Pablo (Host) (00:00): So today we're going to be talking about the really early days of HiMama. And specifically the topic is how to do customer discovery, proper customer discovery. We've had a few people come on the show to talk about this, but at the end of the day it's such an important topic that most founders get wrong, I've gotten wrong in my early days. And doing it right, I mean, not only saves you a bunch of time, it just makes it so much more likely that you solve a real problem, which without that you've really got nothing. Welcome to the Product Market Fit Show, brought to you by Mistrial, a seed stage firm based in Canada. I'm Pablo. I'm a founder turned VC. My goal is to help early-stage founders, like you, find product market fit. Ron, maybe actually before we start could you tell us a bit, just really quickly, what does HiMama do? What is HiMama?

Ron (Guest) (00:52): Yeah, HiMama is software for daycares, effectively. And so we started the company in 2013. And this was just really good timing because the early childhood education sector, as it's called within that sector, was behind in terms of technology adoption. So when you think 2013, it's the age of Facebook. People are – there's starting to be more and more young parents who are digital native. They've had a smartphone, had access to the internet through most of their adult and teenage lives. And so we hit a very good timef rame there when Wi-Fi adoption was good. Tablet adoption was ramping up pretty aggressively. And we really rode that wave in this industry that really was a pen and paper type industry.

Ron (Guest) (01:51): And lots of times when I would tell people about what we're doing, I would show a visual of the cork board in the daycare center with the calendar and the pictures of what's happening and the letters to the parents about what's going on. And this is in 2013. And this was very common. So if you would tell a parent this, they would be like, yeah, totally, that's what my daycare is like. And meanwhile, parents are getting all their information online. So there's just a disconnect, and we helped close that disconnect.

Pablo (Host) (02:22): Perfect, so appreciate that context. Maybe we can start there then. How do you even notice this in the first place? What's the origin story for, for HiMama?

Ron (Guest) (02:31): Yeah, so I now have a three- and five-year-old. But at the time I didn't have any kids, but I had a friend of mine who had a toddler. So he was about two years old, and he was going to a daycare program. And me and my friend were – we were just brainstorming business ideas. I knew I wanted to do something more entrepreneurial. I was doing consulting before and really wanted to play my hand at starting a business. This was something important to me. So I did what I don't recommend to anybody. I quit my job, and I just started talking to people and figuring stuff out. And I was talking – we were talking about that daycare.

Pablo (Host) (03:11): What drove you? I got to jump in on that. What drove you to do that? I mean, obviously, quitting your job to start a startup, most – many founders have done it. But usually they have an idea. Usually it's something that they've worked on. What made you actually take the leap ahead of that?

Ron (Guest) (03:25): A little bit was – it was circumstance with my job. It was just a good opportunity to – I was doing (unclear) overseas. There was a deadline. My other in Toronto, they weren't going to miss me because I'd been gone for – so it was just like a good break. And I knew. I forget exactly how old I was. I guess I was – call it 30, didn't have any kids. I'm like, look, if, if there's a good time to start a company, it's now. We didn't have lots of big bills. We didn't have a mortgage and all that stuff. And this was a passion I had for a long time. So it was a little bit of a now or never moment. And we were chatting – we were chatting about this experience with daycare. And he was saying, every day he got home this – they call it a daily sheet. So it was just literally a sheet of paper. And it would say, okay, here's what Adam had for his snack today. Here's when he used the potty. Here's the activities that he did. And it was just such a poor experience from the parent's perspective.

Pablo (Host) (04:33): So that's the really high-level problem. Okay, there might be something here. Maybe we can digitize the space, which is a pretty classic move that many industries have gone through. What do you do at that point?

Ron (Guest) (04:45): Yeah, so 2013, believe it or not, what I did was I just literally opened the yellow pages, and I found 10 daycares, and I just called them. And I just had a few questions to learn a little bit more about problems we might be able to help you with. I'm not selling anything. I'm just looking for five to ten minutes of your time. And just gauge a reaction, and then almost just do a score for those ten calls. And say of the ten, what happened? And I would say of the 10, 70, 80% were let's say, intrigued. Their interest was piqued. They were like, hmm, okay, that's interesting.

