The SaaS Podcast: Build, Launch & Scale Your SaaS

Episode: First Customer: Living in His Customer's Basement to $100M | Qualia

Host: Omer Khan
Guest: Nate Baker, Co-founder & CEO, Qualia
Date: January 22, 2026

Episode Overview

This episode delves into the remarkable journey of Qualia, a software platform for title and escrow companies, from its unconventional early days—literally living in their first customer's basement—to scaling past $100M in ARR. Nate Baker recounts how a risky, academic approach to market selection almost led them astray, the critical lessons learned from their first customer, and how an initial blind spot in sales threatened their growth until a pivotal shift transformed their trajectory. With actionable details on how to secure early, upfront contract revenue and overcome objections when entering complex markets, this episode offers a playbook for early-stage B2B SaaS founders on finding product-market fit, scaling revenue, and staying deeply connected to customer pain.

Key Discussion Points & Insights

1. Origin Story: Picking an Unsexy but Critical Market

• Academic Market Selection:
  • Nate and his co-founders wanted to avoid flashy consumer products and focus on B2B verticals with enduring value.
  • "I put together a list of 10 selection heuristics to identify the market that we wanted to go after... things like, you know, we want to build a platform, not a feature, something with network effects..." (08:14)
  • Finalists: Life insurance broker software, insurance adjusting, and title/escrow (Qualia won).
• Warning About Pure Research Without Customer Validation:
  • "It was entirely academic... I would actually caution against that. I think we got very lucky." (10:57)
  • Even core business model assumptions turned out wrong.

2. Building Before Talking to Customers (and Why That Was a Mistake)

• Started Coding Without Validating Real-World Pain:
  • "We then just started building... which is kind of the opposite of what I would recommend to everybody." (12:07)
  • "Probably wasted a solid like three or four months... before we actually found customer number one." (12:07)

3. The First Customer: Barry Feingold & Full Immersion

• Serendipitous Meeting Leads to Game-Changing Partnership:
  • Barry (state senator & real estate attorney) approaches the team at a conference.
  • "Barry walked up... 'Do you go to Stanford? Yes. Are you software engineer? Yes. Okay. I'll be a customer.'" (15:55)
• Extreme Proximity: Living in the Customer’s Basement:
  • For two years, team members rotated living in Barry’s basement to deeply understand the customer's business and workflow.
  • "I probably spent a total of a year living in his basement... onboarding... You’re gonna have meals with his family. You have to tutor his kids in math. That's part of the deal." (18:08)
• Why It Worked:
  • Critical domain understanding and trust accelerated development.
  • "To actually understand what your customer does, you just have to be so in it." (18:53)
• Crisis Spurs Progress:
  • Barry’s prior software vendor found out, cut off access overnight before Qualia was ready.
  • "It became kind of the most productive month in the history of the company because we had to be there for Barry." (19:34)

4. Early Revenue & Go-to-Market Strategy

• Ultra-Focused Geographic & Customer Wedge:
  • Focus on Massachusetts, then gradual geographic expansion.
  • "We basically focused exclusively on Massachusetts as our first market." (22:33)
• Worried About Market Size?
  • Expansion path (products and geography) was always planned.
  • "We knew the national expansion was built in... and we were trying to be really, really, really efficient." (24:05)
• Staying Lean:
  • Team paid very little, incentivized by equity.

5. Selling Before the Product Exists: Securing Multi-Year Upfront Contracts

• Asking for Real Commitment Early:
  • Multi-year, upfront contracts provided development cash and mutual buy-in.
  • “The best tool for early stage SaaS founders... is annual upfront contracts or multi-year contracts upfront, like all the cash up front.” (27:32)
• Tactics for Closing Early Deals:
  • Position the offer as a heavily discounted multi-year deal (“probably more than an 80% discount versus what they were paying...”) (33:39)
  • Leverage social proof—Barry made introductions to competitors.
  • Hyper-local sales: "We actually had more salespeople in Massachusetts than we do now." (29:51)
• Objections & How to Tackle Them:
  • Trust (“Are you going to be around next week?”) was mitigated by local focus and customer references.
  • "You need to be building for [real pain] as fast as possible... But we sort of had a view early on that... we'll divine the correct answer here. It just... wasted time." (12:07)

6. From Engineer Mindset to Respecting Sales

• Realization of Missing Sales Capability:
  • Early belief: “The product would speak for itself, but it didn’t.”
  • Post-inflection: “We hired a VP of sales... and he said to us, 'I've never seen such a gap between great product and incompetent sales execution.'" (32:10)
• Inside Sales Motion Drives Growth:
  • Within 12 months after focusing on sales: 45k ARR → $3.5M ARR.
  • Scaled quickly: 30 reps in four months.

