In this episode, we had a chance to discuss the world of startups, gamification and behavioural change with Dr Kerstin Oberprieler. Kerstin successfully developed, launched and exited PentaQuest, a platform-based behavioural change product and continues to consult into the area of corporate culture, change and behaviour.
I started by asking Kerstin about gamification and human-centred behavioural change. Kerstin’s journey into gamification was fascinating, discovering an interest in business and psychology. She came across gamification as an emerging research area as her undergraduate and doctoral studies unfolded. The journey started during her studies, finding market pull and interest in how gamification could be used to support organisational change. This started through the development of a ‘classical’ game, with pen and paper, but the challenge was to develop a game that would make a business.
Kerstin shared the challenges of building a digital product, juggling access to coding skills, engaging with clients and obligations a supportive employer. This period allowed for the testing of a Minimum Viable Product (MVP) and identifying important aspects to enhance user and customer experience.
Kerstin’s first client came through unexpected circumstances arising from a conference presentation and audience members seizing the concept and championing early experimentation within their organisation. This is a particularly interesting aspect of the journey in the context of current discussions around Australian industry demand for innovation and technology and the role procurement plays in nurturing new businesses – live conversations at the Cooperative Research Australia National Innovation Policy Forum which has been facilitated by Kerstin the past couple of years. Encouragingly, the first customer became an advocate for the product creating opportunities in adjacent parts of their organisation.
Kerstin shared her reflections on deciding to move full time into PentaQuest after years of testing and development. This involved building an organisation to meet the growing demand for products, the need to build a salesforce and greater flexibility into the product platform. Kerstin also shared the experience of the platform dropping out for a period, and the impacts on clients and reputation. We have reflected on time and timing in earlier podcasts, and Kerstin reflected on the impact that the COVID pandemic had on business growth. The inflection in sales growth lead to a decision to sell the business and Kerstin shared some of the process she went through to find a buyer with aligned interests.
This was a great conversation about the journey from concept through commercialisation to conclusion for a founder. I also reflected on the importance of behavioural change in tech transfer and uptake of new products and concepts, making this a doubly interesting conversation for me!
Transcript
CB: Hello everyone, and welcome to Tech Transfer Talk. My name is Cameron Begley, Managing Director of Spiegare. And joining me today is a colleague of mine from the National Innovation Policy Forum, who just happens to be a bit of a behavioural scientist, and ‘nudger’, which we will find out what that means soon enough. And founder of an interesting business that is really around behavioural change. Kirsten Oberprieler, welcome to the podcast.
KO: Thank you. Thanks for having me.
CB: Oh, it’s a pleasure. I’m very fascinated by this nudging and behavioural change space. Goodness knows, we talk about it enough in the innovation system in Australia. I’m not sure whether nudging is quite enough force, but I am very interested in what behavioural change and gamification is.
KO: Yeah, absolutely. So, I describe myself as a behavioural and gamification designer. So, the behavioural design, as you said, it’s behavioural science that’s applied. So, it’s really looking at how do you apply psychology to business and engagement and citizen challenges. So, it’s really about, putting the human at the centre; understanding the psychology around a particular behaviuor. And that might be looking at motivations, goals, challenges, and the context; some of the unconscious biases that we have; and then using that information to design a solution. Keeping those things in mind, gamification, I consider it a subset of behavioural design. So, it’s looking at using game mechanics and experience design to engage users and solve real world problems. So, it’s not about just playing Candy Crush at work or anything like that, nothing wrong with that, but it’s about applying a playful approach and looking at how might you use game mechanics to engage, reward certain types of behaviours or habits. Those the application of behavioural design and gamification design is quite broad. I pretty much say that you can apply it to almost any problem that involves humans, which is most of them, I think.
CB: I would put it to you, Kirsten, the overwhelming majority of the problems we face are as humans. And as we’ve talked about occasionally on the show, trying to bend the laws of physics is a touch difficult, so bending the behaviour of people might be a more tractable problem. I’m curious though, Kirsten, how does one find themselves in gamification and behavioural change? It’s an interesting fusion of psychology, and I’ll call it IT, but it’s probably not quite right. How did you find your way to this particular set of interests?
KO: It’s one of those things, I think, like most people, when they look back on their career, it makes sense in hindsight. But, you know, I didn’t—sometimes people assume that I was a gamer that didn’t want to grow up. Sort of, that sometimes is the logic. I actually didn’t come to the field from gaming first. I came to it from business and psychology. So, I grew up in a multicultural environment, and I think because of that, I developed a knack for reading human behaviour. And so, I was always very interested in psychology. And why does behaviour differ across contexts, across groups? Why is that? And so, I studied psychology and commerce as part of my undergraduate degrees. And people would always say ‘Business and psychology, that’s a weird combination’. But to me it makes perfect sense. Like, they’re so intertwined. So, I was really interested in management and interested in what makes people tick. And a few years into my career, I came across the concept of gamification, and it was like a light bulb went off. I was like ‘This, there’s something really interesting here. This is really cool. Let me play with it’. And so I started from there. I then went into further study, have my PhD in the subject matter as well. But yeah, that’s how I came to it.
