EP 86: How Deep Listening Led to a Successful Pivot, with Marcel Petitpas

On this episode of THRIVE—sponsored by Workamajig—Kelly and Marcel Petitpas, Founder of Parakeeto, uncover how deep listening and curiosity helped his SaaS platform pivot in order to provide greater value to agencies that want to understand their profit margins.

Episode 86 Links

Parakeeto: parakeeto.com
Agency Profit Toolkit: parakeeto.com/thrive
iTunes / Apple Podcasts: itunes.apple.com/us/podcast/thrive-the-agency-scaler-podcast/id1370205729
YouTube Channel: youtube.com/channel/UCboltXvff1KfeCHpQbY_8PA/
Vimeo Channel: vimeo.com/agencyscaler

TRANSCRIPT

EP 86: How Deep Listening Led to a Successful Pivot

Duration: 19:18

Kelly: So welcome back to this week’s episode of Thrive, your agency resource. Today, we’re going to talk about pivoting. But not necessarily just pivoting because everybody’s doing that these days. We’re going to talk about it in the context of deep listening and why that matters in order to create a successful pivot. I’m joined by Marcel Petitpas, Co-founder and CEO of Parakeeto. A good friend of mine, Parakeeto is a software that helps agencies and consultancies automagically create accurate data-driven estimates for their projects, literally in seconds, using their historical data from harvest. So really, really niche. We’ll talk about how that all occurred. Marcel, thank you so much for joining me today.

Marcel: Thank you for having me Kelly. Always a pleasure to spend time hanging out with you.

Kelly: I agree. I like to spend time with myself and I really like to spend time with you. So you say that you have known since the age of 7 that all revenue is not created equal. And I would love for you to extend upon that.

Marcel: Yeah, we learned that tough lesson. I think all agency or service business owners learn at some point in their career, which is that you can lose money on a job. And we learned that. My brother and I, on a snow day, because we grew up, I still live in Canada today on the East Coast, we get a lot of snow here in the winter. And so it’s not uncommon for you to have a day off from school because there’s too much snow and we thought, hey, maybe this is a good opportunity for us to go make some pocket change. So we grabbed our shovels and we went knocking on the neighbor’s doors to offer some snow shoveling services. And that was going swimmingly well for the first little while. Everyone paid us handsomely relative to the time it took us to clear their driveways. And it all changed when we got to Miss Harrison’s house. She was kind of an older lady. She was widowed. And when we knocked on the door. She was so excited to see us. And she kind of said, yeah, could you shovel the driveway? And we said, yeah, totally. How much will you pay us for that? Because we were kind of we didn’t know how to price. We’re seven years old. So we were on the honor system. I was like, what will you pay us to shovel your driveway? And she said, I’ll give you guys each a toonie, which is like a funny Canadian coin for $2. And we looked at the driveway, we thought, yeah, that seems fine. Like it’s just a light dusting of snow. So we said yeah, sure, whatever, for two bucks we’ll get this done in a few minutes. It’ll be fine. It’s less than most other people paid us but whatever. And we went over and started shoveling the driveway and figured out that she hadn’t cleared her driveway since the last time it had snowed. So below that nice thin layer of snow that would have been easy to shovel. There was basically a coat of ice that we had to chip through for the better part of a few hours. And I remember at one point, like sitting there and it started storming again. And I’m just like, so dilapidated. I’m like, man, this is the worst. And when we went back up to collect our payment a few hours later, she gave us the $2 that she promised. And I think she felt bad because she knew it took us longer than we expected. So she went back in the house, and she gave us these little sesame snacks as a tip. And I was just like, man, we got to figure this out. I don’t want this to happen to me ever again. I knew at seven years old that I had been grossly underpaid for my time.

