442: Prodoscore: Creating a New SaaS Category No One Asked For - with Sam Naficy - The SaaS Podcast - Real Lessons on Growing Profitable SaaS

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[00:00]
Sam Nafisi
Foreign.
[00:10]
Omar Khan
Welcome to another episode of the SaaS podcast. I'm your host Omar Khan and this is a show where I interview proven founders and industry experts who share their stories, strategies and insights to help you build, launch and grow your SaaS business. In this episode, I talked to Sam Nafisi, the CEO of Proto Score, a SaaS platform that uses AI to show companies how work gets done by analyzing data from the cloud tools employees already use every day. Sam's startup journey began in the early 2000s when he built a tech business from scratch and scaled it to 55 million in ARR over two decades. But after stepping away from that company, he wasn't planning to start over until a close friend pitched him an idea. Sam initially came on board as an investor, then just months before the pandemic hit, he stepped in as CEO. What he walked into wasn't pretty. The product was still in beta, there was no revenue, and most people thought it was just another employee surveillance tool. Convincing buyers and their teams that this was about helping people work smarter, not watching their every move was an uphill battle. But Sam had seen this before. He knew how long it can take for people to accept a new category, so they leaned into customer feedback, kept evolving the product and pushed through the noise. Slowly things started to click. The team still had to work through plenty of challenges, getting media attention when they weren't ready for it, a market that needed education and years of trying to figure out where exactly they fit. Today, Protoscore is a 7 figure ARR business with a clear ICP, a sharper pitch, and customers who now see it as a valuable tool instead of something to fear. In this episode you'll learn how Sam rebuilt from scratch after a 20 year exit and why this time around felt even harder. What it actually takes to create and validate a new software category when everyone assumes you're building the wrong thing. How they turn skepticism and pushback into buy in by giving employees their own productivity data. We talk about how Sam and his team found traction through outbound sales, media coverage and a hard earned understanding of their real icp and why carving out a new category demands relentless focus, capital and the patience to keep iterating. So I hope you enjoy it. I talk to a lot of founders who have the same challenge. They've got an amazing product idea but need a technical team to build or scale it. If you're looking to develop a B2B SaaS product but don't want to hire and manage an in house team, listen up with Gearhart is a product development studio that handles the entire technical side of building your software. They've built over 70 successful products, including SmartSuite. Who's founder trusted Gearhart after his $200 million exit to help build his next big venture. Some of Gearhart's customers have gone through YC and their portfolio companies have won over 10 startup competitions. Until the end of May, they're offering our listeners free strategy sessions with their leadership team. Just visit Gearheart IO to book your session. That's Gearheart IO. Sam, welcome to the show.
[03:20]
Sam Nafisi
Thanks for having me, Omer. I appreciate it.
[03:22]
Omar Khan
My pleasure. Do you have a favorite quote, something that inspires or motivates you?
[03:25]
Sam Nafisi
Yeah, I thought about this one. Is that which does not kill you makes you stronger. I think it's kind of a very apropos to an immigrant coming to a new country. But another thing that I talk to a lot of my, especially my kids, is I'm a big sports nut. I'm a sports junkie. And there's a Michael Jordan quote that has a lot of relevance to me. And he says something to the effect of I've missed about 9,000 shots in my career. I've lost about 300 games in my career. I've taken 27 game winning shots and missed them all. And I failed over and over again. But I've been very successful. Something to that effect. I love that. It's so perfect for business guys. You know, we feel a lot.
[04:15]
Omar Khan
Awesome. So tell us about Protoscore. What does the product do, who's it for, and what's the main problem you're helping to solve?
[04:20]
Sam Nafisi
At its core, Omer, it's a data analytics company that provides tools for employee empowerment, employee productivity, visibility for middle management, and the C suite. So what we do is we capture all of the APIs for the cloud tools that are used in their daily scope of work. Email, CRM, telephony, Slack. For chat, it could be Jira and GitHub. For the developers, it could be Zendesk and ServiceNow for the call center folks. We capture all of that use AI machine learning to provide intuitive indicated next steps and how they could be more productive employees.
[05:01]
Omar Khan
Great. And give us a sense of the size of the business where you in terms of revenue, size of team, customers and all that stuff.
[05:10]
Sam Nafisi
Yeah, we're in the high seven figures in rough revenue numbers. We have about 150, let's call it logos as customers and I believe as of last count about 130, 135,000 employees on the platform.
[05:27]
Omar Khan
Great. Now, before we get into like where the idea came from and how this business started. Let's talk about your background because this is not your first startup. You previously built, I guess a similar business and had a successful exit with that. So can you just tell us a little bit about that?
[05:48]
Sam Nafisi
Yeah. I started a company, I was a little kid, crazy to look back. It was in 98. I started a company called DTT at the time, it's been renamed DTIQ and it focused on. It was a SaaS company as well that grew to about 55 million of ARR when I exited it. And that basically did data analytics for restaurants, hotels and retail environments. And how we did it there was. We captured video. So all the video and all the third party data points in a restaurant. So assume a McDonald's. We capture the point of sale data in the register, we capture the time and attendance for the employees that clocked in and clocked out. We capture the inventory control modules for the walk in freezer, the temperature control modules, and aggregated all of those into a dashboard way before AI and provided analytics to the franchisee or the corporate stores.
[06:49]
Omar Khan
As you said, you were a kid. How do you come up with an idea like that? It seems like a pretty ambitious think to go and build.
[06:56]
Sam Nafisi
I was, I was hustling Omar. I was a typical immigrant from. I'm Iranian originally. I had moved to America when I was 12 and I'd been hustling. I'd finished my undergrad, I was going to law school. I didn't know what I wanted to do. Windows 98 came out, if you remember. I'm old. You do. So Windows 98 took the idea of video cassettes, if you remember those VCRs and the surveillance to digital CDs. Right. I tell my kids this, like what are you talking about? That CD video. So I saw an opportunity to be able to store video digitally. And one of the things of immigrants is I wanted to also open five McDonald's. There was an aspirational aspect to that franchise world that is very rare and unique to the United States. So I had a partner at the time who crazy. He was a liver transplant surgeon. And he said, Sam, Instead of opening McDonald's or five McDonald's, why don't we sell this technology into a McDonald's or a Subway or a Burger King? So we married my wish of the franchise world to technology and Windows 98 and started this little company that struggled mightily and had a fortunate outcome.
[08:08]
Omar Khan
How long did you work on that business before your exit?
[08:11]
Sam Nafisi
So I was founder, chairman, CEO from October of 98 through 2018. So for 20 years I was actively involved fundraising and all of the everything about it, from zero employees to about 550 employees. Then I became chairman at some family situation that come up and I had to be a single dad and be focused on my children. So I took about a couple years off on an active role and then that company got sold to Cisco's private equity firm. And then I began my involvement with my current role at Proto Score.
[08:50]
Omar Khan
Right. And I guess in some, some ways we could say, you know, technically you're not the founder of Protoscore, but in many ways you are because it was so early on when it was just an idea, in many ways. So tell me about like where the idea came from and then how did you get involved with it?
[09:09]
Sam Nafisi
Yeah, so absolutely, I'm not definitionally the founder. My partner, Chrisanto Sajibrahim, brilliant, brilliant product guy. He founded the business, it was his idea. And I had known him, he was like a little brother to me for 20 years. Brilliant product guy. Had multiple products that he had exited. Small, never really companies, but more aqua hires and products and done very well for himself. And he came to me and said, Sam, I've got this idea, would you be interested? And it was probably six months or so before COVID roughly, roughly that the product, the idea, all his. I started investing to support him. And I'm a big believer in Chris and truly a visionary. And that's how my involvement became initially as a high level board member investor. That morphed into being a CEO about a year thereafter.
[10:00]
Omar Khan
Yeah. So how did you become CEO of the business?
[10:04]
Sam Nafisi
So as I invested more and more and we thought that we had a product, we had a company here, it was more than a product that we could build a company that was also very similar to what I had done in the past. He came to me and said, Sam, do you mind stepping in? Right. I'm a product guy, I'm not a CEO. I'm not going to, I can't, you know, I don't want to build a business. So I did step in probably 2020 ish. 2021 maybe even, I'd say, I think in January of 21 I stepped in actively. A CEO.
[10:31]
Omar Khan
Right. And the business was still pre revenue at the time. Right?
[10:34]
Sam Nafisi
Yeah, we had some beta and pilots. I don't believe we had much revenue, if at all, I don't recall exactly, but minimal.
[10:41]
Omar Khan
Great. So you, you've been involved with the business from very early stages. You've seen the idea evolve and when you came on board, what were the, what were the biggest challenges you saw ahead of you and where did you focus your time?
[11:01]
Sam Nafisi
Yeah, look, the number one challenge is in this and my other company and broadly defined has been when you create new categories, there's just, there's going to be an issue of adoption educationally. You've got to educate the market, you got to educate the buyer's sphere of this, the importance of the product. And then you initially have the inherent stigmas. Any new category that is created has an inherent stigma initially that did. Proto Score does as well. Did as well. It's been far lessened and mitigated. And that was very similar to my old company for this one as well. It was the idea of culture. Big Brother. What will my employees think about if you're kind of watching them? And we have to differentiate ourselves. Right. There's been a lot of tools in the marketplace that are surveillance, that are watching your mouse clicks and URL movements and camera movements. We've seen all the funny gimmicks on YouTube. We do none of that. And that was Chris's brilliance. Our founders brilliance was that this has nothing to do with clicks and Big Brother and surveillance. We're only capturing the APIs of cloud tools. If you've got Spotify in the background and listening to music, we don't care. Right. If you got a YouTube channel and you're meditating of our business, we're only capturing data that is consigned to your corporate email.
[12:28]
Omar Khan
Right. So tell me a little bit about. You said, hey, you know, new category creation is. Was a big challenge for us. And with any new category there's a lot of education that you need to go through before people even realize, okay, I got a problem I need to fix. And you know, this is the solution for me. There were just help us understand why it was a new category because I think you've kind of answered that to some degree that there were a lot of tools out there that did that surveillance stuff. Right. And so you decide to stay clear of that and focus purely on data through the API and productivity and so on. But were they, were there not any other tools like that or similar in the market at the time?
