The First Customer - Aligning People, Purpose, and Progress with Co-Founder Alex Levin

In this episode, I was lucky enough to interview Alex Levin, Co-Founder and CEO of Regal.io.

Alex grew up in Manhattan with a father who ran a steel service business. Alex absorbed early lessons about business operations and efficiency. While his father’s ventures in technology during the late 90s exposed him to a rapidly changing landscape, Alex initially explored entrepreneurship by selling wild fruit with his brothers as a child. After working for another company rather than launching his own software business a decade ago, Alex finally co-founded Regal.io, a business focused on improving customer engagement through proactive outreach, blending traditional contact center practices with marketing automation.

Alex discussed how Regal.io started by identifying a gap in online service conversion rates, particularly in industries like home services, healthcare, and retail. He emphasized the importance of personalized interactions in driving higher conversion, recalling their early partnerships with companies like The Farmer’s Dog and MakeSpace. Levin highlighted Regal.io’s vision of treating customers “like royalty” by combining outbound calls and texts with insights from customer data to improve experiences. He also reflected on product development challenges, the value of gathering early feedback, and how the right partnerships and feedback loops were crucial to their growth.

Unlock lessons from Alex Levin’s adventures in collaboration, strategic thinking, and sustainable success in this episode of The First Customer!


Guest Info:
Regal.io
https://www.regal.io


Alex Levin's LinkedIn
https://www.linkedin.com/in/alexlevin1/

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https://www.linkedin.com/in/jayaigner/
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Transcript

[00:00:27] Jay: Hi, everyone. Welcome to The First Customer podcast. My name's Jay Aigner. We are sponsored by JDAQA Software Testing. If you're a custom software development shop or SaaS company looking to increase product quality or delivery efficiency, JDAQA has you covered world class manual automated performance and security testing, check us out at JDAQA. com. Now let's get on to the show and welcome today's guest, Alex Levin. He is the co founder of regal. io, a Harvard graduate, a startup investor and a growth expert. So, Alex, thanks for joining me, buddy. How are you?

[00:00:58] Alex: Thank you for having me.

[00:01:00] Jay: So, where did you grow up? I know you're in New York now. where'd you grow up and did that have any

[00:01:04] Alex: You are. So, I grew up in Manhattan and, you know, my wife thinks it's crazy. But so my two brothers and I grew up in a little apartment in the city and we never knew anything else that was, you know, what was normal for us

[00:01:16] Jay: Did that have any impact on you being, an entrepreneur later in life?

[00:01:20] Alex: growing up in New York specifically? No. But my father ran a small business. And so. That definitely had an impact, like from a very young age, we heard about sort of what it was like to run a business, like good days, bad days, like all that stuff. So definitely from a relatively young age, we understood a little bit about business.

[00:01:38] Jay: And do you find yourself running into any of the same stuff you saw him going through, as you were growing up?

[00:01:44] Alex: Largely, no. So, my father had a steel service center business, so not at all a software business, nothing to do with software. And so, you know, there's some lessons like, you know, Hey, buy low, sell high, like, you know, be efficient. You know, with your funds, like stuff like that, but it's very different kind of business at one point, very late in his career, he tried building a technology company in the late nineties, like everybody around a lot of the things that they had to deal with as a steel service center and sell that technology to other folks.

so I think. You know, that is closer, but even in those late, you know, if I think back to like what he was doing in the late nineties, it was quite different. Right. It was like, you know, raise as much money as you can. Like eyeballs on the page was what was measured. Like it was a different world if you think back to it.

So, you know, lessons in what not to do a little bit, you know, more than what to do.

[00:02:37] Jay: That's fair. what was the first business you tried to start or you did start?

[00:02:41] Alex: Oh, I don't know if I called it business when we were kids. Like we used to go out into the countryside and brothers and I, and like. Pick wild fruit and sell it and stuff like that. Yeah. And it could make pretty good money, you know, but in terms of real business, like I got close to starting a software business, probably 10 years ago, did a lot of research and ultimately found a business in that space that I thought was doing it right and joined that business instead of starting it myself.

