CEO David Stephens and his team at Guided Knowledge had big plans for 2020. As a growth-stage sports technology company, they had premiered their first product, Dragonfly Golf, at the PGA Show in Florida in January.
Designed to enhance the performance of pro golfers, the product is a smart suit and digital coaching app that provides incredibly detailed information about players’ techniques. The press covering the show went crazy for the technology, and the team was excited about the future.
They had the ears of famous golfers in the US. They were planning to build out a sales team stateside. And they were aiming to ramp up to 30 sales ahead of a planned capital raise in April.
All that came to a screeching halt two short months later. The IMG Sports Academy in Florida, which had been one of Guided Knowledge’s top-tier customers, shuttered, along with most of the rest of the United States.
Suddenly, David, who had taken over the helm at Guided Knowledge in January 2020, was faced with some major decisions. He acted quickly, asking the team to take a 20 percent reduction in pay and ceasing growth plans in the United States.
He and the team rushed to build out virtual demos so they could continue to speak with prospects without in-person trials of the technology.
And most critically, David switched markets entirely. With the United States on lockdown, Guided Knowledge focused its attention on the United Kingdom’s golf market.
All of these rapid changes understandably made investors nervous. The company is young, David was brand new to the leadership team, and he had to convince everyone that his proposed moves were the right ones.
David’s never led through a pandemic before—none of us have!—but by listening carefully to investors’ concerns and communicating his plan clearly and often, he was able to build trust and assuage any fears expressed by stakeholders.
Because David made decisive changes, he was able to retain most of the team, obtain a government loan in the UK, and lead the company through a successful capital raise, where they secured nearly double the funds they were seeking.
The future still looks bright for Guided Knowledge. David has created a five-quarter plan, so the business is able to think ahead while also dealing with today’s shifting realities. And they have big plans to expand into other sports and even into the world of media.
The golf fans in our studio audience were excited about the product and shared other business opportunities they see for it. In turn, David shared the company’s plans to eventually build out a version of Dragonfly Golf aimed at amateur golf enthusiasts.
David says his biggest takeaway from leading through this time is that necessity is the mother of invention. This is not the product launch that anyone imagined for Guided Knowledge. But with honest communication, a belief in the product, and some quick thinking, David and the team have managed to uncover great opportunities, even in this difficult time.
Rob Ristagno: The coronavirus pandemic has created challenges for all businesses. Privately held growth-stage companies typically face headwinds anyway. Now, there are even more unique hurdles to scaling up. On this week’s CEO Campfire Chat, we sit down with a man who took over the reigns of a high growth company in January, not knowing what was coming two short months later. He shares how he’s managed to stay optimistic, pivot quickly, and ferret out new opportunities for this fledgling organization. Oh, and raise capital at the same time.
Announcer: This is the CEO Campfire Chat with your host, Rob Ristagno, taped in front of a live studio audience. Join us to hear successful growth stories for middle market companies just like yours. Sponsored by the Sterling Woods Group.
Rob Ristagno: Welcome to the CEO Campfire Chat, recorded in front of a live studio audience of senior executives. I have the privilege of introducing you to David Stevens, the CEO of Guided Knowledge. This is a really cool company. It’s sports meets artificial intelligence. David is a seasoned CEO. He has a passion for moving businesses into the future. Definitely a lot of possibility here with Guided Knowledge. After a successful career at McKinsey, David went on to leadership positions at firms such as Wolters Kluwer and Thomson. David, welcome to the CEO Campfire Chat.
David Stephens: I’m David Stephens, I’m an Aussie that lives in Boston and I’m CEO of a UK company. So all of that makes total sense, I’m sure. So I joined… I was doing something else last November, which was fun and lucrative. It was partly fun, but it wasn’t exciting. And so I was out in Hawaii visiting my daughter who lives and works there and I got an email from an investor in this company and said, hey, we need a new CEO you’d be ideal, can we talk. So a week later, I’m on a plane to the UK. And then in January, I started. So the company’s name is Guided Knowledge. The first product is called Dragonfly Golf and my role is to commercialize it and take it global.
Rob Ristagno: What is it you do exactly?