[13:19]
Sam Nafisi
Yeah, no, there wasn't. I'll come to that question in a second Omer, but I'll give my answer in a little bit of a long winded version. My apologies. But if you go back 25 years ago, salespeople used Excel or their notepads for notes and pipeline and managing relationships. Right. When, when CRM tools came about, there was initially a major pushback. Oh my God. Salespeople are not going to like this. What are we doing? I don't like this. I was hesitant right then. We deployed Salesforce and it's become any CRM, you know, they've become ubiquitous. One more analogy. If I told you six years ago that we'd be recording sales calls, transcribing it, giving them next indicated actions, you would have laughed at me. Salespeople would have shot me. Pardon? Saying GONG is a almost get. Gong is a $10 billion business. Every salesperson I've hired at Proto Score, the first question they ask is, do you have gong? It's a new category. Nobody was recording sales call six years ago. So we believe Proto Score is doing some of that in this broad category of employee productivity. Right. It's a broad category and we think we can get a sliver of it.
[14:39]
Omar Khan
Did you find it in the early days when you were having conversations with customers that not only did you have to educate them on the category, but people automatically jumped to the conclusion that you were another surveillance tool?
[14:49]
Sam Nafisi
100%. 100%. And that goes to the product market fit discussion we had and that we focus on is we are very, very employee centric. Right. The idea, the employees get their own Proto Score dashboard. So I see what Sam does. I have when I wake up in the morning. I have in my, in my dashboard, AI driven, indicated actions for my day. How do I work my day to day to be more productive? How do I compare to my peers in the exact same role? So we bucket employees in the same exact peer group, sales, marketing, customer success, developers, engineers. And we compare them against their peers and give them next indicated actions of how they can improve.
[15:38]
Omar Khan
Tell me about, I mean, obviously the product has evolved. It's been several years. Tell me about what that first version of the product looked like. What did it do?
[15:48]
Sam Nafisi
Look at its base. It provided simple visibility to what the employees were doing. Right? Visibility into. Remember, we're connecting through the APIs, we're capturing all the activity in email, Slack, CRM, calendar, chat, LinkedIn, navigator, DocuSign. Very, very basic stuff. And what has evolved? I mean, the transformation of the product in the last 12 months has been remarkable, let alone the last three years. Part of it is just the AI engine we've built and large language models that are curated and specific. And it's been remarkable. The things we're able to surface now, looking back three years ago, it's completely Night and day.
[16:33]
Omar Khan
So look, on the one hand, you're going out there and you're talking to these potential customers and you're getting objections. First of all, you're having to explain, we're not like this, we're this. And then you have to have to educate them on why they need this. But at the same time, what was the reaction from employees with those early customers? Because it feels like, whether they understand it or not, it feels like there's some kind of surveillance going on. And employees can be very good at sabotaging new projects if they really want to. Right. So what was the. What was the reaction? And, you know, was it. Was it overall neutral, positive, negative?
[17:22]
Sam Nafisi
Absolutely. Initially, there was pushback. There was pushback from the employees concerned that this is Big Brother. This is surveillance. And again, I go back 20 years ago, 25 years ago, to that young, little, young Sam of 27 years old, however old I was, I remember vividly, vividly, employees pushing back franchisees and owners of these restaurants coming to us and say, oh, my God, I can't do this. I love my employees. My cousin works here, my uncle works here. Don't bother us. And that story changed if we are able to save the employee from an issue. So this was our story, for example, and this obviously presented itself. If a customer comes in and gives you a $20 bill and demands $100 in change, starts screaming at the employee. Right. You have video analytics around that. The employee is exonerated there. Right? The employee. And that those kinds of stories became the groundswell that the next year, when we went to a conference, franchisees would run to us. We need this. I'm opening two new stores immediately. We went from zero customers to 90,000 locations. Subway Worldwide deployed the solution Worldwide. Every store around the world. We're seeing that happen now at Proto Score. The reason I give that analogy is in the beginning, we had that pushback of the employees not seeing the benefit to them. I could tell you unequivocally, today, employees see the benefit just like they do with Gong, just like they do with Salesforce. We are now empowering them. Look, at the end of the day, either you're a good employee or you're not a good employee. If you're a good employee, you want all the tools that benefits you. Right? And if you're a bad employee, you got a foot out the door anyways. Right? Either this tool pushes you out, or your manager puts you on a pit plan and you exit. If we can empower employees to make the most out of their day and for themselves and for the employer. Why not have a win win? And I'll end with this. Our motto is provide flexibility with accountability. If we're allowing a hybrid remote workforce and, and allowing the employee to be at home at a Starbucks or whatever venue they choose, hey, we'll give you that flexibility. Give me some accountability. What better way to have that win win solution and dynamic than a tool.
[20:03]
Omar Khan
Like Proto Score the new category creation. What were you doing to overcome that and educate the market? Was this more about content marketing? Was this more about how you framed your pitch? Was, was it getting on LinkedIn? What were you doing to, to educate the market about this?
[20:25]
Sam Nafisi
Great question. Look, it's a process. It takes time. And that's why one of the big advice I give to younger CEOs is having the proper capital, right? Because that's when the, as you know better than anyone is the tweaking of your, you know, we're pivoting. In the pivot world, we all use the word pivot where I, I don't call it. We're tweaking, right? We're not having a revolution, we're having evolutions, right? Evolution here, evolution here. And that requires capital, patience, persistence. We did all of those things, right? We morphed the product, we tweaked it to be more employee centric, customers gave us feedback, we got a couple of lucky breaks, we had a couple of big RFPs that we won that led to more opportunities within legal, within staffing. So all of those things and we still have our struggles, right? You know, we're still a very, very small company.
[21:18]
Omar Khan
If you were talking to a founder today who is trying to build a new product category but doesn't have a lot of investment behind them, do you think that is they can succeed or just a new category creation? It's just by the nature of the business means you need to have significantly more funding to be able to make a breakthrough here.
[21:50]
Sam Nafisi
Look, I think I would say go for it. I tell that young CEO, my friend, go for it. But remember my quote that I said in the beginning? Remember the Michael Jordan quote? He missed 9,000 shots and lost 300 games. So expect a very, very difficult journey. And I have to be fair in that. My experience has been solely in these two that ended up being real companies. These two companies are both new categories. So I don't have a lot of experience creating a startup that's somewhat existing in, you know, it's analogous to other existing companies. Right. So my experience has been in new categories. But look, there's a joy and a kind of an intellectual high that you get from being able to get this off the ground, get adoption, and frankly change lives. I mean, if you are able to create a new category that impacts people, companies, corporations, it becomes meaningful. You know, it becomes really, really meaningful.
[22:51]
Omar Khan
Hey, have you heard of SmartSuite? They were just named 2024 SaaS Startup of the Year by Startup Grind. Well, I recently discovered that Gearhart was the development team behind their success. Gearhart is a product development studio that specializes in scaling B2B SaaS. Companies built by serial entrepreneurs. They understand the unique challenges of startups and can plug into your team to accelerate growth. With offices in San Francisco and London, plus a distributed team of 43 experts, they've helped build over 70 successful products. To learn more about how Gearhart can help scale your development, check them out at Gearhart IO. That's Gearheart IO. Let's talk about ICP. When you were on that journey from going from zero to the first million in ARR, who did you initially identify as your ICP and did that prove to be right or not?
[23:52]
Sam Nafisi
Yes. So let me back up and say to you that, you know, again, this goes to the young CEOs as well. I've seen pitch decks that talk about TAMs and the tab is $8 trillion and they're like, come on guys, slow down. So our initial idea and I push back on it a lot was the Salesforce ecosystem is the right icp. Anybody that has obviously email, telephony, some kind of a UCAS ringcentral dial pad, whatever it may be, and CRM being Salesforce. Right, but that's a massive tam, right? It's, it's this we're tiny little small startup, we got to focus. How do we dwindle that down? And I think as we winnowed that down, we realized that look, it's great for email telephony, Salesforce, they need, they should have slack because we could show a lot of organizational network analysis kind of collaboration tools around that. And then we focus more dwindled it down to furthermore to more mid market to enterprise, right? So we realized that sub 100 seat companies we don't have a lot of efficacy for. So we should go north of a hundred to multi thousands. So you know, as we evolved that ICP kind of started, we started having more focus and furthermore. I never thought a year ago staffing would be our number one icp. Today staffing is unequivocally our number one icp. And as you may know instead of a CRM tool they use something called ATS or an applicant tracking software tool that's kind of analogous for their CRM. So those are Bullhorn is the big one aviante tracker and we integrate with all those and capture all those data.
[25:37]
Omar Khan
So going from to get getting to the first million in ARR. What were the, the main growth channels that worked for you? Was it mostly outbound? Was there anything else?
[25:50]
Sam Nafisi
Yeah, clearly outbound. But I will say that we got very lucky omer in that Covid hit and in some ways lucky, in some ways unlucky. Obviously a horrible event for humanity. But what happened is we got a lot of outsized press. Right. The Wall Street Journal interviewed me and I was on CNBC and I'm like what am I doing? It's a four person company. Like we don't even know what we're doing. But I'm on CNBC's like mid morning show. It was idiotic in the sense that. But because the category was hot and remote work and can't go to the office and the world closed. So I think we got a lot of outsized press which I'm very grateful for. Obviously outbound marketing, cold calls, LinkedIn, SEO, all the normal broad categories that we applied and you know and continue to.
[26:46]
Omar Khan
Let's talk about finding product market fit. So you, you've got this initial product, you, you get some early traction, you get to first million in arrangement. What were the, what were the biggest challenges at the time in terms of finding the right product market fit?
[27:10]
