He sold his 1st startup for 8 figures, grew his 2nd to $3M in a year—while battling panic attacks from the pressure. | Justin Adams, Founder of Aiwyn

Justin sold his first bootstrapped startup for over $10M. He raised $2M out of the gate for his second and then grew from $250K to $3M ARR in one year. He raised $40M in total, including a Series B from Bessemer.

And yet, just a week before recording the episode, he shared a post on LinkedIn about a recent panic attack that left him frozen for 15 minutes. It turns out, the sheer pressure of running a startup gets to him-- like it does to most founders-- and shows up in the forms of panic attacks. Fortunately, he's getting better, but like all of us, mental health is something he has to grapple with, despite all the success he's had.

We discuss mental health in startups, what it takes to be successful, the difference between bootstrapping and the VC-backed route, and how he grew his startup from nothing to 8 figures in just 4 years.

Why you should listen

- Mental health issues among founders are common but rarely discussed.
- Startup life often requires sacrificing work-life balance for success.
- How seemingly simple problems can lead to tremendous value and growth.
- Why starting a startup isn't for everyone.

Keywords
startup stress, mental health, entrepreneurship, product-market fit, venture capital, startup journey, growth, leadership, team dynamics

Timestamps
(00:00:00) Intro
(00:01:07) The Stress of Being a Startup Founder
(00:05:42) The Responsibility for your Workers as a Founder
(00:07:27) Work Life Balance Can't Exist
(00:15:39) The Origin of Aiwyn
(00:20:30) The First Product
(00:27:46) The Main ROI and Business Model of Aiwyn
(00:30:52) Starting During the Pandemic
(00:32:14) The Seed Round & Growth
(00:37:01) Series A
(00:41:41) Reputation Matters
(00:43:42) Finding True Product Market Fit
(00:44:13) One Piece of Advice

Chapters

• 1:07 The Stress of Being a Startup Founder
• 5:42 The Responsibility for your Workers as a Founder
• 7:27 Work Life Balance Can't Exist
• 15:39 The Origin of Aiwyn
• 20:30 The First Product
• 27:46 The Main ROI and Business Model of Aiwyn
• 30:52 Starting During the Pandemic
• 32:14 The Seed Round & Growth
• 37:01 Series A
• 41:41 Reputation Matters
• 43:42 Finding True Product Market Fit
• 44:13 One Piece of Advice

Transcript

Pablo Srugo (00:00.13)

Justin, welcome to the show. 

Justin Adams (0:01)

Thanks for having me. 

Pablo Srugo (0:02) 

Dude, so I'm gonna start somewhere that, not typically how we started these episodes, but yesterday you had a post on LinkedIn, it was a picture of you on the stairs. Basically, you’ll sometimes get these panic attacks that literally immobilize you for 15, 10, 15, 20 minutes or so. And that a lot of it was, maybe all of it, was due to the stress of running a startup and everything that means. So I saw that and I thought, founder, psychology, mental health, all these sort of issues, just they don't get, they always could be talked about more than they're actually talked about, but you know, they're talking about more now than they used to be, but they still don't get the time I think that they deserve. And so like, I thought I'd start there and just kind of ask high level, like what was going on? I mean, that was the short version, the LinkedIn post, maybe we can get the longer version here, like what was happening in that moment and what happened generally in those moments.

Justin Adams (0:52)

Yeah, absolutely. And I'm happy to talk about it because to your point, I don't think it's talked about enough and yet I've had dozens and dozens and dozens of private messages from that post from founders saying they struggle with it too and thank you for talking about it. I had one guy send me a note saying, is this a prerequisite to being a startup founder? And I said, I'm not sure, but I definitely know it's common. so I'll just speak about it personally for myself. I obviously can't speak to other people's experience, but You know, there's different types of stress. I had a previous venture where it was bootstrapped and making payroll was super stressful and just making sure that you're able to keep the lights on. this one, current venture is much more venture backed in it. You have a lot of cash on the balance sheet. And so payroll isn’t the stress, but I have more people,you know, over a hundred folks on the team now that I do take their livelihood super responsible and their customers and you know, maybe some people say I care too much, but I care a lot about that. And I try to hold it together when I'm with the team and with customers and not like I'm having these things in the middle of meetings or whatnot, but it's almost like my body has a delayed response. And so I think stress hits people differently. And one guy was telling me that he has some stomach issues or like, it has to come out some way and I've tried to work on, it happens less frequently than it used to, honestly, for me. I've gotten in a pretty good routine of exercise and meditation and there are tools that help for sure, but it's not like it's a magic switch that necessarily is gonna just be gone forever and so. 

Pablo Srugo (2:52) 

But so what happens in those moments? 

