[MUSIC] >> Welcome to Category Visionaries, the show dedicated to exploring exciting visions for the future from the founders or in the front lines building it. In each episode, we'll speak with a visionary founder who's building a new category or reimagining an existing one. We'll learn about the problem they solve, how their technology works, and unpack their vision for the future. I'm your host, Brett Stapper, CEO of Frontlines Media. Now, let's dive right into today's episode. [MUSIC] >> Hey everyone, and welcome back to Category Visionaries. Today, we're speaking with Ryan Fink, CEO and co-founder of Diggs, an AI collaboration platform for builders that's raised 14 million in funding. Ryan, how's it going today? >> Telling well, Brett, how are you doing? >> I'm doing good, and I'm super excited for this conversation. So I've seen that you've had two exits so far, and I'm sure there's more that are going to come in your career. But I want to start with talking about the exits. So take us back to 2015, when your first company was acquired. What was that day like for you? >> Yeah, I mean, it was a really exciting day. We had been building a computer vision machine learning company for about five years, made a lot of kind of pivots and micro pivots over those five years, and started to hit a nice little vein and grow our customer base. And so a larger company barrier company came along and acquired us. And we're a team of five or so folks, and it just was a really great strategic fit. >> Was that a no brainer to sell? Or did part of you want to keep going and try to build the company bigger? >> Yeah, I mean, there's always that part of you that being an optimist and an entrepreneur that wants to keep going, but it was a no brainer. This one was a no brainer. >> What did you see in the world that others were missing? That's pretty early on to be involved in computer vision and machine learning and AR, like what did you see that others weren't seeing? >> Yeah, so I mean, what got me into computer vision machine learning was augmented reality and being able to interact with AR back in 2010 to 2015, you had to pull out a separate device to interact with this AR content, especially if it was in heads-up displays. So we wanted to solve that user experience gap and create a gesture interface where you can reach out and interact with the augmented content and yeah, as we were doing that, heads-up displays and smart glasses were becoming a little more prevalent. And so I think we just kind of hit really good market timing. Let's talk about that second company that you found it and then also sold. So tell us about Stream. >> Yeah, so actually at the acquiring company of my first company, OTG, helped build and launch remote collaboration software for heads-up displays and brought on some of the first marquee customers like Porsche and GE and others. So kind of got my feet wet in remote collaboration. And so with Stream, when I end up leaving the acquiring company with Stream, I wanted to apply those learnings plus my background in computer vision machine learning to the consumer space. So at Stream, we connected homeowners to remote experts through augmented reality video call so that the remote contractor could capture job specs on a seemingly simple like FaceTime type call. And our machine learning would be working in the background and computer vision to capture more additional content so they wouldn't have to go out and roll a truck. So things like as they were on the video call, a 3D model would be generating real time so they could interact with that 3D model and take measurements or drop in an arrow as a guidance tool or capture serial number and model number of different appliances, things like that. So they didn't have to roll a truck and they could just capture those job specs and then go on site and do the work the first time with the right parts tools and folks to do the work. >> With that second company, were there any lessons that you took from that first company? >> Yeah, absolutely. So in the first company, kind of made every mistake in the book. I remember going through this accelerator and they had a one-page run. Things not to do while you're building a company and being a green entrepreneur, I looked at that and I had made every single mistake on that sheet. So going into stream had really painfully learned from some of those mistakes. And so we applied those to building out stream all the way from how we hired to our tech stack to how we scaled. And scaling stream, we went from my co-founder and I to over 120 people. So internal communication and bringing people along became a challenge at 10, 20, 50, 100 plus people. And those were some really good learnings going through that. >> What did you learn about negotiation when you were negotiating that exit? >> Yeah, so I mean, negotiating the exit was really fun challenge, if I'm being honest. We had stream just raised a round of financing. And so we're in a position where we had the runway and the timeline to keep executing. We had some really great partnerships with Google and Samsung. And we're actually a launch partner with Apple for their new LiDAR device. So we were kind of hitting our pace. And so we were in a position where we didn't really need an exit. But the leadership of the acquiring company front door had spun out some really