The 10 Aha! Moments That Got Us to Acquisition While Maintaining 94% Control (Part 1 of 2)
My cofounder, Ting Sun and I, started Spacio in May 2014 and we were acquired by HomeSpotter in January 2019. Spacio is the industry leading marketing system for listings and open houses¹, serving real estate agents, teams, brokerages, and franchises.
We spent the first 2 years figuring out our MVP (minimal viable product someone would pay for). With consumer expectations at an all time high, an MVP is no longer what it used to be a decade ago. At the same time, with the barrier to entry in technology at an all time low, it has become exponentially harder to stand out and keep people’s attention long enough for the next iteration. Which might be the one you need to get just a little bit more traction. That was the rat race we were in for the first couple years.
When we first started Spacio, it was an open house solution with a consumer app and a business app that interacted with beacon hardware. It had a lot of moving parts. At the time, everyone was talking about beacons as if it would be the next near field technology to take off, failing to question how all similar technologies before it did not.
Our 3-part solution was the one we went to market with and while we got a lot of media attention and many pilot customers, we weren’t getting any traction. People loved talking about us because we were bleeding edge and cool, but users didn’t understand our complicated solution. And that was when I had my first Aha! Moment.
Aha! 1: Don’t confuse media validation with customer validation
It doesn’t take a lot of effort for someone to agree to write about a cool new product, but that doesn’t mean you’re onto something. We fell into the trap of confusing media validation for customer validation. Those two are not the same thing and in fact, are pretty far from each other. The media and your customers are motivated by opposite things. The media wants to talk about something that is unique and groundbreaking, sometimes the execution of that is too hard for consumers to understand. What consumers want is something that solves a problem and makes their lives better. What they need is something they can comprehend right away, and sometimes that can be uninteresting to the media.
We bootstrapped the company from the start and over a year later, found ourselves in a cash strapped position with 90-days of runway and still no product. Determined to find a way to keep going, I reached out to any investor that would take a meeting with me with the purpose of getting feedback on our idea. Investors are quick to tell you what they think is best.
I met with an investor who told me that he thought we were onto something but our product was too bloated. He said our product was 10x bigger than it should be and we should start with a feature that everyone uses at open houses. He suggested that if everyone signs in to an open house, then we should start with a visitor sign-in form and strip away all the other features. Focus on getting the first 10 users, then 100, then 1000. Make the first 100 very happy and figure out what they need rather than try to do everything at once.
I walked out of that meeting feeling relieved as I had my second Aha! moment.
Aha! 2: Keep it super simple, seriously simple
I wasn’t fully convinced yet because stripping away everything but the sign-in form would make the product too simple…right? It would also mean scrapping months worth of work and admitting I was wrong (and my ego hated that).
Why would anyone pay for a digital sign-in form? We didn’t have any other ideas and had nothing else left to lose so we decided to follow that advice and came up with what we now know as the first version of Spacio. Our MVP.
We would later go on to find out that although optically, Spacio was “just a form”, the number of features and integrations this form needed to have in order to serve multiple user types was immense. Investing in building out this complexity created the barrier to entry that elevated Spacio to the category leader.
We overlooked the power of simplicity — both how straightforward it needed to be for consumers to understand and how difficult it would be to deliver. Creating something that is beautifully simple rather than simply beautiful is hard.
We cut Spacio down to a 2-page responsive web app and got our first user, then 10th, 100th. However, it was no longer a “cool” product and I wondered about its potential and where it could go. I was a little uninspired about the new direction when a friend said to me, “Innovation is changing the way someone does something forever.”
And that was my third Aha! Moment. To this day, that was one of my most impactful epiphanies and a quote I often repeat to others.
Aha! 3: Innovation is changing the way someone does something forever
People love to talk about innovation as if it needs to be a giant leap for mankind. But innovation is changing the way someone does something forever, and sometimes that change is only incremental. In our case, it was moving from paper to digital paper.
While that sounds like common sense, we were tasked with changing someone’s 20-year habit from taking a piece of paper to their open house to taking an iPad. Even though the behavioral shift was monumental, the mental shift was small enough that we were given a chance to introduce our solution. Change happens with incremental innovation when consumers are ready to adopt, not when you are ready to give it to them. When I understood this, my enthusiasm for Spacio was reinvigorated. We had a mission — to change the way agents host open houses forever.
We were listening to our customers and making improvements to our product, but we didn’t have enough revenue to support our team. I still hadn’t figured out the greater vision of what Spacio could be. An industry conference was coming up and I knew it would be a timely opportunity to get feedback.
With our half-baked product and no clear idea of the future, I decided to let other people tell me what they thought the potential of an open house solution could be. That strategy proved to be the best thing I could have done at the time and got me to my fourth Aha! moment.
Aha! 4: Let other people tell you why you’re awesome
As entrepreneurs, we love convincing people that we have the solution to solve their problem. I decided at the conference that I would go back to the basics and let others tell me how they thought my product could be applied and where it could potentially go. I met with over 40 industry veterans who gave me ideas on how open houses impact the market. I left with a clear vision of what we needed to be and from there devised a plan on how to get there.
It was also at that conference that I met Aaron Kardell, CEO of HomeSpotter, who would eventually acquire our company 3.5 years later.
This was the first email he wrote me in 2015:
I found it comical that this CEO was impressed with the product we’ve built. We had a 2-page web app that was barely functional! Aaron had seen Spacio written up on a couple blogs and decided to reach out. I guess this is where confusing media validation with customer validation can work for you. We met briefly and became friends that often exchange ideas and sentiments on startup life.
Months later, we launched our solution with one of the largest brokerages in New York thinking it would set off a series of brokerages to come on board. That did not happen. That was when I had my fifth Aha! moment.
Aha! 5: There’s no such thing as herd mentality (in B2B)
When you’re a new company offering an enterprise solution that is light on features, companies are going to try and barter their validation in exchange for free services. They might say they are leaders in the industry and convince you that if they adopt your product others will follow. While it’s a believable story, it is seldom true. Especially in early stage B2B, there is no such thing as herd mentality.
Companies have their own priorities, buying cycles, and budgets. They’re not going to buy something solely because another company did. You’re just going to have to work very hard to get the next deal, and the next one, and the next one until you have product market fit. Even then, you will probably still have to work hard to close new deals.
It helped build credibility to get the first few logos behind our name, but having customers was never the reason we got more customers. It is important to know this so you can set that expectation and know that you can’t give anything away for free thinking the next customer will pay.
In the early days, we set a price that was consistent with where our product and market validation was. We gradually increased it as we grew. We fought for every single deal without the expectation that one would bring in another. No matter what the company was and how tempted we were, we never gave anything away for free.
We knew that we didn’t have a track record or resources behind us for anyone to believe that we would still be alive in 6 months so their business wouldn’t be compromised if they used our service (in case they had discontinue it). We knew that with nothing else to compete on, we had to compete on our word and we made integrity our greatest currency. That was my sixth Aha! moment.
- An open house is an event where a real estate agent opens up a home they’re selling for any potential buyer to walk in for a viewing. That process requires visitors to check-in with their contact info for security reasons and also for agents to follow up after the event.
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