Pablo (Host) (05:25): It’s worth digging into this because I think everybody – everybody's a strong word, but most founders understand you got to go and talk to customers. It's just said so often. But I think what happens in these discussions, especially the early ones, can be night – the difference between success and failure. Often, what founders will do, and I was guilty of this, was you just start pitching. And you start selling. Even if you don't, even if you're like, no, I'm doing real research, all your questions are so pointed, so you're going to get the answers you want. How did you approach this to make sure that you were truly discovering insights and really verifying that you were actually onto something?

Ron (Guest) (06:02): Yeah, I mean, I think the way to think about it is – at least in SaaS and in almost any business you might start, this is going to be a ten-year commitment if you're truly going to create something big in most cases. And you want to know if it's a good idea or not. And if it's not, that's fine. But it's also in your best interest to know that sooner rather than later. So I was just trying to be as objective as possible. I approached it from the mindset of I'm a scientist, I'm a researcher. Not like I am starting a company and I'm an entrepreneur, but more like I'm doing research objectively in this space. I want to know is this something that's worth spending the next ten years of my life on or not? If the answer is no, that's cool, but you'd much rather know that at that stage versus after you've invested three years of your life in it.

Pablo (Host) (07:03): I fully agree. In fact, one of the things we say a lot on the show is before startup mode there's research mode. And if you don't explicitly go through it, you'll go through it one way or another. It'll just take a lot longer. What are some stories from those early days? You call these ten customers. You're like, okay, there might be something here. And then you start spending time at some of these daycares?

Ron (Guest) (07:22): Yeah, so that's layer one. So I'm like, okay, check, this is – people's interest is peaked. Okay, I'm willing to invest a little bit more of my time. So next thing is I visited 10, 20 of these childcare programs in person. So I'm like, okay, let's get to the next level of information. And this was still relatively objective. This was still I have a script, a survey script. I'm going to interview you. And really the goal was to figure out what are your problems? What are your top problems? That still was very objective. So that was to understand, again, where's the market at in terms of being ready for this. The problems that we think they have, are they real? And so when we had asked about the top issues, the documenting information and the amount of paperwork that they had to do was ranked very high and so was communication with parents.

Pablo (Host) (08:23): Specifically on that, when you went out and you asked them these questions, did you ask what are your top problems, or did you ask is documentation itself a problem? Do you know what I mean? Did you lead at all or was it really that high level?

Ron (Guest) (08:35): Open-ended.

Pablo (Host) (08:36): Got it, okay.

Ron (Guest) (08:37): At this point, still very open-ended on those problem questions because again, I'm still in the mode of the researcher mode. If this isn't a problem, I'm – if this isn't a top problem, I don't want to spend my life trying to fix it.

Pablo (Host) (08:51): For what it's worth, I think that's critical because you're trying to understand not just what are problems but also what are top of mind problems? What are true high priority? And if you ask them what are some of your main problems, and they don't list the one that you think you want to solve, it's clearly not top of mind. The flip side is if you go in and you're like, hey, is documentation a problem, anything, is X a problem, most of the time you'll probably get yeah, actually that is annoying, whatever. But it doesn't really matter because if it's not top of mind, they're probably not going to be buyers. They're certainly not going to be looking for it online. Everything's just going to add so much more friction when you go to sell it.

Ron (Guest) (09:24): And I would say this was the stage where I made that conversion in my mindset. So this came out of this, and folks objectively said, these are top problems for us. Then the next round of interviews in which I did – met with 50 childcare programs, I then switched to, okay, let's dive deeper into those two specific things. So, okay, documentation and paperwork are a challenge. What are you documenting? When are you documenting it? How are you documenting it? Is there any information you can provide me on that? What are your challenges with parent communication? What do parents tell you they like or don't like? And really getting into the next level of detail of okay, we know there's a problem, now let's start gathering information to understand how we can solve it. And that's when I started making the switch to figuring out if this is an area where there's a business opportunity to trying to understand what the solution might look like.

