Gabriel Flores 0:00
Hello, everyone, and welcome to the shades of entrepreneurship. This is your host, Mr. Gabriel Flores. Today I'm here with Wassim da here to get that correctly. Yeah, da here. Yeah, here. How are you doing?
Waseem Daher 0:14
I'm great. Thanks for having me.
Gabriel Flores 0:16
You're the founder of pilots. So we're gonna we're gonna talk about pilot here a little bit. But first, I want to introduce the world to us seem really, really cool name. Please give them a little background family education. Where are you calling in from?
Waseem Daher 0:29
Cheryl? I'm calling from San Francisco. But it sounds like we should just take it from the tippy top, huh?
Gabriel Flores 0:33
Yeah, let's do it.
Waseem Daher 0:35
So let's see, well, my parents were born and raised in Lebanon, they and their siblings all moved to the US in the 70s and 80s, mostly actually Northeast Ohio. And then in sort of classic immigrant fashion, many of my relatives worked at it until they became a small business owners of one kind or another, whether it was a bar, restaurant, gas station, small medical practice, that kind of thing. I mostly grew up in the DC area. But my parents worked with the government. And the way I guess I got started on my entrepreneurial journey. Well, one is, of course, being inspired by sort of what I saw with my own relatives and their kind of small business ownership. But it all I think the big turning point for me was, I went to undergrad at MIT where I studied computer science. And that's where I met my co founders, Jeff, and Jessica. And so we were in classes together, we were in the computer club together. And we've actually done now three companies together. The first one was acquired by Oracle, the second one was acquired by Dropbox. And third one is this current one, pilot pilot.com, which is now a tech unicorn. And we're chugging away at it.
Gabriel Flores 1:37
Love it. That's, that's incredible. So have you have you gone back to visit the your parents online? Have you done? Have you been?
Waseem Daher 1:44
Not? Not really like once or twice? Not a ton?
Gabriel Flores 1:47
Nice. So let's, let's talk about pilot, what were what is it? And what are you? What are you hoping to do with it? What's the goal?
Waseem Daher 1:55
Sure. So first of all, what is it? Pilot pilot.com. Pilot provides finance, accounting and tax prep services for startups and growing businesses. And what does that mean? Well, we run the financial back office today for 1000s, of businesses of all sizes and stages across a variety of industries. And what we're trying to do is really trying to be partners in helping our customers build. And during successful businesses, when you work with pilot, you're paired with your dedicated team of experts on our side, who are really focused on helping the business succeed. And that's ultimately the ambition, which is the reason that when we started this company, it was this was a pain we had in our own previous companies. And we're like, well, let's just build the service we wish we could have bought when we were running our previous companies.
Gabriel Flores 2:39
So that is that kind of where the idea of can kind of get into the finance world was like, Hey, we kind of dealt with this ourselves.
Waseem Daher 2:46
Exactly. And, you know, I think the thing that's interesting about this is, anyone who starts a business of any kind, whether it's whether it's a tech company, or whether it's a coffee shop, or a florist, literally whatever it is, there's a reason you do it. And the reason you do it is because there's some product or service you want to bring into the world. And I think what people don't realize what people underestimate is like, yes, you're doing your company, of course, you're spending time on that. But there's a huge chunk of your time, that goes into back office stuff. And the back office stuff is like, it's actually really, really, really important to get right. And it's usually not their area of expertise of the business owner. And even if it is, it's generally not the highest leverage thing they could be doing. So we said as well listen, we want to come in. And we want to be the trusted partner, the expert that takes this stuff off our clients plates. And today, that's principally a kind of accounting, tax prep. Eventually, though, I'd like to be doing everything, all of the kind of like, admin back office stuff that stands between you and just letting you focus entirely on making the business successful.
Gabriel Flores 3:50
So now let's take a step back, because you mentioned that the reason you started this new businesses because you're former businesses that you recently sold off to other larger companies. You kind of saw this as an issue. Let's talk about those other companies. What were those other companies and talk to the audience about? Like, how did you scale it to the point you eventually were able to sell it?