And then, you know, started Regal now three and a half years ago. So that's really the first like scale business that I've started.

[00:03:14] Jay: Got it. So tell me the real story. How did it start and who was your first customer?

[00:03:18] Alex: Yeah, I mean, my co founder and I, worked together, you know, before this and we were hired by somebody. To help, make, you know, make it possible to buy home services online. So everything from like a handyman all the way to, you know, remodels. And the basic premise was, you know, in the old school world, like you have to talk to somebody to like buy home service, the new school world.

You're not going to have to talk to anybody. It's like, well, it'll happen automatically on the internet. And, you know, we built a pretty big business and ultimately. three brands joined together. So Handy, HomeAdvisor, and Angie's List took one company. And so we had, you know, millions of new customers a month.

The challenge we found is that in an online only model, the conversion rates online are much lower than traditional offline conversion rates. So from lead to actually getting the project done was worse when you did it online and we tried all kinds of things. Digital only didn't really move the needle.

But when we started talking to the customer again, you know, so there'd be a person that come in looking for a fence installation and we engage with them and, you know, they have some questions and whatever. And you build trust, you build a relationship and the conversion rate went right back up. So we realized that it wasn't necessarily right to take all of the ideas we'd learned in sort of selling retail things online into industries that were more considered.

And as we started talking to friends and. Financial services, healthcare, things like that. We learned that they saw similar effects that they, you know, the website was important, but they had to figure out how to actually engage with the customer in a conversation to get back to maximum conversion. And so actually our first idea was not to build a business based on that insight.

We went to. Our software provider for our contact center. And we said, Hey, like, you know, this is important to us. Can you help us build software? Not just for customer support, but actually to practically engage customers and help them buy our product. And it's a list of pounds, Sam. They said, it's not our business where we build customer support software to reduce interactions, reduce average handle time, go away.

And so we go, okay, we thought about it and said, well, maybe we have to. Build, you know, think about what the product would be. And we figured like what you really needed is to build a lot of the marketing automation capabilities into contact centers. And what I mean by that is. Don't just treat every inbound as the same.

Instead, start looking at everything the customer is doing on your site, building unified customer profile, proactively deciding, do I want to talk to this customer? What is the message and what is the channel? And then if they inbound, sure. Do I want to talk to them or not? You know, so some of it is proactive outbound and some of it is inbound and nothing like that existed on the market.

So we eventually left to start it ourselves. And that's where we've started focusing is really on these industries where proactively engaging the customer with an outbound call and outbound text and having a conversation drives a lot of value and the historical contact center software legacy things.

Are not doing a good job in that area. And so it's an opportunity for us to really, help these companies serve their customer better, whether it's triple a or Angie or old employer, you know, a row in healthcare, you know, a lot of these companies really care about their customers.

[00:06:26] Jay: Who was your first customer?

[00:06:28] Alex: The very first customer. that signed a contract with us, I believe was the Farmer's Dog actually right at the same time, like the Farmer's Dog and, you know, make space, which is now make space and clutter merge was signed and, you know, obviously make space and clutter and sort of the moving storage industry Farmer's Dog is, you know, obviously retail, but higher end retail subscription and, you know, It's about pets.

And so something people care a lot about. So it's almost like healthcare, not your kids, it's your pets. and we sort of very early showed them some of the capabilities and for very different reasons, they were interested in like on the Farmer's Dog side, they were looking at how to reduce the average CAC, the cost of acquiring customers.

And they looked at whether we're looking at whether engaging people on the phone would help them reduce that. And on the moving storage side. You know, they knew how valuable these leads were and, you know, if they were getting 5 percent of the people to answer them, if, you know, if they could get to 6 percent of people that answer them massively would impact the amount of revenue they could drive.

So slightly different logic, but both were very interested in it. And at the beginning, like we had very little in the form of product, like basically our promise was we'll find a way behind the scenes, like man behind the curtain to like help you improve your. You know, your outbound capabilities, you know, even if there's not much product built yet and over time, as we saw what they needed, we built more and more product and our capabilities became more,significant and ultimately like good enough that they didn't need my co founder and I behind the curtain, like doing everything.

