Release Date 10/6/15 Episode Length 28:21
Brought to you byJotengine
Identifying the Right Pivot Opportunity, and Seizing It
with Andrei Soroker of Sameroom
Rocketship: So Andrei, welcome.
Andrei: Thank you.
Rocketship: Tell us a bit about what you’re doing at Same Room.
Andrei: Same Room is kind of a multi-protocol gateway service that offers interoperability to different real time chat systems. You can bridge conversations between different Slack teams or Slack and HipChat or Skype and IRC or Gitter. We support about 13 different products right now.
Rocketship: From my understanding you guys have kind of had a bit of a journey to get here. Tell us a bit about how you got started and I think it was going through Techstars.
Andrei: Yeah, Techstars was our true start. We began the journey by realizing that the world needed a much better communication system to replace the older team chat solutions that were around and not getting better. This was very early 2013 or late 2012. We built a product that was, it was definitely good enough to immediately start gaining some traction. That’s how we got into Techstars and it was called initially LeChat and then we renamed it to Kato. We spent two years building it all the way up to December of last year.
Rocketship: What did the marketplace look like in 2012? It was Yammer and HipChat? Were there some others?
Andrei: There’s really just HipChat and Campfire and Skype I think was really the biggest thing. HipChat was the official thing. We actually couldn’t use it because it didn’t work in Saint Petersburg, Russia for some reason. Not because of anything getting blocked, just connection was so unreliable that it was unusable. Google Talk was big but there just wasn’t something that really worked. We weren’t the only ones to realize this. Obviously, there were at least 10 companies that I could name that actually built products in that exact space around that exact time.
Rocketship: Right, so December comes along and you have Slack.
Andrei: Yeah, all of last year we really had Slack, a lot of Slack. It was this real pretty thick cloud. Just to set the stage for every million that we had raised they’d raised 180. That skew is where it stops getting interesting, because it really doesn’t matter what you’re doing, how good your product is. We realized that we basically had to, we had to pivot with the company.
Rocketship: During that time, what was it like going up against or competing in the same market as Slack at that time? Were there things that you had tried to gain market share?
Andrei: Yeah, we did pretty well initially. It was a fair playing field. HipChat was the monster at the time and it was easy to deal with. The thing in, Slack, they were a long time and so they actually got a bunch of these pretty hot Silicon Valley companies to use the product early on. What ended up happening was they just took the market that we were going for, the market that we were really going for. These were people just like us working at startups or slightly larger companies. We ended up being the product for everybody else. We had traction in Russia, in Poland and Ukraine and India. That’s not really a traction you want. We want traction here. It was really tough. Those kind of products are very sticky. Once a product gets established it takes multiple weekly articles in New York Times for you to really try to do something else.
Rocketship: Yeah, that’s true and it’s hard to pull a team of 30 or 50 people just to try all these products easily. Once you kind of have a solution you tend to stick with it unless there’s a really major reason to change.
Andrei: Yeah, but with Slack people change very quickly, no problem.
Rocketship: It was that much better than HipChat. We did the same but even getting them to try Slack it took about six months to decide to try it and then once we tried it everyone loved it and we switched over. I don’t know if we would’ve tried three or four versions. You know?
Andrei: Yeah, it’s a very tough … If you’re one of those small vendors it’s a very tough game for sure.
Rocketship: Where did you discover the pivot? Where did you come up with that idea?
Andrei: As we were selling Kato, which is our version of Slack, you have to believe … As a maker of one of these products you have to believe that the entire world is going to use it, it’s going to be universally accepted, it’s going to replace everything. If you don’t believe, then you’re a heretic essentially. All these companies, even the smallest ones, that’s what they believe. Their product is going to rule the world; it’s going to be a complete monopoly. We started to doubt that it’s possible. We saw these teams of larger companies and organically divide across a set of products that really fit their needs best. Skype is really good for external communication. It’s probably better than anything else. It’s really tough to replace Skype with Slack and certain companies. By tough I really mean impossible I think. Chatter is hard to replace because it just so tied into salesforce. Maybe eventually but you just start seeing these things. Once we started to believe that fragmentation was actually getting worse as opposed to going away, we pretty much have to pivot. We have to solve the problem of fragmentation and luckily at the same time we realize that we simply didn’t have the time and money to get Kato to the point where it could stand on its own.
Rocketship: How long did it take you to building new application? You have Kato running, you have the team doing both. I assume you have to do some support. How long did it take you to get something else to market?