David Stephens: So we can measure human performance better than anything, any technology that exists. So we’ve got a smart suit that’s got 18 sensors that an athlete will put on, and we measure with each of those sensors at a thousand frames per second. It’s completely untethered. There’s a little competitor out there that has a tethered version, so you’re going to be plugged in, six sensors and 200 measurements per second.
And so if you are a golf player or tennis player or whatever, the way you move your body makes a big difference. So we’ve got a current PGA golfer who has some known problems. He believes with what we’ve got him into now, he’ll be able to increase his earnings by a million dollars a year and climb up the leaderboard, because we can really help. Golf distance is not arms. It’s all what you do with your hips.
Rob Ristagno: That’s a really a compelling ROI. Is this targeted for professionals? What if I’m just kind of everyday Sunday afternoon golfers, am I going to get value out of this product?
David Stephens: So another analogy we use, I use, we are an airline that has launched with first class only, there’s no business, there’s no economy. One of my colleagues says we’re a Rolex watch with Lennox management. So we’re $15,000 for the solution. So if you’re a weekend golfer, this probably isn’t for you. If you want a Timex watch, go somewhere else, we’ve got a Rolex. But we will have a more consumer product next year. So we’re deliberately starting at the high end and then we will come down. And so we’re targeting the high end, high net worth players and PGA players. So there’s been five years of R&D.
Rob Ristagno: Tell us about the team.
David Stephens: It’s a massive staff of 17 full-time professionals. We do have a whole bunch of contractors and external people. Five of them have PhDs across sports science, across mathematics, and across technology. So we have some [inaudible 00:04:32] and master’s degrees everywhere. So it is based in the UK. The market was all going to be the US. I have a lot of shareholders. This week, I’ve been talking to them all. So we have 68 shareholders.
Rob Ristagno: That is a lot of stakeholders. How do you manage it all?
David Stephens: Well, we have board meetings, so I have a much smaller group on the board. And then, this week, we’ve had all shareholder updates. We launched in golf first, baseball second, but we’ve got applications in health rehabilitation, arts.
So I joined in January. So we have 360,000 pieces of data in every golf swing. And then we create this unbelievable 3D avatar that you can move around, you can see from the top, from the side, or whatever. It’s really aimed at having a coach who really knows what you can do to improve your game.
Rob Ristagno: Kind of what’s the differentiator? You mentioned there’s a competitor out there who has fewer sensors and is tethered.
David Stephens: So the way you would do this normally is a coach will look at you. Obviously, he can’t measure. Or you might use camera technology, which is nowhere near as accurate and way harder to set up. The competitor is tethered, so you’re going to plug in at your back. So we can play a whole round of golf and then come back and look at why I’ve ruined the sixth hole.
Rob Ristagno: You started in January, 2020. I bet you had no idea what was coming. Tell us about your first few months there.
David Stephens: No, it was great. So I was spending about half my time in the UK and half my time here. We had a highly successful launch of the product at the end of January at the PGA show. We were the… There’s two major international golf publications, Golf Magazine and Golf Digest. We were written up unbelievably in both of them. We had unbelievable coverage. They really… The golf magazines said we were licensed to print money.
Rob Ristagno: Can I get one of those licenses?
David Stephens: Yeah. Yeah. So it launched really, really well, all the right publications. We got out of that a bunch of leads. Our business plan was we’re going to start in the USA and then take it globally. So we were hiring a sales team and I knew we needed a capital raise in April. And so we wanted to get some initial sales underway. And so we had lined up about 30 sales.
Rob Ristagno: Sounds like you had an incredible first few months. Great PR, some early sales, enthusiastic investors, then what happens?
David Stephens: And of course COVID came along. So the clouds looked much darker and we couldn’t travel. We cut our run rate in half. In the UK, they have to volunteer, you can’t forcefully do it. So I did lay off a couple of people. We cut travel. We cut all discretionary costs. We put everyone on a 20% decrease. No point hiring the US sales people, because we were going to fly them to the UK and put them in training for two or three weeks so they could really learn the product. Couldn’t do that anyhow.
