These brothers, formerly from DigitalOcean, just got $15 million from Accel to build a company they hope will represent the NYC tech scene
- On Tuesday, Catalyst announced it raised $15 million in a series A round led by Accel.
- Catalyst CEO and co-founder Edward Chiu decided to start the company after his stint at DigitalOcean, where he built customer success software.
- Chiu says that compared to competitors like Salesforce and Gainsight, Catalyst's software is design-focused and easy to use.
- Chiu says that initially, Catalyst struggled with hiring, and he learned it's actually better not to hire the best talent, but rather the people who will contribute positively to the company culture.
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When Edward Chiu was the head of Customer Success and Sales at cloud company DigitalOcean, he built an internal tool that made it easy to manage customers.
After receiving positive feedback from many people within the company, he thought it was a no-brainer: he should probably build it for the mass market.He and his brother Kevin Chiu then co-founded Catalyst, a New York City based company that develops software that onboards customers and measures how happy they are and if they would recommend it to other people.
"When I showed this tool to other customer success leaders, they said this internal tool is better than what I'm paying $100,000 for software on the market," Chiu, who is CEO of Catalyst, told Business Insider. "Most entrepreneurs, when they come up with an idea, they don't get the opportunity to see if there's social proof...We had the chance to dogfood it."
On Tuesday, Catalyst announced it raised $15 million in a series A round led by venture capital firm Accel. Chiu, who was one of the earliest employees at DigitalOcean, says he's excited about the opportunity to work with Accel, as this year, some of Accel's portfolio companies like PagerDuty, Slack, and CrowdStrike have gone public.
"For them to anoint Catalyst with this huge series A investment goes to show they're betting on this market being the next wave they're excited about," Chiu said. "It shows they take their companies across the finish line and they turn them into world class organizations."
With the funding, Catalyst plans to invest in its product and marketing strategy. In the future, it also plans to invest in features that automate and learn from the data Catalyst is collecting. For example, this can give information on an organization's top spending customers, or smaller customers to reach out to that have the potential to grow."As we build out more features, we continue to maintain the same user aesthetics that brought us here," Chiu said. "That's something they're very excited about."
Better than a PowerPoint deck
Catalyst competes with companies like Gainsight and Salesforce. But Chiu says Catalyst's software is a lot easier to get started with and use - even people who normally don't deal with customer operations. He says it's a sign that customer success has become a company-wide initiative, rather than the realm of a single department.
Chiu also says Catalyst's software just takes minutes to set up, while other companies' software is "very clunky" and can take months.
"We have CEOs logging into Catalyst and product managers logging into Catalyst to take a look at the feedback the account manager is taking from customers," Chiu said.
Chiu says that investors were excited about how Catalyst's product has been leveraged at a company like DigitalOcean. This helps when selling to customers as well.
"The biggest thing is we had social proof," Chiu said. "For most companies, when you're a seed stage, it's a PowerPoint deck."
Don't hire 'the best engineers'
Chiu grew up in California's Orange County, spent some time in San Francisco, and now bases his company in New York. He says the diversity of New York City is one of its key advantages, and he hopes Catalyst becomes a company that can represent the New York City tech scene.
"Having lived in San Francisco, I felt everyone was in tech, everyone was talking about their perks," Chiu said. "Coming here, not only is there a diverse group of people, there are diverse ethnicities and diverse careers and occupations. That is a good healthy mix when it comes to an environment where people go back to their homes and not be in the tech world."Still, hiring can still be difficult, especially in New York City. One challenge Catalyst faced, Chiu says, was that initially, it struggled with hiring and building the right team.
"This is my first company with my brother," Chiu said. "We didn't know how to do anything. We didn't know how to hire. We didn't know how to fire. There was a point in time where we made some bad hires, and we hired some of the best people. They were very good at what they did, but they weren't necessarily the future leaders of the organization."
From this experience, Chiu realizes it's not talent that builds companies, but people who can work together and build a positive culture. Now, the company has grown to 19 people, plus a one-year-old dog that spends a lot of time at the office.
"You don't hire people who are the best engineers or best salespeople or best product people," Chiu said. "Building the best culture builds the best company...Yes, you're out there trying to hire the best of the best engineers, but that doesn't always mean they're a good fit for the organization and they actually care about your business to help you win."