Josh Daiter 0:00

People start with a dream and a vision and a product. Like that's how we started. We just like took us a long time to really figure that out. And so for if anyone's listening who's kind of feeling intimidated, like you don't have to start that way at the beginning. You just gotta like put something out there and try, you know.

Angela Robertson 0:15

Welcome back to the Stormy Story Show. I'm your host, Angela Robertson, CEO of Ace Tech, a nonprofit membership society for tech CEOs and founders, so that no one really has to build these complicated tech businesses alone, and that every one of our members can thrive along with their businesses. Today's guest, I'm delighted to introduce you to. His name is Josh Dater, CEO of Inventory, a fast-growing SaaS platform transforming how collectors and hospitality professionals manage wine inventories. With a background in computer engineering and artificial intelligence, he has scaled inventory from a kitchen table idea into a multi-million dollar platform used by wine enthusiasts around the world. Welcome, Josh, to the Stormy Stories Show.

Josh Daiter 1:06

Thank you so much. Thank you for having me. I'm looking forward to it.

Angela Robertson 1:09

I mean, I feel like this is an idea that you would think already exists or is somewhere out there, especially if you are a wine enthusiast, as I'm sure many of our listeners are. What made you realize, though, that this could become a scalable technology business?

Josh Daiter 1:28

Yeah, that's interesting that you asked that question because, you know, when we first started inventory, there was only really one company in the space. Uh, it was Seller Tracker. They were the only other business doing wine inventory management. And when we started the company, I started with my dad, he's a big wine collector, and he was kind of looking for solutions all over the internet to track and manage his collection. He came across Seller Tracker, he eventually ended up not really liking it because of its outdated UI and it was kind of like stuck in the 2000s, if that makes sense. This was back in like 2018. And then he, you know, resorted to an Excel spreadsheet. And when anyone has to resort to an Excel spreadsheet to do anything, you know that there's a gap in the market. And so I love design. I love apps. And I kind of took a look and was like, we could do way better than this. And so that's kind of how it was born. We just decided to make a version of Seller Tracker that was a little bit more modern.

Angela Robertson 2:21

That's so huge, though. I think what you pinpointed there, Josh, about anyone needing to step into an Excel spreadsheet that has to expose a gap. That's gotta hit it. It that just hit me to the core because I'm just thinking about how many gaps in my day-to-day that I am trying to, you know, forge with an Excel spreadsheet. So it's a real pain point.

Josh Daiter 2:41

Yeah, I think a lot of businesses are formed that way. Like anything you have to enter in like data-wise, it's like anything you want to enrich beyond a spreadsheet really should have its own platform where we do all the heavy lifting of like all the metadata and anything you want to know around the thing you're tracking.

Angela Robertson 2:56

Yeah. And so taking that thread along, you've spoken a lot about AI becoming infrastructure rather than replacing SaaS. How is that philosophy shaping the future of inventory?

Josh Daiter 3:08

Yeah, I think that statement really only applies to consumer SaaS to some degree. Okay. You know, if you're a business and you have like a piece of software that's, you know, that you use for some critical piece of your business and you're paying like $10,000 a month for it. At that point, you can do the economics and the math and say, well, does it make sense for me to just build something or, you know, leverage AI to replace this piece of software? If you think about that, it makes sense there. If you think about uh for someone paying like $15 a month, let's just say, for a platform, for them to go and like talk to Claude and build their own version of it, it's gonna cost like way more than $15 a month to do that in in the form of tokens and their time and their effort and troubleshooting. The economics there make a lot less sense. So for us, you know, we we don't really think that AI is gonna replace our industry. We're just gonna leverage it to enhance what we already have. And we're gonna sort of like loop ourselves into that type of technology.

Angela Robertson 4:10

Building in a niche market like wine tech comes with unique challenges. How did you approach growth and customer acquisition early on? Sounds like your dad was signed up from day one, but what about the next customer that comes your way?

