PAT:
Welcome to Like a Glove, the startup podcast about product-market fit. I’m your host, Pat East, and also the executive director at The Mill. In today’s episode, I have with me cofounder and CEO of Civic Champs, Geng Wang. Welcome.
GENG:
Thanks, Pat. It’s great to be on.
PAT:
Awesome. Thanks for being here. Full disclosure, I have just made my second investment in Civic Champs. My wife and I did just this week, so we’re really high on Civic Champs and Geng in particular, and so I wanted to have him on the podcast to talk about product-market fit obviously, but specifically what he’s doing with Civic Champs. We’ll also go into his previous two companies to talk about product-market fit there and how that went.
GENG
That sounds great, and super excited to have you and Jamie keeping supporting us.
PAT:
Yeah, we’re happy to. So let’s start off with, what does Civic Champs do?
GENG:
Yeah, so Civic Champs helps nonprofits, and we give back capacity to nonprofits by automating their volunteer management process, and then we help them increase funding by converting those volunteers to donors.
PAT:
And so why is increasing their volunteer capacity important? I mean, I assume it is, right? But yeah, what are the reasons behind that?
GENG:
So I think at the most basic level, you’re talking about professionals who have gifted skills in terms of managing events or engaging volunteers. And a lot of their time is actually taken up doing fairly clerical work. And so if we can give them back that capacity, they can do more good in the community. And so I think that’s sort of first and foremost on why that’s the most important piece.
PAT:
And so why are they doing so much clerical work around volunteer management? Is that the right term?
GENG:
Great question. Actually, that’s something that we asked ourselves—why does this sort of industry work the way it does today? I think a big part of it is just that as an industry, nonprofits are more underserved by our tech community. There’s not as much overlap in terms of technical talent and the folks that tend to be interested in nonprofit work. And so as an industry, it just hasn’t had as much attention. A lot of the sort of work that we’re talking about is—if you think about when you show up, you have a paper sign-in form, right? And then someone else then has to manually type that information up, put it into some sort of database, and that just takes a lot of double-work, if you will. You would never imagine a consumer-facing company like, let’s say Starbucks, doing a paper form for its customer loyalty programs. That just would seem ridiculous, but that’s sort of how it works today, and everyone sort of has felt that experience.
PAT:
And so really, the nonprofit world, because of lack of tech talent, focus on a need to catch up to more consumer-facing apps that are already using technology to help run their businesses.
GENG:
Right, right.
PAT:
Okay. Got it. Got it. Tell me, what’s your definition of product-market fit? Everybody’s definition is slightly different. That’s part of the reason why we’re doing the podcast is to educate the market. What’s your definition of product-market fit?
GENG:
So for me, the definition is having a product that the market’s willing to pay for at a volume and price-point that can keep your company growing and sustainable. That’s sort of for me, product-market fit.
PAT:
And so what’s sustainable for you? Is that cashflow breakeven? Is that, Hey, this company is going to last forever and ever? If this keeps growing?
GENG:
For me, cashflow breakeven is how I think about it.
PAT:
And so at what point do you think you’ll have product-market fit? The way you’re defining it, if you’re cashflow breakeven, that is a lagging indicator. And so you could potentially have product-market fit before then, but you aren’t going to know it. How far away do you think you are from it then?
GENG:
We have a ways to go for the general market. I think we’re getting much closer for subsets of the community. So in particular two come to mind. We’ve had really positive and surprising traction with private schools. So they actually use Civic Champs to manage their parental mandatory volunteering programs. So parents have to volunteer at these schools, otherwise they have to pay a fee of 200 to 300 dollars a year to make up for it. So there’s a lot of incentive for the parents to do it. And then the school, it’s easier for them to manage that program.
And then the other bucket of nonprofits that seem like it’s closer to product-market fit are folks like a Habitat For Humanity. Their characteristics are that they have a lot of volunteers that they report on, that volunteering number and the hours. It’s really important for them in terms of their messaging and fundraising. And it’s a very frequent event for them. So they have multiple builds typically throughout the week. So this is sort of a recurring pain point, and they have the budget to pay a decent amount. So those are two buckets that we are the closest to, I would say. And then the broader market I think will take a little bit longer.
