“It’s very much one of those things you’d have to pry out of my cold dead hands.”
This is definitely something you want to hear from customers when performing due diligence on a potential investment.
Hi, I’m Deb, Bonfire’s new Head of Marketing. One of my roles is to spread the word when we invest in exciting new companies. With that, I was thrilled to sit down with Jim this week to chat about why we invested in Prospr.
Prospr is an employee management platform targeting an underserved community: frontline team members at brick-and-mortar establishments. The platform aims to keep team members informed and inspired to do their best work. It was co-founded by Erika Wasser (CEO) and Eric Phelan (CTO) who worked together in a past life. More on that later.
We cover all the good stuff in our chat, like what makes Prospr special and how they managed to create super users in such a small amount of time. I also really enjoyed learning more about our investment strategy. Jim gives really interesting insight into team dynamics, what he looks for in a great CEO, and the value of customer feedback.
Let’s start at the beginning, how did you hear about Prospr?
We were introduced to Prospr through one of our favorite sources of new opportunities, a founder we’re already invested with in the existing portfolio. The CEO of Boulevard, Matt Danna, connected us to Erika, and highlighted that prior to launching Prospr, she had built a successful chain of 16 blowout locations called Glam & Go. She experienced firsthand the pain points that Prospr eventually sought to solve with software. We love founders like Erika who are compelled to solve a problem - as opposed to those looking for a problem to solve just because they want to start a company.
Erika sounds awesome, tell me more about her.
Erika has great domain expertise from building her business, and a presence that was at the same time somehow commanding and disarming. A huge part of being a startup founder is connecting with people and convincing them to join you on your quest. Fundamentally it’s a form of selling: convincing people to do unnatural things, like buy from a startup, sell to a startup, work for a startup, lend to a startup, give money to a startup, et cetera. Prospr is a mission-driven business and Erika -- as well as her co-founder Eric -- is a true believer in the mission.
What’s the problem that Prospr is trying to solve?
Small businesses -- especially brick & mortar -- don't typically have IT departments, so oftentimes they end up using consumer apps for business functions. WhatsApp for example is a wonderful platform for communications for consumers, but it’s horrible if you're a business wanting to maintain some degree of control and data governance. The same goes for other built-for-consumer apps that small businesses end up using due to lack of alternatives.
Prospr helps small business owners, operators, and employees be as successful as they can be -- hence the name, Prospr at Work. There has not been a lot of technology applied to frontline workers in customer-facing brick-and-mortar businesses, to help make their lives better and make them more successful at work. Prospr supports this community.
What did you like most about Prospr’s value proposition?
It’s really the one app that rules them all. It’s the only app you need for your frontline workers that includes scheduling, communications, time and attendance, learning, compliance, trouble tickets, etc. It's a broader solution than you typically see in software and it's the right fit for this particular business and opportunity.
What are some of the challenges to building a multi-module solution?
It’s harder to pitch an integrated multi-module solution than it is a very specific thing that someone might be searching for on Google. Prospr has a little bit of a different playbook than what is traditionally considered for a software startup. It's really a distinction between enterprise versus small business in my opinion. In enterprise, the mantra is “focus is a virtue.” You want to target a very specific customer, with a very specific pain point, and nail one very specific thing. Then once you have your wedge, you can expand the nature of offerings and applicability. That’s a good strategy for enterprise buyers where there's a lot of noise and technical competence to integrate various best of breed solutions, but that’s generally not the case for people out in the world running small businesses. So while it runs contrary to VC conventional wisdom, we think that the breadth of Prospr’s offering is a key attribute that will help it win with its specific target customer profile.
At what stage in Prospr’s lifecycle did we invest?
We invested when they were between $10K and $50K MRR. One of the luxuries of our approach as a “late seed” stage investor is that our founders typically have already built a product, and have already landed paying customers when they connect with us. This allows us to speak to actual users about their experience before we invest. We also try to introduce new target customers from our network to use their product and give us honest feedback. We ask questions like - do you have these pain points? How big are they? How much would you pay for a solution? Does this one look like it fits the bill? And so on.
What was the feedback from Prospr’s customers at this stage?
For a relatively early company without a lot of capital and a very small team, they built a product that's already being used by thousands of people and the customers we talked to are off-the-charts satisfied. It's very much one of those products where the customer feedback was “you would have to pry it out of my cold dead hands” and “we don't know what we would do without it.” We received this feedback from a varied set of customers including a big company that runs a convention center, a Dunkin Donuts franchisee, and a nail salon. This is a product that frontline employees need to be happy using, so there’s a high bar for the user experience, and they passed with flying colors.
What is the competition like in this space? Is that something you were concerned with?
There are other single-service solutions that do pieces of this but they don’t talk to each other. There are scheduling solutions, time and attendance solutions, communication solutions, trouble ticket solutions, and knowledge-base solutions, and every single one of those vendors either only serves one need or has confusing overlap with each other. You’d have to maintain a separate employee list in each one of them. If an employee recognizes that a machine is down and flags it, unless you’re using a unified system, there's no way to know who on staff is currently “clocked in” to fix it, and communicate to them without a human having to intervene. That's what this solution addresses and solves for. It can't be solved with a separate ticketing solution and a separate comms solution and a separate time and attendance solution. That's part of the power of Prospr - the integration of previously siloed functionality.
So much of early stage investing comes down to team and team dynamics. Was there anything specific about how Erika and Eric work together that stood out to you?
Sometimes you meet a person and it’s just easy to envision them building a big business and rallying talented people around their cause. Erika and Eric fit that bill. They worked together before at Glam & Go, where Eric was a contractor essentially serving as her CTO/IT. The two of them have a really healthy dynamic. They're both opinionated business people in a positive way, with a healthy push and pull. She focuses on product and he focuses on technology. With a very small team, they managed to build a pretty great, robust product that way.
My last question is about the market opportunity. How do you see Prospr evolving from where it is now?
There are over a hundred million frontline service jobs in the United States and no one is building tools for them. If this application can command $10 per user per month, that’s $1B per month and $12B annual market opportunity - just for subscriptions. Then, they could get into other things like payroll for example. There could be an entire FinTech roadmap for a product and a business like this, so there are lots of ways for the business to expand. Size of addressable market is absolutely not a concern for Prospr.
