Walnut.io's Journey from Idea to $56-million in Venture Capital


What's it like to operate a red-hot startup?

What's it like to raise $56-million in venture capital in a relatively short period of time?

In this episode of Marketing Spark, Walnut.io CEO Yoav Vilner talks about the interactive demo software company's rapid growth and how it raised major venture capital, including a $35 million Series B round in January.

Yoav and I also talked about:

- How B2B SaaS companies can attract their first 100 customers

- When sales teams should be scaled.

- When to hire your first full-time marketer and what type of marketer to hire

- The new world of networking.

Startups are exciting creatures. It's compelling to identify a problem and build something innovative and impactful. It explains why entrepreneurship this positioned as sexy and irresistible. Like growing up, business is hard work, teeming with challenges, hurdles and surprises. You need to deal with the unexpected and follow a road map for success while still being agile and opportunistic. On today's PODCAST, I'm talking about your AB donor, cofounder and CEO of Walnut Dot io, which helps companies easily create personalized, interactive demos. Mentor, Entrepreneur and marketer. Your APP advises startups in accelerators on how to attract customers, build relationships, established like a category and raise capital. Welcome to marketing spark. Thanks for having me. It's arguably never been easier to start a BB SASS business. What's your advice for entrepreneurs thinking about launching a business or entrepreneurs running in early stage startup? I would I would first advice that you kind of look for the rights people even before you think you have the best idea in the world. You know, if you don't have a cofoundery yet, but you have a good idea, you should probably flex and look for someone that's will relate to what you want to do first and have a great chemistry with and, you know, share the D me with. If you have a CO founder already, then your first two or three employees would dictate your success or failure within the first couple of months. So always put the people in front of everything else. I think that's the best thing that you can do. And also make sure you focus. You focus on validating your idea, not to pick, not just because of VC's and investors would expect you to, but because you don't want to spend a decade of your life building something only to find out your actual market doesn't even need and so that's another critical fust step. It's an interesting comment because CB in sights has a long list of the reasons why I startups fail and tapping the list, one of the biggest reasons as that there's no need for the product, and I always find that interesting and troubling, because why would an entrepreneur build anything, spend so much time on developing a business when there's no demand for why do you think that happens and how does it relate to your philosophy of having the team and then finding that, finding a good idea and then validating that. Yeah, sometimes people will rush into building a product they think is great, but you know the world will not care what you thought personally. So you have to do something the market needs and only because, not only because you think it's a cool idea. The second thing when you interview your target audience. You know, let's talk like the to be. When you start interviewing people, you will hear a lot of very excited responses, but when the moment comes and when you actually expect them to pay for it, they're not going to be there. So you have to be very mindful of not just following like five or six positive comments you've got about what you do. You have to talk to dozens of people from different companies, different size companies and different countries and really do a good job at it. How do you know if your idea has legs? We all have to go through the validation process. It's one thing to have this amazing idea, or at least an idea that you think is amazing, but what are the steps that you have to go through to make sure that the idea actually has legs and is their rules in terms of the number of people you need to talk to or the amount of time you should spend before you decide yes, I think we're onto something, and what are the signals that yes, this is this is an idea that's worth pursuing? I would say...