PAT:
So in both of those cases, you got a group of volunteers, so you’ve got a lot of people that you need to manage. In the first case, there’s a really compelling reason for the private school to use Civic Champs because they have to manage all of these people. The volunteerism is mandatory in that case. It’s compulsory. In the second case, with Habitat, it’s recurring. And so the problem always comes up.
GENG:
Right, and it is a core part of their business model. They couldn’t build these houses without the volunteers. It’s how they save on costs. For their donors, they can just talk about how it amplifies the donation. So you give me X amount, and all you need to give me is either the land or just the materials, and the house almost comes for free, so to speak, in terms of labor.
PAT:
So is that kind of the case with the private schools where it’s almost built into their model of “Okay, this is just part of our culture. This is how we operate. We’re going to use volunteers to run whatever programs.” And so is that really the types of customers you need where the volunteerism is really truly baked in?
GENG:
Yeah. I think those tend to be the best fit for us. There’s other folks that we serve obviously, but those seem like right now they’re the best fit.
PAT:
What other markets could you potentially go into where that volunteerism is really baked in? We do volunteerism at Hanapin, my other company. It’s a digital marketing agency. We’ll do volunteerism on Martin Luther King Day and throughout the year with volunteer time off, but it’s not truly baked into our culture. It’s not a recurring pain point, so we could be a client, but we aren’t, yet. What other industries could you go into where it’s really baked in?
GENG:
So politics, a lot of folks have talked to us about that. They need a little bit of a different toolkit if you will, but that’s certainly baked in, whether that’s canvassing, phone banks, et cetera. You rely on your volunteers. There’s just no way to fully staff that, so to speak. The other folks, Habitat’s an example, but you have your food banks, you have just anything that has a lot of labor involved in the model itself that’s volunteering-based tends to be good.
PAT:
Great. Tell me, when you first started working on the idea for Civic Champs, what were the first steps you took to vet out the idea to make sure that it was viable?
GENG:
So Civic Champs has already pivoted once. So we did pretty early pivot. So our original idea was actually to be the Pokemon Go for volunteering, with the idea that there’s no easy way for people to volunteer today in sort of small time chunks. So whether that is five minutes here, five minutes there. You can play video games on your phone in small increments, but you can’t do that in terms of doing good. And so that was the original idea, and we were going to have people take, let’s say, pictures of fire hydrants and streetlights and then create these digitized maps for cities, et cetera, as different campaigns that they could work on.
The pivot happened essentially when we started talking with different agencies and nonprofits. And what we realized is that they just have much more fundamental pain points that are more pressing for them that we can help address, especially as we started thinking about how do we apply some of those interesting game mechanics and technology to solving more mundane topics like tracking your volunteer hours or scheduling them and engaging your volunteers on an ongoing basis. So that’s really what we ended up doing. But the original idea and how we got there was really through a process of talking to prospective customers.
PAT:
So how many . . . It’s interesting that you already had a pivot really right at the very beginning from your original idea. How many customers did you talk to before you realized, or potential customers, before you figured out, okay, we need to change the idea of it?
GENG:
So I think we probably at that point talked to 30 or so consumers, so potential volunteers across different ages. We did some surveys. And then we talked to, I would say 15 to 20 organizations around that time before we pivoted. So I think that was like five city departments, Visit Bloomington. There was a number of nonprofits that we get engaged with. And so once you start hearing sort of consistent things, and you tend to hear that starting in sort of interview 10 or 12.
PAT:
Okay. So you start to pick up on recurring themes in 10 or 12, or at least to be able to identify them. They’re probably saying some of those things through one through 11, but you start to hear them truly at 10 or 12. So let’s take one step back. So when you had the idea for Civic Champs, it was a gamification for consumers, and now it’s more volunteer management for the organizations. How did you come up with the original idea to do Pokemon Go for volunteerism?
