Building a Generative AI Venture from Portugal: João Aroso, CEO of Leadzai (Part 1)

João is a serial entrepreneur who has built several businesses from Portugal. His current company has found its path to scalability with the advent of Generative AI. He discusses challenges of business models and pricing in great depth.

Sramana Mitra: All right, João, let’s start at the very beginning of your journey. Where are you from? Where were you born and raised? What kind of background?

João Aroso: So, I’m from Portugal. I was born and raised in Porto, which is a city in the north of Portugal.

Sramana Mitra: I had been there a long time ago.

João Aroso: That’s cool. Did you like it?

Sramana Mitra: Yes, I did. I went on a river cruise with the family, and there was a family lunch, and they served eel. I still remember eels, which was a little bit hard for me.

João Aroso: Yes, I can imagine. I don’t like it. Cool, the river is beautiful, especially the upper part.

So, I was born and raised there and was quite fortunate to grow up within the international community living in Portugal. I studied in the German school. Most of my friends were expats in Portugal and I think that was super important for my upbringing.

Sramana Mitra: Is the German school common in Portugal?

João Aroso: No, not at all. Well, I think there are two German schools in Portugal. One in Lisbon.

Sramana Mitra: Are your parents German?

João Aroso: Part of my father’s family is Austrian. But I don’t think that was the reason. I think it was just because the Portuguese German school is quite good following a traditional education system. That’s the main reason. We didn’t speak German at home. We have virtually no connection to family abroad.

Sramana Mitra: So it’s a good school.

João Aroso: Yes, and that gave me a special environment within Porto, which is a small city, very traditional in a lot of senses.

I was very fortunate to grow up within the expat community. The metropolitan area has like a million plus inhabitants. So, the expat community is relatively tight. I ended up meeting a lot of Americans, Brits, and a foreigners living in Porto, which contributed amazingly to my upbringing.

Sramana Mitra: What did you do for higher education?

João Aroso: I studied Economics at the London School of Economics and Political Science. Then in the final year, I dropped out to create my first startup.

Sramana Mitra: What year was that?

João Aroso: That was in 2008-2009. I officially started my first startup in 2009.

Sramana Mitra: What was the premise of that startup?

João Aroso: In 2009, we wanted to enable every SMB to have a website. Our focus was to be like Wix.

Sramana Mitra: I was just about to say, what was the competitive landscape? Was Wix around? There were many others that do that.

João Aroso: Back then, we had Template Monster, a huge template store where you could go and buy Photoshop files or HTML files. You know, there was no CMS that was ruling them all. Everything was very customized back in the day.

I remember reading about a $50M raise by Wix around that time and thinking, “Oh God, we’re screwed.” We kind of were. I think Wix did brilliantly well, but we had pretty much the same goal: Create websites for SMBs, allow them to create websites easily.

What we did that was significantly different and the reason why we exited was that we focused on a website generator. It was very similar to the concepts you see today with Gen AI. We wanted people to feed very simple information, and we would automatically generate a website. Back then we didn’t use AI, just some rules. If it were this day and age, I think it would have been a cooler product, but with way more competition. You go to Wix today, and you can almost create a website through chat. It’s pretty much the same concept that we had back in the year of the company. Then we sold the company.

Sramana Mitra: Hold on. Was this a bootstrapped company? Did you fund it? How did you build the company?

João Aroso: Friends and family money. Back then, there were barely any VCs in Portugal.

Sramana Mitra: You were doing this in Portugal, not in London.

João Aroso: Yes, in Portugal.

Sramana Mitra: You came back to Portugal. In Porto or Lisbon?

João Aroso: Originally Porto, then we sold it.

Sramana Mitra: You keep jumping to sold it. I’m trying to understand how you built it to get to the point. How much money did you raise? And what were the milestones of how you were going about it?

João Aroso: We raised a million euros.

Sramana Mitra: From friends and family in Porto.

João Aroso: Friends, family, and business angels, and credit from a bank. I think half of it was credit from a bank.

Sramana Mitra: In Porto, you can get credit to start a startup from a bank?

João Aroso: No, you have to give a personal guarantee on your house or something like that.

Sramana Mitra: That’s what you did.

João Aroso: That’s what I did.

Sramana Mitra: Your parents let you do that?

João Aroso: My parents were kind of crazy and allowed me to mortgage the house.

Sramana Mitra: Goodness!

João Aroso: Yes, that was extreme.

Sramana Mitra: Then tell me a bit about getting into the market and selling. How did you acquire customers? How long did it take you to get an MVP out or a version one out so that you could start charging people?

João Aroso: So the MVP was definitely quick, because we didn’t have a lot of money. We accelerated it a lot. We were obviously embarrassed by that product, which is a good point to launch an MVP. We tested a lot of things within that product. And I think the real change came when we understood the go-to markets. We focused on doing it through distributors. I think that’s where the main difference was.

Sramana Mitra: What is the go-to market that you followed that made the difference?

João Aroso: We found distributors that were selling.

Sramana Mitra: Tell me more. Who were the distributors? What kind of distributors are we talking about?

João Aroso: Telcos. They were super interesting back then.

Sramana Mitra: Special telcos. You found one in Portugal who wanted to do this?

João Aroso: We found one in Portugal. That was our first big client and our first big distribution channel to SMBs.

This segment is part 1 in the series : Building a Generative AI Venture from Portugal: João Aroso, CEO of Leadzai
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