Pablo (Host) (10:32): Is this over the phone, by the way? Are you doing this in person?

Ron (Guest) (10:35): No, in person, and that's something else I really try to encourage early-stage entrepreneurs to do because – I mean, so many reasons. One is there's just so much a higher trust level when you meet people in person. So humans are humans. When you have somebody in front of you, the trust level is much higher. People will open up a lot more. And then they also know you're investing your time. It's like you're physically coming to see me, this is important to you. So I'm willing to invest my time in speaking with you. And the other thing which I found super helpful is – and I think we were perhaps in a unique situation in a vertical market. But seeing the environment that they work in, and that they live in day to day, is actually game changing to see that. And we were able to take a lot away from that in terms of our product design, our users. That was very critical information, seeing that actual physical work environment.

Pablo (Host) (11:49): I couldn't agree more. I mean, at the end of the day, the research and stuff is going to get you the problems worth solving. But the subtleties, the details are going to be the things that determine how your product's built. And that's the difference between usage, and engagement, and not. So you got to be in there to – yeah, you got to be in there to really see it. Let me ask another question just around that. How did you get these daycares to give you the time in the first place? Was that hard?

Ron (Guest) (12:20): Easier than you would think – I think the key is keeping that researcher mindset. Yeah, sure you want to start a business out of this, but most people are pretty open to meeting with folks who are trying to help. And that's just really how I always positioned it. And the other aspect of that too to keep in mind is there's always this curve of innovators and early adopters versus laggards and late adopters. So folks say, look, I'm not interested. There's a good chance they're not going to be the folks you want to be speaking to now anyways. So it's totally cool.

Pablo (Host) (13:06): That fully resonates. I think at the end of the day, we all get sold to and frankly we don't really like it. But few people, if you think about it, are often in a position where they're treated like experts. And so if you go in there, and you treat them like experts, and you're just saying, hey, you're an expert in the space, I just want to learn. In most cases, people are going to be much more amenable to that than you might think.

Ron (Guest) (13:28): Yeah, that's a great point. And that is the key is a lot of folks want to be the expert and provide you with their expert opinions and views. And so putting them in that position is – it goes a long way in terms of getting their time, 100%.

Pablo (Host) (13:45): Maybe to make it a bit more tangible, and I know this is a while ago, but do you remember any – what stories or insights that you noticed, especially in that phase where you're actually in the daycares and you're watching them work, anything that clicked back then?

Ron (Guest) (14:05): Oh, so many things, I mean first of all, you just see how crazy it is. You go in there and there's so many things happening. So right off the bat it's like, okay, if we're creating a product for these folks, these educators to use, it needs to be super simple, super quick and very easy to use. They don't have time. If it's not intuitive and easy to use, they're going to be throwing this tablet out the window pretty darn fast.

Pablo (Host) (14:32): It's often lost, but you want to meet your customers where they are. And so if there's already a feeling or whatever that they don't want to lose touch with, let's say the in-person in this case, then saying that upfront is meeting them where they are. And the message is much more likely to be heard and to ultimately resonate. But again, there's subtleties, there are details that if you're not in there, if you're not talking to these customers, especially and specifically, I think, in person you are – you're likely to miss. So maybe moving on from that, just through this customer discovery life cycle, you've done these 50 in-person interviews. Do you start – when do you start working on the design or the product? Are you doing that in parallel?

Ron (Guest) (15:22): So I would say when we're at this third – after finishing this – call it this third stage of interview, the fourth stage is when we started to transition to designing the product. So this third phase, we were collecting all this way more detailed information. Then next step is taking that information and turning it into some solution. So being an ex-consultant, naturally, I went to PowerPoint, started creating some slides. And they were basically just screenshots of what the product would look like. This was also a very tangible audience, which was another thing that was helpful to learn by visiting the physical environment. They want to see something. It was very hard to conceptualize things to them and concepts. They wanted to see it, and feel it, and understand it.

