May 27 2023
The following is a transcript of a speech Jonathan Hope gave in Tokyo as part of the Founder's Peak event in May 2023 reflecting on his journey as founder of Keychain.
"That's your only weakness, as far I can see." Milton said to his son, slowing his walk to a stop.
"You know what you're missing? You're missing what I have.”
He leans in.
“I'm a surprise, Kevin. They don't see me coming. That’s what you’re missing."
As I reflect on my journey building my company, those lines from the film "Devil's Advocate" come to mind, because it reminds me of the what it means to be early to market. My message to you, the early technical founder, is that if you persevere through being underestimated, being hilariously early will grant you two undeniable advantages:
- First, you will have the gift of time, which if used well, will allow you to refine your product and strategy.
- Second, you'll be so far ahead of your competitors that you surprise them; and the best thing is, they won't see you coming.
Right now, market alignment is happening for Keychain, after years of being laughed at by, well, pretty much everyone. I created Keychain over five years ago with the vision that every person, company, and government will have the ability to manage digital trust, independent of big tech.
And yet when we started out, hardly anyone understood what we were talking about and why. Why would anyone need to manage trust themselves? What does that word even mean in the context of the digital world, trust?
Still, just two months ago --- with the approval of the Japanese government --- Keychain's partners integrated our technology with Japan's national identity infrastructure as part of a ground-breaking pilot to help Japan establish digital trust, even when offline in the event of an earthquake. Keychain was selected, I'm told, because of all the vendors they contacted in their global search, Keychain was the only company that had the solution they sought. Our competitors were nowhere close.
They just didn't see us coming.
Likewise, other Keychain partners demonstrated innovative solutions built on Keychain. And because of the effectiveness of the Keychain product, they are beating their competitors. Just like the others, they didn't see us coming.
It is happening for Keychain, and if you are a technical founder starting out, I want that to happen for you as well.
Typically, the founder of a startup will see a demand, set a vision, then build a product. A slightly early founder will set a vision and once demand is confirmed, build the product. But a hilariously early founder, due to having experienced the problem firsthand, will see the vision and have built the product well before demand is confirmed. It’s a risky endeavor.
The importance of being early is that you avail yourself of a resource far more precious than money, and that resource is time --- time to refine your assumptions and deploy product. Beware though. While being hilariously early de facto means you’re able to see the future, it also means that potential investors will find it difficult to assess your company until traction comes.
The journey of being early is a treacherous one, because you will be underestimated by not only your competitors but also people close to you, including existing investors. The fact that Keychain had progressed so far in our go-to-market strategy allowed us to escape a near-death experience related to an investor.
It is not a secret that in Japan, some investors invest in startups to exert leverage over them. It's a known problem of the ecosystem, but you don't expect it to happen to you. At the onset of the covid scare, the convertible notes of our first round were set to mature in six months. While the company was doing well, we had not yet begun exponential growth, and we were not doing well enough to pay back all the notes immediately. While this scenario is common for many startups, one of our investors was particularly unhappy.
What would you do in this situation? Would you fund raise in the middle of a pandemic scare? Or would you focus on building the business and move the needle forward?
So, what did I do? I bet on myself.
I focused on closing a deal with a large customer for a use case that was perfect for our solution. If successful, this would have moved the needle forward. Yet the clock was still ticking, and we now had only three months until maturity.
I doubled down.
I did what I knew to do best: I delivered massive value to my customer in a small consulting engagement, a practice I had honed during my 20-year career. I then got a license deal proposal to the CEO’s desk and got verbal approval just before the fateful meeting with the investor.
On the call, however, the investor’s response was an unsupportive silence, despite just being told about a deal in-progress, the value of which was greater than our revenue to date. It was there, on that call, that I suspected we were entering into one of those notorious situations. So, I politely cut the call short by informing him that we would make him whole and return his money, effectively retiring him as our investor.
Great, that was easy! Now all I have to do was find the money somewhere and to do it quickly, becuase the investor followed up the call with an email threatening to go after my intellectual property if I didn't pay him.
Well, not only did we close the big deal, but we also achieved records sales that quarter. This allowed me to pay off the investor and retain control of my company. That simply would not have been possible had I listened to the people who told me it was too early.
He underestimated me, and I’m sure he didn't see that coming.
Since that battle, the market changed in our favor. The world awoke to the need for digital transformation, incidences of cyber-security attacks skyrocketed, and politics fragmented the Internet. All of this created the perfect storm for Keychain’s value proposition. The market came to us, and so we enjoy the successes we have now.
You must trust in what you know, trust your experience. If you are an early founder, embrace being underestimated. Use that time wisely to deploy product as soon as you possibly can.
Being early means that the market will eventually align itself with you in a way few founders see. I speak from experience in saying that if you persevere through the challenges of being early, you give yourself a tremendous amount of leverage over your competitors.
You position yourself for success.
And they won’t see you coming.