Sandhya Hedge 00:02
Our guest today is incredibly accomplished and kind, Lars Albright. Say hello, Lars.
Lars Albright 00:11
Sandhya Hedge 00:12
I'm really lucky to call Lars my partner at Unusual Ventures, where he leads our seed and series A investments and all things Vertical SaaS and Fintech. But Lars is actually a three-time Founder of Enterprise Software, and has sold two startups to Apple and MasterCard respectively. His last startup session was a pioneer in mobile loyalty and even today powers the loyalty infrastructure for Fortune 1000 brands like Starbucks and American Airlines. It has by far one of the most interesting lessons and the journey to Product-Market Fit that I have heard about in recent times. So I'm just so excited for this session. Lars, how are you doing today?
Lars Albright 01:01
I'm doing well, happy to be here.
Sandhya Hedge 01:03
Me too. Me too. So I think to kick things off, it would be great to just go back all the way to 2011 and just hear from you about what was happening at the time you were working at Apple when your previous startup had been acquired? What motivated you to start SessionM?
Lars Albright 01:24
Yeah. Happy to be here with you and talk about this. And I'd say, going back to 2011, a couple of big themes started to emerge in the market in 2011. One was really looking at this, I had an interesting lens from my position at Apple to see what was going on in the app ecosystem for iOS developers. One of the common things that came up when I looked at data over and over again is you'd see these retention charts. You'd look at retention after seven days, and then after 14, and 21, to 30, and then 60 and 90. And one thing was consistent, with the exception of very, very few apps, you'd have this incredibly steep decline in consumer retention and engagement. And you'd see it over and over again. And at the same time, you'd have apps coming to us saying, ‘Why can I make any money on my app? I've launched it, I got some consumers, I spent a bunch of money on acquisition. But I'm still not able to build an enduring business.’ And so that started to get me thinking and got my Co-Founders thinking, there's a missing solution in the market around retention. There's so much focus on acquisition. And then you saw, and this has continued through to this day, acquisition costs go up. But we realize that if you ignore the retention component and you don't drive the LTV of your new customers, you just have that whole leaky bucket syndrome, where you acquire customers, and they go right out the bottom. So we saw retention as a big issue. And then the other thing that we saw, which is also pretty relevant today, is a broken system around monetization. We really didn't like, and I know this is something you share this disbelief too, we really didn't like this notion of taking advantage of consumers and saying, ‘We're just going to try to track you as much as we can, deliver up ads, and make money that ultimately wasn't adding to the customer experience.” If you polled most consumers, it was actually taking away from the customer experience. And that was one of the things when Apple acquired us, and Steve was involved in that deal. He said, ‘I want to make advertising beautiful and a positive experience.’ And he had a vision to take it in that direction in terms of high-end brand-based advertising. But still, that wasn't quite enough, in our view, to really provide the right experience for consumers. So that's where we got in this whole kick around, you really need to provide a value exchange to consumers in order to have them want to give you their time and attention, which is really paramount. And then, even further, to want to engage in any type of branded sponsor advertising experiences. So you put those two things together around retention and this belief that there needs to be a better system that provides value for consumers, and we started to get really interested in what would next-gen loyalty look like. That's what was sort of the original idea. Then combining that with some of the things that my Co-Founders had seen from their gaming experience. They had sold their last business to Scientific Games. We started to come together and think about if we could provide, at that time mobile focused, a new form of loyalty that would really fix the retention issue and drive a better experience for developers and then ultimately make them more money, and then create a more sustainable ecosystem for the app developers and doing this across iOS and Android, and mobile web as well. So that was the origin back in 2011, when we got going and what we started with.
Sandhya Hedge 04:48
Right. And the original product idea was called mPlus Rewards. Can you tell us a little bit more about the business model behind that idea?