...that if you're in me to be dozens and dozens of people, if you're in B to se then hundreds. You know, founders used to think that if ten people tell them it's a great idea, then you know Jackpot. But again, if you have to think about people not being either not being totally honest with you and you know they't want to bump you out, you know you're grabbing coffee, they don't. They don't tell you your idea sucks. So the ten that it's good. But you have to speak to Rangers, not your friends and not your colleagues, and kind of get a lot of different reactions. Once you've crossed the chasm from idea to product, you've validated your idea, you develop your product, in this case bb SASS software. The big challenge that a lot of entrepreneurs run into is generating demand or interest in the product. So they're out there, they're busy they're trying to sell, their trying to do marketing and despite their efforts, it's almost like they're spending their wheels. They're not gaining any traction. They have a hard time convincing anyone that the product is worth pursuing this there's lots of reasons for that. Maybe there's a lot of competition, they have no track record, maybe it's a debt, it's a time in the economic cycle when demand is a little bit soft. But regardless of the reason, there's no customer acquisition and those first hundred customers or fifty customers are critical. How do you get those first hundred customers? And, and maybe we can even take a step back, how do you get those first five or ten customers? Are those are the ones that are just taking a leap of faith because they have no social proof that you can't really give them any other examples of people who have gone before them. Once your advice about that? Yeah, your first customer would probably be a friend or you know, a workplace of a friend. Every one of us can get a first customer. Of the first five is more difficult. You have to go beyond your circles. Just show your MVP to a couple of you know companies and offer them to be designed pawtails, which is kind of you don't need to monetize it yet, right. You just need to show investors there's like interest from the market. So tell them we build it out for you and you don't need to pay for it, and then the next two or three customers will be design partners and you would go and grab their logos and go to more serious companies that can pay for it, and it's like a you know, it's like a it's like an interesting climbing up the stairs, one step at a time. Eventually, when you've already hit like a double digit number of customers, that's where things can usually take a nice turn, depending if you're if you're building a valuable product, they can also take a turn to the wrong side. But if you're building something Nice, then that's where you're going to see it kind of taken off. You would want to invest in content and a little bit of pr a little bit early on so people can believe you and trust what you're doing. Like you said, if you don't have the experience or the background, you would have to convince them through other sources that you're valuable, and so press coverage usually does the trick that you can send over to prospects and be very clear about the message and the problem you want to solve. So initially you're looking for guinea pigs, for lack of a better word, people who will invest their time to reap the benefits of your products. So you're looking for them to volunteer their time. The question I have is, how do you make that happen? How do you find those people? Is it word of mouth that you go through your networks, because we have to look at many companies. It's an investment, regardless of whether they're paying any money, they have to invest something. You better find somebody who really needs your product. What's the process for that? Right? That's a good way to find out if you're building something the world needs. If you can't find people that want to get your the value from your product for free, then something just off or either you're talking to the round go to market, and this is completely you know, that's that's a mistake we can all make. Early on,...

...you can switch person as in their organization to see it if there's a better reaction. But if you take your MVP to someone you know vp whatever, let's say a VP product marketing in some organization, because that's your target audience. And they tell you they don't want to devote a little bit of their time to get free value from your product, then you're not building the right thing at the right time, and so you'd have to, you know, pivot a little bit. Eventually. You need to find people that will want to devote a bit of their time for us. You know, it's a demo platform for sales teams and sales leader. So when we just started talking to vp of cells and we spoke to like sixty or seventy of them, that's when a weight list started to foam, and when we saw the weight list keep growing and growing, then we knew that it's a real problem. People need help. It's interesting in the case of Wann described to me those early days when you had this idea of an interactive demo you started. How many people did you reach out to? What was the initial reaction and how did you find those design partners? Yeah, so with will not I say that, you know, the styles aligned in ways that I've never seen much in my life, including helping six hundred startups as part of running an agency once and many years ago, everything just kind of aligned, like the first batch of sixty or seventy VP cels we spoke to said, you know, we would really pay for it. They even named the price that they want to pay for it when it's ready, because they had huge problems of friction between salespeople and developers and product and, you know, people trying to help or interfere with the product, with the demos that sell people are doing, and we told them we can empower yourselves, people to create their own demos and manage it and run it and personalize and everything. And so it was. It was a very it was a very swift beginning and then we launched some product hunt to kind of test the waters and that grew to be the best hunt of that week with, you know, being nominated for their annual awards and it got exposed to thousands of seals leaders and at that point we had seven hundred people on the wait list and everything just kind of took off. We could all be so lucky as a good Turner's hit, that happened. Yeah, one thing I did want to pick up on is you mentioned PR as a way to provide customers with some confidence in you as the entrepreneur and the company and having been a journal must for a long time and having dealt with a lot of PR people. From the outside looking in, it sounds great. Getting Media Coverage, being written about in tech crunch sounds wonderful, but we all know the realities of PR. It's really hard to break through. It's a very noisy landscape. It's hard to attract the spotlights, especially if you're a small company with very few customers and non existent track record. So how do you leverage PR? How do you create a story about yourself that's newsworthy when you have a lot you haven't got a long track record and there's really not a lot to write about? Yeah, that's a great question. You know, if you don't have the right connections, you're in a problem because you can't even a fold to hire a PR agency. Yet right you're at seat stage. It doesn't make sense if you're if you want to get coverage, if you think your story is very timely. You know, because we launched when remote sales became a thing, during the first covid lockdown, and it was a super interesting and then the public saw that were building an editor for Demos and then they said this is like wicks but for Demos, and and then, then, you know, the headlines were like a waks for the most type of thing. So we kind of danced around that. And then we raise our first two point five million seed, which is now considered to be low seed and most journalists would not cover, but it was still at the beginning of covid it was sufficient for an announcement.

