449: Fathom: Why Fixing Retention First Was the Key to Hitting $1M ARR - with Richard White

(upbeat music) - Welcome to another episode of The SaaS Podcast. I'm your host, Omar Khan, and this is a show where I interview proven founders and industry experts who share their stories, strategies, and insights to help you build, launch, and grow your SaaS business. In this episode, I talk to Richard White, the founder and CEO of Fathom, an AI note-taking app that automatically captures and summarizes meetings. In 2019, after running User Voice for over a decade, Richard decided it was time for a change. Like many people, he struggled to take notes while talking in meetings. And so when the pandemic hit, he saw his opportunity. He recruited four of his best engineers from User Voice and raised funding on day one. But growth was painfully slow. After nearly a year, they only had 50 stable users. It turned out the problem was trust. People wouldn't bring an unknown bot into real meetings. They wanted to test it first, but testing it on their own didn't work. So Richard Steen built a clever fix. They created a bot that played pre-recorded video, giving users a fake meeting to help them build confidence. Then Zoom launched its app Marketplace and included Fathom. They exploded to like 100,000 signups in the first month. But they were shocked when they realized that only about 100 people were actually using it daily. It turned out that 99% of the signups had zero meetings on their calendars and Zoom had sent them tons of free users who weren't even using the platform for business. Instead of giving up, Richard saw an opportunity. Thousands of low quality signups were actually the perfect testing ground to fix their broken onboarding. And just as growth took off in 2022, the funding market crashed and VCs were suddenly demanding revenue over user growth. Richard gave his team 60 days to monetize and they started selling a team plan before it was built. They only had two features ready and a slide deck showing what was coming. But it worked. They managed to hit $100,000 in ARR in the first month and reached their first million within a year. Today, Fathom generates eight figures in ARR with 18 employees and serves around 175,000 companies. In this episode, you'll learn how Richard used those 100,000 or so low quality signups to triple their activation rate and build their onboarding process. How selling a team plan with just two features and a slide deck helped them hit the first million in ARR in just a year. How building a fake meeting bot with prerecorded videos solved their biggest trust and activation problem. We talk about what unconventional strategies helped Fathom become number one on G2 and turn free users into their marketing engine. And why Richard says building a second startup is like speed running a video game you've played before. So I hope you enjoy it. Compliance isn't optional anymore, but it also doesn't have to slow you down. If you've ever wrestled with SOC2, ISO 27001 or GDPR, you know how painful and time consuming it can be. Sprinto automates the entire compliance process from evidence collection to vendor risk across more than 300 tools. You stay audit ready, secure and focused on building your product. Trusted by over 3,000 companies worldwide, Sprinto helps SaaS teams breeze through audits and keep customer trust strong. Book your demo at sprinto.com. That's sprinto.com. Hey, Richard, welcome to the show. - Hey, thanks for having me. - My pleasure. Do you have a favorite quote, something that inspires or motivates you that you can share with us? - I have a bunch. I think probably the most worker-related one is Eisenhower quote about planning. Plans are worthless, but planning is everything, which I think we look kind of, I don't like it a lot here at Fathom because we are very much a planning-like kind of culture which are moved pretty nimbly. - Cool. So tell us about Fathom. What does the product do? Who's it for? And what's the main problem you're helping to solve? - Yeah, Fathom is the number one rated AI note-taker. So join your meeting, summarize them for you. It's really for anyone who's on meetings a lot, which is a pretty big tam and got started with it because I had this problem myself, right? I was in a lot of meetings four or five years ago and just struggling to talk to people and take notes at the same time, clean up those notes after the meeting, look at those notes two weeks later and still not know who was what. And so we built Fathom really to solve that problem. And I think one of the key things for us is like, we wanted it to be something for everyone. And so one of our big kind of go-to-market strategies was to make a really good version of Fathom that's completely free. - And give us a sense of the size of the business. Where are you right now in terms of revenue, customers, size of team? - Yeah, it's about an 80-person team. We're about eight figures, kind of. We'll admit eight figures. We have about 175,000 companies that use Fathom any given month. - Okay, great. So the business was founded in, as you said, I think 2020, four or five years ago. And you sort of touched on, I guess, where the idea came from. Before we get deeper into that, you have a really interesting background. And when you and I were talking earlier, I told you that when I first came across Fathom, I was like, oh, who's the founder of Fathom? I found your LinkedIn profile, started reading that. And then the thing that always stuck with me was the thing at the bottom of the profile, which was a product you'd worked on initially. And you'd said a crappy piece of software that taught me more than all my college CS classes combined. And then I was like, this is a really interesting guy, right? It seems very down to earth. It definitely seems like a conversation that we should have. It's taken a long time to get this scheduled, and mostly that was my fault, but I'm glad we're finally doing it. So why don't we just get the audience up to speed and just tell us what that product was, and then what other things you did before getting started with Fathom? - Yeah, I was very fortunate that my, I got into computers at a really young age, and my parents pretty much fostered that, or tearing apart computers, putting it back together. I remember in high school, I was running like a cheat codes website for PlayStation games. It was the number one website for PlayStation cheat codes. My best friend ran the number one website for video game cheat codes, PC cheat codes, and I was always a little bummed. He was always about 50% larger growth traffic than me. But I remember getting a check in the mail every month for like 400 bucks for ad revenue, and my parents being thoroughly confused. So, you know, from a young age, you know, had entrepreneurial parents and got really into bigging computers. So I was doing websites. Was, I think I wrote some software for like the TI-83 calculator that ended up being like some standard software for all the calculus classes in the city I grew up in, in Rowland, North Carolina. So always kind of this bug. And yeah, on my LinkedIn, it mentions this company I made in college that was like, basically software, if you ever go into a hospital back in the day and they have all these channels that teach you about, here's how to deal with diabetes, or you have a newborn. And it was, you know, my stepdad had a company that sold software, sold stuff to really like, technology equipment to hospitals. And I learned that like, what drove all of those TV channels back in the day was like VHS tapes, like racks and ratchet, like VHS players. And there's all these little servos that were like, quick