Episode 8: David Hirschfeld — Founder and CEO of Tekyz
Timestamps:
[2:50] Going on 18 years, is your business where you expected it to be? And what was the big plan back in the day?
[7:20] The product market fit, can you get into detail about what that means as many people don’t know what this means
[11:00] The process of discovering what your customer needs and wants, founder that are focused on the problem
[18:30] You want to be the next Facebook?
[20:10] What have you been doing to change from just growing by using referrals?
[22:40] How is that working out?
[25:25] What are the issues that you see coming up on the horizon
[28:55] What are the two other products you’re building?
[34:30]Who’s the ugly baby of the new products?
[40:45} What are the categories that people come to you for?
Introduction: Are You Tired of the Startup Rollercoaster?
Building a business can feel like a constant cycle of boom and bust, soaring high on initial success only to crash and burn when a major client leaves or the market shifts. This is the story of David Hirschfield, CEO and founder of Tekyz, a software development company. For 18 years, David has navigated the ups and downs of the tech world, experiencing both triumphant exits and painful failures. His journey offers invaluable lessons for any entrepreneur seeking sustainable, predictable growth. Join us as we explore David’s insights on the importance of product-market fit, problem-focused development, and the power of strategic partnerships.
The Crucial Role of Product-Market Fit
David emphasizes the importance of product-market fit, particularly for B2B SaaS companies. He defines it with an explicit formula: selling enough product at a high enough price with a high enough closing ratio to achieve a 3:1 ratio of customer lifetime value to customer acquisition cost. This profitability allows for reinvestment and fuels sustainable growth without constant fundraising. David highlights the common pitfall of founders clinging to their vision without rigorously testing and measuring their product’s viability in the market. He encourages founders to adopt a “clinician” mindset, focusing on understanding customer problems rather than falling in love with their solutions.
The Power of Problem-Focused Development
David stresses that successful founders love the problem, not the product. He advocates for deep customer engagement, urging founders to understand the perceived impact and the actual cost of the situation they are trying to solve. This involves talking to numerous potential customers, identifying their pain points, and understanding how those problems affect them personally and financially. Focusing on the issue makes the solution a natural outcome, increasing the likelihood of product-market fit and long-term success.
Building a Sustainable Pipeline: Beyond Referrals
While referrals can be valuable, David learned that relying solely on personal connections limits scalability. After experimenting with costly marketing campaigns, he discovered the power of strategic referral partnerships. He defines a successful referral partner as generating three to four qualified projects annually. To cultivate these partnerships, David embraced podcasting, interviewing, and being interviewed to build his brand and connect with potential partners. This approach has yielded promising results, generating a steady stream of qualified leads and laying the foundation for predictable growth.
From Service to Product: Creating Your Secret Sauce
David’s latest venture involves developing internal products to address his business challenges, including a referral partner portal, a niche analysis methodology, and an AI-powered project estimation tool. These “secret sauce” products not only streamline his operations but also have the potential to become standalone SaaS offerings, creating new revenue streams and further solidifying his company’s position in the market.
Embrace the Problem, Build the Solution, Scale Smartly
David’s journey offers a compelling roadmap for sustainable business growth. Entrepreneurs can escape the boom-and-bust cycle and build thriving businesses by prioritizing problem-focused development, rigorously measuring product-market fit, and cultivating strategic partnerships. His story reminds us that true success lies not in clinging to a vision but in understanding and addressing our customers’ real-world problems.
Transcript
[0:29–0:56] Rebecca: Hi and welcome to in the business coach’s chair. Throughout this podcast, I’ll be interviewing business owners, business leaders and anybody involved in business at all and taking them through a short business coaching session. We’ll uncover what their deepest fears are, what their greatest desires are and work out how to sort those out for them.
[0:56–1:07] Rebecca: So sit back in your own comfortable chair, relax and learn about what’s happening in the minds of business owners everywhere.
[1:10–1:18] Rebecca: Hello and welcome to In the Business Coaches Chair. Today I have David Hirschfield. Hello, David. How are you today?
[1:18–1:20] David: I’m doing great. How about you, Rebecca?
[1:20–1:34] Rebecca: I’m really well, thank you. Very well indeed. David, you’re the CEO, founder, creator, president What title do you give yourself of your tech company?
[1:35–1:40] David: Yeah, CEO and founder That works for me Cool
[1:40–1:45] Rebecca: And is the pronunciation Tekyz or Tekyz? Tekyz
[1:45–1:57] David: Yeah, like a bunch of Tekyz sitting around the table I got this URL 18 years ago when you could still get a URL with five characters.
[1:58–2:04] David: And Tekyz spelled T-E-C-H-I-E-S was taken. So I got this one.
[2:05–2:13] Rebecca: Oh, well done. Good for you. Good for you. And you’re not just CEO of this company. You’ve got a couple of other businesses as well, haven’t you?
[2:14–2:25] David: I do. I do. I mean, this is really my focus. Okay. I’m partnered in a couple other businesses who all started out as clients of mine.
