How a Cockroach Startup Became a $2.2B Market Leader | EliseAI, Minna Song

1. 0:00 – 2:16

   Intro

   1. SPSpeaker0:00

      If you want to be the best company in the world, I think you have to work the hardest in the world. It's like anything else. If you want to be the best athlete, you want to be the best musician, you're practicing non-stop. Work in a s- tech startup is exactly the same thing. When you don't have a lot of money, that's not something that you can kind of fall back on. You have to do everything yourself, and you should. Talk to all of your customers, handle all of your customer success support tickets. You should do sales yourself. That helps you really focus on exactly what your customers are asking for and what they're willing to pay for. When we launched our product with our first national customer, we were just two people at the time. It was just me and, and Tony, my co-founder. It was a 24-hour service, so that meant he stayed up until 4:00 AM, and I woke up at 4:00 AM and watched it. That was probably the most physically draining [laughs] time, but we were able to survive. Yeah, it was a really exhausting time, of course, but it doesn't really matter. You have problems. You have customers that need things. It's just about every single day doing everything that you can prevent your company from dying. And even when you're exhausted, I think that's pretty motivating. It's a stressful thing to start a company. It's a stressful thing to work at a, at a startup that's growing. You have to take one step in front of the other just to solve problems over time. Being a cockroach, where you can't let anything kill you ever. My name's Minna Song, and I'm the co-founder and the CEO of Elise AI. Elise AI is a tech company that uses AI to drive real-world impact, and we are starting with two of the most critical industries that make up over 40% of the US GDP, the housing industry and the healthcare industry. Elise AI is used by over 10% of the US apartments today, and over two-thirds of the largest property management companies use our software. We raised a $250 million Series E round, which was led by Andreessen Horowitz and participated in by Bessemer Venture Partners, as well as previous investors, Sapphire Ventures and Navitas Capital. Our company has been doubling consistently year over year for the last four years, and we passed 100 million annual recurring revenue earlier this year.

2. 2:16 – 5:17

   Why 90% of Founders Fail to Find PMF (And How Not to Be One of Them)

   1. SPSpeaker2:18

      I met my co-founder in college. So while I went to MIT, he actually met him studying abroad at the University at Cambridge in the UK. So we, we both come from software engineering backgrounds and felt that we should apply technology to doing something good in the world. I think it's pretty obvious tech is the fastest way to bring massive scale impact in the world. So it was pretty clear that we were gonna start a technology company someday. When we started Elise, we actually wanted to start understanding the industry that we were operating in and really knew nothing about the housing industry except that we wanted to do something really, really big in it. And so when I got started, I started working at a real estate firm here in New York City, and that gave me a great opportunity to meet a lot of people. So I took a front desk job where I greeted everyone who came through the door. I picked up all the phone calls, and that's how we got the experience and understanding of the industry that helped us decide what we wanted to build. I, uh, actually don't think it's extreme at all. I think it's actually quite insane when people don't try to spend time really understanding a problem before they try to solve it, and then they waste years and years of building technology that never finds product market fit. So I think this was maybe one of the most obvious, uh, and rational decisions [laughs] that we've ever made, which is just, just learn. Learn about the people that you're building for. Learn about the problems, uh, especially because we didn't come from a background in housing at all. It's really important, especially in industries like housing and healthcare, where so much happens in person. It doesn't all happen in the digital world, so you can't just look at metrics. You can't look at users and how they interact with your online products. You have to be there to understand how they're interacting with the real world. The problem was pretty obvious. I would say that it wasn't something that we had an aha moment. It was just something people were constantly complaining about. We just keep tackling those one by one. Their frustrations, they couldn't reach a building. No one's answering their phone calls. No one's answering their emails, and so that's the exact problem that we tried to solve. It wasn't really a question about what the problem was. It was really a question of is the technology the right technology to solve the problem, and was it the right time? In 2017, a lot of people didn't know what AI was. A lot of people didn't believe that AI could answer their emails. A lot of people didn't believe that AI would do things better than humans in any capacity. A lot of people thought this market was small because companies that had been built in the industry before never grew to be that large of companies. But I can see that other people over the years have, have not seen real estate as a sexy industry, but I think housing was always sexy to us because it's a fundamental human need. It's an incredibly important part of society and our lives, so why wouldn't that be sexy?

3. 5:17 – 7:41

   Brutal Lessons From Our First 10 Customers

   1. SPSpeaker5:20

      The first 10 customers were really brutal. We were cold calling. We were knocking on doors all across New York City. We got lucky with a few customers who signed on, and then we started selling to, to national property management companies. It was pretty crazy that we ended up signing the first and second largest apartment owners at the time onto our platform for their entire portfolio, and we were just two people at the time. It was just me and, and Tony, my co-founder. So we had these large customers buying into a product that two people had built that was meant to run their entire real estate portfolio. How we convince these large customers to work with us. I remember I went to a meeting, it was me and 12 executives, so all of their C-level team essentially sitting in a room with just me. I was in my young twenties. It was three hours of asking me a ton of questions. "Can your product do this? Can your product do X? Can your product do Y?" And honestly, I think I said for three hours straight, I just said, "No, it doesn't do that." And, um, I walked out of that meeting, called my co-founder and said, "This was the worst meeting of our lives. Just forget it. That deal is dead." And then the next day they called me back, the COO called me and said, "We're gonna do this together. We're gonna help you build the product." They knew we were early. We were not hiding the fact that we were a tiny startup, but they believed in us because they believed they had a big problem and that they could work with honest founders to actually solve that. I think when you're working with your first few customers, you have to build a lot of things that they ask for. A lot of people are really afraid of building too much or over fitting for certain customers, but the reality is that fear will paralyze you. You really just need to build what they ask for, and then as you get customer two, three, four, it'll give you a lot more data points and maybe you've built something that's not sustainable in the long run. But quite honestly, I believe that your first customers, you will have to service that forever. That's a really common attribute of early adopters is they want a lot of control. That's why they picked to work with an early stage startup in the first place. But they do want a lot of control, and usually they wanna dictate what your roadmap looks like. I'd say don't be afraid. I, I think you will make mistakes, but that's a normal process I think in, in building a massive company.