Ron (Guest) (16:19): So that was also helpful information. And so creating these PowerPoint slides, I just created, again, screenshots of what the product might look like, seven to eight screenshots. And then that was then going into the next phase of this customer discovery where I would then bring this in. And I would bring it in, and I would present it on an iPad. So it looked like a product, which I think was important as well, to present it in that way.

Pablo (Host) (16:50): Was it just you, by the way, at this point?

Ron (Guest) (16:52): Me and my co-founder, Alana. She was and is our CTO. So she was all on the engineering side, and we were working collaboratively on the product design at this point.

Pablo (Host) (17:03): Got it.

Ron (Guest) (17:04): At this point, I'm actually showing them something. So this is a huge shift from the previous round of conversations where now I'm going in and I'm saying, okay, these have been great conversations with you. We've taken all the information you've provided and information from some of our other conversations. We've actually put something together. And I just want to show it to you and get your thoughts. And again, it's very non-intrusive. Again, it's putting them in the position of they're the expert, and I want to get their feedback and get their thoughts. And we just walk them through and just get their reactions. And again, you're getting lots of great product feedback, learning more about certain workflows. We learned, for example, that there's also parents are sometimes sending them information, which is helpful for them to know. What happened with my child in the morning before I dropped them off? Did the infant have their bottle or not yet? That's helpful for them to know. And so this was also a critical stage in terms of A, getting feedback on what that view on the products actually going to be, and look like, and do. And you also just learn a whole bunch of what I'll call super-detailed things that you just, you wouldn't know unless you're getting to this level of detail.

Pablo (Host) (18:35): By the way in any of these steps did you talk about pricing like even asking like "Hey how much would you pay for something like this?"

Ron (Guest) (18:42): Yeah, I did at that point as well, start to bring in pricing a little bit just to get a sense of where people's heads was at. And again, giving just specific anecdotes, and this is where you have to take all the information you get and be able to decipher what you're going to do with what. We had someone say, look, this looks really great, but your competitor charges a price, which is a one-time price. And then you never have to pay again. And this is 2013. And it's like, okay, we know that the market's not going that way. Cool, but maybe you'll figure that out eventually. And you'd have folks be like, this is awesome, but just if you change the font here, we would probably buy it. You're getting those early signals of who’s ready for this and who's not.

Pablo (Host) (19:43): And the other thing I wanted to ask is, and this is in rough terms, but how long did each step take? So calling the 10 customers, and doing the 50 interviews, then this piece of the wire frames. How much are you – are you spending a month in each step, couple months, weeks?

Ron (Guest) (19:57): I would say it was probably about a three-to-four-month process. And then we built MPV v1 of the product in two to three months with a month of overlap of building while continuing to get information. So in total it was six months from when we were looking up in the yellow pages to having v1 MVP.

Pablo (Host) (20:29): Perfect, okay, so let’s call it six months of research. Did you try and fund-raise during this time or shortly thereafter, or was it all bootstrapped?

Ron (Guest) (20:37): All bootstrapped.

Pablo (Host) (20:39): Any thoughts on that? Did that help or hinder?

Ron (Guest) (20:41): I think it helped because we took our time to get the right amount of information. This wasn't a sector or a business that was going to be overnight boom to bust. And it kept our culture pretty lean and not wasteful.

Pablo (Host) (20:59): And did you ever think through or worry much about TAM?

Ron (Guest) (21:04): No mostly because, I don’t know, this is maybe more of a personal view, but I just have the view of way too much emphasis is placed on that, especially in the early days. You don't know what your TAM's going to be. You don't even know what your business is going to be in ten years. Even HiMama as an example, we started out with the parent communication, but then we did all the administrative capabilities within the center, like staff management, and ratios of staff to children. We did payments, which is a whole new revenue stream, tuition payments. We acquired a company that does curriculum. So we have – we're now on a whole curriculum. Each of these things doubles or triples your TAM. And so I'm a pretty big proponent of just getting started, and getting a business going, and understanding the space. If you understand the customers really well, which is another part of bootstrapping, I think you end up really understanding your customers well. There will be more market opportunities as you grow.

