Building the Future of B2B Events - Alex Reynolds
Today, I'm joined by Alex Reynolds, founder and CEO at Vendelux. Vendelux is a successful startup that helps event organizers and marketers maximize the ROI of organized events. I hope you enjoy our chat about Alex's story of building his startup and his experiences in consulting, negotiations, and building a great team.
Today, I'm joined by Alex Reynolds, founder and CEO at Vendelux. Vendelux is a successful startup that helps event organizers and marketers maximize the ROI of organized events. Alex has a tremendous amount of experience in management consulting at Bain and YP, as well as leadership at Shutterstock. This helped Alex build a truly inspiring startup. I hope you enjoy our chat about Alex's story of building his startup and his experiences in consulting, negotiations, and building a great team.
Learn more about Vendelux: https://vendelux.com/
Please note, the transcript below has been generated automatically.
Alex Reynolds 01:14
We just signed our biggest deal ever with a Fortune 50 company this week, so very excited about that. August is on track to be our best month ever.
Stephan Mazokha 01:28
First of all, congratulations. Are you able to share what the name of the company is or not yet?
Alex Reynolds 01:33
Stephan Mazokha 01:35
Wow. And so perhaps it's a good point to introduce yourself and sort of share the audience with a bit of an intro about who is Alex and what is Vendelux.
Alex Reynolds 01:48
Yep. So I'm the CEO and co founder of Vendelux. We're a two year old startup based event intelligence platform. So we help marketers and companies in general determine the best events to attend and sponsor based on who's going to be there. So we built out an AI engine that will analyze hundreds of thousands of sources for intent data and will help companies maximize the value from in person communication. Because in a post pandemic world, it's harder now more than ever to get FaceTime with people. And when you do, you can make magic happen.
Stephan Mazokha 02:31
Cool. So even from the sort of brief introduction about the product that you're building, it's clear that it's a very complicated system and the whole premise of the product was very nontrivial, I would assume. So it's kind of clear to me where that is coming from, since you have so much background in consulting and you've worked within a lot of interesting companies beforehand, and there is a source of that insight that I really understand well. But it would be great if we could start even before all of that and really learn about where did you start your career and how did you get from just college, essentially, to your first big gig at I'm assuming Bain, right, that was the first.
Alex Reynolds 03:13
You know, I've really been working on projects for as long as I can remember, so my first real job was at a startup between high school and college, where I was working with a startup that was building training simulation software for the Navy. So was doing kind of like QA testing. Yeah. But after graduating college, my first job was at Bain as a consultant. So that was fantastic. Know, you work with really smart people on big challenges and you're exposed to a lot of different business problems, great training program, but the thing about consulting is that you sort of parachute in, you work on a problem, but you don't actually get to see the results of what you're doing. And I didn't love that. And so after about three years, I was ready to move on and ended up going to work at a startup on the West Coast called Peak. I was in person number 25, so wore every hat imaginable, data operations, recruiting, marketing, partnerships. And it was just incredible to sort of see the results of your actions, right? You do something today and then by tomorrow it's implemented and it's having a meaningful impact on the trajectory of the business. And I loved that. I also loved the partnership side of things because I felt like when you're doing a strategic partnership with another company, it's really a win win. Like, how can we work together on the same side of the table to make something happen? And so spent about a decade working on partnerships at Peak and then at a PE backed Ads company, and then finally at Shutterstock. And at Shutterstock I was sort of doing a bunch of different things. And one of the projects I was working on, it was a side project, was around our APIs and around our data. And we didn't even have full time engineers, but we were starting to see some pretty strong momentum in that area of the business. And I looked at that and said, this could be the next 100 million dollar opportunity for Shuttersock. It's a public tech company. So I went and pitched our leadership team, our founder John Orringer, the COO, the CMO, and essentially said, let me build a company, a business within this public company, and we're going to be able to have a huge opportunity. So over about a four year period, built that up from two people to about 75, from almost nothing in revenue to about 30 million in arr. And it was at Shutterstock where we really kind of saw the opportunity for Vendelux.
Stephan Mazokha 06:11
I was curious to hear a bit more about your experience there in terms of, first of all, why did you decide to go there if you had any challenges, of course, around that path? And what was your experience with Burnout and really trying to push towards excellence? Because obviously you wouldn't be able to be here if you weren't successful there.
Alex Reynolds 06:29
Yeah. When I was in college, I studied business and classical civilizations, and so I knew that I wanted to do something in the business world after graduating. And for the consulting path, it's a great way to just really develop a strong skill set. So I really like problem solving. I really liked kind of putting myself in the shoes of these businesses and thinking through what are the different paths forward and how do you solve certain problems and to get to the objectives that you care about. And so in talking to people at these firms, it seemed like something that was going to be really interesting for me. And they have a very successful training program, a successful recruiting program from top tier programs. So I got married last year and several folks from my Bain class were there in Italy for the wedding. So you sort of develop these great bonds. But yeah, when I first joined, I thought, okay, I'm going to be here for ten years. And you always think you're sort of on a path, and so you graduate and then you're going to be there forever and you're going to make partner and all of that. And I think while there, it became clear that this was a great learning experience. I think three years at Bain, I learned more than I would have learned in ten years at other places, and that's helped to kind of catapult in my career. And those relationships have been really strong and helpful.
Stephan Mazokha 08:13
You've said that you've learned a lot of valuable skills that help you later in startup career. Could you be a bit more specific about what lessons have you learned that you but possibly wouldn't be able to get somewhere else? And why are those the critical components to your career at the moment?
Alex Reynolds 08:29
Totally. I mean, from a hard skills perspective, you learn from Excel and PowerPoint and how to tell stories, how to bucket information, which is kind of the language of everything else that goes on. So the world is all about sales, storytelling and kind of like data analysis. And so having those building blocks to be able to from a hard skills perspective is really powerful. From a soft skills perspective, you're working in small teams, you're having to give presentations to all kinds of different companies. You kind of go into a new situation every three to six months. And so you have to learn who are the players, what's the industry, what are the different solutions. And so you're sort of rapidly developing a skill set and a point of view, and you're working with top tier folks, especially at Bain. Like, professional development was one of the most important focus areas. And so every two weeks you're having a conversation about, if not more frequently, about what's going well, what's not going well, where you can develop. And so having that early on in your career with high expectations. It just allows you to really build a good launching pad that can help with pretty much anything that you want to do from there.
