How selling dog toys led to a $30,000,000 software idea

The guest you’re about to hear from is someone who had a problem and created software to solve the problem for himself.

Others started saying, “Hey, we have that problem too; can we use your software?”

And he said no.

He said ‘no’ a few times before he realized he should be saying ‘yes’ and turn it into a product.

Today’s guest is Raad Mobrem. He is the founder of Lettuce, a platform that helped companies manage orders and inventory online.

I’m using the past tense because the company was acquired by Intuit and its’ features integrated into Quickbooks.

Raad Mobrem

Raad Mobrem

Lettuce

Raad Mobrem is the founder of Lettuce, a platform that helped companies manage orders and inventory online.

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Full Interview Transcript

Andrew: Hey, everyone. My name is Andrew Warner. I’m the founder of Mixergy. It’s the place where I’ve done over a thousand interviews with proven entrepreneurs. I mean we really piss off a lot of people because they send in these really earnest emails asking to be on and I say, “No, it’s not a good fit.”

I feel bad about that. But I do feel really proud of the reputation that I’ve got here for featuring people who have really done things, who come here to tell the story of how they did it and they do it because they want other entrepreneurs to learn from their experiences. My goal is that if you’re listening to me, that you’ll use what you’ve learned, you’ll build up a great company and then come back here and do an interview. Let me ask you the same kinds of questions that I’ll be asking today here.

And the guest that you’re about to hear from is someone who had a problem, created software to solve the problem for himself. Others started saying, “Hey, we have that problem too. Can we use your software?” And he said, “No.” And he said that a few times and then eventually said, “You know what? Actually, maybe I should be saying yes.” And he turned it into a product.

His name is Raad Mobrem. He is the founder of Lettuce. It was a platform that helped companies manage orders and inventory online. I’m using the past-tense because the website is not up, but the company was acquired by Intuit. Raad, am I right? It is actually Raad. I got the name wrong so much when we were chatting before as I was trying to get it right. I’m slipping here. Raad, am I right that the features were integrated into QuickBooks?

Raad: Yeah. So, when we were acquired, basically it was all about our technology, also our team as well, but mostly about our technology end. I know QuickBooks is really well-known for their desktop product, which you download onto your PC. Millions of small businesses use it.

But they were really, really trying to switch over to their cloud-based solution, which is also known as QuickBooks online. They did a really good job of building a product for serviced-based businesses, but they hadn’t had feature parity, basically the same feature set as their desktop product for product-based businesses that were selling physical goods. So, they bought us because we could take that technology and quickly incorporate it into their core offering.

Andrew: Okay. So, it was mostly incorporated? I know soon after the acquisition it was.

Raad: I believe so. I left a little over–I was there for a year. I was running product for QuickBooks Online. But I left a little after a year. So, I’m pretty sure they’ve incorporated quite a few features. I don’t think everything yet. We’ll see if that happens. That’s a challenge. But yeah, I think a lot has been incorporated.

Andrew: What did you sell the business for?

Raad: We sold it for about $30 million.

Andrew: Wow. So, I didn’t think you’d actually say the number. I’ve got research here that says $30 million. I didn’t know it was accurate. Why can you say it? Why aren’t you giving me the same answer everyone else is, which is, “I can’t tell you?”

Raad: I mean who cares? I might as well tell people. They’ll find out anyway. It’s public knowledge.

Andrew: No. Intuit didn’t release it.

Raad: I think it was like TechCrunch or Pando or one of those that found out, probably from one of our investors who was a little too proud.

Andrew: I see. I do think that’s how they get a lot of it, right? There are so many investors. They have nothing to lose by telling a reporter. They get a lot to gain from it, partially pride. All right. Wow. What percentage of the business did you own?

Raad: I want to inspire some entrepreneur to go start something, whether they want to change the world or make a bunch of money. Maybe it will be impactful for other people. Who knows?

Andrew: I think it will. I think it’s exciting that you’re willing to talk about it. What percentage of the business did you own?

Raad: I don’t want to say that one. That’s bragging at that point.

Andrew: Really? Brag a little bit.

Raad: No.

Andrew: Is it 30% or more?

Raad: I had about 30%.

Andrew: Okay. Wow. So that’s a life-changing event. Do you remember the day when you signed the deal to do this?

Raad: Yeah.

Andrew: Okay.

Raad: It was actually pretty hilarious because one of my best friends that I’ve known forever, he called me kind of in a serendipitous way right after the whole thing closed and everything was transferred over. He’s like, “Did it happen?” I said, “Yeah.” He’s like, “What are you doing right now?” I said, “I’m literally picking up dog shit from my office.” So, nothing changes, really.

Andrew: How did you have dog shit in your office?

Raad: We have dogs in the office and sometimes they get a little excited.

Andrew: They go to the bathroom in the office?

Raad: I just thought that story was … I think that was a perfect, perfect example of what life is like after you sell your company. Nothing really changes except you can buy a little bit nicer food.

Andrew: And better bags to pick up the poop. You had a previous business that actually helped dog owners?

Raad: Yeah.

Andrew: Dura Doggie.

Raad: Yeah. I actually really loves dog in my world. Yeah. I started a pet products company that was actually out of a class project when I was at UC Santa Barbara. We had this crazy idea for a durable dog toy, which is hilarious now that I look back at it.

Andrew: Why is it hilarious?

Raad: Just because it’s such a 180 of what I … I went to college. I did mechanical engineering. I pretty much programmed to go get a degree and go work for the man, go get a job at a big engineering firm. And then I started this project for this dog toy idea. I sad, “Maybe we can make this into a company.”

So, I went from being a totally almost brainwashed mechanical engineer to a crazy entrepreneur. But then I went from a dog toy entrepreneur, which is so ridiculous now that I think about it, to a tech entrepreneur who’s actually found quite a bit of success, knock on wood. It’s just hilarious what a journey that has happened.

Andrew: I think I see your products here on Amazon. You guys created the fetch toy and the water bowl petite. Is that one of yours, the Dura Doggie disc?

Raad: Yeah. That was one of our first products. Then we came out with this line of toys called Choose Your Cause, which was all about every toy we designed would come in four separate colors and each color would represent a different charity. We would donate to those charities. It was actually a pretty–we made the best of being in the dog toy world in terms of trying to change the world in a little way. We were young too, so that was small time compared to what we were doing now.