CB: It’s fascinating. First of all, the assumption that you shared that oh you were a gamer and you came into behavioural change, where in fact you were interested in behavioural change and came into gamification.
KO: When I came across it, I was curious and I thought, ‘What? Let me—this is really fascinating. Let me play with this thing’. So, basically there was, you know, different business or workplace challenges as, as every workplace has. I came across this interesting new tool called gamification. So, I started playing with it in a very analogue sort of way, pen and paper, cutting out badges and monsters and things and different, different sort of mechanics, and started playing with it and saw some good results. And, and so I was just very curious about why. And that really then sparked and sparked the journey of me digging deeper and deeper into what this technique is.
CB: Fascinating. I imagine, then, that the experimentation that you were running was the early formation or early ideation of Pentaquest, which I think is the journey that I’m particularly interested in exploring with you, because we like talking about case studies and kind of what went right and what went wrong. And so are we now at the genesis of Pentaquest?
KO: Yeah. Yeah we are. Absolutely. So, yeah. So like I said, the very first foray into gamification was about gamifying my colleagues’ behaviour. And there was a range of different behaviours from what I call organisational hygiene type of behaviours, like getting timesheets submitted on time or cleaning up your mess, that sort of thing, through to those more strategic, really important types of behaviours like sharing knowledge and contributing to IP and things like that. So, I came across the idea, I think it was around 2014, if I recall correctly, and I spent about a year or so playing, iterating, testing, observing and tweaking, tweaking the game mechanics. And initially it wasn’t—I didn’t think this would make a great business at all. It was purely that I was passionate about my workplace. I was passionate about my colleagues and contributing to the culture. So, it was very much a passion project. You know, I’d come in on weekends and days off and things like that and play and tweak and refine. So, that’s really where it started.
CB: So, I’m really interested as to why you didn’t think it would make a business in those early stages. It’s almost sort of a bit contrary to what we hear. ‘Oh, I can see a great business opportunity’ yet you said, ‘Oh no, I’m not quite sure there’s something here’. Why?
KO: I think I think it was more I didn’t come across it and thought, ‘Oh, this is a great thing to sell’. You know, I didn’t come to know from that angle. It really wasn’t until clients of the company that I was working with would walk past this gamified wall. And again, it’s all pen and paper at this stage. So, you know, leaderboards and, you know, chocolate bars and you could redeem and like various physical artifacts, really colourful, really engaging and fun. But clients would walk past and say, ‘What is this cool thing? I can see the application of it to my business’. And that’s really when that connection was made between actually this, you designed something that could be replicable.
CB: Yep. Interesting. So, you were starting to get potential customer feedback for a product that you didn’t think could make a business, and suddenly there were customers expressing interest.
KO: That’s right, that’s right. By that stage, I’d started my PhD and was doing itit part-time like on the weekend sort of thing, and was getting deeper and deeper into the subject matter and was still relatively new as well. So, this wasn’t a very common thing. And around that time, not a lot of people had heard of the term gamification. These days, a lot of people have. Back then, people would say, ‘Did you make that term up?’ And I’d have to say, ‘No, I didn’t. I would call it something better’. But it was still very nice. And at that point and I was developing expertise, I was going, ‘Okay, what’s the science say?’ And then I have to make this work on Monday. Is it going to work within my workplace? And really doing that academic thing of applying what academia says in a really practical way. And I’d started along the way getting some consulting clients who said, ‘You know, what you have is really great, but, you know, I want a very specific-use case’. So there was some consulting money sort of coming in, which was great, but it wasn’t until I went, ‘Okay, the thing that I’ve made is actually replicable’. And my very first thought of, ‘Okay, how do we turn this into a business’ was, well, you know what, we just package up the little tokens, we can send boxes around the world. And because I’m not an engineer, my first thought was how do you physically package it up until maybe I’m not that bright, but I was like, actually, there’s a thing called technology and software that would be a much more scalable way of doing this.
CB: Yeah, I was interested in what catalysed the movement onto a platform or to a digital tool, in contrast to where you started. And, you know, frankly, I would start there too, which is a physical tool, right? Just maybe showing my natural bias towards the biophysical. But what catalysed the movement to digital? Was it client pull? Was it the scalability that you could achieve? I’m interested what that was.
KO: Yeah, it was the scalability. So, at that point it was like, ‘All right, you know what, there’s something interesting here’. And at the time, the company that I was working for, um, was quite open to supporting different ideas and potentially looking at spinning those off. So yeah, it was really the scalability. And of course, then I had the big question of, okay, how do I do this? I can’t code to save my life.
CB: I was going to say, how did you become an expert coder overnight or not?
KO: No, and I still can’t code a single line of HTML. So, that was the question was like, I know my strengths are in people and behaviour, and learning to code from scratch was just not. It was just not a right fit for me and not very time efficient. And so, I looked around, okay, well, what are some ways that I could get like, you know, at this point didn’t really have any capital. And, you know, what do we do? So, I came across well, I’d actually used the Australian National University‘s TechLauncher program previously for a couple of other sort of ideas of, of business products that I’d done. So, it wasn’t my first foray into this world. So, over the course of 2016, I then worked with a team there to bring this physical product that I had to life in an MVP software format.
