How to Win podcast with Peep Laja

**Lloyed Lobo:**

**We started by selling a service. It's probably the absolute best way to bootstrap a company to $1 million. In fact, we like use this method to bootstrap to $10 MM. It makes you very good at customer success because customers want an outcome. They don't want software. After you know exactly what to build, then you build.**

**Peep's voiceover:** I'm Pepe Leal. I don't do fluff. Don't do filler. I don't do emojis. What I do is study winners in B2B SaaS because I want to know how much is strategy, how much is luck, and how do they win.

This week, Lloyd Lobo, founder of Boast. ai. The software company that helps businesses capture more R& D tax credits. Lloyd breaks down how he bootstrapped his company to over 10 million in revenue. We also talk about how he used consulting in the early days and his top growth channels.

Let's get into it.

**Lloyed Lobo:** The problem is it's a cumbersome application process, it's prone to frustrating audits and it takes a long time to get the money from the government because what happens is your accountant comes at the end of the year and tells the CTO or tech leader at a company, tell me all the R& D you did that meets this narrow criteria.

So he called me and he said this process is broken. I'm like, okay, let's work together. I wanted to jump at an opportunity to work with him.

We started by selling a service. And you know, in the vc, VC world, this is a very bad word, right?

Like low gross margin, labor intensive unscalable. What happens is customers want an outcome. They don't want software. And when you are, especially dealing with a regulated industry where governments and everything involved, and people have to give you their highly sensitive data, it's hard to just launch a product and ensure they'll adopt it, right?

So, It makes you very good at customer success because customers want an outcome. They don't want software. You don't have like buttons and widgets to hide behind. You get really good at consultative selling. And then after you know exactly what to build, because you deliver a outcome manually and you write down all the processes.

And then you know what to build. And what happens is then as you automate that service, your gross margins go up, your profits go up, and then you can keep scaling. And, and as a result, you maintain, you maintain max control with minimum dilution. Now the thing is, because we were building that kind of company, nobody, we're not fundable, right?

It's like, what the hell these guys are doing? You're not fundable until you are one day.

**Peep's voiceover:** I used a similar path myself, launching first an agency in 2011.

Five years later, I then used its profits to launch an e learning business. And three years after that, used the profits from the e learning business to fund building a SaaS company. That's now Wynter starting an agency costs almost nothing. You only need a laptop and you need to know things. A software company is another matter.

Developers are not cheap. It takes a long time before the product is market ready. This is why most tech founders try to raise capital. Being your own VC is a nice luxury to have.

**Lloyed Lobo:** we also worked on a chatbot in 2013, called Automatically.

We built it, we launched it, couldn't get it to work, over time it failed.

And after that, came back and realized we have this consulting operation going.

There's so many people who are paying us. Why not turn this into a software play? And so we incorporated Boast Capital into Boast AI in 2017. And barreled through 2017 to 2020. Saw good growth and then in 2020. July, we had a term sheet from a growth equity firm who bought like majority, 52, 53 percent of the company, which was a good outcome for us.

If we wouldn't start as building a services company, then we would have probably been more attractive to VCs because we were making revenue and profits. From the beginning, right from the first couple years we had to, we had to pay ourselves.

That's the function of being a bootstrap company. We, we went with the services first model, which forced us to bootstrap and, and on a whole bunch, bunch of things, right? And, and that took us on that path.

if I had to distill it down, these were the key five steps that happened. The first one was, Figure out an ideal customer profile that has a recurring need in an unsexy market that's not chased by the latest hot trends.

So pick like a trend that nobody's chasing and write down like who do you want to serve? What are the pains they're facing? What are the aspirations? What are the goals? What stands in their way of achieving that, right?

We started talking to hundreds of people and honing in on the problem. And figuring out if they'll even want this, right? You basically validate the ICP and the problem you want to solve.

And when people pay you to try it out, you have validation. Then the next is like, okay, product market fit. Product market fit is they get some outcome and they don't cancel.

Using it every year, over year, over year. So we started to see that, and what happened was, you know, once we figured the ICP and honed in on the problem by talking to customers, we offered it as a consulting service and got paid to do the work manually.

Through that process, we got really good at honing in on what we were offering, a repeatable, scalable process. And then we built the first iteration of the product using Zoho Creator and Zapier.

And it was janky, but it worked.