Lars Albright 05:00
Yeah. So our thought at that time was that we could take that thesis we had developed around retention and better value exchange, and we could launch what is often called a coalition loyalty program. So you can think of airline programs as a good example of this. American Express launched something called Plenty a few years back. But basically it's getting businesses to participate in a system or a community where consumers can benefit across those various participating businesses. So we thought, ‘Okay, that's interesting. Could we be one of the first to do it at true scale, within the mobile app ecosystem?’ So we developed an SDK. We convinced a bunch of different app developers and big developers from the Weather Channel, to a bunch of Zynga games, to the NFL, and others to take our SDK and install that. And what they were able to do is then launch a loyalty program for their consumers that motivated their consumers, first and foremost, to establish a relationship directly with the application and with us as the provider of this coalition program. So we had this great community with first-party data. Then it motivated them to interact with the application. So it could be things like, ‘Do you want your consumers to come back five days in a row? Do you want them to recommend it to a friend? Do you want them to interact with three pieces of video content?’ So basically, what we were trying to do is create habits and behavior that would then lead to, back to that example I showed before where you had declining retention. Our belief was that if you could get people motivated to do content engagement early, it would create this habit that would ultimately have them stick around longer if they were enjoying the application. So that was at the core. And then the way we amplified the experience was, if you wanted to interact with sponsors and brands or fill out surveys, you could earn this mPlus rewards currency that then can be redeemed in a reward storefront for things like sweepstakes and gift cards and charitable donations. And what was interesting is that if you signed up for one app and you had other apps that you use, you could do it across all your applications. Earn this common currency, and feel like you're getting rewarded for your time and your behavior. It was very successful in creating a lot of adoption from consumers. We got 2000 plus apps on board. We had 10s of millions of monthly consumers interacting with the system. And we were able to monetize it quite effectively from the advertising front. Our pitch to advertisers was this is not an ad network like a traditional network. It's one where we have a direct relationship with all these consumers. We know a lot about them because they volunteer this information. And they really like our system because instead of feeling like someone's just tracking me without my permission, they're getting value. They've opted in. They get rewarded for their time and attention. Then they can go get tangible benefits for that. And for the developer, they were getting the benefit of hoping you're happier consumers and people were sticking around longer. So that was our first belief, or our first go around and strategy, and how we wanted to apply what we were doing.
Sandhya Hedge 08:15
I think what's really fascinating about it is it's almost like you had three different sets of clients. You had the advertisers, you had the app developers, and you had the app and users. It's fascinating, because how do you talk about Product-Market Fit in this context? Where you have three different sets of people with three different sets of needs, not all of which are perfectly aligned with the other's needs, right? You have advertisers who really just want a lot of engagement on their ads and want to see that converting into revenue. You have developers who just want your app to be extremely fun and don't necessarily want their users to see many ads. And then you have end users, who don't want someone else to own their data and don't want a lot of ads, and want to try a lot of free apps. I remember back in the early days of the mobile revolution. No one wanted to pay for mobile apps. It was very much like, ‘Oh, this is supposed to be free.’ Thankfully, that is not true anymore, so we don't live in a world where everything has to be monetized by advertising. But the fact that you had three different kinds of features, customer fits, to find with one product is really fascinating. Could you share a little bit more about what happened when you launched? What kind of feedback did you get in the market? How much traction did mPlus Rewards have?