Josh Daiter 4:23

Yeah, I mean, we started by just getting all of his friends. That was quite easy. You know, wine collectors they love to go for dinner together. They talk about wine, they share bottles, they share stories. And so that's the number one way we started was like, hey, group of friends, you should look at inventory. And then one of them gets behind it, all of them get behind it. And so we started off that way. And then we kind of hit a wall and we were like, well, we only know a certain amount of people. How are we going to get this out there? And so the number one way that worked for us at least, now every business is different, was just running paid ads. Because the market was so hungry for something to come in and bring wine collecting into the modern day, it was really easy for us to, when someone saw an ad, to be like, oh, this looks really cool. Download the product, and now we have a customer. So customer acquisition was really easy for the first few years. It's getting more challenging, you know, with meta changing their policies and all of the AI apps coming into the market, but we're we're always trying to stay ahead of that.

Angela Robertson 5:20

And in what way are you employing those strategies to stay ahead? Because I think a lot of our listeners are also struggling with these changes and the ways that they were acquiring customers before.

Josh Daiter 5:31

Yeah, for us in the paid media game, it's all about content. Okay. What we discovered is like the more content you create, the better chance you have at hitting something that that sticks. So we're creating like over 20 variants a month of different types of content. And then we just like select the winners and we run those for like a few months, and then we just go until it's exhaustive. Um, but that's the number one thing that I think gives us a leg off against competitors is just the sheer amount of volume that we can put out in terms of content.

Angela Robertson 6:00

That's amazing. It's a and that's no small feat to put together that kind of content strategy. So are you building a team around this? Or what is the way that you're able to kind of expand that reach? Because yes, it's necessary to acquire customers, but it, you know, it takes time, takes money, et cetera.

Josh Daiter 6:20

Yeah. I mean, it's all just one big experiment for us. Okay. So, like, you know, you never really figure it out. You're kind of just always running experiments and then picking winners. Um, but we have an agency that helps us do this. So they work really closely with us to create our content for us because we're really small teams, so we want to keep it that way. Um, we have an agency kind of handling that side. And then internally, we've started our own program. We call it the UGC program, where we reach out to creators who might want to make videos for us and we pay them like X dollars per video. Um, and then if that video hits a certain performance threshold, we'll pay them a percentage of whatever that is. So we're posting every single day different creators, different hooks, and we're kind of just playing the organic algorithm to see what's going to stick. And then if we find something that sticks, we move that into our paid program. So it's kind of like free creative testing, if you think about it. Not really free, but it's much cheaper if you were to just take a random video and throw two grand behind it to see if it will, if it will fly. And we can do it for like $100 in set.

Angela Robertson 7:18

That's huge. That's huge. You recently closed a 2.3 million seed round. Congratulations. Thank you. What changes uh for you mentally and operationally after raising outside capital?

Josh Daiter 7:31

Yeah, I'm sure a lot of people experience this. You know, once you take on outside money, the way that I look at it is it becomes an obligation. You're no longer, you know, creating wealth for yourself. You now owe it to other people to make sure it's successful. You know, you've had their hard-earned money and you want to make sure that you're using that correctly. So the stakes kind of get higher, the pressure kind of mounts, and the way you think about the business becomes very ROI-driven. Like, let's just figure this out kind of thing. You're focused on, you know, if I put a dollar here, am I going to get at least a dollar out or am I going to make make a make a profit on that? So, you know, everything changes when you take money. I I always tell people like, be very, very sure that you need someone's money before you take it. Because if you have an opportunity to bootstrap your company, 100% keep the ownership because I think that's the way to go. But some businesses just need the outside capital, and that's fine too. Just know what you're getting into.

Angela Robertson 8:24

Yeah, I think that's such an important piece, right? Because some people feel like, okay, I've got the money. Now I have the runway and I can go. But I know you've got to have that in mind that it's the stakes are now higher, and it's not just you. And it is a big decision to make, right?

Josh Daiter 8:43

It's very easy to spend that money. Like it's very, very easy. And I think that's you gotta act like it's your money, like it's in your personal bank account. That's like really the only way to not let it just go, you know, and be very careful with where you spend it.

