Episode 437 - Todd Westra / Alex Levin

00:38 Hey, welcome back to the show. We have got an Alex and I don't know about you, but I've never met an Alex I don't like. Alex, who are you and what do you do?

00:48 Yeah, thank you for having me. So I'm the founder of a software business. I've been in startups for a long time, but you know, really like this early stage software business gig. And, you know, we at this point have been around for almost four years and I've been very lucky grow quite quickly and we sort of the North Star metric we use in our businesses, are we helping our customers who are largely the contact centers in big B2C brands, we helping them drive more revenue from customers. And at this point, we've driven more than $3 billion of revenue for them. And that's really what makes us happy is that it's driving real value for our customers.

01:28 I love it, I love it. Now a lot of people talk the way you're talking, but let's get down to it. What are you actually doing with your software? Because I've looked into it, you've got some really, really cool feature sets that you're offering to companies who are leaving a lot of money on the table. What is it that you're actually doing?

01:43 Yeah. If you step back, you know, the sort of first things that came online were all retail. And in that model, largely the playbook was, you know, have a site with a picture of the product and a price and reviews and free returns. And like, don't talk to your customer, right? Customer service was seen as a cost center. And most software was looked at, how I deflect customer interactions and remove those because there's no revenue there. And I think that may be true in retail. What we found is, you know, everyone who shopped online, especially sort of was accelerated through COVID, now wanted to do other things online. So their healthcare, their banking, their insurance, you know their education and in these more considerate spaces, there had always been a human being involved in that process because it's a bit more considered and complicated. And as those businesses shifted online, if they didn't have a human being involved, there was a much worse experience as judged by the conversion rate. Literally like if you were a bank, you know, somebody used to show up in person, 90 % funded the account. Somebody opens a bank account online, 20 % fund the account. That's a like pretty business problem if you can't get people to trust your website enough to go and actually put the money in the account. So we experienced this in the home service industry and then met a lot of other businesses with the same experience. We struggled with the current contact center software and so started Regal on the premise that there really should be somebody focused on building software for these high velocity contact centers that are actually really asking how do I reach my customer? They're not asking how do I ignore my customer, they're asking how do I treat my customer better? How do I use a personal touch in a digital age? And that was going to be a hard. In terms of the specific insight as to how we were going to do it, largely in contact centers, they were taught or we were taught, how do you treat everybody the same? How do you make it all efficient and all the same? Marketing was very different. Marketing was taught, well, the more you can make things personalized and unique, the better the outcomes. And so a lot of what we've done is a lot of the marketing capabilities into the contact center. So how do you have all the untapped customer data in one place? How do you then change how you're going to interact with the customer based off of that? How do you change where you're going to say based off of that? You know, based on what they'd say in the conversation, how do you decide what to do next? And so that decisioning or orchestration is what makes us so different. So we call it journey builder but you know, things as simple as AB testing didn't exist in a contact center environment. So now we can give them tools. So, you know, in the end, you know, that's really where we shine is in these teams that are proactively like trying to have conversations with customers to drive revenue and need tool, you know, need better data strategies to be able to go and do it.

04:30 All right, so is your avatar the contact center owners or are they clients that use contact centers for their lead follow -up and things like that? Who's your avatar?

04:41 Yeah, look, we serve so you know, our customers are like AAA or SoFi or Angie's List or you know, a lot of the big universities online work through these online program managers that we work with or in healthcare, you know, Roman or Forward, folks like that. They have contact centers, some of which are staffed by their employees, some of which are staffed by third party, but they control the software.

05:03 For sure. I love it. Now, this is such a valuable solution. Having owned and operated a contact center for like 13 years, I definitely feel the pain that you're trying to solve here. There's nothing more frustrating than reaching out to a large list of people and nobody answering the phone. High rates of no answers and send a voicemail, things like that. And what you're doing is you are creating a much more professional approach to blending that marketing and the contact center into, hey, here's who we are, hey, we're calling, guess who it is. And you're telling them exactly who it is.

05:41 Yeah. Look, the traditional software is our like five, nine, nice Genesis, which I've used and nothing wrong with them for customer support. But you know, if you're, you know, when we interview customers who are using them and we say, Hey, you know, is your performance going to be better or worse in a year? You know, are you going to drive more or less answer it? Are you going to drive more or less revenue? A hundred percent of them say that it's going to be worse in a year and they have no, no like light at the end of the tunnel. And so they're schooling as fast as they can to call people more, more, more, more, which is only making the problem worse. We offer them a different way and say, here's a completely different set of tools where you can use this untapped customer data to drive better engagement. And for sure the customers, first couple hundred customers are the early adopters, but we're starting to get into bigger and bigger brands. We're realizing that if they want to be the ones that care about customers and care about how they engage with them, they can't keep doing it the old way. They've got to switch to this new technology.

