Jake Aaron Villarreal: Welcome to our podcast, From the Ground Up, where we interview startup founders exploring their journeys, their success, challenges, and lessons learned. We hope you be inspired in discovering what it takes to build a thriving startup. I'm your host, Jake Aaron Villarreal, and here with us today we have Richard White, the founder and CEO of Fathom Video. Richard, welcome to the show.
Richard White: Hi Jake. Thanks for having me.
Jake Aaron Villarreal: Great. Well, thanks for being here. Let me give you a little bit more background about Richard. Um he is not only the founder of the company, he went through Y Combinator in 2012. Uh it's a free app that records, transcribes, and highlights your meetings so you can focus on conversation instead of taking notes. Fathom is a number one rated AI meeting assistant on the re-, review site G2, with almost 2,000 reviews and a perfect 5.0 score. It's also the number one installed AI meeting assistant on both the Zoom and HubSpot marketplaces. Prior to Fathom, Richard founded UserVoice, one of the leading platforms that technology companies from startups to Fortune 500 use for managing customer feedback and making strategic product decisions. UserVoice was notable for being the company that originally invented the feedback tabs shown on the side of millions of websites around the world today. I love your background. Good pedigree, and we'll dive into your company and, and, and kind of your story here. But before we do that, where are you joining us from today, Richard?
Richard White: I'm joining you from sunny San Francisco.
Jake Aaron Villarreal: Great. I was there yesterday and it was sunny, and it's kind of good climate weather for uh coming, coming into the winter season here. Are you, are you originally from there?
Richard White: Uh, I'm like 99% of the residents here, I'm pretty sure I'm not. I'm al- not from here. I'm from North Carolina originally. Uh so, but I've been out here about 15 years, so I feel, I feel like a half local at this point. Um, feels like yeah.
Jake Aaron Villarreal: Very cool. Yeah, I'm from Silicon Valley and lived there a couple years as well. It's a great place to be and proximity is also important, can connect the founders, be close to the startup innovation world and ecosystem. Um we're going to talk about your company and the problem you solve and get into all those details, but you know, I was doing a little research and I loved learning about you and your single cold email to Justin Kan and Emmett Shear of Justin.tv that turned into Twitch, I believe, uh was acquired by Amazon for $970 million. And at one point, if I understand this correctly, you worked for them on a calendaring app, is that correct?
Richard White: Yeah, that's right.
Jake Aaron Villarreal: Great. What was it that made you want to reach out to them in that cold email and what did you tell them?
Richard White: Um yeah, this is a long time ago. This was actually uh 2005. And I was, I think, it's like the era where Gmail first came out. I'm going to date myself quite a bit here. And being an engineer who wanted to become a designer, I was kind of like, "Oh like, Gmail's cool. I want to make Gmail for the calendar." And then I remember a colleague of, of mine sent me a TechCrunch article, I was like, "Oh, you're too late, someone's already built Gmail for the calendar, it's called Kiko. These two guys have built it, they're in this thing called Y Combinator," (we'd never heard of what that was before). And uh and I was kind of bummed for a while. I was like, "I don't know, someone beat me to the punch." And then I played around with their product and I [was] like, "Oh, it's like a really technically impressive product but it was like really badly designed. It was like horrendous design." And so I emailed them and I said, "Your design is horrendous." I actually think I was a little, a little more pointed actually than that, uh but then like, "but I'll help you fix it. Like I want to, you know, I want to work on design you know stuff and so I'll help you fix it." Uh and to their credit, they actually you know replied to that email, were like... I think they were a little skeptical, but they're like, "Sure like, show us what you've got."
And um I remember reading from them later, I sent them a whole bunch of like hand-drawn sketches of like how this thing should work and look and apparently they didn't understand any of those. But at some point I sent them like a full HTML mockup of like what their app should look like and that got their attention and they're like, "Oh, this is really good." And I was like... and so I started working with them uh working out of like the Y Combinator office back when it was in Cambridge. Uh you know, during the dead of winter in Boston. Uh was a fun experience. So yeah it was, it was us, it was actually Kiko was actually a separate company from Twitch. So it was the startup right before they did Twitch. Um and it was like us and the guys from Reddit uh and a few other startups working out of the like YC office in Cambridge, freezing our butts off every day. Uh but it was a really fun and obviously formative experi- experience. I'm still good friends with both Justin and Emmett from, from Kiko turned Twitch. Um and you know I think most of my personal and business network is that early YC crew sort of thing. So I feel, I feel very fortunate honestly, like it was a pretty random Sliding Doors moment where I just like emailed these folks that you know, now you'd be like, "Oh my gosh, these people are well known and obviously everyone knows what Y Combinator is." But back then it was like, "I don't know, there's two guys working on an app that I thought was pretty ugly and I thought I could make better," and there you go.