GENG:
So the inspiration was I was helping create the CSR program for my last company, and so that’s Corporate Social Responsibility. And we were thinking about doing a day of service within the community. So thinking about who and what kind of nonprofits do we partner with, what makes a good fit? And part of the pain point of that was everyone has to take a half day off of work. That’s actually a decent amount of commitment from a company—to say my whole team, that’s a lot of money that I’m not being productive with. And then that triggered my thoughts on my personal volunteering and thinking, oh, I wish I would do more, and why do I not do more? Part of it is actually, well, I have two kids now and it’s harder for me to take a whole Sunday off to go and volunteer. And so what if there was a way to make this fun and easy and casual? I happened to be playing Pokemon Go at the time.
PAT:
So Pokemon Go was kind of big at, well, it still is big, but then it was very much in the zeitgeist, and so that led to some inspiration for Civic Champs. That’s cool. I didn’t realize that. Tell me about when you were doing your initial customer interviews, you talked to a lot of folks and started picking up on themes between interview 10 and 12, how do you know you interviewed the right folks and you didn’t bias your sample somehow?
GENG:
I can’t say that we knew that we had the right folks. We tried. When I talked about talking to consumers, we tried to have a wide spectrum of folks that we talked to by age, by location, similar with the nonprofits. We said, hey, let’s talk to different types of nonprofits and see what their reactions are. That said, it’s hard that early to say, I’m not going to have any bias. I think for me the most important thing was: is what I’m hearing, does that make logical sense? Is it consistent enough that I have enough belief to start to go down this path? And then is the pain point strong enough for me to believe that they are actually going to pay for this?
PAT:
So there were really two big things that I heard in there. One was that the pain point was big enough and compelling enough that you felt, “Okay, let’s explore this some more.” But in general, you started here, it was logical enough to you the conversations you heard that, “Okay, this isn’t necessarily 100% the absolute idea that we’re going to execute and this is the vision of the company, but at least this is good enough to start with.” And then you could figure out things from there.
GENG:
Yeah, it was good enough to do our initial hypothesis. A company launches, and I think folks have talked about it as your initial hypothesis on what would work, and then you go out and test it.
PAT:
Right. So a startup is an organization that’s trying to find the business model. And so you’ve very much treated kind of the initial proposition like that. You’re trying to figure it out.
GENG:
You search for product-market fit. You don’t have it right away.
PAT:
Awesome. So earlier you mentioned that you feel like you have product-market fit maybe with a couple of segments, private schools and in these organizations where there’s recurring volunteers or a big volunteer groups. How far along for the rest of the market, you said it’s probably going to take a little bit longer, how far along do you think you are from figuring out product-market fit from there? Or do you feel like you’re there, and it’s just going to take time to market to them and acquire customers?
GENG:
If you think about if this core group was a small circle, and then we have concentric rings around it in terms of different, similar types of folks, I think we’re pretty close in a number of other groups. So for example, we actually had a new partnership with the National Mentoring Partnership, and—
PAT:
This is mentoring.org?
GENG:
Yeah, mentoring.org. Yep. And so that could be a really great fit for us as well as we launch in the next month or so where we, instead of just tracking volunteer hours, we actually track the engagement between the mentors and mentees. So that seems like a very close, one too. And now each time we get to better fit, there’s always also this sense that we can do even better. The way I see it is that even in the next three months or so, I think that that sort of circle of folks that we can serve who would really love the product is going to be actually quite sizeable.
PAT:
And so what makes you think that in the next three months that that circle gets that much bigger? Is it just kind of a gut feeling, or are there things that your customers are saying to you or prospects sayings to you that make you feel that way?
GENG:
For example, when we talked about the Habitats of the world, for a long time we didn’t have a scheduling tool. We just tracked hours. And so today, we actually launched our new scheduling tool so you can easily sign up for something. And then sort of the magic that happens is that if you’re signed up for something and you show up on site and you’re using the Civic Champs app, it will automatically check you in using sort of geolocation information. And those are features that we actually had signed LOIs for, to say, “Hey, I would love to use Civic Champs, but you really need a scheduling tool.” And so we had again, a number of conversations that pointed us in that direction. And so that’s part of what gives me confidence is having these conversations that say, okay, if we build these three or four features, we know that sort of the circle gets larger because these are things that people said they’re willing to buy. Some of them have even signed LOIs around it. That’s I think the big thing that gives me confidence.
