What’s the difference between being a consultant and running a startup? The
answer might lie with InRule cofounders Rik Chomko and Loren Goodman. The two
were working as consultants in the decision management sector, but when they
found a pragmatic way of conducting business that could be turned into a
product, they made the leap. With that, InRule was born.
Rik and Loren recently sat down to talk with Midstage startup coach Roland
Siebelink to discuss their journey from consultants to founders and the value
proposition that has made InRule successful. The two cofounders also shared a
lot of the lessons they’ve learned along the way.
- Why it’s helpful to narrow your market and dominate one niche before expanding.
- The difference between creating new products and selling old products to new people.
- How Rik and Loren make sure not to add friction to their cofounder relationship.
- Why it’s important for cofounders to share the same values before scaling the company.
- The benefits of having a coach to guide you to the right answers.
Roland Siebelink:Welcome to the Silicon Valley Momentum Podcast. This week
we have as guests, Rik Chomko and Loren Goodman of InRule. Welcome, gentlemen.
Rik Chomko:Hello, Roland.
Loren Goodman:Hello, Roland. Good to be here.
Roland Siebelink:Thank you for joining this podcast. It's great to have
some seasoned entrepreneurs on the podcast this week.
Roland Siebelink:Maybe that's a good segue into the InRule story. We have
been working together for a number of years. InRule recently accepted some
growth capital to really boost further growth in that space. And I understand
the space to be described these days as decision services. Is that right?
Rik Chomko:Decision platform. Decision management.
Roland Siebelink:Decision management. Okay. What does that mean? What does
InRule do? And what's the use case for what kind of a customer?
Rik Chomko:I think for us, If we look at our core customers, It really
comes down to four major industries: insurance, financial services, government,
and healthcare. Places that are highly regulated and have a lot of decisions
that they are in a position to automate. That's what we do. We help these
organizations automate these decisions. I like to say, also augment them, so
it’s a decision recommendation. It's not always saying this is the absolute
decision. We're just gonna automatically approve or not approve this
Roland Siebelink:What use cases are we thinking about then, Rik?
Rik Chomko:Yeah, I was going to go into one of the use cases. One of the
bigger ones, which is loan origination. Generally, anytime you go to get a loan,
there's an engine sitting behind it and a whole algorithm and set of rules that
filter through that say based on you know the type of house you want to buy, and
the amount of money you want to borrow, and what credit history you have, and
how much is a down payment on the house, It runs through a whole bunch of rules
and calculations that say, “You know what, this person looks like a good risk
for us. Based on that risk, we're also going to recommend these sets of
And then as they go down through the process, once they select the process that
then says, “Okay, well, based on that, what rate can we offer them that we think
will be profitable and they'll be comfortable with that rate in terms of paying
down the loan.”
And then finally, the last piece is, when I get to the closing - you've seen
that list. “Hey, you gotta bring your license. You gotta bring your last three
paychecks. That kind of thing. Those are called stipulations. And the product is
also used in that process to say, “What are the things I need to bring to the
closing in order to get the paperwork done?”
And then within that same era, you might use it for commission calculations. You
might use it for any part of your process where you feel like there is a lot of
detail. There's a deep decision you want to make and policy that you want to
enforce within your organization. That’s generally one example. And we can go
into a whole bunch of other examples like claims processing and healthcare and
insurance pricing for all kinds of insurance, whether it be healthcare or
property and casualty insurance.
If you want to say how much it's going to cost to ensure the Fine Arts Gallery
that you have, it's a special set of rules and calculations that determine that.
And usually, that runs through an engine like ours to help determine that.
Roland Siebelink:Okay, very good. How did you get into that space? I'm
guessing it's not that you get out of college and you're like, “Oh, I'm gonna be
working for loan origination, solving the problem of loan origination in the
Loren Goodman:I think that's something we discovered in our own experience.
It was interesting. Laziness is the driver of all innovation. The TV remote was
not invented by someone who wanted to get up and turn the TV channel. When we
were doing consulting work together, we'd written an engine at the time that
automated various aspects of the calculations and also put the customer in
charge of making them.
We did it because it made it cheaper for us to deliver. We could do a fixed-bid
project for less and get them to do some of the work. What we noticed was this
passion for access to automation. When people have the ability to do something
in the first person, there's something a little bit magical about that. And I
see it. Watching kids mix paint and see what color it becomes.
Not only did it get automated but it got automated better. And it got automated
with a sense of ownership that was transitioned from. There was no more arguing
about the content of a document and who was right and who was wrong. Instead, it
was, “I made this. These are my rules” versus if you write something in Word, I
don't think you credit Microsoft for writing it for you in Word. You didn't type
it in, you crafted it in Word.