Like there was actually a self serve product that they could use.

[00:07:58] Jay: how did you get the Farmer's Dog? How did you get that customer?

[00:08:02] Alex: Both, I think, were sort of friends of friends, like, which is often my suggestion to people, like, don't go to your actual friends, because your actual friends are never going to tell you the truth. They might pay you money, but it's They shouldn't and it's a waste like because they're just trying to be nice to you.

You want to go to somebody who you can get a warm introduction to, but who's going to give you an honest answer to, are they willing to pay money for the thing you're doing? And is the thing you're doing driving value for them? And so that's kind of where both of those words and that friends of friends category,it's a good way to get like honest feedback.

Your friends are great, but they're not going to be honest with you. They're just going to tell you it's nice and it's great. And it's wonderful. Like, that's not what you want to hear. Like early days where you're looking for really is something such that like, when you talk to people about it, they're literally like reaching across the table and saying, stop the 18 other things you're trying to tell me to forget about it.

That one thing I want it now. If they're not doing that, you don't have a business. Oh, you might have a small something, whatever. You don't have a business that's going to scale. You need something that's striking enough that people are stopping the conversation and pulling you across the table.

[00:09:09] Jay: I love that. And I feel like we're a little bit of a kindred spirits. I was a, product guy that did an omni channel, is mostly inbound, but for a call center platform, a previous life. So I know that we're held very well. And it's a very interesting, ancient space, that seems to like, you know, iteratively change over the years, but I have definitely lived that,

interesting world of trying to make call centers modern.

And it's not an easy

[00:09:34] Alex: Yeah. It's unfortunate that like what's happened is a lot of call centers are incentivized to act like call centers and just try to lower costs. And then the software they buy helps them lower costs, but it does nothing to really change the way in which those brands are engaging with customers. Our dream is to say, well, in the same way, like a little business is really successful, like little mainstream business is really successful because they know you, they know everything about you.

And they. reach out at the right time because they get in the right item. Like they personalize everything to you. You know, what we want is businesses, the scale of AAA to be able to do that, where they can treat millions of customers, like one in a million. So they know exactly what you've done. They know exactly what's right for you.

They're reaching out on the right channel in the right moment. Like that's a differentiator, not the business that's going, Oh, Hey, I'm going to read from a script now, but the same thing I'm going to tell 800 other people, like That's not helpful.

[00:10:28] Jay: Where'd the name come from?

[00:10:30] Alex: Regal was treating customers like royalty. Like, so from the beginning, like we wanted to impart the idea that like you as a brand could prioritize that and it would actually drive revenue and it was worth using service as a differentiator and using sort of, calling customers sort of, even if it's sales as a differentiator,

[00:10:49] Jay: I know the, kind of the smoke and mirrors get stuffed on the back end to sell a product phase very well. at some point you have to turn that into a product and then you have to make sure that product is, you know, Usable and high quality. Otherwise people will hear about it and they won't come back and et cetera. how do you guys at Regal deal with quality after you've built into a product? Like, how do you make sure, is there like a lot of feedback cycles with the client, are you guys like really in tune with your dev team or are they empowered to kind of make decisions based on consumer feedback?

Like, how do you guys drive quality and usability for the platform?

[00:11:24] Alex: yeah, you know, my co founder, I come from a product background. So it's sort of, I guess, a bit second nature to us. But a couple thoughts to, you know, for folks. So one is don't go spend a year building something before you show the MVP to customers. Like it's a, you're going to throw out half of the stuff you build, like truly like start with mock ups, start with like, get customer feedback as early as possible.

Be embarrassed with the first stuff that you're building. Whether or not you actually put it live or not, it's a different point. So I'm not saying like go and build something that's going to crash and give people a bad experience, but get something in their hands to get feedback as fast as possible and make sure that the people you're giving it to are your real target customer.