Andrew: Did it feel small time at the time?

Raad: No.

Andrew: No. It felt big.

Raad: Yeah.

Andrew: And then you had a problem, a problem that led to this newer business that was much bigger. What’s the problem?

Raad: So, leading up into Lettuce, so, we had the dog toy company and we had a ton of orders that were coming in. It actually became increasingly difficult to do a few things, to manage our inventory because we were selling both online via our ecommerce store, but we were also selling to a lot of other brick and mortar stores, mom and pop shops, which is also known as wholesale.

Andrew: Okay.

Raad: And every order we would take that exact same order information–the name of the customer, their address, their payment information, their shipping terms, their shipping numbers, etc. We would input that information into an Excel sheet. We would input that into QuickBooks. We would input that into UPS or FedEx. I forget which one we were using. Then we would use some sort of credit card process to…

Andrew: Who is that in the office?

Raad: Those are the guys in the office.

Andrew: It’s cool. We’ll turn around the camera maybe later if I think about it.

Raad: Okay.

Andrew: Why did you have to put it in so many places? Why the Excel spreadsheet, for example?

Raad: Just to track our customers. It was like our little mini CRM. We didn’t have Salesforce. We were a very small business. We just had to process these orders by inputting all this exact same information into one system after another. Depending on the size of the order, it would take us anywhere from 15 minutes all the way to an hour per order. So, we were getting hundreds of thousands of orders and it got pretty crazy every month. So, we knew we had to do something a little bit different.

Andrew: Okay. Didn’t QuickBooks also have a CRM that was part of it? They did, right?

Raad: Maybe. I don’t think it was really that well known. Most people think of QuickBooks as an accounting product.

Andrew: Yes.

Raad: It’s until recently that–oh, shoot. I feel so bad because there’s a lot of background noise.

Andrew: I think it’s okay.

Raad: Okay.

Andrew: Do you have another place where you can work?

Raad: Maybe.

Andrew: Keep it going for a little bit longer. Let’s see how it goes.

Raad: You’ll like cut this out or something?

Andrew: Nope. I keep the whole thing in there.

Raad: So they did but not for their desktop product. Their QuickBooks Online, they started making customers a lot more predominant, but people really didn’t understand QuickBooks to be any sort of platform or larger product besides accounting.

Andrew: I see. So you were putting it in all these different places. You said, “I need a better system. I need a better way.”

Raad: Yeah.

Andrew: So you and your cofounder decided you were going to create this thing just for yourselves?

Raad: Yeah. We basically after hours, after the business was kind of like closed down, we were pretty much on the house or the schedule of our customers. We would then at night work on building a solution. Keep in mind, we actually first looked at systems like NetSuite or Oracle or SAP and those were hundreds of thousands and millions of dollars and they were very clunky, in our opinion.

Andrew: Right. They’re not the kind of apps that you like using.

Raad: No way.

Andrew: But you have no experience coding up apps for yourself. What are you doing doing that?

Raad: Well, I didn’t. I was more into the design of the product and the architecture and how it would work, the workflow, UI/UX. Frank, my cofounder at that time for that company, he was a developer. We went to school for computer science and that’s how we knew each other from UCSB.

Andrew: I see. So he wasn’t a part of the dog business, was he?

Raad: He was. But I’m just saying that’s how we met originally.

Andrew: How does he end up as a developer selling Dura Doggie products, same way as you?

Raad: He was just really into entrepreneurship, found out that I was doing the dog toy thing and took me out to lunch and I knew exactly what he was doing. He was trying to get in. I saw a talent there that I didn’t have nor did my other cofounder have and so I said, “This will be a great addition to the team.” That’s how that got started.

Andrew: I see. And when you guys built that software, was there a piece of you that said, “Hey, we can actually get in on this whole startup software resolution and be software entrepreneurs too,” or did you say, “This is just for us?”

Raad: We said this was just for us. I’ve always believed in 100% focus. So we would go to these tradeshows to sell the dog toys and during the downtime, when a customer wasn’t talking to us, we had all these other companies that were exhibiting right next to us. Word kind of spread that, “Hey, these young guys in the pet industry, they have iPads and taking orders on their iPads. We’ve got to figure out what they’re doing. That seems cool.”

Then they found out it was us that made it. I honestly think about 98% of them or something pretty high, some percentage asked us if we could make it for them too. We kept saying, “No, we’re a dog toy company. This is our competitive advantage.”

Andrew: This is 2011. What were they all doing? They weren’t writing it down on a piece of paper when they got orders?

Raad: I think they still are.

Andrew: They still are?

Raad: Oh my god, yeah. I went to a tradeshow probably like a year ago even past the whole acquisition and everything. Predominately, there are definitely more iPads now, but it’s pretty pen and paper stuff.

Andrew: You know what? This is actually going to feed into my first sponsor, which is a company called Toptal. One of the reasons why people hire Toptal is to develop software for their customers. That’s part of their business, they create software.

But you just helped me realize that internal tools are often just as important as the external ones that your customers use. To create software for yourselves, you guys, helped increase your productivity, right? You didn’t have to sit with five different apps typing the same order in. You create something that allowed you to sell more and focus on your business.

I think anyone out there who’s got a problem internally, instead of thinking, “I’ve got to live with it or one day someone is going to create software to solve it,” should do what you did and say, “Maybe we can actually code up a solution for ourselves, even if it’s just a clunky looking app that we internally only use that will make our lives better, it’s definitely worth considering.”

Often people in that situation don’t have developers who have the time to do it because their developers are either working on a project or they don’t have developers at all because they’re in a different business the way that you were.

Well, then there’s a solution. There’s a company called Toptal. They are a network of developers that pre-screened, pre vetted. They are bigger jerks than I am in the sense that they turn down 97% of people who try to be developers in the Toptal network. We only want the top 3%. They want the best of the best, the elites.

So if you need to hire a developer, you go to Toptal. You tell them what you’re working on, what kind of platform, how you work, is this a one-time project? Big project? Is this something you’re going to need a team of people, one person? You tell them the whole thing. They have matchers who will find the right person for you, they introduce you to that right person and if you’re ready to go you can get started within days. That is Toptal. Anyone out there who has an internal issue should be considering using them.