[2:27–2:39] David: And I’m also an investor, a shareholder in a couple. I don’t make a habit of doing that because that complicates the relationship when you’re a provider.
[2:39–2:50] David: but there is occasions where it to me it just seems like too good an opportunity and not to be a part of it because I could see that they’re on a really a rocket ship from a growth
[2:50–3:17] Rebecca: perspective so you know I jump in just occasionally that makes sense so the concept for today is about solving problems in your business or looking at your business perhaps from a different angle I like to go with the flow I’ve no idea where this is heading So we’ll just wing it if that’s okay with you?
[3:18–3:20] David: Sure, absolutely Good
[3:20–3:29] Rebecca: And the other thing is If something comes out that you think Oh no, I actually don’t want to share that with the world We’ll cut it out, okay?
[3:29–3:36] David: Okay, sure That’s probably not the case I’m pretty transparent But if that does happen, I will let you know
[3:36–3:44] Rebecca: Okay, cool. All right then. Good. So, you’ve been running the business for 18 years?
[3:45–3:48] David: Yeah, we’re going on 18 this year.
[3:49–3:52] Rebecca: Cool. Is it where you expected it to be?
[3:54–4:09] David: It’s not where I expected it to be. Well, and technology has changed so much, which my whole business is technology, right? But no, it’s not exactly where I expected it to be.
[4:09–4:20] Rebecca: Okay. Is that, you know, 18 years ago, what was the big idea? What was the big plan or was there no big idea or big plan?
[4:21–4:52] David: Well, 18 years ago, let me go back a little bit farther. I came from enterprise software. and then I started my first software company in the early 90s so like I said I go back a ways with a partner of mine in logistics distribution inventory management and despite every effort on both our parts we grew it anyway to 800
[4:52–5:23] David: customers in 22 countries and exited with the sale to a publicly traded firm in 2000 so that was a success and then I started another software and I was VP of products for them for several years until I left and cast out and did another startup in the automotive industry business to business network for automotive wholesalers and that one failed not because the product wasn’t successful because I was getting traction don’t you? Yeah you do
[5:23–5:33] David: you know very quickly by how people are reacting to your offer or not needed an investor, and I waited too long, and the business just ran, and money couldn’t justify.
[5:34–5:46] David: So I had one successful startup. I had one failure, partly because I didn’t recognize what it was that made me successful the first time, right?
[5:46–5:59] David: And I still didn’t really understand what made me successful, what made me fail the second time that I could have easily avoided. So then I started Tekyz as a software development company.
[5:59–6:13] David: with the idea that we can work with startups and existing companies that are scaling up and help them automate workflows or build SaaS applications, you know, like that.
[6:13–6:24] David: With the idea that it was Web 2.0 was just a beginning buzzword at the time. Of course, everything has changed since then. Yeah. And we’ve done really well.
[6:24–6:50] David: We’ve had some great clients along the way, wildly successful clients, but the vast majority, especially with the startups, fail. So, and in the process of watching so many of them fail because I’ve worked with over 90 startups during that time, I recognize now what are the patterns for startups that are successful and the mindset, and what are the ones, why do they fail?
[6:50–6:58] David: And it’s always for the same reason. They just wait too long to validate that they have product market fit.
[6:59–7:09] Rebecca: That’s fascinating. That’s really fascinating. I am just going to unplug my microphone and my headphones because I’ve realized that’s the problem. Give me.
[7:13–7:15] Rebecca: That’s better. Right.
[7:15–7:15] David: Okay.
[7:16–7:29] Rebecca: All right. So that’s really interesting. And because it’s in the business coaches chat, I want to unpack that because we have lots of entrepreneurs who listen to this as well as coaches.
[7:29–7:40] Rebecca: Sure. So that product market fit, a lot of people don’t understand what that means specifically. Can you get into detail about that, David?
[7:40–7:55] David: Yeah. And there’s a very, well, let’s say you’re a SaaS company, right? A B2B SaaS company, which is probably our sweet spot. It’s not the only thing that we do in terms of software development, but that would be our sweet spot, especially with startups.
[7:57–8:20] David: So if you’re a B2B SaaS company, there’s sort of a golden formula, and that is you can sell enough product at a high enough price at a high enough closing ratio that when you compare lifetime value of your customer to the cost of acquiring each customer, you have a three-to-one ratio or higher.
[8:21–8:34] David: So that there’s enough profit in that equation that you can accelerate your business and growth by investing it back in and still have enough money to pay the salary in place, things like that, right?
[8:35–8:46] David: Right. So without having to raise money. Or you have enough proof of profitability that going out and raising money is an attractive offer.
[8:47–9:00] David: You can make attractive offer without giving away all your equity. And that’s a repeatable number that if you just put more energy in the system, you will grow in a predictable way your customers faster.
[9:00–9:23] Rebecca: Okay. I love the precise nature of that three-to-one formula. and I suspect there are a lot of business owners out there who have been scrabbling around trying to find this product market fit that seems mysterious and you’ve just given it huge clarity.
