Welcome to 2020! It’s crazy to think how time flew over the last year. I hope you and your family had a fantastic break. I definitely needed one. We were moving on full throttle for the last two months of the year and it was nice to step back and reflect on everything we did in 2019.
If you didn’t see the year in review I made for Trufan’s first year, check it out here. Before I wrote this year’s recap I read over what we did in our first year and how we viewed our business. I wouldn’t say that we’ve pivoted from what we set out to do, but it’s safe to say that this second year has clearly shown how our project has evolved into something a lot bigger.
In Year 1, this was how we pitched our business: “We are a tech company that has developed several sophisticated algorithms to help some of the world’s biggest brands and influencers identify and reward their top fans.
Now, after two years, we pitch ourselves as the world’s leading audience analytics platform disrupting the influencer marketing space by helping brands activate their grassroots communities and segment their audiences.
We crafted our new messaging after intensively analyzing the current advertising space. We noted that brands deployed $273 billion in 2018 to push their message through Facebook, Instagram and Google ads. We believe that this model of advertising is a bubble (a modern dot com bubble). There are four key issues with online advertising that will make the bubble burst over time.
1. Domain laundering and click farms have led to ad fraud. Anywhere between $50 billion to $150 billion dollars will be lost due to ad fraud over the next 5 years.
2. Ad blockers are on the rise. Proctor & Gamble’s CEO recently commented on how ad blockers are close to 40% now. People don’t like seeing ads.
3. Brands have little to no control over where their ads are placed. Over the course of 2019, there were numerous instances where brands like JPMorgan and Verizon had their ads put on top of racist YouTube videos.
4. Marketers can’t exactly point out how successful their ads are. When you ask a marketer to validate their advertising efforts, they’ll likely point to how the more money they spend on ads the more sales increase. However, we believe that the current way ads are displayed means that a lot of money is wasted on showing ads to people who already had buying intent. It’s like me, you and your friend worked at a pizza shop giving out coupons. Your friend was the most successful at it but the reason he was successful is because he was giving out coupons to people already in line for pizza. Selection effect versus advertising effect is hard to distinguish.
We believe that as brands start to realize these issues, they will pour more money into influencer marketing.
The question then becomes how you market through influencers effectively and efficiently, especially in a world where influencer fatigue is real. People are tired of seeing sponsored posts and they don’t want to see people with millions of followers endorse products they never use. That’s where we come in. We believe that a brand is better off engaging their grassroots communities made up of superfans and micro-influencers. After all, micro-influencers are less expensive to work with, tend to have higher engagement rates, and finding them through Trufan can ensure that they are already aligned with your brand.
We double downed and tested this hypothesis and it was great to see it work.
In under 2 years we have:
- Acquired SocialRank, positioning ourselves as the leading audience analytics platform
- Grown to 13 employees, 9 advisors and 27 investors
- Raised $1.8M
- Brought on over 100 active customers including Netflix, NBA, NFL, Samsung, and Victoria’s Secret
- Become cashflow positive
- Been accepted into the DMZ’s accelerator program
As the CEO of the company, I mentioned in last year’s recap that my job really comes down to four things: set a clear vision, hire and manage great people, oversee product development and fundraise. Last year the hardest part of the job was fundraising. This year it was hiring and managing a team. By the end of 2019 though, despite the structural changes we made throughout the year and the new people we brought on, I felt proud about the culture we had built at Trufan.
We still believe that scars and wounds are not meant to be hidden.They’re meant to be shown. Without further ado, here are some of the lessons we learnt in Year 2.
We aren’t the smartest bunch of people. I’ll speak for myself. I don’t think I’m the best CEO. In fact, I have a number of new flaws that I noticed in 2019. My co-founder Aanikh will be the first to tell you that he isn’t the best at developing product. Our Chief Growth Officer Scott who heads up our sales team is not the best salesperson. That doesn’t matter though. None of it does.
We know that we are the best at showing up. Every single day, no matter what obstacle is ahead of us, we show up. In my eyes, showing up is the best way to sum up our 2019. We were constantly in motion and that led to new opportunities popping up throughout the year.
At the start of 2019, we had a platform that got good reviews. Our beta testers (we didn’t start truly selling the product until July 2019) saw the value in our platform but still felt like it didn’t look like a tool they would use every day. We knew that it was important to redesign the platform and make it more interactive. We finished redesigning our platform on February 7, around the time that we received a cheque from Round13 Capital and moved to Toronto.