And if you want the special Mixergy deal that they’re offering us, it’s exclusive to Mixergy people, here’s where you go. Actually, here’s what they’re going to give us–they’re going to give Mixergy listeners 80 hours of Toptal developer credit when we pay for our first 80 hours. So, 80 hours of Toptal developer credit is huge after you pay for your first 80 hours. That’s in addition to a no-risk trial period of up to two weeks. Phenomenal company. These guys are growing like gangbusters. Can you actually grow like gangbusters? I don’t know. I think the phrase is they’re doing gangbusters. They’re doing really good work, right?

Raad: Yeah.

Andrew: So if you need to hire a developer and now they have designers, go to Toptal.com/Mixergy and who knows? Maybe the internal tool that you build for yourself, because you built it so well to solve your problem because you live your problem and you know how to solve it right could end up being the next thing you create as a business that actually helps you grow much more than what you’re doing now. They’re a phenomenal company. They’ll help you get there. Go check them out, Toptal.com/Mixergy.

At what point did you guys finally say, “All right, let’s give the software to someone else?”

Raad: So we started getting some phone calls. It was a few phone calls and a few emails from friends that were in the same industry as us, the pet industry and they said, “Hey, FYI, I just told my other buddy or my other friend in the fashion world or the gift industry,” various other verticals, “About what you guys are doing. We can’t find anything like this. You have to make it for us.”

So that intrigued me a little bit. That was a part where I said, “All right, maybe I should look into this a little bit more. It’s not just a pet industry thing. It’s pretty much every vertical that sells physical goods.”

So I went to the New York Gift Fair and I just kind of wanted to check it out. I was kind of like kill two birds with one stone. I thought to myself, “Would this good for our dog toy company next year? Should we try this out?” But also I went around and asked a lot of these exhibitors whether they had a huge problem with order fulfillment, order processing and just even order capturing at these shows. I disguised myself as a college student working on a class project because I remember that worked when I was doing the dog toy business. Everyone would talk to me.

So I went around to all these different booths and talked to a lot of small business owners who were doing anywhere from a couple hundred thousand dollars a year all the way up to hundreds and millions of dollars a year. I learned that for the businesses that were doing roughly $40 million, $50 million or less, it was all very, very manual. Even for the big guys, it was all still very manual, but they had systems back at the office like SAP or Oracle that they can input all these handwritten orders into.

I just saw the frustration, specifically around the smaller business. I could see that frustration in their eyes. I wrote about it in my blog post. You’ll notice when you start talking about a problem, you can see the facial expressions of people and if they start getting excited about it or if they get super sad about it, it means it’s a legitimate problem for them. If you create a solution, you might have something there. So that was it for me. It was just like a really big pain point for all these people. I thought to myself, “We have to do something. No one else is thinking of this.”

Andrew: Why did you have to go and see them in person at this tradeshow? After you got people to come to you at the other tradeshow, after you had people call you, why did you need that other verification?

Raad: It was more only like a few. It wasn’t enough. We had a good business that we growing. We were just under $1 million in sales for a self-funded business for the pet products business, so why ruin that? We could grow that further. But I was just curious. I just wanted to get a lot more data points. I just wanted to talk to a lot more people.

In addition, if we were to do something, we might be able to do things like benefit our process for our dog business based on what I found out. But two, the main thing was we could actually figure out what kind of features and things we would need to create in a solution or a full-fledged solution.

Andrew: I see. By talking to them again and not just saying, “Do you want this, yes or no?” but, “What do you need out of this? How do you work?” I see. So, did you leave with an idea of what the software would look like at the end of that?

Raad: Sort of. We knew it would be an iPad-based system, because that’s what got people really excited. Or the iPad would be a component of our product. We built an iPad component which allowed you to take orders at tradeshows, which was all offline. We knew we had to bring all of these sales channels and connect them together, so whether it’s ecommerce, if it was you’re selling goods at your brick and mortar store POS system. But the one sales channel that was also offline was wholesale. So, we had to bring that online.

Andrew: Okay.

Raad: The slowly for ourselves, as we started getting more and more orders, we started processing the orders. People were even getting excited about that. So, we would test these features on ourselves and then we would ask people about it. So, really, we kind of built a product that was just for ourselves.

Then, once we decided to make it a platform or actually probably like four or five months after we decided to make a platform, we started getting more user feedback and really focusing on that business, the lettuce business by itself. So, that’s kind of why we started talking to more people and then said, “What do you need in terms of a platform and how can we make this better?”

Andrew: You’ve got to say why the business is called Lettuce when you’re in the software business.

Raad: Say that again?

Andrew: You’ve got to tell people why the company was called Lettuce?

Raad: So we came up with Dura Doggie for our dog toy company.

Andrew: Which is a good name, actually. You’re smiling as you say it, but it’s durable doggie toys, right?

Raad: True. But try saying Dura Doggie or pronouncing it ten times in a row.

Andrew: I did have a hard time when I was saying Dura Doggie disc, for example.

Raad: It’s tough. And people didn’t know how to spell Doggie. Is it Doggy or Doggie? It was confusing. So I realized, “All right, this next name for this new company has to be very, very easy to understand, easy to spell, ideally if people already know what the word is, that’s even better.” So we thought of this pun of, “Let us do it for you.” I said, “What if we called it Lettuce, like the vegetable.” Apple called their company Apple. Why can’t we all our company Lettuce?

It was also symbolic in a weird way. It was nutritious for you, just like it is for your body. It helps you. It also symbolizes money. It can help your business grow and make more money, be more efficient. So, it was just kind of like was a good name that stuck. Nobody else was called it, so we said, “Do that.”

Andrew: I think it makes sense.

Raad: Me too.

Andrew: At what point did you decide, “I think we need to focus all of our energy on this and not the dog business anymore?”

Raad: It was a few things that were happening, actually. One, our business was growing a lot in terms of the dog toy business. But we were having some serious manufacturing issues.

Andrew: How big did the business get?

Raad: Just under $1 million.

Andrew: And what kind of manufacturing issues then?