[9:25–9:27] Rebecca: It’s very straightforward, isn’t it?
[9:28–10:00] David: It’s very measurable. Yeah. And it’s not always very straightforward. how to get there, but it’s very measurable. And the problem is with, I find with founders, founders come in with a vision and a belief system, both of which the vision is good. The belief system is bad. So, you know, having vision means you, you believe that you can see where things are heading and what the possibilities are, but the belief system that you are, that you
[10:00–10:35] David: believe that will come true is where founders that are unsuccessful often are stuck in these belief systems. So what does that mean? A founder wears a black robe when they start a company because they have this religious fervor about the success of it, right? And when I’m effective working with founders, I gently peel that black robe off and try to wrap them in a white coat and turn them into clinicians because they have to be able to test and measure. Founders that love
[10:35–10:56] David: their product and believe in their vision often fail. The ones I find who are consistently successful love the problem and want to spend all their time with the customer understanding their problem. And the product is nothing more than just a natural conclusion of the mitigation of that problem, but it’s not the thing they love.
[10:57–11:14] Rebecca: Okay. Right. Okay. Again, really interesting. The process for the discovering that issue that you’re solving for your customer can only come from getting close to your customer, can’t it?
[11:14–11:23] Rebecca: You can’t imagine it. You can’t make it up. You have to really understand your customer, which means you have to talk to them.
[11:24–11:51] David: Right. You have to talk to them often and many different ones, right? You may even be a customer yourself. So a lot of founders also who are more likely to be successful, it’s not limited to them, but it really increases the odds, are those that are in an industry where they’re in a position in that industry where they’re struggling with a particular problem, if not every day, at least weekly.
[11:51–12:03] David: It’s a top-of-mind problem, not yearly. And they can easily articulate how much that problem impacts them personally from a perception perspective.
[12:04–12:33] David: That’s one measure. And from a cost perspective which is a completely independent measure Those are not the same And I can explain why it matters that you understand both those numbers because what you want is because you can have one high and the other low Somebody can believe a problem has a huge impact on them personally, and they would do anything to get rid of it except pay a lot of money because the cost is very low, but it’s actually costing them when you measure it.
[12:33–12:50] David: On the other hand, you may have somebody with a really high cost to a particular problem, and they understand that the cost is really high, but their personal impact from it is very low because everybody in their industry has been dealing with the same problem forever.
[12:51–13:02] David: If they’re inside a bigger company, management is just not going to really support me doing anything about it. Nobody really cares. So that’s a low perceived impact, even though the cost is really high.
[13:02–13:27] David: so as a founder your job with all the niches you can market to and all of the root problem statements that you can tease out from your product which niche is the one that has the one or two of the problems you’re solving at the highest perceived impact and the highest cost then you can get their attention and you can charge enough to for the
[13:27–13:32] Rebecca: product okay I’m with you and how do you apply the principles to your business now?
[13:33–13:45] David: Well, so, okay, you know, cobbler’s, kids’ shoes, right? Yeah. So, and in my business, I’m a service-based business, right?
[13:45–13:59] David: So I’m, it’s a little different in a service-based business because product market fit is basically whenever I find a customer who has a project they need done, that’s who’s my client.
[13:59–14:14] David: So for us, product market fit is being exceptional in terms of how we deliver, how we develop, how we track our level of transparency, how we build design prototypes.
[14:15–14:33] David: Those are things that we strive to be exceptional at. And what that means is that when a group is exceptional at what they do, they have evidence in terms of the artifacts that are produced that other companies who are not exceptional don’t produce.
[14:34–14:47] David: And so I never expect anybody to believe me when I say we’re an exceptional team. I say, let me show you what exceptional teams do and what they produce from an evidence perspective, and you can make your own decision.
[14:47–15:04] David: You know, I’ll tell you we’re exceptional, but you make up your own mind whether we are or not. And so for us, that creates product market fit with somebody looking to engage a software team because they want the things that exceptional companies produce.
[15:04–15:36] David: When I show them, they go, yeah, yeah, yeah, yeah. And then that becomes the standard that they compare against when they’re talking with other companies and other companies don’t do that. So my business problem has always been how to build a consistent pipeline of potential clients and projects so that I can scale in a predictable way so that I can scale my business,
[15:36–15:52] David: which I think recently I have found a way of doing that. But I have spent a fortune over the last three or four years in particular because all my business came from referrals up until three or four years ago.
[15:52–16:12] David: I mean, it still does. But you can’t really scale that way if it’s just on your personal relationships and referrals and nothing else. So you can maintain a steady state and even grow to a certain degree, which we have done as effectively as you can, but there’s no scaling for that.
[16:13–16:20] David: So that has been my problem for several years. I’m finding — yeah, go ahead.
[16:20–16:24] Rebecca: Sorry to interrupt, but have you created a product then, David?
[16:26–16:42] David: Well, we are actually creating a few products that we are building for internal use. Again, we’re that profile that I just described of a company who is struggling.