CB: I’m going to make a couple of assumptions here. One is that there was no time to market pressure, in the sense that there wasn’t a flood of gamification products coming to market and you weren’t going, ‘Oh my goodness, we’re running out of time. We’ve got to get moving’. And of course, it was a resource light solution in the sense you didn’t have to cut large cheques for speed. So yeah, you’re on the, you’re on the time money seesaw. And it worked out well for you, it sounds.
KO: Yeah. Yeah that’s a really great point. Again. You know like I said, gamification was quite nascent. Not a lot of people had even heard of the concept or were talking about the space, let alone having, you know, developed platforms out there. So yeah, you’re right. And at this point I’m still working full-time. So, it was kind of doing this sort of, you know, a part-time to kind of see, ‘Does this have legs?’ And, you know, I had some moral support from the company and so forth, as well, to do that. I’d started my PhD at that point. So, the 2016 iteration was also a first way for me to test and get some initial data that I used as part of my thesis. So, it took a while, took lots of weekends and things like that to get the MVP out. But then at the end of that year, I had a very basic product, you know. As with any good MVP, you should almost be embarrassed at another standard because, you know, it’s like minimal, total minimal.
CB: Um, only in retrospect. Only in retrospect should you’d be embarrassed.
KO: True.
CB: You should be proud at the time, but in retrospect, you could be embarrassed.
KO: Yeah. Thank you for that reframe. You’re right. So yeah, so quite basic. But then that allowed me to test that basic MVP with a couple of the different offices that this company had around the world. And so, that allowed me to test not only the platform, but also all the other things that go around the service. So, you know, identifying behaviours and tailoring it and comms and, you know, all of these things. It was a really first proper test of ‘Can we replicate this in different contexts?’ Aside from the, you know, the Canberra-based office that had the physical gamification before.
CB: It’s very interesting. Uh, co-benefit of having support from your employer at the time that it gave you access to a test bed, which is invaluable at the best of times. Having no, I guess we’ll call them tame customers or tame users. There was no risk of brand damage or image damage because these people were coming along on the ride with you. Of course, Canberra being Canberra is different culturally to every other office in Australia, let alone the rest of the world. So, that’s a really interesting co-benefit of that support from your employer. Really interesting. And what did that access give you in terms of insights for your MVP? What happened next?
KO: Yeah, yeah, thank you. And you’re right. I’m very, very fortunate to have such a supportive organisation to let me take this like random, like brain fart of an idea and develop it, right? And yeah. And so for me, there was a couple of lessons from that very first one, particularly around the importance of the Game Master, which is the name of the person who’s running and administering, administering the game from afar. Because I’m not in the organisation, I’m not in those other countries personally. And so, how do we support that person to get engagement, communicate, make sure people are hopping in online? And things like tech support and, you know, like figuring out all those basic sorts of things as well. So, some very good early lessons in terms of the support structures that go around the platform.
CB: What is a Game Master in this context? So, you gave a few quick examples, but that sounds like a formal assignment of a role for someone using the product.
KO: Yeah. Essentially in a traditional game sort of term, a Game Master is basically like a facilitator that helps facilitate the game reading instructions, getting players on board and so forth. And so, that was the name that we gave the person on the other end. So, it might be a bit like, not quite like an account manager, way too boring for what we were doing, but someone who’s in charge of going, ‘Right everyone, hey, we’re introducing this new platform. Make sure you get on. And how’s it all going?’ You know, all of that sort of in-person support.
CB: Yeah. So, facilitator seems like a good word here. Uh, project coordinator. Project director. You know, like, so long as I’m drifting into the right sort of nomenclature here, because Game Master, of course, I suspect isn’t a term familiar with, to most people unless they’ve used the tools. So, then the iteration process begins. But I’m sensing all the concept testing is still internal within the current organisation.
KO: Yeah.
CB: So, when the second iteration of the product arose, just to to skate a little bit to where the puck’s going, does the second iteration find its way outside the firm, or are there a few loops within the organization ahead of us?
KO: No, it was just that 2016, the MVP that was internal. And then, I had again, another fortuitous moment. And I suppose anyone in business, you know, has a range of good luck and bad luck, I suppose. So, I had a moment of good fortune where a government tender was put out that said, ‘We’re looking for gamification software for HR to nudge workplace behaviours and…’
CB: Oh, my goodness.
KO: I know.
CB: Now, can I ask, at the risk of a slightly delicate question. Did you write the brief for the department?
KO: I had no idea it was, it was going to come out. I had it was pure chance or coincidence or fate, if you believe that sort of thing. No, it came out completely unbeknownst to me. Obviously, when it came out, I saw it and it was like my jaw dropped. I was like, ‘Oh my goodness’. And reading through it, it felt like it had been written for me. Like the synergies between my expertise, what the MVP I had and what the client challenge was, was phenomenal. So, I poured my heart and soul for weeks into that, into that response and won, fortunately. And then, that really then started the trajectory. Now, what was interesting, what I only found out several weeks later, even several weeks into the contract, I had been won, is that the two people who are, who are running it. So, my main clients, had actually seen me speak at a conference prior. Now that they didn’t, they didn’t tell me any of this, like at all. And maybe it’s a probity thing, which is, you know, fair enough. But there had been no, no conversations with me at all, um, aside from like some, you know, random workshop conference sort of ones. But so, they clearly had heard of it. They’d attended a gamification conference and then from that had, you know, crafted the RFQ.