Jake Aaron Villarreal: Yeah, really cool. You never know what you're going to get when you send out a cold email or a cold LinkedIn. So many companies we talk to, we ask them you know, "how did you get your first customer?" And many of them are just cold outreach to you know other founders on LinkedIn or on, on email or you know X or whatever platform that they're on. So uh I think there's something said to be said about having the courage just to send out that outreach. You never know what you're going to get back, but it could change your life, you never know. Um so really cool to hear that. Uh let's talk a little bit about Y Combinator. You went through Y Combinator in 2021. Did you also go through Y Combinator prior to that or was that your first go, go?
Richard White: That was actually my first formal time going through it as a, as a founder. So um, like I said, I worked out of that office in 2005, 2006 and, and knew a lot of the folks in various batches. My previous company UserVoice did not go through Y Combinator because I at that point when I started that company, I just moved to California and they at that point were still doing the like "summers in Boston, winters in the Bay" and they wanted me to move back to Boston. I, I'd have to move back to Boston if I joined. I just did not want to go back to Boston. You spend one winter in Boston, you're like, "I don't want to go back to that." So no, I, I you know, after being what I call YC-adjacent for like 14 years, I decided [to] actually go through the program formally and I went through it in the dead of the pandemic right, so it was the first fully remote batch, like intentionally fully remote. I think the batch before us was the one that got kind of like halfway interrupted and they went from like in person to "oh everyone doing remotely." But we were the first fully remote batch. So a very different YC experience than I think I would have guessed, but it was, it was really awesome nonetheless.
Jake Aaron Villarreal: Yeah that's cool. You've had startup experience. Um before we talk about your current company, Fathom Video, what, give us [a] little foundation of your startup experience. How many startups had, did you have prior to that? And what, what were some of the things that you learned, kind of a loaded question, but what were some of the things you learned that you've applied to your current company that's been you know beneficial?
Richard White: Yeah I mean I think uh you know, UserVoice is the one prior. This is like the, the only one I've raised significant funding for, where is about $10 million for that business. Um you know, if you count Kiko there's probably two or three other startups where I you know raised less than 50k sort of thing. And it was you know, almost just that line between passion project and startup right. Like, did some open source projects back in the day uh that were big in the Ruby ecosystem. Did a few kind of almost more like lifestyle start-, startup apps. Uh time tracking app, like video encoding product. All sorts of things. Um but it gets kind of more fun every iteration. I like you know, I, UserVoice I ran for over 10 years, and you know, raised money in 2008 and I you know left that company in 2020, so actually it's about a 12 year run.
Uh and the Fathom experience has been super fun. I was, described it to people as like playing an old video game for the first time in a while and like being able to like speedrun it because you know exactly what to do sort of thing. I, I often think of startups as like Minecraft. I don't know how much you or your listeners play games, but I think of startups like Minecraft. And like when you first do a startup, you first drop into Minecraft, it's like "what do I do?" It's just like this open-ended world, there's no instructions. And then you very quickly learn you got to go punch a tree and gives you some wood, if you've played Minecraft before right. Like it's a very different experience you know, within the first hour you've got like a castle built and like it just... things are clicking right. And I think that's the biggest challenge with startups. Like you don't know what you don't know. And there's a lot of things that are actually multiple choice questions that'll initially feel like an open-ended essay question. Right like "oh what, what marketing channel should we use?" "Oh I don't know, like I don't even know what the marketing channels are!" Next time, you do your second or third one, you're like, "okay, there's like six to choose from, four of these don't apply for very obvious reasons, so really picking between A and B."
Um and that's been the really fun part. The other really fun part of doing you know your N plus one startup is you get to go cherry pick, especially if you be nice to them, the best people you've work- worked with before to go work on this one right. Uh and so most of Fathom's team uh, at least initial team, were all folks that [I] worked with at UserVoice and were some of my favorite folks to work with. Um and so really fun just to have... it's really hard, like your first startup right, like getting your first couple engineers is like the most painful thing ever. So to be able to start a company like we did with Fathom, with "I've got like four of my top engineers from, from my previous company," that's just yeah, starting on second base really.
Jake Aaron Villarreal: Yeah, that's cool. Yeah, you get the A Team out of the gate and you kind of know what you got and you hopefully you execute and you're off to the, off to the races. Um let's, let's get into Fathom. Uh so you know, there's obviously a problem you identified. What inspired you to create it and what's it solving so the listeners know what you do?
