In this interview, John Walter posed the question: “What if we make it an incentive so that if a company is willing to adopt this tool, they are also making these AI assistants more valuable? These AI assistants are becoming more useful to the consumer because they’re able to do more real-world tasks and not just write poetry.” My response dove into the complexities of market timing, lessons from past ventures, and how redefining our go-to-market strategy turned challenges into a scalable platform and successful exit. One of the hardest things—and probably not really talked about a whole lot around being a founder—is timing and gauging where the market is and where the appetite is. Then, tapping into that early traction while you build toward the bigger vision. What this sounds like to me—and I’ll tell you about Experian, which I think is super relevant here—is that the only two times I’ve really lost money in a venture were when I went direct to consumer. Your total acquisition cost or customer acquisition cost compared to customer lifetime value is typically inverted. It’s crazy expensive to acquire a customer because you’re competing for very limited wallet share. I mean, your $10 a month or $20 a month product is competing against everything else. So, the customer has to have a problem right then in order to pull out the credit card. And then you’ve got to keep them as a customer. If you look back 10 to 15 years at LifeLock, the identity monitoring company, they were pretending to be a tech company, but they were really a marketing company. They would spend $70 million a year—or per quarter—just on marketing to acquire customers. They also had a big retention problem. When we launched our second company, we went after social network monitoring for teenagers and kids—for cyberbullying, sexual predation, and reputation management. This was back in the early days of social media—around 2012, I think, when we launched. We realized that you’re asking your customers and prospects to adapt their value system in order to purchase your software. What happened was we were competing against a couple of other companies. One of them sold—I forget who they sold to—but their COO and I met one day. He said, “Man, you’ve just got to abandon this company. Walk away from it. There’s no business here.” But what we did—and I don’t call it a pivot as much as just redefining our go-to-market strategy—was I went to the identity monitoring companies and said, “Look, what we’re doing isn’t a standalone product, but it’s a great feature in your product, in your bundle.” So, what we ended up doing was becoming a platform—a back-end platform. We built out all the APIs so we had all the integrations into the social networks. We had all the algorithms to monitor for stuff. Then we went to these companies and said, “Just embed us. We’ll make it super cheap because our cost is so low.” And they all did—all of them except LifeLock, which is funny. We ended up selling that company to Experian because Experian has one of the largest consumer bases for identity theft monitoring. They’re a credit union, but they’ve got all these consumer products you’re talking about, right? So, they ended up rolling us into that. What that did was take our core product and our mission—which really stayed the same. We wanted to get kid protection, call it, at scale. DoNotPay, by the way, has raised $26 million, and I suspect a great chunk of that isn’t going into the tech—it’s going into what we’re talking about with acquisition costs. But we found that distribution, right? So, we focused on the infrastructure, the algorithms, and all of that because it is kind of a two-sided market in some aspects. This is a public episode. If you would like to discuss this with other subscribers or get access to bonus episodes, visit chriscrosby.cx