Stephan Mazokha 09:57
I see. Cool. So after working at Bain, after working with Peak for, like you said, a decade, you've later switched over to YP, right. What were your responsibilities there, and how did you get.
Alex Reynolds 10:12
Know with when I went to YP, I was joining the company at a very interesting time. So they had a you know, of course, like, when people think about the Yellow Pages, they think of the big yellow phone books, and it feels like an old school company. And when I joined, they sort of had this legacy business, a billion dollar business that was in decline. And then there was a new digital business that was a billion dollar business with double digit increases year over year. So it was sort of a changing of the guard moment. And I came in, the CMO, the head of product and the head of strategy were all former Bain consultants. That's how I originally found out about the role. But what was interesting to me is that this kind of newer digital business was taking off. And where I was coming in to do partnerships was all about bringing new revenue opportunities and new monetization opportunities into the Yellow Pages app. So at the time, probably 375,000,000 Americans, they had somewhere around 40 million unique monthly active users. So it was a huge digital audience. And I think a lot of people will use Yelp, right, if they're on the coast, but certain demographics, certain geographic locations, we're using the YP app and so working on partnerships that could bring the experiences into the know. Now, of course, you go into Yelp and you want to book a reservation, you can do that right from within the app. But we're talking ten years ago, and this was not something that was readily available at the time. So bringing experiences like Uber OpenTable other reservation options, TripAdvisor into the YP experience so that customers that were using the app would be able to do what they wanted to do and there'd be a good partnership model. So we would win as a company. The partner, like an Uber would win, and the user of the app would win as well.
Stephan Mazokha 12:37
I see. And what was your experience of working with these big companies like Apple and Uber when you were at YP?
Alex Reynolds 12:44
It was know. Of course, there are large companies, and so as someone in partnerships, you have to really work to make sure that you're on as even footing as possible right when you're having these conversations and understanding that you're going to have value for both sides. But that's part of the fun of the experience and kind of building the relationship, understanding what folks care about, what folks are willing to be more flexible on, and then finding the path where it makes sense. So at YP especially, we had this large audience that was very valuable to these companies, and they couldn't necessarily get that audience elsewhere. And so for us, that was a really large kind of like negotiating lever where we were going to be providing a ton of value for them, and in exchange, we wanted value for us and our customers as well, of course.
Stephan Mazokha 13:44
Was that part of your career very heavy on negotiations, by any chance, since you worked in partnerships?
Alex Reynolds 13:51
Definitely. I think negotiations in general are almost every role in any company has a fundamental need for the sales skill set, and negotiation is a big piece of that.
Stephan Mazokha 14:03
How would you build yourself up to the point where you can get into the room with these people who are representing these Humongous billion, trillion dollar companies at this point and negotiate your position to the point that you get an upper hand? What was your age at the time when you were working there?
Alex Reynolds 14:22
Let's see, I was probably 23.
Stephan Mazokha 14:28
And you were representing YP in these negotiations for Humongous contracts, I'm guessing, with these big tech companies. How can a 23 year old successfully win these kinds of relationships and negotiations with such big companies? Were you leading them or were you sort of on the background, sort of assisting other people in the company?
Alex Reynolds 14:51
No, I was leading these conversations. I think being a consultant at Bain helps a lot because you're in these rooms with Fortune 50 companies and you're tasked with presenting pieces of the story. So I can remember being 22 in my first six months out of school and sitting in a room with 50 or 100 executives at a huge conference table and having the partner present a slide and someone has a question about a specific data point or specific graph. And I had to get up there and talk about it. And sometimes there's politics in the room. So you have executives who have 30, 40, 50 years of experience that don't like the outcome that the data is suggesting. So they're coming at you and kind of trying to get you to slip up or get you to buckle. And so you're much better at it the 10th time that you do it than the first time. So there's certainly a piece of the experience that matters. But this is kind of what I was talking about before, where having that Bain experience, in three years, you get the experience and maturity of working ten years. But no, I think in partnerships in general, I didn't start with Uber right away. There were smaller companies where you kind of learn from trial and error. But there's definitely one thing that I really recommend when people are trying to do partnerships is to sit down and write out a list of all the things that you care about as the company. So what are the things in the top five things that you would want from a partnership in order and then write the same list for the company that you're thinking about partnering with. So what are the five things that they care about and then compare those lists and something that they might care about a lot is something that is easy for you to do. And something that you really care about a lot is something that might be easy for them or vice versa. And so just understanding what the relative rankings are of what people care about allows you to go into a conversation and know kind of like where the rules of engagement are drawn, right. What people really care about, and this.
Stephan Mazokha 17:19
May be a very silly question, but nevertheless, where do you get that? So let's say you're a small company, you're a startup and this will come as a follow up question later too, in the context of vendor locks, but you're a small startup and you've built this technology that you are hoping to sort of scale up and sell to big companies and be successful. And you need to get into these conversations. How do you get this kind of insight in terms of what the opposite party is interested in? Assuming that you probably don't know it very much about these people and your experience working with them is zero because you've never been with them before. How do you get that kind of information? And what would be the strategy? Let's say an aspiring entrepreneur with some sort of an idea and a technology would need to apply to successfully get into the room and get the result they're looking for?
Alex Reynolds 18:09
Yeah, ideally you can do a discovery call with the person. If the goal is how do I get in the room with the right stakeholders, then you can't do that. And so you really have to work your way up from something that can happen. And so if we're talking about from an entrepreneurship perspective, getting customer one is the hardest because you don't have proof points, you don't have data. And so what are the things that you can do? You can find a smaller company that's going to be more willing to work with you. You can find somebody that you have a connection to that will allow you to get in the room somewhere. You can be aggressive and send 1000 Cold emails or Cold LinkedIn messages and your hit rate might be low, but all you really need are a few people to respond. So it's really do whatever you need to do, of course, as long as it's legal, right, and ethical. But do what you need to do to get that first customer, that first partnership, that first relationship, and then everyone after that becomes that much easier because you can point to that one, especially if you make sure that that first one is successful.