Angela Robertson 8:58

Yeah. Very, very careful. That's so important. Many founders focus heavily on product. We've talked a little bit about how you came from ideation to new product with inventory, but it sounds a little bit like the trust that you've been able to build with your customers and maybe even the distribution model are what's created the moat for you. What gave you the confidence to kind of pursue that so heavily as opposed to kind of staying stuck in the product and iterating, you know, the engineering mindset?

Josh Daiter 9:34

Yeah, it's a great question. I mean, we were stuck in that mode for like years. Like we're I would say I would classify inventory as a product-led, like a product-driven growth company. So like we start with building a great product and then by word of mouth, kind of people talk about it. But that only takes you so far. And especially now, you know, there's something like I don't know how many apps there are being submitted to the app store a day, but it's like getting exponentially larger. You know, anyone can kind of like build our feature set. Anyone can go, I mean, it would take them a long time to do it with the level of care and security we have, but you could build a copycat. But in my opinion, no one's gonna download that if they've never heard about you, if no one's behind it, if your friend didn't say it was good. I I think ultimately building that trust with consumers is important and is the thing that's gonna like keep you ahead. Like if you type in wine on the app store, there's only three apps that really appear in the top three, and we're one of them. It'd be really hard based on the number of reviews we have, downloads to like crack that top three. And I think those who kind of hold the crown there are gonna keep the crown. So, all this to say, like it's gonna be extremely hard to just build copycats and get out there. You have to figure out your distribution, build trust, and and you know, get the right people on your platform.

Angela Robertson 10:45

And do you think that's what it what's going to separate companies that are enduring from short-lived ones? Because, like you're saying, AI just continues to make software development faster and cheaper. So is it is it really that trust and distribution? And maybe even go a bit deeper and tell us like how you are specifically doing that with inventory.

Josh Daiter 11:05

Yeah, 100% is trust and distribution. Like building is virtually free. Anyone can go and build anything, but marketing is hard. Like that is, and it's always been hard. It's even harder now. Like it's become more competitive. For us, I mean, we're lucky to have, you know, capital behind us that definitely helps. But again, like back to that content piece, like the fact that we're able to create so much content and get that reach and reach that hits. I think that really helps because it's kind of like like a self-fulfilling cycle. You get people to download the app, they talk about it. It helps kind of drive our cost of acquisition down and more people talk about it. And you know, we have to spend less and less on marketing. So you really have to spend lots till you hit a certain point and then you can spend less. Um, and that's when you know you've reached kind of like, I want to say like the product market fit version of marketing.

Angela Robertson 11:52

Um, yeah.

Josh Daiter 11:53

Where you've really hit that critical mass. But I think that that's gonna be the thing that differentiates, you know, products from being something that, you know, can maybe be viable to something that has true staying power.

Angela Robertson 12:03

It's so true, right? Because you can build the greatest product ever. And yet if nobody knows about it or if the right audience isn't seeing it or experiencing it the way that they should, they're not going to be attracted to it. And they may choose something that's less desirable or, you know, less of a fit for them. They just don't know what else is out there.

Josh Daiter 12:22

Yeah, I've I've seen wine apps that honestly have downloaded and I've been like, wow, like this is pretty good, but no, it has like no reviews or has no downloads. No, like they figured out their marketing or they haven't turned it on and they haven't, maybe they don't want to like it's a crowded space. Like you're fighting for that, you know, that ad spot. So I think like it's it again, like it's something I say like we still haven't figured out. And I I don't think we'll ever be able to say like we figured it out. It's kind of like a month by month, did this cohort work? Did this cohort work? Did this cohort work? I've I mean for the next however many years.

Angela Robertson 12:55

And that's what you're iterating on, right? You're talking with the team, presumably with this agency too, on like what works, what doesn't, and doing that revolving going forward, not trusting or not assuming necessarily that it's always going to be a success.