Sam Nafisi
Let me start by saying I'm not sure we at least have the perfect product market fit yet. Right. I think we're very, very good. I think there's a great product market fit that we have. Is it perfect? I don't know. I don't think anybody knows anybody has frankly. I think that's the iterative process of the evolution of our products. For any software software company, we're in the same boat. So its evolution have been, has been very customer centric, customer feedback, customer driven in areas that we could help them. For example, an area that we focused on recently in the last six months has been employee engagement or disengagement. We call it kind of the attrition risk. And the attrition risk could be twofold, either burnout or checked out. Right. The two pendulum of. So we're able to now 90 days before an employee attrits show with over 90% certainty that they will attrition. And it came out of conversations with some of our heavy, heavy users like you have all of this data. There's all this analytics you're doing around our data. Can you show us be a leading indicator to potential attrition? It doesn't mean the employee is going to leave. They may be having an issue at home, they may be sick, their child may be sick. So it's not an imperative issue that they're leaving, but it's a foresight. Have a conversation with Sam, see what's going on, motivate him, engage him, or if he's going to exit, exit him.
[28:56]
Omar Khan
Yeah, that's a great example because you have good attrition and bad attrition, Right. So if you've got some kind of prediction of somebody who's going to leave and you consider that bad attrition, you have enough of an opportunity to do something about it or have a conversation, right?
[29:15]
Sam Nafisi
Correct. Somebody's burned out, omer. Somebody's working 16 hour days. They're, they're exhausted, they're looking to exit. You want to do everything in your power to keep that employee. So this is not a negative alert, it's an alert to, hey, talk to Sam. You, he may need a week off, he may need an assistant, he may need some help. It's not meant to be punitive at all. It's meant to be a coaching environment, a coaching tool.
[29:41]
Omar Khan
You were also telling me earlier about some of the other things that you have built into the product now, like helping your customers understand the ROI and effectiveness of meeting times and so on. And in many ways it strikes me as, you know, I'd love for you to explain what those are, but I'm curious how you navigate through this sort of maze where you're getting feedback from customers. And a lot of these might sound like great ideas, but how do you decide what's on strategy and what isn't? Because there's a lot of stuff you could build, right?
[30:31]
Sam Nafisi
Great question, great question. And we just had a product call two hours ago and here's the, here's what's happening. And the exact same thing happened my old company, right? The product is meant to be used. The heavy users are what I call middle management, VP level, director level. They're in the product all day. They're in proto score, they know their teams, they're looking on all the analytics. Okay? The C suite is not going to be in the product. Guess what? I'm not in Salesforce all day. I don't look at Salesforce Pipeline review. I have a Monday morning sales review with the Team. My VP of sales Mil makes a dashboard for me. Talks about new pipeline creation, new opportunities, revenue coming in, attrition, my four, five, seven KPIs, that's it. I'm not looking at Salesforce all day. The same, exact same thing here. C suite is most likely not going to be in. What we do for the C suite is provide a weekly report. In that summary report says these seven people are at risk of attrition. These six people are not using the cloud tools. We are spending $1,200 a month for each employee. These six people are on excessive meetings. For example, I want my inside salespeople to have 90% of their meetings externally. If my inside salespeople have half their meetings internal, there is a problem, my friend. They're not selling. I don't want them to be in calls. With marketing and with customer success, they got to do outbound. So we provided those and highlight those for the C suite. So that's how we kind of bifurcate the utility of the product. Because as you said, it could be overwhelming. Overwhelming. Right. I'll give you one more example. I think CEOs would appreciate this. We do a lot of work around organizational network analysis. We call it ona. Historically, companies, when you have a layoff or you have a rif, or you hire people and onboard, be it through an acquisition of another company or, or you hire new employees, you want to incorporate them into the fabric of the company. There is no visibility for anyone at all that shows all communication real time between all your employees. We are the only company that is capturing every data point live. Email, calendar, chat, telephony, all of it. So we put all that, what we call it, ona, and show real time that if you were to terminate SAM, who does SAM communicate with all day? Who are SAM's bridgers and ecosystem and show the ripple effect of SAM terminating or sam's onboarding. How do you tether Sam to other employees to ensure his success?
[33:33]
Omar Khan
The one thing it strikes me here is that you're collecting all this data and you have the opportunity to create these different types of solutions like you've described here. Right? So we talked about the employee productivity kind of measurement. Then there's this ROI on how the product is being used and how maybe licensing is or licenses of software are being utilized or the effectiveness of meeting times. And it sort of strikes me like that on the one hand that makes complete sense because you have access to all this data, so why not do this and create this value? But on the other hand, it feels like many of these could be standalone products themselves. And so do you get into a situation where it becomes harder to explain the, the value prop because you're doing all of these different things. Has that been a challenge?
[34:39]
Sam Nafisi
No. Look, we tell our pitch has always been. And to mitigate the concern of culture, all of what we're capturing, the company already has. We're not doing anything. All of the data are in these silos. Email, telephony, CRM, Slack, LinkedIn, Navigator, Zendesk, Jira, GitHub, they have all of that. We're capturing it all, aggregating it in one dossier, one kind of location, and then using our magic of AI machine learning to massage it, to provide a scoring system to be able to trend analysis and measure the employees. So can they log into Salesforce and look at all the activity individually? Sure. Can they log into email one by one and see? Absolutely. You're never going to be able to aggregate it all into one dashboard, see it all, and do the analysis that we do in a broad large scale. And that's what we, we hope is our differentiator.
[35:41]
Omar Khan
I'm curious, given the 20 years you spent building the last business, what do you think was one big lesson you learned from that experience that has turned out to be a really useful guide as you go through the process of building and scaling Protoscore 100%.
[36:05]
Sam Nafisi
One answer only. Be well capitalized. The most important advice I can Give any young CEO new startup, 1 million of revenue, 10 million. Be well capitalized. Right. You know, look at the times we're in right now. Right there it's indecision, there's chaos in the marketplace. And I think if you're well capitalized, you weather storms, you're able to again, evolve. Not a revolution, but an evolution. It provides that flexibility, right? So I'm all about being well capitalized. And look, if there's one bit of advice besides that I would give laser like focus. You know, we throw a lot of stuff on the wall and see what sticks when a couple of them stick double down, triple down on those items. You know, sometimes young CEOs tend to want to continue throwing more wall stuff on the wall because they see that fake broad tam of the world truncate the tam, narrow the tam laser like focus. Be well capitalized, you maximize your chances of success.
[37:11]
Omar Khan
Love it. All right, on that note, let's wrap up. We've got the lightning round. I've got seven quick fire questions for you. You ready?
[37:17]
Sam Nafisi
Go for it.
[37:18]
Omar Khan
What's one of the best pieces of business advice you've received don't have regrets.
[37:24]
Sam Nafisi
Mistakes are okay. Regrets kill and cripple.
[37:27]
Omar Khan
Yeah, I love that. I've seen that. I mean, you talked about being a sports fan. I've seen that with the best athletes and sports players. It's like this play by play, and then once that play is over, it's out of their head. Right. And where. The rest of us have this ability to kind of ruminate on this stuff. If you let it, it's crazy. What book would you recommend to our audience and why?
[37:49]
Sam Nafisi
I love autobiographies. So I don't know. Churchill's, Aristotle's, Nietzsche. I can't name a single book. Come back to me on that.
[38:03]
Omar Khan
What's one attribute or characteristic in your mind of a successful founder?
[38:08]
Sam Nafisi
Calm under the stormy times that inevitably come your way.
[38:12]
Omar Khan
What's your favorite personal productivity tool or habit?
[38:15]
Sam Nafisi
Morning routine.
[38:16]
Omar Khan
What's a new or crazy business idea you'd love to pursue if you had the time?
[38:21]
Sam Nafisi
How to replicate productivity for college students.
[38:25]
Omar Khan
What's an interesting or fun fact about you that most people don't know?
[38:30]
Sam Nafisi
I sold Cuban cigars as a 19 year old kid to pay for my college tuition.
[38:36]
Omar Khan
Wow. That's why. Now it connects back to why we were talking about cigars at the beginning of this session. Finally, what's one of your most important passions outside of your work?
[38:50]
Sam Nafisi
My children. Absolutely. My children. I joke around and say that people ask me, what do you do for work? And I inevitably say I'm a dad.
[38:58]
Omar Khan
How many kids do you have?
[38:59]
Sam Nafisi
Two. Four step, but two of my own. Do you have kids?
[39:03]
Omar Khan
Yes. Yeah, I've got two. They're both teenagers now.
[39:05]
Sam Nafisi
Oh, good luck. How old?
[39:07]
Omar Khan
16 and 19. And they don't want to spend much time with you when they get to that age, right?
[39:15]
Sam Nafisi
Yeah, no, I'm a little ahead of you. I got 22 and 19. 22 and 20. Just turned 20.
[39:21]
Omar Khan
Nice. Nice. Great. Well, if people want to check out Prado score, they can go to prodoscore. And if folks want to get in touch with you, what's the best way for them to do that?
[39:32]
Sam Nafisi
Yeah, it's samroto score.com go to our website. There's a lot of information there. You can access me our marketing folks. And again, Omar, I really, really appreciate this, buddy. This was a lot of fun.
[39:43]
Omar Khan
Yeah, thank you. I appreciate you taking the time to come here. I know we had a few technical issues getting this thing started, but you made me laugh while we were going through that, so definitely made things entertaining. So I appreciate that. Yeah, thank you so much. And I wish you and the team the best of success.
[40:04]
Sam Nafisi
Absolutely. You as well. If there's anything you need further, you know, ping me and I'll get back to you.
[40:08]
Omar Khan
Thank you so much. Cheers. If this episode got you thinking about building or scaling your own SaaS product, let me tell you about a resource that can help. Whether you need a complete technical team or want to scale your existing one, Gearhart might be exactly what you're looking for this. They're a product development studio that specializes in building B2B SaaS platforms. What's interesting is that they can act as your fractional CTO and technical team, but with a unique twist. They've built strong connections in Silicon Valley and can even help connect you with VCs when you're ready. Plus, as a proud Ukrainian born company, they deliver Silicon Valley expertise with an offshore pricing model. They're offering our listeners free strategy sessions with their leadership team until the end of May. Visit Gearheart IO to book your session. That's Gearheart IO.