PAT:
And so in those instances, it wasn’t just prospects saying, “Hey, if you build this product or feature, we’ll sign.” It was them signing an LOI, a letter of agreement [intent]. Can you go into the mechanics of what an LOI is? How is it different from signing an actual contract and why it’s important in these cases?
GENG:
So LOIs are nonbinding. It’s not an actual commitment so to speak, but it’s, psychologically, I think, mentally, though, it gets an organization to be that much closer to actually signing a contract. They’ve, in theory, agreed to pay you X amount of dollars. So you usually have a price point on there, and you’re very explicit on sort of the missing things or elements that you need to do to get them over the hurdle, so to speak. And it’s important because from a fundraising standpoint, you can also show investors that A, you’re being smart about your product roadmap by actually finding things that people are willing to pay for. And B, if your revenues aren’t as high as you’d like them to be, or maybe even if they are, you can show that there’s this other stream that’s just waiting out there for you.
PAT:
So it does show potential investors kind of what the pipeline looks like, but it’s more of a true and real pipeline of somebody who has quite literally signed a piece of paper. It’s nonbinding, which means that if they don’t want to go forward with it, they don’t have to. But it is kind of a psychological hurdle that they have to get over. And with your LOIs, did you do them yourselves, or did you have an attorney write them?
GENG:
I think we just did those ourselves. There’s lots of great templates out there online. I think YC puts out a number of great templates for investment or even for SaaS contracts.
PAT:
So super easy to do.
GENG:
Yeah.
PAT:
I imagine the other part about an LOI isn’t just the psychological factor of signing your name and saying, “Okay, yes, I commit at least in concept to paying you money once you have these,” but it kind of forces a conversation internally at the prospect of, “Okay, are we really going to move forward with this?? versus just a one-on-one conversation that maybe somebody can have independent of needing to talk to anybody, right?
GENG:
Yeah. And most of the organizations I’m talking about, it’s usually the executive director who’s signing the LOI, and they’re able to make that decision.
PAT:
So this is your third company, right? So tell me about the two previous companies. What were the two companies’ names, and what did they do? Just to start off with.
GENG:
Right. So my first startup, its name was Rent Jungle. We were the apartment search engine or Google for apartment search. And then the second company’s name was Community Elf. It’s recently been rebranded as Cosmitto, but it was a social media management agency. And so we focused on the day-to-day doing of social media, posting on Facebook, Twitter, et cetera.
PAT:
Gotcha. And so Rent Jungle was first, then Community Elf?
GENG:
Right.
PAT:
Okay. So let’s talk about Rent Jungle first. Do you feel like . . . I mean, you ended up selling both companies.
GENG:
Yes.
PAT:
And so for Rent Jungle, did you feel like you had product-market fit at that point once you sold?
GENG:
Yeah. Well, I mean, most people aren’t going to buy you if you don’t have product-market fit. So Rent Jungle is interesting. I think even today I feel like there’s still elements that can be done better. What Rent Jungle did a really great job of was the long tail search. So the thesis was that because we had the greatest number of rental listings and sort of the most data behind it, if someone was searching not just for, let’s say, apartments in New York as a generic search, but saying, “I want a three bedroom apartment in New York with a high rise view of the Hudson and dryers and washers included.” And that’s what they typed into Google. That’s where Rent Jungle—
PAT:
That is an amazing long tail search.
GENG:
Right. But you’d be surprised, as people got better and better using Google, they tend to do longer and longer tail searches because they know the more specific they are, then the better the result is going to be for them. And so that’s what Rent Jungle really excelled in. Most of our traffic really was driven to us by sort of organic search engines.
PAT:
And how did you figure out that kind of this long tail and utilizing Google was what your customers really wanted and needed?
GENG:
I don’t think that was the original thesis. I think the original thesis was that if you had the greatest number of listings for a user, that in of itself is very valuable. I like having the ability to see the full market. I think for certain users, I think that’s true, to say, “Hey, I don’t have to go to these other websites.” The same reason you use Kayak for travel, et cetera. I think that thesis was less strong than sort of what ended up happening, which is we specialized in sort of this longer tail.