Lars Albright 09:54
When we first launched, the feedback was really strong. We got, from all three of those constituents, a really good response. Consumers liked it. They were opting in, they felt, finally getting payback, if you will, for the time I'm investing in this application or looking at these ads. Which I get are part of the whole powering the free app environment, but I just want to feel like I'm also getting some sort of reward for that. So that was great. We got lots of signups there. The developers were happy initially because they felt okay, this is good. I'm also forgetting, one thing to mention about the model is the developers, they have to come to the revenue that we generate. So not only was it a retention tool for them, it was an additional monetization tool for the developer. So they were happy. And then advertisers were happy if you could deliver scale and you can deliver performance based on various metrics. So if you're actually driving click-through rates and then ultimately driving conversion, that's what makes them happy. If they can deliver, what's your insertion order at scale, and get the right performance vis a vis other alternatives. And they can back into a price that makes sense whether it's on a CPM or CPC or CPA basis, or a CPI on installs. So initially the momentum was quite strong. And we doubled revenue each of our first few years and got the business up to north of 30 million in top-line revenue with a plan that would have doubled again. So really rapid growth. When I take a step back and think about that, it's like we really hit the ground running. We had a smart customer acquisition strategy because we did it through our app developers, who installed the SDK and promoted that program to their consumers. So we were able to build quite a bit of momentum early on. But that didn't last. That shifted a bit across these constituents. What we found one of the challenges is, regardless of what mechanics we were putting in place from a coalition loyalty program and trying to get people to create those early habits, we could do it for a little bit. But we couldn't fundamentally change the long-term trajectory of retention for applications that just didn't have the right underlying value. What we couldn't do is go in and fix an app if a game wasn't really effective at drawing consumers in and change that app. Or if a news app was just more redundant than other new sources, we couldn't necessarily go in and change or make that more unique, we could improve it for a period of time, but we really couldn't fundamentally change those application experiences enough. When you look six months down the line and you really were driving different retention. So we started to see some declining results there. Then when we really looked at our most active consumers, the numbers started to get a bit smaller. And we said, well, that's not really going to be in great service to our sponsors and advertising community. We just started to see some areas of weakness in these various constituents. Now, not all dramatic, but enough that we were taking note. We were always very, very focused on what our consumers were telling us. So that was that. Then the other piece was, we looked at the business model and we started to say, ‘Okay, we're signing up developers, but we've got to pay them a pretty steep price, which is somewhere in the 40-50% of our revenue share. We then also have to find a reward storefront that has got gift cards and sweepstakes, and we've got to make that valuable enough for consumers. That's expensive.’ That's another, you know, 20 Points off the top of your margin. So you're left with a fairly low gross margin business. And you put those things together. We said, ‘Okay, we got really strong top-line growth, we've got good user numbers, but not necessarily trending the way we want them to. We have a monetization play that's working. But if the user numbers start to go down, that's going to start to go down.’ We didn't like the unpredictable nature. One of the reasons why ad models became so unpopular is because, unlike SaaS, they can spike up and they can go down. You don't have this very predictable month-over-month recurring revenue. You've got more volatile revenue, potentially. When you hit challenging markets, businesses that don't have that locked in are in more trouble. We didn't love that characteristic. All these things came together. I give our team a lot of credit for us to say we still have a lot of belief in what we're doing and the core notion around retention as a service. But we believe potentially we can apply this in a better way.
Sandhya Hedge 14:26
Right, right. What I think the big trough generalizable lesson I take away from it is you can identify two problems right up front: retention and monetization. You had an excellent solution for monetization that actually aligned the interests of these three different constituents. But mPlus Rewards, in its original avatar, didn't really solve the retention problem. The fact that, if the app is kind of a flash in the pan, which by the way, I remember the early days of amplitude. A lot of these apps were amplitude customers. And it would make us so nervous to see them getting really big spikes and user engagement, and all the data volume would go up. They'll be spending so much money on analytics. And then we would see them just falling off a cliff because people were really, really excited about this new game for three hot weeks. And then they'd be like, ‘Yeah, I don't want to play this anymore.’ So that's like a cold retention challenge that this coalition strategy perhaps was just not solving. It's really incredible that you had all this traction, but at some level, you would argue that you didn't have Product-Market Fit because even though all the customers really wanted this to work, at its core, the retention problem was not being solved.