Summary5 min read

Episode 442: Prodoscore - Creating a New SaaS Category No One Asked For

Guest: Sam Nafisi, CEO of Prodoscore
Release Date: May 8, 2025
Host: Omer Khan

Introduction to Sam Nafisi and Prodoscore

In this insightful episode of The SaaS Podcast, host Omer Khan sits down with Sam Nafisi, the CEO of Prodoscore. Prodoscore is a groundbreaking SaaS platform that leverages AI to analyze data from the cloud tools employees use daily, providing companies with actionable insights on productivity and workflow optimization.

Notable Quote:

"Our motto is provide flexibility with accountability."
— Sam Nafisi [15:37]

Sam Nafisi’s Entrepreneurial Journey

Sam Nafisi brings over two decades of entrepreneurial experience to the table. He initially built and scaled a tech business from the late 1990s, growing it to $55 million in ARR before stepping away. Prodoscore marks his return to the startup ecosystem, a transition spurred by a compelling idea from a close friend.

Notable Quote:

"Mistakes are okay. Regrets kill and cripple."
— Sam Nafisi [37:23]

Transition to Prodoscore: From Investor to CEO

Sam joined Prodoscore initially as an investor, recognizing the potential in its unique approach to productivity analytics. However, as the company faced critical challenges, including limited revenue and a stigmatized product perception, Sam stepped in as CEO just months before the pandemic, signaling his deep commitment to steering the company towards success.

Notable Quote:

"If you're allowing the employee to be at home at a Starbucks or whatever venue they choose, hey, we'll give you that flexibility. Give me some accountability."
— Sam Nafisi [20:02]

Overcoming Challenges in Creating a New SaaS Category

One of the primary hurdles Prodoscore faced was establishing a new category in the SaaS landscape. Initially perceived as another employee surveillance tool, the team had to pivot their approach to focus on employee empowerment and productivity rather than monitoring. This required extensive market education and product evolution to shift perceptions.

Notable Quote:

"Any new category that is created has an inherent stigma initially that did Proto Score does as well. Did as well."
— Sam Nafisi [11:00]

Differentiating Prodoscore from Surveillance Tools

Unlike existing tools that monitor clicks, URL movements, or camera feeds, Prodoscore differentiates itself by solely capturing data from APIs of cloud tools like email, CRM systems, and communication platforms. This focus on meaningful data collection fosters a culture of productivity without invading employee privacy.

Notable Quote:

"We're only capturing the APIs of cloud tools. If you've got Spotify in the background and listening to music, we don't care."
— Sam Nafisi [12:27]

Evolving the Product: From Visibility to Actionable Insights

Prodoscore’s product has undergone significant transformations, particularly in the past year. Initially providing basic visibility into employee activities, the platform now utilizes advanced AI and machine learning to offer intuitive next steps and productivity enhancements. Recent features include predicting employee attrition risks and assessing meeting effectiveness.

Notable Quote:

"We're able to now 90 days before an employee attrits show with over 90% certainty that they will attrition."
— Sam Nafisi [27:10]

Identifying and Refining the Ideal Customer Profile (ICP)

Sam emphasizes the importance of a focused ICP over a broad Total Addressable Market (TAM). Initially targeting the Salesforce ecosystem, Prodoscore narrowed its focus to mid-market and enterprise clients, ultimately identifying the staffing industry as their primary ICP. This strategic narrowing allowed for more effective outreach and product alignment.

