10 Aha Moments that got us to acquisition in 5 years
10 pivotal Aha Moments that got us to profitability and acquisition 2.5 years after making our first dollar.
Hi, it’s Melissa, and welcome to “your founder next door”, a bi-weekly column with relatable stories of my journey bootstrapping eWebinar to $5m ARR. No BS, just straight-up truth bombs on what it’s like to build a company without an abundance of resources or friends in high places.
When my last startup, Spacio, was acquired 4 years after inception, my cofounder and I owned 94%. It took a painful 2.5 years before we made our first $10, then just one more year to break even. Spacio was, and still is, the leading open house check-in solution in the real estate industry.
For context, an “open house” is an event set up by the seller’s real estate agent, where homebuyers can view the property for sale without an appointment. A popular concept in the US and Canada that usually happens on Saturday and Sunday. When attendees walk into the home, they’re greeted by the agent and asked to sign in on a piece of paper; Spacio was the iPad version of that, collecting leads digitally for automated follow-up.
Nothing was easy about that company...from finding product market fit, to grueling and long sales cycles, to low contract values.
Spacio was my first product company (my previous business was an agency). The hardest thing about it was that we had no experience and made a number of poor decisions as a result. Everything had to be learned from scratch. There were endless trials and tribulations, failures more than successes.
There were 10 pivotal Aha! Moments that got us to acquisition 2.5 years after we made our first dollar.
A little bit of background…🕵🏻
Spacio was founded in 2014, and my cofounder and I spent the first 2.5 years pivoting and repositioning to figure out our MVP (my definition of this is minimum viable product someone would pay for). With consumer expectations at an all time high and the barrier to entry in technology at an all time low, it became exponentially harder than a decade earlier to make a product stand out. With every iteration, we hoped to get just a bit more traction to keep people’s attention until the next one. That was the rat race we were in for the first couple years.
When we first went to market, Spacio was a three-part solution: a consumer app and a business app that interacted with beacon hardware. The idea was that homebuyers would walk into an open house and automatically receive the property info on their phone (on the consumer app), sent by a beacon which was programmed by the business app. It had too many moving parts.
Everyone was talking about beacons as if it was the next near-field technology to take off, failing to question how similar technologies before it had not. As a result, we got a lot of media attention and many pilot customers, but no traction. People loved talking about us because we were bleeding edge and cool, but users didn’t understand our complicated solution.
That was when I had my first Aha! Moment.
Aha! 1: Don’t confuse media validation with customer validation 📰
Just because people love to write about a cool, new product, doesn’t mean you’re onto something. We fell into the trap of confusing media validation for customer validation. Those two are not the same thing. In fact, they are almost always far from each other.
The media and your customers are motivated by opposite things. The media wants to talk about something that is unique and groundbreaking, sometimes the execution of which is too hard for consumers to understand. What consumers want is something that solves a problem and makes their lives better. What they need is something they can comprehend right away, and most often that is uninteresting to the media.
Since we had bootstrapped the company from the start, we found ourselves a little over a year later in a cash-strapped position with 90-days of runway and still no product. Determined to find a way to keep going, I reached out to any investor who would take a meeting with me with the purpose of getting feedback on our idea.
I met with an investor who told me that he thought we were onto something but our product was too bloated. He said it was 10x bigger than it should be and we should start with a feature that everyone uses at open houses. He suggested that if everyone signs-in to an open house, then we start with a visitor sign-in form and strip away all the other features. Focus on getting the first 10 users, then 100, then 1000. Make the first 100 very happy by figuring out what they need rather than try to do everything at once.
I walked out of that meeting feeling somewhat relieved, not realizing I would soon have my second Aha! Moment.
Aha! 2: Keep it super simple, seriously simple 😘
While I was relieved, I was not fully convinced Stripping away everything but the sign-in form would make the product too simple…right? It would also mean scrapping months worth of work and admitting I was wrong about my product and usage assumptions (and my ego hated that).
Why would anyone pay for a digital sign-in form? We didn’t have any other ideas and had nothing left to lose so we decided to follow that advice and came up with what we now consider the first version of Spacio. Our MVP.