Justin Adams (2:54)

Yeah. For me, my heart starts racing. My body is telling me that I'm gonna die, even though mentally I know I'm not and I've been through this and I know what this is. But the sensations in the body are so powerful that it almost tricks your brain. And so for me, I have kind of a routine that I briefly described that tries to help me get in and out of those faster. Like I said, I-

Pablo Srugo (3:31) 

What is it? Yeah, like what do you do?

Justin Adams (3:32)

Well, for me, it's a combination of medication.My doctors prescribed me Xanax, which I take only when I have those. I know that's something that people can get, different people can get addicted to. And so I'm very careful not to make that regular. But if I feel one coming on, I'll take that. I'll try to get to a place where I'm not alone. So even like… if I can get to one of my dogs, that they're almost like therapy dogs for me, where they know and they'll just sit there and let me pet them. And it's almost like they can sense what I'm going through. And then just positive self-talk and just trying to tell myself, one, I'm gonna be okay, and then two, whatever is kind of stressing me out or whatever I'm worrying about. Life is so much bigger than that and setbacks and whatnot is not gonna define who I am as a person. And so those are kind of the, that's the formula that I've found to be the most successful in terms of something that maybe, an episode that could last an hour, I could maybe knock down to 10 minutes now. And so trying to kind of minimize one, it happening at all, and then two, if it does, how can I get in and out of it as quickly as possible? 

Pablo Srugo (4:44) 

You mentioned the employees and I understand the responsibility obviously of a founder/CEO having employees. I guess my question is, what about that puts so much weight on your shoulder? Because if you from a cold calculated standpoint, you could argue, listen, you're hiring top 10, top 20 percent of people in an event where I win doesn't go well, they go sideways and you have to do layoffs. They'll be fine. They'll probably find a job within two months in most cases. It'll be fine. I know it's cold and calculated, but I guess I wonder what story you feel like when you think about these things that makes you feel like that much responsibility and care for these individuals? 
 
 

Justin Adams (5:28)

Yeah, I mean, what you mentioned certainly is logical and is accurate. I guess I feel a sense to…. one of the primary motivators for when I started, I went after having sold my last company was to help create opportunities and wealth for other people, not my… not just myself and so even the amount of equity kind of gave away and everyone in the company has equity. That's just a really important reason of why I'm doing this and why I put in the hours I do. i mean, some people could say, maybe you back off the hours. You've already had some success and that's just not the way I'm wired.So right or wrong, I played sports growing up. There was never a coach that could motivate me or criticize me more than I was already criticizing or motivating myself. I've just been internally wired that way. 

Pablo Srugo (6:26) 

What's your routine like? Like you mentioned a lot of hours. What does your typical week look like?

Justin Adams (6:31)

I don't have a typical day just in terms of, you know, but I'll usually get on and start working around 730 in the morning. I'll try to take a dinner break with the family, but then I'm probably on, you know, eight to 11 then at night and I'll work most Saturdays. Some days I try to have it be a lighter day where I was kind of maybe checking emails, making sure I'm not the, I have to feel a responsibility for me to never be the bottleneck in the organization. I don't want the reason something can't get done is because I haven't been responsive enough. That just means I'm always on, know, rightly or wrongly. So even when I'm on vacation, I'm, you know, I'm still plugged in. And again, I know that's not. 

Pablo Srugo (7:14)

You feel like that's necessary? Cause a lot of people talk about balance and these sort of things and there are a lot of different ways to think about it. At any of stages where your business gets to a certain stage where you can do that and it's reasonable. What's your take on those early days like you're a product market trade days like can a founder actually assume they're gonna have any balance or you think? 

Justin Adams (7:33)

No.

Pablo Srugo (7:34) 

Or does being there all the time is just what it takes. 

Justin Adams (7:36)

I was fortunate this last week I actually went back and taught some classes. Entrepreneurship at my Alma Mater and one of the things I told the students, In my opinion, this is Justin's opinion, not the school's official opinion or the professor's that work-life balance, at least in a startup is a myth. And anyone that tells you that is just lying to you or hasn't achieved anything. And I like to think of it as work-life seasons or in harmony. there will be periods. I mean, when I sold my last company, I could have taken as much time off. I could have never worked again. you know, I had a lot of options that I wouldn't have had had I been chasing balance. So I was out of balance for a number of years, but then I had a lot more options to, you know, create the harmony or balance or whatever I wanted in my life. But I think if you're just chasing balance all the time, I think you just end up being mediocre at everything. But that's just my opinion. 

Pablo Srugo (8:30)

Why is that by the way? Why do you think that in those early, especially those early meetings like the zero prime market days, that you need to be still all in?