Notable Quote:

"We are very, very employee centric... employees get their own Proto Score dashboard."
— Sam Nafisi [14:49]

Growth Strategies: Leveraging Outbound Sales and Media Coverage

Prodoscore achieved its first million in ARR through a combination of outbound sales efforts and unexpected media exposure during the COVID-19 pandemic. Appearances on platforms like CNBC and features in the Wall Street Journal provided significant visibility, complementing traditional growth channels like cold calling and SEO.

Notable Quote:

"Because the category was hot and remote work and can't go to the office and the world closed. So I think we got a lot of outsized press."
— Sam Nafisi [25:49]

Navigating Product-Market Fit in a New Category

While Prodoscore has made strides in establishing product-market fit, Sam acknowledges that perfection is elusive. The iterative, customer-centric approach has been crucial, with ongoing enhancements based on user feedback ensuring the product remains aligned with market needs. Features like organizational network analysis (ONA) further solidify their market position.

Notable Quote:

"Our experience has been in new categories... if you are able to create a new category that impacts people, companies, corporations, it becomes meaningful."
— Sam Nafisi [21:49]

Lessons Learned: Importance of Capital and Focus

Drawing from his extensive experience, Sam underscores the necessity of being well-capitalized and maintaining laser-like focus. Adequate funding provides the flexibility to evolve the product without major disruptions, while a narrow focus ensures resources are effectively utilized towards areas that truly resonate with the market.

Notable Quote:

"Be well capitalized... laser like focus."
— Sam Nafisi [36:05]

Lightning Round: Quick Insights from Sam Nafisi

In the episode’s concluding segment, Sam shares personal and professional insights through a series of rapid-fire questions:

Best Business Advice Received: "Mistakes are okay. Regrets kill and cripple."
Favorite Book: Enjoys autobiographies and classic philosophy, though no specific title was named.
Attribute of a Successful Founder: "Calm under the stormy times that inevitably come your way."
Personal Productivity Habit: Maintains a morning routine.
Dream Business Idea: "How to replicate productivity for college students."
Fun Fact: Sold Cuban cigars at 19 to fund college tuition.
Passion Outside Work: "My children. Absolutely. My children."

Notable Quote:

"Calm under the stormy times that inevitably come your way."
— Sam Nafisi [38:07]

Conclusion

Sam Nafisi’s journey with Prodoscore offers invaluable lessons in category creation, product evolution, and strategic focus within the SaaS industry. His emphasis on employee empowerment over surveillance, combined with a steadfast commitment to capital and customer-centric development, positions Prodoscore as a noteworthy player in the productivity analytics space.

Connect with Sam Nafisi:

Website: prodoscore.com
Contact: Available through the Prodoscore website’s marketing team.

If you're inspired by Sam's journey and looking to build or scale your own SaaS product, consider partnering with Gearhart, the development team behind SmartSuite, the 2024 SaaS Startup of the Year by Startup Grind. Gearhart specializes in scaling B2B SaaS platforms and offers free strategy sessions for listeners until the end of May. Visit Gearhart.io to book your session.