We would later go on to discover that although optically, Spacio was “just a form”, the number of features and integrations it needed in order to serve multiple user types was immense. Investing in building out this complexity created the barrier to entry that elevated Spacio to category leader.
We had overlooked the power of simplicity — both how straightforward it needed to be for consumers and how difficult it would be to deliver. Creating something that is beautifully simple rather than simply beautiful is hard.
We cut Spacio down to a 2-page business app and got rid of the consumer app and beacon component. That’s when we got our first user, then 10th, then 100th. It was no longer “cool”, I wondered about its potential and where it could go. I was a little uninspired about the new direction until a friend said to me, “Innovation is changing the way someone does something forever.”
And that was my third Aha! Moment. To this day, that was one of my most impactful epiphanies and a quote I often repeat to others.
Aha! 3: Innovation is changing the way someone does something forever💡
People love to talk about innovation as if it needs to be a giant leap for mankind. But innovation is changing the way someone does something forever, and sometimes that change is only incremental. In our case, it was moving from paper to digital paper.
While that sounds like common sense, we were tasked with changing an entire industry’s 20-year habit from taking a piece of paper to their open houses to taking an iPad instead. Even though the behavioral shift was monumental, the mental shift was small enough that we were given a chance to introduce our solution. Change happens with incremental innovation when consumers are ready to adopt, not when you are ready to give it to them. When I understood this, my enthusiasm for Spacio was reinvigorated. We had a mission — to change the way agents host open houses forever.
We were listening to our customers and making improvements to our product, but we didn’t have enough revenue to support our team. I still hadn’t figured out the greater vision of what Spacio could be. An industry conference was coming up and I knew it would be a timely opportunity to get feedback.
With our half-baked product and no clear idea of the future, I decided to let other people tell me what they thought the potential of an open house solution could be. That strategy proved to be the best thing I could have done at the time and got me to my fourth Aha! Moment.
Aha! 4: Let other people tell you why you’re awesome👂
Our favorite pastime as entrepreneurs is convincing people that we have the solution to solve their problem. I decided at the conference that I would go back to the basics and let others tell me how they thought my product could be applied and where it could potentially go. I met with over 40 industry veterans who gave me ideas on how open houses impact the market. I left with a clear vision of what we needed to be and from there devised a plan on how to get there.
It was also at that conference that I met Aaron Kardell, CEO of HomeSpotter, who would eventually acquire our company.
This is the first email he wrote me:
I found it comical that this CEO was impressed with the product we’d built. We had a 2-page web app that was barely functional! Aaron had seen Spacio written up on a couple blogs and decided to reach out. I guess this is where confusing media validation with customer validation can work for you. We met briefly and became friends who often exchange ideas and sentiments on startup life.
Months later, we launched Spaciowith one of the largest brokerages in New York thinking it would set off a series of brokerages to come on board. That did not happen. That was when I had my fifth Aha! Moment.
Aha! 5: There’s no such thing as herd mentality (in B2B)🐑
When you’re a new company offering an enterprise solution that is light on features, companies are going to try and barter their validation in exchange for free services. They might say they are leaders in the industry and convince you that if they adopt your product, others will follow. While it’s a believable story, it is seldom true. Especially in early stage B2B, there is no such thing as herd mentality.
Companies have their own priorities, buying cycles, and budgets. They’re not going to buy something solely because another company did. You’re going to have to work very hard to get the next deal, and the next one, and the next one until you have product market fit. Even then, you will probably still have to work hard to close new deals.
It helped build credibility to get the first few logos behind our name, but having customers was never the reason we got more customers. It is important to know this so you can set that expectation and know that you can’t give anything away for free thinking the next customer will pay.
In the early days, we set a price that was consistent with where our product and market tolerance was. We gradually increased it as we grew. We fought for every single deal without the expectation that one would bring in another. No matter what the company was and how tempted we were, we never gave anything away for free.
We knew that we didn’t have a track record or resources behind us for anyone to believe that we would still be around in 6 months – a legit concern companies had. With nothing else to compete on, we had to compete on our word and made integrity our greatest currency. That was my sixth Aha! Moment.