PAT:
Gotcha. In the case of Civic Champs, you started off with one idea, pivoted over to something else. In the case of Rent Jungle, started off with one idea and really kind of kept that same idea, and it was just a slight pivot.
GENG:
Yeah. Or the niche of users that were really excited about us was not perhaps what we first envisioned, or it was one of the groups that we envisioned, but they were the ones that were our champions.
PAT:
So it was the same market in other words, whereas Civic Champs is a completely different market. Right? Your customers aren’t consumers, your customers are the nonprofits. In Rent Jungle, customers are still the same. It was a subset of those. And so you figured that out probably just via Google analytics.
GENG:
Mm-hmm. I mean we had sort of flat growth and then just, it felt like out of nowhere, maybe four or five months in, we saw just this 10-20% week-over-week growth for three months. It was just ridiculous, something—
PAT:
The hockey stick.
GENG:
Yeah, the hockey stick happened. And you’re just like, whoa, I don’t understand why.
PAT:
Let’s do more of that.
GENG:
Right. Whatever this is, let’s do more.
PAT:
So tell me about Community Elf, now rebranded as Cosmitto. That was a social media management agency, posting status updates, Twitter and Facebook status updates. So you sold that one. So presumably you feel like you had product-market fit there.
GENG:
Yeah, it was a service company. So even from the get go, from a gross margin standpoint, it was always sort of quote unquote profitable. And the only question is could we scale to get enough customers per rep to sort of make it profitable as an enterprise? And this was 10 years ago, and so posting on social media was very novel. I think the real challenge was that it was actually relatively easy to sign up new customers because everyone sort of needed this.
PAT:
They didn’t know how to do it themselves.
GENG:
They didn’t know how to do it themselves, and they needed help. So we ended up signing a lot of folks pretty quickly. I think the challenge was really on the retention side because a lot of folks had no idea why they wanted social media. You had car dealerships.
PAT:
Everybody’s talking about it, but why do I need to keep doing it?
GENG:
Yeah, yeah, exactly. There’s no thesis behind why they wanted postings, and we happened to be a great service that made it cheap. But then what we needed to do was really think about for each of these sub-markets, what drives ongoing value so that we can keep them. So that became sort of the main challenge over the long run.
PAT:
And so on both of these cases, Rent Jungle and Community Elf, now Cosmitto, you figured out kind of what the sub-market was. You started off with one market and figured out there’s a sub market in there that really likes your service. And so you honed in on those?
GENG:
Yep.
PAT:
For Community Elf, how did you figure out what those sub-markets were? Just conversations with customers?
GENG:
I feel like this is the same, and maybe there’s a better approach, but for us it’s always been the scattershot approach. So we started with apartments because that’s the industry we knew, and then we said, “Oh, what looks like an apartment?” Well, car dealerships and any sort of the classified site, restaurants, et cetera. And so we went there, they wanted to sign up. And then we said, “Oh, what else could we do?” And so we started doing brands and white labeling for agencies. And actually in the long run, that was a big part of our business was actually the white labeling service for other agencies. Because let’s say a large agency often has great work in terms of graphics and messaging and design, but it’s pretty expensive when it comes to doing your ongoing maintenance. What we could do is really operationalize that and say, “Give me the messaging, give me the strategy and I’ll do all the work for you.”
PAT:
Very cool. And so that was kind of a pivot as well. It wasn’t just, “Hey, let’s get you started doing social media” 10 years ago, which was extraordinarily novel. It’s, “Hey, let’s figure out how to operationalize this for you so we retain you as a customer?”
GENG:
Right, right.
PAT:
Tell me, in addition to being CEO of Civic Champs, you’re also an EIR—Entrepreneur-In-Residence—at Purdue at West Gate and Kelley Business School [of Indiana University]. And so in your roles at those two institutions, what do you see as the biggest product-market fit mistake that startups usually make?