Loading summary

Transcript76 lines

[00:00]
Sam Nafisi
Foreign.
[00:10]
Omar Khan
Welcome to another episode of the SaaS podcast. I'm your host Omar Khan and this is a show where I interview proven founders and industry experts who share their stories, strategies and insights to help you build, launch and grow your SaaS business. In this episode, I talked to Sam Nafisi, the CEO of Proto Score, a SaaS platform that uses AI to show companies how work gets done by analyzing data from the cloud tools employees already use every day. Sam's startup journey began in the early 2000s when he built a tech business from scratch and scaled it to 55 million in ARR over two decades. But after stepping away from that company, he wasn't planning to start over until a close friend pitched him an idea. Sam initially came on board as an investor, then just months before the pandemic hit, he stepped in as CEO. What he walked into wasn't pretty. The product was still in beta, there was no revenue, and most people thought it was just another employee surveillance tool. Convincing buyers and their teams that this was about helping people work smarter, not watching their every move was an uphill battle. But Sam had seen this before. He knew how long it can take for people to accept a new category, so they leaned into customer feedback, kept evolving the product and pushed through the noise. Slowly things started to click. The team still had to work through plenty of challenges, getting media attention when they weren't ready for it, a market that needed education and years of trying to figure out where exactly they fit. Today, Protoscore is a 7 figure ARR business with a clear ICP, a sharper pitch, and customers who now see it as a valuable tool instead of something to fear. In this episode you'll learn how Sam rebuilt from scratch after a 20 year exit and why this time around felt even harder. What it actually takes to create and validate a new software category when everyone assumes you're building the wrong thing. How they turn skepticism and pushback into buy in by giving employees their own productivity data. We talk about how Sam and his team found traction through outbound sales, media coverage and a hard earned understanding of their real icp and why carving out a new category demands relentless focus, capital and the patience to keep iterating. So I hope you enjoy it. I talk to a lot of founders who have the same challenge. They've got an amazing product idea but need a technical team to build or scale it. If you're looking to develop a B2B SaaS product but don't want to hire and manage an in house team, listen up with Gearhart is a product development studio that handles the entire technical side of building your software. They've built over 70 successful products, including SmartSuite. Who's founder trusted Gearhart after his $200 million exit to help build his next big venture. Some of Gearhart's customers have gone through YC and their portfolio companies have won over 10 startup competitions. Until the end of May, they're offering our listeners free strategy sessions with their leadership team. Just visit Gearheart IO to book your session. That's Gearheart IO. Sam, welcome to the show.
[03:20]
Sam Nafisi
Thanks for having me, Omer. I appreciate it.
[03:22]
Omar Khan
My pleasure. Do you have a favorite quote, something that inspires or motivates you?
[03:25]
Sam Nafisi
Yeah, I thought about this one. Is that which does not kill you makes you stronger. I think it's kind of a very apropos to an immigrant coming to a new country. But another thing that I talk to a lot of my, especially my kids, is I'm a big sports nut. I'm a sports junkie. And there's a Michael Jordan quote that has a lot of relevance to me. And he says something to the effect of I've missed about 9,000 shots in my career. I've lost about 300 games in my career. I've taken 27 game winning shots and missed them all. And I failed over and over again. But I've been very successful. Something to that effect. I love that. It's so perfect for business guys. You know, we feel a lot.
[04:15]
Omar Khan
Awesome. So tell us about Protoscore. What does the product do, who's it for, and what's the main problem you're helping to solve?
[04:20]
Sam Nafisi
At its core, Omer, it's a data analytics company that provides tools for employee empowerment, employee productivity, visibility for middle management, and the C suite. So what we do is we capture all of the APIs for the cloud tools that are used in their daily scope of work. Email, CRM, telephony, Slack. For chat, it could be Jira and GitHub. For the developers, it could be Zendesk and ServiceNow for the call center folks. We capture all of that use AI machine learning to provide intuitive indicated next steps and how they could be more productive employees.
[05:01]
Omar Khan
Great. And give us a sense of the size of the business where you in terms of revenue, size of team, customers and all that stuff.
[05:10]
Sam Nafisi
Yeah, we're in the high seven figures in rough revenue numbers. We have about 150, let's call it logos as customers and I believe as of last count about 130, 135,000 employees on the platform.
[05:27]
Omar Khan
Great. Now, before we get into like where the idea came from and how this business started. Let's talk about your background because this is not your first startup. You previously built, I guess a similar business and had a successful exit with that. So can you just tell us a little bit about that?
[05:48]
Sam Nafisi
Yeah. I started a company, I was a little kid, crazy to look back. It was in 98. I started a company called DTT at the time, it's been renamed DTIQ and it focused on. It was a SaaS company as well that grew to about 55 million of ARR when I exited it. And that basically did data analytics for restaurants, hotels and retail environments. And how we did it there was. We captured video. So all the video and all the third party data points in a restaurant. So assume a McDonald's. We capture the point of sale data in the register, we capture the time and attendance for the employees that clocked in and clocked out. We capture the inventory control modules for the walk in freezer, the temperature control modules, and aggregated all of those into a dashboard way before AI and provided analytics to the franchisee or the corporate stores.
[06:49]
Omar Khan
As you said, you were a kid. How do you come up with an idea like that? It seems like a pretty ambitious think to go and build.
[06:56]
Sam Nafisi
I was, I was hustling Omar. I was a typical immigrant from. I'm Iranian originally. I had moved to America when I was 12 and I'd been hustling. I'd finished my undergrad, I was going to law school. I didn't know what I wanted to do. Windows 98 came out, if you remember. I'm old. You do. So Windows 98 took the idea of video cassettes, if you remember those VCRs and the surveillance to digital CDs. Right. I tell my kids this, like what are you talking about? That CD video. So I saw an opportunity to be able to store video digitally. And one of the things of immigrants is I wanted to also open five McDonald's. There was an aspirational aspect to that franchise world that is very rare and unique to the United States. So I had a partner at the time who crazy. He was a liver transplant surgeon. And he said, Sam, Instead of opening McDonald's or five McDonald's, why don't we sell this technology into a McDonald's or a Subway or a Burger King? So we married my wish of the franchise world to technology and Windows 98 and started this little company that struggled mightily and had a fortunate outcome.
[08:08]
Omar Khan
How long did you work on that business before your exit?
[08:11]
Sam Nafisi
So I was founder, chairman, CEO from October of 98 through 2018. So for 20 years I was actively involved fundraising and all of the everything about it, from zero employees to about 550 employees. Then I became chairman at some family situation that come up and I had to be a single dad and be focused on my children. So I took about a couple years off on an active role and then that company got sold to Cisco's private equity firm. And then I began my involvement with my current role at Proto Score.
[08:50]
Omar Khan
Right. And I guess in some, some ways we could say, you know, technically you're not the founder of Protoscore, but in many ways you are because it was so early on when it was just an idea, in many ways. So tell me about like where the idea came from and then how did you get involved with it?
[09:09]
Sam Nafisi
Yeah, so absolutely, I'm not definitionally the founder. My partner, Chrisanto Sajibrahim, brilliant, brilliant product guy. He founded the business, it was his idea. And I had known him, he was like a little brother to me for 20 years. Brilliant product guy. Had multiple products that he had exited. Small, never really companies, but more aqua hires and products and done very well for himself. And he came to me and said, Sam, I've got this idea, would you be interested? And it was probably six months or so before COVID roughly, roughly that the product, the idea, all his. I started investing to support him. And I'm a big believer in Chris and truly a visionary. And that's how my involvement became initially as a high level board member investor. That morphed into being a CEO about a year thereafter.
[10:00]
Omar Khan
Yeah. So how did you become CEO of the business?
[10:04]
Sam Nafisi
So as I invested more and more and we thought that we had a product, we had a company here, it was more than a product that we could build a company that was also very similar to what I had done in the past. He came to me and said, Sam, do you mind stepping in? Right. I'm a product guy, I'm not a CEO. I'm not going to, I can't, you know, I don't want to build a business. So I did step in probably 2020 ish. 2021 maybe even, I'd say, I think in January of 21 I stepped in actively. A CEO.
[10:31]
Omar Khan
Right. And the business was still pre revenue at the time. Right?
[10:34]
Sam Nafisi
Yeah, we had some beta and pilots. I don't believe we had much revenue, if at all, I don't recall exactly, but minimal.
[10:41]
Omar Khan
Great. So you, you've been involved with the business from very early stages. You've seen the idea evolve and when you came on board, what were the, what were the biggest challenges you saw ahead of you and where did you focus your time?
[11:01]
Sam Nafisi
Yeah, look, the number one challenge is in this and my other company and broadly defined has been when you create new categories, there's just, there's going to be an issue of adoption educationally. You've got to educate the market, you got to educate the buyer's sphere of this, the importance of the product. And then you initially have the inherent stigmas. Any new category that is created has an inherent stigma initially that did. Proto Score does as well. Did as well. It's been far lessened and mitigated. And that was very similar to my old company for this one as well. It was the idea of culture. Big Brother. What will my employees think about if you're kind of watching them? And we have to differentiate ourselves. Right. There's been a lot of tools in the marketplace that are surveillance, that are watching your mouse clicks and URL movements and camera movements. We've seen all the funny gimmicks on YouTube. We do none of that. And that was Chris's brilliance. Our founders brilliance was that this has nothing to do with clicks and Big Brother and surveillance. We're only capturing the APIs of cloud tools. If you've got Spotify in the background and listening to music, we don't care. Right. If you got a YouTube channel and you're meditating of our business, we're only capturing data that is consigned to your corporate email.
[12:28]
Omar Khan
Right. So tell me a little bit about. You said, hey, you know, new category creation is. Was a big challenge for us. And with any new category there's a lot of education that you need to go through before people even realize, okay, I got a problem I need to fix. And you know, this is the solution for me. There were just help us understand why it was a new category because I think you've kind of answered that to some degree that there were a lot of tools out there that did that surveillance stuff. Right. And so you decide to stay clear of that and focus purely on data through the API and productivity and so on. But were they, were there not any other tools like that or similar in the market at the time?