play, quick rewind, quick play again type thing. And I was like, that's insane. And so I made some software that like, basically digitized all that. And it was terrible software. I didn't even know what a database was back then. Like I was like, I skipped the database classes in CS. So I didn't even use the database. It was just like a flat file. It was terrible. I think it got used by like one hospital, but I learned a lot in building it. And it kind of like set me on the path so I continued this kind of journey of entrepreneurship. - Cool. And then you built, but actually then you started working as a product design lead at Kiko. And that's an interesting story as well about how you landed that role. - Yeah, I was, so I went to school for computer science. I was very much an engineer programmer, but I really wanted to be a product designer more than an engineer or I wanted to do both. And I remember this was back, I'm gonna really date myself. This is back when Gmail would come out. When Gmail comes out, everyone wants to make everything desktop. Let's put it in a web browser, right? And the next obvious thing to build is a calendar. And so I was talking to my coworkers like, oh, I wish I really want to build kind of Gmail for calendar. And Google Calendar wasn't even out yet. And one day my colleague came up to me and said, oh, bummer, someone just built it. And like show me a TechCrunch article of these guys that built this like really robust kind of web calendar, which didn't really exist to that day and age. And I remember playing around with it. And first I was really bummed. I was like, oh, like it's someone beat me to it, right? And then I played with it more. I was like, oh, but it's kind of crappy. Like it's like technically really impressive, but the design is terrible. And like it's doing all these things that are unintuitive. And so I just cold emailed the guys. And I was like, hey, saw your product, super cool. You're doing lots of innovative things. Design is terrible. And, and then I went on like, I want to help you. Like I'll help you fix the design. I want to be a designer. And like, first of all, huge kudos to them to even opening that email and replying to it, right? But they were probably like, okay, like tell us that could be better. And so that kind of random cold email ended me quitting my job and working with those guys full time. They were in this whole program called Y Combinator, which I had never heard of up in Boston. I was over in North Carolina. And so I was flying up to Boston for half the month, freezing my butt off in the winter and working on this office with the founders of Reddit and the founders of some other startups. And it was like, you know, at the time I had no idea what was happening. I was like, yeah, it's cool. We're just like hanging on something. Turns out it's like the most formative thing that ever happened to me. Cause it's like, you know, I got into the slipstream of really amazing entrepreneurs. The guys that had Kiko with the founders were Justin Connem at Shere, who went on to do Twitch. And obviously we know how Reddit turned out and stuff like that. And so that kind of was like my sliding doors moment that got me from kind of, called like the minor leagues of entrepreneurship where I was in North Carolina, hacking on stuff of my own into, oh, great. Now I'm surrounded by some of the, you know, now some of the best entrepreneurs in the world. And that got me from Boston, California. And there we go. - That's so cool. And then, and then you kind of worked on a couple of other products. And then eventually you launched User Voice. - Yeah. And so I actually, I think through that experience on Kiko, I wrote down like three or four different ideas of around problems we were having running Kiko. And one of them was trying to kind of gather, we were a three person team and we had thousands of users and we were trying to gather feedback. And so I was like, oh, Reddit for customer feedback. Like why don't we get users to basically like crowd source their feedback to us? I don't have to spend all day trying to figure out, you know, what's the most important thing. And that instead of going to work on Twitch, which maybe I should have done, I had said went to work in sort of my own company called User Voice, which was basically that, which was basically like a Reddit for customer feedback. And did that, you know, work that company or in that company for about 10, 12 years. And really learned a lot 'cause we did everything that business. We started off bottom up PLG, you know, by the time I left, it was basically an enterprise company. You know, we'd actually pivoted, we were a PM product, we were a customer support product that were PM product again. And so I got to experiment with different markets, different business models. Like it was a kind of like I call like my finishing school for entrepreneurship. - Are you still involved with User Voice today? - I'm still on the board, yes. - Okay, and so was it an acquisition or is it still kind of a privately held thing? - Yeah, it's still a profitable privately held company. - Cool, okay. And then all right, so you're doing well with that. It's growing, you're serving enterprises. And so you talked about the pain that you identified with Fathom, but what pushed you to say, okay, I'm not gonna spend the next five, 10 years of my life building this product? - I mean, I asked myself every year kind of two questions when I was running User Voice. One, am I uniquely learning from this company? And two, am I uniquely qualified to push this company to the next level? And for the first time in 2019, I said no to both those questions. And I was like, okay, like I think I know, all right, it's time for me to find something new. I felt like I'd done all I could do to kind of put my vision into that company. It was time to put someone else's vision into that company. And so yeah, and so that's kind of, around the time sort of thinking about new products, new ideas, and that's kind of pandemic happens. We're all on Zoom, this idea kind of creates a pandemic a little bit, but obviously pandemic happens now. Everyone's on Zoom meetings and the value of building something that can take notes automatically on Zoom meeting just becomes so obvious. - So how did you get started with Fathom? A lot of founders or aspiring founders have these ideas. Some can start building a product. Maybe that's a curse if you start building a product too soon. Others have their own sort of challenges, but just getting started with it, what were the initial steps you took here? - So I think Fathom looked very different than the first days of user voice, right? First days of user voice, I'm a first time founder. I've never raised funding. And I'm like basically falling asleep with my laptop coding day in, day out, right? And I wrangle a few other people into following that same sort of crazy lifestyle. And I think we got some friends and family money, like 100K that got us a year and a half of runway sort of thing. Fathom is very different. Fathom, I basically started with four of the best engineers from user voice because we actually worked on some stuff at user voice and actually spun it out of user voice. So I got to take some of my top engineers. So I started on second base, if you will, Fathom, where I've got four amazing engineers from day one. At this point now, I've raised some money, built a multi-million dollar business. I can raise from my network, I can raise from folks. And so we raised money on day one, literally just on the strength of the idea. So very different starting pattern. And I think in general, a lot of what Fathom feels like, I call