But people don't think this way, and they try to do everything at once, and then they have trouble. The problem is when you're a bootstrap company, you don't have the liberty to blow that kind of money. And so it becomes more methodical.

**Peep's voiceover:** This is actually the smartest thing to do with a tech startup. Build the first version of the tool that's actually no code. When we launched MVP for Winter, we were using Webflow and Typeform to clobber together the functionality we needed at the time. And we did the work manually behind the scenes. You should only write code to scale, when doing it manually holds you back.

When you get to this point, you've already learned a lot, you have paying customers, and all is good that you're building the right thing. Nothing worse than spending months building a thing that customers don't want, or that doesn't work the way it should.

**Lloyed Lobo:** And what we did really well, Pep, is in parallel we built a community.

when we started the company, we started cold calling people, reaching out to manufacturing, construction, oil and gas, all this traditional tech industries that could pay money because in 2012, nobody wanted to do business with startups, right?

They don't pay money and we couldn't get any customers, man. They won't talk to us. Imagine two guys saying, Oh, give me your data and I'll give you money.

**Peep Laja:** Was that cold outreach?

**Lloyed Lobo:** Cold outreach first. And, uh, because we didn't have any money to spend on ads or anything else. We did spin up a landing page that we built ourselves on WordPress.

Yeah, so it was hard. We started with cold outreach, cold email, cold call, and then nobody would talk to us. So we said, okay, you know what? Let's go to the events these people host. So we went to manufacturing events, oil and gas events, construction events. Couldn't relate with them. Like, they're like, who are you guys, right?

we got really dejected and we said, let's go to the startup community events. We're founders ourselves. we first launched in a small city in Calgary, Alberta, because my co founder was there.

We felt, Oh, this is our tribe.

They resonate with us. We're having great conversations. We participated in hackathons. We started having drinks and dinners with them. And like, they became our life when we did the company. Hanging out with all these founder events. So through that, we really got to understand them because we were them.

That was the pain. And we started to build a reputation there and get some one to early customers. We've worked like early customers. And all our competitors, especially the big four would say, man, you guys are going to go bankrupt in six months. These guys are never going to pay. So I'm like, you're making fun of us that these guys are never going to pay.

I mean, that's the only bet we can play. There's no other bet. Now I can, we can't play the bet that we'll go after your customer base and with your customers, because that's not happening.

Now, fast forward 2023. all these big accounting firms now have startup programs, but it looks so fake.

all the events we were going to were high level CEO platitudes. Not tactical advice. So they bring these CEOs from big companies who talk about the aspiration of entrepreneurship. Now, to a founder who's at zero or one, that's not very helpful. I want to know how to get my first customers, how to do product led growth, how to do conversion rate optimization, how I hired my first employee, those things.

This high level aspirational stuff is not valuable to me because I've already decided to start it. So that was one gap. The other gap was the media in these small cities were not giving any attention to startups. So we're like, okay, there's two key things we could solve. Coming from Silicon Valley, we had a network.

So we started hosting events where we would invite speakers who were maybe not 50 million, 30 million, 100 million in revenue, but 5 10 million in revenue. To a founder at 1 looking to get to 5, or 0 looking to get 1, that's invaluable tactical advice. And our messaging then went from, Hey founder, I'm inviting Pep to talk about his journey getting to 5, and we're going to talk about these 3 topics.

I got 10 seats at the co working space just for some pizza, casual. They loved it. 10 people came. The next one, 20 people came. More and more people because we kept it like small seats, invite only. One day we had 200 people show up to the co working space. And the guys running the co working space is like, come on, this is not a pizza meetup anymore.

That evolved into a conference which became Traction and Traction has now 120, 000 subscribers. We've done big conferences, podcasts, et cetera. You spoke at our, one of our first Traction conferences in San Francisco.

**Peep's voiceover:** If you're a small, especially bootstrapped company, you can't buy attention. But marketing is a game of attention and you can buy a lot with money. You can spend more, which is the easiest thing to do. You can hire more creators and so on. But like in real life, you can't buy true love. Real affection is worth far more than attention.

No amount of marketing dollars can buy you what Taylor Swift's relationship with her fans earns her in loyalty and devotion. This is an opportunity for startups. While you can't outspend others with paid media, you can do earned media and build real relationships. Putting on events and meetups does not have to be expensive at all.