[13:19]
Sam Nafisi
Yeah, no, there wasn't. I'll come to that question in a second Omer, but I'll give my answer in a little bit of a long winded version. My apologies. But if you go back 25 years ago, salespeople used Excel or their notepads for notes and pipeline and managing relationships. Right. When, when CRM tools came about, there was initially a major pushback. Oh my God. Salespeople are not going to like this. What are we doing? I don't like this. I was hesitant right then. We deployed Salesforce and it's become any CRM, you know, they've become ubiquitous. One more analogy. If I told you six years ago that we'd be recording sales calls, transcribing it, giving them next indicated actions, you would have laughed at me. Salespeople would have shot me. Pardon? Saying GONG is a almost get. Gong is a $10 billion business. Every salesperson I've hired at Proto Score, the first question they ask is, do you have gong? It's a new category. Nobody was recording sales call six years ago. So we believe Proto Score is doing some of that in this broad category of employee productivity. Right. It's a broad category and we think we can get a sliver of it.
[14:39]
Omar Khan
Did you find it in the early days when you were having conversations with customers that not only did you have to educate them on the category, but people automatically jumped to the conclusion that you were another surveillance tool?
[14:49]
Sam Nafisi
100%. 100%. And that goes to the product market fit discussion we had and that we focus on is we are very, very employee centric. Right. The idea, the employees get their own Proto Score dashboard. So I see what Sam does. I have when I wake up in the morning. I have in my, in my dashboard, AI driven, indicated actions for my day. How do I work my day to day to be more productive? How do I compare to my peers in the exact same role? So we bucket employees in the same exact peer group, sales, marketing, customer success, developers, engineers. And we compare them against their peers and give them next indicated actions of how they can improve.
[15:38]
Omar Khan
Tell me about, I mean, obviously the product has evolved. It's been several years. Tell me about what that first version of the product looked like. What did it do?
[15:48]
Sam Nafisi
Look at its base. It provided simple visibility to what the employees were doing. Right? Visibility into. Remember, we're connecting through the APIs, we're capturing all the activity in email, Slack, CRM, calendar, chat, LinkedIn, navigator, DocuSign. Very, very basic stuff. And what has evolved? I mean, the transformation of the product in the last 12 months has been remarkable, let alone the last three years. Part of it is just the AI engine we've built and large language models that are curated and specific. And it's been remarkable. The things we're able to surface now, looking back three years ago, it's completely Night and day.
[16:33]
Omar Khan
So look, on the one hand, you're going out there and you're talking to these potential customers and you're getting objections. First of all, you're having to explain, we're not like this, we're this. And then you have to have to educate them on why they need this. But at the same time, what was the reaction from employees with those early customers? Because it feels like, whether they understand it or not, it feels like there's some kind of surveillance going on. And employees can be very good at sabotaging new projects if they really want to. Right. So what was the. What was the reaction? And, you know, was it. Was it overall neutral, positive, negative?
[17:22]
Sam Nafisi
Absolutely. Initially, there was pushback. There was pushback from the employees concerned that this is Big Brother. This is surveillance. And again, I go back 20 years ago, 25 years ago, to that young, little, young Sam of 27 years old, however old I was, I remember vividly, vividly, employees pushing back franchisees and owners of these restaurants coming to us and say, oh, my God, I can't do this. I love my employees. My cousin works here, my uncle works here. Don't bother us. And that story changed if we are able to save the employee from an issue. So this was our story, for example, and this obviously presented itself. If a customer comes in and gives you a $20 bill and demands $100 in change, starts screaming at the employee. Right. You have video analytics around that. The employee is exonerated there. Right? The employee. And that those kinds of stories became the groundswell that the next year, when we went to a conference, franchisees would run to us. We need this. I'm opening two new stores immediately. We went from zero customers to 90,000 locations. Subway Worldwide deployed the solution Worldwide. Every store around the world. We're seeing that happen now at Proto Score. The reason I give that analogy is in the beginning, we had that pushback of the employees not seeing the benefit to them. I could tell you unequivocally, today, employees see the benefit just like they do with Gong, just like they do with Salesforce. We are now empowering them. Look, at the end of the day, either you're a good employee or you're not a good employee. If you're a good employee, you want all the tools that benefits you. Right? And if you're a bad employee, you got a foot out the door anyways. Right? Either this tool pushes you out, or your manager puts you on a pit plan and you exit. If we can empower employees to make the most out of their day and for themselves and for the employer. Why not have a win win? And I'll end with this. Our motto is provide flexibility with accountability. If we're allowing a hybrid remote workforce and, and allowing the employee to be at home at a Starbucks or whatever venue they choose, hey, we'll give you that flexibility. Give me some accountability. What better way to have that win win solution and dynamic than a tool.
[20:03]
Omar Khan
Like Proto Score the new category creation. What were you doing to overcome that and educate the market? Was this more about content marketing? Was this more about how you framed your pitch? Was, was it getting on LinkedIn? What were you doing to, to educate the market about this?
[20:25]
Sam Nafisi
Great question. Look, it's a process. It takes time. And that's why one of the big advice I give to younger CEOs is having the proper capital, right? Because that's when the, as you know better than anyone is the tweaking of your, you know, we're pivoting. In the pivot world, we all use the word pivot where I, I don't call it. We're tweaking, right? We're not having a revolution, we're having evolutions, right? Evolution here, evolution here. And that requires capital, patience, persistence. We did all of those things, right? We morphed the product, we tweaked it to be more employee centric, customers gave us feedback, we got a couple of lucky breaks, we had a couple of big RFPs that we won that led to more opportunities within legal, within staffing. So all of those things and we still have our struggles, right? You know, we're still a very, very small company.
[21:18]
Omar Khan
If you were talking to a founder today who is trying to build a new product category but doesn't have a lot of investment behind them, do you think that is they can succeed or just a new category creation? It's just by the nature of the business means you need to have significantly more funding to be able to make a breakthrough here.
[21:50]
Sam Nafisi
Look, I think I would say go for it. I tell that young CEO, my friend, go for it. But remember my quote that I said in the beginning? Remember the Michael Jordan quote? He missed 9,000 shots and lost 300 games. So expect a very, very difficult journey. And I have to be fair in that. My experience has been solely in these two that ended up being real companies. These two companies are both new categories. So I don't have a lot of experience creating a startup that's somewhat existing in, you know, it's analogous to other existing companies. Right. So my experience has been in new categories. But look, there's a joy and a kind of an intellectual high that you get from being able to get this off the ground, get adoption, and frankly change lives. I mean, if you are able to create a new category that impacts people, companies, corporations, it becomes meaningful. You know, it becomes really, really meaningful.
[22:51]
Omar Khan
Hey, have you heard of SmartSuite? They were just named 2024 SaaS Startup of the Year by Startup Grind. Well, I recently discovered that Gearhart was the development team behind their success. Gearhart is a product development studio that specializes in scaling B2B SaaS. Companies built by serial entrepreneurs. They understand the unique challenges of startups and can plug into your team to accelerate growth. With offices in San Francisco and London, plus a distributed team of 43 experts, they've helped build over 70 successful products. To learn more about how Gearhart can help scale your development, check them out at Gearhart IO. That's Gearheart IO. Let's talk about ICP. When you were on that journey from going from zero to the first million in ARR, who did you initially identify as your ICP and did that prove to be right or not?
[23:52]
Sam Nafisi
Yes. So let me back up and say to you that, you know, again, this goes to the young CEOs as well. I've seen pitch decks that talk about TAMs and the tab is $8 trillion and they're like, come on guys, slow down. So our initial idea and I push back on it a lot was the Salesforce ecosystem is the right icp. Anybody that has obviously email, telephony, some kind of a UCAS ringcentral dial pad, whatever it may be, and CRM being Salesforce. Right, but that's a massive tam, right? It's, it's this we're tiny little small startup, we got to focus. How do we dwindle that down? And I think as we winnowed that down, we realized that look, it's great for email telephony, Salesforce, they need, they should have slack because we could show a lot of organizational network analysis kind of collaboration tools around that. And then we focus more dwindled it down to furthermore to more mid market to enterprise, right? So we realized that sub 100 seat companies we don't have a lot of efficacy for. So we should go north of a hundred to multi thousands. So you know, as we evolved that ICP kind of started, we started having more focus and furthermore. I never thought a year ago staffing would be our number one icp. Today staffing is unequivocally our number one icp. And as you may know instead of a CRM tool they use something called ATS or an applicant tracking software tool that's kind of analogous for their CRM. So those are Bullhorn is the big one aviante tracker and we integrate with all those and capture all those data.
[25:37]
Omar Khan
So going from to get getting to the first million in ARR. What were the, the main growth channels that worked for you? Was it mostly outbound? Was there anything else?
[25:50]
Sam Nafisi
Yeah, clearly outbound. But I will say that we got very lucky omer in that Covid hit and in some ways lucky, in some ways unlucky. Obviously a horrible event for humanity. But what happened is we got a lot of outsized press. Right. The Wall Street Journal interviewed me and I was on CNBC and I'm like what am I doing? It's a four person company. Like we don't even know what we're doing. But I'm on CNBC's like mid morning show. It was idiotic in the sense that. But because the category was hot and remote work and can't go to the office and the world closed. So I think we got a lot of outsized press which I'm very grateful for. Obviously outbound marketing, cold calls, LinkedIn, SEO, all the normal broad categories that we applied and you know and continue to.
[26:46]
Omar Khan
Let's talk about finding product market fit. So you, you've got this initial product, you, you get some early traction, you get to first million in arrangement. What were the, what were the biggest challenges at the time in terms of finding the right product market fit?
[27:10]
Sam Nafisi
