruptive, there should be an incumbent who feels disrupted. So So I’d say seek out seek actively seek to be criticized. Outside, don’t feel so compelled to find one problem or one solution, you know, as per Sequoia pitch deck, because life’s too dynamic for that. You know, and also if you’re going to an organization and you say, Do you have a problem with widgets? And they go, No, that’s the end of your call. You know, if you say you’re probably the widgets, and they say no, and you say brilliant, I didn’t think he did. But what about more about doohickeys instead, then at least you’re extending the conversation, you’re giving yourself more chance, if you’ve got, you’ve done all the slog of getting into a client to have that kind of conversation. And you’ve immediately close it down because you’ve got one problem, one solution. Life’s more dynamic than that.
Yeah, anyone that gives you advice, he’s probably done it at some kind of bias. So say outside of mentorship. So understand that. I guess I understand why that advice is being given to you. If you then make the decision to go with it after that, then fine. But you need to step back from the hype of the American models and the VC models because there is more out there than just that.
So investment isn’t the only route. You know, there are grants, there’s there’s, there’s various awards, debt equity works just as well with people. Yeah, and there’s some very interesting decades that there’s one debt with equity organization I’m aware of stateside has to do with social impact.
And they they do all kinds of deals where for the first two or three years is a moratorium on repayments, etc, etc. So be creative, where you go for your funding, but don’t just go to the default, almost the lazy, quote unquote, option of going down the VC route, because it’s painful day or painful. So I guess, I guess my last thing is, I mean, I had a call this week from a member of our advisory board. And he said, The problem is investors don’t understand what you’re doing, but your clients do. And I said, Well, yeah, so that’s the investors problem, then I.
Yeah, no, I think that’s a great perspective. I think there’s a lot for entrepreneurs, founders, execs for the startup or scale up stage to take from this conversation. And I think, you know, a lot of it, you know, comes to having that confidence, having that belief. And sticking to that and not being led astray, like you say, with a lot of models and other people telling you how your business is supposed to work, how it is supposed to get access to funding, how it is supposed to grow, how it is supposed to solve problems, what problems it’s supposed to solve.
So now thank you very much for for taking the time today. I’m sure we will have you on again to have more conversations and find out how things have developed but no, massively appreciate it. I’m sure everyone listening to will as well.
Now, that’s been the last couple of sessions have spoken to Matt. It’s been very, very interesting and an eye opening. And I think a lot of founders just wonder if they’re on their own with it all. Is it just me who thinks like this? Or is it is it just me that worries about x? And I think that what you’re doing have becoming almost like a lightning rod for people to talk about this with and create a new kind of tech founder culture that’s focused on brilliant product. It’s brilliant clients changing the world and not giving our money to people who just spend other people’s money.
Absolutely no thank you. And yeah, thank you again for for taking the time. Thank you for joining me on this episode of Inside the scaler. Remember for the show notes and in depth resources from today’s guest, you can find these on the website inside the scale app.com. You can also leave feedback on today’s episode, as well as suggest guests and companies you’d like to hear from. Thank you for listening