Personal relationships open most doors. And if you're hosting your own events, you also get perceived authority and power. My agency became an authority in its space once we started putting on conferences. I organized my first conference with Wynter while we were just two and a half years old. And when I say I organized it, I mean it.

I did the whole event management thing by myself because it's actually not hard. It's a myth that it needs to be expensive and that you need a large events team.

**Lloyed Lobo:** The second thing what we did was, we're like, nobody, no media is covering startups.

We can sit and cover startups, but I'm like, who's going to read our blog?

So I reached out to the local newspaper because I'm like, who will have a more higher domain authority site for the region than the local newspaper?

So I'm like, give me a blog, I'll cover startups. They're like, go away, we don't, it's not of interest, right? That's what they said. Then what I did was, I wrote a couple of startup blogs on some second tier sites also in the region. And got them viralized like through friends, whoever I covered, they share it, like hundreds of tweets back then, Twitter was big,

And I sent it to the reporter and the key is to follow up and the reporter's like, Oh, this has got good traffic. Fine. I'll give you a blog. The first blog I call Startup of the Week and I shared it with the founder I covered and he socialized with his whole network family. It blew up. It blew up so much that in two days, the editor messaged me and said, If you write it every week, I will turn it into a print column.

So now we got the second social proof which drove two things. It drove us backlinks from a high domain authority site, and It put us in the newspaper. So now here's what's happening every 6 a. m. on every Monday, the founder is going to the convenience store to buy copies of the paper, take photos and share it.

So that drove us an insane amount of, uh, like social proof, which created partnerships with incubators, accelerators. Customers. We became the good guys and then we leveraged that social proof to host conferences, have great speakers like yourself, Twilio CEO, Eventbrite, and, and you name it, everyone, right?

And, and so that journey was how we got from, you know, our first million to now 10 million. Basically, we just amplified and scaled it.

**Peep Laja:** So from zero to one and then one to 10, did your business strategy change a lot?

**Lloyed Lobo:** No, man, it didn't. This was, it was literally, when you say change a lot, it got refined. Our business model stayed the same, is still the same. Our customer base, ICP, stayed the same.

**Peep's voiceover:** What Lloyd described here is usually the smartest way to go. Keep going after the same ICP if it's working. Jason Lemkin, the SaaS legend and founder of SaaStr has said that the number one mistake he sees from 1 million to 10 million ARR is chasing new market segments, new categories, new areas.

Where the companies have zero or almost no traction. Double down on what is working. Period. If SMBs are your core, stay there at least until 10 million in revenue. Do not chase customer segments where you have zero or only token traction.

**Lloyed Lobo:** So if you want to start a company, I feel today you've got to figure out a market that's large and growing. It doesn't have to be a big one today. It can be small today, which was our case, the startup market, large and growing. There is a propensity to pay and there is an ease of access. Now, manufacturing or construction on oil and gas were large markets, and there was a huge propensity to pay, probably much higher than startups.

But if you don't have ease of access, then how are you going to start anything? If you keep banging your head and getting nowhere. So you got to pick the market that gives you ease of access and then level up. And so the business strategy didn't change. I mean, in the early days, the community wasn't that defined.

We didn't have a name like Traction. I mean, we started in 2012. We named it Traction in 2015. Before, until then, it was just meetups and a newsletter. Meetups and a newsletter. And a lot of the things I think we're fortunate on because today a lot of influencers or LinkedIn business to business influencers, they're building audiences on LinkedIn.

For the most right? The problem is these platforms, while great to build an audience, you don't own that audience, right? You don't have the emails of that audience. So if you don't engage them, if you can't get them to sign up for a newsletter that you engage with, if you can't get them to come to an event, you don't own that audience.

And if the algorithm changes, you lose your engagement. And this is what all platforms do, right? First, they show your followers the content, then they start showing your followers other people's content because they have to survive on sponsorship. And then the percentage of your, your mindshare from the audience keeps decreasing and decreasing.

So it's very important to own your audience. These are things you've done, that's how you build your community, your audience, your newsletter.

**Peep's voiceover:** Owned media is content marketing 2.0 here's Anthony Cannata, founder of AudiencePlus, explaining why focusing on rented channels like Twitter and LinkedIn is only a means to an end. And what we really need to focus on is owned media.

I'm not suggesting like stop posting on LinkedIn or Twitter or anything. It's actually quite the opposite. That's where our audience is and we need to be there too, but we need to reframe what we're trying to accomplish on these rented channels.