Kelly: It’s such a good story, because I think like we probably all have stories like that, especially if you live in a climate where you shoveled snow as a kid or you mowed lawns, or you had a paper route or whatever the case may be right. And that also speaks to your entrepreneurial spirit at seven years old, which I love. But since we’re talking about your big pivot today, with Parakeeto, can you share a little bit with us about what the vision was for the software? From its inception, like what pain points were you aiming to really mitigate for agencies, and then we’ll talk a little bit about where it went from there.

Marcel: Yeah, so the original thesis for the business and the thesis hasn’t really changed. But obviously, what we’ve learned is that our approach to solving for that problem had to be very different. But the original thesis is that small and mid-sized agencies have a lot of trouble answering simple, important questions about their business without drowning in spreadsheets, things like are we making money on our projects? Are we profitable? Should we be utilizing our team better? Do we have capacity for new work? All these kind of day to day operational questions that are a function of time, and people and money and that tend to have data required to calculate them that live in all kinds of different places in the organization, time tracking tools, accounting tools, and so on. So we had this vision to create essentially a middleware platform that would integrate with your time tracking and your QuickBooks and your project management, pull all the necessary data into one place, and answer all those questions for you, kind of in an automated way. That was kind of what we originally had set out to do with the product.

Kelly: Sounds great. Right?

Marcel: It sounds amazing. It was easy to sell that value proposition and in the beginning, it was easy to sell it to myself and to clients. But eventually we started to figure out how difficult it was going to be to actually deliver on that value proposition and what was going to be required from a data perspective, from a technology perspective. And, I think, we started to realize that we were kind of in over our heads once we actually got to the point where we had to try and onboard people onto the product and get them to that outcome.

Kelly: Yeah. So before we talk about where it pivoted to, or where it is now, I should say, let’s talk about the concept of reframing this, because as you and I spoke about earlier today, it’s really easier. It would be really easy for someone to say, “Hey, you set out. You had this thesis. You built this platform. It didn’t actually take off like you failed.” And there certainly could be people that are in that camp. But then there’s another way to look at it. And you shared with me a book that you’re reading. So I wanted to talk a little bit about how you’ve been able to like reframe this from the standpoint of failure into a mindset shift.

Marcel: Yeah, I mean, you alluded to it earlier, it’s kind of about the framing. If our framing was we need to make this product work, then yeah, totally would have been a failure. But we were able to, as a team kind of step back and say, well, look, our objective isn’t to make this product work. It’s to build a successful business and solve a real problem for agencies. And so, learning that this path was going to be potentially not viable was an important step along the way. Because we could have kept investing in that indefinitely until we ran out of money, ran out of time, ran out of energy, whatever the case is, but we were able to catch that soon enough. And ultimately, looking back, we’ll probably say that was a critical turning point in the business. But at that time, we really had to basically take a step back and think like, our current circumstance is a reflection of the mindset and the thought process that we had before. And obviously, this isn’t going to work. We need to kind of reframe the business, reframe our approach, and try to learn as much as we can from this experience to increase our chances of getting it better next time.

Kelly: Yeah. And for me, anyway, here’s where like the magic lives in this story. You didn’t pivot and say, okay, we’ll just come up with another thesis. And we’ll just like, throw something against the wall and see if it sticks. You actually went to the people who were familiar with it, or had tested it, or demoed or knew about it, or whatever the case may be and said, here’s the problem, or here’s the problem as we understand it. Is that still the case? And what kind of things would actually help you more?  So you took a stance of curiosity, you took a stance of realizing that it was totally okay for you guys to be wrong. And you took a stance of really honoring deep listening, like deep listening to what your customers’ needs are. So can you talk a little bit about that?