CB: Wow.
KO: Yeah. So it was very fortuitous.
CB: Yeah, that’s incredible. So often is the case, Kirsten, that there are sliding door moments. You know, good and bad, but there are sliding door moments, and we’ve heard a few of them. This is certainly the first government procurement sliding door moment that we’ve come across. Uh, or at least, at least perhaps I should be more specific. The first good government procurement sliding door moment, because we have heard of a few that have gone the other way. Nonetheless, it’s amazing not only that the sliding door moment happened, but in the other universe that you and I occupy. I’ll just put a little drop in the podcast here for the role of government in market making and procurement, which is a whole conversation we’ve been involved in with Jane (O’Dwyer) and the National Innovation Policy Forum, and here’s a lovely working example of that coming to life.
KO: Yeah, absolutely. And it was a surprise to me, not only because, you know, no-one had spoken to me about it or anything like that, like it was a complete surprise, but also because in thinking about this, I really thought I wasn’t going to be working with government anymore. So, I’ve spent my career working with government, and even prior I’d done a lot of work in government, and I just thought gamification is too innovative for government. They’re just not going to get it. They’re not going to want it. So, I was fully expecting to just work with private organisations. I should say, as well, so, this was in 2017, and in 2016 we’d incorporated the company. So, that was when we’d like we’d known, ‘Okay, there’s something here’. But again, in terms of what you think of your ideal customer and all of this sort of stuff, I really didn’t put government high on the list at all. And so, I was completely surprised and delighted.
CB: Yeah. And it would be easy to sort of quickly agree and laugh nervously and move on at this point. But when you think about the sort of purchaser you’re looking for, you’re probably looking for organisations that are, you know, this might sound a bit harsh, but are more dynamic; that have an appetite for change. That are, and they’re probably not, turns of phrase one would associate with the public service. We’re dealing in gross generalisations here because I think we both know, and I’d hope listeners know, of course, there are pockets of real innovation in the public service.
KO: But yeah, and this, and this is the case and proof. So, this was a federal government department that took a risk. And again, this is why, you know, 2016 Kirsten didn’t think that I was going to be working with government because I thought they’re just too risk averse to try something, something like this, which is it is novel. It is new. Um, but you know, again, those, like you said, sliding door moments, they decided to take a risk and try something, something different and try a new approach, a different approach to nudging behaviour, more than just the traditional human resource tactics that you might use, like ‘Let’s do more training’, you know, etc. They said, ‘Let’s, let’s try something different’. Won that contract. And then, that was really the start to go, ‘Okay’, again, ‘let’s take this out of the organisation and test it with a real client’.
CB: So, now there’s the excitement is there and the contract is signed. And the upside is the contract is signed. And now, gulp, we have to deliver.
KO: Yep. Yep.
CB: So I’m really interested in the delivery, because I’m going to assume here that the delivery was product development and iteration simultaneously.
KO: Yes, it was. Um, and I mean, this totally could be a hindsight bias, but I don’t remember feeling nervous about it. Only because I think I’d worked in this space, you know, I’ve done user research, human-centered design. So, um, and, you know, I’d been thinking about and working on this product for so long. This was exactly the chance that I was waiting for. And so, I already had a software partner lined up. So, initially when I, you know, MVP stage, I reached out to a software developer and said, ‘I want to do this thing. Like roughly how much would it cost? Like, is this, could you- What even is this?’ So, when we won the contract, I knew exactly who I was going to go to to help develop the product. And I went about my all the sort of usual normal consulting activities that I was very comfortable and confident and hopefully competent in, in terms of understanding client requirements. We did a lot of user research. Again, you know, government department, very different to the private consulting land from which I came and from which the product was conceived in. And so, a lot of user research, primary research, also surveys to try to understand where the behaviour is, where’s the culture, where’s the opportunity? So, a lot of it took about about six months or so from the contract being won to a pilot. And we did a one-month pilot. So, a lot of research and obviously design and very much involved in the client and developing it from there. So ,yeah, it was a very exciting time.
CB: Absolutely. So what does a pilot look like here? You’ve already done the first pass with the ANU program, and got your MVP. You’ve dusted off the MVP. You’ve handed it to a software engineer that you’ve costed into the project. Now, you’ve got a beta version?
KO: Yeah. Pretty much. Yeah.
CB: Okay. Okay. How did the pilot go?
KO: It went, it went quite well. So, and again, for context, the use case was around professional development, learning development and culture, those sorts of behaviours. And one-month pilot and obviously, you know, collecting data pre- and post- to, to know what’s working, to know that it’s working both for us and the client. And we measured things. So, we did one division within the department to compare with the other divisions. And that was our control. And there was for example, we looked at some of the completion of some of the learning modules, and there was a sixfold increase to those that were using the Pentaquest platform to the departments that weren’t, a six-fold increase. So, it was a very, uh, strong, um, case to say, ‘Hey, this is working. It’s nudging the behaviour that you want’. And of course, we were collecting anecdotal feedback as well about the user experience and the interface design. And obviously, there were things to improve, but generally it was quite positive. And again, we had the data to show this is making an impact.