it like speed running a video game you've played before. And I use a lot of video game analogies when thinking about startups. But my favorite one is like playing Minecraft. Like, I think when you're doing your first startup, it's like you're getting dropped into Minecraft for the first time. And you have no idea what to do, right? Take you half an hour to figure out, I got to punch a tree to get some wood. And then, you know, like, it doesn't tell you what the rules are. Doesn't seem to be any rules. It seems to be completely open-ended. If you've watched 10,000 hours of Minecraft or played 10,000 hours of Minecraft, it's a very different experience in the first hour. You know, then the first hour you've got a moat, you've got a castle, you know, all these things. And that's what it feels like, I think, doing kind of the second startup, right? You kind of know all these things that felt like open-ended questions are actually like multiple-choice questions when you already boiled them down. And so I think that's what was kind of fun with Fathers. We had to kind of start and be like, okay, we know what a good market model is going to be for this stage. We know like what we're building. We know that that's a big enough market. Like we've done the research sort of thing. But at a high level, you know, as a product that I knew I could use myself, I knew that, you know, it solves the problem I have. You know, I tested, I talked to, you know, all of our sales team at Use Royce. I talked to the CS team at Use Royce. Yeah, just everywhere I went, I found people like, oh my gosh, I'd love to have that, right? And there were some people in the space. There was a company called Gong that was kind of doing call recording, specifically for sales teams. And we looked at that and we interviewed about a hundred different people that use Gong, managers and ICs. And that gave us a really strong conviction of, ah, okay, I see where the weakness is in that model. It's a very expensive product because the inputs were used to be really, transcripts used to be really expensive. Transcripts to get really cheap. So you don't really need to charge $150 per seat anymore. In fact, we give away for free. And it's more than just sales. Yeah, sales definitely benefits from this. But again, so can products, so can marketing, so can CS. Everyone in meetings can benefit from this. So we did some market research, got the engineering team. And so really it felt like we really started with a pretty strong plan in terms of conviction around what we were doing and how. - So what was, what did that first version of the MVP look like? What did it do? - I mean, the first version, actually, all it did was it recorded a meeting and then after I could go into the transcript did I can like highlight sections of it and turn that into kind of like a highlight reel. Very quickly, it was obvious to me as like the first and only user. Like, last thing I want to do after I have a meeting is like wait a half an hour for the recording and then go back through it and like do all the, like it shifted from one work, kind of work to a different kind of work. And so from that, we came up with like, well, we need to make it really fast. And our engineering team telling the engineering team, like it needs to be faster than like how much faster, like in terms of getting you the content after the meeting. And I was like, I don't know, just keep making it faster. I'll tell you when it's fast enough. And I think we got to about 30 seconds. I was like, okay, this is fine. Like this is, this feels almost instant. And then we did some work so that instead of me having to highlight things after the meeting, I could do it in the meeting. I'd click a button and it'd be like, oh, don't remember that's an important segment. And we always knew though that that was like a, kind of a bridge. Like we basically built this whole company with the assumption of two things. One, the transcription is going to become free. And two, the AI was going to get really good. And the hard part of this business was actually not the AI or the transcription. It was building a reliable recording architecture that sits on top of Zoom and Google Meet Microsoft Teams because there's no actual APIs for doing that. They're all, it's an undocumented kind of API. And so we're going to spend a year just basically building recording infrastructure that's a highly scalable real time fast. We'll build in some AI features that are going to highlight things. But we're really building this business for the day when AI gets really good and we can drop that as like a new engine into an old car type of thing. - So initially you focused on doing, just supporting Zoom users. And what were some of the challenges there? I mean, even today, I mean, my personal experience like trying to use Zoom APIs and there is, I can see documentation, kind of. But it's like, it's really frustrating. I mean, that was the number one thing we saw. We saw that there were some people back in 2020 that were building some products in the space and the reviews on all of them were it kind of works. It works most of the time, right? And for a product like this, if you're trying to replace something as consistent or reliable as note taking, whether it's with a Google Doc or pen and paper, that's reliable, right? It can't be, oh, I'm going to commit to using this tool and it works 80% of the time. It needs to work 100% of the time. And to your point, the challenging thing is there's probably easily 50 to 100 different scenarios where you might join a Zoom meeting or it might be operating, right? It might be, you're the host, you're not the host. You're on a bad connection, you're on a good connection. Like, and so, you joined after the start time, you joined ahead of it. You left it, like, there's all these scenarios. And what you realize is like, you know, working versus not working is like the perception of the user, right? Like, I'm sure all these other products actually were working in the very specific way they were set to build, but it felt like it wasn't working. But it shows up late. It feels like it's not working, right? If it leaves early, it feels like it's not working. Like, so there is no definition of what, you know, what working is except for what the user thinks it is. And so we actually, I think the hardest thing we had in the beginning was there's no like specific API. The only way to figure out is this thing working is we literally paid people after the first experience to tell us how it went, right? And which, like we built from day one, a really good pipeline for, if you have a problem on this meeting, tell us and we will go debug, you know, where this kind of cause between your expectation and what actually happened. - You know, usually at this point, I'm kind of digging to figure out how you got your first 10 customers. And one of the things that you had said earlier was, you know, our first 10 customers weren't nearly as important as our first 10 stable users. Can you just explain what you mean by that and why that was important? - I'm a big fan of kind of attack your core metrics in serial. And so like some people try to like, hey, you know, launch a product and you launch a product and you're trying to monetize and you're trying to acquire customers and you're trying to retain them. Like you're trying to figure out all three of those metrics at once. And I find that's like really, really challenging and hard to do. 