Marcel: Yeah, absolutely. And I mean, this was like our theory from the beginning, that we wanted to build a very customer centric company, and we want to build our software in a very customer centric way. But of course, that’s a lot easier said than done. Like, tactically, there’s a lot of moving pieces around that. You’ve got to be reconciling customer feedback against your vision for the product and balancing those two things, strategic considerations, and so on. And then there’s a certain volume of feedback that you need to be able to achieve, to see patterns and see clear direction and credit where credit’s due. A good friend of mine, Anthony Cintron, was really critical in helping us kind of go through the process of learning what this new path was going to be. And a big part of that was that he was an external facilitator. We brought him in as a consultant. And he was able to kind of be an objective facilitator of what we called a solution design process. And he kind of really helped us go out and have these conversations with our customers, with people that weren’t our customers that were interested and really kind of asked why aren’t we able to get you to a successful place? Why are these issues that we’re running into with our product happening? We understood like you want this outcome, but we had to get a deeper understanding of how it was actually going to help us get there. And that led us constantly back to the source, which was estimation. We realize more and more and more as we have those conversations that the foundation of all these systems for agencies is the ability to make somewhat accurate assumptions about what projects are going to look like. And that really just happened through having a lot of conversations with clients and then being able to step back and as a team kind of lay our swords down and reframe being wrong almost from like, being afraid of being wrong to like being excited about being wrong. And this is a crazy thing, right? Because if we didn’t get a definitive answer to that, or if we didn’t get enough signals, then it would have been difficult to make the decision to say, okay, we need to close that door, we need to scrap what we’ve built and invested a lot of time and money, and building and move in a different direction. But there’s a certain turning point where we started to be like, we were embracing the fact that we might be wrong about this. And then we were going into the next idea of being like, how quickly can we prove ourselves wrong? And it was a total shift in mindset with how we looked at being wrong. It’s like, we want to figure that out as quickly as possible so that we can increase our chances of landing on the thing that’s going to be right.

Kelly: Right. And what I also hear you saying is like, the mindset shift, probably also had something to do with like removing your ego, or tamping your ego down a little bit in that process. To say, yeah, like get me to wrong, get me to know, right? Because like that only opens up all of the possibilities and the opportunities. We can clear out what’s not working quicker. It’s a total mindset shift. When you’re talking about building anything, it’s not just a SaaS platform. I mean, you’re talking about any type of project, any type of creative output or technological output. So yeah, so you’ve pivoted. And now talk a little bit about all of the solves for  this platform, the real time feedback, the comparison to past projects, and estimates and all that, because I think it’s exciting that agencies now have the ability to use something like this.

Marcel: Yeah. So I mean, as we went down this rabbit hole o f estimation, we figured out that it was like a real pain point. And some of the things that we kept hearing were, we’re not good at this. We’re not very accurate at it. We were having trouble with scope and with profitability. And when we started to try and reverse engineer the process, everybody had their own idiosyncrasies the way they did it. But largely, the process was, well, we kind of try to think about what have we done before that smell similar to this thing that the client wants, and we try to pull up that proposal or we try to find that in our time tracking tool, and we use this historical information to try and get better next time. But over and over, we kept hearing like that is an arduous process. And it’s time consuming. And we spend way too much time on estimates. We started doing the math on like, how much time are you spending. Like well, all of our executive leadership in a room for three hours. So that’s five people at three hours. We all billed out at 200. So we’re spending 1000s of dollars a week like building these estimates. There was all these bottlenecks to where it was like the senior most people in the organization because it was very subjective and not a very data driven process, they were kind of handcuffed to this thing of having to approve and look over estimates. So we kind of step back from all those learnings and said, okay, we want to create a workspace where we can make it easier to use information about projects you’ve done in the past, to get the next ones, and create a feedback loop between what actually happens and what we assume is going to happen. And so, Parakeeto, essentially, is a tool that you can connect to your time tracking tool. Today, we integrate with Harvest, and pull in projects that feel similar to the one that you’re estimating. And then it actually just breaks down by task, like how much time you spent on these past projects, and allows you in real time to compare your estimate to those other projects. And then also gives you some feedback on the profitability of that project to the forecasted profitability based on the inputs and outputs. So you can say, hey, here’s the budget, what’s the hourly rate gonna be if we charge this much? Or you can flip it and say, here’s what we need to make. What should we charge the clients? And it’s really just kind of a workspace where you can take all these things that you might have been doing in spreadsheets and kind of do it in one place and collaborate with your team and streamline that whole process. Hopefully get more accurate over time.