Even with the redesigns though, our platform went through an immense amount of scrutiny. Accounts sometimes were not run properly, certain parts of the platform led to dead ends, and the data we gave wasn’t always displayed properly. That being said, we still saw value in the platform and the criticism we got did not stop us from showing up.
Over the course of 2019, we sponsored and attended various events from Social Media Week Toronto and Collision to the Athlete Tech Summit and EGLX.
We made several trips to New York and LA to demo our product, get customer feedback and build relationships. We also hosted several dinners where we invited our investors to meet potential customers. Doing all of this helped us refine our product and create something that today is designed well both in terms of appearance and functionality.
It also helped to acquire SocialRank, a platform that was highly reputed in the audience analytics space. Trust me, had we not shown up there was no way we would have gotten the opportunity to acquire the company.
After we found out from Alex, the founder of SocialRank that they were moving onto starting a new company and they were looking to sell SocialRank, we got right to the drawing board. Aanikh and I spent several nights working away at the deal; providing documents, figuring out how the integration would look like, raising money, etc. We began negotiating the deal on September 18 (sometimes even negotiating the deal from our bed) and on October 8 we were given the green light by SocialRank. It’s important to note that we weren’t the highest bidders for SocialRank. There were several companies that offered to buy them for more money. The reason the founders of SocialRank, Alex and Michael, decided to go with us is because they trusted us to keep SocialRank going and to further the reputation they had built up with their customers.
We got the whole deal done in under 2 months (the deal was internally called “Project Obsidian”). The quick turnaround was not just because of us, it was also because of how professional the SocialRank executive team was and how quickly our lawyers at Osler were able to work. We truly appreciate them.
Acquiring SocialRank brought a lot of attention to us. We were covered in various news outlets from TechCrunch and BetaKit to Business Insider and DailyHive. However, 2019 was also a year of realizing how all the times we showed up helped build our brand. Our team first noticed this at a sports analytics conference in June. Our Business Development Manager Cameron was shocked how many people came up to him and knew what Trufan had done before. I was shocked that even when I was in Mumbai, I met entrepreneurs who had heard of us.
We are proud of the brand we are building and are even prouder to be a Canadian company.
Cash is king and customers are everything
When 2019 began, we made the decision to double down on sales. We did everything to make money from day one (lesson we learnt from Michael Hyatt in our first year). When a customer asked if something was possible, we frequently said yes and then went back to the drawing board to figure out how to do it. We even went into several pitches and priced ourselves way too low. We were scrappy and tried to make a buck in whatever way we could. This mindset which we eventually shifted from led us to start a new line of business called “Experiences”. We realized that some brands didn’t know what to do with the data we gave them. However, they would pay if we took the data and did something with it. That’s what Experiences became. We created events and videos around a brand’s top fans. To create some strong case studies, we carried out experiences for free for Nike Toronto, Major League Baseball and the Toronto Raptors.
Our scrappiness knew no bounds. I used to take coupons and promos mailed to me and give them to our Customer Success Manager Jay. Jay would then email the brand representatives or marketing heads at those companies with a screenshot of the mail and a simple question: “want to send these to your top fans online?”
Near the end of 2019, we realized that our gunslinger attitude to sales was great but needed some focus. We had to run with the product we had built and trust that it was valuable to our target customers. That was the only way we were going to be able to scale (it’s very hard to scale the Experiences side of the business). After we acquired SocialRank, we began focusing exclusively on increasing recurring revenue. We did this by creating as many sales pathways as possible. Our sales team cold called and emailed potential clients but we also focused on setting up smart affiliate partnerships with individuals and brands that could bring us 3–5 leads monthly. Moreover, SocialRank had built up great brand equity so it wasn’t uncommon for the platform to get 10–15 leads per day from people that wanted to test it. Some of those leads were even big brands like Coca-Cola and Holt Renfrew. Lastly, we went to our existing customers and offered them discounts if they referred us to another client. We also went back to potential customers that said no to Trufan a year about and pitched them on SocialRank.
We had so many leads to deal with that it became imperative for our team to become good at closing deals. This meant getting on as many calls a day as possible and having a clear sales process (who does the demo, who does the pricing call/closes).