Josh Daiter 13:12

Exactly. Like we never want to make the same mistake twice. So we take notes on things we uh tested, we don't do that again, we move on. And I think like in terms of having a leg up, that's the like experience that we have. We know like what works and what doesn't work, whereas someone new coming in may struggle with figuring that out. But it just takes time, it takes effort. It, you know, it starts with having a good product. I think it, you know, it's hard to market something that, you know, like a leaky bucket where people download it and then they don't pay or you you don't have anyone staying. You have to have a good product and then figure out your marketing.

Angela Robertson 13:47

Mm-hmm. Yeah, that's what keeps it going. So, what are you measuring as success with your marketing right now? You know, what is actually converting for you?

Josh Daiter 13:56

Yeah. I mean, what we we take a look at the basically the unit economics. So it's like, okay, we spent X in a certain month. What did that drive in terms of revenue? What what hits our bank account? Um, make sure that if we spend X in one month, that we're able to make a profit on that customer in 12 months' time. So anything that's over 12 months' time is technically a failed cohort for us. If we're profitable at month 12, it's a success and we keep going. So it's really a function of how much cash you have on hand to be able to fund that model. So like the longer it takes for you to get payback on that customer, the more money you need in your bank account to fund operations to make that money back.

Angela Robertson 14:36

Exactly. But you're tracking all of those points along the marketing chain to get the ROI for your customer coming back. Yeah. That's, you know, you think that that's straightforward, Josh, but actually I would say that not enough founders or companies are doing that, right? They just kind of think marketing stand is a has to happen, but how do I measure impact? It's a whole other thing.

Josh Daiter 14:58

Yeah, it's it's complicated to set something up like that because you can look at it holistically, like, okay, we spent X and we made X, but then it's like, okay, let's break down what we spent. Can we optimize that even further? Are we hitting the right channels? Are we measuring the right things? It's like to me, that's the sign of a mature company in terms of marketing, one that can really tell you what their cost of acquisition is and when they can make a payback on their customer. But like, no one starts that way. Like you've, you know, people start with a dream and a vision and a product. Like, that's how we started. We just like took us a long time to really figure that out. And so for if anyone's listening who's kind of feeling intimidated, like you don't have to start that way at the beginning. You just gotta like put something out there and try, you know?

Angela Robertson 15:40

You gotta try. Exactly. That is the goal. You have to just put something out there. It's true. Now you've gone through bootstrapping, fundraising, scaling, rebuilding, all of these different stages in the founder life cycle. What has been one of the stormiest moments in your founder journey so far?

Josh Daiter 15:59

Oh my God, we've been through so many, so many ups and downs, you know, running out of money, getting money at the last second, having to let a whole team go. Um, I would say that was the hardest thing we've ever been through. We had a great team, you know, when we first bootstrapped, we had a great team of like eight to nine people working on the product. And then we just realized, like, again, this is the sign of an immature company who didn't understand their unit economics. We realized this wasn't viable. Like the way we were operating or the level of uh number of employees in our spend just wasn't making sense with the revenue we were getting. So we unfortunately had to restructure and pretty much let everyone go. And that was a really, really, really tough day. I promised myself after that that I would never put myself in that position again because it was really hard. And so that's also part of kind of what formed me as an entrepreneur is understanding like the stakes of what you're dealing with. You know, it's all fun and games until you have to alter someone else's life and their income. Uh and then you just don't feel great about yourself. And that all stems from decisions you make, and so it can weigh heavy. So that kind of, you know, I grew up a lot that year. I had to really pick things up and understand, you know, what makes this business tick. How are we actually gonna make money? And so that was one of the hardest things I think I've ever been through.

Angela Robertson 17:14

What did you do during that time period? Because, you know, like you lay off the team, now you're on your own. It's a lot to sort of process and figure out what to do next. What were some of the things that you did for yourself to go through that?

Josh Daiter 17:29

Yeah, I mean, we almost shut down for good. Like we almost weren't here. I think it was a mix of, you know, I partnered with my dad and he had put a lot of money into it. It was a mix of some cost bias. Like, you know, we put just put so much into this and we have users and we have traction and like that that's gotta keep us going. But those that year and a half after that, it was hard. Like I almost put my head down and didn't pay attention to like what people were even saying. Like I just saw like new users go up and I was just like, okay, let's just keep going. Like I wasn't really, you know, I was just kind of believing in it to an extent that wasn't realistic. And then one day I just said, you know what, this actually is realistic, but we need to like shave this and this and this, and like we're we're very close to what we would call product market fit. Let's just dial it in a little, and then we kind of just took off from there.