Justin Adams (8:38)

In a startup, every single thing is against you. You don't have customers, you don't have money, don't have, all you have is an idea, it may be an idea and hard work. And so you're competing in a space where you can have your competitors, there's incumbents, et cetera, that have all the resources that you don't. And the only thing you have is speed. And to take advantage of that speed, you have to be all in. Maybe there's some people that have been successful starting something, you know, didn't need speed or could kind of, you know, do it halfway. I just, I've yet to see, you know, many examples of it. And you're playing odds, or it's like poker where you don't know anything for sure, but you're trying to give yourself the best, you know, calculated odds possible. And I think, you know, being all in, putting in that effort is something that, you know, shifts your odds, I don't know it's a lot or slightly, but it definitely shifts it. And so to not do so, you're basically saying, I'm okay with the outcome being lower odds. And for me, why would I even start, I'm not gonna play that game if I'm not gonna put the odds as much in my favor as humanly possible.

Pablo Srugo (10:06)

I think it's totally true. Obviously there's exceptions to everything and I'm sure there's people who have, you know, done something successful with less hours and this and that, I think on the whole, that's the reality. And it's that way because of something you said, which is status quo in the startup, again, especially pre-product market fit. Obviously, you know, we focus a lot on that. So I talked a lot about that stage. I'm not saying after product market fit, it's all easy and you can go to the beach, but as you get bigger, status quo starts to change and there is an inner momentum that does let you pull away in ways that are just not possible because in the beginning, status quo is failure. Like, status quo is your startup's gonna die. And so you know, like it really takes so much energy for things to not default to status quo and just completely fall apart. And I think that's one of the reasons why that zero prime market state just requires so much mental energy, so much hard work, so many hours in and kind of that all in presence. Okay, well maybe that's a good segue then to actually dive into the full story, right? So before, I mean today we'll talk more than anybody, your current startup, Aiwyn. I think it's quite relevant that you had a startup before this that you mentioned a few times called Waystar that I understand was bootstrapped and ultimately acquired. Maybe tell us like what that was about and kind of what the story is there.

Justin Adams (11:29)

 Yeah, absolutely. So the company was called digitized.ai and Waystar acquired it. And Waystar is now a public company, went public a month ago. but I had been working in and around back office process automation for a number of years while I was at PWC and just thought that that was a trend that was going to continue. And so found a use case automating a part of the revenue cycle in healthcare. And so decided to start that company. It's kind of the classic put all your chips on the table, you know, empty the bank account and kind of hope it works out. 

Pablo Srugo (12:13) 

What did it do? Like what was the problemit solved?

Justin Adams (12:15) 

in the US healthcare system with insurance companies, before you have certain medical procedures, let's say you tore your ACL and you need to go in for a knee surgery. The hospital needs to get what's called a prior authorization from the insurance company. Meaning it's like a pre-approval that if the hospital does the knee surgery that your insurance company will reimburse them for that. And when I started looking at that problem, I was shocked by how manual it was. It's quite literally an army of people either faxing or phone calling into these insurance companies getting these approvals. 

Pablo Srugo (12:55)

And this is when we're talking like eight years ago or so? 

Justin Adams (12:58)

This was 2016, so about eight years ago. Yeah, exactly. It's better today, but you'd still be shocked by, I just saw a revenue cycle company in the news raise $35 million yesterday. there's still a lot of issues. And the US healthcare is the number one expense, discretionary expense in the United States.In other countries obviously different, but in the US there's a lot of money spent and it's just very inefficient the way that the system's been set up and so very manual. And so we built a pretty narrow slice of technology, but was fortunate to be in the right place at the right time and a private equity firm being capital was consolidating a number of technology solutions in the space and we were one of the solutions that got consolidated and that was, as again the Waystar is now a public company. I think it went public about a month ago, but that was kind of their, you know, called a 10 year journey to consolidating the industry and putting together a company that could stand on its own end to end solution that could be publicly floated in the United States. 

Pablo Srugo (14:14)

How big did Digitize.ai get like revenue wise, employee wise, like how much can you share about the actual acquisition? 

Justin Adams (14:19)

Yeah, we were just about I think 15 employees at the time. And again, it didn't… we had a number of kind of big customers, but it was really more a technology play. And because we had to bootstrap it, again, we weren't hiring, couldn't really hire for growth right ahead of the revenue that we brought in. So it was not a bad model because you don't, from an equity perspective, you're not diluted. And like you are when you're raising significant venture, but there's just different, there's… positives and negatives, bootstrapping versus venturing.

Pablo Srugo (15:01)

Of course. I mean, the upside is, whatever the exit is, you get way more of it. I assume the exit was probably what, like seven figure, low eight figure kind of range, you were majority shareholder sort of thing? 

Justin Adams (15:11)

Yeah, it was eight figures, majority shareholder. Exactly. It's enough to be life changing. 

Pablo Srugo (15:17)

100%. Okay, cool. And so then that happens. What happens between then and starting Aiwyn? I guess I'm interested in the origin story of Aiwyn and what leads you to do that. 