[16:43–16:58] David: Oh, back to that. So somebody in a company, it may be their company, they may be a stakeholder employee in somebody else’s company, but they’re struggling with this problem that is top of mind, that has a high perceived impact and a high cost.
[16:58–17:13] David: And they can easily articulate why it personally impacts them, how they feel threatened by this problem. And they can articulate the cost of what this problem is actually costing them financially or the business.
[17:14–17:29] David: And then they’re part of an industry with people doing exactly what they do that have the struggling with the exact same problem that they’re struggling with. and they have reach to that community of people that are in that same position.
[17:30–17:57] David: Those three formulas set somebody up to potentially be successful. It reduces the risk dramatically if they’re coming at it from that position. Then they have to make sure that they take off the black robe, put the white coat on, and go out and talk with all the other people like them and find out what the nuances and differences is from all their perspectives and, you know, and the perceived impact and the cost equations, and that’s where they should spend their time.
[17:59–18:17] David: The problem mitigation becomes obvious when you do that. The software just becomes the natural evolution of that process instead of it being this thing where you are going to be the next Facebook and you spend a million dollars and can’t get, you know, 50 people to use your platform.
[18:18–18:18] David: Yeah. Right?
[18:19–18:32] Rebecca: I see lots of those. I do too. And I’m like, I was listening to the interview Mark Zuckerberg on Joe Rogan. He’s like three billion people use his platform every week.
[18:32–18:40] Rebecca: Like, good luck with creating something to commit with that. I mean, that’s like a big conversation.
[18:41–18:56] David: There’s one that just recently, a big one that just recently failed. not my client, but I know somebody who was a senior person in their marketing, in the marketing world for this company, a company called Almanac, which was a competitor to Notion.
[18:56–19:17] David: Oh, yeah. And, yeah, four years ago, I think, maybe, they received $20 million in funding. Okay. And went crazy in staff and development team and, you know, did what your classic startup that just has all of a sudden a lot of money and doesn’t have good governance.
[19:18–19:28] David: Yeah. And, you know, everybody had the, what are they called, seats, whatever Herman seats. I can’t think of the name now. It just slipped my mind.
[19:29–19:40] David: The expensive, you know, chairs at their desks and, yeah, and the beautiful office. And they grew to 80 employees really fast. And that was, you know, they started doing layoffs two years ago.
[19:40–19:51] David: and now finally four or five years, six years after they started, they’re closing their doors. And I don’t know that they’re even being acquired.
[19:51–20:03] David: Did they shift into a different product? I think they shifted into another product, which is now sort of a different startup. But anyway, this is so common, right? Because they aren’t focused on the problem.
[20:03–20:24] David: They’re focused. They had believed that they had this cool solution that just everybody would love and use without having a very clear customer and problem statement. So anyway, founders that are focused on the problem are way more consistently successful than those that are focused on the solution.
[20:25–20:36] Rebecca: And how — so the past three or four years you’ve been developing your business to get to this point where it’s no longer relying on referrals. So what have you been doing?
[20:36–20:36] Rebecca: What have you done?
[20:37–20:55] David: Well, it’s not that it’s not relying on referrals anymore. I sort of gave up on trying to find a different way to bring in business. So instead I embraced, but it took me a few years of spending a lot of money in marketing to realize that that’s not going to work.
[20:55–21:09] David: And I didn’t want to build a big sales team until I was sure I had a repeatable way to put highly qualified potential clients in front of salespeople and scale that.
[21:10–21:23] David: And so what I finally realized I had to do was I have to create referral partners, people that are in the flow of that stream of potential business.
[21:23–21:54] David: and a successful referral partner in my mind is somebody who can refer three to four qualified projects a year to my company that’s a right that’s an active referral partner uh it doesn’t need to be a hundred it does but it’s more than just one in a year and then the problem is who are those people and how do i establish the relationship with them and that’s and that’s when I finally about four months ago
[21:54–22:06] David: embraced podcasting. And so both interviewing and being interviewed. As well as of course the brand building, right?
[22:07–22:38] David: Yeah. So it’s a blend of all of it. But this is, I believe it is starting to really show promise as the way around it. Then of course I have somebody that’s helping me with marketing who’s really good, who’s helping me build the brand, both in the podcast and with Justin general, and working on Top of Mind campaign for all of the referral partners that we have now engaged as a result of this exercise,
[22:38–22:41] David: the podcasting, both being interviewed and my own podcast.
[22:42–22:45] Rebecca: Perfect, perfect. And how’s it working out?
[22:45–22:57] David: Well, it’s only been four months. Okay. I’ve been in not even four months, probably three months. Okay. My podcast is nascent.
[22:57–23:14] David: I’ve only done a couple interviews. It’s called Scaling Smarter. Okay. I’ve only done a couple interviews so far on that one, and I haven’t published them yet. But I’ve been on 32 interviews, I think, during that period of time.
[23:14–23:32] David: We’ve done a really good job marketing me for the interviews. And I’m going to be, by February or March, I’ll be starting, I’ll be setting up the podcasting for my director of operations, who’s in India.
