“My dad is a doctor and my mom is an artist… I wanted to be a scientist when I was in kindergarten,” said Well Principled founder and CEO Ryan Richt. “I’m a mathematician by trade.”
Taking something that doesn’t look quantifiable and turning it into math is something Richt has been doing since he went to Washington University and worked on the Human Genome Project. Later he used that skill to help Monsanto make new plants at a farm optimization startup called CiBo Technologies.
He’d earned an MBA about 14 years before, and after wrapping up work for CiBO Technologies he called some MBA friends who were working at major brands and he came across the problem that eventually morphed into Well Principled – an AI driven software that helps the makers of household appliances and other durable goods figure out how best to use their advertising budget, and how much product they should produce – core decisions for huge businesses. But it didn’t start out that laser focused.
“We have all these quantitative models they teach you about (in business school), but I called up my MBA buddies, and they said they didn’t use them,” he laughed. “They told me ‘we have spreadsheets and hunches. We have these big software packages from Oracle and SAP and every month we just delete everything out of them and copy our spreadsheets in.’ And that’s how major products that we buy and use in the U.S. are made and managed.”
His first run at a solution was a broad portfolio of products built around optimization technology for research and design, human resources, marketing and supply chain. In the idea stage he contacted Mike Miller, a physicist that ran a database startup Richt had contracted with while working for Monsanto… because he knew Miller had raised venture capital and he wanted to find out how to get in front of venture capitalists. What he didn’t know was that Miller was working as a venture capitalist at Liquid 2 Ventures, football star Joe Montana’s VC firm.
“He pushes us to apply for Y Combinator, and he invested in us before we did that and we got in” Richt said, adding that participants in the pre-seed round included Cultivation Capital, Founders Fund, Y Combinator and Washington University professor Anne Marie Knott. “At the same time we recruited our first big customer, because we had been developing the products for six months at that point.”
Unlike most of his cohort at Y Combinator his business plan projected a path to being a Unicorn by getting 500 customers, and charging them $2 million each. At Y Combinator he met with a lot of resistance.
“We sat across from this really aggressive guy who has lots of questions and is really skeptical and drilling into it. I didn’t find out until later it was Gmail inventor Paul Buchheit,” Richt said. “Coming out of Y Combinator we raised our seed round” from Global Founders Fund, Soma Capital and VentureSouq.
Coming back to St. Louis they also won an Arch Grant. Contacts from there and Cultivation Capital opened their network to other customers, fueling growth.
“Through some of those early customers we identified the most valuable problem to solve,” Richt said, adding that the suite of tools proved to be mostly unnecessary. “It’s called S&OP, process sales and operations planning… That’s where marketing and sales and supply chain every month come together to plan the business, and that’s the process we really focused on automating and optimizing and we wouldn’t have found our way to that without those early customers.”
Those early connections with customers helped define what Well Principled should be, and Richt says early stage founders should get their product or service out there as soon as possible to find out what works and what doesn’t. That’s when he learned the important stuff.
“We’re really inventing this new academic discipline… we’re the translational researchers to bring that to business and leave this lasting intellectual contribution,” Richt said when asked about success. “I think idea stage founders have to have the force of the market pushing back against their ideas.”