7. Overcoming Objections & Expansion Tactics

• “You Don’t Understand Our Market”:
  • Each state had unique legal and process requirements. Founders responded with deep dives—spending weeks/months in each new market.
  • “It’s an incredibly large lift to get over the regional nuances... we had a customer in Texas... churn because we didn’t understand Texas... Came back recently and are a happy customer now.” (35:49)
• Strategy: Relentlessly focused on understanding local specifics before scaling.

8. Product-Market Fit: Evolution of Confidence

• False Early Confidence:
  • "At the beginning we were unreasonably confident... We really didn’t understand the scope of the problem..." (41:06)
• Realization:
  • True product-market fit took far longer and required much deeper execution than anticipated.

9. Future Vision & The Role of AI

• Big Opportunity Still Ahead:
  • Home-buying is still a painful, expensive process—huge scope for improvement.
  • “We are the correct delivery mechanism for all this AI stuff that’s coming out... AI-enabled B2B use cases are seeing incredible growth rates.” (42:47)

Memorable Quotes & Moments

• On Living in the First Customer’s Basement:
  “If you signed up to be a new team member... here’s some plane tickets. Your onboarding is actually in Andover. You’re going to live in Barry’s basement for the next two weeks. He’s going to teach you title. ...You have to tutor his kids in math. That’s part of the deal.”
  – Nate Baker (18:08)

• On Sales Blind Spot:
  “I’ve never seen such a gap between great product and incompetent sales execution.”
  – Nate Baker quoting Qualia’s first VP Sales (32:10)

• On Overcoming State-by-State Complexity:
  “The number one thing for us was always like, ‘You don’t understand Tennessee, you don’t understand Texas’... we had a customer... churn because we didn’t understand Texas... they came back recently and are happy.”
  – Nate Baker (35:49)

• On Asking for Upfront Multi-Year Deals:
  “The best tool for early stage SaaS founders... is annual upfront contracts or multi year contracts upfront, like all the cash up front ... The cash flow was meaningful... The customer liked it because they got an amazing deal for the next five years. It was a vote of confidence.”
  – Nate Baker (27:32)

Segment Timestamps

• [04:59]—What does Qualia do?
• [06:23]—Company size, revenue, products, and new ventures
• [08:14]—How and why Nate picked their initial vertical
• [10:57]—Warning about relying on “academic” market research
• [12:07]—Risks and waste from not talking to customers early
• [15:55]—Finding first customer Barry Feingold
• [18:08]—“Living in the customer’s basement” for deep immersion
• [19:34]—Crisis when Barry’s old vendor cuts off his software
• [22:33]—Geographic focus and lean, efficient early operations
• [24:05]—Thoughts on initial market size and expansion plan
• [27:32]—How Qualia secured multi-year upfront deals and handled objections
• [32:10]—The transformative impact of bringing in a professional sales leader
• [35:49]—Objection: “You don’t understand our market” and evolving the product
• [41:06]—Refined understanding of product-market fit and scale
• [42:47]—AI as a driver of the next era of workflow SaaS
• [45:40]—Lightning round (business advice, book, personal habits, and fun facts)

Actionable Founder Takeaways

• Ground yourself deeply in your customer’s world—literally, if necessary.
• Don’t rely on ivory-tower research alone; validate core assumptions with real customers ASAP.
• Secure upfront, multi-year revenue via discounts to fund development and strengthen mutual commitment.
• Embrace sales as a core competency—even if your product is amazing, you need process and talent to close deals.
• Respect local complexity—winning early in niche or regional markets enables deeper understanding, social proof, and expansion.
• Stay scrappy and focus on customer value—make your customers money.
• Prepare for expansion by planning for both product and geographic scalability.
• Adopt the best-in-class tools and approaches (including AI)—the landscape is shifting fast.

Quick Reference

• Qualia: https://qualia.com
• Contact Nate: nate@qualia.com

This episode tells the story of how grit, humility, and relentless customer immersion fueled Qualia’s rise, offering founders a practical map for their own vertical SaaS journeys.