valuable assets out of ServiceMaster, this whole marketplace of professionals and their home warranty company. So they had a real applicability for our technology. And our vision at stream was always to create a digital twin of the home and plug into a marketplace where you get on demand expert helping advice as a homeowner. And so it just seemed like a really great fit. So as we were going through that acquisition negotiations, we really ran it open and transparent just around we're not really for sale, but the strategic fit felt really good. So as we were negotiating that acquisition, again, we just got to a place where it had to make sense both for our team, for us, and then also make sense to protect our vision, because we felt like we still had a lot to accomplish. So front door ended up keeping us as a wholly owned subsidiary, which was really important to us. And then of course, we got the price right for the team and investors and everybody involved. But I think one of the key learnings that I had was I'm a very transparent person. Kind of what you see is what you get and taking that into negotiation and not posturing and just being really transparent and honest throughout the entire process really helped pay dividends, not only during the process when things got tough, but also post acquisition. It established a really great relationship between our company and the acquire. What can you tell us about patents? I see that you have 30 plus patents to your name. What have you learned about that process? Yeah. So I mean, I grew up in the age of Shark Tank and my dad was always a tinker, and I like to take things apart and build things. So I always wanted to be an inventor. And so ever since my first startup, one of the first things I did was I filed a patent. I thought that was just so cool. But there's so much applicability to having an IP portfolio than it just being cool or just having patents because as a small startup, you're not going to be able to afford to really defend them, but it's more about protecting your approach for your product. And then also what I learned as we scaled stream, for instance, is we had a really great patent portfolio protecting our approach. And when we brought on large partners like Lowe's and Best Buy and Trager, our IP portfolio became really important to them because although us at stream was a small target, those large brands become targets for patent infringement, et cetera. So an IP portfolio actually really protects not only you, but the partners and clients that you bring on. And so that's just been a continued part of our strategy. And we brought it over here to Diggs as well. I think we filed 11 or 12 patents in our first about year and a half. So after the second exit, I hope you got a little bit of time to relax and take a breather. But as you were thinking about, what's next? What was it about Diggs and everything that you're doing there? Like, why Diggs? What was about that problem that just made you say? Yep, that's it. Let's do round three. Yeah, great question. So I was supposed to take some time off. I told my wife, I'm going to take a year off, kind of recoup from the grind of being a founder. And I lasted all of about, I think, three months. So my wife is an absolute saying, and she married an entrepreneur. When we met, I was building my first company. But coming out of stream, one of our visions, our long-term visions, was creating a digital twin of the home, a real semantic understanding. And our approach was to do it through these micro video calls, through support and maintenance calls, and even folks giving bids. So we'd get these little snapshots into the home. Other folks in the market, like Matterport, send somebody out to scan the space. So no one's really captured substantial piece of the market from a digital twin's perspective. So after stream got acquired, I also built my first home. And going through that home building process saw that it was not digital whatsoever. And at the end of the build, I was left with a physical binder with very little of the information on my home. So between that vision that I still had, and itch that I wanted to scratch, and going through a personal situation of going through a home build, came up with the idea for digs by proposing to my current co-founder a challenge. Which was, how do you create a digital twin of the home so that the homeowners empowered with all this information without making anyone go out and capture it? So kind of an audacious challenge, right? So my co-founder is a former residential home builder. And so between me being a homeowner and him being a former builder, we put our heads together and we felt like we came up with a pretty novel approach, which was all the information on the home flows freely and exists throughout the build process. But it's not captured or organized in any meaningful way. So at the end of the build, it's lost out into the ether. So what if we could apply our background in computer vision machine learning, essentially AI, and have it run in the background of an existing builder's workflow. And then we can ingest all that information, all that data, so that at the end of the build, our AI could generate a true semantic understanding, both spatial information from the blueprint, and then a semantic understanding from all the inventory, like the lights, flooring, the