If there’s one word that defines visionary Startup CEO, Irshaad Ahmed, it’s grit. His secret is targeting antiquated industries, in fact, he has pioneered in traditionally overlooked customer segments by unlocking value creation in exceptionally creative ways.
His latest venture, Towgrace, a vertical SaaS platform for the towing industry, has scaled to 40 cities over the past 18 months. Subsequently, Irshaad has lent his knowledge to become an invaluable resource for other founders and early-stage Startup CEOs about go-to-market strategy and scaling their companies similarly.
How He Did It: Targets Underserved Industries
Ahmed strategically targets industries that are lagging in technology adoption. His company, Towgrace, is revolutionizing how towing businesses operate and grow. Inefficient processes and an over-dependence on traditional customer acquisition methods like insurance companies and AAA burden tow operators. Towgrace is increasing operational efficiency and effectiveness by providing comprehensive sales and functional tools while driving growth.
Strategy: Innovative Solutions for Real Problems
Towgrace holistically addresses the core challenges faced by tow operators. It offers an all-in-one solution, from lead generation to geolocation tracking, dispatching, and fulfillment. But the true genius lies in Ahmed’s customer acquisition strategy, which employs a ‘Trojan Horse’ approach. Recognizing the difficulty of selling software to small and medium-sized blue-collar enterprises, Towgrace initially offers a marketing service for lead generation that requires its app to receive leads. This strategy subtly introduces operators, who tend to be technology-averse, to all the benefits of the transformative SaaS platform.
The Killer App: The Flagship Feature
A standout feature of Towgrace is its streamlined process for managing quotes. The incumbent process tow operators employed was writing down customer pickup & drop off locations and then using Google/Apple maps to pinpoint addresses and mileage distance. They then used a calculator to manually calculate the price of the service based on the mileage calculation and their specific fees. Towgrace simplified that clunky and inefficient process into 1 click for the tow operator. Operators send the prospect a link through the app where the prospect fills out service details, which directly uploads into the app with contact info, pricing already calculated, quoting and invoicing options, along with dispatch and GPS directions. This innovation, analogous to the transition from fax to email for this industry, has dramatically simplified a tow operators’ workflow. “It’s what I imagine sleeping on a mattress for the first time felt like – I can never go back to what I was doing before” a Towgrace customer commented.
What’s unique about this feature is it already exists in some incumbent software platforms. Ahmed recognized it wasn’t a lack of technology that existed to address those antiquated workflows, it’s that incumbent software solutions hadn’t specifically presented themselves as a direct solution for the challenges tow operators face. Hence the market opportunity to drive significant adoption through being the first-mover advantage from a brand positioning perspective.
Continuity: Leveraging Stickiness to Layer On Revenue Levers
Ahmed’s company leverages this ‘stickiness’ to pave the way for additional revenue streams and effectively evolves Towgrace into not only a SaaS but also a FinTech and InsurTech company by offering payroll services, fuel credit cards, and insurance cost reduction through collective bargaining. This approach results in Towgrace becoming the platform for the industry and the default operating system for any tow operator.
Re-Calibrating How Startup CEOs Think About Strategy
Ahmed has become a mentor to many founders navigating the “zero to one” hurdles in getting a Startup off the ground. “A misunderstood skillset of an early stage Startup CEO is to understand their thesis that guides their company’s vision relative to the series of experiments required to validate that thesis. And subsequently execute a go-to-market strategy that scales” he shares.
“Substantial value creation resides where the market feels an immense amount of frustration and pain, however that pain is not entirely understood by the market participants enough to search for a solution. A founder’s objective is to read between the lines, and build tailored solutions solving those pain points. The more targeted the solution, the stickier the product becomes” Ahmed asserts.
Ahmed has become known for his uncanny ability to analyze antiquated, unsexy industries from a bird’s eye view, and identify where value creation can be unlocked with new technology or growth-hacking strategies.
Ahmed elaborates, “Product distribution trumps product innovation – founders sometimes over-index on the tech itself and conclude more features equals more growth. True innovation and creativity is manifested in how the product reaches the market participants with the most crucial need for it – that’s where the flywheel effect really starts to take off.”
Redefining Startup Success
Many who understand the dynamics of Silicon Valley and how VCs invest in Startups know that evolving narratives and growth rates are what drives fundraising momentum. Vanity metrics like company headcount and fundraising announcements has led to idolizing fundraising over building sustainable businesses.
Ahmed explains, “Founders find themselves inadvertently letting VCs dictate their company trajectory with hopes they will facilitate the next round of fundraising. What’s not often understood is the misaligned interests between VCs and founders. VCs are in the business of divesting out of companies, not investing in companies – an important nuance to appreciate” Ahmed adds. “Their board governance typically lets them push founders to optimize for top line revenue growth at the expense of building sustainable, cash flowing businesses. Their fund economics dictate this high-risk high-reward approach where the 1 out of 100 investments that succeed make up for the other 99 failures.”
Ahmed’s guidance to founders centers around the perspective that dollars from customers are exponentially more valuable than dollars from VCs.
“Most early stage Startup CEOs don’t address the business model risk associated with this approach” Ahmed explains. “If their fundamental unit economics aren’t in line and growth is subsidized by outside capital, the company is effectively built on a house of cards and will fold as soon as VC dollars become scarce. VCs want you to hit it out of the park with a risky approach because they’ve baked into their model that only 1% of their portfolio companies will probably succeed. Founders should focus on getting on first base with a higher batting average” he adds.
2023 has seen the largest number of Startup shutdowns, directly correlated to the sizable contraction of VC funding in 2023 as a result of rising interest rates.
Ahmed elaborates “The collateral damage of these fund economics isn’t just the graveyard of startups that couldn’t raise their next round. It’s the startups that could have existed and never launched due to a business model’s inability to reasonably justify a path to unicorn [$1 billion valuation] status. In contrast, they could achieve 10% of that valuation and still be wildly successful for shareholders. Success isn’t zero sum and the “what gets funded gets built” paradigm needs to be inverted. The collective benefit for global economies has suffered as a result of that stifled innovation” he adds.
A New Asset Class
Irshaad’s surgical, first-principle style approach to building and scaling businesses has become a new standard for early stage Startup CEOs.
Ahmed explains, “There’s an incredible opportunity to arbitrage the gap between Venture Capital and Private Equity with a new asset class. Early stage companies solving market needs that can scale with capital, however, don’t need to reach Unicorn status to be deemed successful – and haven’t hit the revenue thresholds normative where Private Equity typically starts to engage.”
Needless to say, this hasn’t made him incredibly popular with Silicon Valley VCs. His response: “It’s time the disruptors start being disrupted themselves.”