Stephan Mazokha 19:29
I see if you could speak to yourself ten years ago, or actually even maybe three, four years ago and you could provide yourself of that age with a bullet point list of what do you need to do, literally, very specific, in order to get, let's say, this wonderful T Mobile partnership, right? What would be the to do list of action items you would need to do from scratch to even get into the room with these people and provide them with the opportunity that they would not say no to.
Alex Reynolds 20:05
Yeah. So you got to take it one step at a time, because if you look, if I'm sitting here worrying about IPOing right now, then I'm not focused on kind of taking the next step. Right? And so kind of like, little by little, a little becomes a lot. So if you take it from the top or from scratch, let's use kind of building a business and we can use vendor lux or we can just talk more abstractly. But the first step is to find a burning pain point, right? You need to find something where people have real pain. Your solution can't be a nice to have. It can't be something that somebody sort of feels like it might be an issue. You need to find pain where people are upset, they're furious, they're unhappy, they're frustrated. The more of an emotional response there is, the better. And essentially, I think it's great if you've experienced that pain yourself, because then you know that you are intimately familiar with the problem. I posted today about how we're customer zero when it comes to Vendelux, right? We built Vendalux for ourselves with the pain that we experienced. And so I can always sort of put myself in the customer's perspective, which is very helpful. But of course, the first idea that we had around this event space, which was our burning pain, right? Like, marketers struggle to measure ROI, they struggle to drive revenue from partnerships. They don't have tools to do their jobs. They're the unsung heroes of organizations, right? All of that. We kind of had a sense that we wanted to do something in that world, but you have to go out and talk to hundreds of potential customers to understand. In the beginning, we thought that we would sell to salespeople because we were more on the go to market side and not on the event marketing side. And through conversations with Chief Revenue Officers and CMOS and event marketers, it became clear that we really needed to sell to event marketers and that they were the ones that would own this platform. So you just learn so much by having those conversations as, you know, you don't want to just come out and tell them exactly what you're building. You want to understand their pain, because you can always develop a solution based on that once you feel like you have a really strong pain point that a lot of people experience. Right? Because if you're going to build a big business, you need to know it's not just one person at one company that has that pain. It has to be depending upon how much you can sell it for, it needs to be a lot of people or like a ton of people that are experiencing that pain. Then you need to start developing a solution. And I think a lot of people get hung up in this part of building a business where they will tinker in their lab indefinitely and they want to build the perfect platform. But the reality is that the goal should be to create something, an MVP and minimum viable product and get it out in the hands of customers as quickly as possible because you're going to learn so much more once it's in their hands. And you don't want to spend all this time building something that you think is perfect only to put it in the hands of customers and find out that it's not the right thing. And I recommend entrepreneurs that they should really focus on the $1 test. People, when they hear your pitch and your passion about the business, the last thing that they want to do is look you in the eyes and say, this sucks or this isn't going to work. Right. They kind of want to say, oh, this sounds great, I love what you're doing, but are they willing to pay for it or not? That's the ultimate test and it doesn't matter. It can be a dollar, but if people are willing to pay for it, then you're on the right track and you can make it happen. And then from there it's a lot of testing and iterating and building and figuring out what are the main features that you need to add to drive even more value for your customers, how do you solve more of their pain points or in a better way, in a faster way and all of that scales. You know, our first customer was not a company the size of T Mobile. It was not for anywhere near the value of this contract. But you sort of build your way up.
Stephan Mazokha 24:54
Yeah, like Full Graham likes to say, do unscalable things first and then you can always find a way to scale them up later. I'm curious to hear, so you were at the time when you came up with this idea, were still a charter stock, which I'd love to ask more about, but I'll ask at the end of this discussion, given that you've been a charter stock, what made you think that this is an idea that is worth giving up? This probably very stable, very interesting, very exciting job and really dive into this full time.
Alex Reynolds 25:22
Yeah, we experienced this pain when we were at Shutterstock. So my co founder and I were there together and in building that business unit up to 30 million in recurring revenue. We found that when we went to events and they worked well, it was the best thing that we could do for the business. We would generate tons of new opportunities. We'd see existing customers and partners, and it was fantastic. But we had our fair share of duds where you'd show up and you sort of knew instantly that it was a waste of money, a waste of time.
Stephan Mazokha 25:58
And what events are we talking about? To be more specific?
Alex Reynolds 26:01
Sure, mostly conferences and trade shows. So we would work with all kinds of companies in the ad space or website builders, or we started to do deals with AI companies, like OpenAI towards the end. And so we went to the AI summit in London, or Mexico in Germany, or the Can Lions event in Can, France. Plenty know NAB in. So it was kind of this high risk, high reward proposition. And we looked at kind of how the mothership at Shutterstock and frankly, how a lot of companies were doing this. And it was all kind of backwards, where it was just taking literally hundreds, if not thousands of hours internally to plan for these events, to answer basic questions like, what event should we go to? Who from our company should we send? Right? Because that can be hard. Like, you might have 30 sales reps. How do you determine who should go and then how do you drive and how do you measure ROI? So we looked at that and kind of said, there has to be a better way, right? There has to be a way to use data, use insights, streamline this decision making, help companies make more data driven decisions, and ultimately, basically save money, save time and increase revenue from the channel.
Stephan Mazokha 27:31
So essentially, you decided that there is a need for a system that would be able to that, let's say, an executive in a company could go into and understand that for their particular niche, this event, hypothetically, and I'm guessing there is a whole library of events that you have, has this kind of ROI for your particular sort of, I guess, requirements. Right. And you would then facilitate the organization, I guess, of tickets and I'm guessing Booth for that kind of event. Is that kind of stuff that you were thinking of?