countertop, all the way down to the grout and paint color. Could our AI take all that information, organize it in a meaningful way so that the homeowners empowered with a full understanding of their home at the end of the build. So that kind of inspired us to say, hey, I think we're on to something here. The next step was, okay, we have to solve real pain points for builders. And fortunately, Ty has walked a mile in their shoes. He used to build luxury homes in Big Sky, Montana. And so he's felt some pain points from the builder perspective. So we came up with a hypothesis of some pain points we think we can solve. We did a market analysis around who's solving these problems. And it turned up there's very few people focused on solving what we decided to go after, which ended up being a collaboration between the client and the builder. Why do you think that is? I think a lot of folks have looked at some of the builder pain points specifically from the builder perspective and have approached solving them from that viewpoint, where we had both a homeowner perspective and a builder perspective. And it was a very crowded space of people solving builder problems from the builder perspective. So we wanted to kind of flip it on its head and start with the client experience and then our work our way back. So I think it was just a little bit of a unique approach. And we've always been ones to focus on the user experience, just making a really delightful, easy to use product. And so starting from more of like a B2C approach, a lot of us to do that and a byproduct is our product is so simple to use that builder adoption has been phenomenal. What's it like selling to home builders? Are they open to new technology like this? Does it require a tremendous amount of education? What are those conversations like? Yeah, so I mean, we went into our go-to-market approach with this being top of mind because traditionally you hear builders are pretty adverse to technology. Now, what we found, and I don't know if it's more of just the market timing had shifted, but builders are actually, they've been really receptive to new technology. I think the key is it just has to be really simple to use. So I think we hit the nail on the head there. And of course, one of the first things we did is we interviewed 25 or more builders before writing even a single line of code, just to get like our prototype out in front of them, have them test it, use it, and then we would iterate before we wrote any code. And so we did a lot of user research around usability around the pain points we're trying to solve before ever building a product and then releasing it out into the wild. So I think we did a pretty good job of ingesting and distilling all of the builder feedback and then building a product that they actually need. This show is brought to you by Frontlines Media, podcast production studio that helps B2B founders launch, manage, and grow their own podcast. Now, if you're a founder, you may be thinking, I don't have time to host a podcast. I've got a company to build. Well, that's exactly what we built our service to do. You show up and host and we handle literally everything else. To set up a call to discuss launching your own podcast, visit frontlines.io/podcast. Now, back to today's episode. When it comes to adoption and traction, are there any numbers that you can share? Yeah. So we launched publicly our free beta in February of last year. So over the last year, we've brought on over 5,000 homes onto the platform. Again, just in a little over a year, we're in all 50 states and a handful of provinces in Canada. We're seeing about 20% of our users are coming into digs by just word of mouth referrals. So builders and vendors and contractors are referring our product to other builders. And then once folks are on digs, we're really sticky. So our stickiness ratio is right around 41.4% and just to give you kind of a benchmark world classes right around 16%. What do you attribute to that success? What do you think you've gotten right? So I think number one is probably focus. So we've really stayed true to who we are and who we're not. So what I mean by that is digs is not a project management software. There's great companies out there like builder trend to have really captured that part of the market. And it does get tempting when you hear from builders. Well, if you just had this feature, that feature, I would adopt your platform. So really staying true to we're not a project management software. We're focused on the client experience layer for pre construction design, handoff, and warranty. And then we're going to partner with project management software for the in between the construction process. So I think that's been a huge part of our successes staying away from some of those temptations. How do you do that? That sounds so easy when you say like that. But how do you stay away from those temptations? How do you stay focused? I mean, you're right. It's one of the hardest things that we wake up and do every morning. And you know, it takes a village as they say. So it's our EPD team, our engineering product and design team, really making sure that we're ingesting customer feedback, and then doing the distillation process, making sure that we're distilling it against who we are, our company vision, and the core pain points we're