I think that we found this and we played to this strength. And then behind it
was a set of algorithms to make it work. And then we were like, “Well, this is
actually maybe a product.” And turns out there's an entire space that existed
for that product. We came at it from pragmatic taking bullets in the field, as
opposed to from the academic side of the algorithms behind it.
Roland Siebelink:Coming back a little bit to the InRule story, looking back
at all this time since you started the company, moved from consulting to more of
a product company, and now accepting your growth investment, what have you
learned as entrepreneurs? What have been some key pivoting points or points
where you said, “Okay, this is really a big learning that makes us better as
entrepreneurs, makes us a better company?”
Rik Chomko:For me, the first one is to pick your market. Try to pick a
niche that you think you can be successful in because if you try to be all
things to all people, it's going to get really difficult on you. And I did learn
that early on from one of the folks that worked with us in the organization.
We decided to focus on a particular technology stack versus trying to be - back
in the day, that would have probably really hurt us. And then I did specifically
remember a moment where we were at a conference. And I said, “Man, wouldn't it
be great if we just had this feature in the product and it did XYZ, and we could
sell to all those other people.” And he looked at me and said, “You can't. You
just can't do it. Not right now. Keep it in mind for the future. But if you try
to add, that's a whole nother new product effectively that we will be selling to
a whole new group of people, a whole new group of personas, if you will. And
that's not a smart move.”
And I remember that. And I think focusing on a niche market. Don't try to be all
things to all people. Get really good at your niche and then expand from there.
Roland Siebelink:It's very counterintuitive for entrepreneurs usually,
Rik Chomko:It's tough. I'm telling you. When you look at having to walk
away from business and that business might be critical to you making the next
paycheck, it’s really hard.
Roland Siebelink:Explain to some of the earlier stage entrepreneurs that
are listening to this podcast, why would you limit your market artificially that
way? What's the driver behind that?
Rik Chomko:Because you can get very distracted. For me, the distraction
factor is one of the things. You pull resources away from working on you already
may have a set of successful customers in one area. And usually there's enough -
if you pick your market right, there should be enough business to go after in
the market you picked versus trying to go off and do this other thing. It might
be adjacent to what you're doing, but it's not core to what you're doing. And
that is really distracting.
Roland Siebelink:Yes, you have to keep re-inventing new products versus
just selling the same product to more people, right?
Rik Chomko:Right. You pull these resources: engineers, sales people,
pre-sales people, you pull them over and you start focusing on this other
problem. Then everyone else has to get spun up on what the problem is, what the
solution is. And then actually develop it and then go market it and sell it. You
think about all the effort that goes into that. And then you're pulling all that
away from the core product.
Loren Goodman:I was going to add, on one side of it, I look at it just
simplifies thinking when you narrow what you're doing. And it's really hard to
do because I want to do everything. And there's nothing we can't do. In order to
make a decision, making it so that you can think about it in smaller and smaller
scopes, makes a better and better decision.
In terms of what I have learned from being an entrepreneur - and this is
something I learned from Rick actually - was to protect and never threaten
relationships. Because stress can be ridiculous. The first customer is a piece
of cake. That's a walk in the park. You already knew the guy who started the
business. Second customer, not as hard. You got your network, you're playing it.
Third, fourth, fifth, a little tougher. Maybe one you don't know already.
When you get into the six to 10 - and this is in enterprise software, these are
big contracts. But you get to six to 10, when all of a sudden you've exhausted
your personal network. And now you're setting up your booth at the trade show
and you're out in the wild. I always contend nothing interesting happens in the
shallow end of the pool. That's the moment.
And I found when I speak to protecting relationships, it is that in those levels
of incredible stress that it's very easy - and Rick and I have been working
together across multiple companies - and I don't know many people who have been
business partners as long as we have new who basically can't stand being around
each other. One of the things with Rick is we protect that relationship and we
never add friction. Operating from that standpoint, it's very hard to do when
you're furious with the other person. Never bluff. I think that transparency and
our ability to communicate is the only reason we could collectively fly a plane
100 feet off the ground through a forest.
Roland Siebelink:That's a very good learning. There's a lot of startups,
scaleup companies where the co-founders are worried about having constant
conflict. Rick, what's your take on that? How do you keep working well with your
co-founder through all these stress and all these ups and downs that every
business inevitably goes through?
Rik Chomko:Values do get challenged when the going gets tough. What are
your values? What do you line up on? And I think that's an important thing to
consider if you're going into business with someone, do you have the same set of
values? And don't believe in the same things? Because if you do that, those
tough times will be a little bit easier, should be easier.