06:38 Right, right, right. Obviously, like one of the big trends that I see that you're solving for is, you know, it used to be that people get a phone call, they answer it. Then it was, hey, this call is coming from an out of my area code number, I'm not gonna answer it. And then it became, hey, everyone seems to have my area code calling from somewhere outside of my area code. And what you're doing now, one of the features in your software that I absolutely have loved and looking at it is the branded caller ID. And how are you doing that? You're essentially saying, hey, hey, it's Todd's company with my logo and everything and we're calling about X. Holy crap. I gotta imagine your answer rates are just off the hook.

07:21 Yeah, the goal from the beginning was to make sure that this conversation wasn't seen as something intrusive or bad, but actually an extension of the experience. So, you know, if you're going online looking for Purdue, you know, a certain class and trying to figure it out, if you can do it yourself, fine. But if you can't and you're abandoning, but in that moment, a call comes in on your phone and it says Purdue and you answer and they go, Hey, Alex, I see you're on this class, but really the interest to take this class is this other one. Can I help you figure out which of the professors or which of the start dates you need? It becomes something additive instead of subtractive. And so as brands get known for doing it the right way, like people will use that as a channel. And like when we interview customers, it's not that they don't like phone conversations, it's that they don't like spam. If they know it's something from a brand that they're trying to engage with, that's going to be helpful. If an ambassador from that brand knows what they're talking about. People are very excited to use that. It's actually much easier and faster to talk through something than it is to do any of these other methodologies. 

08:21 Did a chat. Right, right. Chat, email.

08:26 Yeah. Don't get me started on that with a bot who like, keep waiting for five minutes, keep waiting for five minutes. Like I'll go crazy.

08:29 So totally, totally, I feel your pain. No, this is a very, very cool solution. And for those of you who have an existing outbound, particularly outbound call response system in your business model, you need to look at the software, you need to look at what they're doing. This is absolutely a game changer. I Googled and looked up competition. There's not a lot of people doing it as good as Regal's doing this. And so Alex, I love..I love what you're doing. I love the brand. This is a very, very cool solution. 

08:59 Thank you.09:00 So looking at your solution and looking at your business and looking at your business model, talk us through what was kind of the origin to like that key decision where you said, okay, this is the problem we want to solve and this is what people seem to want. Let's dive into this. What did that look like for you?

09:20 Yeah, for sure. I mean, just to give you some order of scale, like our main investor is Emergence, who's a sort of well -known SaaS VC. And one of their more famous investments was Zoom. You know, we grew faster than Zoom, you know? So I think there was something very special, you know, as we started talking to people where people really needed this. If I go back and look at what happened or why it happened, I'd say one thing I sort of point to particularly is that we were sort of in a market where we had what sometimes called like an earn secret or a learn secret, right? And that my co -founder spent years in a home services business online. So we own our business on Angie's list and home advisor where we struggled with this problem and found the answer ourselves. And, you know, very few people had been through that experience. And so there weren't lots of people out there building software to do this. You know, I think that quadrant of business where you're that type of business, right? Where you're doing something that is very valuable to customers, but not a lot of people know about it, like that's a good place to be, right? So, you know, you want to be something that's contrary to the common narrative. So what's the common narrative? Well, phone is dead. Nobody answers the phone. Cool. So no one's building business in there. But if you actually do build a business, we did it, turns out that a lot of customers need it. And it is something that's very valuable. So, you know, sometimes we talk about this as like build an unsexy business. I don't know that that's the sexy or unsexy, just it asks, you know, I call this sometimes the golf course problem of private equity. So guess who owns every business that's related to golf? Well, the private equity companies. Why? Because all the private equity guys play golf and they go, who owns that golf cart? Who owns that, you know, ball washing machine? Who owns that tea box thing? It's just what they see by the company. So stay away from the things that everyone else is looking at. If you want to have true you need.

12:52 I love that. That's fantastic. So, but everybody's using call center. I mean, what inspired you to dive into this space? I mean, were you previously a contact center owner or what was kind of the, how did you evolve into this?