Richard White: Yeah, um, we... what's fun about this product uh I think is, you build something that like almost everyone can use right. Almost all of us are on, on video meetings, whether it's Zoom, Google Meet, or Microsoft Teams. And basically what Fathom does is, you know I always hate taking notes. I'm one of those people, if I talk to you, like I'm kind of single threaded. I tell my girlfriend this all time: I'm single threaded, right. Like only do one thing at a time. I can switch rapidly between things, I only do one thing at a time. So I'm either typing out a note or I'm talking to you, but I can't do both. Um and that's what basically Fathom solves is, it basically records your meeting in real time, transcribes it, uses AI to summarize it automatically. Even do, do all the like post-meeting work for you. You can grab a click clip of like, "Oh here's something Jake said that was interesting," grab a clip of the meeting, send it to Slack, fill in your CRM for you, etc. etc.
Um and you know, that's, was kind of the inspiration we had three and a half years ago, almost four years ago when kind of had the first genesis for the, for the project. I was actually doing a bunch of Zoom calls uh while I was still at UserVoice doing some user research. Like "we're, we're thinking about building a new product." And I you know, I think I was doing 10 to 15 calls a day, uh like 20 minutes at a time talking to someone, showing them the product, getting their feedback on it. And you know, it's like they always say right, if you run into a problem like once a day or once a week it's one thing. But if you're running into it 10, 15 times a day it becomes very acute to you like, "Oh this, this is really painful, there's got to be a better solution to this." Um and that's basically what it's all... it's like, I think I'm actually a pretty good note taker. I take notes, I spend 10 minutes after the meeting cleaning up the notes, I'd digest them down to some analysis I'd present to my team. And three weeks later I wouldn't remember any of the details from those meetings that were important. They'd all kind of blur together in my head. Uh and I'd share with my team, "here's some bullet points of what I learned," and they'd all kind of shrug and be like, "cool, whatever," right?
And so uh we early on prototyped it: well, what if instead of sharing like these like synthesized you know bullet points, that you share like, "here's a highlight reel of here's what four people had to say, here's like the big aha moments from those four meetings." Night and day difference, right. Human- human... we respond to that kind of like other human emotion as opposed to just you know, the CEO telling you "Oh yeah, the calls went really great, people are excited about this." So that was the original inspiration for Fathom's... like, we were working on a totally different product that I was like, "wait a minute, this note taking thing is actually really real scourge, like why do we do this? This is ridiculous."
And then if you think further about it, it's like, where do these notes go? They go into our CRM a lot of times. If we're doing a lot of sales calls or customer success calls, it's a crazy idea right. You have this hours of meetings with customers, prospects, and then you like down sample this into like a page of notes. You lose like 99% of the data in that, that compression process if you will, right? And then we try to extrapolate everything we know about our customers and our business from that 1% of, of notes, right? Which, I used to run our sales team for a minute (I'm you know engineer by trade but I ran our sales team for a year), you know the most painful thing about running a sales team is trying to get them to write good notes. Some people write me a transcript, some people don't write me anything. At the end of the day I could never figure out like what are customers actually saying, why are they not buying. Can I just hear them saying why they're not buying or why they are buying? Um and so that's the big idea of Fathom is like, it's kind of insane in this modern era that you wouldn't just record your call, wouldn't just have it automatically transcribed, wouldn't have AI do it for you and do all that heavy lifting. And you can just have a conversation with someone.
Jake Aaron Villarreal: Yeah, that's great. You know it's, and definitely in today's world where there's a lot of remote and hybrid um workers where you know you, a lot can be lost in translation. What uh... and you, and you actually started building, built this way before OpenAI became real prevalent in the news and in our current lives. Um the AI component of that... I mean talk to us about the buildup of your, of the infrastructure of your platform. Because you know for a lot of companies you can just subscribe to backend systems and now cobble stuff together and you know you're really a marketing company just you know having your functionality go out to market, but maybe you didn't build that and you lose some things in that process and you get some benefits too. But what um, how much of, of what you've created is from really from the ground up?
Richard White: Yeah, it's interesting, we, we had some pretty strong hypotheses about this early on. Um I think it's also the other difference of like doing your second, third, fourth startup. It's like you don't just go run off and build a product. You're like, "I have a hypothesis about like where the world is going, what, what you should build and what you should not build" right, in this new world. Um I remember putting the word "AI" into our app name in like early 2021 and all my investors were like telling me "Don't do that. AI is like terrible brand, like people don't like AI products." Right, because all the gen one AI products from 2015 to 2018 were all kind of bad, right? They weren't that good. And I remember being like "No, no guys don't worry, like it's, it's gonna get there soon," right? And they thought I was kind of a crazy person.
But we had this hypothesis around Fathom which I think is kind of interesting, where our whole hypothesis was that the real enabling technology for this is actually transcription. And transcription cost when we started the company was pretty expensive, and was like $2 an hour to transcribe um with machine right, with machine transcription. It was pretty good, it reached this point where it's like I gotten to a level of accuracy that I think is good enough. Um but $2 an hour adds up pretty quickly, right? Um and that had come down. I think if you'd gone back five years before, probably would have been two to three x of that right? So because of this, the only people that are building products like this were charging like $100 per person, $150 per person per month. And we had this insight that like "We think the cost this is going to zero, and we think the cost is going to zero very quickly. Um and we think therefore that like we can be the first people to give away a product like this for free." Because we were competing with companies like Gong and Chorus and stuff like this that had built this technology and only really deployed [it] to sales teams. We thought that was a mistake, we think anyone on [a] meeting could use this. It's just that the cost to build the system has been so high the only people it's been built for are the people that will spend the most money for this, which is sales teams.