Andrei: Six weeks. Kato also took six weeks. We try to build very fast to see if it’ll stick. March 1 was when we very quietly made Same Room available. Then we went to the launch conference, it’s where we talked to some people about it. I think our first paying customer was March 6 for Same Room.
Rocketship: Were you working with your existing customer base on this?
Andrei: With Kato?
Rocketship: Yeah, did you sell it to that existing Kato base?
Andrei: No. We did eventually announce Same Room to all of the Kato users but that was much, much, much later. We stopped working on Kato just cold turkey in January. It kept running. It’s still running actually. Joelle: Was it difficult to get your team onboard with the change and keep everyone really motivated to tackle a new problem?
Andrei: We had a … Joelle: Did you face any pushback from the team?
Andrei: We were pretty big. We were maybe 18 people which is relatively big and then we went down to eight when we made this change. Most of the people didn’t have a choice but the rest of the team, we just said this is what we do now. My co-founder, Peter, he basically built the structure behind Same Room pretty quickly and he brought it to a point where the rest of the team could just start adding services, integrations, HipChat, IRC, Skype, Hangouts. These things are essentially just horizontal additions to an existing infrastructure so that infrastructure, once we put that together the team knew what to do. The biggest problem really was trying to understand how to get users, how to get customers.
Rocketship: Is this a distributed team problem or is this a team size problem? How do you guys identify your customers?
Andrei: We initially thought that the no brainer kind of target was any company that is an agency of some sort, so it’s a consultancy that just has outside clients. It could be a development shop, it could be an ad agency, really marketing agency. For very obvious reasons, they probably are using Slack internally and they need to talk to all these other people and there just aren’t great options other than email and Skype and this is where you start immediately getting to this fragmentation. We sent about 9,000 cold emails, very well curated emails to all sorts of agencies and got zero money out of those actually.
Rocketship: Nine thousand.
Andrei: Nine thousand, zero dollar, two sign ups. It became clear to us that … At the same time, we started writing blog posts and just publishing these integrations online and 99% of our sign ups come just from searching for this stuff on Google. Their agencies, their development shops so it’s that same audience. It’s like selling migraine medicine to people who don’t yet have a migraine. It’s actually impossible. Once they do have a migraine, it’s pretty easy.
Rocketship: You guys double down on an SEO channel and did you do extra work to kind of move up in those rankings once you saw that that worked?
Andrei: The amazing thing is we don’t have a competitor yet at all. It’s kind of this Goldilocks area for us where it’s a very complicated technology so it’s really not that easy to enter this space and there’s no one fighting for the keywords on Google, so every single article that we have is number one. Immediately. The next day it’ll be number one. That’s valuable. That’s really the only way it’s working right now.
Rocketship: Wow, that’s cool. You have the articles as an inbound strategy. Did you give up on the sales strategy then?
Andrei: Yeah, it’s just a waste of time.
Rocketship: It’s interesting. Yeah, Joelle go on. Joelle: Andrei when we were talking earlier you mentioned something that thought was interesting and we hadn’t talked about yet on the show which is hiring immigrants to come and work here and some of the challenges you’d faced and why you’re passionate about that.
Andrei: Sure. Joelle: Can you tell us a little bit about your background in that and some of the things that you’ve been working to do on that front?
Andrei: Yeah, absolutely. I think it’s good to say that both my co-founder and I we are immigrants. He’s from Western Ukraine; I’m from Siberia, so Middle Russia. I came to San Francisco when I was 13. This is just before high school. He graduated from college with a master’s degree in computer science and moved to the US also to San Francisco in 2000 and then a couple of years later we met. Basically, we speak Russian. It’s relatively easy for us to hire Russian speaking engineers, which is an awesome resource of engineering talent. Problem is they don’t live in Russia or Ukraine and we clearly see this problem where nobody really wants to live in Russia but then there just isn’t that much choice. Bringing people here is a lottery right, which you’d probably lose based on just the number of people who are trying to get here. That’s been a very interesting experience for us. It’s also interesting that we have a distributed team which is actually a very good team and a very motivated team but we haven’t met some of our employees in person ever. Our longest serving engineer, we had worked with him at a previous company which is where we found him and we met him after three years of working with him very, very closely. Now he lives in Fairfield, California. That’s …
Rocketship: Did you bring him over?
Andrei: We brought him over. We lost the H1B lottery twice, then we brought him over on a trainee visa which is it’s a J1 visa. It’s 18 months and now he’ll have to go back home in March.