Raad: It was just like we were getting really, really big delays and defective products, more that your typical five to ten percent of shipments. It just seemed pretty clear that the manufacturer we had picked was starting to meet its threshold on what it could supply to us. So, we would have a lot of time and a lot of difficulty expanding that business. We would need to raise way more money and dedicate a lot more time to expanding it by finding new manufacturers, etc.

Andrew: I see.

Raad: So, that was already starting to struggle a little bit for us. Then it was honestly like right after that tradeshow I got way more passionate about it and I started spending a lot of nights with Frank working on Lettuce. Then I would say around that four to five months after we had started building the platform version of our product, that’s when we decided, “All right, let’s go full-fledged into this.”

And then we got into Launchpad LA, which was the biggest accelerator at the time in LA. The guy who ran it–it’s no more because the guy who ran that went on to become the Chief of Staff for Elon Musk for both SpaceX and Tesla.

Andrew: Who was that?

Raad: Sam Teller.

Andrew: And then did Mark Suster have a piece of this business too?

Raad: Yeah. Mark Suster, he was basically the face of Launchpad. He initially started it but then Sam Teller ran it. I believe Mark did have a little chunk through Upfront Ventures.

Andrew: I see. So, you got–how’d you get money from them? What do you think you did that won them over?

Raad: Oh my gosh… Well, I tell you exactly what I did. So, I went to a speaking engagement that Mark was speaking at. He was giving all this advice on how to fundraise and do all these things. Basically everyone hounded afterwards. It’s what happens to me now when I go speak. It’s just a thing people do. People hounded him.

I just waited to be the last person. I wanted to be the last person. I followed his advice. He said, “Make sure when you come up to someone even after this talk that you know someone that I know and mention there name and come up with something we can talk about that’s relatable to both of us.”

So, I went up to him afterwards and I said, “Mark, nice to meet you. I’m really good friends with Jason Spievak. He’s the CEO or founder at the time at Invoca, which was actually called RingRevenue at the time. He mentioned that we should come up and talk to you afterwards. I told him that we’d be at this event and you would speak.” Mark was on Jason’s board, still is.

I met Jason one time–one time. It was through a mutual investor. So, Mark took a liking to that. I told him we were really interested in potentially applying to Launchpad and I’d love to pick his brains a little bit. He’s like, “For sure. Just have Jason intro us.”

Andrew: This guy you met only one time, now you have to go back him.

Raad: So then I go back to my angel investor, my first angel investor, John Petote. He’s a Santa Barbara guy. That’s how I met Jason. I said, “John, I need you to setup a lunch with me and Jason.” I kind of played both of them in a funny, weird way. It was like the one time where I was like a little untruthful, sort of. But basically I said, “Jason, Mark got really excited about our product. I don’t have his email. Do you mind introducing us?”

Andrew: Okay.

Raad: So, I got Jason to introduce us. But Jason also liked us. When we met him the first time, it was a couple-hour meeting and then the second time it was another couple of hours. He liked what we were doing and he liked me personally, I think. He’s actually an investor in my new company too.

Andrew: Okay.

Raad: So, yeah, I kind of worked that angle in that work. Then as a result of that plus a few other connections that we have being with the whole Launchpad Group, that helped quite a bit. Then I did something that was really impulsive and really weird. We were starting to freak out because we didn’t hear back about Launchpad and we were a little worried that we didn’t get in. I said, “Fuck it.” Excuse my language.

Andrew: Do it.

Raad: “I’m going to write a big, big email,” which now I would never do, by the way, but it was sincere. I wrote this big email saying why we were the guys to pick, why we had a vision and why we think that vision into a really, really big reality and success. And it was a really heartfelt letter.

And then two days later, it was, I think, right after Christmas, I get a call from Frank and we had been checking our email probably every 20 minutes. I woke up–I remember this very vividly–around 5:00 a.m. I checked my email, no response. And then I get a phone call at about like 7:00-ish waking me up because I went back to bed. And Frank called and said, “Dude,” and I knew immediately. We’re Santa Barbara kids, so we still have a little bit of dude in our language. But he was just so excited and I knew immediately that we had gotten into Launchpad.

They were a true accelerator. They accelerated our business and our connections and our network and our ability to fundraise significantly.

Andrew: Was it just fundraising or did they help you think through the product better?

Raad: They helped us–it was one of the products where they couldn’t help as much because it was order management. Who does that? They had never dealt with that kind of thing. So, they helped us way more in terms of how to think about the big picture, how to think about processes to implement, some frameworks. A lot of it was with fundraising and also just a network.

Andrew: What do you mean by the big picture? We actually asked you, we did a whole pre-interview with you, we spent a long time with you, our producer did. Then at the end, the producer said, “What would you teach if you could teach a class?” And you said, “How to think big.” It sounds like that’s one of the things that they helped you do at Launchpad LA.

Raad: 100%.

Andrew: How did they help you think bigger?

Raad: You have to understand I’m a pretty young guy at this point. I had grown a business to be around $1 million and I was like, “We’ve made it.” And I also didn’t understand the economics of venture capital. I just thought like everybody thinks, “I’ll go raise from some investor and that money will help us grow. They’ll love our idea because it’s the best idea in the world and yay, I’m the best.”

Andrew: Yeah.

Raad: But that’s not how it works. Everyone kind of has a selfish reason for doing something. VCs have to make a certain amount of return and they have to make fairly large bets based on the amount of money they’ve raised for their fund. So, I just was taught about how I should think a little bit bigger and how it’s potentially possible to get to that size. I don’t think like in the beginning I thought, “If we make this a $10 million to $30 million business, we’re set. Life is great. We made a huge business.” But they really taught us about what it means to be a really big business and how you could potentially get there.

Andrew: What’s the difference? Once you say hey, there’s something bigger than the vision that you had, what do you do? How do you change your processes? How do you change your business? How do you change your actions based on that?

Raad: I would say it’s a part mentality shift and it’s part leaving out ignorance and being informed on what is big. So, with us, it all started with that mentality shift. It was actually Adam Lilling, who was one of the partners at Launchpad, he sat in there with me and he was the one that had this conversation. I love that. I don’t know if you know Adam, but he’s the nicest person in the world. I love Adam. Everybody loves Adam.