So I call this sometimes the Y Combinator problem. Like if you're in Y Combinator, All the other companies in Y Combinator will happily buy your product. It's part of like the deal. But if you're not going after small early stage startups, then all the feedback those people are giving you is terrible feedback and you shouldn't listen to it.

So make sure that the early people you're putting it, you know, when you're putting in their hands, they're the right kind of people. so then in terms of building the product, you know, I think you have to start defining some SLA service level agreements, whether internally or externally and say, Hey, for this, You know, feature the API response time needs to be under a second and the uptime needs to be wide and this needs to be Z.

So you have some way of measuring yourself and then, you know, yeah, you know, not every flow is going to be something that you QA, but the beginning, like, you're probably doing manual QA of some major flows. And over time, you create more automated QA systems for those things to make sure you're able to hit your SLAs.

As you obviously get more and more sophisticated, like now we have multiple instances and when things roll out, they go to an alpha and then a beta and then they go to, you know, general. So, like, you get more sophisticated over time, depending on how mission critical your tools are, like, in our case, mission critical software, because if you can't talk to your customers on the phone and SMS, like, you got a real problem.

So, you know, we've gone further in that area than most, in terms of, like, who's empowered. You know, ultimately, like the product teams are very empowered to figure out what to build. What we try to do is be very clear on the goals we're trying to achieve and try to be very clear on, like, who are the customers that are that need this and what they want and connecting the product team with them so that, you know, we can make sure we're building the right stuff.

I'd say that is easier. The hardest part is getting engineers to go on the same journey. So easier to get a product person to go on that journey. The hardest is to then have the engineer also go, okay. I understand what the goal is of this customer and why we're building this thing rather than just saying, Oh, this is an intellectual exercise for, you know, some app that I'm building.

I think at Regal, we've done a very good job of one, getting engineers that want to work in that way, which is important. And then encouraging them to understand why they're trying to build the feature, which leads to a much better product. But yeah, not every company is able to do that.

[00:14:20] Jay: if you had to start over tomorrow with everything you learned, what would be step one?

[00:14:28] Alex: I had to start again tomorrow in this, you know, what would be step one? I don't think I do things that differently. Honestly. I think it'd be a little bit less stressed about revenue early. You know, it's easy to say that now, because I know that the product is something that people will pay money for or as early, like we wanted to charge people money to make sure it was really something they wanted, but yeah, knowing that it works, like maybe I wouldn't charge as much money at the beginning, get more early stage customers in, you know, so accelerate growth and.

Later sort of, you know, agree with them that pricing would go up as you know, the product became more advanced. That's probably the single biggest change. But again, it's, you know, I'm saying this now knowing that the product works. If you do that and like people are not, you know, are using your product, but then later you find out they're not willing to pay.

Well, that's then you wasted a lot of time.

[00:15:19] Jay: yeah, I think that's a great point. How has that customer changed or how has your targeting changed? Who is the customer today versus who was it when you thought it was when you started?

[00:15:32] Alex: Yeah.We always knew we wanted these more considered businesses mid market and up.two things have changed. One is we used to basically, as long as people are willing to pay at least 24 grand a year, we take them as a customer. Now we're more discerning. If we don't think they'll get value out of all the things we're selling, we won't even agree to sell them one piece of what we're selling.

And so there are some customers who would pay us, where we're not willing to take them. The other thing that's happened is we've slowly as the products be more sophisticated, stepped up into larger and larger teams. And you have to be careful about that. You know, if you, from the very beginning, we're only going after enterprise.

Okay. That's a different model, but we wanted to do mid market and enterprise. We started in mid market and then slowly as we were ready started. Selling the product into larger enterprises and, you know, wanted to make sure we could listen to the feedback that, you know, mid market customers wanted, you know, us to do and, you know, what enterprise customers wanted us to do.

We never had 1 customer that was, you know, so much of the revenue that we had to only do what they wanted, you know, I think no customer was ever more than 10 percent of the revenue. You know, but you can get yourself in trouble if early you go up market and there's a customer that's 50 percent of your revenue and like, you have to do everything they say, even if it's not, what's good for other customers.

