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When These Entrepreneurs First Pitched Podium, A VC Analyst Walked Out On Them. Now, Their Company Does Over $100 Million In Annual Revenue

Before Eric Rea and Dennis Steele co-founded Podium, they were just two guys with a mission to help small businesses have meaningful interactions with their customers. Just six years later, Podium has become a company that does over $100 million in annual revenue, reaches 1 in 4 cellphone users, and facilitates over 250,000 text messages a day for over 180,000 users.

But the company’s prospects weren’t always encouraging—and while it has now raised over $200 million, investors weren’t always excited about funding Podium. Back in 2014, Rea and Steele were even walked out on during a meeting with an analyst at a venture capital firm.

To learn more about the earliest days at Podium, why it focuses on helping smaller businesses as opposed to enterprises that have deeper pockets, and how it’s helping hundreds of restaurants during the Covid-19 pandemic, I sat down with Podium CEO Eric Rea.

What Inspired The ‘Interaction Management’ Concept At Podium

In 2014, we continued to witness the upclimb of social media marketing. More uniquely, we started to see brands not only communicate with their customers online but also shift their outreach efforts to texting.

But “whenever there are major shifts in societal behavior, you see new categories open up to describe them,” Rea shared with me. “As our interactions have become more diversified and the tools we use to meet those interactions have expanded, we adopted interaction management to group these together.”

While some of the ways brands managed their customer relationships were already changing course in 2014, the Podium journey didn’t start because Rea looked for ways to capitalize on emerging markets. Instead, the inspiration was from his father, who ran a local bicycle shop that did millions in revenue yet lacked the resources to effectively showcase customer experiences online. “He literally had no tools to help him,” Rea explained.

The mission and earliest iterations of Podium were really centered around building a product that business owners like Rea’s father could use. And as text messaging became an increasingly acceptable marketing channel, Podium took what was “easy, fast, and familiar” and “what was usually a 2-4% conversion rate for DIY review campaigns suddenly jumped up to 40-50% when we used messaging,” Rea says.

The Early Days Were Like ‘Drinking From A Firehose’

As Rea and Steele continued to learn more about local businesses and their challenges, they spent countless hours building Podium—and fine-tuning it with customer discovery—to be a resource mom and pop shops could trust as a key part of their software stack. But with next to no funding support and no additional employees, getting Podium into the hands of a critical mass of users became quite difficult. 

“Dennis and I would get up, work out together, and then go sell the MVP of our product door-to-door from 9 to 3 pm,” Rea tells me. “We’d ask questions and get feedback from these local businesses the entire time. Then we went back to the spare bedroom of my apartment and took all of that feedback and wrote it into the product from 4 to 8 pm. After that, we were doing an online coding bootcamp to learn how to make it all work from 8 to 11 pm,” Rea explains.

While this process was exhausting, what it did was create a tight feedback loop between the earliest Podium customers and its first iterations. And through those conversations, Rea and Steele started to see first-hand just how helpful Podium could be to these small business customers.

While the Podium co-founders proved there was a real need for what they were doing, not everyone agreed—whether about the approach or its target customer demographic. “I still remember how one serial entrepreneur with some really high-profile successful exits came up to Dennis and me and told us that none of this would work,” Rea shares. 

Discouraged, the co-founders were tempted to just give up. But after sleeping on it, the co-founders decided to trust their own experience and keep pushing.

The Sell To Small Businesses: The Advantage And Addressing Complacency

A big point of contention with Podium’s business model in the earliest days was its target market—small businesses. In many cases, companies that are able to hit $100 million in annual revenue do so by having a few high-ticket customers. The model of having a lot of smaller-ticket customers is far less common—and one that frankly most investors and operators overlook. 

“There has been this narrative that has been retreaded over and over that somehow local business is dead, but that couldn’t be further from the truth,” Rea tells me. “There are millions of businesses that interact with their customers from a physical location. Online innovation has created a huge opportunity for us to modernize the way business happens locally.”

And that opportunity was especially clear to Podium because, in Rea and Steele’s experience during customer discovery, small businesses were happy to add to their tech stack, as most of them were underdeveloped. Aside from his company’s technology, Rea’s background would also help Podium win customers over. 

“When I would tell them about my dad’s tire shop, small business owners could relate to it on a deep level because those problems were their problems,” Rea shares.

Expanding Offerings While Scaling: Differentiating From Reputation Management Companies

While many early-stage SaaS startups tend to compete against big technology corporations and other early-stage SaaS startups, Podium’s biggest challenge when it launched six years ago was competing against reputation management companies. To win, Podium needed to offer quite a bit more than a streamlined solution to help local businesses secure online reviews—and build an ecosystem of products.

Starting with reviews, Podium now has six products that are “rooted in messaging to streamline every step of the consumer journey,” Rea explains. To give me an example, Rea referenced Podium’s Webchat widget, which helps businesses streamline customer service. Podium also provides a number of backend services, from aiding employee collaboration to the company’s feedback tool that tracks NPS scores.

Reputation management firms can’t help customers at scale due to the service-based nature of their business. But at Podium, having the last six years to scale its software service out to its customers has allowed it to learn the ins and outs of what local businesses need. Then, the Podium team builds out those features.

“When you look at having multiple solutions all working together in a solid platform that was specifically built for local businesses, we are pretty unique,” Rea says.

The Decision To Launch A Free Podium Product To Help Small Businesses During Covid-19

In light of the Covid-19 pandemic and how hard it’s hit small businesses, Podium looked at different ways it could help the community it serves the most. An idea struck Rea when he was conversing with a friend in the restaurant industry who was looking for places to send their leftover food. 

“Almost overnight, we created a program called Text-to-Takeout where we were giving the functionality of these products for free to our local restaurants,” Rea explained to me. And within the product’s first week of launching, Podium saw over 100 restaurants pick up the product. 

Through the free functionality, restaurants could place thousands of orders that they otherwise wouldn’t have had the opportunity to. “We have since expanded our Text-to-Takeout program to serve all single location local businesses in the US,” Rea shares. 

“We call it Podium Starter and it will help get these businesses the basic tools they need to start messaging right away when they need it most.”

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