[23:33–23:44] David: She’s worked for me for 11 years, and she’s exceptional. And so she’ll be doing, we have a company in India called Tekyz Tech. And she’ll be focusing on the East Asia market.
[23:44–24:04] David: with her podcast reach. So, um, but this is something I think has legs, right? Because, uh, um, um, I, uh, in the process of doing this, I’ve already signed up 11 referral partners, I think today, um, just from the podcasting.
[24:05–24:38] David: And I’ve received four or five qualified, maybe six qualified really well qualified referrals in that period of time. And so I can see the scaling and growing quite quickly now It definitely working if it continues to work at this pace And if the referral partners are consistently active over a period of time a percentage of them So if I sign 10 people, I expect one or two to become an active referral partner.
[24:39–24:50] David: Right. And there’s no pressure, but there’s a lot of value to them to want to refer projects if they come across projects. Some of them will be super referrers and some never refer anybody.
[24:50–25:04] David: Right. And hopefully it blends out to 15 to 20 percent of them will refer three to four projects a year. By the end of the year, that would be sending me eight to 10 qualified referrals a month.
[25:05–25:19] David: Yeah. Maybe maybe double that, which would be huge because if they’re qualified, which means they have a budget and they have a project. and they need to start, then we’ll close 80% of those.
[25:19–25:33] Rebecca: Yeah, yeah, undoubtedly. You’ve got rid of all the barriers to entry if they’re qualified in that way. Okay, so that sounds like you’re solving one of the key business issues that you have had.
[25:34–25:46] Rebecca: Let’s see, you know, how that turns out for you. It sounds like you’re on the right track. What are the issues that you see coming up on the horizon then?
[25:47–25:48] Rebecca: Anything? Nothing?
[25:50–26:16] David: Well, balancing. Okay. So we’re building three products internally. One is a referral partner portal because there is nothing out there that I have found that makes it easy to manage and track referral partners for this type of, you know, for the type of business that we have, right?
[26:16–26:27] David: There are expensive products that are channel partner related, which is not what we’re doing, right? There are many of those, and they’re expensive. They’re focused on enterprise midsize companies.
[26:27–26:47] David: But for just managing your referral partner network and being able to report commissions earned so that there’s a place, the referral partners can both add a referral optionally as well as see what the state of that referral is and the state of all the referrals.
[26:48–27:04] David: There really isn’t much out there that I have found. I’ve done a bit of hunting for it. So we’re building our own referral partner portal, which we need ourselves. And then it’ll turn into a SaaS product for all the people that become our referral partners.
[27:04–27:16] David: It starts to become its own network because many of them will want to have their own referral partner network. So it falls into that. We have a problem. We know what the cost is and the value and the personal impact.
[27:16–27:27] David: And we’ll be speaking to referral partners constantly about this product. So we really write naturally in front of the problem all the time. Yeah.
[27:27–27:38] David: And we will, as soon as we’ve got this product, I’m not doing pre-launch sales. So with Launch First, what we do is we go out and we do pre-launch sales with the concept.
[27:38–27:52] David: That’s how we prove product market fit, by getting people to actually buy a pay us for that product before we even start development. Usually the design is done, but we haven’t started development.
[27:52–28:13] David: And if we can’t get those sales from who we believe are ideal clients, even though we’re offering them a killer opportunity to get in early, then there’s probably a problem either with who we picked as our early adopter or the product messaging or maybe we’re building something that the world doesn’t need yet.
[28:13–28:34] David: And we can try pivoting two or three times very quickly and easily at that stage because we haven’t built the product yet. and if we can’t it’s then it’s fair to say that maybe we just, this is the wrong product for the wrong time in the wrong market and we fail fast and cheap, which failing fast and cheap should be the goal, right?
[28:34–28:38] David: I’m going to make this fail fast and cheap or it’s going to be successful.
[28:39–28:41] Rebecca: Yeah, and you know pretty damn quickly, don’t you?
[28:42–28:47] David: Yeah, you do. You know very quickly by how people are reacting to your offer.
[28:47–28:52] Rebecca: Or not. The lack of reaction that tells you.
[28:52–28:53] David: Or the lack of reaction.
[28:53–29:00] Rebecca: Yeah, definitely. So you mentioned balance there. So there’s that on the go. What else? Two other things, I think you said?
[29:00–29:11] David: Well, two other products we’re building. So we have the referral partner portal, which we’re building. We have the launch first niche analysis methodology.
[29:11–29:37] David: And the niche analysis is the hardest part of that whole methodology because it’s tedious and it’s metrics driven. it requires founders to spend a very concentrated amount of time understanding all the, first of all, who are all the potential niches they can market to, what are all the root-level problem statements that they tease out from their product.
[29:37–29:50] David: A root-level problem statement is basically if you say, here’s our problem statement, and you ask, why does that matter two or three times, then you’re going to get down to the root problem statement.
[29:50–30:02] David: When does it get to the point, well, because if I don’t fix that problem, it’s going to do this to me. And that’s right, and it will prevent me from being able to achieve whatever.