13:07 Yeah, in the home services space, we had a 5,000 person call center. So we had a big call center and we'd use tools. And when we realized how important sort of these sort of proactive engagement conversations were, we actually went, we're using, I won't even say, we're using one of the big, big players at the time. We were probably spending, I don't know, 15, $20 million a year with them. So we were like a real customer and we went to them and said, Hey, some tools for us to help us do this better, they told us to pound sand. So I don't know if it was a wrong decision for them. Like they had a very good business on the support side, moving people from traditional on -prem support solutions to the cloud, and they were growing and they were building features there. And we were asking them to do this thing on the outbound side where they thought outbound was dying and voice was dying. So they didn't do it. So in the end, like that was the opportunity for us. Like, we saw what was happening firsthand and they weren't going to react.

14:02 That's crazy. Okay, so what you just said is two awesome things. One is sometimes the people you look at as potentially your biggest competitor just aren't willing to budge. They're focused, they're laser focused, and they don't really care about what you're gonna do. Second thing is you saw the opportunity and said, this can't be that hard. Let's build a nice cloud solution that we can tack into and add into it the things that we actually need chances are someone else needs that, right?

14:34 I don't know the crazy part is now we went direct for the first couple of our customers, but now that we're at some scale, we've started partnering with those big traditional contact center software companies because they never invested in the outbound tools and they see that we did and they go, we want that for our, you know, we want that for all of us. How do you bring it back into our tool? So, you know, they're not fools. Like they feel they're wrong and they know they're not going to invest in it. And so now we've started working together.

14:59 That's funny, that's funny. And we can get nerdy later because I've also built some solutions for my contact center as well. We'll get into that later off the air because that will just bore people to death. But this is a really cool solution and I honestly, that decision had to have been one of the key things that started the business. But looking at client acquisition and the way that you were bringing people into your company, was there a key thing that you looked at and said, Okay, that right there changed the whole trajectory of what we were doing.

15:34 Yeah, you know, for sure. I think we made some decisions that other people don't early on. So like, just as a couple of examples, we started selling before we had a product. People go, what do you mean? Like, how do you like, well, you know, we didn't want to spend a year building something to show it to people just to get the feedback that was wrong. So the first thing we showed people was a deck and we got feedback on that and iterated on the deck long before we ever built anything. When we did finally build things, we built very, very thin software, using as little like software as possible to get feedback. And then based on the feedback, we then got deeper. So at this point, we have a very sophisticated tool, three, four years in, but at the beginning it wasn't. What we were doing was we were adding value to people, even if the software wasn't sophisticated. So that was one sort of decision. The other one is, I sold the first 3 million in AR myself, like there wasn't anybody else. And so that meant that I was much closer to what customers were asking for what was going on. I think too early people start adding people into the process. And now all those learnings are split across four or five people instead of one, and it slows everything down. So, maybe I should have like started getting some help faster than 3 million, but we sold 3 million in a year. So I don't know, but definitely like that was helpful the person that was like the, at the end, you know, tip of the spear at the beginning. And, you know, someone sometimes asked me when they should hire salespeople and I'm like, well, you know, not until you've gotten pretty far, like make sure you're the one doing. I'm trying to think of other, yeah.

17:04 Well, that's good advice. I was gonna say, that's good advice because a lot of people do jump into hiring a sales guy before they even have their first sales done. And it's like, you're not gonna get that feedback that you need to pivot and modify and adjust product unless you're hearing it directly from the clients. And so that's something really important that I feel like you've really exemplified. I think maybe you did bring it a little too far, going all the way to three million before you got some other guys involved, but it helped and it was only one year and that's fantastic that you were able to do that in one year.

17:40 Yeah. Yeah. No, if I think about the other things we did differently early on, you know, I'd say we believe generally like in smaller teams. So like, I don't know, some people agree with me, but you know, we don't believe that like more people solve the problem. And so we stayed very lean for a long time. Like we used vendors as much as possible rather than rebuilding things ourselves. Like we focused on the area where we were going to be most differentiating, not on things that like we could use from other people. I mean, sometimes the way I frame this is to say, you know, once upon a time, businesses were a thousand employees and 10 vendors. Today it's 10 employees and a thousand vendors, right? Recognize that shift, be ready for it. Like, you know, you should be thinking through like, how do you maximize what you're doing by managing vendors rather than doing it yourself? Because it can be a very, especially early on, a very good way to accelerate your growth without having to build it yourself.