Lars Albright 16:01
Yeah, at least not been solved for long enough to think it would be solved early. You and I've talked about this, and I think this is fascinating that revenue can fool you into thinking that you have Product-Market Fit. It can make you think that you're getting really high, real momentum on the revenue side. But if you're not really thinking about it, is that true Product-Market Fit? And the answer sometimes is not. We had such dramatic growth on that side that it took us a little while to recognize that. But ultimately, we also needed to see things play out over time to look at these trends. Ultimately, we recognized we didn't believe that we had true Product-Market Fit in a way that would scale to be the type of value we wanted from the business. And we could have kept growing top-line revenue and kept making tweaks here and there. But ultimately, we really believe that the challenge still existed, and we had an interesting approach to it. That's right around the time when we were thinking about the business dynamics. We had a couple of customers or potential customers come to us. AT&T and Rakuten, the Japanese e-commerce player, came to us and said, ‘We love what you're doing around retention and loyalty and customer engagement and using data to drive better customer experiences. That's all great. But we don't want to do it as part of a coalition. We'd love to do it in our own environment or not our own environment, but for our own business with our own white-label solution. So would you consider doing that?’ That's what got us thinking we could take this platform, turn it into an enterprise software model, create a basis that will be applicable across various verticals, and then go out and deliver, not as a coalition but individually, to these enterprise customers. The beauty of it is that it really took off pretty quickly. We had very large ACV deals early. We signed up AT&T, we signed up Rakuten, we signed up Kimberly Clark, we signed up Coke. They were paying us, these are big deals, half a million and even upwards of a million dollar ACV deals. It really started to make us think this direction is viable. That's when we started to go through the hard pivot, winding down the coalition business while we built up the enterprise software business. We really worked on starting that off. That was probably about, I can't recall the exact timing, but probably about three years into the business when we really started to make that change.
Sandhya Hedge 18:29
Got it. And could you spend more time on how that pivot happened? For example, did you have to change the team composition? Or did you just kind of change what people were focused on? What did it feel like in the boardroom while you're trying to figure out what your goals are this quarter, when we have one live business with over 30 million and gross revenue, and we are trying to pivot and sell this completely new product to fairly different customers? How did you actually navigate that pivot process? And what did the execution plan for it look like?
Lars Albright 19:13
First of all, it was much harder than I thought it would be at the time. So I naively felt, okay, we make this decision. Six months, we'll be fully on our path. But there are so many things that go into it. It's where I joke with people. You know, back in the Quattro days, we actually had a very early pivot a couple months into the business just in terms of our focus. This one was a few years in the business. It's far easier to pivot earlier than it is later. Particularly when you have dozens of customers and millions of consumers, and the market also gets to know you in a certain way. There's a branding element and a go-to-market element that's big on this. Also, you bring up a great point on the board level. They were happy with the fact that we were continuing to show really good revenue on their sites. Although I'd say a couple of things, and I've talked about this to other founder CEOs, I was sharing with them some of the concerns about the business, which I think is an important thing that you have to do if you don't want to be transparent if you have some questions. So we did have a good board discussion around that. That was a helpful foundation. It wasn't a complete shock to them. Then I'd say the thing that really did help, which is really just good, fortunate timing, was having a couple of customers that validated this new direction. I think it's much harder when you go to a board and say, ‘You know what, we're going to make this dramatic move, and we're going to shut down one line of revenue that's growing. We're gonna do this new direction, but we're just not sure what's going to happen. We'll see.’ Instead, we could say that we're going to go in this new direction, which still builds off the foundational elements in the platform and our core thesis in the market. But we think we've got a much better way to apply it, a better business model, recurring revenue, just a more viable plan to build a large sustaining business. And we've got this early customer traction from real brand name logos that are saying they need this, that gave the board a bit more comfort to say, okay, we can fully support it. And to their credit, once we had that discussion or set of discussions, they got fully behind it. They said, ‘Great, let's go do this, we believe in the direction and the team, and we're going to support you in doing that.’ So I have a lot of respect for the Boards for them to think differently about the business, get on board, and be really helpful in helping us build the next chapter. So that was at the board level. From a team perspective, absolutely. You've got to look at the team, not only from the senior leadership team that needs to get everyone on board with the new direction, that was pretty quick, because people all had a role in playing a part in this new strategy. But where it gets more complicated is thinking about how your product team functions. What are the types of engineers you need on board? What new talent do you need to recruit on the go-to-market side? It's very different. We did nothing on the advertising side anymore. It was all about SaaS-based selling. We needed to build up that entire new team and then a whole new go-to-market motion, building the top of the funnel and getting in front of analysts to show them our approach. There were a lot of things that had to go through the business. And back to my naive assumption that maybe we could do this in six months, it really took a little over a year to go through that, probably even longer, to really, fully have the market truly understand our approach. So yeah, that was hard. I mean, there's really no other way to put it. Those were hard. There's a book called The Messy Middle. This was the messy middle for us. It was kind of progress in some areas, back in other areas, progress, back. Eventually, we powered through and got to a point where we had the right organization, the right go-to-market motion, and the right branding in the market. So people understood what we did. And we built up incredible momentum with these great Fortune 500 logos.