[30:02–30:19] David: The root problem statement has to end with something like that, or you haven’t gotten there yet. So if you just say we’re — if the root problem — most of the time when people do problem statements, they don’t. They don’t really understand it, and they provide a benefit that they’re trying to — that they believe the product will accomplish.
[30:19–30:20] Rebecca: Yeah, okay.
[30:20–30:31] David: Instead of the problem itself. Yeah, right. Then they get past that, and then they give you a problem statement, which is very high level and generic that nobody cares about. Yeah, yeah.
[30:31–30:46] David: Like a survey app, for example, for a client that we were working with who had a pitch deck, and one of the problem statements was businesses don’t have the information they need when they need it.
[30:46–31:18] David: okay that’s very generic and it’s true and everybody knows this so who cares whatever right yeah okay and it took a few whys to get down to what the root level problem was but you have to stand in the stakeholder’s shoes is struggling with this in the context of their business to be able to articulate that root level problem okay for example i’m a corporate manager and I’ve got like maybe a director in my company and I’ve got 10
[31:18–31:53] David: managers reporting to me and each one of them have 10 people in the team so there’s 110 people total and on one of my teams I’ve got people that are really unhappy and they start leaving the company and I don’t know they’re unhappy until they leave the company and they post a one star review about our company and now we’re going to have to spend that much more money on marketing and advertising and recruitment to replace that person. We’ve lost their corporate IP because it walks out with them
[31:53–32:20] David: if we don’t have playbooks implemented everywhere. And we have to spend more money now to find good recruitments than we would have before that person posted on the job boards what a crappy company we are. And it’s all because I just didn’t, and I am going to lose my job or be demoted, or there’s no chance of ever being promoted again if I don’t figure out how to fix this problem.
[32:20–32:47] David: That’s the right, the root level problem for that person. But if I’m a restaurateur, that root level problem sounds a lot different, even though it’s the same thing. Unhappy customer because bad weight service, leave a one-star review. My reputation as a restaurateur goes, Right. So root level problems are critical because if you want to make somebody lean forward when you’re reaching out to them, they’ve got to feel like you understand the problem they’re struggling with.
[32:47–32:50] Rebecca: Yeah, you really do. What’s your third product, project?
[32:51–33:03] David: So the third product is estimating projects. So we do, like I talked about being exceptional, one of the things that we’re really exceptional at is estimating projects.
[33:04–33:28] David: Okay. in terms of the level of detail and depth that we go into and the accuracy. And so once we’re in process with a client for years, we’ll estimate, like our largest client last year, estimates versus actuals, because we track both, we had a 5.6 variance from the estimates versus the actuals.
[33:28–33:40] David: Most software development companies are around 30% variance with existing customers. and 200% to 300% variance with, you know, brand new estimates.
[33:41–33:44] Rebecca: That’s called making it go along, that is, David. Yeah.
[33:45–33:59] David: So, you know, but we estimate really accurate, but it’s an expensive process to spend that time to do that. And so we’re building an AI model for basically mimicking our estimation process because we’re really accurate.
[34:00–34:12] David: Right. and then that’s for us internally, which we’re going to then turn into a SaaS product, right? And that one we’ll do pre-launch sales using our prototype.
[34:12–34:28] David: Prototype will be ugly, but it will work and prove the concept. And we have a design prototype that’s beautiful but won’t be out for a while. So we’ll do launch first with this product, which once we’ve got the first version of it available, which is soon.
[34:28–34:40] Rebecca: and out of the three let’s call them your little I don’t know projects that you’re nurturing your three children that you’re nurturing here which one’s your favourite
[34:40–35:01] David: none of them well none of them are my favourite yet because I haven’t seen because we don’t have the working models of them yet to automate the process that we’re doing but the one I need the most immediately is the referral partner portal.
[35:01–35:18] David: Okay. Because now we’re tracking all in spreadsheets at the moment, you know, in my CRM, but that’s not a good way to track it and on spreadsheets. And I can see that getting to be a bigger management problem, and it doesn’t give my referral partners any visibility.
[35:18–35:19] David: Okay. Right.
[35:19–35:25] Rebecca: So I’m going to ask that question a different way around. Is there anyone out of the three that are the ugly baby?
[35:26–35:27] David: That are what? The ugly baby?
[35:27–35:28] Rebecca: Maybe, yeah.
[35:32–35:46] David: Probably launch first only because it’s really difficult to do this. It requires a more sophisticated AI model to do it because every single startup is different.
[35:46–35:58] David: And so you’ve got to have enough data related to that startup that it can — because there’s a scoring matrix. that there’s a couple scoring matrices, one for that perceived impact and one for the cost.
[35:58–36:22] David: And then we take those two things and then bubble chart them based on the top problem statements by niche. But the scoring is hard because you may have 20 niches and 15 problem statements, which gives you 300 intersections in your matrix.
