SM: You burned $25 million and then figured out the business would not fly?

NZ: Yes. We then raised more money. Some of our existing investors re-invested and we found some new investors as well. It was the 2000s, after all!

SM: Did you decide you were going to do something else at that point?

NZ: Yes. We decided we were going to stop selling it as a service and start selling it as a product. First, we reduced the size of the company. We did not need the service people and we did not need as large of a sales force. We focused on productizing the product. It took us from July 2001 until the end of 2001 to make the switch from a service-based company to a product-based company.

SM: Did you validate your new proposition before making the strategic shift?

NZ: Not really. We did validate with a few customers. I think the process of validating before going to market is great and you can do it, but if you look at a lot of great companies their path was different. Their technology was so disruptive and unique that it could not go to customers first.

SM: Who were the customers that you did validate the product concept with?

NZ: Some of our existing customers. Usually in our space, you focus on large financials. If you win them, you win the market. We did not go out and do a big market validation.

SM: There are always product visionaries when it comes to high tech, and if you know who they are you can have validation without doing a massive validation operation.

NZ: Certainly. We did a validation, but there are various types of validations. We did not do the type of validation that you see product managers trying to do. We did not go out to customers, showing them the complete feature list. We did know that customers had a pain point with our previous service model, so we had a basis for our evolution. We already had validation of the pain point, and some validation that our method to ease the pain would work.