Let me start by saying I'm not sure we at least have the perfect product market fit yet. Right. I think we're very, very good. I think there's a great product market fit that we have. Is it perfect? I don't know. I don't think anybody knows anybody has frankly. I think that's the iterative process of the evolution of our products. For any software software company, we're in the same boat. So its evolution have been, has been very customer centric, customer feedback, customer driven in areas that we could help them. For example, an area that we focused on recently in the last six months has been employee engagement or disengagement. We call it kind of the attrition risk. And the attrition risk could be twofold, either burnout or checked out. Right. The two pendulum of. So we're able to now 90 days before an employee attrits show with over 90% certainty that they will attrition. And it came out of conversations with some of our heavy, heavy users like you have all of this data. There's all this analytics you're doing around our data. Can you show us be a leading indicator to potential attrition? It doesn't mean the employee is going to leave. They may be having an issue at home, they may be sick, their child may be sick. So it's not an imperative issue that they're leaving, but it's a foresight. Have a conversation with Sam, see what's going on, motivate him, engage him, or if he's going to exit, exit him.
[28:56]
Omar Khan
Yeah, that's a great example because you have good attrition and bad attrition, Right. So if you've got some kind of prediction of somebody who's going to leave and you consider that bad attrition, you have enough of an opportunity to do something about it or have a conversation, right?
[29:15]
Sam Nafisi
Correct. Somebody's burned out, omer. Somebody's working 16 hour days. They're, they're exhausted, they're looking to exit. You want to do everything in your power to keep that employee. So this is not a negative alert, it's an alert to, hey, talk to Sam. You, he may need a week off, he may need an assistant, he may need some help. It's not meant to be punitive at all. It's meant to be a coaching environment, a coaching tool.
[29:41]
Omar Khan
You were also telling me earlier about some of the other things that you have built into the product now, like helping your customers understand the ROI and effectiveness of meeting times and so on. And in many ways it strikes me as, you know, I'd love for you to explain what those are, but I'm curious how you navigate through this sort of maze where you're getting feedback from customers. And a lot of these might sound like great ideas, but how do you decide what's on strategy and what isn't? Because there's a lot of stuff you could build, right?
[30:31]
Sam Nafisi
Great question, great question. And we just had a product call two hours ago and here's the, here's what's happening. And the exact same thing happened my old company, right? The product is meant to be used. The heavy users are what I call middle management, VP level, director level. They're in the product all day. They're in proto score, they know their teams, they're looking on all the analytics. Okay? The C suite is not going to be in the product. Guess what? I'm not in Salesforce all day. I don't look at Salesforce Pipeline review. I have a Monday morning sales review with the Team. My VP of sales Mil makes a dashboard for me. Talks about new pipeline creation, new opportunities, revenue coming in, attrition, my four, five, seven KPIs, that's it. I'm not looking at Salesforce all day. The same, exact same thing here. C suite is most likely not going to be in. What we do for the C suite is provide a weekly report. In that summary report says these seven people are at risk of attrition. These six people are not using the cloud tools. We are spending $1,200 a month for each employee. These six people are on excessive meetings. For example, I want my inside salespeople to have 90% of their meetings externally. If my inside salespeople have half their meetings internal, there is a problem, my friend. They're not selling. I don't want them to be in calls. With marketing and with customer success, they got to do outbound. So we provided those and highlight those for the C suite. So that's how we kind of bifurcate the utility of the product. Because as you said, it could be overwhelming. Overwhelming. Right. I'll give you one more example. I think CEOs would appreciate this. We do a lot of work around organizational network analysis. We call it ona. Historically, companies, when you have a layoff or you have a rif, or you hire people and onboard, be it through an acquisition of another company or, or you hire new employees, you want to incorporate them into the fabric of the company. There is no visibility for anyone at all that shows all communication real time between all your employees. We are the only company that is capturing every data point live. Email, calendar, chat, telephony, all of it. So we put all that, what we call it, ona, and show real time that if you were to terminate SAM, who does SAM communicate with all day? Who are SAM's bridgers and ecosystem and show the ripple effect of SAM terminating or sam's onboarding. How do you tether Sam to other employees to ensure his success?
[33:33]
Omar Khan
The one thing it strikes me here is that you're collecting all this data and you have the opportunity to create these different types of solutions like you've described here. Right? So we talked about the employee productivity kind of measurement. Then there's this ROI on how the product is being used and how maybe licensing is or licenses of software are being utilized or the effectiveness of meeting times. And it sort of strikes me like that on the one hand that makes complete sense because you have access to all this data, so why not do this and create this value? But on the other hand, it feels like many of these could be standalone products themselves. And so do you get into a situation where it becomes harder to explain the, the value prop because you're doing all of these different things. Has that been a challenge?
[34:39]
Sam Nafisi
No. Look, we tell our pitch has always been. And to mitigate the concern of culture, all of what we're capturing, the company already has. We're not doing anything. All of the data are in these silos. Email, telephony, CRM, Slack, LinkedIn, Navigator, Zendesk, Jira, GitHub, they have all of that. We're capturing it all, aggregating it in one dossier, one kind of location, and then using our magic of AI machine learning to massage it, to provide a scoring system to be able to trend analysis and measure the employees. So can they log into Salesforce and look at all the activity individually? Sure. Can they log into email one by one and see? Absolutely. You're never going to be able to aggregate it all into one dashboard, see it all, and do the analysis that we do in a broad large scale. And that's what we, we hope is our differentiator.
[35:41]
Omar Khan
I'm curious, given the 20 years you spent building the last business, what do you think was one big lesson you learned from that experience that has turned out to be a really useful guide as you go through the process of building and scaling Protoscore 100%.
[36:05]
Sam Nafisi
One answer only. Be well capitalized. The most important advice I can Give any young CEO new startup, 1 million of revenue, 10 million. Be well capitalized. Right. You know, look at the times we're in right now. Right there it's indecision, there's chaos in the marketplace. And I think if you're well capitalized, you weather storms, you're able to again, evolve. Not a revolution, but an evolution. It provides that flexibility, right? So I'm all about being well capitalized. And look, if there's one bit of advice besides that I would give laser like focus. You know, we throw a lot of stuff on the wall and see what sticks when a couple of them stick double down, triple down on those items. You know, sometimes young CEOs tend to want to continue throwing more wall stuff on the wall because they see that fake broad tam of the world truncate the tam, narrow the tam laser like focus. Be well capitalized, you maximize your chances of success.
[37:11]
Omar Khan
Love it. All right, on that note, let's wrap up. We've got the lightning round. I've got seven quick fire questions for you. You ready?
[37:17]
Sam Nafisi
Go for it.
[37:18]
Omar Khan
What's one of the best pieces of business advice you've received don't have regrets.
[37:24]
Sam Nafisi
Mistakes are okay. Regrets kill and cripple.
[37:27]
Omar Khan
Yeah, I love that. I've seen that. I mean, you talked about being a sports fan. I've seen that with the best athletes and sports players. It's like this play by play, and then once that play is over, it's out of their head. Right. And where. The rest of us have this ability to kind of ruminate on this stuff. If you let it, it's crazy. What book would you recommend to our audience and why?
[37:49]
Sam Nafisi
I love autobiographies. So I don't know. Churchill's, Aristotle's, Nietzsche. I can't name a single book. Come back to me on that.
[38:03]
Omar Khan
What's one attribute or characteristic in your mind of a successful founder?
[38:08]
Sam Nafisi
Calm under the stormy times that inevitably come your way.
[38:12]
Omar Khan
What's your favorite personal productivity tool or habit?
[38:15]
Sam Nafisi
Morning routine.
[38:16]
Omar Khan
What's a new or crazy business idea you'd love to pursue if you had the time?
[38:21]
Sam Nafisi
How to replicate productivity for college students.
[38:25]
Omar Khan
What's an interesting or fun fact about you that most people don't know?
[38:30]
Sam Nafisi
I sold Cuban cigars as a 19 year old kid to pay for my college tuition.
[38:36]
Omar Khan
Wow. That's why. Now it connects back to why we were talking about cigars at the beginning of this session. Finally, what's one of your most important passions outside of your work?
[38:50]
Sam Nafisi
My children. Absolutely. My children. I joke around and say that people ask me, what do you do for work? And I inevitably say I'm a dad.
[38:58]
Omar Khan
How many kids do you have?
[38:59]
Sam Nafisi
Two. Four step, but two of my own. Do you have kids?
[39:03]
Omar Khan
Yes. Yeah, I've got two. They're both teenagers now.
[39:05]
Sam Nafisi
Oh, good luck. How old?
[39:07]
Omar Khan
16 and 19. And they don't want to spend much time with you when they get to that age, right?
[39:15]
Sam Nafisi
Yeah, no, I'm a little ahead of you. I got 22 and 19. 22 and 20. Just turned 20.
[39:21]
Omar Khan
Nice. Nice. Great. Well, if people want to check out Prado score, they can go to prodoscore. And if folks want to get in touch with you, what's the best way for them to do that?
[39:32]
Sam Nafisi
Yeah, it's samroto score.com go to our website. There's a lot of information there. You can access me our marketing folks. And again, Omar, I really, really appreciate this, buddy. This was a lot of fun.
[39:43]
Omar Khan
Yeah, thank you. I appreciate you taking the time to come here. I know we had a few technical issues getting this thing started, but you made me laugh while we were going through that, so definitely made things entertaining. So I appreciate that. Yeah, thank you so much. And I wish you and the team the best of success.
[40:04]
Sam Nafisi
Absolutely. You as well. If there's anything you need further, you know, ping me and I'll get back to you.
[40:08]
Omar Khan
Thank you so much. Cheers. If this episode got you thinking about building or scaling your own SaaS product, let me tell you about a resource that can help. Whether you need a complete technical team or want to scale your existing one, Gearhart might be exactly what you're looking for this. They're a product development studio that specializes in building B2B SaaS platforms. What's interesting is that they can act as your fractional CTO and technical team, but with a unique twist. They've built strong connections in Silicon Valley and can even help connect you with VCs when you're ready. Plus, as a proud Ukrainian born company, they deliver Silicon Valley expertise with an offshore pricing model. They're offering our listeners free strategy sessions with their leadership team until the end of May. Visit Gearheart IO to book your session. That's Gearheart IO.