CB: That’s an incredible first set of results to get a six-fold increase in the behaviours you’re after.
KO: Yeah. In a month.
CB: It strikes me. I have to ask you a question, Kirsten. If it’s a six-fold increase, why is it Pentaquest where Penta is five.
KO: That was the data. So, we called it Pentaquest. Quest, a mission, a goal. Again, bringing in the gaming term. And initially, when we were looking at it, it was about, what are some components of a high performing team? Great culture. You know, all these different things. And so, initially we sort of identified five, five core components of it. And we also liked the idea of five, like a hand, like the high five. So, celebrating and I always sort of liked the idea of having like Greek Latin sort of terms in businesses. And so, hence Pentaquest.
CB: Hence Penta. Right. So we’ve got Pentaquest with the six-fold increase.,
KO: Yeah, right. Just in the first part.
CB: Yeah. So, this is fantastic. So, this contract that you’ve secured with the federal government has not only allowed you to move from alpha- to beta-testing and moving on to gamma from there, but now you’re getting insights into user interface design. And now, heaven forbid you’ve actually got results that you can hold out to future clients, which is always really powerful.
KO: So important.
CB: So, it’s almost like not the perfect storm, but the opposite of that. Everything’s coming together quite nicely at this point. I’m suspecting, though, that there’s a moment ahead of us where we need our second customer.
KO: Yeah, absolutely. And again, at this stage, you know, we’ve been sort of doing bits and pieces of small consulting work, which was a good way to bring in a little bit of revenue and, you know, stretch, stretch my gamification muscles and grow them again. You know, doing the PhD on the side and the government department let me use this as one of the case studies in my PhD, or that was in 2018, which is where we’re about to head. So, we had a great win. And that was sort of near the end of the year, really a great way to to end the year and then go, ‘Okay, you know, now how do we get other customers?’ And so, the first step was leveraging the successful pilot with this government department. And so, we put forward, or they asked us and we put forward a proposal for doing a year-long pilot. And across the, across the department, not just the division. And I remember very clearly, I was on, it was the start of 2018, I was on holiday in Africa, and one morning I woke up in Namibia and I checked my emails and there was an email saying, ‘Congratulations, you’ve got the next contract’. It was a lot more money. So, that was just such an amazing moment. And then, that then gave me the confidence to quit my job, which I was still doing, and go full-time all in to Pentaquest, because at this point I was still doing it with support of my employer and then doing my PhD as well.
CB: That is quite the leap, isn’t it, when you’re in full-time.
KO: Yes. Yes. And, you know, we’d, we’d had, you know, two years by now of, uh, testing, refinement, proof that there’s, there’s something here, and I’m capable of taking it somewhere. Fortunately, I’ve got a very supportive partner. And so, we’ve been talking about this like ‘We’ve got a mortgage. Can I really quit my job and reduce my salary and all of these things?’ That really was the catalyst to say, ‘Hey, let’s take that leap’.
CB: Jump out the plane and hope the parachute opens before you hit the ground.
KO: Yeah, exactly. You are saying before like that gold moment? I didn’t have it earlier. I did have it now. Like finishing my job on a Friday and then starting on a Monday. It was like, ‘Okay, like, now it’s all up to me. Now I’m on my own’. And I wasn’t on my own. But you know, I definitely had that, the screen painting moment of like, ‘Ahhh, here we go’.
CB: Yes, absolutely. It’s not a matter of life or death anymore. It’s far more important than that.
KO: Yeah.Yeah. That’s right.
CB: But what a great way to build out that second client though, which was within the department and working more broadly. So, that was effectively taking those results and working through a relationship in order to build a bigger, better offering that they were able to sign on to.
KO: That’s right. That’s right.
CO: It’s fascinating. Many is the time that we talk about relationships versus transactions. And tenders are transactions. I believe they’re transactions. Some others listening might say ‘Oh, hang on a tick. That’s not always the case’. Maybe it’s not always the case. But if you’re in a relationship, which is what you’ve just used to build something of mutual value rather than a procurement event, which is ‘I need something and I really I’m pretty unfussy as to who gives it to me’.
KO: Mhm. Yeah.
CB: So, what a great way in order to build that second client out. And as you mentioned, it’s got a bit more scale to it. It allows you to jump out of the plane and I dare say invest more in some software engineering to continue to move from beta-to-gamma to I think it’s delta and epsilon are the next two. Now, we’re full-time. Where are your efforts directed to, Kirsten? So, you’re the founder. You’re the inventor for all intents and purposes. So, just to set the scene a little bit. Are you more and more involved in the development of the product, or are you starting to get into the business development side or, heaven forbid, you’re out trying to raise money? All three, maybe in different proportions?
