Experiences of a start-up entrepreneur in funding: Interview with Justin E.lane-ALAN Analytics
Justin E.lane is the CTO of ALAN Analytics, a start-up with innovation in AI that provides deep insights to give a deeper understanding of markets, creating alternatives to previous market research methods that go far beyond sentiment analysis. The stage where ALAN analytics is the MVP, rebuilding the solution after a preliminary market test. Funds obtained are related to the seeds stage. The perspective is to work for a Series A- funding in the early periods of 2022.
Luca
what is your opinion about the weight between financial and qualitative elements? Which one is more relevant?
Justin
When it comes to how people have viewed our business and what we’re doing, I would say the qualitative elements have far outweighed any of the financial projections; we’ve gotten both verbal and written confirmation of investments for our seed round before they even saw our financial projections. One element is connected to the funders’ high academic levels and the presence of expert advisors. The other element we’ve shown is that the tech works within a particular stage of validation.
Luca
Now we are going to see how you evaluate previous presentations. How were company vision -mission-purpose articulated, explained and visible?
Justin
I think, in our last pitch, that was actually not well articulated. I think we could have done a better job on that.
Luca
How were the problems solved, articulated, explained and visible? Were they linked to the previous elements described?
Justin
I think that’s almost a mixture of not well articulated and well explained. So, my reflection is that my issue has regularly been in pitching that I can clearly say the solution. Still, I don’t always answer the question. Well, what are you solving? So that’s the problem. I’d say the solution as well explained where I failed was explaining the problem.
Luca
What about value proposition?
Justin
I do think that we do a pretty good job of the value proposition of reframing what they need and saying here’s what we give you something you don’t already have regarding your ability to craft a message
Luca
Thank you, Justin. Now, minimum viable product. I now understand that artificial intelligence is complex for those not working in the industry because of my low knowledge level. Now, do you think that considering the complexity of the application, the MVP was clearly specified to the readers?
Justin
I think that it’s something that we’ve worked on actively because I think we could have explained it better than we did in the past. As I explained to the product lead, “don’t get so technical. They don’t care. The thing is, they know their value, they know what they care about, but the details of it. That’s just for the backend developers”. And me to worry about when it comes to that’s not always the value for them, or it’s not how to articulate the value the best way. So we’ve been working on that.
Luca
Now, this is a tricky question. Market validation is the phase when you have the first revenues. So, do you think that the market validation was articulated?
Justin
I think it was well articulated as a technology but not well articulated as a product. And that goes back, , to like the MVP thing that I’ve been working on. Because as a technology, I was saying, “oh, we’re using this with the Norwegian government, we’re helping them with the COVID responses, we’re helping these script analytics companies in Hollywood “. But that’s a lot about technology validation. It was not the product validation. And that is something that we’ve had to refocus and try and better understand that we’ve been lacking when it comes to product validation. So that’s one of the things that’s not that was not well articulated. We’re moving and getting better at it.
Luca
Thank you, Justin. And then what about the market definition?
Justin
Again, this is something that, in all honesty, we have struggled with, because on the one hand, we’re AI. We’re natural language processing, but we’re also focused very specifically on text analytics. So some people separate out those markets. We don’t want to frame ourselves as just an AI company as if we’re going up against Google because we’re not. We’re really focused on a specific niche market than an AI application. I think that our market definition was visible.
Luca
What are the market definitions that you think are valuable and usable?
Justin
The way that we’re trying to frame it is by creating a new market. We’re creating a market for resonance marketing. And the way that we hope to do that is basically by cannibalising the sentiment analysis and social listening market. What I should have driven home is that I was trying to justify the business on the back of an existing market when really what I should have done was more of a zero to one strategy saying that we are totally different from these guys.
Luca
And how is the market penetration?
Justin
We are actively working with different partners because we’ve found that they can really help us increase our sales channels’ efficiency. We’ve found that our sales cycle is still long. So being able to work with a partner, we use the efficiency of their established sales cycles and then build our tech into it because they can’t build our tech. We’ve been working on that for sales channels for market segmentation is difficult. We propose the same product but differently to satisfy different requirements to different segmented targets.
Luca
A brilliant answer; thank you, Justin. Because segmentation helps to create a different sales funnel with different contact points. Thank you.
Now let me ask this Were you able to define the market size? Considering then that you have developed the segments, also following the channel’s opportunities.
Justin
Yes, we have looked at those so far as they help to produce good estimates. However, I’ve found that AI is challenging to define the segments in a particular market because many are cross-segment. But there’s not really an AI market. It’s very much AI for a market. AI is the tool; AI is not the market. And so it’s hard to actually get a good definition of market size, in my opinion. I don’t think I’ve found an investor who doesn’t know that the AI market is enormous and growing at a blinding rate. It’s so fast. We do include it.
Luca
Okay, Justin. Market trends. How did you consider them?
Justin
We focus on that as an aspect of social media adoption based on how much data are available. You know, we’re analysing data and putting it in front of decision-makers. So how much data is there? Is there now, and how much data will be there. Because we’re a text analytics company.
Luca
Did you fully consider the business model elements related to your venture, then transfer to the different elements on the pitch?
Justin
We always included an evident one slide element that just says about the business model, with doing a subscription-based software as a service approach with an enterprise client API access. We have also highlighted the tiered subscription approaches scale, including freemium and features in the different tiers. So I would say we do that.
Luca
Did you use all the elements from the business model? Partnership, clients of the last year?
Justin
Not really. So, we present that next to it when we discuss our partnerships as elements for traction, not always as aspects of the business model itself. We still are in a phase where we are moving away from Consulting, thus project-based towards a product. But we did that.