Alex Reynolds 28:01
Yeah. So we help with the planning process and then kind of the post event. So we don't help with ticketing or anything like that, any of the nuts and bolts of the actual event. But there's roughly 2 million businesses that are spending over a million dollars a year on events. And those companies have an event marketer, a dedicated person who's responsible, and often a team of event marketers that are responsible for figuring out how to allocate that budget and how to across the 30,000 B, two B events that happen every single year. Which one should they have booths at, which one should they attend? What satellite events should they throw around those conferences? And it takes months to plan for each of these events. So we like to think of these event marketers as the unsung heroes of organizations because they have to make magic happen, right. They're again spending all this time and energy to throw an event. And if an event isn't perfect, it has to be perfect. If it's not 100% perfect, then people, sales or whomever are saying what happened? And the event marketer can throw the best event. They can choose the best event in the world. They can have the most amazing booth, they can have a great VIP dinner scheduled. But if they don't get partnership from other stakeholders, including sales within an organization, then they're not going to see the benefit. So they're kind of on the hook for all of the results. So if it doesn't go well, then the CFO is asking, why do we spend all this money? But they can't actually drive the conversations that will ultimately turn into revenue. So it's a very hard position to be in. It's a thank you job, and yet it's critical. And so we're coming in and helping this entire job function have a seat at the table. We're helping them make more data driven decisions to help them ultimately showcase why they should be at events and putting them in the driver's seat to create more revenue for the company and hold their partners like sales, accountable.
Stephan Mazokha 30:14
This is really exciting. So you came up with this idea because you've had exactly this pain at Charter Stock. And what was your first POC. Like? How did you validate this idea? Did you go out to your peers and other companies and you've asked them around about this and you built some manual demo for them? How did this really work for you?
Alex Reynolds 30:33
Yeah, we essentially had a lot of conversations with marketers just to validate. So even before we had a proof of concept, we did a lot of discovery. Right. So just understanding what are your pain points as an event marketer? What are pain points around the ability to plan for events? What are the pain points on the ground? And of course, there were a lot of pain points that were not relevant for what we're doing, but there were a lot that were. And so we started to kind of by triangulating, we understood that if we could help marketers know in advance who was going to be at an event, then they could make decisions in a better way. And getting that information about who was going to be somewhere is not easy to get. Right. If it was easy, then Vendelux probably wouldn't exist because somebody would have already built it or the need wouldn't be there. But there's a huge research component to trying to figure out who's going to be there. And even when you try to do it yourself often, you're not going to get the same result that we will when we're doing this for all of our customers. Across all of these different events, we've built a. Great system for that. But to your point, yes, once we had that hypothesis, we built a proof of concept, an MVP to get something in place as quickly as possible. So I think we spent two or three months from kind of the design doc of here are the main pages that we want to having a contractor build that out. And we ended up having our first customer the month that we launched.
Stephan Mazokha 32:25
Wow. So a couple of questions about that. First of all, how did you fund the whole development of a POC? Did you just use money from savings or did you find some other way to do this?
Alex Reynolds 32:35
Use money from savings? Yeah.
Stephan Mazokha 32:36
Wow. Who was that first customer? Was that the person you've interviewed before when you were doing the discovery stage? Or was there some other person you reached out to? How did that work?
Alex Reynolds 32:47
My co founder had reached out to, let's see, we had gotten connected to the CMO at a travel startup. I think he reached out on LinkedIn. And she was a true believer. She understood the value proposition. She had experienced this pain. And I think that there's kind of that adoption curve of technology. So there are people who are going to be those early adopters, those innovators, and they love getting access to technology on the cutting edge. And so you have to find those people because they will be okay with things not working 100% and technology being the early adopters.
Stephan Mazokha 33:36
Yeah. The super fence.
Alex Reynolds 33:38
Yeah. And so we spoke to a lot of people who maybe now have become customers years later. But in this particular case, even though we didn't have nearly enough data compared to, you know, where we are today, the platform didn't work nearly as well as it does today. She bought into the vision and the mission and has been a part of the journey from the very beginning.
Stephan Mazokha 34:05
I see. What did it take for you to find that first customer? How did you reach out to them? And did you send like Cold emails? Did you send sort of LinkedIn messages?
Alex Reynolds 34:16
We were maxing out our LinkedIn in mail credits every month, sending Cold emails. We were using sales tools to so we defined our ideal customer profile. So we were looking for event marketers VPs of events, CMOS at companies call it between 101,000 employees. So LinkedIn Sales Navigator has a tool where you can kind of drill down to that audience. We looked at first the people in our network who fit that description. Then we looked at people that were second degree connections where we could ask somebody for an intro if we didn't know somebody, then we sent a Cold LinkedIn or a Cold email outreach. We a b tested a lot. We did future selling, like essentially whatever we needed to do to get folks that were interested. And as you would expect, the hit rate was low at first with the discovery. We wanted to get people on the call because even if they weren't interested in buying, every single conversation was a new data point for us. And so we learned something from every conversation, and it sort of follows a pareto principle, right? Like 80% of the value would come from 20% of the conversation.
Stephan Mazokha 35:39
Alex Reynolds 35:40
But hearing something from one person was not nearly as valuable as hearing it from five people. So some of those conversations turned into customer conversations, others turned into advisory conversations or investor conversations. But throughout, we were kind of building this movement that has only kind of grown as we've been building.
Stephan Mazokha 36:03
What were the signals in those conversations, especially with those first group of customers that you've had that made you think that they were superfans? Because like you said yourself, you spoke with more people, but some of them didn't turn out to be valuable, sort of or the initial stages of the startup. Was it just you followed up with them later with the POC and they said, no, thank you, or were there any other signals that made you believe that it's worth sticking with them and asking for their opinion when you're building it?
Alex Reynolds 36:32
Well, I mean, the biggest indicator of whether they were a superfan or not was if they bought. Right. So if they became so they committed.
Stephan Mazokha 36:40
Before you gave them the product or did you come back to them later after you built it?
Alex Reynolds 36:47
It was all of the above. So if our original conversation was before we had a product, it was based on what they said. Right. So one marketer told us that if we could build this product, it would be an event marketer's dream. Right. And so you hear something like that, it's not, oh, this would be nice, or oh, this seems cool.
Stephan Mazokha 37:09
The reason I'm asking this is because in the couple of conversations that I've had with other founders, some of the approaches that I keep hearing is that you want to even build, like, a low fidelity clickable prototype and demonstrate to people who potentially would be your customers and make them pay immediately after that as a commitment to not run away, essentially. So that's why I was curious, because for some people, it's really the feedback, the insight, I guess fire in their eyes of the potential customer in tamazar's some others bigger clients is some sort of a commitment. And I was curious what that story looked like for you, which sounds like you essentially built it with your own funding and you came back to them and they were just excited because you kind of guessed with the niche that really correlated with what they actually needed.