And so we had ty-, go like "cost of transcription is zero, we're going to bet on that and we're going to give this thing away for free. And [if] we're wrong we're dead." Right? If we get this wrong, it turns out it doesn't... you know if it was still $2 an hour today we'd be out of business, right? But like, we thought it came down precipitously. And we also thought that like people don't want a transcript. Like I don't want to have a meeting with you and then read a transcript. But the transcript will be the enabling technology, that the enabling like artifact you do need to feed into an AI, right. That's where all the fun stuff happens. You want a summary, you want the actions from the meeting, you want to pull out the product feedback, you want to pull out all the objections, you want to pull out all the positive moments and negative moments. All that stuff lives in the transcript. So users don't want a transcript, but they want the things the transcript enables. And that was basically our, our whole thing.
And so we also didn't believe in building AI models internally. Like we knew that there were a bunch of big companies that were working on this, and we just felt like we're not big enough, we're not going to raise enough money to build out our own AI team and compete. And so we, unlike a lot of competitors, we had this theory: we're going to give away the product for free, we're going to focus really highly on reliability and cost, we're going to build out a lot of our own infrastructure, but we're not going to build our own AI models. Uh and I think that all of those choices have turned out to be the right ones to make, thankfully. So [we] look smart.
Jake Aaron Villarreal: Yeah, no, really good, really smart and forethought definitely was in there. And sometimes you have some luck on your side too. And I think every company that we talk to, I mean...
Richard White: Honestly, God the transcription stuff got cheaper way faster than I would have ever guessed. Right like, you know, it's, to be dir-... you could be easy, being directionally accurate is easy, getting the timing right is what's really hard. And that's where I think you get really lucky, right like...
Jake Aaron Villarreal: Yeah, no doubt. You know, um talk about the company today. So you can give it away for free, what's the business model?
Richard White: Yeah, so I think g- free was really important to us. Um we think it also enables kind of natural virality because you're present into your meetings and other people are seeing it. And really easy to refer products that are free, really hard to get virality on paid products. Um and then we always have this theory that once we land at an org it will spread within the org. And at some point we will then sell a different product to the manager. Um you know the man-, the, the user has a different... like we have a user and what the user wants is to have less stressful meetings, they don't want to take notes and have to worry about missing something. But then there's up the chain a manager. And the manager wants to know what's happening on those meetings. And we thought, "okay, when we get to the point where we've got enough adoption of the team, we can go to the manager and say 'hey, your team's loving this, it's making them more productive. We actually have a product for you uh that will help you kind of have insight into what's happening on these meetings.'" Because the managers are all afraid that they don't, they're expect[ed] to be omnipotent, right. You're expect[ed] to know what's happening in your team's meeting, especially if you're a sales manager, customer success manager. Uh and so that's been the model to date, is we basically charge you at the team level once you want to coalesce all of your team's meetings into like one central repository where you can get alerts and insights and stuff like that.
Jake Aaron Villarreal: That's great. Yeah, I mean look, as a leader of a company myself, you always want the data, but you're not always there to, to hear it or you're not in the meetings to listen to what's going on and how you can direct, redirect, you know, provide guidance. So any tool that can help you have that oversight without being a Big Brother I think is great. And more importantly, being able to serve your customer better too. Because what they're sharing on a meeting and you have to go back and support that customer, there's a lot of times that you don't always remember everything they shared and you can go back, or you can strategize before you get on the next call with them. So I think it's, it's really valuable. Um and it's not just for sales like you were talking about, I mean customer support, customer success, and there's probably a lot of other ways too. A lot of internal meetings, you know. Half our lives in working at a company are in meetings. So I think I can understand where there's real value of, of your product.
There's also real competition in your space. So what do you do different or what's the differentiating value that you have in, in what you're providing as an AI assisted note taker uh during meetings that, that other companies don't do or, or maybe you just do it differently or better?
Richard White: Yeah I mean I think you know like I so we always had this theory we were going to use third party AI because we just assumed that would be the best. And so we actually invested in other areas. We f- invested a lot in user experience um and we invested a lot in reliability. Uh and so that's why we've you know built out our own infrastructure for this, uh scaled a lot of our own infrastructure. And spent a lot of time on like, you know, when you join a meeting you're always in a hurry. No one ever like joins a meeting it's like not in a hurry, not stressed out right. And so making it really easy to use is super important. Um a lot of these tools would be like you know they join, the, the bot would join before you did, people didn't like that. Or you couldn't kick it out when you wanted to, you couldn't pause. And so we, we got to learn from I think a lot of the gen one solutions, gen one kind of AI solutions for this, and uh and were able to make something it's a lot easier to use.