Justin Adams (15:29)

So I stayed with the acquired firm until right around COVID hit. And I was pretty burned out at that point, just given the intensity of that build and sell. And so I thought that that would be a natural transition point to step back and take a breath. And obviously as the world was shutting down and so I didn't know what I wanted to do next. I didn't think I would start another company. Like I I was pretty burned out. didn't know, you know, I was 36 at the time. What am I going to do with the rest of my life kind of thing? And so took some, wanted to take some time to figure it out. And I'd say probably a month or two after that, I just woke up one morning and I went to bed that the night before burned out and I woke up the next morning and the fire was back in my belly to do it again.

Pablo Srugo (16:21)

 Just like that!

Justin Adams (16:22)

Just like that. i don't know what happened that night while I was sleeping or what caused it, but it was tangible and real. so I said, if I'm going to do this again, I had a couple conditions. One is I wanted to go the venture route, build something really with scale, meaningful. And the second is I wanted to go from having a really small founding team to bringing on a lot of people beside me. So pretty unusual, we started with five co-founders in the business. And obviously that comes with a lot of equity dilution, but then you also start with this team that are all real owners.

Pablo Srugo (17:10)

Did that work out or did any end up leaving or quitting or anything like that?

Justin Adams (17:13)

No, as of today, we still have all five co-founders.

Pablo Srugo (17:16) 

Wow! that's very unusual.

Justin Adams (17:19)

Yeah, four years later. you know, now the roles have changed and shifted and we've had to do that. But the good news is, you know, pretty low ego team in the sense that, you know, if there was a better role to play that, you know, a lot of times they'd be the first people to raise their hand and say, hey, think I'm going to create more value over here. You know, we've scaled to the point beyond where I'm talented at, like let's bring in someone that has seen this next level of scale. so definitely a special group of people to build alongside. 

Pablo Srugo (17:56) 

So you decide that you want to do something big. You'd want to do something that's venture backed. You're okay with having many co-founders, but like, what are you actually going after? Like what's the problem that speaks to you that you want to solve? 

Justin Adams (18:08)

So I was at PwC as a mentor for a number of years and saw how technology was bought and adopted within the firm and PwC spends hundreds of millions of dollars a year on technology. And I said, well, what are the firms that maybe aren't the big four, right? What do they spend it on? And so I had that open question combined with the experience of when I sold the first company, the accounting firm that was doing the due diligence for me did a good job, good work product. And then when it came time to bill them, or for them to bill me made it really painful. I got an invoice like two or three months after the transaction closed and it said, mail our $80,000 due to this PO box. And I was like, I don't even have it. I closed the SVB account because I already distributed all the funds. I don't have a checkbook. And so I think I ended up writing a personal check to pay them. And it just kind of left a sour taste in my mouth. And it's like, why would you put friction or make it painful for me to give you money, right? And so that kind of got us thinking, hey, maybe this accounting technology space would be a good area to look at building. And it turns out, there's a couple of very large incumbents that aren't always the most innovative. And so we just thought it was a market to kind of go after and, My vision is kind of what, a company here in the United States called Andoril and what they're doing to defense contractors is similar to what I think Aiwyn can do in the accounting tech space in terms of just modern, good technology that works and creates a lot of value. that's the kind of bigger vision, but obviously you don't start there, right? You have to start with a product that gets traction and get the product market fit and then If you can get to that point, it then affords you the opportunity to expand from there.

Pablo Srugo (20:16)

And what was that first product, like that wedge that gets you going? 

Justin Adams (20:21)

So for us, it was actually an easy to use client payment experience. And so the problem, the pain that I felt around paying the accounting firm, we solved for was the product that we built. so early… early on when I would tell the team is, I spend way too much money on Amazon because they make it, all I have to do is swipe right and I could buy things and they've taken all the friction out of paying. And I said, the hypothesis we had is if we created a similar experience, would people pay their accounting bills faster? And the hypothesis and the data,

proved out, so not only was it a better experience as a client, not getting a paper invoice or being able to pay easily, what we found was like 40 % of the payments started to come through mobile. It was so easy, people were sitting on the back of their Uber, just clearing out their- 

Pablo Srugo (21:29)

And they were paying with what? Like, were they paying via wire or were they paying via credit card? Like, what was the common thing?

Justin Adams (21:34)

Yeah, credit card and ACH are the two ways in the US that they tend to pay. And what was like, I guess one of the things that makes it hard for me to understand is youknow, e-commerce payments is, e-commerce is so devolved, payments in general is so devolved, obviously it's tripping the big one bold, like whatever, there's so many different things. how come these guys were running on paper invoices? And it sounds like that first solution that you had seems super simple. Like what was reality, guess, helped me understand what was missing that you guys saw that nobody else had like put together. 

Justin Adams (22:10) 

These legacy systems that these firms are running on, because they're legacy, they don't have APIs. And so modern technology hasn't been built on top of it. Down market in the SMB space, there is a lot of modern technology because smaller firms will use QuickBooks and QuickBooks has modern APIs, but the larger firms literally have these systems that data goes into and you can never get the data out. And so they were having to manually pull the data out of the system and send these in. 

