Walnut.io's Journey from Idea to $56-million in Venture Capital

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Mark Evans: Startups are exciting creatures. It's compelling to identify a problem and build something innovative and impactful. It explains why entrepreneurship is positioned as sexy and irresistible. But growing a business is hard work, teaming with challenges, hurdles, and surprises. You need to deal with the unexpected and follow a road map for success while still being agile and opportunistic. On today's podcast, I'm talking with Joab Delneur, cofounder and CEO of walnut.io, which helps companies easily create personalized interactive demos. A mentor, entrepreneur, and marketer, Yoav advises startups and accelerators on how to attract customers, build relationships, establish that category, and raise capital. Welcome to Marketing Spark.

Joab Delneur: Thanks for having me.

Mark Evans: It's arguably never been easier to start a b to b SaaS business. What's your advice for entrepreneurs thinking about launching a business or entrepreneurs running an early stage startup?

Joab Delneur: I would I would first advise that you kind of look for the right people even before you think you have the best idea in the world. You know, if you don't have a cofounder yet, but you have a good idea, you should probably flex and look for someone that will relate to what you want to do first and have a great chemistry with and, you know, share the DNA with. If you have a cofounder already, then your first two or three employees would dictate your success or failure within the first couple of months. So always put the people in front of everything else. I think that's the best thing that you can do. And, also, make sure you focus you focus on validating your idea, not not just because VCs and investors would would expect you to, but because you don't wanna spend a decade of your life building something only to find out your actual market doesn't even need. And so that's another critical first step.

Mark Evans: It's an interesting comment because CB Insights has a long list of the reasons why startups fail. And topping the list, one of the biggest reasons is that there's no need for the product. And I always find that interesting and troubling because why would an entrepreneur build anything, spend so much time on developing a business when there's no demand for it? Why do you think that happens, and how does it relate to your philosophy of of having a team and then finding the finding a good idea and then validating that?

Joab Delneur: Yeah. Sometimes people rush into building a product they think is great, but, you know, the world will not care what you thought personally. So you have to do something the market needs, and only because not only because you think it's a cool idea. The second thing, when you in interview your target audience, you know, let's talk like b to b, when you start interviewing people, you will hear a lot of very excited responses. But when the moment comes and when you actually expect them to pay for it, they're not gonna be there. So you have to be very mindful of not just following, like, five or six positive comments you've got about what you do. You have to talk to dozens of people from different companies, different size companies, and different countries, and and really do a good job at it.

Mark Evans: How do you know if your idea has legs? We all have to go through the validation process. It's one thing to have this amazing idea or at least an idea that you think is amazing. But what are the steps that you have to go through to make sure that the idea actually has legs? And is there rules in terms of the number of people you need to talk to or the amount of time you should spend before you decide, yes. I think we're onto something. And what are the signals that, yes, this is this is an idea that's worth pursuing?

Joab Delneur: I I would say that if you're in b to b, dozens and dozens of people, if you're in b to c, then hundreds. You know, founders used to think that if 10 people tell them it's a great idea, then, you know, jackpot. But, again, if you have you have to think about people not being either not being totally honest with you and, you know, they wanna bum you out. You know, you're grabbing coffee. They don't they don't wanna tell you your idea sucks. So they'll tell you that it's good. But you have to speak to strangers, not your friends, not your colleagues, and kind of get a lot of different reactions.

Mark Evans: Once you've crossed the chasm from idea to product, you've validated your idea, you develop your product, in this case, b to b SaaS software. The big challenge that a lot of entrepreneurs run into is generating demand or interest in the product. So they're out there. They're busy. They're trying to sell. They're trying to do marketing. And despite their efforts, it's almost like they're spinning their wheels. They're not gaining any traction. They have a hard time convincing anyone that the product is worth pursuing. There's a there's lots of reasons for that. Maybe there's a lot of competition. They have no track record. Maybe it's a it's a time in the economic cycle when demand is a little bit soft. But regardless of the reason, there's no customer acquisition. And those first 100 customers or 50 customers are critical. How do you get those first 100 customers? And and maybe we can even take a step back. How do you get those first five or 10 customers? Those are the ones that are just taking a leap of faith because they have no social proof that you can't really give them any other examples of of people who have gone before them. What's your advice about that?