Waseem Daher 4:12
Sure. So the first company is going to call a case splice, we had some technology that was actually based on my co founders master thesis at MIT, we had technology that could take software updates, and install them while the system was running. I'm sure you've seen this on your laptop or your phone, you get the notification, hey, you need to restart to the status updates. I love. Exactly. It's such a feature. And and this is a huge pain. For server systems like yes, it's inconvenient on your laptop or your phone, but it's actually a big problem for servers that host your website or credit card processing or email or whatever. So we had technology that could transform these updates and it could be installed without rebooting. And we sold that as a subscription to IT administrators who administer these kind of large server farms. We totally bootstrapped the business we got started with, like a government grant and a little bit of winnings from winning a business plan competition. And we just kind of like slowly but surely one foot in front of the other, like, got more customers use that money to invest in growing the business until, you know, we, we grew to seven figures in revenue, the team was probably about 15 ish people. And then Oracle came along and said, Hey, listen, this capability you have is highly valuable for our customers, we'd like to make it part of our offering, we'd like to buy the company. And so that's really what happened with the first company. And then we were at Oracle, the transition over the tech left, kind of got the band back together, we said we knew we wanted to do another company. And our second company was called zulip. This was this was 2012. At the time, it was a group chat tool for businesses. So it's kind of like a slack like product at a time when slack was, well, Slack didn't really exist, I think slack was still making a mobile game at that point in time. And we sort of had a strong and opinionated hypothesis that listen, chat at work, could be different and more productive than it than it is now. Or the status quo. And 2011 2012 was pretty poor. And we actually we did that company for about two years. And then Dropbox acquired at Dropbox, I think was both interested in getting the team and had designs on, we'd like to do something kind of in the collaboration space on top of file sharing.
Gabriel Flores 6:24
Now, when you say when when these organizations acquire company do do use the team, right, the three co founders? Do you as co founders also kind of go in become Dropbox employees and kind of help integrate it? So for for some certain amount, amount of time?
Waseem Daher 6:40
Yeah. So I was at Oracle for a year, for example, and I was at Dropbox for for two years as well, my co founders.
Gabriel Flores 6:45
Okay. And then so are you guys having conversations still, at this time? You're at Dropbox, you're having conversations, and you're like, you know what? Remember that other issue we were dealing with? Can we help? Can we resolve that with a new company?
Waseem Daher 6:59
Yeah, I think the feeling and I had a great time at Dropbox, a lot of love and respect for the team there. I think we learned a lot. I think we did a lot. But I suspect I felt like we kind of knew in the back of our minds, like, we're gonna get the band back together again, like this was not our final company, like we're going to do it again. And actually, we didn't spend a lot of time talking about it, we spent almost no time thinking about it at Dropbox. What were at Dropbox, we were honestly laser focused with, how do we make our time at Dropbox successful? How do we make the company successful, right, there comes a sort of an actual point where like, all right, I'm ready to go do my own thing. And what's interesting about this actually is, I'm a big believer in team before idea, which is, I knew I wanted to work with this founding team again. And that was more important to me than what the idea was. So the first thing we did is we all got together and said, Okay, let's do another company together. What is it? Like? What is it going to be? And it wasn't necessarily going to be where we landed, we just knew that this is the team that we want to do it with. Okay, what spaces can we get excited about?
Gabriel Flores 8:00
Now, let's talk about scaling a little bit. How do you how do you, you got the idea? You know, maybe we can take a look back at that first company where you got the idea scaled it? And how do you like market and brand it to the point where a team like Oracle actually takes notice of a small company like yours?