GENG:
Ooh, that’s a tough one. I think the biggest thing I see, so at times you’ll see the solutions looking for a market, and that can be tough. I think the biggest thing I still see is not launching quick enough and just getting to market and getting that early feedback, and really that’s usually held back by this wish for more technology, or a better solution or this ideal solution as opposed to, I think this is not super novel, but really getting out there, getting initial feedback on a true MVP that can prove different parts of your thesis, if you will. So “Will my customers do X? Oh, they will. Well, the other part of my model requires this. Will they do this other thing?” And just getting out there and getting that real feedback early on without getting bogged down.
I think the other thing that I see once in a while is people that are close to product-market fit or getting pretty close but decide to pivot because they want to chase something a little sexier. Because a lot of the companies, because we’re based in Bloomington, are led I think by young students, they sometimes go for that bigger market that they think they can build the multibillion-dollar company in when their original idea was more niche but potentially a better way to start.
PAT:
So why do you think they go after these bigger markets? Because who wouldn’t want to go after a bigger market? So why is that necessarily a bad thing?
GENG:
It’s not necessarily a bad thing. I think your model, your expectations, your funding are very different. So I’m hesitant on giving specific examples.
PAT:
We’re a small community.
GENG:
Small community. But I think, and this is not my advice—so if you think about, I think maybe it was Peter Thiel saying, “Hey, what you really want is a small group of fanatical users that you can focus in on and build a product for them first and then grow from that.” Whereas I think I had this issue probably, too, which sometimes that doesn’t seem as sexy, and you say, “No, well, that’s too small of a market.” And you might get some feedback from even investors that say, “Oh, that’s too small of a market.” But really, as long as I think you have the vision of how to get to that big market, that’s totally fine. And you don’t have to go after everyone at the same time.
PAT:
So some of that feedback on it not being a big-enough market might be from investors who obviously want a return on their money. They’re investing for fiduciary reasons. But just because they want a big market to finish with doesn’t necessarily mean they want a big market to start with. But maybe that’s some of the things that startups think they’re hearing is, “Hey, we need to start off with a much bigger market.” Is that fair?
GENG:
Yeah. Yeah. Yeah.
PAT:
One of the things I heard in an earlier answer was about folks wanting to wait until there’s better tech to be able to get that customer feedback. And would you recommend that folks go out and get feedback without any tech?
GENG:
Yeah, I think so. I think for most companies, almost all companies actually, you can get feedback without any technology at all. The classic example is sort of building the vaporware, essentially just the website that says, “Here’s all the stuff I do. Click to sign up today, and put in your credit card.” And then you say the, “Oh, I’m sorry, I’m just kidding. We’re not quite launched yet.”
PAT:
“We’ve got six weeks to launch” or something.
GENG:
Right. Or whatever it is. “But you’re first on our list.” That’s sort of the classic example. But there’s other things you can do. So think about Rent the Runway as another example, where they had a trunk show for their very first proof of concept. Then they went to catalogs. Then they went to a website, but all the back logistic was manual.
PAT:
Done by hand.
GENG:
Done by hand. So you can see that progression to say, “Okay, my end vision is this magical platform where dresses come to you on delivery for your big event, and all the logistics is taken care of and you can ship back in a box,” et cetera. “But what I’m starting with is just a trunk show where I literally bring physical dresses to a location and women come and they can touch it and try it out. And that’s what I’m starting.”
PAT:
And so in that particular case, what I’m hearing is there’s software, like maybe a marketing website that helps folks figure out, hey, this is a legit thing. But on the back end, it’s very much manual. So it’s true software as a service. You’re figuring out the service portion to start with.
GENG:
Yeah.
PAT:
Awesome. Very cool. All right. I think that does it for this episode of Like a Glove. Geng, can you give us some contact info of where to reach you?
GENG:
You can go to our website, it’s civicchamps.com. And there’s a sort of contact form there. Or you can reach me directly on my email geng@civicchamps.com.
PAT:
All right. Thanks a lot, Geng. I appreciate it.
GENG:
Thank you.
Like a Glove is a production of The Mill, a coworking and business incubator space in Bloomington, Indiana. Our mission is to launch and accelerate high-potential companies, and our vision is to become the center of coworking and entrepreneurship in Indiana. You can learn more about The Mill at dimensionmill.org. Thanks for listening, and be sure to check back every other Monday for new episodes.