So you can get, you need to get all kinds of triggers and hooks and but eventually, like try to reach out to journalists, you know on your own, whether on twitter or anything, and offer them a stowy. A lot of founders of kind of afraid of that right. They don't want to, you know, they're afraid of this whole thing of talking to journals. There like, if I don't have a CMO, I don't know how to do that, but I think journalist really appreciate talking through the founder and CEO. So just try it out if you if you've raised some funds for seed round, then I think it's good enough for a first announcement. I found that as well when I'm dealing with clients is they want to hire a PR person or, in some cases, they want me to reach out to a reporter or a blogger. And I and agencies and people like myself, consultants like myself, we don't have the streecred we don't have the credibility. Entrepreneurs, on the other hand, they're authentic, they're they're doing it, they're the ones. It's their time and money and energy on the line, and I and my advice to a lot of entrepreneurs is is go out and talk to reporters. Reporters like talking to the source of truth. They want real world examples, they want to hear firsthand about what's going on with startup, some one, entrepreneurs Niki of trends. So I think that's that's great advice. Once you've got product market fit, once you've validated your product, once you've got a few guinea pigs or customers in the mix, what's the next step? Because some companies will just set higher sales team and they'll go hard hoping that the product sells itself, if as long as you can reach out to enough people. Other companies leverage marketing because they want to build a brand, and some companies do both what's your advice is, or a general rule of thumber when things should happen or whether things should happen at the same time, because for a lot of much purners it comes down priorities, competing priorities. Yeah, most of them remember way too late to handle, first of all, to handle any of what you just mentioned. You know, I've seen startups to were kind of successful but they forgot all about the CMO or a VP of sales up until the like second or third year, and you know, things started to gradually crash. So you have to focus on your brand, your positioning, the value proposition from day one. I think, even if there's not a lot of budget, just start walking on your brand. The thing is it's a slow process and the other thing is your competitors are probably going to beat you to it. For us was made, by the way, a very a very odd decision of bringing on a VP of sales as our second employee. We did not have a full product even sell, but he's also our target audience and so we also use him to help us shape the MVP of how VP of sales would want to use our product and and that was a very smart move in between. You know, he built out our pipeline and and leverage is network and that was a very smart move for us. What about marketing? When did marketing become part of the warmer, the warmap mix? So our ten employee has been ahead of marketing and it's also super early on. Like usually, I'm not saying bringing a full, full time head of marketing when you're ten people. It's usually the size where you're still building out your product, trying to experiment, experiment the directing with your design partners. But it's like my personal background is marketing, so it was my it was my personal hunch that we need to get it early and, you know, get it right, and it's really paid off. Like we're considered to be one of the best brands right now. We need to be sales and we're getting hundreds of leads each month just of different initiatives that we have around brand, and so it paid off. Timing for marketing is always an interesting question, particularly when it comes to hiring a full hunt employee. Many of the companies that I work with have at best a junior marketer because they're not quite sure that they're ready for marketing or they don't have a confidence in marketing or they don't have a budget for marketing. My question to you is, how do you know when the time is...