Pablo Srugo (22:47) 

And these are the systems where they're tracking billable hours, like what they've actually done. 

Justin Adams (22:51) 

that's right.

Pablo Srugo (22:53) 

Okay, I see. And so your secret or your unique insight or whatever you wanna buzzword, you wanna use was actually just doing the work to build on top of these legacy systems. 

Justin Adams (23:02)

Yeah, we had to invent a technology that could sit on top of these systems. It's called a translation engine and we've patented it. And so we have a brilliant CTO who kind of figured out how to do this and no one, even to today, four years later, has kind of figured out how to do that. 

Pablo Srugo (23:20)

And so that's definitely like the secret sauce whatever you wanna call it like I'm throwing all these buzzwords. I guess the question is like when you then go out to sell that, sells like a bit of a no brainer, right? Like you're going to people who obviously live in the real world, like they're used to paying on Amazon and all these other places and you go to them like, I'm the only one given the stack that you use that could enable that for your business. Did you feel like it was that well received? 

Justin Adams (23:43)

Yeah, one of the things we did too early on is I'm a big believer in building with customers and not kind of, I think one of the mistakes I see a lot of entrepreneurs is like, create a really cool technology in a garage and then come out and say, who wants it? And sometimes people want it, but oftentimes they're building a better mousetrap that isn't necessarily needed. And so we actually had three beta customers that we were building our initial MVP with. And so we tried to find different size firms, so kind of a mid-size, little larger, and then big, and to make sure that whatever we were building was applicable across our total addressable market. And so what we did is we said, Hey, if you give us the time and feedback as we build this, we'll A, you know, give you heavy discounts if you like it and B, there's no obligation like, you know, to use it if you don't like what you see at end of the day. And so we, we de-risked it for these beta customers to kind of help us make sure that what we were building really made sense for them.

Pablo Srugo (24:54)

So it was free for them as you built it?

Justin Adams (24:56) 

It wasn't free. It was heavily, heavily discounted and they had an opt out. You know, we said, hey, we're gonna, when we think it's complete enough, we're gonna say that it's now live. And at that point you can opt out and walk away and no obligations or if you like it, you can use it at 20 % of what we're gonna sell it for. I see. Yeah, something. I'm not a big believer in giving stuff away for free, I just think there's a psychological thing that even if someone's paying $1 for, they value it differently than free. so that's actually both companies, I've never done a free pilot or given anything away for free, because I just fundamentally don't believe in that. But that's just my opinion. 

Pablo Srugo (25:47)

Well, I would agree. I mean, I'd find free is dangerous. Like, free can just… lead you astray. And I've seen founders start with free and have it work. So it's definitely not black and white, but for me, it's a little scary because you just never know what's actually gonna happen when you're like, okay, cool. Now it's time to pay. And they're like, actually, I like it that much.

Justin Adams (26:05)

There's something psychological that happens, right? When someone's paid for something that's bought in. 

Pablo Srugo (26:09) 

Well, maybe my first question is actually, when you talk about these legacy systems, were there like a handful of these systems that everybody used or was it very fragmented and you had to build on top of a lot of different legacy systems. 

Justin Adams (26:22) 

Yeah, that was one of the things to our advantage is there was only a handful really that has critical mass in the industry. And so we've expanded, but in terms of kind of getting going, just having a couple of these gave us enough to really go after and go to market with. one of the, know, I talked to a lot of people about what it is like selling to accounting firms and A lot of them can, you know, not all, but some of them are risk averse and just by the nature of, you know, when you're trained to be an auditor, you're looking for what's wrong. That's kind of the mindset you have. so, the one thing going back to the point you made earlier is: they understand numbers. And so if you can show a strong, real ROI, then they'll adopt it, especially if they're I think outside of that initial beta firms that really took a chance on us and believed in us, everyone we've signed since then have done multiple reference calls with other firms to make sure that they're de-risking that buying decision. 

Pablo Srugo (27:33) 

And what's the main ROI? Is it get paid faster? Is it have less like bad debt? Like what's the number one thing that this does for them?

Justin Adams (27:41)

Yeah, so it's all the above. It decreases DSO pretty dramatically, so in one case we saw affirm's DSO drop in half, so it went from, I'll call it four months to two months. 

Pablo Srugo (27:56)

So that's the days it takes to get paid. You've seen four months, yeah. Now two months, 

Justin Adams (28:01) 

Yeah, And accounting firms are cash businesses. A lot of people don't realize because it's a partnership, what they do is whatever profit that they've accrued over a quarter or a year gets distributed to the partners, and so they're not sitting on a pile of cash like maybe a corporation is. so the speed of cash coming in is actually really important. Anyone that's running a business before understands the importance of cash flow. And so that's a huge thing. The other benefits, the client experience was a lot better and a lot of firms are looking for how do we differentiate ourselves by creating a better client experience across the board. And certainly that payment is part of that. And then internally, it just reduced a lot of manual work that the finance team was having to previously do all this manually. 