Sandhya Hedge 22:58
And with the previous business of mPlus Rewards, were you still maintaining the contracts you had with your customers there? How did you approach sunsetting the previous business?
Lars Albright 23:16
We looked at it systematically and tried, as quickly as we could, to get out of any contractual obligations. There were some that we just couldn't, we had to stay with for longer. But we were very disciplined and had some of those tough conversations with developers who were saying, ‘Wait a second,’ because some people were very happy. They're like, ‘Wait, why? Why are you shutting this down?’ So we worked on that. And we just went after each kind of relationship. Some were easier. Some were harder. And that took 12-plus months to get fully out of those. And then at that point, we were out entirely. We didn't have any contracts that straddle the old business and the new business. I think that was an important part of fully transitioning into kind of chapter two.
Sandhya Hedge 24:03
Got it. And this time around, what are some of the Product-Market Fit indicators you are looking for, given you what you just went through with mPlus Rewards? What was the different metric or different feeling that we needed to say, ‘Yes, this direction is not just promising, but this is the right way to go. And here's how tangibly it feels different from the previous three years’?
Lars Albright 24:32
Yeah, so part of it is that we were able to find customers where there were buyers that really had this need. So we were able to go to CRM leaders who could be VP of Marketing and CMOS. We were able to go find these people within organizations, and they're like, Yes, I need something that's going to help me drive retention and customer loyalty. I don't have it. I need it as of yesterday. If you can help me solve this problem, this is going to be incredibly important for my business. And the other piece that is really critical, and this is extremely relevant today with what's going on with the changes in iOS and the changes in Android, is businesses were tired of being disintermediated by third-party networks, and they wanted to make sure that they established a relationship with our customers. And one of the best ways to do that is through customer loyalty programs that actually invite you into the program. So you think about it, a lot of it is a permission-based data acquisition play, where you go from knowing nothing about your customer to having a customer profile to having a way to reach out to them. You can then communicate with those individuals, you can deliver personalized offers, you can get behavioral data on them to ultimately drive a better experience. And that trend started a while ago with companies realizing that they wanted that direct connection. And we were hearing that in organizations, time and time again. And that was powerful. So we started to feel a bit more, it still was an enterprise sale, and you had to go in and it was not easy. But there was definitely a receptive audience across these core verticals. And we focused on retail, fast, casual kind of restaurant space with companies like McDonald's, or Chipotle, or Starbucks. We focused on travel and hospitality, and then CPG. We built a motion around those verticals, and were able to build success in some case studies and go out and start to create real momentum. So one of it is that we just felt the market need, we found buying personas within the organizations that were receptive to it. And then also, we validated they're really willing to pay significant dollars for it because it was such a need. And then I'd say the other pieces were, once we got launched with some of our early customers here, it was performance. The performance was effective. So unlike before, where we started to feel like oh, no like, is this really gonna drive retention for these applications that you can't totally fix. In this case, it was really driving business impact. It was allowing them to deliver better experiences for their customers, and build more customer loyalty, have more data, and it was an important part of their overall CRM strategy. So those elements of recognizing those marketing needs, seeing receptivity from the potential buyers, and then seeing performance, made us feel like okay, we have something here. Now, a separate conversation was we certainly developed Product-Market Fit. Now if we have a truly scalable approach is a bit of a different story because we were going into big enterprises, they were pushing us around and saying, we're happy to license your platform. But we need these services. And this customization, this middleware. And that was a whole other element to the true kind of scalable Product-Market Fit, which is something that is very challenging in the enterprise side.