And then being honest and transparent with each other. Everyone is always going
to have moments where you're not seeing eye to eye on things, but to keep that
in and not be transparent. But you also have to be respectful. And I think
that's another big part of it. Because if you lose that modicum of respect, then
we run into problems where it becomes more of an argument that you're not going
to make progress on.
But I really do believe in making sure your values are lined up. Because if
they're not and if you don't believe that - if you don't believe doing best for
the customer versus making a few extra dollars is the right way to go, you're
gonna have an argument at some point, and it's gonna go the wrong way.
Roland Siebelink:And you can’t reason for his principles anymore, right?
How do you discover those values with your co-founder?
Rik Chomko:I don't think we were really purposeful in it. Starting out. I
don't think we had any idea what they were. We just maybe got a little lucky
there in that we did share the same values, but Loren probably has a story.
Loren Goodman:I was excited to find out you had values.
It's funny, you bring up the thing about doing right by the customer. Rick and I
will eat our shoe to make a customer happy. If it came out of our mouth as a
brand promise, we follow through on it. With other mindsets that can create a
great deal of friction. But we believe we're playing the long game. I agree on
the values. I don't think we've ever actually overtly discussed it. But we do
very much align on how we do right by our customers.
Roland Siebelink:Yeah, and you have a set of core values already set in
stone when we started working together. When I was your coach for a few years,
Rik Chomko:Yes, and I guess along those lines is if you can come and figure
out some agreement on what those are, it does help as you start to scale, as we
found out working with you. Once we knew what those were, then being more
consistent in how we reward or not reward along those lines I think helped me
realize a new level of thinking and growth around a company.
And then also reinforcing those values when you had a chance to communicate to
the company. Looking at something that someone might have done right and
communicating something that reinforces the value that we believe in across the
entire company, I think, has a pretty good geometric effect on it.
Loren Goodman:Don’t keep track and compare sacrifices. There's going to be
time when Rick's on vacation and I'm working 80 hours a week. But there will
also be a time when I'm on vacation and Rick is working 80 hours a week. But I
think the moment you notice that you're keeping track of your sacrifices is the
indicator that's time to talk, that's time to get it out in the open. Because if
you don't feel it's balanced and there's an imbalance between risk and
sacrifice, that's a key piece of the recipe.
Roland Siebelink:Great advice. I love that. Loren. Tell too many
entrepreneurs and co-founders, I think.
Rik Chomko:Yes, and I think what's underneath that is trust. There's a
level of trust there that says, “Hey, I know that you work your butt off at some
point, I'm running into a personal problem or I've got something that I need to
step away for a little while to do whatever it is and then trust that you're
going to come back and deliver some equitable amount of value to the company.
Roland Siebelink:Excellent. Okay, We've almost been talking for an hour.
I'd like to finish with a quick fire round that I like to focus on tips for
entrepreneurs. The people who are a little bit behind you, that have started
their company in the last couple of years. And maybe let's start with what kind
of a book would you recommend to them? Are you currently reading it or a book
that you've recently read that would be really helpful to some of the
entrepreneurs in our audience..
Rik Chomko:I will give you one that I've read that I thought was really
good for entrepreneurs and anyone that's in a position of senior leadership in a
company. It's “The Hard Thing About Hard Things” by Ben Horowitz. Everything you
read generally in a book is all the great things that happen when you're leading
perfectly and the way to do it all perfectly. But he talks about all the hard
decisions that he had to make. Firing friends and running a company into the
ground. That, to me, was really insightful and frankly pretty refreshing to hear
that it isn't always a perfect path and that it's a roller coaster ride.
Roland Siebelink:I love that book too, Ben Horowitz, right?
Rik Chomko:And then the other one that I'm reading now is “Mindset,” and
it's all about growth versus fixed mindset. I've heard of the concept before.
I've always been intrigued with it, never really sat down to read the book. I'm
getting through that and I think there's just some great examples and hopefully
have a chance to educate or at least share it with other people in the company.
I’ll point out it's very easy to fall into a fixed mindset. You think about
growth, both personally and professionally, it can lead to some great things.
Roland Siebelink:Absolutely. Loren. What about you?
Loren Goodman:Well, it's interesting, Rick. You took mine. My initial one.
But the other ones that come to mind, One is a book called “Zero to One.” It
captures innovation in such a unique and crisp way.
The other one I liked was “Lovability,” which talks about creating a little bit
of something of what people love versus something that solves their problems.
And lovability starts with you using your own stuff every day, making sure that
it's personal. I found that to be fairly inspirational.