'Cause they all kind of confound each other. And so I tend to kind of look at it as like, what's the, what's the riskiest metric would start there and work our way down with the least risky metric. And so for us, the riskiest metric was retention, was user retention. Can we just get, can we just build a product, you know, not even a multiplayer version, just a single player version that people use day in and day out. And, you know, we knew at some point we would monetize and we'd monetize by selling a version that's to a manager, right? That's like a different value prop, right? You want to roll the top to your team. But I had high confidence that like if we could get to a point where we had really good retention and then we were really good at acquiring customers and they got really good at referring other folks 'cause they're in a meeting and our products in the meeting, we built this like really good kind of viral flywheel engine and then we monetized on top of that, right? I'd already run, you know, you know, kind of a high seven figure SaaS company. I wasn't super interested in just doing that again. I only wanted to this company if we could really get escape velocity. And so we really just focused first and foremost on like, which has proved that we can make a killer experience for folks 'cause I've always believed like, if you can build a killer experience in folks and they use it day in, day out, you almost always can find a way to monetize it. You know, they only use it once a month, maybe more when we're challenging, but if you can find something people use every day, there's not a product I don't know that doesn't find a way to monetize that. So yeah, so I think the killer thing for us to figure out how do we get those first 50 stable users? - And what were some of the challenges with getting those users using the product or activating them? I know trust was an issue in the early days, right? 'Cause this was this completely unknown product and AI sort of note takers weren't that common. - Right, yeah, so I think, you know, most of the people were getting those first 10 users, it was almost all me reaching out to folks on LinkedIn, friends, friends of friends, be like, hey, will you try this product sort of thing? You know, one of the challenges was just making sure it was reliable, right? So that feeds back into that, like, you know, having a feedback loop and like I said, a little bit paying people for their feedback. There were, we noticed like people don't just, they're not immediately gonna bring into the next meeting. Like they were all basically like, oh yeah, I wanna play test this thing first before I expose it to my colleagues, my customers, my prospects, right? And so we saw that too in a lot of our feedback was like, oh, how's your first call go? Oh, I just met with myself to try to see how this thing would work. And it actually doesn't work that well when you meet with yourself 'cause they beat themselves, they wouldn't talk to themselves. They were kind of like, what's, you know, it only really works. So we actually noticed this and we, you know, we have a bot that joined the meeting to record. And I went to my engineering team and was like, can we have a bot that goes to the meeting instead of recording? It just like plays a video. So you can kind of like have like a fake meeting with someone and they're like thought about it like, yeah, I guess so. And so we built out this pretty cool apparatus that allows you to have like a test call if they call with the recording. And we kind of made it fun, right? You thought you were talking to a real human and you saw this person talking and they're like, oh, I'm just recording, right? When people are like kind of like, you know, message you on their voicemails kind of thing. And so that really helped. Like then we saw, oh, great. People now have a way to play with this product and again, get the trust to understand how it works before they bring it to a meeting with their colleagues or customers. - It's funny you say that because I had identical experience this morning where I was looking at some software. I won't mention which one to use instead of what we're using now to record these interviews. And so I was like, oh, great, I'll just test it. And so I, you know, connected to it, started recording and talking to myself. And then sort of downloaded the files. And I was like, well, that was a pointless exercise because I don't have anybody else on the other end. I didn't see whether it records two different tracks and how it separates the video and audio between me and the other person. And like if I had a bot who had come along to that meeting that would have been super helpful. So completely understand that. One of the other challenges you mentioned was that people had to remember to bring Fathom along to meetings, right? What was going on there? - Yeah, so the way our app worked is like you had to, once you joined the meeting, you'd have to go to our app and click a button. Okay, now add Fathom to the meeting. And it seems, okay, that seems like good work, but then you realize every single person in the way they join a Zoom meeting is they set up their workspace first. They get their docs in place, they get their notes in place. Then they click start and they join the meeting. And once they join that meeting, they aren't opening anything, right? 'Cause they're now walked in and like, hey, you know. And so we're like, oh, crap, we had this huge problem, people were really excited to use Fathom, they do that test call. They're like, oh, I'm really excited to use this. And then they'd forget, right? They just go, oh, I just clicked the Zoom link at the scheduled time. And so we're like, this is a huge problem for activation. And so we actually ended up building a desktop app that would actually, you know, one so we could know when you're on a meeting and then be like, hey, so we'll take you about to join the meeting. Do you want to bring Fathom into that meeting? And even better, we could just have them say, like, here, do you want to opt in just to have Fathom join when you join? And that was like one of those things that like, you know, it took, you know, it was like a 10x metric improvement. Like, oh, all of a sudden we had no one activating too. We had 60% of people activating. And so just a reminder, it's like, you know, to really understand how people actually operate when they're using your software. - A quick break to thank our sponsor, Sprinto. Most companies treat compliance as a side project. But without it, enterprise deals stall. Sprinto turns compliance into a competitive advantage. Its automation platform unifies audits, risks, and vendors. So you're always audit ready. With 300 plus integrations and AI driven monitoring, Sprinto keeps compliance running quietly in the background. Join over 3000 SaaS teams already using Sprinto. Learn more and book a demo at Sprinto.com. That's Sprinto.com. - So beyond those initial 10 users, as you started to scale the word is getting out, you're getting more and more users here. What was going on? How did the product hold up? What was like, what type of people was signing up for Fathom? - Yeah, so I think it took us about almost a year to get to like a first version where we had like 50 stable users, right? Like that were, you know, one core that just continues it over and over and I was like, okay, thank God. And right around the same time, we were about to launch. And we'd actually, you know, I think in startups like, the key thing is you gotta have like good hypotheses that are directionally correct. And then you gotta get lucky on the timing of some things. And one of the things we got lucky on was, Zoom was launching a marketplace. And so we kind of, you know, kind of like my email to Kiko back in the day, I cold emailed the person running that program. It was like, hey, I think you should