KO: Yeah. So, very much at that point, doing the bulk of everything. So, doing, servicing the customer, working with the software development team to continue the development of the product. At that point, the team did start to grow a little bit, but I was still very much, you know, wearing lots of hats. And the focus was on developing the platform. Obviously the pilot was successful but we could see opportunities to, you know, improve the functionality, tailor it more, have it work for now, an even bigger number of teams and so forth. So, that was the focus and at the same time still going out there and selling. So, that was great. We then got another customer, another government department and sort of picking up on your point about relationships. Our first client was lovely enough to put together an event, and so that our client was the HR team, and they kind of put on an event for other HR teams across government saying, ‘Hey, we’re doing something really cool, you guys should know about this’. And so, the client and I did a presentation together. And from that we got a second federal government department. And they were then a client of ours for five years running, which was amazing.
CB: That is fantastic. That is the essence of the conversation we touched on earlier about government being a procurer and market maker and supporting Australian innovation. Sorry for those listening abroad, but it’s a really fantastic case study in and of itself around the role of government procurement. But I’d just like to circle back momentarily to platform expansion that you mentioned in the product. So, what does that mean to someone who’s not as digitally savvy, which is me and maybe a few other people listening? Um, what is a platform expansion, in contrast to the product that you’ve got at hand at this time in the journey?
KO: Yeah. The one-month pilot showed, obviously there was like small little tweaks in terms of functionality, but really to make to make this product a lot more customisable to the client, we then really needed to build a backend, um, because rather than the client having to say, ‘Oh, we want to change this activity’, and then coming to me to do it and then me passing it on to the software, I was like, that is just too slow. I want the clients to own this. I want this platform to be living and breathing just like their culture, just like their organisation. They need to be able to have something happen in the morning and in the afternoon, be able to put that into the platform. So, the platform is really responsive. And so, to do that, they need a proper back-end interface. And, of course that helped. That would really help them with the scalability of other clients because we wanted, it to be customisable, not just in terms of the types of behaviours and activities, but a whole bunch of other things as well. So, that was part of the roadmap for 2018, then was looking at the back-end, and there were a few other functionalities that we added. So, one was the ability to have tasks or projects or things that people worked on collaboratively, rather than just individually. So, there were a few of these sorts of features that or the needs for these sorts of features that came out from that testing and that really then drove the development of what we focused on during that time.
CB: In my mind, that translates as as a user being nudged, there was an interface that was working, but the Game Master needed more back-of-house tools to be able to change the settings in order to drive or drive in a certain direction, or stop going in a certain direction, as the case may be, that that was that that idea of platforming.
KO: Yes. That’s right.
CB: Yeah. Got it. That makes sense to me. Now, we find ourselves rollicking along. Third customer, another government department. At this point, things are going swimmingly. Have we broken out into the private sector? Which was when we started a little while back. It was ‘I never thought I’d be selling to government’. So, now perhaps is the thought, ‘Am I ever going to sell outside of government?’ Has the private sector started knocking on the door?
KO: Yeah, and again, this was the interesting thing about running a company that was doing consulting and a software as a service aspect as well. And it was partly to, you know, again, profile wise, people would be like, ‘Oh, this Kirsten person, you know, saw her Ted talk. Let me talk to her. I want to explore what this is’. So partly it was interesting and building a profile in quite a niche industry. And then, the reason for saying ‘yes ‘is to, to keep the lights on and keep, you know, because we were purely bootstrapping and using profits to, to grow, started getting some other customers as well. One of the things that was a consideration is, you know, have we found a product market fit and how do we know where we should expand to? And so, there’s always this tension, I think, between finding more clients that are like the ones you have, that have the same problem, that have the same targeting, the same people, versus how much do you expand? And so, and that was probably a question we continued to explore over several years where we understood LND professional development culture and HR as a client. So, it was about trying to find more of those, but then also going, ‘Well, but this is so replicable. Maybe we should be focusing on other things’. And so, we we had some other clients as well with different use cases that, that we were also playing with, and kind of seeing how generalisable the platform is to different behavioural challenges
CB: And how generalisable was it? Or is it, I should say.
KO: Um, yeah, we’ll get to the ending. But um, not every customer pilot was successful, you know, which is part of the learning journey. So, you know, there were a few that we tried that, you know, and then there’s always various reasons, you know, client or like kind of different things. But not every pilot was successful, especially when we started to try to kind of go differently. But probably the biggest problem that we hit in 2018 was costs, because we were outsourcing our software, um, which, and we had a fantastic development partner and obviously, you know, wouldn’t be where we were without them. But they were expensive. And I had this, sort of getting closer to 2019 I had, we talked about the high moments of, you know, waking up in Namibia and getting the contract. I had a very low moment. It was my birthday and I was sick. My partner was overseas somewhere, generally just kind of feeling kind of broke. And so, I was already low. And then our platform went down…and it went down for two days.
CB: Right.
KO: Right in the time when, uh, that third client was doing their performance conversations. So, it was like a critical time for them to use the platform. And it was a very low time because there was only so much that I could do in terms of getting it fixed, so I could be like, we’re working on it. And then the development team was working very hard and working overtime and things to try to fix it. But also, I was one of their many clients, you know, and it was costing through the nose. That was one of the biggest problems that went ‘Okay, we need to now, we need to bring it in-house’. We can’t just be outsourcing it. It’s eating our profit margin. We’re really paying a lot. And you know, that was probably always going to be on the cards. But they were really, really feeling it in that low point there.
