How we pivoted to a $90m+ Exit

please welcome Jason Andrew to the stage all right uh good afternoon good to see everybody hope you got some lunch some good food there and I did want to start by just uh thanking Nathan for the invite and cool event having some really good conversations and also congrats on the 145 million dollar raise I think it's awesome um so my name is Jason Andrew I was in Silicon Valley for about 20 years I'm in Eugene Oregon now and I started Limelight Health with three co-founders in 2014.

uh we were uh started out as a multi-carrier quoting system for insurance brokers in the life and health space I'd been in the insurance industry for now about 22 years and so when we started the company we were you know grew it for about six and a half years and we were acquired in August of 2020 and then I was at Phineas for the last two years on an earn out and just left two months ago and so now I'm trying to figure out what I'm gonna do when I grow up if you have any ideas I'm open to conversations

um so just trying to figure that out okay so um so today I'm going to talk about how we pivoted multiple times to about a 93 million dollar exit um I'm really enjoying the bootstrap mindset here so full disclosure we raised about 44 million dollars over four rounds of funding so all the pitfalls and challenges that have been discussed all day around taking Venture we went through a lot of those but it wasn't a meaningful exit for our Founders and employees and investors and so we're really thankful for that as well um

so over the next 20 minutes we're going to talk about um what we did to get our first million and and kind of some of the ways we went about that how we found uh product Market fit which actually took us about probably six years almost till we sold the company actually forgot product Market fit um and then why an exit for us made sense and where we were at in the marketplace uh what things were keeping me up at night and and why that seemed for sure um the the best path so thankfully uh you know we grew revenues from uh the

first year all the way through our exit um and when we when we started the company uh we did some things that you know worked on a prototype but we were then you know acquired we were doing almost 12 million in 2021 and our way to about 19 million um and so you know we were having some growth but uh we had about 50 of that was Services Revenue the other 50 was uh recurring error and really because we were doing big Enterprise deployments at that point in time uh you know it was

probably a three-year recurring revenue on the on the services side of it so um that explains some of the multiple that we got which is kind of a blend between SAS and and the services so um I know it's kind of cliche but I'm going to talk about really for me a lot of it as a CEO was about relationships and intuitively trying to figure out where the business needed to go and having really great people that helped us along the way and just learning how to go from a Founder to a CEO through

the whole path and so we we did a prototype for the first um really for the first um year and it was built in one programming language and when we finished that we also my co-founder Michael had a lot of connections in the industry and we had about 20 to 30 clients that paid us about thousand dollars total in advance that's where our first year revenue and they really did it based on the fact that we had a prototype that they believed we would deliver to them and it was on the relationships and the trust and we did a

lot of work to to deliver on that but if we hadn't had Michael and didn't have the relationships in the industry and what we were doing we would not have gotten those first customers signed up without a doubt um and then another relationship that Michael didn't used to was an angel investor who actually ended up investing in the company becoming an advisor to me and then ultimately we hired him later on he was instrumental in a lot of areas of the company but one of the first things that he did was make an introduction to an insurance carrier was one of the largest insurance carriers in

the in the world and they said yeah we'd love your your product which was really a prototype at the time we want to work with you and so we had a huge decision to make after a year of selling to Insurance Brokers having about 20 clients on the insurance brokered side of now going Enterprise and we had 13 people in the company at the time and we really decided if we do this we're gonna have to take our baby which we just built put it out on the doorstep in the rain ignore it and go all in on this insurance carrier which is going to pay

us about a million dollars in revenue for the next year of work and become a customer so we made a bet we went after the million dollars and we then worked really diligently to try and take care of the customers we had there but we largely did not have capacity to do both well and it took about two years to rebuild the product for the insurance carrier space while we kept the brokered side of the business alive and spent a lot of time with those customers who were very very very patient with us um

so it we we didn't at that time turn off the other business and so we kept growing that and so now we had two businesses one selling to Insurance Brokers the other one selling to insurance carriers we had one insurance carrier and that was for about almost two and a half years that we had worked with um so in terms of culture and authenticity um this is my co-found one of my co-founders Garrett viggers uh he's a musician and so we got into it in the early days neither one of us were technical co-founders so uh we couldn't

code so we were mostly remote we had some engineers in the office so when they were up late at night because in the early days we were like you know burning the count on both ends I could buy pizza and he could play songs and we were just walking around the office and like trying to encourage the guys like hey keep going man we're gonna get through this you know and um but what we started doing then on our All Hands was playing music uh just as a way you know to kind of encourage people and get like music and that was the thing when we sold the company we had 140 employees and I swear probably 80

were really really good musicians of some variety or another and all through the life cycle of the company we started doing all hands where an employee would say hey I'm gonna do a song an original or a cover or something like that we had everything from Opera to rock songs to you name it but then we started actually in uh serenading customers so we had like a huge uh executive team come from Ireland and they came to our office they visited a bunch of companies in Silicon Valley and so we like serenaded these guys and they came to our office and they were blown away they're like we've

never had anybody in a sales meeting serenade us with a song and we're friends with them to this day and we've gotten then then we started doing that to uh go on site we'd outside with customers we'd like sing to like all their employees and so what it did was we knew we were looking for ways to stand out because we were still building our product and we had competitors that had a lot more money and a lot more skilled engineering teams and it it was huge in in settings apart and it was authentic because we all liked music