...right to hire that first full time marketer and, as important, what kind of skills should they have? Do you hire a generalist who can use a jack of all trades or a Jill of all trades and they can do anything, or do you hire a specialist who could help you leverage a particular channel or particular type of marketing? Yeah, I would first say that kind of varies according to like your specific industry and product and everything. Some industry is require to be more loud and, you know, better with content and build a brand early on. Well, with with some type of startups, you could be better off, like building your technology in the garage for the first year. But let's say you're, you know, Parut of any industry that's competitive and you want to go out there and go above the radar. I would say like around your anywhere between two and ten or fifteen first employees, that's when you want to squeeze in that first marketing and you would want, like I think the idea of a generalist could be good, like if there's like a medium level generally is not hoping to be CMO. You know can handle the social and the branding and the website and the first PPC campaigns, handling your pl team and everything. Even foremost found out that that is good, too good to be true. Usually they would not find even that guy early on until they raise sufficiently more funds and then they can pay for the more expensive people. What about the the flip side, when it comes to sales? Your first higher, one of your first hours with the BP sales how quickly should beb SA started scale their sales? Because if you've got demand, I guess you can handle more drs and you can hire more sales people and now have enough to do. But is there a rule of thumb in terms of how quickly should build out your sales team? If you're I'm I'm talking as a here, as if you're not a sales start up, because we are, and so we had to bring them on super early because it made sense. If you're not a sales stout up, then you know, I would say the minute that you feel if hit a little bit of a fit, of a mnket fit, like if you feel that you've if you spoken down to a hundred customers and something would actually happen, like your product can do something, then you should start with your first time with your fill time sales person. If you feel your product is not the yet, your design ptterns are disappointed, there's too much of a road map until the moment you actually feel it's time to launch and everything, then you should probably hold off for a little bit more. What was the journey like? At long that heard the first PP of sales tre mend just demand or interest in the product. So there was a giant pipeline. Did you seal up quickly or were a little bit more pragmatic? It was very fast. Like we started a first deal with a couple of design PATON NOS, raising two point five million seed round and seeing way it goes, and we ended our first dear with over a hundred customers, including fortune companies, and raising a total of fifty six million dollars. Incredible. Maybe we can ship yours a little bit and talk about fund raising. Raising money is very exciting because for entrepreneurs it's seen as validation of all the hard work that they've done and the team and their teams I've done. But it's also takes a lot of time and effort. What's your advice, having gone through and having raised so much money, what's your advice on how entrepreneurs should raise money? Because it can't be very distracting. You can often be out of the business while you're trying to talk to investors and raise capital, and they and there can be some downsides if you find that you're not raising the money that you need. If you're a entrepreneur and you're looking to raise money and if you're the CEO and you're the visionary, how do you manage the balancing act between raising money and running your company? It gets very distracting. And from the moment that you're gone online and above the radar, let's say you've been even announced your first one or...

...two million dollars of investments, that's when they go after you, like the VC's and the funds and the angels investors, and they would talk at to you as a good lead and they would ask for your time and then you'd have to think if this is worth my time now, because the more you ask so that you're not raising funds right now, the more the more they will keep trying and following up, assuming you're a good team with a good product. Right people are not just wasting time on but investments. But if you're if you're a good deal, then they're going to keep trying and it's never ending, like it's a black hole dozen hand. Every time you think you've, you know, finished talking to investors, a new week begins and people reach out. So this is something you should be mindful. If you're not, if you really don't need money for the next six months or eight months, like you don't need to talk to anyone, you'll just be wasting your time and you're giving investors some data points about where you are businesswise and you have to think if this is the right call for you. Maybe it's not the right move right now. Maybe it's a maybe it's an investor that's been working with a competitor and you know he's just trying to sniff around. So only do it, like a couple of months before you really have to, and only do it with funds that you think will be valuable to you. So what was your experience like? You did that initial two point five million seed round and the scheme of things, it's relatively small. Also, in the company Gets Red Hot, you've got this giant pipeline with hundreds of customers. I suspected VC started knocking on your door. How did you go from a seed round raising fifty six million dollars, and and how hard was it on you personally to be involved in that process and raise that much money? Everything is very emotional, like you know, it's hold and easy and good and bad all it once, because if you're on a roll or you know, like you said, a hot topic, then you're going to get everything inbound. But Ninja, you just have to decide who is worth your time. But also then you can decide and it doesn't work out and the terms don't walk out and you've wasted weeks of your life, like anything can happen. For us it was like starting with a two point five million seed, going above the radar, making noise, being the first top rated product and product hard, getting double digit press articles in a first couple of months, growing the waiting list to seven hundred companies. That's when we got to extend our seed to six million because there was a lot of inbound demand of amazing investors from city can valley, and so eventually it was six million seed and a couple of months later we were a commercial with a couple of impressive clients and we've done our fifteen million series a and a couple of months later, over a hundred customers, lots of engagements and thirty five million seriesly. So the question that I've always wanted to ask a CEO who raises a lot of money, when you get all that money in a short period of time, what do you do with it? Obviously, the the investors, want you to move fast. They want you to hire fast, they want you to build the pipeline. I want you to build out the structure. Do you put the money in the bank for a while and you think about it, or you just start? Do just start executing on the plan that you've had that accompanied your your fund raising activities? I think the smallest thing I've done is bringing a full time vp of vpy of finance to help me out with all of these planning and a VP of people, because growing fast, if it can hurt anyone, it's your people. Have to do more than wise and keep your DNA. You know some people are going to be bombed out. You haven't promoted them. You've brought on some more experienced people from the outside, like when you grow that fast and you you grow like a stuft up that's been alive for like five or six heals, but in under two years, and that can reflect a lot on the people. So we tried to get everything right with my management team and you have to spend the month like theoretically have to spend the money to grow, but now they're is...