We also began to notice that our business was more appealing to brands than influencers. The types of brands that came on as a client varied though. We bucketed them into five categories: DTC/ecommerce, CPG/retail, sports, regulated industries (cannabis, pharma, finance) and agencies/channel partners.
The biggest validation we got for our product came on December 3. We travelled to New York City to meet some of our customers. Some of them told us they couldn’t do their job without our platform. That was great to hear :)
Building a good product doesn’t happen overnight
Our product has always been the core of our business. If it didn’t operate well, then nothing else really would matter. We started 2019 off doing a few redesigns to the platform. We got Jeremy Becker to do these redesigns and after we pushed the UX changes, we noticed our customers spend more time on the platform per visit.
Past that, we demoed our product for the first time in public a day after we moved to Toronto. On February 15 at Tech Toronto, we showed our product off including some changes we were hoping to make in the future (update fan profiles, automate billing, etc). You can watch the demo here: https://www.youtube.com/watch?v=CxasyUclknA
It was crazy to think we started 2019 off thinking our focus needed to be on sales. However, by March we noticed our focus needed to be on product. We knew that for our sales process to be effective we needed to find product-market fit first.
What does product-market fit meant to us? Have 100 customers say they love your product and they are willing to pay for it. That was our benchmark for product-market fit.
In the first half of 2019, we didn’t know if we were a software for influencers, a software to help brands run fan loyalty over social media, a software to help small businesses or a larger solution to a big problem around online advertising (as described in the first few paragraphs). How did we achieve product-market fit and how did we figure out what we wanted to be? We kept moving. We heard from our customers, we noticed what our competitors did, and we kept in mind what our key advantages were.
We did everything we needed to tighten our grasp of why our customers needed us. Our advisor Michael Hyatt told us that we need to be clear on our messaging. “Make it very clear what you do and how people pass your message on.” After we realized that our biggest value add to a customer was giving them access to their grassroots communities, we realized that we needed to emphasize that in every part of our business.
In the last year in review I wrote, I mentioned that “our goal by the end of 2019 is to incorporate predictive analysis and machine learning into our algorithms so we become an AI powered fan engagement and discovery platform.” After acquiring SocialRank, we essentially did that. Though we have not included any machine learning into our algorithms we have built a two-prong solution. The platform we worked on before acquiring SocialRank specializes in fan engagement. It can help any user understand more about their audience from their engagement patterns to their sentiment at any given time. SocialRank facilitates the discovery aspect of our offering. If you want to search for an audience that fits your marketing campaign you can do that easily on SocialRank. It’s essentially Google for audiences.
Not every investor is right for you. Be selective of who you bring on board
We’ve been pretty lucky when it came to the partners we were able to bring on. We’ve now raised close to $1.8M and we’ve secured investment from several NBA players, media executives, and Canada’s top venture firms. That being said, after we announced our first round, we had multiple individuals and investment firms reach out wondering if we were still raising. Aanikh and I were very clear on one thing: we were not going to be another tech startup that has an issue of founder dilution. We were going to raise money when we needed it (for a specific purpose) and if we raised again, we were going to take money from individuals and institutions that could help us grow.
About a year after we raised our first round, it was September 2019 and we were thinking of raising another seed round because our runway was dwindling down (we were four months away from being out of cash). We knew we couldn’t run out of money especially since our product was finally in a great place and our sales were picking up. When we set out to raise another round, we got some interesting answers. Many firms were interested in writing a cheque but would have taken a lot of equity. Some firms in Silicon Valley told us that raising $500,000 was too small and that we should take $2M or $3M. I’m glad we stuck to our gut and kept showing up.
A few months later, instead of raising a huge round, we took on venture debt to acquire a company. The month after we acquired SocialRank, we became cashflow positive and we are currently on track to pay back the firm that structured our debt deal. Debt financing was really a blessing in disguise. We gave up way less equity and we were able to get the whole deal done in a week.
The move we made was admired by Michael Seibel (President, Y-Combinator). When we chatted with him during our YC interview, he liked how we were going about building Trufan and the energy/enthusiasm we had for the process.
No point in focusing on things you can’t control
2019 ended for us on a really positive note. However, the entire year was a rollercoaster. We had some major losses. We had hires that promised to come on board and then backed out at the last minute. We incurred a significant amount of legal costs transferring our company from an American company to a Canadian company. We had delays in our product updates, and we went through an overly tedious process trying to secure insurance for our business. That being said, we walked away from all of these losses and let downs with a single lesson: if you can’t control it, don’t worry about it. Most of the losses we took in 2019 were really out of our control and we knew that worry about them would do absolutely nothing for us. Instead, when we faced failure, we made sure to iterate our way out of it.