Joab Delneur: Yeah. Your your first customer would probably be a friend or, you know, a workplace of a friend. Every one of us can get a first customer. The first five is more difficult. You have to go beyond your circles. Just show your MVP to a couple of, you know, companies and offer them to be design partners, which is kind of you don't need to monetize it yet. Right? You just need to show investors that there's, like, interest from the market. So tell them we build it out for you, and you don't need to pay for it. And then the the next two or three customers will be design partners. And you you would go and grab their logos and go to more serious companies that can pay for it. And it's like a, you know, it's like a it's like an interesting climbing up the stairs one step at a time. Eventually, when you've already hit, like, a double digit number of customers, that's where things usually take a nice turn. Depending if you're if you're building a valuable product, they can also take a turn to the wrong side. But, if you're building something nice, then that's where you're going to see it kind of taken off. You would wanna invest in content and a little bit of PR a little bit early on so people can believe you and trust what you're doing. Like you said, if you don't have the experience or the background, you would have to convince them through other sources that you're valuable. And so press coverage usually does the trick that you can send over to prospects, and be very clear about the message and the problem you want to solve.

Mark Evans: So initially, you're looking for guinea pigs, for lack of a better word, people who will invest their time to reap the benefits of your product. So you're you're looking for them to volunteer their time. The question I have is, how do you make that happen? How do you find those people? Is it word-of-mouth? Is do you go through your networks? Because we have to look at many companies. It's an investment. Regardless of whether they're paying any money, they have to invest something. You better find somebody who really needs your product. What's the process for that?

Joab Delneur: Right. That's a good way to find out if you're building something the world needs. If you can't find people that want to get your the value from your product for free, then something's just off. Or either you're talking to the wrong go to market, and this is completely you know, that's that's a mistake we can all make early on. You can switch personas in the organization and see if if there's a better reaction. But if you take your MVP to someone, you know, VP, whatever, let's say a VP product marketing in some organization because that's your target audience, and they tell you they don't wanna devote a little bit of their time to get free value from your product, then you're you're not building the right thing at the right time. And so you'd have to, you know, pivot a little bit. Eventually, you need to find people that will want to devote a bit of their time. For us, you know, it's a demo platform for sales teams and sales leaders. So when we just started talking to VP of sales and we spoke to, like, 60 or 70 of them, that's when a waitlist started to form. And when we saw the waitlist keep growing and growing, then we knew that it's a real problem. People need help.

Mark Evans: It's interesting. In the case of Walnut, describe to me those early days when you had this idea of an interactive demo. You started how many people did you reach out to? What was the initial reaction, and how did you find those design partners?

Joab Delneur: Yeah. So with Walnut, I I I say that, you know, the styles aligned in ways that I've never seen much in my life, including helping 600 startups as part of running an agency once a many years ago. Everything just kind of aligned. Like, the the first batch of 60 or 70 VP sales we spoke to said, you know, we would really pay for it. They even named the price that they wanna pay for it when it's ready because they had huge problems of friction between salespeople and developers and product and, you know, people trying to help or interfere with the prod with the demos that salespeople are doing. And we told them we can empower your salespeople to create their own demos and manage it and run it and personalize and everything. And so it was it was a very it was a very swift beginning. And then we launched on product hunt to kind of test the waters, and that grew to be the best hunt of that week with, you know, being nominated for their annual awards, and it got exposed to thousands of sales leaders. And at that point, we had 700 people on the wait list, and everything just kinda took off.

Mark Evans: We could all be so lucky as entrepreneurs to have that happen. Yeah. One thing I did wanna pick up on is you mentioned PR as a way to provide customers with some confidence in you as the entrepreneur and the company. And having been a journalist for a long time and having dealt with a lot of PR people, from the outside looking in, it sounds great. Getting media coverage being written about in TechCrunch sounds wonderful, but we all know the realities of PR. It's really hard to break through. It's a very noisy landscape. It's hard to attract the spotlights, especially if you're a small company with very few customers and a nonexistent track record. So how do you leverage PR? How do you create a story about yourself that's newsworthy when you haven't a lot you haven't got a long track record, there's really not a lot to write about?

Joab Delneur: Yeah. That's a great question. You know, if you don't have the right connections, you're in a problem because you can't even afford to hire a PR agency yet. Right? You're at seed stage. It doesn't make sense. If you're if you want to get, coverage if you think your story is very timely, you know, because we launched when remote sales became a thing during the first COVID lockdown, and it was super interesting. And then the public saw that we're building an editor for demos, and then they said this is like Wix but for demos. And it's and then the the the, you know, the headlines were like a Wix for demos type of thing. So we kinda danced around that. And then we raised our first 2,500,000 seed, which is now considered to be low seed and most journalists would not cover, but it was still at the beginning of COVID, it was sufficient for an announcement. So you you you need to get all kinds of triggers and hooks and but eventually, like, try to reach out to journalists, you know, on your own, whether on Twitter or anything, and offer them a story. A lot of founders are kind of afraid of that. Right? They don't wanna you know, they're afraid of this whole thing of talking to journalists. They're like, if I don't have a CMO, I don't know how to do that. But I think journalists really appreciate talking to the founder and CEO. So just try it out. If you if you raise some funds for a seed round, then I think it's good enough for a first announcement.