18:34 I love it. I can't emphasize that enough as well. I think that to your point, starting off with a very thin product, but making it very aware to your clients that this is what we're thinking, try this out and give us feedback is one of the best ways to not overburden yourself with so much overhead upfront and front load your costs when you don't even know what the customer really wants. I just had a conversation with a startup yesterday about a very similar thing that he was trying to produce and we had a very similar conversation. So it's actually very validating that you're saying what you're saying because I encourage them to do the same thing. Don't go into heavy production until you get a few people to beta or alpha. What it is you're trying to do. Let them know it's an alpha, but we'll get the feedback you need so you can know where to dive into and really put your depth.

19:23 Yeah. I mean, the other thing I feel for a lot of sort of founders that are first time founders where they spent a lot of their time in the first year solving problems that are known problems, but they've never been through it themselves before. And so like they're wasting time. I encourage people to like go spend a year or two at another startup, like learn on somebody else's dime before you go launch your own thing. And like, how do you fire? How do you manage teams? How do you fire? How do you do sort of communication in a company, like watch the founders do all that. They won't do it all right, but see what you like, what you don't like. So that by the time that comes up for you, you're not wasting cycles on that kind of stuff, which can completely waste your time. And you're spending the time on, you know, what is the go -to -market motion, you know, that we're going to do? You know, what is our product, you know, feature that's going to be next? Like on the things that are going to make you different than everybody else, not the things that are just the same as everybody else.

20:18 Yep, totally agree, totally agree. I love this advice. I love this session of the podcast because I want to ask you personally, I know you've had other businesses that you've launched and exited, but in this particular business, as you've been growing it, was there an unexpected, I mean there always is, but what is an example of an unexpected challenge that kind of caught you off guard that you weren't really prepared for and what did you do about it?

20:46 Yeah, sure. To be a founder is to do two things. One, tell the same story again and again and every day. So you better like the story because you're going to be repeating it. But also, to be on this roller coaster, right or one minute, like the greatest thing ever happens, and the next minute, the most terrible thing happens. And the people that just have the perseverance to keep moving towards that goal that they've been repeating to everybody else, like people who believe the thing they're saying do very well. The people who like, they believe the highs or they believe the lows, like, you know, whatever the expression is, this too shall pass. If you believe it too much, you know, I think struggle. You know, if I think about things that went wrong, I mean, there's a million of them. You know, from the, you know, from the very beginning, like I remember at some point talking to VCs going, what are you talking about? Like what, this isn't a business. And you learn that, well, those are the VCs that don't deal in this kind of product. And they just don't understand the situation. The ones we talked to who knew the problem situation go, this is exciting. Here's money. So, you know, very early in the morning, like you have to make sure you're talking to the right people. I think in our case, like, you know, COVID really changed the business. We thought we were going to be in a position where we'd all be working together and like it'd be easy and all of a sudden, no more. And so we decided very early on, we wanted to keep an office. And so three days a week was always the plan. Other than like one month when it got really bad in like a January, we've always had people in the office. And like, that was like a whole new thing to explore. And like, I remember when like there was an engineer who lived in, we were trying to hire an engineer, lived in Brooklyn. And he goes, well, my rate is 150 if I work from home or it's, you know, 170 if you want me to come into the office three days a week. And we're like, you live in Brooklyn, my girl, this is a nap. Like what's going on? Like it's shifted now. Like that's not right. But like, that was how crazy it got, you know, then like there were vendors that like didn't deliver. Like we thought like we had vendors that were committed to do thing over period. And even though there were contracts, they changed the board thing where they don't deliver on the thing they're supposed to. And like that then has ripple on effects to our customers. you know, or if you think about hiring, like, you know, we've made some bad hires where, you know, for sure, like we think that we're pretty good at it and we're very proud of the people in the team, but there are times where you get it wrong and you have to then take a deep breath and like figure out like, why, why did you get it wrong? Like, why is it the wrong match? They may be great, but just not great for this business and help them find the right thing instead of saying, you know,

23:17 I love that all four examples that you just shared are perfect examples of, I mean, honestly, we could do a whole episode on every one of those four because I think they're super valid. And, you know, when dealing with vendors, you gotta expect that they're not gonna act perfectly all the time. Their model changes, just like your model might change. And so if you have them doing a specific thing you need, have three vendors that do the same thing and just determine which one is more aligned with what you're doing, right? And there's so many quick fixes to the things that you talked about, but they are challenges that you've got to face and you got to expect because as a founder, I love how you kind of identified that there's two primary roles. You got to innovate and you got to just fix problems all the time. Is that right?

