Spotlight on Small Business Owners: Erik Fogg, ProdPerfect
ProdPerfect’s Erik Fogg talked with us about bike helmets, bookkeeping and the unique challenge of launching a startup that disrupts a long-established tech niche.
Erik Fogg is a startup veteran. A graduate of MIT. A published author. And one of the founders of ProdPerfect, a Boston-based startup that builds automated end-to-end quality assurance (QA) testing for web applications.
Unlike the traditional QA process, ProdPerfect leverages live user data (rather than educated guesses) to determine what tests to write and maintain. And therein lies the disruption.
Fresh out of MIT, Erik started his career fixing factories across North America as an operations consultant. From there, he was brought into HelmetHub, a helmet rental system for bike share programs. It was there that he met Dan Widing, who he hired to be HelmetHub’s lead software engineer.
The two have been best friends ever since. Six years into their friendship, the duo traveled to Poland together. Erik had no idea what Dan was cooking up until somewhere between four and six vodkas in, Dan turned to Erik and said, “So, I have this idea.” And ProdPerfect was born.
What inspired you to start ProdPerfect?
We got started because we realized that in the world of web development and software development, there have been a lot of great advancements with data and analytics that have helped build products better, but quality assurance had been left behind.
QA had always been this redheaded stepchild. Mark Zuckerberg famously said, “Let’s move fast and break stuff.” QA was always an afterthought. QA didn’t have the resources it needed to be good at its job. And because it wasn’t good at its job, it wasn’t sexy.
A lot of the advancements in technology that had been affecting other areas of web development could be applied to QA. What we want to do with ProdPerfect is bring data-driven decision making to quality assurance.
How is ProdPerfect’s approach different than traditional QA testing?
The biggest problem in quality assurance web applications is people don’t know what to test. We’re taking the user traffic from the current application to tell you how your users are using your application. Let’s test the things they’re trying to do to make sure that those always work.
And that’s what ProdPerfect does. It takes the data from how people are using the application and writes tests that reflect it. So our customers are confident that whenever they ship code (make an update), they haven’t broken something about their application that’s important to their users.
What’s the biggest challenge ProdPerfect has faced as a startup?
The biggest challenge for us is that the product we’ve built is fundamentally disruptive. ProdPerfect is not a better mousetrap. We’re going to people who have spent the past 20 years doing things a certain way and telling them: You need to let go of having a feeling of control over what gets tested because machines using data are going to make better decisions than you.
We’re asking them to take this big leap into the future, into the unknown, where they’re not personally in control anymore. A lot of people said nobody’s ever going to sign up for this because of the sales challenge. They were wrong, but it was hard.
Has growing so fast been difficult?
We had our first sale four months into the business with three people. It was this recurring revenue sale, and we very quickly had to get some sort of financial control over our business. We had to understand where we were spending our money.
FINSYNC has helped us create a level of predictability around what we’re spending and taking in, and what we’re likely to spend and take in, so that we can make budget decisions in order to keep the pace that we’ve been keeping.
That’s been mission critical for us. I need to be able to report what our revenue looks like, and we need to be able to raise money on this.
How does FINSYNC help you run ProdPerfect?
FINSYNC helps with the centralization of everything. The platform can do everything I need as far as paying people and taking money in, and then it knows where all that money is and where it’s gone. And I can print a report on it, which is great.
We don’t have anyone who’s going to sit there with a spreadsheet and do that all day. There are only three of us, and two of us are trying to build a product. That’s one of the biggest challenges that FINSYNC has helped us solve. I don’t have to do the work, and I don’t have to hire someone.
Everything is in one place and we’re able to tack on FINSYNC’s bookkeeping concierge. At the end of the month, I can go look at my books and know how we’re doing with the budget. In fact, I can look week to week and know how we’re doing with the budget. And I can make decisions on it with a short amount of time and a very tight level of data.
Has ProdPerfect had trouble accessing capital?
We ended up raising a substantial equity round, so we don’t have cash flow issues right now. But knowing that we can get access to working capital from our future invoices through FINSYNC helps me sleep at night.
We’re in a SaaS business. And the SaaS curse is that you throw all this money at bringing on customers, you have this cost to acquire a customer, and then there’s a time period for it to payoff. Because of that process there’s normally a fundamental limit to how quickly you can work because of your working capital.
With FINSYNC, we can get a credit line with an extremely competitive rate on our invoices. With the knowledge of our customer acquisition costs and a history of revenue generation, FINSYNC provides guidance into our future revenue, allowing us access to capital.
The working capital crunch that limited growth — we just strategically eliminated that problem. That problem is gone. And it will never exist for us again.
Is there anything you would do differently if you could go back?
Yes. One thing that took us way too long to do was figure out what channels were bringing us the most customers. We spent a ton of money on customer acquisition channels that weren’t working.
And all I needed to do was spend four hours, which is a terrifying amount of time in a day. But it’s a one-time four hours to step back and do the math. Let’s see where these people are coming from, who’s closing, and who’s actually turning revenue for us. And we found that of the eight channels we were working at, six of them were a waste of time, two of them were great.
It turns out we could do less work and get more out of it because we were smart and we made some fact-based decisions. Obviously FINSYNC financial control was a big part of being able to do that in four hours.
Any advice for startups out there?
When people with an idea ask me about how they should get started, I usually say get a better idea. Your consumer app is probably not going to work. If you want a start-up idea that’s actually going to be a good use of your time, the idea needs to be a completely unique solution to a very expensive problem for a lot of people.
So those are the three key things. You need to be the only one with it. People need to be willing to spend a lot of money. And there needs to be a lot of those people. And if you can do that, you’ve got a good startup idea. And then you should go build it.
The other thing I learned is that a lot of people are going to give you advice, and it’s probably wrong. If someone listens to you for ten minutes and they say do this thing differently, they’re probably wrong. If you have conviction that the way you’re going to do something is going to work, stick with it.
You’re the startup founder. The whole point is that you’re disrupting the things that normally work. If you just did the things that normally work you wouldn’t have a startup. You would just have a regular small business. But if you want to go disrupt things, you’re going to be breaking rules.
If venture capitalists and other startup founders are uncomfortable with the rules that you’re breaking, it means you may very well be doing something right.
Erik Fogg, Founder of ProdPerfect