Waseem Daher 8:19
Yeah, you know, it's interesting, because I don't think that there's necessarily a secret there, which is, I think the thing that got Oracle to take notice is that customers took notice, and the customers liked it, when they told their maybe, let's say their friends, but really, people in their same industry. And it was sort of a capability that really solved the problem that they had. And, you know, people ask me a lot, how do I build my company to be acquired? Or how do I get acquisition conversations to happen? And the unfortunate or even how do I raise money. And the kind of unfortunate reality of it, especially in acquisitions is, the best way to build a thing that will get acquired in some ways, is build a strong business. And if you build a strong business, actually, you probably don't necessarily want to sell it. So there's the secret to having success on fundraising, or acquisitions, in some ways, is actually just make the business successful. There is no kind of shortcut or cheat code for it. And for us, it meant being laser focused on do we know who our customers are? Do we viscerally understand them? And are we solving a problem? That is a big problem for them? And I think if you have all those elements, that business will be successful.
Gabriel Flores 9:32
You know, that's something that I think we talk about often on this podcast is the importance of solving a problem. How you know, you mentioned you originally the pilot in particular this this currently organization right now, where you got the idea looking at your old business, what are other ways entrepreneurs can think about, you know, because they they want to have their business six be successful as well. What is the secret to business success? Like, how do how do they make their business successful? What are some thoughts that you might have on that?
Waseem Daher 10:05
Yeah, I think you just have to solve a hair on fire problem for someone. And so there, there are two ways to go about doing that. One is, if there's a problem that you have, that is a hair on fire problem for you, and important and, and there are lots of people like you in the world. Well, that's actually that's also kind of a shortcut, because you can build for yourself, knowing that you are representative of a larger population. And so you'll you'll show up working on the thing with strong conviction that you're solving a hair on fire problem for someone. The other option is getting really precise about who it is you think you're serving, and really having conversation with them about, hey, listen, talk to me about your top three problems and confirming that the thing you're doing is, in fact, on that list, I think the biggest danger that folks have is they think they're solving a problem for someone. But it's actually not a problem that anyone really has. Or if it is a problem that they have. It's priority number 100. And they're never gonna get to it, they're not willing to spend time on it, they're not willing to spend dollars on it. So you really have to be disciplined about confirming that you are solving a problem that is really a top three problem for someone.
Gabriel Flores 11:19
You know, it's funny, one of these episodes recently talked about brand guidelines and talking about customer personas, right and building a customer persona. What are some questions you could ask to help build? You know, What questions did your team actually asked to help build your customer persona?
Waseem Daher 11:37
So we did a bunch of work surveying both our customers and the people who show up at our website, who are not yet customers, to try to segment to say, Okay, what industries? Are they coming from? What stage of companies they coming from? What roles do they have? Why did they reach out? Like, what is the pain point, and as you have lots and lots of these conversations, you start to hear themes. And then you can kind of group by theme. Oh, the reason I'm buying pilot is because I you know, need help forecasting. Or maybe the reason I buy in pilot is I know I need to deal with tax deadlines. Or maybe the reason I'm buying pilot is I had a previous accountant, and I didn't like them, or they made a bunch of mistakes or whatever. And over time, you start to hone and refine these personas. And you understand okay, well, you're an example of Persona XYZ, these are the problems you have, and therefore this is what we need to do to make working with pilot really successful for you.
Gabriel Flores 12:34
What, what motivates you to keep going?
Waseem Daher 12:39
I mean, honestly, working with amazing team, I mean, kind of, as I, as I said, before we started this startup, we were at Dropbox together. And I thought a lot about, well, do we want to do another company together? If so, why? Like, what am I personally trying to get out of it. And I think, you know, two things kind of rose to the top of the list. The first was a desire to work with smart, talented people. I think above all, I like I want to work with smart, talented people who pushed me to do my best work every day. And I think that, for me is far and away the most important requirement, like I think what people don't appreciate is that your day to day happiness is actually much, much more informed by the people you work with, then even the company mission, and I'm not saying the company mission is not important. Of course, it's important. But if you're working on the world's most inspiring mission, but your coworkers aren't great, I guarantee that you'll be miserable. So number one thing that motivates me is like the desire to work with more talented people. Number two is there's this kind of energy that comes from making something that people want, like, when I tell people what we're up to, I want them to say like, wow, that sounds awesome. I really need that. And there's a joy in making something that really solves a problem for someone and in seeing their excitement about what you built is a really, really satisfying feeling. And that lets you take pride in your work. And I think that feeling is a really, really critical part of keeping you motivated. And so honestly, I guess to answer your question, in brief, I think what keeps me motivated is essentially like the love of the game. It's the energy I get from working with amazing people chipping away at a hard problem that real people have.