We questioned whether we really needed the hire that said no to us. We made another strategy and moved on. We made sure to learn our lesson on the legal side and to cap our legal fees for work in the future (we did that for our M&A costs). We tried to work with our developers to make sure that their focus was on getting the most important changes pushed first. We asked for help from our entrepreneur friends who had secured business insurance.
That’s what you really have to do when you run a business. Whenever you hit a wall, just break the whole thing down and move on.
Work with people you love
In 2019, I made sure to take every chance to audit myself. The more honest your critique the better chance you give yourself to grow.
In critiquing myself, I realized that I lead by example but honestly, I wasn’t the best manager. I could delegate work well but building a strong culture required more than just that.
Right now, I’m trying to do better. I’ve made sure to check in with my team multiple times a week. We host a retreat every quarter which allows us to get out into nature and ideate on immediate issues. We have a company basketball team and play every Sunday.
We also do a paranoia session every Thursday. This is a session where every employee comes around a table and shares what their doubtful of. They could share doubts on the sales process, product roadmap or even the overall direction of the company.
I’m happy that we also brought on an experienced CMO. She has over 25 years of experience and it’s going to be great working with her to develop a stronger culture at Trufan.
Remember your why whenever you feel lost
When you’re building a company it’s easy to get lost and forget why you started your business. Think about it: every day you’re thinking about targets to hit, feedback to analyze and tons of things to implement.
During those moments, it’s always great to remember why you are building your company and why it’s so amazing to be an entrepreneur. For Aanikh and I, we started Trufan to deliver incredible fan experiences. Nothing symbolizes that more than the campaign we did with the Toronto Raptors during the 2019 NBA Finals. We found one of the Raptor’s top fans, a mother who was going to mortgage her house to pay for finals tickets for her son’s 10th birthday. The Raptors gave us two tickets to give to her and her 10-year-old son Lincoln who celebrated his 10th birthday at the game.
What’s great is we’ve taken our why and done something more with it. After we saw how viral the Raptors campaign went, we decided to co-produce an original content series with L.A. production company Best Crosses Media. We shot the pilot episode of the show with Orlando Magic star Aaron Gordon who rewarded a 71-year-old Magic fan at her house. We’ll be shopping the project around soon and are hoping to find a network that believes in our mission.
If you don’t have a moment like that yet, just remember why it’s amazing to be an entrepreneur. I remember being at Artscape Daniels in Toronto a few months ago. I was sitting in a room with my friend Nickolas Singh who was going to interview Away’s co-founder Jennifer Rubio. After we set up the room for the interview, someone from Artscape came in and said Jennifer was just wrapping up a meeting with The Weeknd and his team. I just froze and immediately thought “The Weeknd is meeting an entrepreneur. That’s so cool.”
In today’s world, entrepreneurs are rockstars and on the days you feel bogged down, tired and defeated, just remember you are a rockstar too.
2020 & The Future
We’ve hit the ground running in 2020. After starting at the DMZ, we found out we were named as one of ten startups that will have the opportunity to pitch in St. Louis for STADIA Ventures’ annual fellowship.
Our goals for this year are lofty and challenging (but hey life wouldn’t be fun if you didn’t set high goals).
We are looking to expand our team (currently hiring a sales director and customer success manager). If you are interested or know someone that is, check out our careers page.
We are also close to wrapping up our integration with Hootsuite. We are looking to integrate our platform with other platforms that have a user base in need of our data.
The biggest goal we have this year though is to stay cashflow positive and to double our revenue by the end of 2020. We really believe we are the only company in the world to offer such a sophisticated yet intuitive product at such an affordable price.
Whether we hit our goals or not, you can bet we’ll be learning a lot this year and just like we’ve done in the last two years, we’ll be very excited to share them.
From the entire Trufan team and I, I’d like to thank you, our community of supporters, for all the love you have shown us as a team and Trufan as a product.
As I said last year, “I hope that this article can help you go right where we went wrong or at the very least, inspire you to think about entrepreneurship in a different way.”
Reid Hoffman summarized entrepreneurship as “jumping off a cliff and assembling the glider on the way down” We are going to continue to assemble that glider and are excited to continue to show up.