Pablo Srugo (28:55) 

Which is true, like overhead, like that's not billable hours work ever.

Justin Adams (28:59)

 Exactly, that's right. That's just true back office, yeah, overhead costs. 

Pablo Srugo (29:03)

And what's the business model that you went with? Like, do you take a percent of that transaction? I assume the numbers are too big to take a real cut, or is it just pure SaaS? Like, how do you structure it?

Justin Adams (29:12)

It's a combination of the two. So our model is we have a SaaS fee for the platform and then we do have some payment volume that revenue that's kind of the Delta between what comes in and what our costs are.

Pablo Srugo (29:29)

 What's the ACV? 

Justin Adams (29:31)

About, I'd say at this point about 60K. 

Pablo Srugo (29:33)

Okay. So they're pretty- they're meaningful typically. And then I guess going back, like those three beta customers, did all three end up converting to full customers?

Justin Adams (29:42)

I wish I could say yes, two of the three did. One, the biggest one was going through a major new ERP implementation and just felt like they didn't have the capacity or bandwidth to convert, but they're still, we're still talking to them, hope spring’s eternal on that one.

Pablo Srugo (30:03)

 But with two of three, you still felt at the time like you were still solving kind of a must have problem.

Justin Adams (30:10)

Yeah, I mean, it's not like we weren't talking to other firms as we were kind of building this with them, right? We were in the market talking about what we were building, seeing if we had early interest. And so we created what we called our Trailblazer program, which wasn't the same kind of heavy, same discounts, but it still was heavily discounted for being an early kind of customer. And I want to say we probably kept the Trailblazer program intact for the first 20 or so customers of ours before we felt like we had enough critical mass where we didn't have to de-risk it as much. 

Pablo Srugo (30:48)

walk me maybe just through some time where I was like, you started this business early 2020, mid 2020? 

Justin Adams (30:53)

The height of the pandemic. was like May, May of 2020. so the co-founders were like meeting in my backyard outside cause we couldn't even like go in the building together. 

Pablo Srugo (31:02)

Right. Yeah. That's right. And so, okay. So you start mid 2020, when do you raise the first round of funding?

Justin Adams (31:08)

So I was fortunate that I had some friends and family that had invested in my previous venture that when I said I was gonna start another one, they basically said, hey, sign us up. And so we raised friends and family pretty much from the get go in 2020. And then- 

Pablo Srugo (31:27) 

How much did you raise? 

Justin Adams (31:28) 

We raised $2 million. I had given them enough of a return that they were willing to put a percentage you know, back into this other-

Pablo Srugo (31:37)

 Bit of a no brainer, yes?

Justin Adams (31:40)

Yeah. And then we, and so early 2021 is when we went live with our first customer, kind of got the first product to market, you know, over about six months, let's call it. 

Pablo Srugo (31:50)

Like post your three beta customers? 

Justin Adams (31:52)

No, that was live with our three beta customers.

Pablo Srugo (31:55) 

Okay. In the beginning of 21. how long did you work with them until you launched? 

Justin Adams (32:01) 

Basically from the middle of 2020 to early 21, so call it six months.

Pablo Srugo (32:06)

Six months with those three beta customers and then you went fully live.

Justin Adams (32:10)

Yeah.

Pablo Srugo (32:11)

Okay. And then in kind of mid 21, you raised a pretty massive seed, no? Like $14 million or so. 

Justin Adams (32:16)

Yeah, it was 14 total, but that included the convertible notes. So that included that friends and family round. And we were seeing enough interest in the market. Our investors, know, revolution, took a, they took a gamble on us because while they saw a lot of market interest, we didn't have live

ARR or what we had allowed was very little. So, you know, they saw this pipeline of like, hey, you know, call it, you know, a million bucks of interest in the pipeline at various stages, but we're basically betting  on the entrepreneurs and the vision.

Pablo Srugo (32:55)

But if you went live early 21, then how come you didn't have meaningful ARR, let's say like six months later or any ARR six months later?

Justin Adams (33:01)

 We did. mean, but it was meaningful in the sense of-

Pablo Srugo (33:05)

 it was like a few hundred K.

Justin Adams (33:05)

Yeah, like 10K a month or something like that, 15K a month.

Pablo Srugo (33:09)

And so you raised that round and then guess walk me through the trajectory from then on. When did you feel like you really started to hit kind of an inflection point? 

Justin Adams (33:21)

Yeah, I would say in 2021, we went from zero to call it 250K by the end of the year. And then 22, we went from 250 to like 3 million. So that is probably where-

Pablo Srugo (33:41) Big year.