we ended up doing concerts when covet hit and we invited customers we invited Partners we invited family we started to talk about mental health you know and so you say we probably spent as much time thinking about culture and doing quirky stuff like that as we did building the company and it may have been in some folks Minds a complete waste of time but it was authentic and it was real and to this day the acquiring company adopted that they've done eight concerts globally and we ended up becoming the the music sponsor for the largest and sure Tech

um event globally uh for this third year running now and so it's it's been something that the company became known for we got a lot of business a lot of customers out of that and uh our sales team could call in and people would start talking about music and it just dropped uh the guards that people had so anyway so um you gotta figure out your own thing whatever it is in terms of your culture so um as we continue building the company uh in in the the kind of the

first pivot we we had to again uh make the decision to move away from the broker Channel we went into the the carrier market so um all right let's go to section two so in terms of relationships and and the importance of relationships um after we had uh pivoted and shifted um it was 2016 we were heading into 2017 and we were we were growing um but our I started getting overly

concerned about how we were going to be able to scale and how we were going to really grow the business and so I had brought on uh that said said another slide a gentleman around kind of late 2018 as an advisor who had sold a company that was in the space that we had started with and so I had asked him if you were my seat what would you do how would you grow this business you know how would you go about it and he basically wrote me a report and said look you're going to slog away for probably 10 years and maybe if you're

successful you might get to 10 million in Revenue but it's highly unlikely that's about the space that you're going to be able to grow into obviously I was super concerned after that and I was looking at where the market was so I had then looked at our carrier Market space where we had this one customer and looked at companies that were in an adjacent space to us and I started cold calling some of the executives that had retired after they had gone public one of them responded to me a guy named Pete Espinoza who had been the head of sales at guidewire which is now about a 9 billion dollar company

and I said Do you ever advise and help people and he said sure if I like them I do it and so Pete I said will you come out I'll fly you out I'd like you just to meet with our executive team and tell us all the problems you had how you got through it and what you did to build it so Pete said sure I'll come out and I spent a whole day with our team and really told us all the challenges they had all the difficulties he ended up then coming on as an advisor helped me hire his entire previous Enterprise sales team and then made an introduction

to an executive at Ernst young who was instrumental in US raising a future round as well as being able to build out the model we shifted to and so again it was really some of these relationships that gave the Insight in terms of making these huge shifts every time that I felt like I didn't know where to go what we were doing in terms of building the company um Pete then made an introduction to a third person who was uh probably the fifth employee at guidewire she ended up

joining our board and was instrumental in how we got to the point where we had to make a product change later on as we went there so um fast forward then to about 2017 we we raised our series B and at that point in time we were trying to figure out how to really penetrate this market and I started getting concerned because now as I looked at our competitors they had all on average been in the market for about 27 years and had raised on average

about 100 million dollars compared to at that time we had raised about 10 and so I went to the board and we started looking at it and saying look we're going to if we're going to be able to scale this it's going to take us a ton more money a ton more time and the market seemed to be getting more and more competitive and I started getting concerned that we weren't going to be able to execute on that we had a fairly immature product we had now had five carrier customers and we had a really good brand in terms of the work so we

raised a series C so now we raised 30 million dollars this is towards the end of 18. and I hired an executive team one of which was a really seasoned product leader who had said look we've got products in three different categories right now and we have to really focus if we're going to cross the chasm and make it as a company so we shifted over the next 12 months this is about six years in it's from waterfall to Agile we had 405

customers 400 in the broker Channel and five in the carrier so we cut off completely the broker Channel which was really scary and got rid of 400 customers we were left with five and towards the end of that year we then got uh interest about four inbound folks that we had built relationships over the last several years on the Strategic side and I had went to the board and said look I think that we've got again a pretty immature product we're gonna have to raise a ton more money and this is going to take us a long time and the

Market's getting more and more competitive and so we made the decision um it's a longer conversation so I'm going to now but made the decision and the board agreed and then we were acquired in about eight months later about eight month process of going through that so this was kind of the cross in the chasm when we raise the money um again we were we had probably four different businesses because of the way that we had built the product we were in the broker Market we were in the peo market we were in the carrier market and

we had a data business so we cut off three or four of those and focused exclusively on just the carrier Market um and it was a really really scary time so um over last minutes uh 20 minutes talked about making bets and pivoting early on just following uh where the market is leading we didn't know at the time what our product Market fit was and we had to shift that several times to me kind of culture and authenticity is super important and so whatever that is

for you we spent a lot of time on building culture and I think it's super important um it can be cliche but I think relationships are are critical um in in terms of for us it was a relationship at every stage that either helped us get a customer help us to get funding helped us to be able to figure out how to build our product um and then we've got folks that had been on the path we had gone to so we went to companies that we wanted to imitate and brought them on either to our board and as advisors end up often hiring advisors as employees that were

super helpful and had the roadmap and how to grow um and then I started doing a ton of market research assessing the risk and realized again that we had a very immature product and looking at the competition that just the life cycle for us to be able to scale to the next level and get where we thought we were going to be wasn't uh the path that was going to work and so we tapped out and it was a really good tap out I'm thankful for it but um thank you that's it [Music]