Gabriel Flores 14:14
No, as an entrepreneur, what are some things that keep you up at night? What are you thinking about?
Waseem Daher 14:20
I mean, honestly, just consistently providing a high quality experience as we scale. Like, I think for any business, regardless of what the business is, it generally it's easy to do a good job for one customer. And it's harder to job, a good job for 10 customers or 100 customers or 1000 customers and so on and so forth. And so as we grow, which growing is a good thing, of course, the game gets harder, and the stakes get higher. And interestingly I think the bar is not just don't do a bad job. The bar is actually well listen, the experience for customer 10,000 should be better than the experience for customer one because we've learned a ton we built time the company is much bigger, we have more resources. We've written all this software like That's kind of the standard we should be holding ourselves to. Now let's
Gabriel Flores 15:03
let's get a little, little technical. What are some common mistakes? You know, common bookkeeping mistakes, entrepreneurs are going to make that the pilot can help them with?
Waseem Daher 15:13
Yeah, sure. And I think these are good things to take to heart, whether you are a pilot or not. And they're probably five that I highlight. The first is don't mix your company's money with your own money, you definitely definitely need and want to keep these pools separate for two reasons. One is the IRS gets very unhappy when you don't, that's a good reason in and of itself to do. But even if they didn't, you need to know what the health of the business is. And if you can't separate a business's expenses and revenues from your own, you're not gonna be able to do that. So definitely, definitely, that's called commingling do not commingle, do not mix your company's money with the businesses, your company's money with your money. So like, get the company a bank account and get the company a debit card or a credit card. And just like keep those expenses separate. That's number one. Number two is I'd say is always use a payroll system to pay your employees. Payroll is complicated. There are lots of kind of laws and regulations around it. And again, the government gets very unhappy when you don't do it correctly. And it's tempting to be like, Oh, surely I can just like write this person a check in, it'll be fine. It's like, no, if you have employees, there's payroll tax, there's all kinds of filings that have to happen, there's a rule. So just always, always use a payroll system to pay employees, I promise it is worth it, they're not that expensive in the grand scheme of things, and you'll save yourself a bunch of pain. Number three, is even if the business made no money, the business has to file a corporate tax return every year. So just because it wasn't profitable doesn't mean that you're off the hook on the tax return. So make sure you understand kind of what the tax obligation is, and you're following up on it. And the fourth is, really make sure someone's paying attention to the books like you need to know how what the health of the businesses, which requires you to know, what you're making, what you're spending, how much cash available, etc. And the fifth is, again, kind of the reasons why this company in the first place, and this is a little bit of course, I'm biased, but I think it's good advice. I think it's probably a costly mistake to be doing the bookkeeping yourself, like you should hire pilot, you hire someone, so that you the business owner, you're still going to engage with the work product. But that doesn't require you to do it yourself. And it means that you can focus your time on making your business more successful. And because the reality of it is like, if you spend all of your time producing like really perfect, high quality bookkeeping. Well, good, you have good insights into the business. But that's not going to like make your customers happier with your service. Like you need to be laser focused on the things that will actually help you deliver value for customers. If you can partner with experts to take care of the stuff that is important, but it's like it's not where you should be spending your time.