Rocketship: Take me through, because I know very little, what is the H1B visa?
Andrei: H1B, it’s basically the official way to bring foreign professionals to work for you in the United States and there’s a quota. I think the quota is about 80,000 visas that are available. I’m actually not an expert. I think 20,000 of those are reserved for academia or something like that and then 60,000 for VC funded companies and such and the Googles of the world. This year I think there were maybe 400,000 applicants or 360,000. Something pretty … Not great odds.
Rocketship: It’s a lottery system? Is that … Sorry.
Andrei: Yeah, a lottery.
Rocketship: It’s completely random?
Andrei: That’s what they say. I hear that Facebook never loses so I’m not sure that it’s that random. Joelle: What are the advantages for you to continue to hire employees from Russia or elsewhere if your goal is to try and bring them over but the odds of that are very low?
Andrei: We only bring them over if they want to or we’ll tell them that we’ll try and not right away. The reason that it’s great is because it’s many time cheaper to employ these people, so you can hire four very good engineers for the price of one mercenary engineer in the Bay Area. Mercenary means they’ll leave in 18 months to a company that’s going to pay them 30% more money. That’s really what we’re seeing. This is why the insanity’s going on so bad. We’re not, we just don’t want to play that game at all. The motivation is very, very strong. Also, a distributed position is actually a great perk for a lot of people. Family and people, people with kids they don’t need to go to the office to socialize they just need to avoid commuting an hour and a half each day so that they can see their kids more. That’s a huge incentive for a lot of our employees to just actually keep working with us because it’s a very nice work environment. Also, outside Silicon Valley it’s not that easy to find a good job, interesting problem, not working at a services company, not working for an agency. We have an advantage in this case. We can basically hire the best people in Russia or anywhere else and it just gets a little fuzzy in the Bay Area, too much activity here. Joelle: How do you go about hiring?
Andrei: It’s mostly people who want to work with us they’ll just send us an email and then we have a very simple interview process. This is engineers, hiring for other position is much more difficult. Our biggest success has been essentially just people reaching out to us and also word of mouth. It usually starts with finding one great person and then they know people and then it kind of starts from there. Then once people start hearing about you they’ll start emailing and asking is there are positions available. Joelle: Interesting.
Rocketship: Yeah, very cool. I’m curious, you guys have this distributed team, you have a product that integrates all of these services. What are you guys using internally to communicate?
Andrei: We got off of Kato in August, I think early August, and we chose Fleep IO, which it’s a small startup in Estonia. We chose them because they’re one of maybe three small players left in this space and we want to support. We want fragmentation, we want to support someone else. It’s a very interesting product and we actually like a lot of it. They started around the same time as Slack and Kato and they’ve just been plowing along. Fleep has an amazing integration with email. It’s basically built by Skype engineer so a lot of the Skype ideas are brought to Fleep and done much, much better. This is only texts, nothing to do with video or audio. I’ll tell you, we just built a really, really cool integration between Intercom and Slack. It’s a bi-directional integration that lets you reply to customer questions and requests from Slack. We started using Slack for this, so now we kind of use Fleep and Slack. Really we have accounts everywhere else as well. Right now, we’ve been for the first time I think I’ve been using Slack quite a bit for this, just for customer support. We probably do maybe 20, 30 conversations per day. There is a load there.
Rocketship: Very cool. What’s your opinion of Slack now that you guys have pivoted?
Andrei: It’s a platform, which is great because selling Slack was really hard to companies. We don’t have to do this anymore, so we tried doing that. It’s almost impossible. They did the work for us. I think it’s missing a bunch of the stuff that we built in to Kato, which is too bad. I wish that the Kato was available, but it’s not. Not yet but otherwise it’s a great API, it’s pretty stable. They have lots of money to make it better. Everyone’s using it, which is easy so we can finally charge Slack users money. That’s fantastic. We even charge free Slack users money.
Andrei: Yeah, because people don’t pay for Slack but they pay for Same Room.
Rocketship: Oh, very nice. Awesome, this has been great. Tell us where can we keep up with you and Same Room online.
Andrei: We have a blog. Of course, it’s sameroom.io/blog. Our Twitter, it’s sameroomhq. Our Twitter is not very noisy, to the point.
Rocketship: Very nice. Well thank you so much.
Andrei: Alright, thanks so much. Joelle: Thanks Andrei.