24:03 Yeah, I think the sort of job of founder changes is the business scale changes. So like definitely what I do today is quite different than when we were 10 people like in a room. But yeah, those things are pretty true throughout. The hard part I think as a founder particularly in my opinion is knowing at what point in time. Do you put in place more process on any given thing? And when I say process, what I really mean is whether it's technology or people or a, you know, like literally a process, like when do you do that? Because if you do it too early on whatever thing. You just slow the business down and you do it too late. Everything's breaking. So take like HR as an example, like you have, you know, 10 people, do you hire a VP of HR and get like a big HR system? Well, I don't know. You have 20 people to do it. You have 30 people to do it. You have 40 people to do it. Like knowing at what point in time you make that decision is important because if you, you know, if you think like, well, I, I'm better because I did it earlier. No, like you might've just slowed your whole company down, you know, or Hey, I'm a faster moving thing. Cause I did it later. Well, no, you might've just like, Create a world where you're gonna have more than car problems that are worth it. So the right time is important, not whether you do it faster or do it later.

25:16 I love it, I love it. This has been so fun. This is seriously a really fun interview because A, I'm pretty familiar with the pain points that you're solving. B, I think that your experiences are exemplifying what a lot of the listeners of this podcast are hearing and feeling, and that is, man, I see where I want to go, I see the problem I'm solving, but boy, these challenges hit me in the face, and maybe I'm not as dialed into my avatars as I think I was, and maybe I'm not hitting the language that I need to be using to identify who I want to work with and B, C, who do I get to invest in me? These are all questions that people are wondering and you just kind of went through very chronologically through all these issues that people face and I appreciate it so much. Is there something that, I love to ask people, is there somebody, someone, some group, something that you do to maintain sanity as a founder, when sometimes it's hard to bounce the problems off of your team.

26:16 Yeah. look, I've seen a lot of people with different solutions for me. Like I have a co-founder that like I'm very close with. So we went into the business, having worked together for six years. We're 50, 50 and everything. So there's no power imbalance. Like in theory, I have a CEO title, but that is not how decisions are made. Like, you know, I, I'm sort of in parts of the business and she's responsible for others. So I think that makes it much easier. I can't imagine people who have to go into it without the co -founder that they trust. That is like by far like the easiest. I have friends where they didn't have a co -founder and so they used an investor kind of as that, or they used the CEO pod group. And yeah, there are ways to sort of compensate, but for sure I'd encourage people like go find somebody you trust. And you know, you want them to have a different skillset than you. It doesn't necessarily have to be technical and non-technical. That's not the split anymore, but you do want somebody who looks at the world a little differently or, you know, sort of has a, you know, set of skills that you don't have.

27:16 Agreed, agreed. I can't emphasize that enough. Get someone with a different skill set, but somebody that understands the pain that you're feeling as a founder, because it does get lonely, and you are lucky to have a good partner. Not everyone has a good partner. A lot of people have a partner, but not a good partner. And so find someone that does compliment you, not someone that's exactly like you, if you're looking for a partner in your venture that you're launching. Good advice? Alex, what do you think?

27:43 The only other message I give people is like, you know, why, why Combinator and the press have made like starting businesses very sexy. Look, it's not, honestly, it's not like I happen to like it, my co -founder likes it, but it's not right for most people. So like, don't go and like do it just because you see it in the press. Don't go and do it because your friends are doing it. Like if it's something that you can't avoid doing, you have to do it. Sure. Then you should do it. Like, you know, don't do it otherwise, because you're just going to like waste a couple of years of your life on something you're not having fun doing. You know, there's plenty of interesting businesses out there. 

28:12 And then you end up not being passionate about it.

28:16 Yeah, where you can go work with somebody else and, you know, help build that business out and have more freedom. You know, if you go start a business, like you better be committed to it for the long run.

28:25 Agreed, agreed. Alex, we appreciate so much your time today. I've got links to you and your business down below. If people want to reach out, best way to hit you, LinkedIn.

28:36 Yeah, always email me at hello at regal .io. Look, if you're running outbound call centers and you want to chat about the fact that you're worried that your performance is getting worse, come talk to us. There are other ways to do this.

28:50 Right. Right, I love it, I love it. Thank you, thank you, thank you. And for those listening, I hope you learned something valuable. Don't hesitate to throw some comments down below to ask Alex any question that you might have wished I would have asked or you want details on something else, throw it in the comments, both of us will respond. Love and appreciate you all. Alex, thank you so much for being here today.

29:08 Yeah, thanks for having me.

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