trying to solve. And if the feedback doesn't fit one of those three things, we just have to be okay saying no. What about the marketing philosophy? How do you summarize the marketing philosophy and really just the approach to marketing? Yeah, so we've taken a relationship based marketing approach. And what I mean by that is we've identified some really targeted events with our ICB geese, which are residential home builders and contractors and vendors. And so we attend these events like International Builders Show, we meet with builders, we build relationships, and then we also sponsor various different podcasts in the industry. And then we've identified several folks in the build industry that really resonate with our vision around building a better client experience, both during the construction process and post and partnering up with them just to amplify our message. So for instance, Mike Rowe is somebody that's really aligned with our messaging and- The birdie jobs guy? Yes, I haven't watched that been so long, but I love that show. Same here. Yeah, grew up watching that show and I have been a huge fan of Mike's for a long time. And he was actually the keynote speaker last year at International Builders Show. And I just remember going to the keynote and there's probably eight to 10,000 build professionals in the audience. And Mike's message just resonated so well with that audience and with us as well. There's myself, my co-founder, and our head of marketing there. And I just remember turning to them and saying, "We're going to work with him one day." And they both kind of chuckled at me and, you know, eventually we got a hold of his folks and- or his team and we sponsored his podcast and over about a year just built up a relationship with Mike and his team. And it just came to a point where we both said, "Hey, what Mike's trying to do in the trades and getting more of the upcoming use into the trades if college isn't a good path for them." And then what we're trying to do on the technology side with amplifying through AI, amplifying the existing workforce that Builders have, you know, our software can also become a really great recruiting tool for the up-and-coming generation. And so, yeah, we decided to partner together and now Mike's a spokesperson for Diggs. What's he like in person? That's so cool. Yeah, I'll say his voice is even more epic in person. But what you see on TV with Mike is exactly what you get with him behind the scenes. He is just a down-to-earth guy who really cares about the trades and just making the trades a viable and better place to be for everybody. So, yeah, if I could hang out with him more, I absolutely would. Yeah, but those are fun conversations and fun meetings. How do you think about messaging the ROI of this to the Home Builders? Is there an ROI story or you're saying that this will give your customers a better experience and that'll make you more moneyier? What's that type of storyline look like? So, yes. So, we're focused on the pre-construction, the design, handoff, and warranty. So, for the pre-construction, there's also a sales component there on the front end of the Build process. So, we have Builders like Masarosa out of Oklahoma, who he sold 10 more homes this year because of Diggs. So, he's using Diggs as a sales tool, telling these homeowners, "Hey, we use a digital experience to better help you track off your decisions for us to collaborate and communicate more clearly and concisely together." And then, at the end of the Build, you're going to get a full digital version of your home for better maintenance and home ownership. And it's been a great sales tool for Masarosa and many other Builders alike. And then, of course, the efficiency gains as well during the Build process for the design phase, having one single source of truth that the Builder can bring in all of the stakeholders. So, the flooring, lighting, electrician, cabinets, bringing in all of those vendors and the homeowner into one area where they can collaborate, make decisions when changes happen, notify the relevant stakeholders. There's just a lot of efficiency to be gained. And then, also, our AI was something like Ask Diggs, which is our AI chat, allows anyone in the Build process to ask the digital home a question, and Diggs will give that person an answer. So, things like, "Well, is the crowd color in the kitchen that was chosen?" Diggs would be able to answer that. And then, on the backside, Ask Diggs can answer warranty questions for the homeowner. So, the homeowner can be empowered with information on their home without having to reach out and talk to the Builder or a contractor. What do you think spend the most important go-to-market decision that you've made apart from partnering with Mike Rowe, of course? I think all the upfront market research that we did and defining our ICP before we even had a product. So, one of our first hires was VP of marketing, Denepiel. And her mission was to come on from day one and help us create our go-to-market strategy and really deeply understand our core target audience. And then, how do we reach them? Because, traditionally, Builders are pretty difficult to reach. It's a pretty fragmented space. So, how do we get in front of them? And the dream is to always have a word of mouth, flywheel type of effect. But how do you do that in such a fragmented