Alex Reynolds 37:55
Yeah, I think if we were building today, then building a kind of interactive prototype in Figma would probably be the way that I would go because it's relatively affordable and if you can get people to buy in without writing a single line of code, then that's ideal. I think for us, by the time we started building the MVP, we had pretty good signal that this is something that people would pay for. And we had our first customer the same month that we launched the POC. We were up to ten customers within the first five months. I think we had enough validation where we felt good about it, but maybe we were fortunate and we thought we were in the right place and we were. And if we had thought that we were and then we didn't have that kind of a reaction, we would have had to go back to the drawing board and it would have been painful financially. And from a time perspective, I think that's great advice. If you can build mocks that whatever you can put in front of people as quickly and cost effectively as possible, do it.
Stephan Mazokha 39:12
I see. How did you determine the proper pricing for the first set of customers?
Alex Reynolds 39:21
Yeah, that's a great question. It's kind of more of an art than science and I think most people make the mistake that they go too low on pricing, right? So you're not sure and you know where all the bodies are buried with the platform and what it can't do and so you come out and you go low. We did a lot of experimenting is kind of the answer. So we would come out and say, would you do it for this number for one customer? And we might go lower or higher for another customer. If it was a big company, maybe we would have a higher number. And we were all just trying to figure out and triangulate and so it's worth what somebody's willing to pay and different people's pain, some people might be experiencing the pain more or less, and so it's worth more or less for them. And over time we've become a lot more scientific about how we price and what are the upsell levers and what are the different plans. But all of that is based on what are the different features that people are really going to pay for. And how do you think about servicing a big company versus a small company? In the early days, though, with an MVP, you just don't have that same level of differentiation often. And so just getting people on board paying something is ideal and pricing will always go up. So our first ten customers, I think the average price was maybe $5,000 and now our average price is more like 30 or $40,000. So it has gone up dramatically in a small period of time and we expect that to continue.
Stephan Mazokha 41:18
Is that the cost per year? And for how many users that's per year?
Alex Reynolds 41:24
And that's kind of for our baseline plan. So we have larger customers that are using our salesforce integration or they have enterprise features and so we do deals up into the hundreds of thousands of dollars, and that will continue to increase. So I'm pretty excited for our first million dollar deal when that day comes. We're not there yet. No, but we don't price based on user. So one, we consider events to be a team sport. So we want as many people at a company to be on Vendolux because we want all of that collaboration to happen around events.
Stephan Mazokha 42:01
Yeah, it decreases stickiness too.
Alex Reynolds 42:04
Stephan Mazokha 42:06
I guess my concern about and the reason I've asked about pricing, I think you're absolutely right. The more you can charge him, the beginning the better, because you can always give discounts, even if something but with that comes a fear, at least in my head, because I'm at a similar stage at the moment too. Which is, if you were to come to a client potential and you would tell them, let's say I'm going to charge you, whatever, $1,000 per month for this product, hypothetically, they would say, OOH, that's too much. This is ridiculous. I'm not going to pay. The fear is that you're going to lose them. Because if you're going to go back and start saying, okay, if this doesn't work for you, I'm going to give you that discount at that same conversation. Now, you've lost the upper hand in that negotiation. Coming back to that original question that I've had, because how do you I guess if you've asked too much, what is the approach that you would, I guess, suggest on how to go down and still not lose your, I guess, face in that conversation?
Alex Reynolds 43:03
Yeah, I think digging into the why of it so you can say this is let's use your example. So you come in and you say, here's a proposal. It's $1,000 a month. I usually like to deliver pricing over a call or in person so I can see their reaction and their body language. Some people will throw up on the price no matter what, even if it's within their budget, because they're just trying to negotiate. Other people will have this look in their eyes like, oh, there's no way. So I think understanding, if somebody says, hey, we really like your product, but this is too expensive, then digging into it, it's like, okay, well, why is it too expensive? What's going on? And you can say, well, in our case, it might be, hey, we don't actually go to that many events. We only go to one or two major events a year. Okay, that's helpful. Or hey, we give 10,000 credits for one of our plans. So someone might say, well, I don't need 10,000 credits, so it's expensive, given that I don't need all of these credits. Okay, well, what if we created a plan that has less credits? Or what if we create a plan that is only US. Based or has limited seats, or like, there's ways that you can bring down the offering in order to justify a price decrease. And then there's also levers of value that the customer can provide for you. So look, we're in the early innings. Every customer win matters. And so if this goes well, would you be willing to do a case study? Would you be willing to do a press release? Would you be willing to be a customer reference for other customers? If you could do that, then I could justify a lower price point. Or if you're willing to do a two year deal, then maybe you can do we'll do this for $200 a month for year one, and for year two, we're going to do 1000. And by that time, our pricing is going to be $5,000 a month. But you're going to get it at what the price is now. So there's all kinds of ways that you can justify reducing price for reducing features and what you're offering, or by getting other levers of value from your customers.
Stephan Mazokha 45:24
I see. Coming back to the original topic that you've mentioned about the fact that you guys collect a lot of data to make it to calculate some sort of ROI for people who choose certain events. First of all, how do you collect the data unless this is some super secretive trick that you don't want to share? And how do you compute that sort of value return to the company that considers that event?
Alex Reynolds 45:49
Yeah, I mean, we've kind of built a robust technology stack to go out and get the information that we have. And we partner with event organizers, we partner with event marketers to be able to have a good view of what's going on. And one trend that we're seeing in the event space right now is that people are waiting longer and longer to sign up for events. So about 50% of event attendees don't sign up until the last two weeks before the event now. And so as a result, even if you had perfect insight into everybody that was going to be there, you wouldn't know half of the audience until within a week or two weeks of the event.
Stephan Mazokha 46:35
And that is objectively too late for somebody to make a decision whether to invest. I get it right.
Alex Reynolds 46:40
So we have a predictive algorithm that will look at all kinds of factors, such as where people have been in the past and what types of events do they go to, and kind of correlate across all of our different data points to be able to have an idea and an opinion of where people will be in the future.