include us in it. We're this great startup, we're building this cool product. I think it'd be a perfect fit for your Zoom app marketplace. We're wanna launch exclusively on Zoom, et cetera. And so it was like us and like 50 established companies launching on day one in Zoom marketplace. And, you know, we quickly got to the top of the list, maybe because it was alphabetically sorted and we changed our app name to AI note taker by Fathom instead of Fathom, maybe, I don't know. But, you know, I think we always have the ceaseless that at scale, you know, you're gonna bring Fathom in your meetings, people are gonna see it. You have to explain why it's there. And they'll be like this kind of natural kind of word of mouth virality. But the challenge with all this kind of business, like how do you get the first 10,000 users? And that we kind of got a gifted kind of like, here's a simple solution to that, right? You're gonna join this new marketplace and Zoom's gonna put you in front of 10,000 to 100,000 people. And that was true. And so we got real excited. We launched, I think we got, you know, I think about 100,000 signups in the first month. And then at the end of the first month, we had 100 DAU. And so we had this real kind of panicked moment of like, what did we get wrong here? And we're kind of freaking out. Like, you know, at this point it's like, oh, we don't have a business, right? Like, we had 100,000 signups and all the other people were using it. And we went back through the data and we kind of were like analyzing one of the things you do to set up Fathom is you connect your calendar. That way we know what meeting you're on. And so that's, you know, important to, you know, system to run. And we just ran this analysis. How many of these people actually have like, you know, I don't know, a normal number of Zoom meetings and we're like, oh, like 0.1%. 99% of these people had no meetings on their calendar. And then you have to remember this is middle, this is mid 2021, this is like deep in the pandemic. Zoom is being used for all sorts of things, not business-related. And Zoom initially opened up this marketplace to their like free users only. And so they basically sent us the worst users they have from like a frequency perspective. And so obviously we learned this we're a little hardened. Okay, we're not as bad at this as we thought. And in the end, it actually ended up being a silver lining because it basically gave us a lot. Like what we also learned is our onboarding process wasn't very good, right? Even those users are not the best users. Our onboarding process is not very good. And so we spent, you know, I basically stapled myself to one of our engineers for three months and every day we woke up and we're just like, great. One of the top three things we can do to improve the onboarding process. And usually that's a hard thing for Sharp to do 'cause usually you're only getting in the beginning a couple of signups. It's hard to get any statistical significance of like how good is this process getting? Thankfully we were getting 1000 signups a day just to happen they're pretty low quality 'cause they're people that aren't very, you know, very good. But they're still earnestly going through the signup process. And so we kind of got fortunate because now we got three months with a lot of users to really hone in this onboarding process. We took it from like a, yeah, I think it was like 25% success rate to like a 70% success rate. And, you know, that really served us going forward. Once we started getting better users we started to open up the platform to more and more folks. But that was kind of like a real crucible way to go through of like figuring out like, oh gosh, I thought we're dead too. No, no, no. This is just the quality of the users and we can, you know, get something positive out of this. - So did you have to change anything to get different types of users or reaching different types of users or was it just Zoom kind of changed the way they were exposing the app store? - We basically have lobbying Zoom to like, okay, like, you know, Zoom at this point was very conservative for a bunch of different reasons. And so around security and so they weren't, they weren't open apps for up to their best users but they did over time. And so again, it kind of worked out 'cause in retrospect that they'd actually sent us 100,000 good users and we had onboarded, you know, even a third of them, we would have fallen over. Like those are the things we were scared of. It was like, we don't know how to load test this thing for going from 50 users to 50,000 in a month that would have worked. So it's kind of one of these crazy kind of like the universe gives you just what you need kind of thing situations. - Yeah, it feels at the time, but then you look back and go, oh, that was a good thing. - Yeah, exactly. - And also sort of around that time, I think somewhere in 2022, you were kind of forced to start monetizing ahead of plan. What was going on? - So I mentioned like, I don't like to do things in serial and the metric, so we had fear of retention. You know, we'd figure out onboarding kind of activation and we were really focused now in early 2022 on like, how do we kind of ramp up virality? How do I make it easier for people to, you know, share fathom with other folks? And that's when the kind of the bottom drop down of the market, if you will, on funding. And we had had a pretty, honestly, probably pretty aggressive fundraising strategy as maybe the hubris of a second time founder that grew up in probably the most bubbly period ever, right? 2020, 2021, like, you know, people were raising crazy rounds with, you know, very loose metrics at that time. And so our original plan was we're not going to monetize for at least another year. We're going to keep focusing on just on growth, right? We just want to focus and gain this free product out there. It gets as many as you're possible. And at some point we'll build out kind of our team product that we sell to managers. That's where we're going to monetize. And part of that is like, I was fundraising every six to nine months. I don't think we ever had more than 12 months of runway kind of intentionally. I just had such confidence in what we're doing. And I also know that I only work well under pressure, so I didn't want us to have four years of runway sort of thing. But then the bottom falls out of the market and it's very clear very quickly, you will never fundraise again unless you can prove revenue, right, unless you can show you can actually monetize this, which is really frustrating. Because people are using this day and day out. Even if we don't monetize these users, the time is huge. But it doesn't matter, right? Now the hive mind of investors has shifted. And now everyone is like, yeah, they would talk about growth, growth, growth, to profitability, profitability, right? And so we had to very quickly pivot and start figuring out how to monetize. And I think the biggest challenge there was just balancing growth for monetization. Yeah, yeah, let's talk about that. Because now suddenly you're in a situation where it was kind of very clear cut. We're focused on great product growth. And then now monetization suddenly almost overnight has become super important. One, how did you sort of flip to switch what happened? And then I'm kind of curious, what did that do to-- did it slow down growth? Well, and this is the thing I was most afraid of. One of the things I saw at User Voice My Previous Company is we were free for the first year as well. Completely free. And we saw we actually similarly had kind of a natural invoked virality to the business. And I remember the day at User