[36:22–36:39] David: And you need to have enough distribution in the scoring of those things between 1 and 300 that when you bubble chart it the obvious early adopters potential early adopters float to the upper right of that bubble chart Alright cool Alright so and you
[36:39–36:46] Rebecca: got, David, you got the deal out of the three. Which one’s the one that you go, do you know what, that’s the one that’s going to fly?
[36:48–37:07] David: I think a referral partner report, I know the it’s called Estimize, Estimize will, but it won’t take off in the same way because there’s no natural referral network for people to share with other development companies the tool, right?
[37:08–37:18] David: Except within their own companies and other people in their companies using it. But I think there might be also, they don’t want to tell anybody about it, how they’re able to produce these really good assets.
[37:19–37:33] David: So where the referral partner portal is a natural, you know, has a natural networking effect to it. And so I believe that one has the best chance, you know, of really taking off.
[37:33–37:39] David: And plus, we also need it the quickest because, you know, for managing our own stuff.
[37:40–37:40] : Yeah.
[37:40–37:49] Rebecca: So that’s kind of brought it more into balance in terms of the only one. Aí a pessoa vai ficar em casa, sabe aí?
[37:50–38:22] David: O trabalho é o que eu vou fazer. partners ask when it’s going to come out because they need it for their own networks perfect so you’ve already got waitlist i’ve already got a waitlist and and corroboration um on the need for people to want to use it and then we can offer deals to them that if you provide one qualified referral a quarter then you can then you can use it subscription free you know for your own network
[38:22–38:45] Rebecca: Amazing. Yeah, when we’re working with clients, we call that the secret source. So the business gets so good at doing that particular part of the business that it ends up being a separate product, sometimes a separate limited company, LLC, Inc, whatever, and its own profit center.
[38:45–38:54] Rebecca: sometimes in exceptional cases that secret sauce business ends up being bigger and more successful than the original business
[38:54–39:18] David: yeah I can see that I don’t believe it because that just gets in the way of following being a clinician but I can already see the traction for this and how strong that traction is and how easy it is to start to attract people outside the network to the product, I have no idea because we haven’t tested that yet.
[39:20–39:39] David: Or who the early adopter, ideal adopter is and we’ll have to go through launch first to kind of try to figure that out and test that. Which is all part of our plan to do all that. But right now the big plan is getting that first version, that referral partner portal out, which I think will be in the next few weeks.
[39:40–39:45] David: An early a version that we can start to use and track for our own virtual partners.
[39:46–39:53] Rebecca: Yeah, that’s really exciting. And like you say, you absolutely will be able to measure that. It will be crystal clear.
[39:54–40:08] David: Yes. It will be crystal clear. And even if it’s not, even if we can’t forecast, predict that it’s going to start to generate much revenue on its own over the next six months or a year, we need it for ourselves.
[40:08–40:17] David: Yeah. Yeah. So so the motivation to build it and the investment in it is required for the growth of my business to manage the growth of my business.
[40:17–40:30] Rebecca: Which circles back really nicely to one of your original statements about producing something that solves a problem that you personally have. Yes. Beautiful.
[40:30–40:33] David: Well, it seems like it’s my the model that I always talk about.
[40:33–40:40] Rebecca: It really does. It really does, definitely. Congratulations on that one. Well, I hope we’ll see.
[40:42–40:51] David: Once we hit, you know, a million AR, then I’ll feel like I can pat myself on the back. Until then, it’s just, it looks like it has a lot of promise, right?
[40:51–40:55] Rebecca: Yeah, it really does. David, is there anything you want to ask me?
[40:56–41:06] David: Oh, yeah. So, like, what are some of the types of problems that people bring to you that you work out in your show? Because I’m really curious what that sounds like.
[41:07–41:19] David: And I’d be happy to talk about the ones I have, you know, that we could work out. You just caught me at one of those times where I feel like I’m on a path where right now it’s not about problems.
[41:19–41:20] David: It’s about execution.
[41:21–41:52] Rebecca: Perfect. Yeah, there are different phases in a business. the category is that people come to us for fall under revenue not enough sticky revenue or not profitable revenue people don’t have the right people in the right roles doing the right things, no succession plan and a strategy really unclear as to where they’re heading long term usually they’ve usually got a one year plan but beyond that they’re a bit like no idea
[41:52–42:27] Rebecca: where we’re taking this thing and sometimes there is a strategy but it sits in the founder’s owner’s head which is useless because nobody else knows what’s going on and we solve those problems usually with looking at the culture so we start with culture first what’s your purpose, vision, values are you living, breathing those things because that, if you are then that informs all the other pieces of the jigsaw and if you’re not then that’s where we come in and go right well let’s sort out the bits that
[42:27–43:04] Rebecca: are really lacking and then we’ll tweak the bits that you’re doing okay on at the moment and it usually well certainly in all the clients I’ve ever worked with it ignites that passion that enthusiasm that engagement that you need from everybody in the business to work towards this common goal and helps them understand you know for what purpose they’re doing this and which gets them through the hard times and the easy times so yeah it’s um that that’s it
[43:04–43:17] Rebecca: so your balance piece uh to me fell into the category of of strategy from the way you described it, which the babies do you pick to work on primarily?