Justin Adams (33:42)

Yeah, that's a big year, right? Where we saw that kind of inflection point. And so it was then in the middle of, it was in the kind of spring of 23, we went out to raise our series A round. Now, one thing to mention, some pretty seismic shifts happened if anyone remembers in 21 and 22 in kind of venture land with that famous Sequoia memo about getting fit. And we, even in the midst of our growth and having success, we did have to do a risk to make sure that we got our union economics in place. because the reality of the funding world had changed, Rather rapidly and dramatically. And I just wanted to make sure that we didn't wait too long. And so, you know, in hindsight, while it super difficult, it sort of been some work. 

Pablo Srugo (34:43)

What did you go from like how many employees to how many employees?

Justin Adams (34:45)

We probably went from like 30 to 20, something like that.

Pablo Srugo (34:49) 

Okay. Yeah. That's big. 

Justin Adams (34:52) 

Right. Yeah. And like that was probably the most excruciating part of the journey. 

Pablo Srugo (34:57) 

Although I'm surprised just from the sense of like, I mean, 30 employees and three million ARR, like that seems pretty good at eye level no?

Justin Adams (35:03)

Yeah, yes, but as I projected our burnout, I'm always operating. I think the number one job of a CEO is to make sure that company doesn't run out of money. You can survive everything else, but if you run out of money, then it's game's over, right? And so I operate from the sense of like, I'm assuming I'm never gonna raise another round, even to this day. We have $20 million on our balance sheet and I'm operating like we're not going to raise more money. Now we might, there's probably more of a chance that we do than we don't. But that's just my mentality because I want to control our destiny and I want our products and our customers to be the deciding factor, not that I was too aggressive in the hiring and the spend. 

Pablo Srugo (35:57)

So does that mean you always kind of operate on this kind of path of profitability, you always have that planned out on what you have in your career burden, your kind of let's say conservative growth assumptions, you can become profitable on your own. 

Justin Adams (36:07) 

Yeah, yeah. So after I raise every time I look at, what would it take to get to profitability? Cause I think even strategically, now there are maybe cases where the PAM is so large and the market moves so fast that you decide that you just have to, you know, burn and pray. Fortunately in our market, neither is true and so we can burn, and when we do burn, but we can do it intelligently. And I always think that having maximum optionality, to never, if you want to raise, to raise, but never have to be in a position where you have to raise. And that actually when you're talking to VCs and they know you have to raise, that you're giving them leverage versus having the option to raise. 

Pablo Srugo (36:59)

But ultimately you did raise a Series A, right? In 22, what did that look like? 

Justin Adams (37:05) 

Yeah, so we raised from Bessemer and we were fortunate even in the tough market, you know, all these media stories about funding drying up and, you know, we were fortunate partly because I hadn't moved so quickly in getting our economics right. We had you something like eight or ten turn sheets 

Pablo Srugo (37:29) 

and so this is the second half of 22

Justin Adams (37:31)

 this was in June or 22 

Pablo Srugo (37:34)

Just as it's turning around. eight to ten term sheets is probably I'd say the highest number I've ever heard like I've heard two three five, you know, even like peak 21. 

Justin Adams (37:43)

Yes Yeah, it was kind of crazy and I I think in hindsight while most of it what was true There was still enough dry powder looking for high quality deals and there just weren't that many in market.

Pablo Srugo (37:55)

Where were you at? Like ARR, was it, I guess it's like five, six-ish?

Justin Adams (37:58)

 Yeah, we were probably around four or five at that point. Yeah. The other thing I've done is I've, and this was the same with our seed, I've never maximized valuation as a deciding factor in the terms. And so even with this A round that the best of our led, I had offers for other firms at a higher valuation. But for me, getting the right firm, the right partner. And as I told the partner who joined our board from Bessemer, said, if you don't create enough value to bridge that, call it $10 million valuation difference in me choosing you, then I've badly misjudged the value I think you can bring us.

Pablo Srugo (38:47)

That's legitimate ultimately. How big was that series A? 

Justin Adams (38:50)

So that series A was about 20 million and we did about 15. Again, I'm always dilution sensitive and so we did about 15 in primary and then gave some early, our early friends and family had the option to sell at a nice return. So some were able to take some chips off, some chose to take some chips off the table. 

Pablo Srugo (39:16)

What do you think about secondaries? Like personally, I feel like I was thinking about this the other day. I'm like, If I'm a founder, and this is a privilege, right? Cause you got to get yourself in a position where secondaries are an option, obviously. But if you can, I just think taking some chips off the table at anything beyond like seed plus and above is a bit of a no brainer. Unless like, I mean, in your case you had an exit, so we didn't need to, but like, I don't know if you have any thoughts about that, but I think like, if you haven't had that liquidity event yet, taking some chips off the table almost every time, small amounts, right? It's a bit of a no brainer.