So, sorry for the background noise. So, Adam is the one that kind of took my mentality and shifted it to think way bigger. As a result of that, I went about doing everything in a way bigger way. I thought about, “How do we change our marketing to get us to hundreds of thousands, millions of dollars by the next few months?” Just basically everything changed from product, from marketing and customer service, from our sales people, “How do we scale this out? How do we do things that will potentially get us to this really big-sized company?”

Andrew: I see. So, what’s marketing at the level you were before and what was the new idea for marketing that would help you get even bigger?

Raad: Yeah.

Andrew: What were those two?

Raad: This is exactly a perfect example. I’ll go back to the dog toy business and I’ll go back to Lettuce. Dog toy business–we were terrified to spend any money on marketing. We were like if we spend $1,000, we’ve just lost $1,000 and that might not get us any customers. We were terrified. We were so emotional about every little decision. When I got to Lettuce, we created a financial model. In that financial model, we created it in such a way where we said, “All right, if we spend $1,000,” we were actually spending a lot more money. “Let’s say if we spend $100,000 on marketing, how many customers can that potentially get us?”

So, we figured it out. We created a lot of different marketing strategies and we tested all of them. We pretty much picked the top three, top five for us. We kind of came out and tested it enough where we knew for every dollar we spend, we’ll get x-more revenue, x-dollars more revenue over this period or this lifetime–basically for every customer acquisition cost we had, we understood what the lifetime value was. As long as that was roughly 3x or more, so basically if I spent $100 on Google AdWords, I could potentially get a customer that will pay us $300 over a certain period of time.

Andrew: I see.

Raad: If that worked, that’s just a scalable business. You put more money in to bring more money out. Does that make sense?

Andrew: Absolutely. It actually reminds me a lot of Gabriel Weinberg’s idea from the book “Traction,” where he says lay out all the possibilities and then just run a few small tests for a few of them. But at your size, who’s doing these tests. How do you get someone who can actually try all these ideas with full on creativity and full on control so you know what actually works and not what happened to work?

Raad: I’ll kind of jump into the new business now, Wedo, and I’ll explain more about what Wedo is in a little bit, but right now, for example, we’re a seven-person team, very small. Before we were a four-person team–me, myself, my cofounder and our two founding developers. I am the one that would start testing these marketing channels.

Andrew: You sit and you buy Facebook ads. You sit and do whatever else.

Raad: Not even doing Facebook ads. We’re not even at that point yet because it’s a fairly new business. I’m actually going to probably do that tomorrow or early next week.

Andrew: Okay.

Raad: But yeah, we were testing various things. I started writing for Medium. I said, “I have this knowledge set a lot of people ask me about.”

Andrew: I told you before we started great articles on Medium. I feel like you did your research and you also have the experience to backup what you’re saying. So it’s you plus other people, it’s worked for everyone, go try it.

Raad: Thanks so much, man. Yeah. It’s basically just based off my experience and from my friends’ experience who have always started companies. I just write about those.

Andrew: So the Medium blog post that you did was your experiment in content marketing?

Raad: Yeah.

Andrew: I see. So why do you have to do that? I understand why you have to do content marketing, but when we talk about Facebook, why does the CEO have to go and try it?

Raad: So you start trying it out in the beginning days. Obviously this doesn’t scale out as you become 100+ percent company, even 25. You start off very small, doing it yourself. You do 20, 30, 40, 50 tests, small tests. And then we get to the point where you say, “All right, we have a product that people like. We’ve tested a product. It’s reached product market fit. We’ve done a number of marketing tests. We figure out that 10 of them work really well for us. Of those 10, 5 are very scalable.”

And you go to an investor and you talk to anyone who is willing to give you money. In our case it was probably venture capitalists. We say, “Look, we built a product people love. We know how to grow it. We’ve already proven it. Now we need to get some funds to add fuel to the fire and grow this piece.” Once that happens, then I hire people to take over those things. And then over time, instead of the idea of ticking over things, we hire people that actually come up with the ideas. They’ll come up with things I don’t even know. I try not to do the things that I’m bad at.

Andrew: So then why not start at least with this company from the beginning saying, “I’ll bring in someone else to manage this process of experimentation.” I feel like there’s a reason you want to do it yourself and get your hands dirty.

Raad: I would say it’s because I just want to kind of be more educated in it. If I’m not and I give some sort of advice, it can be bad. I have to be a leader and I have to fine tune people to be a part of this one family we have, this one entity and have a clear–I’ll say it in a way that’s like this. We have customer benefits. Customer benefits are we want to save people time. We want to help people get more done.

Andrew: We’re talking about Wedo, the new to-do list for teams.

Raad: Yes. We want to help them remember. Those are our three customer benefits.

Andrew: Okay.

Raad: Now, that’s easy to say. That might be our culture of what we’re trying to build. It’s hard to be vocal about that unless you’ve tested and tried and figure out that those actually work and what those people want.

Andrew: Okay.

Raad: So imagine if I started a company and I said, “We’re A, B and C,” and they’re totally off. And then you hire a marketer who comes in and says, “I don’t think that’s right. No, that’s what we’re doing.” And then they do it and they find complete failure. They failed miserably because of it. As a result of that, the look at you like you have no idea what you’re doing.

Andrew: I see.

Raad: You just have to test these things yourself to figure out if it’s going to work or not, you have some sort of credibility, some sort of authority and can kind of guide them into what you’ve already found and why it works. They also just respect you because they now know that you’ve done what they’re about to do and how hard it really is. It’s easy to go and tell a salesperson or a marketing person or a developer or anything, “Hey, go get that done ASAP. It shouldn’t be that difficult. In reality it’s really hard. If you don’t really get that, you just kind of sound like an asshole.

Andrew: I see. And then you set them up for success by showing them the path that already worked and letting them continue.

Raad: Exactly. And then helping them find new paths to success as well.

Andrew: Let me talk about my second sponsor, Acuity Scheduling, by asking you–I notice in your app, I can’t actually use it because I need an invite code, which I will ask you for after this interview, but do you talk to people who sign up to this app who have the invite code, do you talk to your users in any way?

Raad: Oh my god.