Sandhya Hedge 27:50
Let's dig into that a little bit more. I think first, I just want to set a level. What does it look and feel like as a startup to be working with Starbucks, a really large company? For example, often we tell founders, if you're going to do a top-down sales cycle, that takes months, you have proof of concept. You have to go through security or working with Fortune 500 companies, your contract value needs to match that sales cycle, right? A long sales cycle means large contract value. What did that look like at SessionM? Did you guys feel okay, yeah, we have a good match between how long the sales cycle is, and where we are able to land with these big logos?
Lars Albright 28:39
Yeah, we did. That's one thing that we were able to do. We had a long sales cycle, kind of a six to six-plus month sales cycle, but we were able to match the ACV to that, and it was in a pretty significant way. We, even early on, had deals that were paying us $2 million a year and ACV 500,000. Some of them skewed us up, but on average, we were in that five to 600,000 a year ACV, which can allow you to successfully support the unit economics of your direct sales team, deal with long cycles, and remember it's not just the sales cycles, it's also implementation cycles. Which, in an enterprise, deployments are not 30 days. They can be several months as well. So you do have this lag in the business and what worked for us is our deal size was large enough that we're able to put a pretty dramatic growth, from effectively zero to over 30 million in recurring revenue, close to the time of our exit. So, it is something that I have a lot of respect for, or healthy respect for, that if you don't have that match it can be very painful.
Sandhya Hedge 29:46
AWhat did it feel like to negotiate both the custom requirements and pricing with a large company? What was your approach? What are some of the pressures Inside the startup and your lessons today from that experience?
Lars Albright 30:05
The pressure is intense when you have one of these big deals that you think you can go get, that you know is going to be very impactful to your growth in your business, and he's going to help you build momentum. You're under pressure to be flexible to get that deal done. And I think we were good, and that we drove strong pricing. So we were disciplined on that front. We were overly flexible. And we started to learn this as we went through as in the customization request that, oh, we just need you to do this. And that's something that we definitely had to move fast and fix things later when we came to some of that. And the challenge is, given our success of signing on all these large enterprise companies, it got harder and harder to go back and fix everything. So you start to build up tech debt that you need to go deal with. And so that's something that I think you have to be mindful of, that there's an element of realism you have to have when you're going to negotiate with a massive company, that you do need to have some flexibility. But if you go too far outside of the scope of your platform, what you want to do for your roadmap, you spend a lot of time going back and playing catch up. And that's something that we had to do. But generally speaking, our team did an amazing job of knocking down these big logos and bringing them in. And from that perspective, it was really working quite well. The delivery side gets complex. We also, in the midst of all of this, we brought on an equity investment from Salesforce. They led one of our rounds. We formed a really tight go-to-market partnership with them that also fueled growth because we were aligned with them. We had integrated offerings that made it easy for our joint customers to buy both products and bring us on. We motivated their sales team with incentives and comp. And that worked incredibly well. And we had a nice momentum building there too. So a lot of rapid growth in this business. And I'd say probably the biggest lesson is that piece where you have to stay disciplined to what your core offering is. And then services are going to be an element of it, without a doubt. Because they're enterprise customers, they want some services, but you have to think about that really strategically so you don't end up going too wide.
Sandhya Hedge 32:13
Sounds like you want to separate out. ‘Okay, yes, we'll build this custom product’ versus ‘no, we'll handle that. And professional services, we just need to make it work for you and don't have to build something we have to maintain.’ Could you share a little bit more about where some of the more challenging customization requests came from? Was it integration? What was it that usually people asked for that required custom work? And then hindsight, what would be a framework of this is the stuff we should have pushed back on versus this is the stuff that yeah, it was a good idea to do even in hindsight?