4. 7:41 – 9:27

   Only Cockroach Founders Survive

   1. SPSpeaker7:43

      In our first round of funding, we had literally over 100 rejections. A lot of the rejections were the same. They're like, "We're not interested in this market. We only look at horizontal SaaS, or we only look at enterprise SaaS." And things in the housing industry were not really interesting to them. When we didn't have a lot of funding, we really just relied on ourselves and our ability to build features that our customers were asking for. I think we were cash constrained, so we didn't have huge engineering team to build lots of features in parallel. But I think that prioritization helped us build the things that were absolutely the most critical, that had the highest amount of value, not ancillary features or features that were just providing kind of optics for customers to, to think that they were kind of feature full products. So I think money doesn't actually solve a lot of problems. I think when people raise a lot of funding early on, they, they think that they're successful and they throw a lot of money at problems and, and think that those problems are solved. But really what happens is those problems end up doing and growing and, and they're still there. And when you don't have a lot of money, that's not something that you can kind of fall back on. Your problems are very obvious and you know if you solve them or if you haven't solved them. Eventually, as we started building a track record of showing real growth in the company, investors started to see what was possible. Yeah, it was a really exhausting time of course, but it doesn't really matter. You have problems, you have customers that need things. You have to take one step in front of the other just to solve problems over time. Being a cockroach where, um, you can't let anything kill you ever.

5. 9:27 – 11:59

   The Secret to Hypergrowth

   1. SPSpeaker9:28

      What's our secret sauce? I think a lot of our growth has come from building a lot of products. No matter what customer we're pitching to in the housing industry, we have a product that solves the problem that they are thinking about today. So whether that's something about their leasing process, whether it's something about their maintenance process, we have a solution for them. And that's really just come from having really high product velocity as a company. Another big reason is that we've just hired really, really well. I've spent most of my time focused on getting the best and most talented people I can possibly get. I interviewed, personally interviewed the first 400 hires that we made. It's been incredibly important to have really strong people because when you're moving so fast and you have so many different products, it turns out that a lot of people have to make decisions themselves. And you need to have really smart and really hardworking people that are going to move the company forward. Because if you're moving quickly, the CEO cannot make all the decisions for you. The CTO cannot make all of the tech decisions for you. You need everyone to have really strong business acumen. One of the most painful hiring mistakes I made was probably around 2021 when we were raising our first big round of funding our series B. And, um, I hired a ton of people who were really good at specialist roles. And the challenge I was trying to solve was that everyone, everything was so chaotic. Every early stage employee was working on five different things, and the constant complaint was, "I can't get anything done well because I keep switching context all the time," which is a very common early stage company problem. And then I decided to solve that by hiring people who are kind of really good specialists. So if somebody was doing five things, now they could pick the one that they re- really wanted to do, and then you'd hire four other people that were specialists. The problem is everyone started losing the context. So they'd be building really well, but in five different directions and the company was not moving forward. We were not building products that our customers cared about. We were not selling products that our customers cared about, and it was just way too early to make those types of hiring decisions. So I went back to really valuing generalist hires, and I found that we could move a lot quicker if a lot of people were able to context switch, were able to have success across many different domains, whether that was sales or customer success. They could think technically at the same time as speaking with customers, and those ended up being some of our most valuable hires for a very long time.

6. 11:59 – 14:50

   Forget Shortcut, Just 24/7 Grind

   1. SPSpeaker12:00

      When we launched our product with our first national customer, we needed to keep the service running 24/7. And this was the most important deal of our lives. It had to go perfectly. So Tony and I were monitoring the system 24/7 because we knew this was our shot. He stayed up until 4:00 AM, and I woke up at 4:00 AM and watched it. And by the way, at the same time, we were building new features with this customer. We were trying to sell new customers. We were trying to support our existing customers and other portfolios that we had signed on. So that was probably the most physically draining time. I still work seven days a week, 90 hour. 100 hours is not really sustainable. That's when you're actually starting to eat into sleep and, and deteriorating over time. But 90 hours is sustainable. It just means you wake up, you go to work, and you go home, and you go to sleep, and you get proper sleep, and then you just do it again tomorrow. And you do that every single day, and that is how problems get solved. I think that my suggestion for founders is always if they're not working seven days a week, they're not growing their company as fast as they should. Their company is going to be beaten by another company that is working, uh, their founders are working seven days a week. So that's just extra time and effort that will accelerate the growth of your company. If you wanna be the best company in the world, I think you have to work the hardest in the world. It's like anything else. If you wanna be the best athlete, you wanna be the best musician, you're practicing nonstop. Tech startup is exactly the same thing. The culture here is filled with a lot of people who just really like solving hard problems, and you're surrounded by so many people that have this type of culture. There's this kind of intense gravity that when you bring in new people, they feel that energy, and they really wanna meet that bar. I actually think that most of the next unicorns will be products that are built in unsexy industries. I think a lot of the most important problems that are left to solve in the world are problems that are typically deemed unsexy. If they seem sexy, that means people are already very excited about them, and they're already trying to solve them. And so long term, everything that we try to do in housing and healthcare is to make these industries much more financially stable and much more attractive so that we can have more housing providers, and we can have more healthcare providers. And that serves all of us. And we want capital to be put in the most fundamental and important parts of society that serve us as humans. [upbeat music]

Episode duration: 15:00