Building a Generative AI Venture from Portugal: João Aroso, CEO of Leadzai (Part 4)

Sramana Mitra: At the point at which this switch is happening, what are the dynamics of the company? Do you have customers? Are you still operating with that 1.5M in financing?

João Aroso: We’re still operating with the 1.5M in financing, but we’re starting a new fundraise. We have some early customers in Portugal and Italy. We were trying to figure out where to go in terms of differentiation when we realized that with GPT-3, we wouldn’t be scalable. So, we were trying to figure out where we wanted to go in that moment. That’s when we realized from a business standpoint that the only thing that matters to our end customer is what business the campaign is generating.

We come from a digital advertising background. We were concerned about CPC [cost per click] and CTR [click-through-rate] optimization, the impressions share, and a lot of other metrics that are usually relevant for professionals in the industry. We were always focused. Personally, that’s the area that interests me the most with SMBs. If you talk to an SMB, say a small accounting firm, they don’t care about the CPC or CTR, or the impressions share.

All they care about is how much business does this generate for me? That’s the reason why they run campaigns, right? That’s what we went ahead and did. We realized that’s the only thing that matters to our customers.

I would say that we didn’t pivot from a product standpoint. The product is pretty much the same, but from a business model standpoint, we kind of pivoted. We went from being a SaaS platform provider to create and manage your campaigns to sell our leads or business opportunities to my customers.

That’s our business today. We don’t charge for software. We completely focused our business in 2020-21. on a pay per acquisition or pay per lead type of model.

Sramana Mitra: So you pivoted the business model from SaaS to lead generation. Paper action essentially is the model. And what what audience did you go after? Was there a particular segment of SMB? That you were going after where your algorithm worked better? What kind of positioning work did you do on top of this pivot?

João Aroso: What we clearly see is that we’re not particularly interesting for e-commerce. So, today we reject e-commerce customers. We’re particularly useful for businesses that have no recurrence. So, imagine, a pest control company.

Ideally, their customers are not recurring customers. Otherwise, there’s something wrong with their service, right? We target specifically those type of companies because those are the companies that need to acquire customers all the time, those are the ones where we add more value because they feel the need to work with us very often.

On top of that, we like businesses where the conversion is almost in one touch. When you have businesses where the conversion is too complex and requires multi-touch processes, the value of the lead and the attribution is not that obvious. For a plumber, if someone calls, they ask for a quote or to go to their place. It’s very direct and easy to identify.

Those are the verticals that we focus on. Home services is a very big vertical for us. It’s probably our largest vertical, but it’s just 5% of our revenue. We have 80 verticals that are more or less the same relevance, except home services, which is two or three times more relevant. But everything else is fairly distributed throughout 80 verticals.

This segment is part 4 in the series : Building a Generative AI Venture from Portugal: João Aroso, CEO of Leadzai
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