Voice we put up a pricing page. And we put up a pricing page and we lost half our signups. Even though the same free product was still available, now they're just even showing that there are paid plans, we lost half our signups. And so this time around, I was like, OK, I want to learn from that. And so I really struggle with it. How do we monetize this without kind of like ruining that growth lever that we had? Thankfully, we always had kind of a plan around this. And the plan was always like, we're not going to try to monetize individuals, even if they say they will pay for it, which we did have a lot of people saying, I'll be happy to pay for this, which is I think a really good sign. We always knew, no, we don't want to charge the sales rep or the CS person or the freelancer. We want to charge folks when it's a founder and executive that's saying, I want to roll set for my entire team and I want visibility on what's happening on my team's meetings. And so the good new-- the nice thing about that is like it's a different value prop. It doesn't-- it kind of keeps this clean separation between your growth engine and where you monetize. The downside to that is it's a whole new product, right? It's a whole new set of feature functionalities. It's not just going back to existing folks and say, oh, by the way, now everything costs $10 a month sort of thing. But I felt it was the right thing to do, because I knew if we just started charging money for the free product, it would ruin virality, it would ruin all the growth. So we started basically selling this product. The problem is, I think it was like June, May or June, we realized we need monetize. And I gave the team-- we have to start selling something in 60 days. Thankfully, one of the things I did with some foresight was I'd hired already-- I already had three really good sales people on the team. And again, it's the benefit of speed running a video game before I went back to some of my best sales people from user voice about a year, year and a half before this moment. And I said, hey, I don't have anything to sell today. But at some point in the future, we're going to flip a switch and we're going to start selling this other product. I'd love for you to join now, basically play the role of customer success, get to know our customers, get to know the product, become a real product expert. And so when we flip that switch and say, great, it's time to sell something, you'll be ready. We'll hit the ground running. And I remember coming to them and being like, OK, it's a little earlier than I planned. It's time for us to flip that switch when you start selling something. And we'd 100% sales with process. And it was important to have a sales team because we're mostly selling the roadmap. We had about 12 features in this Team Edition product that we thought people would want to buy. We only built two of those. But we knew we had to show revenue. And so I was like, great, you've got to get on there and pitch to sell them on where we're going with this. And they're going to get in early and walk in good early pricing, et cetera. And it kind of worked. We actually got 100K in ARR in the first month. And it kind of just grew from there. We got to a million in revenue in about 11 months. And eventually built out that product while we're selling it sort of thing. But yeah, it was a very difficult pivot. So you had this outbound sales motion kind of kicking in earlier than planned. And then were you still offering-- was there a premium plan at that point where a free user could switch over? No. So there's no individual paid plan that came later. There was just basically this team plan. It wasn't really outbound. It's actually more like farming. It was basically going to people-- we were putting kind of basically ads in the existing app saying, hey, we've got this new product, team mission, sign up for a trial for it. And so I honestly think most of that first 100K, probably even most of the first half a million we sold, was really the people that were just huge advocates of Fathom. They loved the product. They were big fans. And I'm like, look, the features probably don't warrant what we're going to pay you for this. But we want to support you, that sort of thing. So it was all inbound in that existing kind of free user base. So I remember when I first came across Fathom, and I was like, OK, it says free forever. And I was like, nothing's free forever. I'm digging around, trying to find more information. And one of the things that struck me was how generous the free plan appeared to be. And I was like, there's got to be a catch. You're going to store this stuff forever. And honestly, I couldn't really find anything that kind of raised any alarm bells at the time. So I think it's really interesting that you still-- most people would not have done that. Most people would have said, we've got this user base. The easiest thing in the world would be to offer a paid plan and just convert some of those people. But you went down a different route and you started selling. Also, you were selling the team's plan before you had a team plan, which is slides, right? Yeah, we had a couple of the features, but we didn't have really the full product built out. And that was the thing. I was like, we had a slide. Here's the 10 features of the team plan. It's like eight of these say coming soon sort of thing. So it was a little vaporwary, for sure. So Zoom was kind of like your big acquisition channel, at least for users. What else were you trying? What were you able to get to work? What didn't work? I mean, at this point, it was Zoom. And then it was a lot of that virality. And it's funny you mentioned the thing about being skeptical about it being free forever. That was actually one of the biggest challenge we had. People would be like, this is too good to be true. This is too generous. What are you doing? Are you selling our data? We actually had to put a thing on the home page. It's like, yes, it's free. Here's how. And it's still on our home page this day. You can click it. And we actually explain here's how our business plan works. And it's like, no, no. We know at some point, some of our users will convert this team plan. They'll pay money. We're not selling your data. We're not doing anything to various-- we've got really good optimized costs. It was crazy that it was like-- I think 10 years of software companies put out free plans that are, when they're too good to be true, they really are too good to be true sort of thing. We had to really overcome that. But yeah, so I think during this era, we were 95% of our traffic was coming in still from that Zoom at Marketplace. That was really what got us off the ground. And then it started shifting over time to being driven more by our users bringing Fathom into meeting and telling other folks about it and raving about it. And again, part of that's why the free plan was so important to us, because we knew you only get that kind of rabid kind of fandom and people really spreading the gospel of your thing when you provide them a lot of value by giving them-- we're going to give you this really good product, and we're going to be free forever. There's no catches to it. And still to the statement, the majority of our users are on free. And we're totally fine with that, because the value we get is marketing. You're telling your folks about it. So what we saw over time was kind of like Zoom started 100%, and then slowly as we started replacing our Zoom traffic with our own kind of referral traffic. Around this time, we also did product hunt early on as well. And that was something that worked really well for us in terms of getting really good