So, that's, those are the two sort of transitions on like the target customer.

[00:16:52] Jay: I'm going to ask a question that I cringe thinking about, but I'm going to try to pull an answer out. That's not cringy. AI is.or call center software and interactions and workflows and stuff like that is kind of ripe for that technology for AI. how are you guys, or how are you planning, to use AI in a real way in a way that drives more revenue for you guys, isn't just, you know, marketing material, like have you guys put it in the pipeline or is it, you know, still something you guys are thinking about?

[00:17:26] Alex: Yeah. So. you know, forever when people have thought about, like, how to use AI, you know, people often, you know, look for use cases where there's like a lot of labor that's highly centralized and very repeatable. And so 1 of the use cases that comes up is contact centers. And so it tends to come up to the top of the list.

Particularly on very repetitive inbound support interactions via text, like, you know, Hey, I want my, where's my return or I want to return my product. So those are perfect for automation.you know, we weren't interested in that support use case. Like, we always knew that, like, if we were going to use AI to create a virtual agent for sales, it was going to require voice, first of all, where there's more nuance, like there's interruptions, there's multiple streams of things happening at the same time.

There could be more, you know, more than two talkers.so we knew voice would be harder and we knew that sales was more complicated because there's a wider range of conversation. then like a basic support interaction. So I'd say three years ago, three and a half years when we started, our answer was basically, yes, we need all the same tools and one day it'll be a voice agent instead of a human being, but that's so far out, forget about it.

the improvements in some of these issues around like interruptions and voice and the improvements in the LLMs have been such in the last six months, we have started working on now like virtual voice bots. To replace human beings and even in sales situations, or at least enhance, you know, what you're doing in certain situations.

I don't think it's gonna replace every use case yet. It'll only be good enough for scheduling and for qualification and a couple things to start, but it's getting better so fast that like for sure we're into it. I think for us, like we're still small enough that it's okay if we have. you know, basically we cannibalize some of the seats.

Basically, instead of a company paying for an agency, we say instead of that, pay for an AI bot. We're small enough, that's fine. If you're the size of Genesis or Five9 or Nice, that's hard to transition from a seat model to, you know, an AI bot.

[00:19:33] Jay: That makes sense. all right. one last question about you, non business related. If you could do anything on earth and you knew you couldn't fail, what would it be?

[00:19:41] Alex: That's not business. You mean,

[00:19:43] Jay: not business. I don't know. You can't say take over the, you know,

[00:19:46] Alex: yeah, no, like, 

[00:19:47] Jay: you personally. 

[00:19:48] Alex: you know, from, you know, I have kids. So like, if I could make sure that like, they're happy and well adjusted, you know, as adults, I think that would be like very high on the list. You know, for my, you know, for myself personally, I've, you know, I love mountaineering, but I've never had the risk reward ratio to doing like real big mountain winter mountaineering, like, you know, in a partner or things like that has always kept me away from it.

But if I knew I wasn't going to die. Yeah, I'd like to go to Himalayas and some of these places and go to like 8, 000 meter peaks, you know, it's just an incredible experience, but yeah, but the risk, you know, whatever reward ratio is not there for me otherwise.

[00:20:26] Jay: Yeah, not not dying on top of a mountain is probably a pretty safe bet. all right If people want to find out more about regal or about you, how do they get in touch

[00:20:34] Alex: So you can always go to regal. io, email me at hello at regal. io. You know, if you have outbound contact centers, if you're trying to figure out how to increase your engagement with customers to drive more revenue, we'd love to chat with you.

[00:20:46] Jay: beautiful? All right, Alex. Well, it's great having you on I had some really good insight and I hope people reach If anything else, check them out at regal. io and you're on LinkedIn too, right? I think I saw you on there. So, i'm sure we'll get some inboxes from this So thanks for being on buddies.

Good talking to you.

[00:20:59] Alex: Thank you.

[00:21:00] Jay: See you, man 

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