Luca
Market adoption and traction: did you put it as the baseline of projections?
Justin
We discussed traction, but not a lot from market adoption. We wanted to put your best foot forward just because we’re in such an early stage regarding market adoption. We focused on technical traction because we’re getting really interesting traction in the media as well. We have different articles written about us every few months. So we focused on that with adoption. There’s only so much that you can say at an early stage.
Luca
And what about the main future milestones?
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Justin
At the time, we didn’t; we did not articulate those very clearly in the presentation. But we weren’t very clear on any revenue milestones or fundraising or anything like that. So that’s something we’ve tightened up as well because, at the time, it was not there
Luca
How did you make evident the teams composition?
Justin
We had two slides for teams, one for our internal team, intended as the leadership team, and one for our advisors’ team.
Luca
Did you never think about projecting the future resources to show the human capability or marketing capability?.
Justin
We never connected those two in public. In private, we did that. And we did that because we know how much we’re going to pay for each person. However, we created an entire organisation chart and timeline and who’s going where and who’s underneath. So, there was the team there was no connection to the milestones initially No.
Luca
Did you specify the investments destination?
Justin
Not specifically. So, we said we wanted to raise x. And then we had like, four bullet points of what we wanted to focus on with that. So, it was there, but it wasn’t super well-articulated. Now, of course, we have a complete financial model that goes out for three years, at monthly intervals where we can show an investor it was like a bullet points list; we needed x, y, z
Luca
I understand, Justin. Now we have other questions. That’s the definition of a disruptor. Does it match with yours? “Market disruption occurs when a product fits a new and emerging market segment that is not being served by existing industry incumbents.” Do you agree? Or do you have another concept?
Justin
I would say that what we have is a disruptive technology. I don’t know that the word market disrupter fits perfectly, though. It’s market disruption if you’re already in that market. But for us, it’s really kind of like it’s more market replacing; we’re trying to replace sentiment analysis and social media analytics. We’re not trying to necessarily disrupt it; we’re trying to say the whole thing is irrelevant unless you are the social media platform itself.
Luca
That makes sense, just to see if this definition can create problems or confusion.
And now I would like to ask for your thoughts if disruption matches with uniqueness.
Justin
I think that the idea of a role of a disrupter always has to match with uniqueness. Because if you’re not unique, then you’re not disrupting anything. You’re just another guy.
Luca
Okay, that’s fine. Did you consider the impact of the competition?
Justin
Yes, we now have a slide with a grid listing our key competitors and our features. You can actually get a charming market overview and show where we shine, which also answers your next question, right? Because it also highlights what our competitive advantages.
Luca
Which type of competitor analysis did you use?
Justin
So the only fundamental analysis of competitors we looked at was the features. So we just did feature analysis; what do they have that we don’t have? Or won’t have? And what do we have that they don’t have? That’s what we focused on because we wanted to get to the core value. The other thing that we looked at as well is efficiency. And we didn’t do this initially. But while we were looking at features, we realised that we could look at efficiency because our system tested it and benchmarked on a couple of critical features. It benchmarked as accurate as IBM Watson. But then we looked at how much IBM Watson costs. And that’s which is good because then we have like market validation for potential pricing.
Luca
Did you consider which KPIs are relevant?
Justin
Our KPIs at the moment are related to the tech dev roadmap. Still, in the future, our KPIs will have to be, at least, user growth. We need to see more people using our product, growth over a month and definitely, year over year. Time on the platform is not something that we’re particularly prioritising, though. Still, the number of users in each of our usage tiers (premium, gold level, enterprise ) have seen growth in, at least, the baseline usage growth. Over the next year and a half, it is essential to design and monitor these KPIs, i.e., at the enterprise level as expected or at our Platinum level.
Luca
You are building your company with high cultural level people. And in the future, you will use other high-level technical people, but you will need other resources with a lower cultural level. You need to consider that you are creating the culture. Okay, today is nice, fantastic. Tomorrow, other resources and need to fit. So this is my question: How critical are the skills of the internal resources? How will you manage the organisational culture?
Justin
I think it’s critically important. I’m looking at the skills of the internal resources and figuring out a way that they can work together; trying to understand the skills, it’s super important, but how do I link those skills interpersonally between the different people on our team? It will be even more critical as we hire the following 10 or 15 people next year. So I’ve seen start-ups lose their culture at that period, and I’ve seen them lose their momentum and morale. But the other part of it is like, when he’s on a project that he backs up, he feels like an integral part of the company. He believes in the product; people are willing to do more when they believe in it. But if that team starts to get unbalanced, they start to don’t keep believing in the team, the product, the business; they don’t keep believing in me as a leader and an entrepreneur for the company.
Luca
Speaking about intangibles, which ones could support the growth through delivering the company’s value?
Justin
Now the brand is obviously tech and IP focused in many cases, particularly for us. But the brand that we have, I’ve noticed, has affected how we are evaluated by VCs. You know, we’re willing to go out and say something that might be unpopular and a little controversial, so long as we can back it up. But also making sure that we have a brand that’s open and transparent because we’ve been compared to Cambridge Analytica in the media directly. We basically say, look, we are not Cambridge analytical; we work in the light.
Luca
Absolutely. Okay, what kind of knowledge did you use to design business models, strategies, market definition, etc.
Justin
The knowledge I used for business model and strategy is just the knowledge I’ve acquired working in start-ups over the last years. I’ve worked with one foot in universities and the other one in tech start-ups. Plus, I have seen a lot of other people’s failures.
Luca
Yes, and this is very important. Justin, thank you for this interesting interview from an Entrepreneur point of view.
Justin
Luca, thank you for the opportunity.