early adopter users. And we also, I think, did a lot with operationalizing kind of social proof with G2. We really invested a lot G2, which is Yelp for software. It's an inexpensive product to buy, but we wanted people to not have to feel like they had to do a bake-off and try to rate these products before they bought one. So we have a lot of people that love this product. Let's ask them if they'll write reviews for us, because if we get a lot of good reviews, we bet that shortens the sales cycle. And so people will just be like, oh, okay, I love this product. And looks like a lot of other people do too. Great, like I don't, yeah. And I think that worked pretty well. And it turned into like, not only did it help with short and sale cycle, we got so good at that that like, it actually became another significant like traffic source for us because we became quickly like, the number one actually app on G2 in terms of like user satisfaction. So that's pretty cool. - So I'm guessing when you started, there weren't a lot of AI note takers around. Around, by the time you get to a million ARR, the market was probably pretty flooded by that time, I'm guessing. - Yeah, I mean, I think I mentioned like, our two core hypotheses were, transcription is gonna come free, and AI is gonna get really good. And our corollary to those two was, if you wait till those two things are true, you're like two to three years to wait to build this business because it'll be an obvious thing to build in everyone will rush in. And that's exactly what we saw. It was like kind of late 2023, when you get to GPD four, and that's when, in like cloud two, and that's when AI can now write notes. And so like, the highway stuff I talked about kind of goes away and it's like, great now we get to drop in really great meeting summaries written by AI on top of that really reliable recording infrastructure and transcription architecture we've built. And, but it's also the point at which everyone else looked at that. It's like, it's a bit, in some ways became like the new Hello World app, I think for founders to go. Like, what can I do with AI? Oh, I can take a transcript and I can like make a summary out of it. We're like, yeah, we, we know. And so, yeah, so we started seeing a lot of startups pop up. Well, we really didn't worry about it too much. 'Cause again, we had this strong thesis that like, it's a virality based business. And so you're tough to beat a company that's already been building that, yeah, that five wheels been spending for two, three years like ours had. What about zoom itself? Because then they, they kind of became a competitor, right? With their own kind of built in meeting note takers and stuff like that. How did that change things for you? Yeah, I mean, so we were exclusive to zoom for the first two years. And part of that was, you know, marketing related. Like, you know, we want to just tie ourselves to what we thought was the market leader for the people we were going after. And I think that worked really well. They were a great partner for us. Obviously, they got us those first, you know, 10, 100,000 users and beyond. You know, I can't say enough good things about them. We also knew at some point, two things would be true. They would obviously get into this game. And we would obviously want to spread beyond the zoom platform. The other reason we did zoom only is because of the, it allowed me to constrain the complexity of the solution. Right? Like, as I mentioned, getting this to work on zoom was the hardest part about this, getting to work reliably, right? 'Cause of all the different ways you could run a zoom. Same is true for Google Meet and Microsoft Teams. Each one of these things is starting from scratch with like a huge complexity mountain to climb. And so I didn't want our engineering team to try to climb all three of those mountains at once in the beginning. We're just going to focus on zoom. And then once we get zoom really dialed in, we'll then move on to Microsoft Teams and Meet. And one of the things we knew early on is that we can look at all this aggregated calendar data from our users and see that kind of cross-platform usage is just really high. Maybe not as much within the Microsoft Teams ecosystem. Like if you're in Fortune 500 or if you're in an enterprise, everything's Microsoft. But for most of us that live in what I call the free internet or you've got Slack and Salesforce and HubSpot and all these things, we kind of flip between Google Meet and zoom the way you flip between kind of Netflix and Hulu type of thing. And so we kind of knew at some point that yes, we know zoom will get into space. We also know that zoom is unlikely to build a solution that works also on their competitive competing platform. And so that was kind of, you know, at the same time they were kind of competing with us, we started saying like, okay, great, it's time for us to move on and start supporting all the platforms, which is the number one thing our users want us to do. - So the business is doing eight figures in ARR currently, but you had some huge growth in like just 2024, right? I think like revenue like 10X in like the last six months. Like what, what drove that? - Before we put really AI into the core of this product, we had a really good business. And when we dropped that in, then we could say we can now automatically detect all your action items, accurately, we can write amazing meeting notes. We saw every single metric we had in the business go up by about 20%. Whether that was activation or retention, everything went up. And so, you know, that moment happened for us about December of 2023. And from that point, you know, I think forward, it was about, you know, like a 10X increase very quickly. You know, I think it took us about a year to get from one to 10 million. And it took us a year to get from one, sorry, sorry, it took us a year to get from zero to one. Took us another year to get from one to 10. And so, and then it just continued to accelerate beyond that. So I think it was one of the things where like, we had a lot of good stuff in there and we took a good product and made it great when we kind of added that functionality in. - We should wrap up. Let's get on to the lightning round. I've just got one question for you. Like, it just kind of hit me that, you know, you're clearly a product guy and you've had a successful business with a user voice and now with Fathom. But I think a lot of it is just driven by, you just seem to be this guy who just sees problems and is just driven to build a solution. And it's not necessarily kind of driven by, you know, a kind of business or making money and kind of like we talked about your background or these little, there was a bunch of other things that you'd built that we didn't even talk about. Just what is it like? How do you kind of approach things? 