Um the other thing is we're still the one, the only one that's like, like completely free. Um you know everyone started every like every one of our competitors tried to charge money, tried to charge individuals for this product. Some of them now are launching free versions, but they're generally like usage limited or something like that. Um and I think that's a big selling point of like, you're kind of asking people... it's kind of an innovation product. You don't know you need it until you start using it. But you also know you're going to commit to it, like it's, if you like it you're going to use it a lot. And so I don't think people like being on the hook for "I'm going to start investing in this thing but I might have to pay a lot of money for it." So that's the benefit of own, own infrastructure is we can afford to give away for free. And even on our team product we can afford to always be not only the highest rated app and easiest to use, but also we can price match anyone, right, because of that infrastructure advantage.
Jake Aaron Villarreal: Yeah, it's cool. So for the audience that can't see a screen or hasn't logged into your system yet, what do they get? Walk us through the, the process. So you, you get on a Zoom call or you get on some video call or you have a meeting, and after that meeting everything... I'm just going to kind of walk through and you can close the gaps where I'm off here...
Richard White: Sure.
Jake Aaron Villarreal: You get a transcript after the call, captures everything that everyone says on the meeting. I'm assuming you can either hit an AI generate summarize button, or there's something that's going to collect everything that's said and then potentially pull out the action items of the meeting and sort of next steps in some format that's easy to read, and then you can share.
Richard White: Yep. Yeah, so I think most people's experience is, you know you get this app, you tell Fathom "hey I want you to join this meeting, I want to record this meeting" (you have a lot of control over whether it joins or not, doesn't just blindly join). Follows you in, follows you out. Soon as the meeting ends, within about 30 seconds you will get an email. And in that email will be an AI summarization of your meeting. Um and so it'll take a 30-minute meeting and turn it into kind of one page of notes. It'll break out each topic, it'll give you bullet points under "you know this topic was discussed, here's the three key bullet points."
Um if you're curious about any of those bullet points... maybe you weren't on the meeting or you're half paying attention... you can click on any of those bullet points, it'll take you to that part of the meeting. So you can rewatch that section.
Jake Aaron Villarreal: You can rewatch. Yes, you rewatch.
Richard White: Any part of the meeting, and that's what you kind of think it's like people don't want a transcrip-, what they want is almost like this like table of content. "Here's what was discussed, here's what we learned." And if you want to at any point, "I don't want just you to give me the text artifact, I want to go back and rewatch. Ah, Rich was talking about you know the revenue goal for 2024. Great, I want to go rewatch that. Let me click and watch it."
Um so yeah, gives you all the action items. And then if you're someone in you know like in a sales or customer facing role and you're using HubSpot or Salesforce or Close CRM, it'll automatically like log that meeting for you, put that summary into the, into the meeting, log your task into your CRM, all that sort of fun stuff. So uh, and yeah if... so let's say a cool moment came out. You're like "oh talking to this customer and they have this cool piece of product feedback." You can jump into Fathom, you can grab a link to just like that 30 second part of the call, drop that into Slack. Your product team can watch that part of the call within Slack. Um yeah, that's basically the, the Fathom experience for the most part.
Jake Aaron Villarreal: Wow, that's cool. I didn't know that there was that app- ability to, to, to go into the actual video and, and kind of rewatch that again. I thought it was just looking and rereading the summary notes. Um so that's really cool.
Richard White: No, we actually think it's really important to watch. Because we think the summary can get you the right point, but at the end of the day you want to see that raw like... you know, I don't want to watch your entire 30-minute meeting, your all hands or whatnot. But if I do care about a topic I want to see the human discuss that topic, it's always that's the most engaging content. Um and so we try to make sure we always give you a path back to that.
Jake Aaron Villarreal: Yeah. What have you learned about how people use Zoom and take notes based on all this data that you've captured and the experience you've seen?
Richard White: I mean the, the one thing we've learned is that like, well very obviously people don't like taking notes right. People are, people... most people when they get on a meeting it's a very stressful situation. Their internal CPU is running at like 90% right, it's like "Right," you know. And I think a lot of the things we had to build were things that just... you know once you get on the meeting you're not going to go mess with an app. You're not going to be like, "Oh hold on, I now I'm on the meeting, let me configure which things everyone gets..." Their workspace ready, they get on the meeting and now they're "in", they're on the stage right.
Jake Aaron Villarreal: Yeah.