Mark Evans: I found that as well when I'm dealing with clients is they wanna hire a PR person, or in some cases, they want me to reach out to a reporter or a blogger. And I and agencies and people like myself, consultants like myself, we don't have the street cred. We don't have the credibility. Entrepreneurs, on the other hand, they're authentic. They're they're doing it. They're the ones it's their time and money and energy on the line. And I and my advice to a lot of entrepreneurs is is go out and talk to reporters. Reporters like talking to the source of truth. They want real world examples. They want to hear firsthand about what's going on with startups and what entrepreneurs think of trends. So I think that's that's great advice. Once you've got product market fit, once you've validated your product, once you've got a few guinea pigs or customers in the mix, what's the next step? Because some companies will just set hire a sales team, and they'll go hard hoping that the product sells itself as long as you can reach out to enough people. Other companies leverage marketing because they wanna build a brand, and some companies do both. What's your advice? Is there a general rule of thumb of when things should happen or whether things should happen at the same time? Because for a lot of entrepreneurs, it comes down to priorities, competing priorities.

Joab Delneur: Yeah. Yeah. Most of them remember way too late to handle first of all, to handle any of what you just mentioned. You know, I've I've seen startups who were kind of successful, but they forgot all about the CMO or a VP of sales up until the, like, second or third year and, you know, things started to gradually crash. So you have to focus on your brand, your positioning, the value proposition from day one, I think. Even if there's not a lot of budget, just start working on your brand. The thing is it's a slow process, and the other thing is your competitors are probably gonna beat you to it. For us, we've made, by the way, a very a very odd decision of bringing on a VP of sales as our second employee. We did not have a full product to even sell, but he's also our target audience. And so we also use him to help us shape the MVP of how VP of sales would want to use our product, and and that was a very smart move. Mhmm. In between, you know, he built out our pipeline and and leveraged his network, that was a very smart move for us.

Mark Evans: What about marketing? When did marketing become part of the Walmart the the Walmart mix?

Joab Delneur: So our tenth employee has been a head of marketing, and it's also super early on. Like, usually, I'm not saying bringing a full full time head of marketing when you're 10 people. It's usually the size where you're still building out your product, trying to experiment experiment the direction with your design partners. But it's like my my personal background is marketing, so it was my it it was my personal hunch that we need to get it early and, you know, get it right. And it really paid off. Like, we're considered to be one of the best brands right now in b to b sales, and we're getting hundreds of leads each month just of different initiatives that we have around brand, and so it paid off.

Mark Evans: Timing for marketing is always an interesting question, particularly when it comes to hiring a full time employee. Many of the companies that I work with have, at best, a junior marketer because they're not quite sure that they're ready for marketing or they don't have the confidence in marketing or they don't have a budget for marketing. And my question to you is, how do you know when the time is right to hire that first full time marketer? And as important, what kind of skills should they have? Do you hire a generalist who can who's a jack of all trades or a Jill of all trades and they can do anything, or do you hire a specialist who can help you leverage a particular channel or a particular type of marketing?

Joab Delneur: Yeah. I I would first say that kind of varies according to, like, your specific industry and product and everything. Some industries require to be more loud and, you know, better with content and build a brand early on. Well, with with some type of startups, you could be better off, like, building your technology in the garage for the first year. But let's say you're, you know, part of an industry that's competitive and you wanna go out there and go above the radar, I would say, like, around your anywhere between 10 or fifteen first employees, that's when you wanna squeeze in that first marketing. And you would want like, I I think the the idea of a generalist could be good. Like, if there's, like, a medium level generalist not hoping to be CMO, you know, can handle the social and the branding and the website and the first PPC campaigns, handling your PR team and everything. Even for most founder, that that is good too good to be true. Usually, they would not find even that guy early on until they raise sufficiently more funds, and then they can pay for the more expensive people.

Mark Evans: What about the the flip side when it comes to sales? You you're a first hire one of your first hires with the VP sales. How quickly should b to b SaaS start ups scale their sales? Because if you've got demand, I guess you can handle more BDRs and you can hire more salespeople, and they'll have enough to do. But is there a rule of thumb in terms of how quickly you should build out your sales team?