Stephan Mazokha 46:57
I see. And do you directly pull data about attendees and those people who purchase tickets from the event organizers, or is that sort of not available to a company like yours?
Alex Reynolds 47:09
It depends. So we work with a lot of event organizers. It's an interesting space because event organizers and event marketers have very similar problems when it comes to an event intelligence solution like ours. So as a marketer PayPal is a customer PayPal's marketing team wants to know where their competitors are going to be. Well, if you're Money 2020 as a finance event, you want to know kind of like, what share of wallet are you getting from a company like PayPal? Are they spending more dollars at your competitors or at your event? And these sides, the marketers and the organizers are not sharing this data because they're concerned that it's going to get out in the wild and people are going to abuse it. And they don't want this level of information flow. So we kind of can sit in the middle and only share the information that's relevant for both sides and help to make sure that we're securing the information in a way where both sides feel comfortable. So that's kind of the challenge and the opportunity for us that we can unlock amazing outcomes for both marketers and organizers by partnering with both sides.
Stephan Mazokha 48:31
That being said, that's a very interesting point that you've mentioned. Given that you have this access to both of these sites, do you provide some sort of value? Maybe it's not advertised yet to organizer that let's say is considering to build some sort of event but needs to test their grounds to see if there is any value. Let's say if I were to consider building some sort of end myself for a very tight niche, could I come to Vendelux potentially and be like, hey guys, can you provide me some insight possibly for some sort of money return?
Alex Reynolds 49:01
Yeah, I mean, I actually have never thought of that. So I appreciate that.
Stephan Mazokha 49:07
You're welcome. More ideas?
Alex Reynolds 49:10
Yeah. We've worked with established events where usually event organizers want to understand what audience should I have at my event and who should sponsor or exhibit at my event? And those are the two audiences that they're trying to build companies that will exhibit and people to attend. And every event wants to build kind of the right ecosystem. Right. It's sort of a very delicate balance. If you don't have the right types of stakeholders with the right titles and the right kind of objectives of going to the event, then the event is not successful. And so it's critical to make sure that you have the right people in the room. But yet 50% of those people aren't signing up into the last two weeks. So it's a big challenge for these organizers to make sure that they have the right people. And if they don't, then the companies that are sponsoring the event are not happy and may not come back again. So it's a big pain point on both sides that again, we help solve.
Stephan Mazokha 50:19
Yeah, of course. And I'm thinking about this think of it this way. Let's say you're in this tight relationship with T Mobile and they decide that they would want to roll out some sort of a new product or a new plan or something like that, and they're planning to advertise that with a certain amount of budget on these five different platforms. And you could send that kind of a signal to potential organizers that you know very well and that are very, let's say, skilled up in this space as a signal and say, hey, we have this opportunity, we have this potential commitment, and we can help you connect the two parties, maybe get some share of it, obviously. But this way you could help, I guess, even smaller agencies that organize these kinds of activities to scale up in the market since you have the kind of access that nobody really does because usually this would be like a many to many combination graph. You're this core in the middle that makes all the right decisions and the right connections between people.
Alex Reynolds 51:17
Stephan Mazokha 51:19
Okay, I was curious to hear what was your vision for the company for the next five or ten years?
Alex Reynolds 51:25
Yeah, so our vision is to empower humanity, which big word humanity, to build meaningful professional relationships. So we've started with events because events are sort of a magic moment where you have a group of people together in person in real life for a shared purpose and a shared reason and there's just really strong intent and it's magical. People are open to new experiences and new relationships and new ideas when they're at an event in a way that they might not be sitting on their couch and there's strong attention. Right. People aren't necessarily distracted in the way that they might be when they're at home and there's just a million different things going on. So we've started with events and our mission, kind of like what we're laser focused on right now, is to empower event marketers to lead and win. Kind of going back to the event marketers, are the unsung heroes of their organizations. But how I think about mission versus vision is that the mission is what we're doing now. The vision is where do we want to be in 510, 20 years? And the mission will kind of expand out and eventually become that vision. So for us on the vision side, it's not just about event marketers, it's about all of humanity. We want to help everybody in the world, whether they can go to events or not, to build meaningful and that's important, meaningful professional relationships. There are, of course, like LinkedIn, for example, is a great way to build professional relationships. But our perspective is that clicking connect on somebody's profile and messaging with them is not necessarily building a meaningful relationship. And so how can we take the power of that in person event where people are open to new relationships and new ideas and how can we bring that to everybody everywhere to drive those relationships?
Stephan Mazokha 53:28
So how big is your team at the moment?
Alex Reynolds 53:30
Stephan Mazokha 53:34
And I'm guessing that a lot of that growth in terms of the team started when you received your seed round which based on my knowledge, is 2.4 million. Right. In 2021. I'm sorry.
Alex Reynolds 53:45
Yeah. We closed on the initial round 2.4 million in January of 2022, and then we launched kind of the official version of the platform in late January. And at the time, it was just my co founder and me. We had a few contractors who had helped to build the initial version of the platform. And with that initial funding, we were able to build a small team of folks and grow from there.
Stephan Mazokha 54:21
I see a couple of questions related to that. First of all, since you've mentioned that you used to work, I'm guessing with vendors, I'm guessing software agency that build the software for you, potentially some designers. I'm curious, what was your experience with that relationship between the agencies as well as with the investors? Was it one of the conditions of sort of receiving the investment that you need to build your own team, or did they really not care, and were there any concerns related to that component?
Alex Reynolds 54:51
So we worked directly with contractors, and two of those folks are still involved with the business today. One came on full time and the other is still a contractor. And there were other folks who were with us and then took other gigs or we kind of phased out as we built the team ourselves. But we didn't want to work with an agency. We wanted to work directly with people. And the hope was always that we'd find people that would be part time and would help us before we had funding where we couldn't quite bring them on and have it be like a part time to full time type of transition.
Stephan Mazokha 55:37
I see. Cool. All right, so no agencies. That's still interesting. I was just curious because sometimes I hear this point that if you work with an agency, it's really hard to scale that up as a startup. Okay. At which point did it become clear that you're ready to go and start chasing VC money? I'm guessing.