Much like SEO and others, we're trying to drive people into an owned relationship. And again, for the, for the, in the consumer media space. That's called a subscription. We don't call it subscriptions in B2B. We call it, sign up for a newsletter or an opt in to our marketable database. These like really inhuman kind of, you know, things.

Um, but as we get folks to subscribe, there's an exchange of value happening, um, that is rooted in relational context, not rooted in commercial context, at least initially. And so you can imagine like just by doing that, you're Going from something like, uh, at least in the B2B SaaS space, a one, one to one and a half percent conversion rate on your website to about a 10 percent conversion rate.

So you can 10X the amount of people that are wanting to hear from you when you're not trying to explicitly sell them on the first date,

**Peep Laja:** So over time, uh, you built up certain moat. We had the community moat that is, you know, hard to replicate, uh, brand relationships, all that stuff. What about the product side? Does the product have any built in defensibility?

**Lloyed Lobo:** On the product side, what we're doing is we're collecting unstructured data from people.

Like your, all your R& D data from Jira, GitHub, and all these tools. And we're normalizing it and we're marrying it to your financial data, your payroll data, your banking data. So now we have a score of your businesses R& D, like people do for MRR financing.

And so there's a defensibility through integrations with like, big platforms like JIRA, GitHub, and a bunch of, like, Monday. You name the tool, we have the integrations.

And then the other one is, is the industry regulated? This is an accounting space. The regulated industry. And so think about it now, I've collected 10 years worth of R& D data from companies in a system that I've normalized. Big four accounting firms, they've been doing it manually from their clients and they have to trash it.

For the level of data I have on companies, like thousands of companies over a 10 year period, Going into the 11th year is, is a huge data moat in and itself, because now I have the, I have seen the R& D of the majority of the companies, right?How many companies can come and say I have access to a thousand, two thousand companies intellectual property?

And I know exactly how much they spend on it and what the financial outcome was, right? So I see there's a data mode

**Peep Laja:** So now looking back would you have advice to fellow B2B SaaS founders?

**Lloyed Lobo:** Number one is, what is your personal definition of success?

And that doesn't mean money. That means... If you had a F-you money, what would you do day in day out? Write down your personal definition of success. And for some people it is maybe, I don't know, booze, babes and boats. And for others maybe it is sitting in Bali all year long. So like, you gotta write what is your personal definition of success that brings you joy you could do for the rest of your life.

Second, how much money do you need in your bank account to make that happen? Third, how long do you want to run a company for? Fourth, is there a version of the company you don't want to work for? And fifth, based on that, then you figure out, okay, what's the argument to raise? And based on these questions, who should I raise from?

in the last two years people raised a very high valuations Unicorn porn and now it's a graveyard

That is advice number one. Advice number two is alignment. Great companies are built on great alignment. Alignment with your co founders, alignment with your VCs, alignment with who it is.

Figure out the mission and the values and very important to align. And a lot of people laugh at this when I say it, but as they have issues, as they grow up, it's, it's mostly because of misalignment on values.

so imagine this, the two of us are co founders and you're deeply care about control. And I deeply care about, you know, money, right? So we're going to be at loggerheads.

**Peep Laja:** Uh

**Lloyed Lobo:** But then we're going to start fighting about things because we're not aligned.

As the company grows, because as soon as success comes, you're like, Oh, where's, you know, why didn't you tell me about this? And you're like, Oh, you're spending too much, right? It's, it gets into those conversations. So I think alignment is very important. And I think if you can align. on values and you can define your, you know, why you're doing it.

Like the personal definition of success. Those are two check marks. And the third thing I learned, which is an advice for everyone, the key ingredients to building anything successful, right? Whether it's a hundred million dollar company or a billion dollar companies, three things you got to get really good at communication.

You got to be good at creation and you got to be consistent. Communication plus creation and consistency will explode you

**Peep's voiceover:** So, what did Boast AI do to win?

1. They first delivered the product as a service, which helped them learn how to sell it, how to deliver it.

2. They minimized waste by rolling out a no code version before a true software product was built. They found an underserved market and doubled down on it, sticking with it until 10 million in revenue.

3. They built an owned media machine based on content, events, and relationships.

And that's how you win. For more tips on how to win, follow me on LinkedIn or Twitter. Thanks for listening.