Joab Delneur: If you're I'm I'm talking as a here as if you're not a sales startup because we are, and so we had to bring them on super early because it made sense. If you're not a sales startup, then, you know, I would say the minute that you feel you've hit a little bit of of a fit of a market fit, like, if you feel that you've if you've spoken down to a 100 customers and something will actually happen, like your product can do something, then you should start, with your first time, with your full time salesperson. If you feel your product is not there yet, your design partners are disappointed, there's too much of a road map until the moment you actually feel it's time to launch and everything, then you should probably hold off a little bit more.

Mark Evans: What was the journey like at Walnut? How are the first VP of sales? Tremendous demand or interest in the product. So there was a giant pipeline. Did you scale up quickly, or were you a little bit more pragmatic?

Joab Delneur: It it was very fast. Like, we we started our first deal with a couple of design partners, raising 2,500,000 seed round and seeing where it goes. And we ended our first year with over a 100 customers, including fortune companies, and raising a total of $56,000,000.

Mark Evans: Incredible. Maybe we can shift gears a little bit and talk about fundraising. Raising money is very exciting because for entrepreneurs, it's seen as a validation of all the hard work that they've done and the the tea and their teams have done, but it also takes a lot of time and effort. What's your advice having gone through and having raised so much money? What's your advice on how entrepreneurs should raise money? Because it can be very distracting. You can often be out of the business while you're trying to talk to investors and raise capital, and it and it there can be some downsides if you you find that you're not raising the money that you need. If you're a entrepreneur and you're looking to raise money and if you're the CEO and you're the visionary, how do you manage the balancing act between raising money and running your company?

Joab Delneur: It gets very distracting. And from the moment that you're gone online and above the radar let's say you've even announced your first 1 or $2,000,000 of investments, that's when they go after you, like, the VCs and the funds and the angels investors. And they would target you as as a good lead, and they would ask for your time. And then you'd have to think if this is worth my time now, because the more you ask so that you're not raising funds right now, the more the more they will keep trying and following up, assuming you're a good team with a good product. Right? People are not just wasting time on bad investments. But if you're if you're a good deal, then they're gonna keep trying and it's never ending. Like, it's a black hole. It doesn't end. Every time you think you've, you know, finished talking to investors, a new week begins and people reach out. So this is something you should be mindful. If you're not if you really don't need money for the next six months or eight months, like, you don't need to talk to anyone. You'll just be wasting your time. And you're giving investors some data points about where you are business wise, and you have to think if this is the right call for you. Maybe it's not the right move right now. Maybe it's a maybe it's an investor that's been working with a competitor and, you know, he's just trying to sniff around. So only do it, like, couple of months before you really have to, and only do it with funds that you think will be valuable to you.

Mark Evans: So what was your experience like? You did that initial 2,500,000 seed round. In the scheme of things, it's relatively small. All of sudden, the company gets red hot. You've got this giant pipeline with hundreds of customers. I suspect that VC started knocking on your door. How did you go from a seed round to raising $56,000,000? And and and how hard was it on you personally to be involved in that process and raise that much money?

Joab Delneur: Everything is very emotional. Like, you know, it's hard and easy and good and bad all at once because if if you're on a role or, you know, like you said, a hot topic, then you're gonna get everything inbound, but then you just you just have to decide who is worth your time. But also then you can decide and it doesn't work out and the terms don't work out and you've wasted weeks of your life. Like, anything can happen. For us, it was like starting with a 2,500,000 seed, going above the radar, making noise, being the first top rated product on Product Hunt, getting double digit press articles in our first couple of months, growing the waiting list to 700 companies. That's when we got to extend our seed to 6,000,000 because there was a lot of inbound demand of amazing investors from Silicon Valley, and so eventually it was 6,000,000 seed. And a couple of months later, we we were commercial with a couple of impressive clients, and we've done our 15,000,000 series a. And a couple of months later, over a 100 customers, lots of engagements, and 35,000,000 series b.

Mark Evans: So the question that I've always wanted to ask a CEO who raises a lot of money, once you get all that money in a short period of time, what do you do with it? Obviously, the the the investors want you to move fast. They want you to hire fast. They want you to build the pipeline. They want you to build out the structure. Do you put the money in the bank for a while and you think about it, or you just start do just start executing on the plan that you've had that accompanied your your fundraising activities?