Aha! 6: Compete on integrity 💪
For us, that meant going the extra mile for customers without sacrificing our values. It meant being responsive to our customers’ customers to ensure their reputation would only be enhanced by choosing us as partners. It meant laser-focused execution and follow through. It meant delivering exactly what we said we would, when we would, and being accountable for any shortcomings.
That attitude became the foundation of every relationship we formed with our customers, partners, and industry friends.
Someone once told me that it takes years to build a reputation and only seconds to destroy it.
People love rooting for the underdog and they want to help. But if you want them to take a chance on your company, they need to think to themselves, “I’m willing to put my name to this company because this person will not let me down”.
Our business was growing faster than our ability to keep up and we were accumulating debt with service providers that were imperative for our operations (i.e. lawyers and accountants). We had just enough customers to think maybe we were onto something but not enough to know for sure we had anything more than early adopters.
After years on the grind without any real success, my cofounder and I had considered quitting, getting real jobs and living “normal lives.” At the time, we asked ourselves how we would feel the next day if we gave up — we both said we would always wonder if Spacio could have been more. With only a few months left of runway and an unreasonable desire to win, we decided to give it one last push.
I gave myself 90 days to do everything I could in my power to make the business go and if we were going to go down, we would go down with no regrets. It was with that determination that we finally raised a small amount of capital from two private investors which helped significantly propel our product development and customer acquisition.
Aha! 7: Leave no stone unturned 🪨
That was my 7th Aha! Moment. There’s always a way if you look hard enough. I talked to anyone who would give me the time of day, and anyone who could potentially lead us to capital. Our largest investor (private investor who put in $250k), in fact, came through an inbound call from a part-time real estate agent who liked our app and wanted to buy our company thinking we were a one-man show. I laughed when I took his call and told him that our company was not for sale but we were raising capital and asked if he knew someone with money. He introduced me to the fund manager at his company and the rest was history.
In order to win, you have to be the one who keeps going when giving up seems to be the only option.
We got the capital we needed to get out of debt and hire two more developers to keep up with customer demand. It didn’t take long, however, for me to realize that having investors really sucked. There is no such thing as free money. Having investors meant I was responsible for managing their expectations and reporting on things that I didn’t have to before when I was truly my own boss. That taught me one very important lesson…and my 8th Aha!
Aha! 8: The only people who have to give you money are your customers 💰
Unless your business can sustain itself, you will always be at the mercy of your investors, an extra layer of pressure to deal with on top of running your business. That wasn’t something I was prepared to deal with and I could see we had limited time to get to profitability before we would have to raise capital again.
From that moment on, we focused on revenue and nothing else. Being revenue driven served our product so well that my cofounder and I used it as a way to settle disputes over decisions. We would ask ourselves, “Does this help drive revenue?” If yes, we would prioritize it. If not, it would have to wait.
While revenue does not guarantee the exit you want, it does afford you the freedom to choose your destiny.
Building a business is hard and doing it alone is even harder. I realized we didn’t have to do it alone because so many people were ready and willing to help. You’ve probably heard the phrase “fake it till you make it.” Nowhere is that more true than in the startup community where everyone is “killing it” and doing really well.
In reality, nobody is killing it and nobody is doing really well. Everyone is struggling in their own way.
Aha! 9: Be authentic, ask for help 🙋♀️
When you’re doing well and don’t need help, others are inclined to leave you alone. I found that by being authentic and saying, “I’m trying really hard and I’m struggling, can you help me?” goes a long way. Some of our biggest opportunities came from seasoned entrepreneurs and industry leaders who were empathetic about where we were and wanted to give back. They wanted to pay it forward and do for us what others had done for them.
Aha! 10: Be honest to yourself about the life you want to lead 🤩
The media has skewed our idea of success so much that we believe raising venture capital, getting peer endorsements, and media recognition defines our success. VCs are quick to dismiss entrepreneurs who “just want to build a lifestyle business,” making them feel inadequate while so many of them have never built a business of their own.
Between zero and unicorn, there are millions of successful businesses and entrepreneurs who need to understand that the definition of success is a very personal thing. With all the noise and social pressure, it’s easy to fall into the trap of letting others define that for us.