Lars Albright 32:57
Yeah. There are a bunch of them. Integrations are definitely one. And we worked with point-of-sale systems as well. So one of the elements that we did is we delivered personalized offers in real-time at point-of-sale. That was a part of our overall customer engagement. Loyalty offering and point-of-sale integrations are challenging. Usually, it's not the top line of ‘oh, we can integrate with x-system.’ There's always some sort of difference with how a company or vertical deals with that integration, that you end up having to say, ‘Oh, well, our out-of-the-box integration didn't really work here.’ So then we had to quickly create a solution. But was that solution really built to endure across multiple customers? And the answer there is, typically, it's not because you're moving quickly. So I'd say one of those things is integrations. Understanding the complexity. And the variations of integrations and how they work across different customer sets is something that we didn't fully appreciate, when we just say, oh, yeah, sure, we can do that integration. So those are things that we had to learn through or work through. The other one was interesting for us working with big enterprises, as many of them were in our global organizations, and they pulled us into international markets far sooner than we were ready to go. But they basically said, ‘okay, you don't want all of Europe, or you don't want to be in Southeast Asia with us, then fine. We'll go find another vendor.’ Of course, at that point, back to your way back to your question about how do you feel as a start-up. You don't want to give up any ground. You want to continue to expand and grow that. So we were pulled in, you know, the way we thought about it at the time it was positive, and that we were having global expansion isn't so exciting, because it's a larger addressable market, which is all true. But it's incredibly complex to launch in all these different markets. So particularly when you get into we launched in Malaysia and Singapore and throughout Europe, and there are all sorts of things to consider from data residency to language localization to different integrations and different partners you need to have and how do you support these customers and how do you think about your customer success program and all these different things that you jump into You without even having fully appreciated that. And I actually remember, there was a deal that we did, it was a Malaysian-based retailer. And I was feeling a lot of pressure to kind of hit a quarterly number. And I said, Well, I, you know, can we really pull this off, and we kind of talked ourselves into that we could, and eventually we did. But it wasn't. It wasn't before a fair amount of, you know, a fair amount of hard work and pain to get to the point where we could support that effectively. So, things like that are a couple of integration keys, just that the depth of them and the variations that come up thinking carefully about international expansion, you know, making sure that if you do build any middleware that it has the right SLA associated with them. Sometimes those can get not forgotten, but they can just become disorganized. So there has to be a lot of discipline around that middleware development. And then the last one, I'll leave, I'll say here is vertical expansion. So we would often have success and then say, get traction, another company in a different vertical will come to us and say, Oh, great, we want to, we want to do what you're doing in fast-casual restaurants, we want to do it for airlines. You say Great, that sounds like the core problems, the same customer retention, creating a customer profile, real-time data management. But then you go into that, that vertical, and there are so many nuances and different systems that you need to then go learn about and integrate effectively with. And that takes a lot more time than you realize. And then you also have to build a whole go-to-market and sales motion around that and marketing motion. So the notion that you can just quickly expand into verticals is also something that we learned and realized that we really had to take a step back and make sure we were prepared from a product level and a marketing level and just organizationally to go attack these new verticals.
Sandhya Hedge 36:43
It's just fascinating how you have to be so careful about your timing when you go broad when you go deep. AIt sounds like, in hindsight, you felt like you went broad a little too early. But I'm curious, when did that eventually become an asset? Because you had a global acquirer like MasterCard, who potentially might have valued the fact that even though you're a startup and you're relatively small, you have presence across a lot of different verticals, a lot of different geographies. I could see how that would be a great asset for an acquirer like MasterCard.
Lars Albright 37:25
You're absolutely right. That was actually an important part of their consideration because they're a global organization. So they were not interested in just a North American business. So from that perspective, it really did help us to show that we had, at a minimum, at least thought through what scaling globally means now at MasterCard, and as we've learned, and I learned when I was there, it's a totally different level of scale. And it's a totally different global operation. One of the world's most global, in the sense of what they do on a real-time basis, every minute. But that was an important part of our time, attracted to what they were trying to do. So yes, in some ways, that really did work. But I'd say the other thing, too, is going back to how we were doing a lot of this on a pretty quick timeframe because we were kind of making up for lost time, we'd had Chapter One of the business, and we were really trying to make a lot of progress. And I think, you know, in hindsight, if everything were perfect, and you had a couple more, either 18 months, 24 months to really build that base, and then grow from there, that would have been smoother. But as I've talked about before, one of your things as a Founder and a CEO and a founding team is you've got to adapt,, it's never going to be exactly the way you think it is. It's never going to be totally perfect. And really, it's the best teams that can be flexible, adapt, and then have the persistence and the fortitude to go see that through. And that's where I give our team a lot of credit.