...also a kind of a switch in mindset ahead of the recession. I don't know when it's published, but people are a recession. That's going to happen, and so you have to focus not just on growth with your money, but also on being efficient and, you know, getting revenues shifting. There's a little bit there's a lot of talk these days about BBC as company building a technology category, and I'm curious from your perspective, what does that mean? Is it important? And if you do want to build a category, how do you do that? What are the key steps? I think eventually every startup describes themselves as as if they were building a category, but it's not often true. Like for us it's luckily been true because it's really did not exist before, like we were competing with brick and moto solutions and powerpoint presentations and videos and and stuff, and so I've seen. I've seen it happened really fast, from talking about it and hearing it's a nice idea, up until the point where you have hundreds of inbounds and you know, Golt knows writing a blog post about your industry, and I've seen it happened real fast. I think the main point is trying to be first to market and trying to be the first one to announce what you do, and so the market would appreciate that you've come up with it first and then establish yourself with a lot of presence. The more followers you have on the on Linkedin and the more content that you have, the more educating content that you produce and thought leadership pieces and all that, all of that kind of connecting to a huge puzzles, a huge puzzle that says you know you're dominating this category. The other thing I want to talk about when we are trying to arrange this interview is one of the topics that you were focused on is networking, and I found that really interested in over the last two years is that networking has changed. The days of going to conferences and meet ups and coffees and dinners that I'll disappeared. But obviously networking is still important. A lot of it happens over resume, over things like this. As an entrepreneur WHO's trying to leverage networks, because it's important to sort of build up that network. How do you do it these days? Conferences are coming back, fortunately, slowly but surely, but what's your approach and networking and how do you how do you do it effectively and efficiently so that you can build a network that that works for you? Yeah, that's a great question, because it's, you know, it's sometimes it's just remote and digital. Sometimes, like I said, it's in the real life and it's really helped to tell what's going on these days. If you have a strong presence online, I think it really reflects on the offline. I work a lot on, you know, my the content that I provide and Shell on my linkedin and everything everywhere else, and then when I and podcast, by the way, I get invited off and I gladly take it, and then I go on to actual events and you actually see people you know, know who you are and know the the tone of voice that you have and the positioning that you try to own, and there's a lot of correlation in between. I would say the more engaging content you share, like, let's say, even creating a podcast, like you're doing, or just participating, or or a blog or, you know, video serious or of course, that raising a lot of money never hurts your heart cr f I'LS right of being, of being a tech figure. But even before that, if you if you dominate a specific topic, then it's really going to reflect on the real life events and the real life network. We've teased the last twenty eight minutes at warm that but never really talked about what Walmat does and who it serves. Perhaps we can take an opportunity to give me a mini sales pitch on Walmut dots it that I owe? Yeah, for sure. So. So we're letting sales teams and mugketting teams create interactive Demos, personalized demos. They help them put the prospects in the center. So you know, no to prospects are like and they should probably...

...get different experiences. You can embedded on your website so you don't even if to take the zoom called you can just send it to a million prospects. You can walk them through the Interactive Demo. You can get insights and conclusions and you know, another takes into the process. You can collaborate with your appeals and sales people on your company and eventually you can call it. You know, you can look at it from different angles. If it's product led growth that we're allowing, if it's just personalization, if it's just making be to be sales less difficult, this is usually the call of what we do. Where can people find more information about you and Walnut? I'm everywhere. It's really held to ignore. So, but, but, well, no, dot I o and are different handles on Linkedin and twitter and my own linkedin. I'm always available. Therefore, feedback and messages awesome. Well, thank you for all the great advice and insight and thanks everybody for listening to another episode of marketing spark. If you enjoyed the conversation, leave her review, subscribe by Apple podcast or your favorite podcast APP and share by social media. To learn more about how I have BEB SASS companies as a fractional Clo strategic advisor and coach, send an email to mark and market MC dot s a, or connect with me on Linkedin. I'll talk to you aver.

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