#098 GeniusLabs | If You Don’t Quit, Someday You Will Find Product-Market Fit

If you don't quit, someday you will hit and find your product market fitting and create a product that gives value. It was very hard, sometimes depressing. But if you don't quit and then you succeed, you feel very good with yourself and you get more confidence. Welcome to the Midstage Startup Momentum Podcast.

Each week, we interview up-and-coming founders of some of the fastest-growing mid-stage startups across the world. Your host is Roland Siebelink, who will share some of his own experience helping startups scale from 10 to 1,000 people in a few years. Here is Roland. Hello and welcome to the Mid-Stage Startup Momentum podcast.

I am Roland Siebelink and I'm a coach and ally to many of the fastest-growing startups around the world. Now, today's guest is very special. He's dialing in from Israel, and he's a founder who actually once raised 300Ks to build something in crypto, but then gave all the money back to his founders. So what happened there?

I want to hear that story. Today's special guest is Nadav Ben-Odiz. He's the CEO and founder of Genie Labs. Hello, Nadav.

Thank you for joining the Midstop Startup Momentum podcast. hey Ronald thank you very much it's a pleasure to be here oh it is a pleasure to have you on the show for sure well before we get into that story Nadav I just want to hear what do you do with Genie Labs like what is the purpose of the company what impact are you looking to make in the world and how far are you amazing so at Genie Labs we are basically building a content engine for gaming studios, helping them to create content for different use cases that needed in the game, which are the in-game content, the levels, the characters, all the core of the game, the live ops, which is how games monetize basically money from the users and how they retain them as much as they can.

And of course, for marketing need, which is how the game studios acquire new users, new players, through creatives, through art. And so we help them to automate those processes inside the game studios. But our vision is actually to help them to understand, not just like to build an engine content that helps them to create content, but understand what content will bring more value, what content will convert more, how to measure success of creative in marketing, how to improve the creative for the live ops.

So this is what we are aiming for, to be a smart content engine for gaming studios. So for those listeners who do not understand the gaming ecosystem all that well, can you give us a quick introduction of what are the major players and maybe also some what are the pressures or the challenges that most of these players face? Yeah, so gaming is a huge industry in one hand. It generates above $200 billion revenue per year, and it's growing.

It's bigger than movies, right? I'm not sure, but I think it's at least equal. It's a very innovative industry, like people always try to improve and giving better experience to the player. And Genie coming to help the studios, like we are B2B and we're helping them to support their players, basically.

And the challenges that we are solving are the content problems. Like at the end of the day, in gaming industry, in the gaming industry, the content is the king. like without content there is no game you know we have the economy and you have the mechanics but you need to have fun game interactive game and usually to do it like the gaming use like characters that you are connected to a story uh like everything of a story inside the game that push you forward as a player to be curious about what what next or be or to develop motivations to progress inside the game levels and each game with different style and different genre of what is motivated the gamer to play.

So I think the problem that we are solving at Genie Labs is how do I create in times that the content is very hard to produce, is very expensive to produce. people especially the gen z i think they are spending a lot of time with the biggest competitor of the gaming industry which is basically tiktok and instagram and all of those uh social platform and other media competing for attention right exactly competing with the eyeballs uh it's all about the eyeballs, where the user wants to spend his time.

So in those platforms, the UGC platform like TikTok, for example, so the content is created and changing in seconds. You will always have new content to see, new things that are interactive and customized and personalize to the users because there are a lot of creators that creating the content and it's gaming it's different because in gaming you have 30 people let's say artists that creating the next level more interactive content so it's limited so actually our job is to help them to automate the process and with the same 30 people that creating art that producing the content in the gaming, in the game studios, to be able to compete and create a lot of content to interact the users.

Because especially in mobile gaming industry, the live ops that I said before, which is a short shortcut to live operations, it's how I keeping my players engaged all the time, how I retain them and now I monetize them So because it mobile gaming and players stay for a few months usually the average paying user stay for a few months maybe a year or two. The content needs to be always new, always refreshing. Nadav, as in any startup, there's the building the product side, which we just discussed, but then there's the go-to-market, right?

So how do you get in contact with your buyers? who typically do you reach out to? What is your go-to-market strategy so far and how successful have you been up to now? It's a hard question.

We are still early stage startup. We started from the Israeli hub, let's call it. We love gaming. We know a lot of people here.

So we opened doors in different gaming companies for starting point. Some of them didn't want to work with us. Some of them say, okay, it sounds like a good idea. So this is how we started, like from word of mouth.

We start for one game and then two games, three games, four games. Just use introductions from like investors or people you knew or how did it work for you? I'm always looking for the very concrete things that founders do to get their go-to-market going, you know? Yeah, so this was my last year main go-to-market.

to go to existing customers, to say to them, you know how much is impactful for you. Do you have any colleague in Israel, out of Israel, that you can connect us with, introduce us? So it's work from me proactively approach to them or just for a gaming industry? Asking for referrals, basically, right?

Exactly. And investors, as you said, I met with VCs that not necessarily invested in me, but they see the product, they see the value, they see the pipeline and the traction that we have. And they want to help to their portfolio. But now we are developing another way of active outreaching to different gaming companies through LinkedIn, through other channels.

