In Menlo Park (CA), we meet CEO and Co-Founder of GuideSpark, Keith Kitani. Keith talks about his story how he came up with the idea and founded GuideSpark, how the current business model works, as well as he provides some advice for young entrepreneurs.

INTRODUCTION

Martin: Hi, today we are in Menlo Park in the GuideSpark office. Keith, who are you and what do you do?

Keith: So I’m Keith Kitani and I’m the CEO and one of the co-founders of GuideSpark, a company that is really designed to help organizations communicate and connect with their employees better through video and mobile communications.

Martin: And what did you do before? Because you‘ve had something like a really rollercoaster life over the last fifteen years or so.

Keith: Exactly. It’s my second startup. I was originally, a long time ago an electrical engineer but went back to business school and changed my direction. But I started a company in the late nineties, it was a company called Presedia that we sold Macromedia that was then bought by Adobe and that was Adobe Connect so it was really in the eLearning and communication space and decided that while I loved Adobe and that company that I wanted to start over and so we started this company 2008.

Martin: How did you come up with the idea for GuideSpark?

Keith: Well, I’d like to tell you that I just came up with it one day and all of a sudden it was rocket ship but unfortunately that wasn’t the case. So we started this company in 2008 and originally around the idea of helping people with financial education and financial health but that was right before the recession and that was not a great time to sell wellness products. So that was a tough time for a couple of years.

But what ended up happening is we started talking to customers and customers really pointed us in a direction about helping them communicate better with their employees, around things like benefits and compensation programs. And so the way we came up with the idea overnight is that we kept listening to customers over the years of time and finally realized we had a big huge market opportunity and really around 2012 the company really started to grow very fast.

Martin: Especially yourstory’s very interesting because you did a big pivot of your business model. Can you elaborate on how the business model was looking before and after?

Keith: So, we were in an area of financial health, of financial education and financial wellness and that’s a business actually we are back in but at the time it was not a great time for HR. So we were actually running out of cash so we had to really find a business that we could really have that would sell to customers. So we talked to a lot of prospects and customers and found that they had this need to communicate more effectively around benefits and compensation. So they spent a ton of money here in the US on benefits and it’s hard for employees to really understand the value of those programs and so we were able to create video and mobile education around it and it worked well.

BUSINESS MODEL OF GUIDESPARK

Martin: Let’s talk about your business model for GuideSpark. Basically and currently who are your customers and what type of value proposition are you doing to them?

Keith: We have an interesting customer base that has been around different startups and companies. But our customer base – we have over 600 customers, they range in size from 100 employees all the way up to the large Fortune 10 companies. And in fact we’re now in 20 percent of the Fortune 500 so it doesn’t matter what size company you are.

The other thing interesting about our business is that we have almost every industry; so we have city governments, we have high tech companies, we have trucking companies, we have mining companies, we have pretty much every industry. And so if you think about it, every company has employees, every company has to communicate to those employees and we’re really starting to hit all of those different people.

Martin: Mainly in the US because of the different kinds of regulations for benefits?

Keith: Yes, so we’re US-based but we’re supporting some of our multinationals internationally. But the real value proposition is if you think about how companies communicate today, it’s really the same way they’ve been doing it for the last ten, twenty, fifty years. It is employee manuals, it’s PowerPoint presentations, it is long text emails and if you think about how you connect and get information in your daily lives it’s probably video, mobile, interactive. And so what we’re doing is really helping companies transform their traditional communications into these new forms of communication that really are more effective in engaging employees.

Martin: And do you see some kind of increase in conversion rates from showing employees that information and then to really sign up to a specific benefit program?

Keith: Absolutely, that’s one of our key value propositions but there are a lot more value propositions around that. So increased participation in programs is one of them but also reduced call center time, reduced travel, there are a lot of different opportunities that have been incredibly valuable for corporate companies to utilize.

Martin: After you pivoted the business, how was it like to acquire the first customers? How did you tackle them?

Keith: The way we pivoted the business and it’s interesting when people say ‘pivoted’, it feels like it should be a sharp turn. And for me it took a while because for many years we were telling every investor, every employee, every customer how financial wellness is the greatest thing in the world, so it takes a little while. Because we were listening to customers it actually wasn’t that hard to actually get them to sell because they would tell us what they wanted and then like any small company would say, “Hey that’s great that’s what we do”, as we started to sell it and started really to refine that offering and that value proposition.

Martin: Did you first focus only on the Bay area in terms of customers or did you say, “Okay, let’s sell it nationwide?”

Keith: So what I would say is for the first year or so we focused on the Bay Area but very, very quickly we realized it didn’t matter where you are. You are a company, you need to communicate and so we quickly grew all across the country because we’re able to really access them through telephone.

Martin: How are you currently managing the customer relationships and trying to re-nurture them? So are you doing something like conferences with them or monthly walk-ins or steady calls?