CB: Crystallised in that moment because now the cost-benefit-risk equation quickly realigned.
KO: Yeah.
CB: Yeah, that’s fascinating. So, what were the consequences, if I may ask with Pentaquest, and the client? Did this create bad feelings? Did it cost money? What were the consequences for you and the relationship with the client?
KO: Yeah, I mean, it definitely cost us money, as in it cost Pentaquest money. You know that because the client was paying for software as a service agreement. You know, we didn’t charge them extra, and it was part of our agreement to have the platform available. So, it was definitely a cost that we, that we wore. Definitely had to do some damage control, which is, you know, embarrassing. And, you know, you have to be humble and, you know, all of these things that are sort of uncomfortable. Again, fortunately, this client was just wonderful and understanding. And again, our HR client, they would have been doing damage control as well and would have to report up to the CEO and things. So, it was definitely consequences from that. But we got through it, thankfully.
CB: Imagine if it had been a tender.
KO: Oh, my goodness.
CB: It would have been all about the contract rather than the relationship. But I’m going to sort of put it on the table as a working hypothesis. So, now we have in-house software.
KO: Well, now we have, now we have the need for in-house software. So, that really became ‘Okay, we need to do something different here. We need to bring it in-house’. But again, sort of bringing on a team costs a lot of money and more money than we had. And so, at that point we went, ‘Okay, we need to raise, we need to raise some money’.
CB: Right. So this catalysed an external raise.
KO: That’s right, that’s right. And that was a whole new learning experience for me. The harrowing process, that is VC world. A lot of great lot of iteration, all of those sorts of things went through that fun process and then raised some, I suppose angel or seed, probably angel funds, from a few high net worth individuals. And that then allowed us to bring a team in-house.
CB: I would suggest, based on this conversation, the fact that you’ve got clients, you’ve got revenue. You’ve got a certain brand established. Your personal brand as much as the Pentaquest brand. So, you’re probably at an advantaged position with, with, with what you’re offering to be invested in, compared to ‘I’ve got this great idea’.
KO: Yeah. Yeah, definitely, because we were bringing in revenue from day one. And as you say, you know, we had clients, had stats, had some really great case studies to back up that, you know, what we were doing was working so got the seed funding and that allowed us to bring the team in-house. So, at this time, the end of 2019, the start of 2020, probably about 15 staff. So, that was probably half of that being IT tech and then half being business admin as well as then, at that point, you know, I had some sales people on board and customer service people as well.
CB: So, things are now accelerating and at quite a clip. Where are we going at this point? So, we’re accelerating to exit. Were you at this point, where you’ve got this team around, you’re thinking it might be time to wrap the business up and sell it, or sell more of it? Where is it taking you personally at this stage?
KO: Yeah, so definitely at this point, obviously, you know, things are going well and we have some investors now obviously who expect an ROI. And so, the talk about exits is becoming more and more. I mean for me, personally, I’m loving what I’m doing. I’m loving entrepreneurship, and I’m loving the autonomy. I’m loving the innovation. So, for me, it wasn’t at that point. So, this is again in 2020. It wasn’t the idea wasn’t sell, and sell to exit. But maybe, you know, stay on in the company or sort of those sorts of thoughts. But, of course 2020, that was a very interesting time. And I felt and I still feel kind of guilty about this, but we actually did pretty well in 2020.
CB: Yeah.
KO: And I think the reason we did well is because at that point, the world and workplaces, which again, was our key target market, went ‘Okay. We need a way to engage our people digitally and do this in a nice way that maybe has some playfulness’, and at the same time, games and gameplay, you know, because people are stuck at home and bored out of their minds. Game and gameplay for socialisation online was becoming more and more, so those factors helped our business. And I suppose, in terms of timing, like you say, perhaps that was a good thing where, you know, we could see some of this opportunity a couple of years ahead. And so, when that hit, obviously initial shock and different things like that, but from a gamification platform perspective, it was good.
CB: Yeah. So, that led then in 2020, you then accelerated through Covid I’m inferring here.
KO: Yeah.
CB: And the business scales as a consequence of that which then leads to an exit in 2022.
KO: Yeah, that’s right. And so, 2021, you know business is going well at this point. Personally, my partner and I decide that it’s time to start a family. And while, initially I’d always sort of thought I can do both, there was a couple of sort of health things, and I kind of decided, you know what, let’s, let me not do these two things at once. I have my first baby, which is Pentaquest, and it’s now, you know, old enough to, I don’t know, go to school or whatever the analogy might be. Starting to look for…
CB: Pentaquest was ready to be released into the wild.
KO: Yes. That’s nice. Yes, exactly. And then there was the question of ‘Where on earth do I find somebody who wants to buy the business? How do I find these people?’ And so ,we had, you know, a couple of contacts with people that had been interested, so I approached a few of those, but then sort of all kind of wrapped up when I came across a site called Flipper, flipper.com. It’s a platform where you can, yeah, sell browser-based, internet-based businesses. And so, I listed it on there and sold it within 30 days. So, it was relatively rapid.
CB: That’s pretty cool.