Angela Robertson 18:19

And it sounds like, you know, it I know that you're saying that it was a really challenging period and that you were almost just relentless in your belief. But at the same time, you're watching those new users tick up. So evidently you're also measuring against whether people are using it. You are taking some data in and making those decisions, right?

Josh Daiter 18:40

Oh, a hundred percent. But our spend to revenue was still wacky. Like we still weren't like making a dollar on our dollar. Uh we were overspending, um, the the you know, the unit economics weren't making sense. It was only until we like were honest with ourselves. I think a lot of people aren't honest with themselves, and we just sat down and like looked at the numbers and said, Yeah, this doesn't work, but we're not gonna give up here. What can we do to make this work? We raised the price. We did a whole bunch of things just to make things make sense. And it's funny, we raised the price and we actually got more users. So price was a signal of value for us, and it worked in our favor and on both ends. So we're really grateful for that. And then OMC we figured out our content strategy and our distribution model, and um, everything kind of came together there.

Angela Robertson 19:27

But like you had wild discovery, right? You raise the price and you get more customers in, but it's because they now see that maybe there's value there in your product more than what they were expecting before, right? And sounds like maybe your ideal client is also someone who is somewhat discerning from a value perspective too, if they're a wine connoisseur.

Josh Daiter 19:51

Yeah, it's funny. The number one feedback we get still, like on our cancellation forms, is too expensive. And but we've tested lower prices against higher prices, and the higher price always wins on revenue user. So it's like you're kind of just filtering people out. Like, okay, so people start a trial and they're like, you know what, I don't want to renew at the 150 a year. That's fine. But the people that do are generating more revenue and they're doing it at a higher volume. So there's a lot of like people in there that don't, you know, that pay and don't say anything. And so sometimes what you measure can be selective bias versus what you're seeing. So if you're getting, you're sending out a form, know who you're sending this form out to, but measure the whole thing, right?

Angela Robertson 20:34

Yes. Yeah, bring it all in. So true. Looking ahead, how do you see technology reshaping hospitality in this wine industry over the next five years?

Josh Daiter 20:47

Yeah, I mean, this is a classic answer, but I think AI and automation are going to do a ton. We really believe in that. That's why, like for us, we just launched uh our MCP server, which basically lets people connect inventory to Gemini, to Claude, to ChatGPT, because if they if a restaurant wants to, if they use Claude and they want to compare their, you know, QuickBooks PL to their spend on wine, they can do that all with a Claude integration. And so we just want to be at the forefront of that and make sure that we're prepared for people doing more things with these tools. But I think that that's gonna change a ton uh as we move forward. Like integrations are gonna be super easy. Uh, I think tools like Claude, GPT, whatever you choose, are gonna be at the center of all business operations.

Angela Robertson 21:32

And it sounds like it's reframing expectations, right? You know, people would think that there would be no way to measure this before, or no way to avoid, you know, wine spoilage or spillage or overordering, et cetera. But now you have the if you're tracking the data and you own the data, then why not use it to make the decisions you need?

Josh Daiter 21:52

Yeah, a hundred percent. A hundred percent I agree with that. That's huge.

Angela Robertson 21:56

Well, Josh, it's been a real pleasure speaking with you today. I hope all of our listeners are excited to explore what inventory has to offer. And I look forward to our next conversation whenever that may be.

Josh Daiter 22:10

Likewise, thank you so much for having me. I really, really appreciate it.

Angela Robertson 22:14

At Ace Tech, we believe one of the most valuable resources a leader can access is another leader's experience. That's why I created the Stormy Stories show to bring you honest conversations about the moments that test us, shape us, and ultimately make us better CEOs and founders. Thanks for listening, and I'll see you next time.