Roland Siebelink:Okay, another question I had on my quick fire round. If
you could work with any leader for a week, who would it be? Loren, let's start
with you this time.
Loren Goodman:Well, the cliche answer would be Rik Chomko. I actually think
I would take probably Bill Gates or Satya Nadella as people. And Satya,
specifically. There is something about his belief and focus.
I watched a great leader. I was in a meeting the other day and I just watched a
great leader, how they express something in a completely un-offensive way. It's
just a set of skills. I would say, I feel like if I spent a week with Satya
Nadella, I would walk away with a doctorate in being awesome, just just watching
him operate every day.
Roland Siebelink:That's awesome. What about you, Rik?
Rik Chomko:Yeah, I'm going to go there more historical. I just can't think
of any one tech leader. I’d like to draw from all of them. But I love Abraham
Lincoln and reading about him. And Teddy Roosevelt and Winston Churchill, so
it's hard for me to really pick any one of them.
Roland Siebelink:What’s the trait that you aspire to in picking those
Rik Chomko:I think they have all been inspiring in tough times. They
overcame adversity and they were inspiring, but they also stood up for their
beliefs. Maybe those are the two main qualities that draw me to those examples.
And that's why I’d want to spend time with them.
Roland Siebelink:Some sense of real integrity there, even in the face of
severe hardship is what you’re saying.
Loren Goodman:And that's the moment that matters 100 times more than the
next most important moment.
Rik Chomko:And also, they were great communicators. They all had great
examples of where they communicated to people what their vision was and why they
think. And then following up with solid execution.
Roland Siebelink:Excellent, very good. One last question, the quick fire
round. If an entrepreneur feels like, should they be using a coach, yes or no?
What's the main benefit you think you get out of a coach as an entrepreneur?
Rik Chomko:I'll go. You have a chance to step back from not having to
orchestrate and facilitate the thinking of your team and participate with them
versus having to - that's one part, just in the facilitation part and having
someone there to run that and walk you through and be more of an unbiased
observer and not bring in emotion or other things. You, as a leader, get a
chance to participate with your team and do the thinking with them.
I think you have a subtle way when you're doing that as a facilitator to dismiss
someone's idea because you don't think it's right, whereas a facilitator coach
will always give it the airtime it deserves. And I think from a coaching
standpoint, as a coach that's talking to other leaders, especially in the
software space, I think it helps that you have a perspective. As an
entrepreneur, founder, you can get a bit insular at times and not have the
perspective of wider things that are going on in the industry. I guess I'll put
those two things as number one and two.
Roland Siebelink:Very good. What about you, Loren?
Loren Goodman:I think to Rik's point, when you're working with a coach, you
eliminate the mood of the room, and you're forced to recreate the context of a
problem you're coping with, having to voice it all. It's just so useful -
working with you, for example - having to explain how we got here or explain the
history or explain the decision. In it, the words to think about it and
eliminate the emotional side of it naturally arise. By the time I was done
telling you the problem, the answer was quite clear. But it was the way that you
didn't weigh in and the way that you listened.At times, I'd be like, “All right,
Socrates, let's skip that part. Just tell me what you think.”
Roland Siebelink:That did come up a few times. I do remember that.
Loren Goodman:But I would say, with the scale up in its whole, everyone
could say, “You got to trust each other. You gotta have team trust. It’s like “I
trust these people.” Understanding what it means and really creating - there's
one thing I got from you that I've applied to almost every aspect of my life,
which is how to give feedback.
“I witnessed. I felt.” Not “you did.” Not “you wanted to.” Not “you were
trying.” Inferring nothing of the mindset whatsoever. Simply my senses took in
this information and then my mind felt this way. When you put that on the table
like that - to quote my wife, she is the world's leading expert on her own
opinion. Everyone is. When you are only expressing your opinion and what you
sensed from your perception, there is no room to argue.
Roland Siebelink:Very good. For those people that are interested in
learning more about Inrule, where should they go? What's the best way to get
started in understanding what InRule can do for them?
Rik Chomko:www.InRule.com, and feel free to reach out to Loren or myself
Rik at [email protected] if you want to reach me. Loren is at
[email protected]. We'd be happy to answer any questions you have.
Roland Siebelink:Great! Thank you, Loren Goodman and Rik Chomko, CTO and
CEO of InRule, our guests on this podcast Silicon Valley Momentum this week.
This was a pleasure to have you on, gentlemen. And we are looking forward to all
the impact that InRule will be making with its new growth capital.
Rik Chomko:Excellent. Thank you, Roland.
Roland Siebelink talks all things tech startup and bring you interviews with tech cofounders
across the world.