Alex Reynolds 55:58
So we had gotten to ten unaffiliated customers, and that's kind of generally what we were looking for is that ten companies that they weren't our cousins companies or where we knew the CEO or the CMO. And so we kind of gotten ten organically from people that we didn't know. And that was strong enough signal where we said, all right, if we were able to get ten, we should be able to get to 100. If we get to 100, we should be able to get to 1000. We get to 1000, then we can IPO. And so kind of ballpark.
Stephan Mazokha 56:35
Alex Reynolds 56:37
With ten, we decided to raise, but it was really challenging, the climate in late 2021, even though for VC funding, everything was booming. I mean, it was fantastic. It was probably one of the best times to raise as a business. But unfortunately for us, we were coming out of COVID and there were a lot of concerns about events and were events ever going to come back? And people thought that virtual events were going to be the future. And so we had a lot of investors that just did not believe that in person events were going to come back. And we were fortunate that we found our lead investor, ben narson at Tenacity, who got it instantly. He knew within ten minutes he's like, yes, event marketing events are going to come back. The pendulum is going to swing all the way back. People have a basic human need to meet in person and this can be a massive business.
Stephan Mazokha 57:41
I see. Cool. Something I like to ask founders who've received funding, and it may be hard to answer since you may have not counted, but still, how many pitches did you need to make in order to get that? Few? I'm guessing that would agree. Too many. I'll give you an example. I've spoken with a person last week about the similar and I asked her a similar question. She is an ex Googler, really talented person as well, and she told me that she needed to pitch to 19 vestors to get five of them to agree and essentially together they formed the first round.
Alex Reynolds 58:18
Yes, that sounds about right. Of course it depends, right? That's always the answer. As a consultant, that's the number one lesson you learn. The answer to every question is it depends.
Stephan Mazokha 58:30
And I'm trying to push deeper than that. That's the whole point of this conversation.
Alex Reynolds 58:34
Yeah, I think generally, depending upon your traction and the space, like right now, of course, Generative AI is very hot, so those deals are flying off the shelves. But I would say roughly like 60 firms is a good barometer. 60 firms that are in your space. So they're interested in B, two B, like for us, B, two B. They do the right stage, they lead rounds. Right, that's important. Once you have a lead, then it can be fairly easy to find other folks that will fill out the round if you need additional firms. So sometimes founders will make the mistake where they're having a lot of conversations with a lot of people with the titles of investors or at VC firms. But if it's the wrong stage or the wrong focus area or they don't lead rounds, then you're kind of spending time in the wrong areas. So I don't know if I have my head, but we probably spoke to 60 and I think psychologically raising funding is unlike anything that I've ever done before because normally when you're in sales or you're in partnerships or anything else where you're kind of going out school applications, the hit rate is much higher. So even in sales, I mean, if you're closing 15% of your deals or 10% of your deals, that's pretty good. So one in ten, let's say. But when you're doing a VC round, you need one lead investor and most companies that go out to raise, if they get one lead term sheet, that's a lot. So you talk to 60 potential leads and you get one that says yes, that's great. A lot of companies will talk to 60 and get no term sheets. If you get two or three or four, that's fantastic, right? And all of those hit rates, those fantastic hit rates are lower than what you would see in sales. So it's just psychologically, there's a lot of rejection and that's okay. You're not looking for everybody to say yes, you're looking for the one person that's going to be the best fit for you, and that true believer. But when you're in the trenches, it can be very lonely and very difficult.
Stephan Mazokha 1:01:05
And that's exactly why I was asking you this question. I will be asking these questions for pretty much most of the founders they will speak with in the future because similar to my previous questions to other founders about cold email to how did you get your first customer, how did you get your first investor? What numbers did it take for you to go through in order to get that? It's because most of the people, they just don't realize the magnitude of effort it requires to even get that first yes. In fact, I think last week I was watching a couple of videos from Y Combinator Startup School, which is like a free online course, and they were demonstrating what it takes to get the first yes in terms of the first customer. And they were saying that, look, if you're getting, you need to start counting backwards. So for example, if you want to get your, let's say, ten responses from possible customers and that response rate is whatever, 10%, then you need to get 100 email cent or something. Or if you want to get, obviously the numbers are lower, but then out of those 5% of people who responded to you, maybe only half of them will actually get on a call. And even maybe 20% of those will be the ones who even try the product that you sent to them, and even the less will actually pay to you. So when people say that I failed, well, you failed not because you suck, but because you just didn't talk to too many people given how much noise is there. So I'm really appreciate that you mentioned these numbers because for a lot of people, this could be sort of a North Star in terms of what do you need to take in terms of effort to actually get something right? And given all of that, you're pretty lucky in terms of your idea, it's a really fantastic idea and you got fantastic results, obviously, which is huge. Kudos to you. If your idea is not as tractionable, your numbers need to be exploded even further. So I think that's why it's an important topic to share and really, I guess, be. Open about. So that's great that you shared those things. So what culture are you trying to build in the company and how do you approach the point of hiring employees at this point? Since I'm guessing this is a big part of your days these days.