We are sponsoring conferences. For example, next month we are going to Gamescom, Germany. Nice. Yeah.

So it's a good way to meet new people and to scale up your sales pipeline. Yeah. But then, of course, any founder listening to this who's in an earlier stage will say, well, referrals is all good and fine. But how did you get your first customer?

Tell us that story. It's a long story. But as you said, I raised $300,000 when I was a student. Yeah.

When I was 26. And then like in crypto, we decided to do a pivot. So we closed the company and we said to the investor, listen, we are, first of all, not a good fit as a founders. And second, like we are pivoting and we are not sure what to do.

So until then, we don't want to burn in the industry. Right. Take the money back. It's okay.

It was our first interaction. and I said to those investors, listen, I'm very determined to create another startup. It was good for me to gain some experience, but I'm going forward and pushing how to create something I love and impactful. So they gave me another 50K just to not quit and I set out their offices and start to think about my next phase.

I met another almost like what in Silicon Valley they would call an entrepreneur in residence something like this like I just sat in their offices and it was hours like spending in it was not ChetGPT then like in YouTube, what to do just like doing research in a way right, yeah endless research but actually something that is really helpful is first of all to choose an industry you love yes i didn't have a background in anything not in real estate not in gaming not in finance so i just picked gaming because that was something i love and i knew that is a pretty big market even though you had dabbled in like prop tech and some other industries right but in the end you just chose an industry that you have a passion for already right yeah passion and also like uh to be realistic to see like if there is enough gaming companies or companies in this field that I can approach, which is easier if they're in my local and then to go out.

So this is what I'm looking for. So is the market big enough, but also do you have enough entry points in your local market, in your local community to indeed find those first customers, right? Exactly. Exactly.

because if you need most of your customers are for example in Germany so it's much harder to meet your first customer so that's exactly what I did, I just met with lots of gaming founders that I knew I met with investors and told them listen I'm looking for gaming industry leaders to understand some problems what their pain points to learn about the industry and this was pretty hard phase because i think it's a really must have skill actually to for a founder to to know to open doors and because you know you don't have any experience in anything especially for first time founder without even a degree yeah um to open doors because people are busy not everybody wants to help you and most of them not believe in you so you need to convince them to open the door for you and helping you and like fast forward I met with one game studio for that called InPlay Labs which is a startup that creates the game Animals and Coins which are our first customers.

And they just, we had a lucky, they just like acquired by Playtica, which was another great logo to add to the slides. Yes. And so it was a great foot in the door in a big company. And they just said to us listen if you will solve this problem we have a lot of content that we produce We have a lot of challenges to keep the LiveOps schedule of the content LiveOps, on track.

Yeah. And we miss opportunities and we lose money because we don't do it in the right frequency and we don't have more budget. We don't want to spend more budget on it. So this was real confirmation that there was an actual pain point there that you can help solve, right?

yeah and i think and this is a tip that i give to to new founders like anytime like if you want to validate the idea don't listen to anybody that telling you hey this is a really cool project i like it it's a great vision like if you will do it i will use it like it's not strong enough you really need to validate with the persona if he's going to pay on this how much he's going to pay on this like if you had this like in next month I told him I'm going to develop it in next month next month is in your like pipeline you will get the access to the platform would you agree to sign a contract with me right now if I'm creating this for you would you be able to sign it right now with me?

And he said yes, which was a strong validation. That's excellent, Nadav. And I actually want to double click a little bit on what you said, like it's a crucial skill for founders to learn how to open doors. So this really goes into the realm of founder sales versus just hiring a salesperson or something, right?

It sounds like you're definitely on the first side of that. Like you have to do founder sales, especially in the beginning before you can even hope to scale your company. Would that be correct? 100% agree.

Like if you don't want to sell your product, if you don't know how to sell the product, so nobody else would be like determined to enter to your company and sell it for you. Like it's super hard. It's meaning that you don't know to communicate the value. you don't really understand the product market fit if it has and it's like if you don't understand the problem and you can't communicate it to the customer so it's really hard to understand what to build next that's the crucial part of it as well right it's not just learning to open doors and to ultimately push a contract up somebody's nose as you said right but also to learn from them like what is actually what sucks about my product right now what what do i need to do better what is the problem that i'm actually trying to solve for them actually another interesting point is that i met with this guy i hope you will not hear it but i met with this guy like sometime something like a year ago before i back to his office and told him uh listen i what to do like what is your problems and a year before I met with this guy like again he said to me listen I have this problem like the same problem that he told me like after a year I have this problem if you will solve it I will pay you and I didn't listen for him I just raised some money I raised 1 million dollars back then just to make the timeline clear so I returned the money to the investor I got 50k from them I found my new co-founder, Yotam, which is an algorithmic engineer.

And we raised together $1 million to do something in the gaming industry. And we spent a year trying to find what to do. We know that AI can help in gaming studios. And we tried a few products, like three, actually, three products that we developed that wasn't required, actually, from the customers.

