Bringing a Generative AI Product to Market: RJ Talyor, Founder CEO, Backstroke and Pattern89 (Part 6)

Sramana Mitra: Can you double-click down and talk about your validation process in this company, given what you experienced in the previous

RJ Talyor: One thing that I’ve done is structure contracts. I found that everybody loves to be cheerleaders for startups, but ultimately, startups are measured by revenue. We have structured all of our engagements with these early customers around revenue, meaning if we’re gonna work together, you are committing to paying us for that.

The second is we’re gonna drive revenue for you, and if we don’t drive revenue for you, then you can escape from that early engagement. Then the third thing is, we’re doing 18-month contracts. One thing I learned was twelve months isn’t enough to build enough software that the customer feels like we’ve lived into our promise. The 18-month mark allows us to get Version 1 of software up while we do kind of a human services approach for the first six to nine months. We’ll get a version of the software up, then they log in and tell us all the things that aren’t there, then we can add those things, and then still be in the window that we can get them to renew after that.

Sramana Mitra: Are they paying you during this period?

RJ Talyor: Yes.

Sramana Mitra: The entire 18-month contract is a paid contract?

RJ Talyor: Yeah.

Sramana Mitra: So your validation is sales, essentially.

RJ Talyor: Yes.

Sramana Mitra: I love that because the other way around is what generates enormous numbers of freeloaders that are very difficult to get rid of downstream.

RJ Talyor: Yes. In Startupland, I’ve learned that people want to cheer you on, which I love, but what we’re really looking for is the 2%-5% of people who are interested in being an early adopter. People who are willing to take a risk, for a discount, maybe, but they want be the early adopter, they want to take a risk with dollars, and they want to be that change maker. That’s not everybody. A lot of people will say that they like to innovate, but actually they don’t.

Sramana Mitra: There is a kind of saying in the technology industry is, no one gets fired for buying IBM products. You can replace IBM with something else that is run of the mill and established. But those are not the people who take risks on startups. But there is a category of people, especially now. We are in 2024. Obviously, there are lots of people in the industry who understand the value of startups, innovation, etc. and are excited by that. So there are buyers inside of enterprises who do that.

RJ Talyor: Yeah, the worst is when you land a meeting as a startup with big company with a cool logo, and you get into that meeting, and you just want it to work so badly. Then you realize that they are not interested in where you are. It’s so tempting to just be like, “Okay, I’ll just do it.” But then you end up distracted and serving a customer that’ll never be happy at that stage.

So, it takes quite a bit of discovery to find those customers, but they’re out there. That’s the cool thing. Those are the customers who have an innovation budget, or are willing to pull out of their existing budget, are willing to go to bat with you with the legal team, because they’ll say, “Are you SOC 2 compliant?” Of course we’re not yet, but we will be, and here’s our roadmap. That word champion is thrown around a lot. You have to find a champion within an organization who will champion you through those hurdles, and they’re rewarded by being early adopters. You have to really treat them well, go above and beyond, because they’ve done the same for you.

This segment is part 6 in the series : Bringing a Generative AI Product to Market: RJ Talyor, Founder CEO, Backstroke and Pattern89
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