KO: It is. It’s one of those, when you’re selling your business and you’re, you know, like there’s a vetting process like, like you’re trying to, I guess, interview people, make sure that they’re a right fit. And so trying to maximize, I suppose, what a buyer is willing, how much they’re willing to buy, which is obviously very important to my shareholders, are most important to my shareholders. But for me, I also really wanted someone that had a values fit because I poured so much love and tears and everything into this product. I wanted someone who understood it. And then, even through, you know, the interactions with the potential buyers, it was this really bittersweet thing where people are like, ‘Sounds great, why are you selling it?’ Or someone’s like, ‘Well, you know, you’re poking holes and you don’t have this, or I don’t have this right’ or whatever. And so, you’re both like trying to defend how good it is, but also being like,’ I also want to let it go’. So, it was just a very emotionally, very interesting, interesting time.
CB: Yeah. So, there’s a value and values conversation happening here.
KO: Yes. That’s right.
CB: And, it is interesting how people will come at the moment differently. And you’ve just highlighted a couple there which is ‘So, why are you selling? It’s too good to be sold’ versus ‘Look at all the problems with it. I’m going to lowball you’.
KO: Yeah. Yeah. Exactly. So, it was just yeah, it’s a very interesting time. So, we, I think we ended up having like an Excel spreadsheet with different criteria, you know, in terms of values fit. And there were other considerations in terms of handover. And again, at this point I was pregnant and I was like, I’ve got a baby coming. That’s my, that’s my time. Like my timing.
CB: There’s a very clear deadline here.
KO: It’s a clear deadline. It can’t be extended. The baby does not care about your deadline. So, it’s you know, it’s happening. I had interest from buyers all over the world. And so, there were other considerations in terms of time zones. And do I really want to be like, you know, up at two in the morning when I’m eight months pregnant and all that sort of stuff, that all factored. And of course, again, the big question, obviously for the shareholders, who’s going to pay the most. And I was very lucky to find the person that had the best value fit and offered the most amount of money. So, I went with them.
CB: Yeah, that’s a nice combo. To sort of close the story of Pentaquest then, was the buyer an Australian company or was it someone abroad?
KO: Yeah, it was an Australian company.
CB: Oh well, that’s a nice way to sort of finish it. So, everything ended up staying Australian-based, which I then infer the staff carried on inside Pentaquest and have lived a happy life since.
KO: Yeah, there was a variety, so some moved on at that point, then some stayed on with the new company to kind of help with the transition. And, you know, again, it’s one of those, I’ll use the word bittersweet again, one of those things where, you know, a bit like, I suppose seeing your child, you know, move out or something. It’s this, sort of this, this moment. But at that point, you know, I sort of come to accept that I was ready to let it go and hand it over to, to the new company in, in whatever format, you know, and in whatever shape they want to kind of take it forward. And obviously, at that point, you know, I was about to have a baby. So, plenty of other things to focus on there. Yeah, a wild ride. And one of those beautiful parts, like I always like, you know, think fondly back to that time. Hard though it was at times.
CB: I am in fact going to start to draw things to a close by, actually quoting something from The Economist, of all things, which just struck me as you were describing that, and I read this only last week. “One of the joys of science journalism is being able to watch acorns that have just been planted grow. Some sadly wilt to seedlings. Others reach the sapling stage but go no further. Some, though, become sturdy oaks. With luck, you get to watch the sturdy oaks come through”, and in your case, with Pentaquest, that sturdy oak emerged. So it just struck me, as you were describing it there, that that’s what goes on in this business, whether it’s founders, whether it’s the role of tech transfer specialists, whether it’s scientists, that’s the joy of it. It’s also the pain that comes with it, of course.
KO: Yeah, that’s a really beautiful quote. I really like that. And, you know, looking back on it and thinking about it in leading up to our conversation, I was thinking about how, yeah, how grateful I am for that journey. And, you know, especially the wonderful team and the investors and the board and everything like that. It was, yeah, really, I feel really blessed to have done that. And, you know, we all know that that’s about the number, the failure rate of startups in the first year and the subsequent years and so forth. So, for my first real foray into my own business and my first ever SaaS (Software as a Service) product, it’s a pretty good, pretty good way to end it. So, I feel quite lucky and grateful for that.
CB: Kirsten, if you’re a betting person, which I happen not to be, one and done.
KO: Yeah, maybe.
CB: I suspect that curiosity and adventure will overtake you at some point, particularly when the kids are a little bit more settled in school and normal patterns, whatever they might be. Different, but normal patterns reemerge, I suspect you’ll be getting back into the, into the startup mode and doing new adventures and doing new things.
KO: Yeah. Look, let’s, let’s, let’s talk again in ten years and we’ll see. You may be right. I mean, for now, me doing my consulting and behavioural science and gamification, it suits me just beautifully in terms of lifestyle. And, you know, still a lot of that curiosity but also freedom that works for me at the moment. But yeah, never say never.
CB: No. Absolutely. Well, my hope is, Kirsten, that I will talk to you sooner than ten years time. But I am very grateful. And thank you so much for sharing your journey with us on the podcast. It has been fantastic talking about it. Thank you so much.
Thank you. It’s my absolute pleasure. I really appreciate it.