Andrew: Your eyes opened up. What’s your process for getting them on the phone? I’m about to do the sponsorship message for Acuity Scheduling here.

Raad: So we went them emails. A lot of them send feedback on the app within the app and we’ll respond to that immediately. And then every couple weeks or so I’ll spend a day, a full day just calling them.

Andrew: You just call them up?

Raad: Call them up.

Andrew: So let me suggest something that could work for you. Here’s how Acuity Scheduling, my sponsor, could actually fit in. The problem with calling them up is you wasted a lot of time hoping you’re going to get somebody on the phone, right? When you do, you may not be fully prepared because you can’t prepare for every single possible person who can answer the phone.

With Acuity Scheduling, you connect to them, you add your calendar to them so that Acuity knows what your availability is. So, for example in the middle of your call day, you scheduled a lunch Acuity will know, “That’s not a time I can book for him.”

Then you go into Acuity Scheduling and you say, “Here’s a time that I want to take phone calls, Thursday between 9:00 a.m. and noon and then from 2:00 to 5:00 I’ll take phone calls. Then you say how long you want the calls to be, maybe half-hour each and then you could then ask for certain information from your customers, like what their phone number is, what their email address is, why they signed up, etc.

You put that all in, they give you a link. Now when you want to talk to someone, you can email them and say, “Can we talk? Here’s a link with my calendar,” and they can go and book themselves. They pick a time that works for them. They commit to it. They enter their name, they enter their phone number. Automatically that goes to your calendar so you remember to fall them up with their name and their phone number so you know where to call and how to connect with them and it goes on their calendar that they should be prepared for this call.

They also will get an email and they can decide how often to email them. I choose to email people a day before and an hour before to make sure they’re fully prepared. That’s how you get so many people on the phone that you just sit there and you can work the calls a day. It’s incredible. Acuity Scheduling is built for that.

All right. Be open–is that something that’s useful for you?

Raad: Yeah. That would be really cool, actually. I’ve actually looked for something like this and I’ve had troubled finding it, but now that I know what that is, I’ll check it out right after.

Andrew: It’s a fantastic tool. They have tons of features that I haven’t even gotten into. They’ll add the person to your CRM if you’re like. You can connect using Zapier to tons of other apps. Anyone out there who wants to try it out can go to Acuity Scheduling.com/Mixergy. When you attach that /Mixergy at the end. You get 45 days free. He’s a longtime Mixergy fan. He built this business while listening to Mixergy. I’ve got to get him on here to do any interview. Not it’s just rocking. It’s AcuityScheduling.com/Mixergy to get the 45 days free.

Raad: I like it.

Andrew: Where were we with the story? I see how you kind of cranked it up. What I’m curious is what’s the number one thing that worked for you for getting customers with Lettuce?

Raad: With Lettuce. That was honestly app store integrations or just integrations being featured on the integrated partners’ app store. So we had integrated into solutions like ecommerce solutions like Shopify. We were the number one app on QuickBooks’ app store. So that drove quite a bit of traffic and then also some manual stuff, like we had sales people go to a ton of tradeshows. They would just kind of walk around to each of these exhibiting boots, kind of like we did with–

Andrew: Really? Walk up to people who paid for their booths and say, “Here’s a better way for you to do this?”

Raad: Yeah.

Andrew: Interesting. Did that scale? Did that bring you enough customers to be really significant to your bottom line?

Raad: Yeah.

Andrew: Wow. We were charging customers anywhere from $80 to $2,000 a month. So we had a high lifeftime value, and as a result, we could spend a little bit more money on getting those customers.

Andrew: Was there any kind of app store SEO that you need to do to really rise up in those app stores? Shopify has a ton of integrations.

Raad: Not really, not at the time. It was in its infancy for Shopify and even QuickBooks for Intuit. So, no. Also, Google AdWords worked pretty well for us for some specific keywords. It was pretty competitive because you’ve got to remember, we were competing against ERP order management systems that were making hundreds of thousands of dollars.

Andrew: And they could afford to really buy up those keywords.

Raad: And they could spend a lot of money on ads.

Andrew: I forgot where I read how you got introduced to Intuit and how you ended up buying. But I remember you saying that you didn’t talk to them with the idea that you would sell. It just kind of happened. Is that right?

Raad: Yeah.

Andrew: So they had flown out to meet us for a biz dev deal. We reached out to them and said, “We’re performing really well in the app store. People seem to really like our product. We’d love to do a little more of a formal partnership and see if we can get it promoted a little more. We have this technology that helps with your QuickBooks Online product.

So they flew out. That turned into a four-four conversation. I kind of knew what was going on once we were passed an hour, but I didn’t want them to assume too much. But basically yeah. That’s what it was. I mentioned, “We’re going to be in the Bay next week. I’d love to look at Intuit’s office.” They asked, “Why are you coming out?” I said, “We’re about to go fundraise. That kind of created a little bit of urgency.

So, it was roughly like a week and a half or two weeks after that that they basically called us up and said, “We’d like to buy your company.”

Andrew: And you knew that telling them you were fundraising was going to create urgency.

Raad: Yeah, 100%.

Andrew: Sorry?

Raad: I acted stupid, but I knew what I was doing.

Andrew: You kind of wanted them to buy you out at that point. Why were you ready to sell to them?

Raad: We were not ready. I was just curious. I was a little worried about the economy, like what’s happening now. It happened like a year after it. I thought this was all going to happen last year.

Andrew: You mean 2013 but it happened 2014.

Raad: Well, we sold in 2014, so I start it was going to start happening in 2015.

Andrew: You’re saying the tougher economy 2015.

Raad: Still it happens. It started to happen. It’s getting really hard for a lot of companies to fundraise unless you’re a good company. If you’re always a good company, you’ll be fine. So, I got a little worried about that. Also, I wasn’t ready. I was just curious to see what they would buy. It also helped me fundraise too. If Intuit was interested in buying us, it would help us quite a bit. But then I found out they might buy a potential competitor and that kind of got me a little nervous.

Andrew: I see.

Raad: So, I basically realized who should take this or negotiate it a little bit and then once we negotiated it to the price that we sold, I said we should take this. This was like a life-changing thing. I was 27 at the time and I always knew I could always go and start another company.