Sandhya Hedge 38:50
And what would be your advice to founders today, when someone is out there in the market raising a Series A, and they're like, ‘Well, we have 500k and ARR, we have Product-Market Fit’? What is usually your response, what questions do you ask, and what advice do you give folks where you feel like you have revenue but not Product-Market Fit?
Lars Albright 39:14
I mean, I do think revenue is a great indicator of value. I think, particularly when it comes from institutions that have some credibility behind it, I know how hard that is to do. So I do respect that on that level.
Sandhya Hedge 39:33
It means you're solving a problem that there is real demand for.
Lars Albright 39:37
Right. There's real demand for it, and there's smart people on the other side of the table that are buying the solution. And so I think it's great. I wouldn't shy away from it. I also think it's incredibly motivating for an organization. There are pros and cons to this. But sometimes, you see founders wait too long to go live and start generating revenue because it's very clarifying for an organization. There is nothing like a real customer to get you to really deliver at a higher level. That can be very effective to move you forward faster. But the things that I do look for are, how repeatable is this? How skilled, fine, you might be able to scale to 5 million or 10 million, or 15, or 20. But what, what's gonna get beyond that? How do you get to 100 and 200 million of recurring revenue? And is there a path that really feels like you can do that in a way that, back to my points around repeatability and scalability. Those are really important things. So I do look a lot for that, just knowing some of the growth challenges we had to go through to get to the other side. That's a really important piece. Yeah, so I think when I like it, I have a lot of respect for it, as I said, but I would say you have to think a little bit beyond those first chats because that's the other thing too. People sometimes get to a milestone, they're so focused on getting to maybe that first million of ARR or 5 million, and you do whatever it takes to get there. But then it's really okay, what's next, like, you've got to then have the next chapter. And it has to be building on the strong foundation that you've put in place at first,
Sandhya Hedge 41:08
Yeah, I think I know. Obviously, some responsibility, the investor ecosystem and folks like us have to take responsibility for this too. But once you start generating revenue, if you're on the revenue treadmill, like every quarter, you need to show that you are growing faster or better than the previous quarter. And it's really hard to get off that treadmill and say, yes, there's demand for what I'm building, but I'm not quite solving the problem in the right way. And either I don't have the end results, or I'm building too much custom software for each client. It's not a repeatable scale, like, stepping off the treadmill and forsaking revenue, so you can change your product. You can pivot. It’s extremely hard. But you know, the right thing to do for the long-term future of the company.
Lars Albright 42:03
Yeah, that is a great point. Something that I completely agree with. I think there is this, and this goes on both sides of the table as investors and as founders. You need to think really carefully about this. But once you sit, effectively, start a set and say go and the revenue piece, as you said, it's really, really hard to pull that back. Many founders don't even realize that they've started, ‘Oh, wow. Like, shoot, I put up, you know, 80,000 this quarter.’ Okay, but now it started, like, you don't really want to then say, ‘Oh, well, next quarter, I did 20,000.’ It's typically got to be growth quarter over quarter year over a year. And so that treadmill is real. And that is a lot of pressure. I mean, having, and you've dealt with this in your past roles, that pressure and particularly for a founder CEO, is really intense. And so you then have to start managing that revenue growth, as opposed to necessarily going back and making absolutely the right foundational decisions for the product. So I think I'd say back to your original question. Just be really careful that when you have decided to put that revenue up, you have a really good plan to continue that growth trajectory. Otherwise, you're gonna have a lot of challenges and explaining to do.
Sandhya Hedge 43:22
Well said. Thank you so much, Lars, for spending time sharing the story of SessionM with us. I'm sure it's been incredibly useful for so many founders listening in. If anyone wants to reach Lars, you can reach him on LinkedIn. If you're in the vertical SaaS space or doing something around loyalty or Fintech, do reach out. He's just incredible. I've seen him in action, and he’s just an incredible advisor to have around your table. And it will be super, super valuable to get his advice. Thank you so much for spending this time with us, Lars.