Pablo (Host) (22:14): Ron, you might be surprised on just how true that is when I talk to – just through this show. So many post-Series B stage founders who now have $10 million plus AR businesses who in the early days – I mean maybe in your case, maybe you thought through, okay, there's X number of daycares generally. If they pay this much could be a big business. And that's the extent to it. But the whole focus really is just on can we actually deliver real value to a daycare or 10 daycares? Is it going to be differentiated enough to everything else that they might be doing, or buying, or status quo, or whatever it is, and then just putting one foot in front of the other. And honestly I think especially if you take that bootstrap approach, these things are linked. From the founder's perspective, does it really matter?

Pablo (Host) (23:03): If worst case scenario you succeed, and it's a five or $10 million business, and then you don't know where to go, you got something pretty solid, as long as your ownership was good. And you can get lost. And I remember doing this at Gymtrack. You can get lost in the story and just in the clouds of trying to create this billion dollar plus opportunity so that you can win over VCs like myself who think maybe a bit too much about TAM. So yeah, I think that's valid. I really do think it's valid.

Ron (Guest) (23:33): Yeah. And if you look at so many businesses that are even extremely large today, most of the stories in the media about them are about all their big successes. But if you go back to the early days, oftentimes they started like that too. They started like that too. The Airbnb folks were selling cereal for a while to stay alive. Uber was just black, those limos, proper limos in one city. Everybody starts somewhere. You just have to start. That's the key, right?

Pablo (Host) (24:09): That's right, and you have to provide, I think, real value. To close the loop on this, when did you land your first customer? And what were those early releases like?

Ron (Guest) (24:23): So what we did, which is very common in education in ed tech is we launched with – we launched with somebody on – call it a pilot. So we just gave them two or three iPads, gave them the product for free because we just wanted to. We didn't want – we knew it was going to be buggy and maybe not an optimal experience. So we're just like let's get somebody using it to see how it goes. So we went with one of the folks that we had talked to through this whole process. And how did it go? I mean, it was super MVP. I think we were – Alana finished development and getting the product live 30 minutes before the day started that day.

Ron (Guest) (25:14): So it was very last minute. But this is the nice part of doing it this way. Having them use it is huge. This is where you go from being the conceptual tech entrepreneur product design person engineer to okay, this is in the real world now. And so things like process, what processes do they have during the day, how does this fit into what their day looks like starts to come out a little bit more. What happens if the teacher's late? What happens if they can't find the iPad? What happens if their wifi is a little hit or miss? The training aspect because then you're immediately – you're starting to get these questions. And you're like, okay, obviously they have these questions. This is now starting to inform what does our training look like for this product?

Ron (Guest) (26:11): And then also seeing that some teachers were using it much more thoroughly and much better than others. So already you're seeing inconsistency in user behavior, which informs training, but also is starting to form thoughts on your user profiles in terms of, for example, teachers who were younger, usually digital native, and they picked it up and they're like, like, okay, this is just like I'm using Facebook on my smartphone. And then teachers who were not digital native, tried to avoid technology, and they were trying to use the same product in the classroom. Two totally different use cases in terms of how you work with those users. So these are the kinds of things that are starting to come out from having this be in person.

Pablo (Host) (27:05): And once you released v1, had some usage, figured out and saw some of these bugs, and figured out onboarding a bit, you started, I'm assuming, really selling it. In those early days, did this just take off or was it more of a slow burn, would you say?

Ron (Guest) (27:22): Slow burn for sure, which has pros and cons. I almost saw it as a positive. I would get a lot of resistance, a lot of hesitation from childcare directors saying we don't – this isn't for us. This isn't our thing. We prefer not to have technology at all in our centers and what have you. We don't think our teachers will be able to do this and do their job effectively. We don't think parents are going to look at it anyways. Lots of objections, lots of resistance. But what I would say is this was actually very motivating for me because I saw the people on the other end who were very excited. And I could see that they were the early adopter profile.