Andrew: Which you did.

Raad: Which I’ve done. Yeah. Exactly.

Andrew: Who helped you negotiate? Did you have to do it yourself or did any of the investors help you think it through?

Raad: Yeah. We had a couple investors who had a lot of experience in M&A. One was an actual investment banker that’s focused on M&A. He kind of told us of all the things and traps to kind of watch out for. Then we had another friend, actually it was Jason Spievak, who of all the people, he helped quite a bit in terms of thinking of how to negotiate, how to counter-argue some specific types of terms that are much more pro the company buying.

Andrew: Like what?

Raad: Just like some legal things, like indemnification, boring basically but things that could bit you in the butt like 10 to 20 years later and you want to make sure things like that balance. So, that was pretty good. And then also kind of how to value the company. At the end of the day, it’s what someone is willing to pay for it and what it means to them.

So those ideas kind of gave me the framework or the mentality to think a little bit differently about how I approach things. That’s really the greatest advice that I could have gotten, these frameworks that allow me to take my own style and input it within those frameworks.

Andrew: By the way, Jason was one of the first Mixergy interviewees. I interviewed him back in 2010. Anyone who is listening to us should check him out. His name is harder to sell, so just search for the word RingRevenue, one word. I know he’s changed his company name since them, but super-smart, incredible business. I think I might have been introduced to him through mark Suster or maybe he say Marl Suster and so he did the interview. I forget what exactly happened, but there was a connection there.

So, before the interview started, I asked you a question that I’ll ask you right now. Why does the world need another to-do app? Why does the world need Wedo when there are tons of to-do apps already in the App store. You’re smiling as I say this, you’ve heard it before. Why?

Raad: There are a lot of to-do list apps, a lot. I’ll start it off with this. There are a lot of to-do list apps. There are a lot of bad to-do list apps. There are probably about five top to-do list apps right now, Wonderlist being one of them. We admired them a lot. They’ve built an incredible product. It’s beautifully designed and they sold over to Microsoft for like $200 million, something crazy.

Andrew: Is that right? I didn’t notice that.

Raad: I talk to Christian, the founder, really nice person and doing a great job in building that up. There are a few other larger competitors. But in the big picture, none of them have become really, really big. Some of them have around 18 million users or so, but nothing tremendously big, nothing like Microsoft Word or Google Docs, Google calendar, etc.

Andrew: I was talking to the founder of Todoist about it. It feels like there’s room for lots of to-do apps in the marketplace but not one to ever dominate and that seems to have been the way things have gone for years.

Raad: I disagree with that.

Andrew: Do you think there will be one that dominates?

Raad: Yes, 100%.

Andrew: Why? It feels to me like one of the reasons why they don’t ever dominate is people blame their to-do apps for the problem of not getting things done, so they then stop using them and then they think, “Well, I need a to-do app to get things done. The other one didn’t help solve my problems, so I’m going to go get another one.”

And they just keep looking for tone that will magically get them to actually do stuff. And then all to-do apps that end up making money end up really transitioning to project management in some way because as teams, you really have to get stuff done and be willing to pay for it. What do you think of that analysis?

Raad: That’s all dead on. I’ll go down to a foundational reason why a lot of these to-do list apps aren’t gaining a serious amount of action. 18 million is a lot of users, but once again, it’s a mentality shift, I want to get to 100 million users? Why do I get to that point?

Andrew: Right. You want to be Evernote sized, not one of dinky competitors whose name I can’t even think of here to give an example. You want to be the dominant player.

Raad: I want to get bigger. We want to be number one. That’s how you think about it. It’s a foundational issue and that is we sometimes forget that the best products in the world, especially with technology are the ones that mimic what we do in the real world but with technology and automate the portions that give us anxiety or discomfort.

Andrew: Okay.

Raad: So, right now, you have all these to-do list apps and there are a couple of things that happen. The lists get huge. The lists get very, very big. They have a tough time doing one of the key things they’re supposed to do, which is help people remember, kind of act like a second brain.

So, we believe in building an incredible reminder system. We’re in the process of doing that. It’s already pretty cool. It reminds me at various times that kind of surprise people. It helps them get more things done. So, that’s the thing. If you’re having for picking up groceries in the middle o the day at the office, you’re just going to ignore that. But if you’re on your way home and you’re about to go to the grocery store and you pass a grocery store and that reminder comes on, it’s a lot more relevant. So, you have a higher chance of getting things done.

Andrew: That’s a good point. When I look at the home screen on my iPhone and that reminder app has a red number on it, I tend to ignore it because I think, this could be something for the weekend. I don’t want to be distracted. It could be looking for schools for my son. Well, I can’t do that now. I’m working, so I ignore it.

Raad: Yeah. It’s kind of like the whole inbox problem. There’s a whole reason why we have–we all wise for inbox zero, but it really never happens because we kind of ignore some things.

Andrew: Okay. What else?

Raad: The other thing that happens in the real world–this is one of the key things why we think it’s going to be a bit differentiator is communication. Right now all these to-do list apps, not all of them, but some of them have the ability to comment on a task, but that’s once you created a task.

A lot of times, I’ll be communicating with my girlfriend. I’ll be texting here, “Hey, love, can you go pick up a couple bottles of wine for the barbecue tonight?” Or she’ll ask me to pick up our dogs from the groomers or other various things. As a result of that communication, some sort of a to-do gets generated.

So, believe in enabling people to communicate and we bring that front and center with tasks in our application. It’s nothing crazy. We’re not making this super-robust a million features because that’s the worst thing you can do. We just wanted to build a product that mimics how you do things in the real world and automates the parts that you’re kind of bad at or give you anxiety. So, that’s a fundamental thing that we think about.

And then there are a few other things we’re doing, one really big thing, I can’t tell what that is, I’m sorry. I’m usually really open, but I think this one thing will dramatically change the way we look at how we do our to-do list.

Andrew: When are you going to do that? When are you going to release that thing?

Raad: We don’t know yet. We don’t know.

Andrew: We’re talking weeks, days, months? You don’t even know.

Raad: No comment.

Andrew: You’ve got to develop it.

Raad: It’s being developed. I’ll tell you that.