space? And so, putting together that strategy and then testing and iterating early and often, I think has been one of the best things we could have done. As I mentioned there in the intro, you've raised 14 million to date. What have you learned about fundraising throughout this journey? Yeah. So, raising the first seed round was actually a pretty funny story. When I left Stream to take some time off, I decided to get into venture as a venture scout, learn the other side of the table. So, I joined a VC out of Seattle called FUSE. They're about a $250 million fund. Now, I'm investing in B2B software. So, I was doing some venture scouting with them, which essentially means I just meet with founders and help source some deals and participate in due diligence and whatnot. But I was meeting with one of the founders of FUSE, actually, all three founders of FUSE at breakfast catching up one day in Portland. And they asked, "You have to be noodling on something, Ryan. Do you have any ideas? Do you have anything you're working on?" I said, "Well, matter of fact, me and my co-founder are working on something called digs." And so, I shared digs and the vision and how it can become this digital twin and build a marketplace around it and whatnot. And in that meeting, Brendan, one of the partners took the receipt for breakfast, turned it over and wrote terms for a term sheet on the back of their seat. I since negotiated them up. That was a very unique experience and probably pretty rare. But the first two companies that I fundraised for, it was a numbers game. So, I had hundreds of conversations with VCs. And you learn a little bit from each conversation. You don't probably want to take everything word for word and take it a bit with a grain of salt. But one of the things you do get is you get a sense of the VC environment through all these conversations. And one of the things that I think we did really well throughout the past couple of companies was even when an investor would say no, we would ask them if we could keep them updated on a monthly cadence with a friends of insert company name, email. And a lot of the investors that we identified as good fits, but they just needed more convincing, we put them on this email list. And we're really diligent about sending out an email at least once a month religiously. And what we found over the years, both at OTG and Stream, and then even here at Diggs is some of the investors who said no, ended up coming back around six months, 12 months later, and actually investing in a subsequent round. And that's because we had built a relationship over time. We had kept them up to date on our progress and traction and execution over months or a year. And that had just been such a great tool and fundraising. So, with Diggs, it was no different. We raised our first pre-seed round of $7 million from some VCs that invested in my last couple of companies. And that was really to build this really talent dense team that we have. And then once we had enough market validation, we raised another $7 million seed round just to give us the time and space. And that's when we brought on some net new investors and formalized aboard and we're off to the races. And we're up on time years. We'll do just one final question. And that question is, what's the big picture? What's the three to five year vision look like? Yeah, so in three to five years, we hope that every new home in the US is generating a digital twin for the homeowner. We have things today like car facts for your car, but there's nothing like home facts for your home where you have this complete record of everything that's in your home so that you as a homeowner can better support it, maintain it, and even have better resale value and more confidence when you're purchasing a home. So that's really important to us is to create a really accurate record of the home when it's handed off to new homeowners. I would also say builders increasing their existing workforce's output and happiness, just continuing to raise the happiness for the builders and everybody who works so hard to build a home. And then finally, the digital twin of the home, once you have that semantic understanding, I think there's a really fantastic opportunity to create the API of the home where then brands that homeowners love, whether it's a retail brand furniture, etc, or products or services, plug into the home and provide new experiences that we haven't even imagined today. Amazing. I love the vision. All right, we're up on time here, so we're going to have to wrap. Before we do, if there's any founders that are listening in that want to follow along with your journey as you build an execute on this vision, where should they go? So you can follow us on Instagram at digs.hq on LinkedIn at digshq, or you can check out our website and follow our blog at digs.com. So D I G S dot com. What was it like buying that domain? I have to ask. It was a harder negotiation than negotiating our stream exit. That's awesome. All right, Ryan. Thanks so much. Really appreciate it. All right. Thanks, Brett. If you're a B2B founder looking for help launching and growing your own podcast, visit frontlines.io/podcast. And for the latest episodes, search for category visionaries on your podcast platform of choice. Thanks for listening, and we'll catch you on the next episode. (upbeat music)