Gabriel Flores 17:49
You know, to have those five, it seems like you know, we're really focusing on like the finance piece, making sure you're you're in the know. So let's let's give the listeners a little bit of let's drop some knowledge on him a little bit. Let's talk about what is the burn rate? And how does one calculate the burn rate. Because I think this is very important for these entrepreneurs to understand.
Waseem Daher 18:09
cheerier. So burn rate is really it's a concept probably mostly for startups that have raised money of some kind, but it's a useful concept. In general, the burn rate is essentially, how much money are you spending in a given month, minus how much money are you bringing in in a given month. In other words, like net of all of your activity, how much money has left the company's bank account. Now, if the company is unprofitable, you have some burn rate. If the company is profitable, your burn rate is negative, like you're actually making a little bit of money at a given month. And the reason it's so critical to get a handle on your burn rate, is, let's say you have a certain amount of cash in the bank and you have a certain burn rate. You do some math, you just divide those numbers. And you can see you can return what's called your runway, which is well listen, if I keep spending at this rate, I'm going to be totally out of money in three months, or five months, or six months, or a year or two years, or whatever the number is. And the reason you need, like such a good handle on that is because ultimately, ultimately, there are only two ways that your business can fail. Way number one is you run out of money. And way number two is that you give up. And the if you don't know what your burn rate and your runway are, you might accidentally run out of money without knowing it. So burn rate is like it's a very simplistic metric. But it is a helpful one because it basically tells you listen, how much money are we spending each month? And what does that imply about how long I can continue to do this without taking some other kind of action?
Gabriel Flores 19:43
Yeah, I just want to repeat what you said because I think that was so powerful. Your business is only going to fail because of two reasons. You run out of money or you give up and I think that is so true because I think a lot of the time tends to be the ladder of giving up part time. Where, where are we? It's easy to kind of do it. Because I think, to your point, the difficulty of the accounting piece, you know, now what, who is your typical client? Who who does pilot typically aim for for a client?
Waseem Daher 20:15
Yeah, so we have a bunch of folks, I'd say are, a lot of our early customers and clients were in our technology startups, various kinds, whether it's two people in a garage, just getting started, or a company that has, you know, 300 500 employees and a full time finance team, like, tech startups are really where we got our start, and we're just a perfect slam dunk fit for them. We also have a lot of E commerce companies, we have a lot of consultancies, we have it's, we have a quite diverse and interesting mix of businesses that we serve, I would say the the theme that is present in all of them is that they're all quite tech forward are quite modern businesses. Like today, if you have a stack of paper receipts, you handle a lot of cash and there no electronic systems, pilot is not a very good fit for you. But if you're all in kind of modern electronic workflows, that's really our sweet spot.
Gabriel Flores 21:09
Okay. Now, where do you see pilot where what's the goal?
Waseem Daher 21:14
So the goal ultimately, kind of, as we sort of said earlier in this conversation, like, there's all of this stuff you have to do to have your business operate. That is not their expertise to the business owner. And a big piece of that is the accounting and the tax and the finances. But there's also like legal and HR and IT and business insurance, and small business, lending, and other all this stuff, all the stuff that is important, it's important to get right. But it is not your area of expertise. I want Pilate to be the trusted partner, that just takes care of all that stuff for you. And I think a good analogy, and it's a little bit technical is like, if you look at something like Amazon Web Services, like when we first started our first company in 2009 2008 2009, the status quo at the time is if you needed a server somewhere, like you went to a data center, and you like put the server there. And sometimes the hard drive died, and you had to replace it. And it was a huge pain. And then Amazon came along and said, You know what, if we run your technical infra for you, we'll do a better job of it. And it will be more scalable, and you'll get magic that you can't get anywhere else. And over time, Amazon with Amazon Web Services did more and more and more, which meant that your business didn't have to hire a whole engineering team dedicated to running and maintaining that infrastructure. And they did a better job than you would have had you done it anyway, I want to do that same thing, but not for your technical infrastructure. But for your company's infrastructure. In other words, your back office. So all this stuff that's important is really critical. You want an expert doing it. If we can do it all for you under one roof, and you can focus on the unique reason you started the business in the first place. I think that's really, really powerful.