[43:17–43:21] Rebecca: And you’ve answered that. Great. You’re good to go. Yeah.
[43:22–43:52] David: And that’s been the hardest thing for me was to figure out where to prioritize, especially with the internal product development, until I started to see this referral network building and starting to see I’m getting referrals from the partners and that I’m able to refer some things to the partners, right? Because it’s kind of a, you know, I want it to be a, you know, where we’re feeding each other to the degree that that’s possible. And so that’s,
[43:53–44:05] David: that over the last, literally over the last three or four weeks has crystallized my priorities, what we need first and why, and how it’ll add value to the business in the right way.
[44:05–44:20] David: Because I expect over the next year, or my goal is over the next year to 18 months, that we become an equivalent product company and service company, not just a service company.
[44:21–44:32] Rebecca: Perfect. That is the golden goose right there, David. And that’s, yeah. Yeah. Whenever I’ve worked with service businesses, it’s what’s your product, what’s your product, what’s your product?
[44:33–45:00] Rebecca: Right. that’s where you’re going to get the growth as you rightly said right at the beginning the service will get you so far and if you’re lucky and you acquire or you expand or you suddenly get a series of huge contracts or whatever you can scale that but it’s so hard to do nice one good I’m really intrigued to see you in a year’s time David
[45:00–45:02] David: yeah me too I’m really intrigued to see
[45:02–45:16] Rebecca: me in a year’s time as well yeah that’s amazing thank you so much i really appreciate i’m going to finish with one last question if your business personality or a character either who would it be
[45:16–45:22] David: or how would you describe it i’m not sure i understood the question if my what if my business
[45:22–45:39] Rebecca: had a personality or characteristics or was a character you know famous not famous fictional either describe the characteristics of the business or describe the person or thing that it might be?
[45:43–45:56] David: Okay, I need to think about that. Let me see. Personality that my character would be, I’m trying to think of a character that is translucent.
[45:57–46:08] David: That’s probably not the right thing. or I don’t have a good answer for you.
[46:08–46:23] David: I’m going to spend a lot of time on this. All right. And I may send you a little audio recording. Here it is after the recording that you can add it or a Zoom, a Loom recording or something.
[46:23–46:32] David: Okay, cool. because I don’t have I can’t think of who that would be today I’m going to ask a supplementary
[46:32–46:32] Rebecca: question
[46:32–46:35] David: you know what it’s Phoenix
[46:35–46:38] Rebecca: okay cool it’s Phoenix
[46:38–46:58] David: because I have several times had a lot of my or more than 70 or 80% of my revenue coming from one large client that happens as some of these clients just grow really fast, and then we’re trying to keep up with them.
[46:59–47:13] David: And sometimes because we do such a good job, they get acquired, and then they’re using the acquisitions development team, and we’re helping them transition, not because we failed, but because we’re really successful.
[47:14–47:25] David: And then we lose the whole revenue stream within a few months. And we have to basically pick ourselves up from the ashes. I have to do that several times.
[47:26–47:40] David: Right. And I’ve never borrowed money from anybody except during COVID when the SBA loans were so cheap. Right. Yeah. I did that just to put it in the coffers.
[47:40–47:51] David: But I’ve never borrowed money. I’ve never had a, you know, it’s all been me. Right. And bootstrapped and had no trouble keeping cash flow and keeping the company going even during those periods.
[47:51–48:02] David: periods. So, Phoenix, I think. I don’t want to be a phoenix anymore. Now I just want my feathers to get bright and grow.
[48:03–48:04] Rebecca: You want to be an eagle.
[48:05–48:08] David: Right. Okay. Phoenix to an eagle. I love that. Phoenix to an eagle. I love that.
[48:09–48:16] Rebecca: Love it. Great. Amazing. Thank you so much. I wish you all the luck in the world. Thank you.
David Hirschfeld founded Tekyz, a company dedicated to transforming business software development. With over 30 years of experience, his journey began with a physics degree from UCLA and a successful sales career at Computer Associates. After launching and selling his first software company in 2000, David found his passion for empowering entrepreneurs.
He developed the Launch 1st™ methodology, which focuses on generating revenue before coding begins. This helps startups gain traction while minimizing risks. With a commitment to innovation and collaboration, David leads Tekyz in providing AI-powered development and SaaS solutions, making a meaningful impact in the tech world.
Tekyz is set to launch two new AI applications: one for automating the Launch 1st Methodology Niche Analysis and Estimiz, an AI-based project estimation tool. Outside of work, David enjoys golfing and woodworking.
You can learn more about David Hirschfeld and Tekyz by following his LinkedIn profile — David Hirschfeld LinkedIn Profile.
For more information about Tekyz’s services and how they can help you harness the power of AI in healthcare, visit tekyz.com or contact the founder directly at [email protected].
Episode 8: David Hirschfeld — Founder and CEO of Tekyz was originally published in Tekyz Blog on Medium, where people are continuing the conversation by highlighting and responding to this story.