Richard White: And so as a designer, a really fun environment to work in because you have no attention span to work with right. Um we actually have some fun features actually in the meeting. Like in the meeting we have this little UI where if you hear something that you actually want to make sure you highlight, like "oh like Jake just gave me some great product feedback," you can actually click a button in the meeting and Fathom will like create a highlight and send it out to Slack while you're still on the meeting. But we had to learn to like... we actually had more of those features early on. We actually dialed them back or made them smaller, made them easier to read. Like, ask less of the user in the meeting. Because we learned that the user just, they're focused on the meeting right. Um so we'll give them subtle cues, like we'll give them like monologue alerts. Like "oh hey, you've been talking straight for two minutes" uh or you know "you've been dominating this conversation, you're 90% of this call." We give like little things during the call, but we've learned that like you can't give the user too many things because they're just, it's already a lot just having a meeting, especially an external facing [one].
Jake Aaron Villarreal: Yeah, that's really cool. God, how many meetings do we get on these days that are video too, or you know, you almost have to relearn how to be an employee within a company depending on what company you're at and, and how to, how to act and, and the burnout that happens. And so yeah I think that's great. Uh I love the fact that you get the email automatically after the meeting without having to do anything. I mean that's half the battle right there is having to copy and paste something and then send it out. And who you going to send it to? If you're on the meeting maybe there's an option just to send out immediately, I'm assuming, which I think is great. That's really...
Richard White: Yep, you, you can click a button and everyone in the meeting could get that email. Um yeah, the speed thing was also a big thing. Like you know most of the people that built traditional systems like this, like if you're familiar with like Gong or even Zoom itself, still take like half an hour to get you a meeting recording um more. And that was an early thing we learned early on. It's like "okay if you're going to try to replace notes, one thing notes do have a virtue of is like they're immediate, right." I get off the call, I've got my notes, I'm used to after a meeting ends I process my notes right. And so if we're going to replace notes we got to get to you instantaneously. And that was a huge infrastructure lift to be able to do that in real time.
Jake Aaron Villarreal: Yeah cool. You know, um when you raised capital in any of your companies, it was a very different market than it is today. What uh what's really been the big difference of say your last company where you raised money and today for Fathom?
Richard White: I mean it's interesting, you know my first round of funding I ever raised was spring of, oh gosh no I'm going to get this wrong, I want to say 2009. Right? Right after the 2008, like that was like the, that was like a pretty epic collapse right? Like Sequoia was writing these memos of like "good times are over." Um and it's funny for Fathom, we raised, we actually raised every six to nine months since we started the company. Uh so we raised 10 million to date, but we've done it in almost, almost seven or eight tranches, I don't know the exact number. Um and so you know we've raised money in 2021 when you know market was [as] good as it gets, we raised money in 2022, raised money in 2023. And you know the difference between 2023 and 2021 is pretty dramatic right. Kind of difference between 2006 and 2009. Um so uh you know, there's a you know a significant flight to quality or a significant like it, you know retraction of the market in the last 18 months, I think we're all aware of. Um which yeah is neither good nor bad, it just is what it is. I think in general it's actually been pretty good for us. Um but we'll see.
Jake Aaron Villarreal: What's the, for listeners out there that are looking to raise capital, maybe they've already raised a Series Seed and they're looking to add more but they're struggling, what's worked for you? Do you use a certain platform? Do you do outreach to your users? Like how many investors are on the cap table? What's been the process to raise every year when quite frankly many companies might be closing their doors because they can't quite get that next round?
Richard White: I mean we've always bet on ourselves pretty heavily right. Like the downside to raising every 6 to 9 months is you got to keep hitting your milestones right, like it's a, it's a high risk maneuver right. Um and it's funny, I think even before this downturn happened everyone's like "oh you got to have 30 months of runway." We never had more than 12 months of runway in this company. We've always been like... we had such confidence in what we're building and how we're building it that we're like, "we'll raise more at a slightly higher value at that point, right um, when we, when we need it." And we have, we have you know, technically on the cap table about 100 people. Um and if you count, we did a Wefunder last year uh that was a thousand people. Now it's an SPV so it's not a thousand people on the cap table technically, but you know essentially there's about 1100 people that are investors in the company. Um and so we've had a very unique perspective on fundraising which I think is easier to pull off as a second time or third time founder, where it's been very angel heavy, um very small check heavy. Uh and doing things like crowdfunding.
