Building a Capital Efficient Second Venture: LiftLab CEO John Wallace (Part 4)

Sramana Mitra: So, what you’re saying is that you got this input about what the market was looking for, and because they were paying customers on the first piece of the functionality, you were able to get them to give you access to data. Because in all of this, as you know, in building AI products, access to data is one of the big gating items so that you can develop anything without problems.

John Wallace: Yes. We cannot build these products in a laboratory. We need to do it in the trenches with customer data.

On that same topic, I’m just rewinding to the experiments. Think about it. They were putting their ad dollars into these experiments, right? I can’t develop these algorithms for the experiments without millions of dollars, and I didn’t have that. So, it needs to be in partnership with Alpha customers that believe in what we were and the vision.

Sramana Mitra: Yes, absolutely.

John Wallace: So, we were flying out to talk to the first customer, and doing everything on the whiteboard with no product, no nothing. We were just coming up with what we thought they needed. It takes quite a bit of persuasion and trust to get someone to say, “We think you can figure this out.”

Sramana Mitra: Yes, and that’s where the domain knowledge and the credibility matters, because they will give you that time of day only if you bring that kind of credibility to the table. Otherwise, you don’t have a chance of even getting a shot at it.

John Wallace: It’s the part of being an entrepreneur that’s hard to quantify. Being bold enough but being credible. There’s a balance there that you have to strike. And it’s a personal thing to do.

Sramana Mitra: So, let’s switch gears a little bit and try to understand your financing strategy. You said you needed millions of dollars to build these products. You didn’t have millions of dollars. You were doing paid POCs, but you did have an exit with DataSong, and this is your second venture. Your team also has been a part of that exit. So, did you guys put in some of your own money?

John Wallace: Well, we started with what was going to be kind of a friends and family round. So, we went out and lined up a number of people that had industry backgrounds or had exits or both. Along the way, we had interest from a fund, and we ended up pitching Cowboy Ventures, an early stage VC fund, who chose to lead our round.

Sramana Mitra: Okay. So, so again, I think domain knowledge and track record kicks in gear. Raising seed funding without the product in place only happens when you have a track record, credibility, and domain knowledge.

How much did you raise from Cowboy Ventures?

John Wallace: The whole round was a couple of million dollars.

Sramana Mitra: So, a couple of million dollars. You have some customers in paid POCs who are giving you very good input. This is happening in 2018?

John Wallace: 2019.

This segment is part 4 in the series : Building a Capital Efficient Second Venture: LiftLab CEO John Wallace
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