Joab Delneur: I think the smartest thing I've done is bringing a full time VP of VP of finance to help me out with all of this planning and a VP of people because growing fast, if it can hurt anyone, it's it's your people. You have to do it smart and wise and keep your DNA, you know, so people are gonna be bummed out. You haven't promoted them. You've brought on more experienced people from the outside. Like, when you grow that fast, then you you grow like a startup that's been alive for, like, five or six years, but in under two years, and that can reflect a lot on the people. So we try to get everything right with my management team. You have to spend the money like, theoretically, you have to spend the money to grow, but now there's also kind of a switch in mindset ahead of the recession. I don't know when it's published, but people are a recession that's gonna happen. And so you have to focus not just on growth with your money, but also on being efficient and, you know, getting revenues.

Mark Evans: Shifting gears a little bit. There's a lot of talk these days about big to be SaaS companies building a technology category. And I'm curious from your perspective, what does that mean? Is it important? And if you do wanna build a category, how do you do that? What are the key steps?

Joab Delneur: I think eventually every startup describes themselves as as if they were building a category, but it's not often true. Like, for us, it's luckily been true because it really did not exist before. Like, we were competing with brick and mortar solutions and PowerPoint presentations and videos and and stuff. And so I've I've seen I've seen it happen really fast from talking about it and hearing it's a nice idea up until the point where you have hundreds of inbounds and, you know, Gartner's writing a blog post about your industry, and I've seen it happen real fast. I think the main point is trying to be first to market and trying to be the first one to announce what you do, and so the market will appreciate that you've come up with it first and then establish yourself with a lot of presence. The more followers you have on the on LinkedIn and the more content that you have, the more, educating content that you produce and thought leadership pieces and all that. All of that kind of connects into a huge puzzles, a huge puzzle that says, you know, you're dominating this category.

Mark Evans: The other thing I wanted to talk to you about when we were trying to arrange this interview is one of the topics that you were focused on is networking. And I found that really interesting over the last two years is that networking has changed. The days of going to conferences and meetups and coffees and dinners, that all disappeared. But, obviously, networking is still important. A lot of it happens over Zoom or over things like this. As an entrepreneur who's trying to leverage networks, because it's important to sort of build up that network, how do you do it these days? Conferences are coming back fortunately, slowly but surely. But what's your approach to networking, and how do you how do you do it effectively and efficiently so that you can build a network that that works for you?

Joab Delneur: Yeah. That's a great question because it's, you know, it's sometimes it's just remote and digital. Sometimes, like you said, it's in the real life, and it's really hard to tell what's going on these days. If you have a strong presence online, I think it really reflects on the offline. I work a lot on, you know, my the content that I provide and share on my LinkedIn and every everywhere else. And then when I and podcast, by the way, I get invited often, and I gladly take it. And then I go on to actual events, and you actually see people, you know, know who you are and know the the tone of voice that you have and the positioning that you try to own, and there's a lot of correlation in between. I would say the more engaging content you share, like, let's say even creating a podcast like you're doing or just participating or or a blog or a, you know, a video series or of course, that raising a lot of money never hurts your hurts your efforts, right, of being of being a tech figure. But even before that, if you if you dominate a specific topic, then it's really gonna reflect on the real life events and the real life, network.

Mark Evans: We've teased over the last twenty eight minutes at Walnut, but never really talked about what Walnut does and who it serves. Perhaps we can take an opportunity to give me a mini sales pitch on walnut..io.

Joab Delneur: Yeah. For sure. So so we're letting sales teams and marketing teams create interactive demos, personalized demos. They help them put the prospects in the center. So, you know, no two prospects are alike, and they should probably get different experiences. You can embed it on your website so you don't even have to take the Zoom call. You can just send it to a million prospects. You can walk them through the interactive demo. You can get insights and conclusions and, you know, analytics into the process. You can collaborate with your appeals and salespeople on your company. And, eventually, you can call it you know, you can look at it from different angles if it's product led growth that we're allowing, if it's just personalization, if it's just making b to b sales less difficult, this is usually the core of what we do.

Mark Evans: Where can people find more information about you and Walnut?

Joab Delneur: I'm I'm everywhere. It's really hard to ignore. So but but walnut.io and our different handles on LinkedIn and Twitter and my own LinkedIn, I'm always available there for feedback and messages.

Mark Evans: Awesome. Well, thank you for all the great advice and insight. And thanks everybody for listening to another episode of Marketing Spark. If you enjoyed the conversation, leave a review, subscribe via Apple Podcasts or your favorite podcast app, and share via social media. To learn more about how I help b to b SaaS companies as a fractional CMO, strategic adviser, and coach, send an email to mark@markhipmans.ca or connect with me on LinkedIn. I'll talk to you later.