Keith: We do a variety of things: we certainly have an annual customer conference. But we also have a customer success team and our customer success and account management team check in at least quarterly with our customers to really you start doing business reviews because our goal is to make sure that our solutions adding value to their business. We are subscription-based model and so if we’renot continuing adding value they’re going to cancel. So it’s very important for us to constantly be in contact with them to make sure that our system and our solution is adding value to that them and their business.

Martin: So you said that you’re based on a subscription model, how did you decide how to price your model?

Keith: That’s always the hardest question when in a new market. Generally, if you’re in a market that already exists you can start to price off other people. But what I would say is it was kind of iterative. We had an idea of what this might cost and then you start to test in the marketplace and try to get an understanding of our value. And so we’ve been able to arrive at a good place in terms of different prices for different company sizes and different sizes of library.

Martin: So over the last 18 to 24 months you’ve been growing extremely fast, did you perceive any types of growing pains or some obstacles that you say, “Wow, that was really hard for us. And this is how we solved it.”

Keith: Solving it, seems like we’re constantly growing so I’m not sure if we fully solved it. To give you an idea in the last three years we’ve grown from about 10 employees to three hundred and so you can imagine that there are growing pains every step of the way there and it’s systems and processes that break. The other thing that’s hard is also people. If you think about their skill sets, initial managers two years ago would have teams of two or three people, and now they could have 15 and it’s a totally different job, totally different skill set. And so for us it’s really making sure that we’re examining each stage of our business what’s right at that stage. And it can be tough because you have processes that you just implemented and you sit back and go, “Well maybe that’s not the right one” or you have a system that breaks.

I mean this funny story that I always talk about is we found out that our payroll vendor had a maximum capacity of a hundred and fifty paychecks and how did we find that out? We ran a hundred and fifty-two. But when I first started with that payroll company last thing I was thinking about is what’s your maximum and you just run some paper checks and then you can find a new system. So I think it’s been a lot of kind of learning along the way. But the key thing for us is to make sure you realize that that’s part of what your business is that you can’t be too locked in because of that growth rate you have to constantly realize that business is going to change, systems are going to change, processes going to change and people have to grow and evolve.

Martin: You’re mainly based in the Bay Area but you have other offices, so how are you trying to solve the recruiting issues that you’re currently facing because in the Bay Area because the unemployment seems to be very low. What kind of measures are you taking to raise offers for extending your growth?

Keith: We’ve been very successful in getting people to join here in the Bay Area but it’s incredibly competitive. And so what we’ve done is we’ve selectivelyadded some offices, so we have a Boston office and a New York office primarily for sales. That’s not only for us to attract great people but also a lot of customers on the East Coast and so it’s a great opportunity for us to grow there. And we just added Portland so we wanted to add— one of the other types of roles we have today are for designers and writers and a lot of creative people and so we’re adding office up to Portland and planning a big presence there. So all of those will supplement the Bay Area, we think talent here is just great place for us but we also needed to realize that we have a huge growth targets and we’ve got to complement elsewhere.

Martin: And are you also planning to enter international clients because from my understanding the benefit system or the offerings are very country or regional specific and so once you’d like to enter India or China or some other country, I would guess you would need to produce a new content?

Keith: So we do support multinationals. So we have companies like Adobe, where we support them internationally. So we have different content for each of their regions so somebody in Japan see something different than US, somebody in the UK see something different than in India. So we already have that model and we could translate content to about 15 different languages but realize that benefit programs are different, compensation programs are different but communication is still necessary no matter what language or what country you’re in.

ADVICE TO ENTREPRENEURS FROM KEITH KITANI

Martin: Keith, let’s talk about the learnings that you generated from your first two companies, maybe there were some other companies. What have been your major learnings?

Keith: There’s a long list of learnings and mostly learned the hard way. I touched on one of them already. I think the key is to always be open to change. I think when you’re in business and business is growing and especially at the early stages you have to be very flexible. We had to pivot our business now at this chief growth stage we have to really make sure that our systems and processes are right and constantly re-look. I think one of the key things is to always be flexible.

The other one for me is, you know, you’ve got to be passionate about what you do and you got to really realize it’s a long road. In GuideSpark here, the first four years we had almost no growth. I was telling you earlier we went from zero to four employees in the first three years. And it was like three to four employees and that’s all we had. And then all of a sudden, we took off. I think it’s about being passionate about what you want to go accomplish and sticking with it. Entrepreneurship can be hard at times.

Martin: What do you like most about entrepreneurship?

Keith: I really like building, building products, building teams, building organizations. I think I’ve loved being at a larger companies like Adobe but I just get excited about building something new and that’s what I’m get to do here at GuideSpark. It’s fantastic, I love what I’m doing.

Martin: Great. Keith, thank you so much for your time and sharing. It was a pleasure.

Keith: Thank you.

Martin: And next time if you’re thinking about what should you do next and you really enjoy entrepreneurship, just go out there and build a great company. Thank you.

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