Introduction to ID R&D

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ID R&D started as one of those startups you read about in books and see in shows or documentaries. The co-founders secured a long-lasting project-based software development relationship with a significant player in the voice biometrics space while retaining the intellectual property generated during the execution of the statement of work. It was a brilliant move that the CEO was able to secure; what a fantastic job and great start! There were two co-founders: one with go-to-market strengths and another with deep technical knowledge and scientific background. With the large contract in the books, the team's ambitions were, as you would expect, how to grow, scale, and develop a top-notch technology company. They heard from their network that a product-led approach worked within successful startups that scale, and at the same time, the CEO had a conversation with me which identified me as a missing piece of the puzzle. We immediately felt that on both sides there was a great match to what they were missing and what I could bring to the table. I could help organize and build a product-led organization, raise funds, and prepare the company for exponential growth and scale.

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Our excellent match propelled us forward significantly every month, every quarter, and every year achieving success beyond our initial expectations. We successfully secured a seed round while also executing customer contracts. At that time, our collective knowledge and the market analysis that I developed allowed us to identify a market opportunity. Based on a hypothesis I formed, we validated the problem with a tiny caveat: all of the existing players in the market at that time were saying, “we tried it, but it is not going to work because of existing technological limitations.” Our deeply technical co-founder had an extensive network of smart individuals that led us to build a team with the right ambitious young, hungry, brilliant minds to solve something others could not. We believed in our team, but everyone else in the industry told us it was impossible and that we were crazy.

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Challenges ahead

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To provide a little context, our business was in the biometrics domain. Our product had a clear differentiation working with only one frame, analyzing with very high accuracy, and finding artifacts that human eyes couldn't recognize. Our breakthrough came in one of those “to pivot or to persevere” moments, as after trying out for several weeks, sprints, and months we couldn’t get to the level of accuracy we expected initially. We argued about what to do. There is always a ‘workaround’ at times of difficulty for engineers to figure out how to simplify the existing challenge. But we maintained a data-driven, product-led strategy of staying true to our core value proposition for our potential client base that had been thoroughly confirmed when we interviewed prospects while getting signals of the pain and urgency.

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Successful solutions lead to great results

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During these times, we were pitching to investors, clients, and partners while at the same time launching our first product to market. It was quite a successful year, as the next few after that. The noticeable outcomes were a little over $5M raised since inception, a product launched, went to production, and we were generating recurring revenue (our first million dollars in Annual Recurring Revenue) through software licensing. Another advantage we had was our partner-centric approach and flexibility in the business model - we were adopting the market while keeping a scalable model, which is a win-win situation. We also grew in team members; we doubled the headcount and kept ourselves lean and sustainable as part of our growth. While building the product team, I started growing product practices and ensuring we could scale as we grew.

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In preparing ourselves for the subsequent growth phases, our next challenge was to keep the momentum going and become the leaders in the niche while maintaining culture and performance. One of the things we did was the implementation of the Objective and Key Results (OKR) methodology. From my previous experience, I knew it would be a change and a challenge for us because only a couple of our team members had heard about OKR methodology and why it was needed. We started slowly to ensure we didn’t overburden ourselves with new complex processes. We first started with the leadership team and then practiced the first year at a company level. It had an immediate impact, and I prepared the plan for it across organization implementation, which took time, but we were on the right track.

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Growth Points

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It became evident there were different ways to grow even further. We could keep growing organically or find more creative ways to accelerate the pace. I previously had great relationships with one of our partners who could be an exciting candidate for those creative ideas based on their vision and values. During this growth stage, we continued pitching and raising our next round to keep our trajectory growing and scaling. We were recognized leaders in the space - facial liveness; however, we also got some incredible technological breakthroughs in voice biometric technology due to our expertise and unbeatable results in independent research competitions. Because of our presence in the industry, we could bring a competitive advantage or something new and help solve more significant challenges. This led us to have interest from several “joint ventures” types of engagements. In front of us was a decision, and we had options, which was fantastic when you could choose during these times, and our investors supported and trusted us with that decision no matter what we would have decided.

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• One option - grow organically, which is less appealing than the other two.
• Second - raise another round, growing moment, and scale by ourselves.
• Third - get a strategically significant merger and grow together stronger.

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As history will reveal later, we decided on the third option - it was an excellent achievement for the team and myself personally, leading a company from zero to one. Our products have been licensed on all five continents, deployed in 55+ countries worldwide, and used by hundreds of millions yearly, and we are just getting started. It wasn’t the end of the story because of some specifics I mentioned above. It wasn’t a merger for heads or for eating an additional piece of a pie of the same market - it was a thorough strategic move from both parties: Mitek Systems acquired ID R&D. Mitek Systems is a publicly traded company; you can see the press release online. We went from a $0 to $49M valuation at the time of acquisition. After achieving another milestone, I could update this case study.

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Inference

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Here are a few lessons that I would like to share that will help you in your journey:

• Leadership team alignment is crucial, and the whole team has to know the ‘Why?’ behind the objectives.
• A mind shift is the most challenging change you can face during transformation or adaptation to new tools or processes - if leadership doesn’t lead as an example, don’t waste time and resources because the success rate will be low.
• Talented people or “creatives” (as Ed Catmull describes them in “Creativity, Inc.” book) are demotivated by decisions they don’t understand - especially if the decision is against their conclusions. Sometimes, you can’t reach a consensus, especially when you have a quorum of creatives with their beliefs, knowledge, and expertise - you don’t always have to agree, but alignment is critical. It is typically possible with a strategic product-led approach, transparent communication, and clear objectives.
• If you hire talented people to do work and “disable” them, not giving resources or trusting them with their expertise (at the end of the day, you hired them to do the job because they are great at it, trust your decisions), expect something will not work. Adapt to change, let go and grow!

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When you identify the pain point (or multiple), urgency comes from every customer interview, and if there is either a clear ROI or budget - you have identified a hypothesis for the market problem. You haven’t confirmed product-market fit until you have quantitative data that customers are paying for a product that solves their pain. Essentially, you achieve product-market fit when they or their users get the expected outcome or solution for their problem, and your unit economics are profitable.