Um and I just think it's been huge for us. Again we're a word of mouth product and that's how we get customers. We don't buy a bunch of ads, we don't do a bunch of things. Uh and so you know every $100, even $100 Wefunder investor is someone that's going around talking about us right. That's like, we actually did that mostly as a marketing campaign and then it turned out we raised over a million from our users. Go "okay well great, well it's also now a funding round." Um so advice I would give, I mean uh you know, "keep hitting your, your milestones" right, is, is, is the only good one really in this market. It's you know, it's tough not to. I, I think when I, I think there's a lot of folks... The thing I think we've done right in Fathom is we thought about distribution at the same time we thought about the initial product right. And we thought a lot about... I mentioned to you that we monetize by selling to managers, but we also do it early on. I was like "we're not going to try to do any of that until we can prove that we can retain free users." We like got 50 you know, we went through 600 users before we got to like a cohort of 60 people that mostly stuck with the product because we figured out all the bugs and stuff like that. Then we focused on onboarding. "Okay great, now we're going to focus on how do we improve our onboarding rate." We thought our onboarding was pretty good, it was like 30% conversion rate at launch. We got it to like 80%. Great. That took us like nine months. "Now we're going to focus on virality." Actually we got halfway to working on virality, the market shifted and we said "nope, now we're going to focus on monetization." Um, um and so I think the thing that I would generally tell people is like don't try to do it all at once, it's really hard. Like don't try to monetize the thing until you prove that people want to use it. Once people will use it, okay maybe now make the onboarding to it better so you get more of those users. Um and so for [a] PLG product like us, I feel like that, that kind of methodical approach to working back to front from retention to acquisition to monetization works really well for us. Um and I would, that would be my advice to anyone is like go constrain the problem. Don't tell [an] investor you're try[ing] to do everything. Be like "look, we're going to try to make sure, prove that we've got killer retention, and then go raise on that. And then once you hit killer retention we're going to go try to prove we got killer like user growth, and then hit on that." And that's basically what we did and I think it worked pretty well.
Jake Aaron Villarreal: It's good, no that's great. I love that process. Sounds like you got a really clean flow of how things go and you have you know going from you know multiple choice options to understanding what, what process you want to tackle next. If you look at the market, what's your, how, how big is this market when you kind of put the numbers down and look at what you're, what you're going after?
Richard White: Yeah, I mean I think we always kind of fundraise on the like "here[s] the market. If you just focus on salespeople alone is you know, there's like 10 million sales folks in the US sort of thing." You know, the current competitors are charging $100 per month for that. We think that's too expensive by a factor of like three to four. So if you could just go charge them $20 a month, that alone's a massive market. And then I kind of do, "oh and by the way that's like 18% of our users are salespeople right, and like oh like okay so now 5x that whatever number you just came up with in your head on that. You should 5x that again to get kind of like here's what we actually think the TAM is." Um it's massive right. I mean as you mentioned earlier we're all on meetings. Um you know and Fathom is still very much focused on mostly external meetings. If you actually want to then think about like, well what if you expanded this to every internal meeting, you got to go easily 5X that number again. Um so that's what's fun about this is like even though there's a decent amount of competition and we think we're in the pole position, it's a gigantic market. Um and so it's pretty exciting no matter what position I think you're in right now.
Jake Aaron Villarreal: Yeah. Are you in the US only or are you international in terms of your customer base?
Richard White: Mostly US, though I think that's probably like 60/40 split at this point. Um we don't intentionally go after you know, it's, it's PLG so people come to us, right. You, like I said we're number one on like the Zoom Marketplace and HubSpot Marketplace which are both reasonably international. Um it's still mostly you know when it's international it's the you know Western Europe or Australia sort of thing. We have not tried to attack you know with transcription, attacking any like right-to-left languages or you know non-ASCII characters, it's like another can of worms that we haven't gone after. Um and again the market in you know the market numbers in the US are, old man, are big enough. But we are available in I think seven different languages now. Um and very kind like we're not in a language... it's mostly a economic issue right. Where it's like certain languages we couldn't afford to give this away for free because we would never be able to actually charge you enough, your manager enough money to pay back all this for usage right. So the one interesting thing about AI is that the AI costs are the same no matter what part of the world you're in. Um and so it's hard to do regional based pricing for AI products because you actually have, unlike most SaaS businesses, you have real hard cost, um which is why I think you're going to see most of them like ourselves focused on kind of the you know US and Western countries.
Jake Aaron Villarreal: Yep. I know that you're uh a lean company, um I think you had 15-ish employees something like that, is that correct?
Richard White: Have 18 folks. Yeah, 18.
Jake Aaron Villarreal: Great. And with being able to hire your previous employees or co-founders or partners, uh it really helps. Um what's, what's some advice you would give to other founders that are trying to get their hiring right that you've learned based on interviews you've had with people you've brought on board that either worked or didn't work. And kind of what's some of the litmus tests that you go through to make sure before you pull the trigger and hire that person you got to make sure they're going to pass.