So we didn't listen from them. And that was a very wrong decision. I ignored for many things and tips and actual pain points that the industry told me during this year. And when I was tired from it, we decided, me and Yotam, to just really do something that the customer wants and really try to listen.

It's very hard. It sounds very easy in the podcast, you know, you need to listen and you need to validate the problem, but it's the actual is very hard in the theoretical. So, Nadav, can we double click on that? Why is that so hard?

Why do founders find it so hard to solve actual market problems? You know, like it's my first-ish venture that I'm doing. But I think it's very common with the first-time founders, especially if they don't come from the industry. So there is a reason that it's harder for them to raise money because they don't know really the market and the problem.

And it takes time to listen, to learn, to understand the customers, to understand the pain points. So it's very hard. and when you raise money first time and you're working so hard about your deck, your pitch deck to the investor and everyone say, wow, it's an amazing deck and it's very convenient and convincing to the investors. Everybody who hear it, even people from the industry say, wow, that actually can change the market.

Right. But when you say, okay, now you can pay on it, you said, oh, let me see. Let me check. I'm not sure this is the right time for us.

So this is the validation that it's not a good idea and you need to change it. But still, there is a feeling when you got $1 million, $2 million, $10 million, first time, it's hard for you to, at least for me, it was hard to really listen to the market and not stick to my plan that I showed everyone, that I committed to everyone. Yeah I think for me was the learning of being agile to develop the ability to make pivots It hard to take your company and change it I see many companies at least in Israel that raise a lot of money even too much money to build something big and it's not working for them.

They're not earning dollar for three years. And now it's very hard for the founders to do a pivot, to tell it to the board, to maybe fire people in your company, to change the business model, to change everything. How do you distinguish between the strength of your vision and then at some point in time also having to admit like this isn't working? Like where's that point where you know like now I do need to pivot?

So for me, it was when I tried to raise money again. Yep. I tried to raise money around one and a half year ago. It was the last pivot we did in Genelapse before the content engine that I told.

So I was worried because we spent a lot of money and the product ARR was around 10K. And not really, but something like 10K. And so I said, okay, we must raise money. Let's build something like let's create something very visionary.

We have kind of a POC or some talks with Roblox. We said, okay, let's do it. But we didn't understand that this is not 2021. Like now it's much harder.

People look about revenues and not like partnerships or LOIs, which is not existing anymore, I think. So I tried to raise money. It was very, to be honest, it was one of the hardest times I had in the startup to meet with more than 45 investors, I think. I went to the US to meet at least 30 and another 15 in Israel.

And I didn't raise money. It was very hard because I knew like deep inside, okay, there is no ARR. Nobody wants to invest. probably 45 investors do understand something.

It's not attractive. Maybe one of them will be believer and optimistic and eventually will put some money, but still. And even then you're like, well, but if they're just a believer, yeah, they may save us, but it's probably not good enough for us to have a sustainable business. You can't build a business on believers only, right?

Yeah, exactly. And I said to myself, I know how to pitch, I know how to sell it to investors, but still it's not making sense for people to put, I don't know, three, four, five million dollars on this venture. So I went back to Israel, spoke with my co-founder, I told him, listen, we need to pivot because with no ARR, we can just close the company. and so ultimately it's really like investor traction that makes you feel like we need to pivot it so um you already hinted at this a little bit but um all founders also try to help other founders that come after them right so what is your what is some some other pieces of advice you would give the other founders that would listen to you if they listen to you of course so if you decide to listen to me so I think the most key takeaway at least for my journey was to not break as a founder just to not stop not be not enter to a loop of sadness and and say, okay, it's too hard for me and quit.

Like if you don't quit, you probably will hit sometime, someday you will hit and find your product market fit and find the real need and will be like able to create a product that gives value to the industry that you are working with. Because there was many times for me that I, many points in my timeline that I say, maybe it's not for me. It was very hard, sometimes depressing. But if you don't quit and then you succeed or you feel very, very good with yourself and you get more confidence that in the next time that you will have hard times, you will be able to go out of those hard.

It's building your personality as a founder. And it's a crucial part to not win every time, especially in the first year, just to lose and lose and lose. And keep yourself moving on. And again, don't break.

Keep believing. Change your thinking every time. Get out of the box. Try to speak with people.

So open doors and create new opportunities until you will find something that works. I think this is my... So persistence, some humility as well, I think, and an open mind is really what you're saying, right? Yeah.

That's excellent. Okay. Well, thank you so much, Nadav Ben-Odiz, the founder and CEO of Genie Labs for coming on to the Midstage Startup Momentum podcast. This has been a great conversation.

and for the audience, we will have another episode for you next week. Thank you, Ronald. I'm excited and looking forward to hear it. Now, Daph, if anyone wants to hear more about Genie Labs, where do they go?

So next month, we will have a new website, so you can search us on Google. But right now, you can hit Genie Labs through LinkedIn and send me a DM, and I will answer you. Excellent. Okay, now if anyone wants an introduction to Nadav, of course, I'm happy to oblige as well.

Thank you, my dear audience. And thank you, Nadav, for joining us.