Andrew: Okay. Would you tell me offline or is it that kind of thing that you couldn’t even say that. How do I get access to this thing? You know what I like about it, I’m looking at the screen, I like it shows tribes, tasks and chat. I like the chat integrated in. My problem with Slack is that it’s just chat. I don’t want aimless chat. I need to-dos. My problem with Asana, which we use is that the chat is buried. I can’t just say, “Hey, where are we with this thing. I can’t ask questions and ping people.”

Raad: Yeah.

Andrew: I’m curious to try it. How do I get my … I shouldn’t be so selfish and ask about myself, even though I’m really into checking out new things. I should ask is there a way for my audience to get invite codes or we all going to have to fill out the name and email address on the webpage?

Raad: Yeah. I’ll create a code for you guys. How about that? Let’s just call it Mixergy.

Andrew: Okay.

Raad: All lower case. It’s not going to work right now. I’ll create it so by the time this gets posted, up to 1,000 people will get instant access.

Andrew: All right. That’s exciting. I’m looking forward to trying it. And I’m looking forward to seeing when this super-secret new thing comes out.

Raad: Honestly, this is the product that I’ve always wanted for myself and pretty much everyone I’ve talked to, friends included, but everybody, they’ve just been blown away like, “Yes, that is the thing that we want.”

Andrew: Are you self-funding this thing?

Raad: No. I definitely put some money in it. You kind of have to. Once you make a little bit, you’ve got to show you have got some skin in the game. But we raised a small round to start building.

Andrew: Friends and family round?

Raad: No, it was all pretty much existing investors from my last company.

Andrew: I like the domain too, Wedo, it’s such a good one, four letters, you can’t misspell it. It’s not even Wedo.io. It’s Wedo.com. What did that cost? That must have cost a bit?

Raad: It was a little bit of money. It was a good chunk of change.

Andrew: It’s worth it. All right. Congratulations on the success. Thanks for being so open. I didn’t even get to the … I’ve got to run, but can you just tell the Krispy Kreme story from when you were growing up? I think we had a great place to end it, but this is such a great story. Your 13 years old…

Raad: How did you hear about that? So good. That just brings joy to my heart.

Andrew: To me too. I love it. I think people can relate to this.

Raad: Yeah. It makes sense. So, I was 13 years old. I did weird things like this all the time, but this was the most memorable one. It was 4th of July and Krispy Kreme donuts were the craze. It was like the cronut, even bigger than cronuts. People were lining up for these things and they’re delicious. I love donuts. I don’t eat them anymore because I don’t like weighing 40 pounds overweight, but they’re delicious.

So, I asked my dad. The closest Krispy Kreme to us–we lived in Santa Barbara–the closest one was Oxnard, which was like 45-50 minutes away. I said, “I need you to drive me somewhere.” I didn’t tell him anything else. He’s like, “What?” And I said, “Just trust me, I need you to drive me somewhere.”

So, we started driving south. Finally he’s like, “Where are we going?” I’m like, “Oxnard.” I tell him where we’re going to do. We go to the donut shop, the Krispy Kreme donut shop. He’s like, “What are we doing here?” I said, “Just come with me.” It was just kind of fun because I was messing with him a little bit too.

I go and talk to the lady who is at the counter and I said, “How much is it for a box of a dozen donuts.” I think she said it was like $6 a dozen. I said, “If I buy 30 boxes, how much can I get each box for?” And she’s like, “$4.” I said, “What if we make it $3 a box?” And she’s like, “Okay, sounds good.”

Andrew: Why, she negotiated? They negotiate in those little stores.

Raad: Totally. You can always negotiate if you buy a lot of stuff. You can always negotiate. I look over at my dad and I said “Dad, can I have $90?” He’s like, “Why are you doing this?” And I said, “Just trust me.” He gives me $100. I give the lady the $100. She gives me $10 and gave it back to him. We started driving back to Santa Barbara and we got 30 boxes and it barely fit inside the car. We go to the park/beach where everybody goes and sits down for Fourth of July, sets up their whole picnic-type thing that they’re doing.

Andrew: I know that place. I’m imagining the place near State Street.

Raad: Yeah. From the wharf to Shoreline Park. I said, “Dad, wait here for hopefully no more than two hours.” So, I took five boxes at a time and I would go up to people and say, “I’m selling a dozen Krispy Kreme donuts. Would you like to buy some?” They said, “Yeah, how much?” “$30.” And everybody was like, “Yes, we love Krispy Kreme donuts. We’re happy to pay for that.”

It took me like an hour and 20 to an hour and 30 minutes to sell through all of them. So, 30 boxes times $30, we made $900. I paid back my dad, $90 plus the additional $10 because it was the easiest thing to do. I didn’t have any change. And he just looks at me like, “What the fuck?”

Andrew: That’s so cool.

Raad: One of my most memorable entrepreneurial moments. The next year, I hired my friend to come do it with me who had a car. He was a little bit older. We did that and we sold like 100 boxes.

Andrew: And it still worked.

Raad: Yeah. It was like the best.

Andrew: I remember when Krispy Kreme was that big. But man, as a teenager, especially a young teenager to have the guts to walk up to strangers and ask them to buy something for $30, that takes guts. That takes determination. I love that.

Raad: It was so fun. I loved it. Thank you for bringing that up.

Andrew: I’m glad you’re willing to talk about that and so much with Lettuce. Congratulations on all your success. Everyone out there who wants to go check out the new app should go to Wedo.com. It’s actually in the app store also, easy to find. Let’s try Mixergy as the code to get in.

Raad: Yeah, all lowercase.

Andrew: Mixergy all lowercase. Good. My two sponsors are the company that’s going to help you hire your next developer. It’s called Toptal. So many Mixergy people have been using them that they keep reupping. Please check them out, Toptal.com/Mixergy. And the company that will actually help you get your people on the phone, your potential customers, your existing customers, your mentors, whoever you need on the phone, this will make it easy. Go to AcuityScheduling.com/Mixergy. I’m grateful to them.

Thanks, man. Thanks for doing this.

Raad: Thank you. I appreciate it, man.

Andrew: I hope this will not be the last time you’re on here. This was fun.

Raad: This was really fun. Thank you.

Andrew: Thank you all for listening. Bye, everyone.

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