Richard White: Yeah I mean I think we've, you know I think hiring and company building is, is something that we're still trying to get better at even right. I think we actually, we're pretty fortunate, we started with you know, hiring your network is always going to be by far the best thing to do right. Like uh you know working with your friends or friends of friends or ex-colleagues is amazing. It's a whole different ball game once you try to go true external and like out of network. Um and that's kind of the next step for us is now focusing on, okay great, we kind of exhausted our personal networks and now we're, we need to grow at a speed where we can't just rely on that. Um and I think it's like you know, I think there's a natural tendency to almost I want to say cargo cult hires or you know like "oh we think we need someone, they kind of look like a CSM but they maybe look like a salesperson," and you work backwards from like job titles that you know into like "what are we looking for," as opposed to working forward from first principles of um "hey there's a uh here's the five things we need this person to do." Forget title. Like we need someone to do these five things. Because it's you know, it's, it's whether it's an... we got things on the engineering roadmap, or it's "oh gosh we, it's clear we've got these three other actions that need to happen [in] our sales funnel that our existing sales team can't do."
Um and so getting really clear of like "oh here's what we need someone to come build" and then go work forwards from that. What type of people would like building these features? What kind of people would like doing these things? What do they need to have from a personality perspective, from [an] experience perspective? Um we've actually been, you know we're actually doing a lot of hiring now, you know plug: we're hiring for uh full stack engineers, so if you're [a] full stack engineer we'd love to chat with you. Um we're, we're a platform agnostic right, so we don't, I really care as long as you can write good code.
Um but we're working actually with this guy uh Lumen, who uh used to work at, was a, is now a kind of recruiting uh kind of mentor and guru for a lot of startups. And so I think this is a lot of advice he's given us which I think is really good. And it's always fun like when you talk to people that are really good in their craft, they always just operate from first principles. They don't, they're not borrowing things, they're kind of like "no, like okay," make it sound so stupid simple. It's like "yeah, what does this person need to build?" "Oh, we were like thinking about like do they need to have a Master's degree in Computer Science, or do they need to come from this company?" It's like "yeah well you can get to that, but like what do they want to build? What kind of people... okay, what do you need to do to build that?" It was like "oh, such a refreshing way to do that."
Um that's I think the biggest insight I've had recently is like don't get caught up in job titles and trying to fit things in existing slots. Just think about what do I need help with very explicitly, and then it works out well. Because when you're interview[ing] people like "hey here's the five things we're going to ask you to do, do you think you'd like doing these things?" "Oh yeah I would," or "that's not really fun." Right like, makes it a really easy conversation as opposed to what it can be a really stilted like "well you know can you write some algorithms on a whiteboard for us?" Like who cares, right like yeah. "Do you have experience building CRM integrations? We building a lot of these." So um I think it's that's the next step for us right. We've spent a lot of effort in the first two, three years on fundraising, on community building uh and building the product. And now it's a you know we're transitioning [to] the company building.
Jake Aaron Villarreal: That's great, I love that. Well if there's any other uh roles you want to plug for the, the listeners. You know we talk to tons of engineers a year, so if you have anything that you want to share, feel, feel free to share it now. If not um where can people find you and where could they find uh Fathom?
Richard White: Yeah, so if you're a full stack engineer, you like building things that are in front of tens of thousands of people every day uh that they use, makes their life easier, you're not just building games and stuff like that, you're building stuff that's like actually creating real utility in the world, uh we'd love to chat. Um and if you want to find me uh you can find me on LinkedIn. Uh I have a little like 8-bit emoji, look up Richard White Fathom, you'll find me. Um no it's not an NFT. Um it's just an 8-bit emoji. Everyone thinks it's an NFT, so we can't have anything 8-bit anymore, someone's not going on NFT. Um yeah, feel free to message me on there. Uh I'll generally, my SLA is generally like one week uh, sometimes faster. Well I love cold emails, especially if they're well written. They've like changed a lot of my career obviously, so I'm always happy to get them and take [them] seriously.
Jake Aaron Villarreal: Very cool, that's great. Well Richard, thanks so much for coming on and joining the show. I really appreciate your time and, and having courage to come in and talk about not only what you do but how you've done it, be vulnerable at some points about you know raising capital, whatever it happened to be. I, I really thoroughly enjoyed it. I hope the listeners did too. Listeners, thanks for joining today, it means the world to me. Uh and my name is Jake Aaron Villarreal, I'm the host of the show and look forward to hearing from you in the future Richard, hope to see progress and how things go. And to the listeners we'll catch up with you on the next episode. Until then, take care.
Before we wrap up, I want to give a big shout out to all the entrepreneurs that are joined to make this podcast possible. And for all the listeners for listening, it means the world to me that you chose to spend your time with us today. I'm your host Jake Aaron Villarreal signing off for now, but can't wait to connect with you all soon on the next episode. Take care.
This show is sponsored by Match Relevant, a company that helps venture-backed startups find the best people in the market. And they do it in three simple steps. First, they sit down with founders to understand their story. Second, they tell their story into multiple candidate channels. And third, they schedule interviews within 48 hours. Find us at matchrelevant.com to learn more about how we do it.
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