Unquestionably, I fell into the same trap, thinking I wanted the same thing other founders were striving for. The glory of raising venture capital and the pipe dream that maybe one day I could exit for $100m just to show everyone else that I’d made it.
I felt like a failure because that was not the path we were on; our product was niche, market size and revenue potential was severely limited. It wasn’t until I started asking myself, “What kind of life do I want to lead?” that I eventually had the courage and conviction to admit that what I wanted was not the pipe dream. I knew I wasn’t willing to make the sacrifices necessary to chase a unicorn. For the first time, I listened to what I truly wanted and all the noise became irrelevant.
When I was sure about what I didn’t want, I knew we would be better off joining a larger organization that had the resources and expertise to help us grow into something more as part of a portfolio of products. That was when we started looking for the right partner, one with the same values and culture as us.
That’s when Aaron (CEO of HomeSpotter) and I started a dialogue as friends, and became partners when HomeSpotter acquired Spacio.
Two months after closing the deal, I started eWebinar (with Aaron’s blessing) to solve the most excruciating problem that I lived with during my time at Spacio: Doing the same boring repetitive webinar over and over again to train and onboard customers.
Why Spacio was a rough business 😓
In a nutshell, Spacio was not a good business for two reasons:
It was too niche both in functionality and market size (Only real estate agents in North America do open houses and of that, only a percentage will switch from paper to digital.) When we weren’t doing well, it was impossible to find other revenue opportunities without significantly changing the product.
It was a blue ocean product – we were first to market with no competitors in the space.
According to ChatGPT, Blue Ocean is a term used to describe a new market space with little or no competition. It is an uncontested market where companies can create and capture new demand, making competition irrelevant.
The biggest misconception about blue ocean opportunities is that it’s a good thing because no one has done it before, so the potential of an untouched market must be huge! I used to believe that too until I made the mistake of attempting to build a startup without existing customers using similar products.
Replacing an old CRM with a better one is a no brainer. People know what a CRM is and businesses know they need it. But, selling a product that no one has bought before is a challenge.
Every deal was an uphill battle because:
1. Every prospect had to be educated on what our product did and why they needed it.
2. Because they had always lived without it, they didn't think they needed it.
3. It wasn't budgeted for, so we had to justify a new line item for ROI they'd never experienced.
4. Without other products for price comparison, nobody knew if our pricing was fair.
5. Most companies didn't want to be first and saw us as a risky investment.
The time and energy it takes to open up a new market is expensive. I didn’t know what I was up against and wasn’t prepared for it. Eventually, we overcame those things. But the business never grew fast and large enough to be exciting.
My biggest learning? Find a product that already exists with a proven business model and make it 10x better. It's much easier to be a second mover than to be first.
That’s why for eWebinar, we went Purple Ocean: Taking a proven business model and introducing it into an untouched market or vertical, also called horizontal expansion.
Being niche wasn’t all bad 😬
Spacio was a terrible business for me because market potential was so limited. But it was a great business for an acquirer for the same reason.
Our revenue was low (sub $1m) which made us buyable (aka cheap). We were capital-efficient, profitable, and had exceptionally low burn with 5 people in Canada.
We were acquired because we were the category leader and because we were a solid business that was additive to another suite of products. We were so niche that nobody else wanted to compete, it wouldn’t have made financial sense.
It wasn't the retirement-level exit I wanted, but it was a life changing exit that gave me the confidence, capital, and time to start eWebinar without stress and on my own terms.
Contrary to popular belief, you don't need a massive addressable market to become an attractive acquisition.
Reflections 🪞
I had some of my darkest days with Spacio and hit the lowest point of my career. There were multiple times when I wanted to throw in the towel, but kept going anyway because I couldn’t imagine a life without the freedom of living on my own schedule.
I am incredibly proud of what we built despite the number of obstacles, but even more that we didn’t give up when giving up seemed to be the only option.
Some stuff you might find interesting👇
The 7 limitations that made my last startup a terrible business for me
8 reasons I went purple ocean and started generating revenue from day one
The story of my darkest entrepreneur moment from the last 13 years in startups
Thank you for reading!
Melissa ✌️
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