Justin Adams (39:49)

100%, so that's actually what I did is I told the investors, I said, I'm not taking any chips on the table personally because I don't need to and I want the longer term upside, but I said, I want each co-founder to be allowed to take, that had not had previous exits be allowed to take certain percentage. Like I said, not a big one, but some to the point where they're able to pay their mortgage off and like that's life- They're not going out buying Lamborghinis, but if you take the, I strongly believe that if you're not worried about paying your electricity bill next month, then you're gonna be able to operate at a higher level than if you have that fear. And so that's what we did in that situation.

Pablo Srugo (40:36)

I totally agree. And I think that's one thing, especially from a first time founder perspective, you might not understand what a small amount means. It's not that small. It's certainly not that big, but it's not that small. Like even on a $5 million round, again, you have to put yourself in this position, but like on a $5 million round, could you take half a million off the table, 250k off the table? Probably. On a $10 million average take one, one and half off the table? Probably, right? Split amongst the co-founders and the early employees and these sort of things. But like you said, that could pay half your mortgage, all your mortgage. Like it can put you in a materially different financial situation where- 

Justin Adams (41:11) 

Fund your kids' college, you know, fund whatever it is, right?

Pablo Srugo (41:14)

 Exactly. Okay. And let me ask one kind of one more question before we stop, which is what changed? Like, you know, you have these betas, you go, you get to 250 K or R and then you have that, that banner year, like 250 K to 3 million, you know, things, obviously growth continued, but that was like a huge inflection point. What happened that year? You think looking back that it led to things really taking off the way they did.

Justin Adams (41:40)

Yeah, one of the unique things about the accounting industry, there are other industries like this, but it's very reputation based, meaning firms talk to each other, they go to conferences, they will share information across firms. And I think there was a certain amount of viral word of mouth about Aiwyn creating value for these firms. And a firm doesn't wanna leave money on the ground if it can pick it up. Right. And so I think that year was the year where when we were early on those three firms, I can't tell you how many firms said, love the idea. This is great. We want to be your 15th customer, not your fifth. And so we've just finally, we scratched and clawed our way. 

Pablo Srugo (42:29)

Did you do something though to drive that? Like it's one thing to have a great product and have happy customers, but did you do anything to drive that kind of word of mouth that led to that reputation being built so quick?

Justin Adams (42:38) 
 You know, what we try to do is we try to find some really good partners and believers in us and just build really strong relationships with some of the folks that were our early believers and, you know, and then make them look good. So if they go and vouch for us to someone they know at another firm, like that puts the pressure on us to deliver, right? That quality experience. One thing I haven't talked about that we focused early on is there's a frustration in the industry with some of the incumbents that their customer service can be lacking. And so we said, we're going to strive to have a white glove customer experience. And so that's kind of the bar. Now, of course, we, you know, we're not perfect at that, whether they're things that we get wrong, but Hopefully every firm that works with us knows that we care and we try really hard. just knowing that is differentiating outside of even any of the technology. 

Pablo Srugo (43:42)

Well, we'll stop it there and I'll just ask the two questions that we always end on. The first one is, when did you personally feel like you'd found a product market fit? 

Justin Adams (43:51) 

I would say it was at the end of ‘21 when we had called 30 firms. It was kind of enough critical mass that you knew you probably weren't just a flash in the pan.

Pablo Srugo (44:05)

And then the other question is if you could go back in time to when you were just starting Aiwyn with one piece of advice for yourself, what might that be? 

Justin Adams (44:13)

Continue to focus on the people that you bring into the company. At the end of the day, your company is nothing more, nothing more, nothing less than the collection of people and individuals that you have in there. And so, that's the number one thing at the end of the day, right, is who you're working with. And just make sure to take your time and make sure you get the right people in because it only takes a few mis-hires to really ruin a special culture. And we've been fortunate and I think we've been pretty good at that. But I don't think that's something that I could emphasize enough to my earlier self.

Pablo Srugo (44:67)

Perfect. Well, Justin, thanks so much for jumping on the show. It's been great. 

Justin Adams (45:00) 

Well, absolutely. It was a pleasure. 

Pablo Srugo (45:02)

If you listen to this episode and the show and you like it, I have a huge favor to ask for you. Well, it's actually a really small favor, but it has a huge impact for whichever app you're listening to this episode on. Take it out, go to a product market fit show and leave a review. Please. It's going to help. It's not just going to help me to be clear. It's going to help other founders discover the show because the algorithms, whether it's Spotify, whether it's Apple, whether it's any other podcast player, one of the big things they look at is frequency of reviews, it's quantity of reviews. And the reality is if all of you listening right now left reviews, we would have thousands of reviews. So please take literally a minute, even if you're just writing great podcast or I love this podcast, whatever it is, just write a few words. Obviously, the longer the better, the more detailed the better, but write anything, leave five stars and you will be helping me. But most importantly, many other founders just like you discover the show. Thank you.