'Cause you're probably seeing problems all the time and you're probably feeling like you want to go and solve them. And there's this one thing about being focused on what you're doing. But I think it's really also really healthy to have that kind of mindset where you're always thinking about how to solve problems or build tiny solutions. And I just want to try to get inside your head a little bit because I think that might be helpful for people who are at sort of the super early stages and not really sure about how to kind of get started. - Yeah, again, I think I was very fortunate that I kind of fell into this group of like amazing entrepreneurs, right? Like, you know, Reddit, Twitch, Cruise, Dropbox, you name all these, all these folks were kind of coming up around the same time I was moved out to San Francisco as part of the Y Comaner kind of community. And I think to a person, what I noticed is that all of them cared about solving problems and building things in like external validation. I always say like, almost a problematic desire for external validation from users. And I almost never heard anyone talk about revenue, cogs, gross margin, whatnot, right? Like that stuff all came later, but everyone was just obsessed with building something. You know, it's on the t-shirt, right? Makes something people want, right? It's like the Y Comaner t-shirt. I think it's, that's like the core ethos, I think of that whole community that I think is really healthy, that everyone just focused on what's an interesting problem and like, how can I solve it? You know, sometimes you get problems that there's only 10 other people that have this, right? That's the problem of that route. But I think that's a much healthier route. When I see people that come in and say, oh, my goal here is to get this business to a million. It's like, I never thought about getting us to a million. I thought about getting us to, how do we get 50% of people to, you know, use us week in, week out sort of thing, right? And so I think that's just kind of the way I think about it. It's like, I know, I get excited about hearing people say, I love using this product, right? And I think that's a, it's a very sustainable, much more sustainable resource than like hitting the next revenue milestone. - Love it. All right, let's go into the lightning round. I've got seven quick fire questions for you. What's one of the best pieces of business advice you've received? - Not really advice, but the first thing pops to my mind is I had an angel investor early on challenge me when I was at user voice and they said, you're not dynamic enough as a CEO. And what she meant by that, I think, was that like I was really focused on one thing and letting other balls kind of fall on the floor. I wasn't kind of juggling all the things you need to as an early stage CEO. And that was 15 years ago and many, many millions of dollars revenue ago. And it still burns me to my soul that someone tells me, like, I'm so competitive. And so I think about that constantly. Am I being dynamic enough today? Am I like keeping on top of all the things I should keep on top of? - It's funny how some of the things just stick down there. What book would you recommend to our audience and why? - I love the score takes care of itself, which is booked by Bill Walsh, who was the football coach of the 49ers in the 80s. It kind of speaks to what I was just saying. It's like, his whole mentality, one of his big mentality is like, he doesn't care about the scoreboard. It doesn't, in our case, revenue. He cares about the team doing all the little things right. So if you do all the little things right, the score takes care of itself. - What's one attribute or character that's sticking in your mind of a successful founder? - I guess I'll refer back to what I said, which is like, I think it's like a need for external validation that kind of borderlines on problematic. - What's your favorite personal productivity tool or habit? - Right now it'd be my whoop. Kind of, I guess, yeah, maybe not exactly what you think of productivity, but I'm terrible when I'm not well rested. Like, if I'm slightly tired, I'm a shell of myself productivity-wise. So I use it, it's like what gets measured gets managed. And so by measuring basically my sleep and what they call my recovery every day, I get a lot more productivity than it used to be. - Yeah, me too. I woke up at like 4.30 yesterday, never wake up that early. And oh my God, I was just doing the dumbest things throughout the day. It was just like, I had to take a nap in the afternoon. But yeah, what's on your crazy business side that you'd left to pursue if you had the time? - This might be surprising as someone who's only ever done kind of B2B products, but I really want to build a really great VR experience that is communal for you and your friends. I don't think that, I actually think VR is magical. And it's kind of surprising that it hasn't really got widespread adoption, but I really want to make kind of like a, you know, imagine alternative to what you used to, you know, as a kid, you go to the club together or something, you listen to music together, build something like that, that's almost time based for you and your friends to get on at the same time and have kind of a shared experience when even when you've got kids and you're all in different parts of the world sort of thing. - Cool. What's an interesting or fun fact about you that most people don't know? - I guess maybe it's, people do know now 'cause I tend to do it a lot, but I love to do analogies to video games. I talk about Fathom in terms of like single player mode, multiplayer, like, you know, we have a point system in Fathom. Yeah, I did my Minecraft analogy. There's, you know, I'm a big video game guy. I actually don't play as many as I used to. I actually watch a lot of video games on YouTube as like a methadone. So I don't feel compelled to play them 'cause I don't have time for it. But I feel like I learn, no one does onboarding better than video games. No one does like user experience better than video games. And I feel like I learned so much from just being a student of how great video games are crafted. - I once worked with when I was at Microsoft at PM who came from Xbox. And it was just so amazing to see this guy. We're building this web stuff and he would just bring this gaming mentality to it. Little things like I say, well, how can we click that? It doesn't make some sort of sound just to register that you did that. I was like, but it was those tiny things like that that they do with video games that it just is a completely different immersive experience. - I mean, your favorite video games that you think about like Zelda and stuff like this, especially the more modern ones, they're incredibly complex interfaces. There's so much to them. There's complex, even more complex than your average piece of software. And yet it doesn't feel complex because if yet for the putting to that and because like in Zelda, they have the whole like tutorial zone where you unlock like one basically button at a time. Have you ever heard of software where you unlock like one button at a time? No, right? Like we're just not that good at it compared to that. They're master's at it. - And finally, what's one of your most important passions outside of your work? - I am addicted to skiing. I don't know. It's something about putting in very little effort and going very, very fast, just like speaks to my soul. - Love it. Richard, awesome. Thank you so much for joining me. It's been a pleasure. I really love this conversation. I think we covered a lot in a relatively short space of time. So I appreciate you sharing your story and your insights and kind of wisdom along the way. Hopefully it's going to help people listening, some founders to go and make a difference in their businesses. I appreciate you doing that. If people want to check out Fathom, if they haven't already, they can go to fathom.video. And if folks want to get in touch with you, what's the best way for them to do that? - Just ping me on LinkedIn. - Awesome. Thanks again and I wish you and the team the best of success. - Thank you so much. - Cheers. Thanks again to Sprinto for supporting this episode. If compliance is eating your team's time, there's a better way. Sprinto automates audits and risk management so you can focus on building, not chasing evidence. Sock 2, ISO 27001, HIPAA, all handled from one simple platform. Go to sprinto.com and book your demo today. That's sprinto.com.