Kelly: And you also have a profitability toolkit that you were telling me about.

Marcel: Yeah. So I mean, this is something that’s we’ve, so to kind of take a step way back, we started doing profitability consulting before we ever started building a product. And that was another way for us to try and get as close to this problem as we could to try and deeply understand it. And so through that, we’ve developed a bunch of checklists, cheat sheets, templates that we’ve used with our consulting clients. And, that’s something that I’m happy to share with your audience. So if you head to parakeeto.com/thrive, if you can get access to that library of tools to help you implement some processes to improve your profitability.

Kelly: Perfect, thank you. I will definitely pop that into the show notes for everyone watching and listening. And yeah, so as we start to wrap up the conversation, like I would imagine that there is a significant amount that you have learned throughout this process. And I always think it’s great to pass on those learnings, those findings, those lessons that we encounter along the way. So what piece of advice would you leave agency leaders with? Not necessarily when it comes to the technicalities of profitability and estimation and all of that, but just in general, like what have you learned specifically from the deep listening and from the pivot itself.

Marcel: Yeah, there’s a couple of things that I think are really critical. The first is something you alluded to earlier, being able to be at peace with being wrong and understanding that that’s not your job. As an entrepreneur, your job is not to be right all the time. Very few entrepreneurs that have had success have been right all the time, and attribute a lot of their success to the things that they got wrong. So being able to kind of lay down your sword and be okay with your ideas, not necessarily being in line with reality, and just being open to learning. And I think that’s the real superpower. Empathy is the real superpower. Because if you can deeply understand your customer, and explain their challenges better than they can and come up with, the right solutions that are intuitive to them, then you should be able to find success. And that is really a process of listening, not a process of being some kind of creative genius. And then the second thing is just embracing closing doors. The more the deeper we get into this business, the more we realize how important clarity is. And clarity is as much a function of what we are doing. In fact, I would say it’s more of a function of what we’re not doing and a function of what we are doing. So really kind of leaning into this idea of invalidating ideas as being just as good, if not better than. Validating ideas so that you can close those doors and confidently say, we are not doing these things. And putting all of your resources and all of your attention into doing the things that you know you have confidence or are going to give you success or that have already proven to give you success. And getting your team aligned around that stuff is going to be a lot easier if you’re able to say no, and do that with confidence and get to that answer quickly. So those would be some of the things that I would encourage you to think about. And then lastly, there’s a book I’m reading right now called A Happy Pocket Full of Money. And there’s something really interesting that I pulled out of that book, which is this idea that your current set of circumstances is really just an image of yourself and an image of your kind of past thoughts and mindset. So really, try to reframe anything that’s not going well that you’re not happy with around an opportunity to kind of observe yourself in that situation and learn as much as you can about your approach. And that’s been pretty transformational for me just in the way that I’ve been looking at things as we go through this pivot, and we deal with all the uncertainty that comes with that.

Kelly: Yeah. Well, I will definitely put a link to that book in the show notes as well. And yeah, really incredible takeaways. I think they’re all important. I don’t know if I would rank or prioritize one over the other. I think they’re all equally important. And just appreciate your transparency and the fact that you took a vulnerable step to say like, hey, something that I was doing wasn’t panning out. And so I took a step back, I said that I could be wrong. And I embrace that and like, look where we are now. So really, really good stuff. Marcel, I am so proud of you. And I really appreciate you coming on the show today.

Marcel: I appreciate you having me Kelly. I know I’ve said this to you privately, but publicly you’re one of the people that supported me very, very early on as I got into this industry, so I can’t thank you enough for being that person in my corner and for always being there for me.

Kelly: You got it.