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How an AI startup used the Scaling Up platform to increase profits

Proof founders Dave Rogenmoser, Chris Hull and JP Morgan, from left to right.

By Verne Harnish 

David Rogenmoser and his co-founders at the Austin-based startup Proof are on the front lines of a trend that’s likely to transform many creative industries: using artificial intelligence (AI) to write content. Their Austin-based startup, which was in the 2018 cohort at Y Combinator, introduced its latest product, Conversion.ai, in January. It uses advanced AI to help companies create Facebook and Google ads, website content and social media posts. “It’s an assistant,” explains Rogenmoser, the company’s CEO. “It’s going to super charge you, help you phrase things differently.”

Although the seven-person company, founded in 2017, is now in growth mode and crossed $13 million in annual revenue for the first time in 2020, it laid off seven people in November as the company got clearer on its goals. Here is how Rogenmoser and his partners used the Scaling Up platform to position the company for growth in 2021 and beyond.

Right-sizing a team

Proof raised $2.2 million in a seed round four years ago and gradually expanded its team to 15 people. However, by 2020, the company wasn’t growing as quickly as its leadership team hoped. Fortunately, Rogenmoser and his two partners, CTO JP Morgan and COO Chris Hull, had read Scaling Up: Rockefeller Habits 2.0 and done a three-day retreat to immerse themselves in it, chapter by chapter, a few years back. 

Using the Rockefeller Habits checklist and the FACe (Function Accountability Chart) helped them get clear on what kind of company they wanted to become and to realize they didn’t have the right people on the bus. There were people on the team working on projects that weren’t moving the company forward.

“They were doing important things but we were not growing as a result of all of that work,” says Rogenmoser. “They were on the wrong bus.”

Although laying them off was painful, he says, “it ended up being a big relief and freed us up to make decisions. From a strategy standpoint, getting our team down to the core, correct people that we really needed changed everything for us. We weren’t bound by the strategy we had set before.”

Getting clear on strategy

By using the One Page Strategic Plan and 7 Strata of Strategy worksheet, Rogenmoser and his co-founders clarified the company’s purpose: getting people writing more words. They also came up with their Brand Promise: Having the highest quality content, the easiest-to-use interface and the highest-quality training around. “If we can really do that—create the best app with the best output, we’re going to do really well and create the flywheel,” Rogenmoser says.

To keep the team focused, the company implemented a five-minute Daily Huddle, in which each team member reports in on their Rocks. Although they initially resisted the idea of bringing structure to the business, they found that it set them free. “We’ve gotten everyone very aligned,” says Rogenmoser. 

Execution = speed

As the company added new people, the leadership team saw quickly how this made their operations more complicated. “Each new person adds complexity to the conversation,” says Rogenmoser. “All of the communication channels grow exponentially.”

To execute on their goals more quickly and effectively, they’ve worked on simplifying every process, such as those used in customer support, to make it easier for everyone to row the boat together. That is important in a company and industry where outstanding execution depends on speed: “We can move much faster,” says Rogenmoser.

Getting profits flowing 

As a result of its efforts, Proof began to get a better return on its investment in growth. One thing that helped was posting a scorecard that tracked monthly recurring revenue upon the launch of Conversion.ai. “We’ve gotten very profitable for the last several months,” Rogenmoser said in May 2021. “For the first time we’ve had a lot of cash on hand.”

With some of that cash, Proof acquired a competitor earlier this year, a move that allowed the company to expand its customer base. “That was an ‘aha’ moment for us,” says Rogenmoser. “Cash sitting around allows you to do something like that. Buying that company was probably the single best decision we made from a growth standpoint.”

And with Proof using the Scaling Up platform to continue fine-tuning its operations, it seems well-positioned to thrive in the highly competitive world of AI.

Verne Harnish
Verne Harnish
Verne Harnish is founder of the world-renowned Entrepreneurs’ Organization (EO) and chaired for fifteen years EO’s premiere CEO program, the “Birthing of Giants” and WEO’s “Advanced Business” executive program both held at MIT. Founder and CEO of Gazelles, a global executive education and coaching company with over 150 coaching partners on six continents, Verne has spent the past three decades helping companies scale-up. The “Growth Guy” syndicated columnist, he’s also the Venture columnist for FORTUNE magazine. He’s the author of Scaling Up (Rockefeller Habits 2.0); Mastering the Rockefeller Habits; and along with the editors of Fortune, authored The Greatest Business Decisions of All Times," for which Jim Collins wrote the foreword. Verne also chairs FORTUNE Magazine’s annual Leadership and Growth Summits and serves on several boards including chairman of The Riordan Clinic and the newly launched Geoversity. An investor in many scale-ups, Verne resides in Colorado. A father of four, he enjoys piano, tennis, and magic as a card-carrying member of the International Brotherhood of Magicians.

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