Ron (Guest) (28:18): They were the folks who – you go in their center, they had some other tech. And they had parents who were more progressive in terms of tech adoption. So I knew that everything was going to go that way. And so it was almost positive to me to know that these folks are going to come around. So cool. I'm happy they're not in a big rush because we can figure out our product and iterate a bit more, get more of these early adopters on board. And over time, they're going to see and, and their parents are going to start asking for this type of product and this type of solution. So it was slow burn, and I again saw that as a positive for us.

Pablo (Host) (29:03): Perfect, so let's stop it there. Let me ask the two questions that we always end on. The first one is, when did you know that you had real product market fit?

Ron (Guest) (29:13): I think there was like three things. One really nailed it. Two were in the early discovering stages. One was that I was seeing tons of workarounds, very heavy workarounds. I gave you the digital camera example. They were doing e parent email lists, Facebook groups, all these different inefficient workarounds that I knew our solution would – It was one of these things where it's not two X better, it's 10 X better sort of thing. So that was one. The second one was when I was doing some of these conversations there was a couple daycares that were thinking about or had already started building their own solution like this, which is a huge lift for a small daycare to build this type of product. So that was a huge validating factor to me. But if they're willing to put in that time and effort, this must be a thing.

Ron (Guest) (30:17): The third one that really nailed it was we had one of our first five customers. And she really fit that profile of what I was talking about. And she was a younger woman, very entrepreneurial. You could see she just got it. She understood her parents, her audience, her customers. And I knew she was our ideal customer profile. She was so excited when she launched with HiMama. It was an absolute hit. And all her parents loved it. And it was just the perfect implementation where you saw everything click with a customer who was really the customer we were looking for. And that's when I was like, okay, this is definitely going to be a thing because there's going to be more and more directors like this young woman who are just really going to get it. And that's when I knew for sure. Whether it was going to be a one millionaire, or 10 millionaire, or 100 millionaire business, that I didn't know. But I knew it was going to be something that was going to – I can make a living on and probably hire some staff and make something of it.

Pablo (Host) (31:39): There are a few better feelings for a founder than providing clear customer value and just seeing the effects of that.

Ron (Guest) (31:47): Yeah, a hundred percent.

Pablo (Host) (31:48): There are a few better feelings for a founder than providing clear customer value and just seeing the effects of that.

Ron (Guest) (32:03): I think one of the biggest things I would say, and I'm working with more and more early-stage entrepreneurs now as well. And I find a lot of folks are a bit too focused on their product and not enough on sales and marketing. And in the same way that we just had this whole conversation about finding product market fit for your product, I think there's basically the equivalent of finding product market fit for your sales and marketing pitch. I don't think this is where a lot of founders are spending enough time. In those early conversations when you're trying to figure out problem solution, also ask them about information that you can use for marketing. Where do they get information? What associations do they work with? What events do they go to? Who do they talk to about this, that, and whatever. You got to make those calls as a founder and try out different pitches and angles. You really have to nail your pitch. And I think a lot of early-stage entrepreneurs maybe actually have product market fit and have a good product, but they don't know how to pitch it where it really resonates with their target audience. And I think that's very critical. So that's one, one lesson I think I would take away.

Pablo (Host) (33:33): I love that one. It's hard to overstate it. In fact, just quick tangent here, but I was listening to one of the latest episodes of My First Million. And they're talking about this company that creates the most expensive but also the best protein shake ever. And they spend many years doing everything they can to market it and really get it out there. And nothing works until they partner with I forget the name of this person, some guy who does some podcast who's known as the health expert. And that person looks at the protein shake, and genuinely believes it's the best protein shake out there, and just vouches for it. Overnight success, right, just because all of a sudden it was the right way to deliver that message to the right audience, instant credibility. I'm simplifying here, but basically that's it. There's so much power in crafting, not just crafting the right sales and marketing pitch, but also delivering it through the channels that are really going to hit your audience. So I think that's a great one.

Ron (Guest) (34:32): Yeah. In the early days you need a good enough product, and you need an amazing pitch.