Gabriel Flores 22:55
And so how do you plan? Do you plan to kind of grow by acquisitions or bring in just because you mentioned their areas of expertise, legal, you know, that you're still in familiar with? How does pilot plan to grow into those areas that they may be unfamiliar with?
Waseem Daher 23:09
You know, it's it's an interesting question. And I think this is really like the 20 year plan for the company. I think we have plenty we have our work cut out for us, really just on the kind of like accounting and finance stuff that we do really well today. So there's there's an interesting kind of strategy question of well, at what point does it make sense to pursue additional things beyond your first thing? And I think there's so much opportunity in what we're doing today that I think it probably does not make sense to invest a ton in, you know, products two through five, we should be laser focused on the thing we do well, today that we know customers want that we have, you know that we've really kind of built some muscle around speaking around.
Gabriel Flores 23:51
You know, and I think that's an important lesson for a lot of entrepreneurs, especially, you know, coming from you who scaled multiple businesses and actually sold them is to also understand there's a time and a place to scale. And you can't do it all at once. You know, we can't Absolutely not, you know, Rome wasn't built in a day kind of thing.
Waseem Daher 24:08
Focus is just like such a key element, I think, for your company being successful.
Gabriel Flores 24:15
Now, what advice what additional advice do you have for these young entrepreneurs, other entrepreneurs, inspiring entrepreneurs, business owners, innovators? What advice would you have for them?
Waseem Daher 24:26
We talked about this a little bit already. But I'd say you just have to stay really, really close to your customers, which are your customers are the ones that are going to hold you accountable. And if you listen to them, I generally find that it puts you on the right track. Because it customer demand is like the one thing you can't really fake or fool yourself with. And so I think the closer you are to the customer, the more viscerally you understand who they are, what they care about why they buy what you do well what you do poorly. Like that's such a key insight in helping your business be six Last fall, and I think it is very dangerous to ignore it, you're really flying blind if you if you're not close to it.
Gabriel Flores 25:07
With that said, what what kind of tactics did your team use to really you mentioned? You mentioned some of the things well, what are some of the other tactics you use to kind of understand your customer?
Waseem Daher 25:23
Well, so actually, in the early days, we did. In addition to like, talking to the customers to get them on board, we actually like did all their bookkeeping ourselves. So we were we were extremely in the weeds on it, we were very, very hands on with the customer, because we wanted to understand deeply. What did they care about? Like, what are the problems they have? How do we make sure that what we're doing really resonates with them? So I'd say, stay as close as you can possibly say closer than you think you need to?
Gabriel Flores 25:52
I like it, I like it. Well seen, thank you so much, again, for joining the shades of entrepreneurship. I really do appreciate it. Now, before we go, how did the folks how do the listeners? How do they find your business? Where can they get in contact with you? If they're interested in learning more about pilot? Where do they find you?
Waseem Daher 26:08
Sure. So you can find me personally, I have a sub stack that was seen that saltstack.com Or I'm missing on Twitter, or on LinkedIn. And then for pilot, you can find us at pilot.com/shades And in fact, if you sign up there, you can get 20% off your first six months with pilot so pilot.com/shades We've got a special promo. Gabrielle for our listeners, listeners of the pod nice to kind of debut Yes.
Gabriel Flores 26:31
And I will make sure that will be on the folks on there'll be on the newsletter as well. So please subscribe to the newsletter for more information. Again, YCM thank you so much for joining us. That was that was a great conversation. I'm I'm going to kind of get into it. And I think you know, I will admit the area I need help in is the accounting world I need ever somebody else to watch over my numbers just so I can make sure you know it's always nice to have another second look, you know, so thank you again so much for those listening at home. Please follow me on LinkedIn, Twitter, Instagram and Facebook and subscribe to the newsletter and have a great night