Alex Reynolds 1:03:14
Oh, yeah. I mean, culture is everything, right? So before we even hired our first employee, my co founder Stefan and I spent really like two weeks kind of in these big working sessions, really trying to think about what are the vision and mission that we just talked about and then also the company values. And for us, it was really important to set up an environment where the values were a trade off. So most companies, their values are like BS, in my opinion. It's like treat people the way that you want to be treated or be kind. Yes, of course those are important. But you would never have a company value that says, don't murder people, right? That's just like a self evident truth. Of course we're not going to murder people. Of course we're going to be nice. So for us, it was very important that we thought about trade offs, where if you had this, not that, that there were definitely people that would take the other side of the trade off, right? And that's fine. Vendelux doesn't need to be a place that is for everybody. Of course we want to be inclusive and have a diverse group of talent, but we want to set up an environment where for the right person that's motivated by these things, then it's energizing. And if it's not, that's okay, but this just isn't the best fit. And so, for example, our first value is builders, not bullshitters. And we're looking for people that are going to get their hands dirty. They're going to be on the field, they're going to make things happen. Not people that just want to sit around in meetings and talk. And again, there are, I think, a lot of people that want to clock in nine to five and be in meetings and not really build something themselves. And that's totally fine, I have nothing against that, but it's just not vendelux is not the right place for those types of people. And when you cultivate a group of people that they all want to be builders in this example, right? Like, builders want to work with other builders. They don't want to work with people that just want to have meetings all day. Your second value is ownership mentality, not a mercenary mentality. And so the idea here is that people can be very successful as mercenaries, where they spend two years at one company and then two years at another company, and their pay will go up, their titles will go up, but they're not going to see the impact of their decisions. And so for us, it's really important to bring in people that have extreme ownership, where they can come in and own a function, no task is too big, no task is too small, and just be incredibly reliable. Basically, we're looking for people that are going to be here for the long run and are going to own their areas. And then, of course, you can rely on other folks because they're going to own their area. So people can be very successful as mercenaries, just not the folks that we're looking for at Vendelux. The third one is pareto, not perfection. So being 80 20 instead of perfection. And so 80% of the value comes from 20% of the actions. And so then the inverse of that is that the remaining 20% of value comes from 80% of your actions or your time. So as a startup, your one advantage is speed. You can't pay the most, you don't have the most people, you don't have the most knowledge, you don't have IP and all kinds of other advantages that big companies might have. Your only advantage is speed. And so if you're a perfectionist, then you're not moving fast enough. You're spending too much time on the things that don't matter. And so it can be hard. You want things to be perfect, but the reality is that it can be being good, being good enough is what matters. And so are we checking the box? Are we making sure that we're delivering the most of the value? Good, let's move on. And of course we'll come back and we'll iterate and we'll build and scale. But first things first is just moving fast and getting feedback. And then the last one, which is the hardest one, is doing the right thing, not the easy thing. And so everybody in their career has multiple chances or times where they can do an easy thing instead of the right thing. And it's the easy thing because it's easy, right? It's easier. The right thing is hard, but we want folks that are going to do the right thing. And this comes down to relying on your team members, right? You want to know that when you look to your left and you look to your right that everybody is going to do the right thing and not just do the easy thing so that we all know that we can build as a team and win.
Stephan Mazokha 1:08:21
Cool. I'm probably going to steal some of those, but it's for a good reason, obviously. What would you say to yourself when you were 20 years old, since you've gone in such a long way? You've probably made quite a few mistakes on your path, and you probably have something you'd want to change or adjust.
Alex Reynolds 1:08:42
You know, I I think I think every mistake that you make is a learning opportunity. So if I, if I went back and didn't make the mistakes that I made, then I might not be where I am today. So I think a lot of it is sort of a frame of reference where of course I made mistakes. I'm not saying that everything that I did was perfect, I missed out on opportunities, but I think failure is the strongest teacher. And so understanding why you failed and reflecting back on decisions that you make can be the best way to not make those same mistakes again in the future. I mean, this kind of goes back to a startup concept of like, the whole idea is to fail fast, right? And so you want to get those features out so that you can get feedback, fail fast and adjust. And iterate so I try to live my life that way as well. I wouldn't tell them to change anything.
Stephan Mazokha 1:09:48
How does your day look like these days? I'm guessing you're super busy with so much pressure on you from all sides.
Alex Reynolds 1:09:56
Yeah, every day is different. I'm kind of overseeing a lot of different areas of the business and so hiring is a big thing right now, but maybe it wasn't three or four months ago. They say that the CEO role changes every six months or so meaningfully. I'm about to go into fundraising mode, so that will be a very different kind of makeup. So it's really what does the business need for me to do the most? And then that's what I'll dive into. But it's a lot of context switching. So you are in a customer meeting and you have a big win and then you're excited and happy, and then you talk to a candidate and they don't want to come on board because you can't get there on compensation and so then that's bad. And then a customer, you talk to a customer that's super happy and they feel like you're making their career and helping them achieve what they want. And so it's very up and down. And then you're in a product meeting and you're whiteboarding out different requirements for the next big feature that you're going to build. So there's lots of different hats as the CEO or as a co founder in general. And yeah, you kind of need to be flexible.
Stephan Mazokha 1:11:18
Of course there is no way to be. Your life is a zebra, especially when you're in this kind of environment. But that being said, do you have any techniques or tricks or really anything you do with your lifestyle that help you to push successfully through the challenges that you probably are facing on a daily basis?
Alex Reynolds 1:11:37
Yeah, I have a great support system, so my wife as number one, but just a community of advisors and mentors that I can rely on and go to. And if I want to talk through something or things aren't going as I want them to, then to really just be able to bounce ideas. And usually it's about changing the perspective and understanding that one thing I like to talk to about with my team is sort of like, okay, is this something that's going to be a big deal a week from now, a month from now, five years from now. Right. And you sort of realize that a lot of the things that we get very worked up about in the moment are things that don't actually have a huge impact long term. Right. And so kind of reframing and having that perspective can help to shift your mindset. My co founder as well. Right. Having a co founder that I can rely on, that I trust, that I have built businesses with in the past, is such a blessing to be able to have that. I've spoken to founders that are solo founders and there are definitely advantages there. But it is a hard road.
Alex Reynolds 1:13:06
Those are the biggest things for me.
Stephan Mazokha 1:13:08
I see. And one of the last questions, I'm sure, you know, with the concept of deep and shallow work, a lot of your time probably these days is spent doing shallow work, which is meetings, discussions, emails, that kind of stuff. How do you still carve out the time for deep work, for producing some sort of content or ideas? How do you split up your schedule and to be able to find those.
Alex Reynolds 1:13:33
Opportunities, nights and weekends?
Stephan Mazokha 1:13:37
Okay. There is no chance to find a workday. I see. Okay.
Alex Reynolds 1:13:41
No, I mean, I definitely have more flexibility. Right. I can schedule it if I need it, but things come up and then it is difficult.
Stephan Mazokha 1:13:54
Okay, look, that's been a really good conversation. Very insightful. Again, I congratulate you on your recent deal and on all of the success that you've had so far. And I really wish you the best of luck. I think you've found a really golden mine of ideas that you could explore. And I'm looking forward to speaking with you again, maybe in a year, seeing what change, what the Delta will be. And I'm confident that it's going to be a huge one. So thank you. It's been a pleasure.
Alex Reynolds 1:14:23
Thanks so much. This was a lot of fun. These questions were very insightful and it's been fun to talk through it.