And then, one of our big customers, a top-tier golf university, they shut down, like every other university, so none of that could happen. So it forced ourselves to say, gee, well, we still want some revenue. We’re going to have to shift to the UK, which was going to be our third priority, maybe, in normal times. And we couldn’t meet people face-to-face and so you couldn’t meet or touch people. So we invested a lot in digital demonstrations.
Rob Ristagno: Tell us a little more about those digital demonstrations. Actually, I’m really curious, because I think a lot of people here know showing is better than telling, in terms of selling and building new relationships.
David Stephens: So we were going to do demos. So we could do them on the live thing. We used GoToMeeting, same as this. So we could do it live with people elsewhere, but we also wanted to record it and create a lot more digital stuff that we could explain the product that we could send them stuff afterwards. But we didn’t have endless money to go and hire big firms to do it.
It turned out one of our PhDs, a sports scientist, was an excellent digital editor, so we ended up using him. And so we were able to stage demos of the product and use, what you could do, all of that stuff that we didn’t really have. So that was great. We delayed our capital raise, because going out in April for what still is a discretionary product didn’t make sense. The UK government, like here, came out with some different schemes to help businesses, to keep people employed.
I had shareholders calling me up, some saying you’ve got to shut the business down, lay everyone off, this is not going to get any better. There were all sorts of different views.
Rob Ristagno: How do you handle the naysayers?
David Stephens: Listen to them. Tell them we’re in control, not you, and this is what we’re going to do. And my board were fully supportive. So I and the board, I’m on the board, we make the decisions. Granted, we take input from people. The people who are investors, they’re all high net worth individuals. So there’s only one investor that owns just over 10%. Everyone else is single digit. And so a good thing is that there’s no single… If I had someone owning 40%, they effectively control the company. There’s no one who controls the company. We control the company. And so you listen, Rob, you’re respectful, but you say, no, well thank you, this is what we are going to do, we think differently to you, and that worked.
Rob Ristagno: You have a clear vision. You can see through the COVID storm. You’re going through things positively, making everyone happy, any doubts ever cross your mind?
David Stephens: Sure. So we made the decision to cut people’s pay 20%, rather than lay too many people off. If we would have laid too many people off, it would have limited the funding we could have got from the UK government, because the UK’s plan was to keep people employed. So I had to have the confidence that we’re likely to succeed without knowing that we’ll succeed, but sure that would have all backfired and some of these shareholders, if we didn’t get it right, would have said, well, I told you so and you didn’t listen and all that. So, it’s just believing in what we’re doing, be open. We can disagree. People have different views. No one knew what was going to happen. So nobody had a perfect crystal ball there.
Rob Ristagno: Now tell us, where are you today?
David Stephens: Where are we today? Well, obviously we’re not out of COVID, but we’ve had some modest UK sales, not as much as we would have had in the US, but, including some really big name golfers too who I can’t use, we had our fundraising, we got double what we wanted. So we got 130% from investors. And what we wanted, wasn’t a lot. We wanted 700,000 pounds. We got 1.4 million. Most of that came from investors. We did get 500,000 pounds from the UK government from their future fund. Expanded the advisory board. I was able to attract as an investor, a Boston-based lady who is a state champion in golf. She was the first and only female on the Harvard men’s golf team. She’s been on the board of the PGA and she’s been the chair person of the board of the women’s PGA. So she’s both an investor and on our advisory board, which is great.
Rob Ristagno: Actually, can you share with us, David, what’s the story? This has got to be a tough, tough sell, convincing people to invest more in a company in this environment, convince people to join the board. What’s the story? Can you share with us?
David Stephens: Luckily, a lot of this business is driven by people who love golf, right? So I suspect that 90% of all the investors are golfers, right? And so it’s part of their passion. So there happened to be plenty of money.
Rob Ristagno: You’ve had luck recruiting advisors. What about employees?
David Stephens: And then, we hired a great guy in the UK, awesome guy, right? He was a previous executive of the Volvo Tour Open. He’s been a PGA player. He’s a well-established guy. The person in the US has a similar background.
And so they have to believe in the product, right? And then we’re also hiring a sports scientist down in Florida to work with us and customer service people, which we haven’t had before. And so, luckily, there’s a lot of people out of work, but here, we’re attracting people who aren’t out of work. We’re attracting people who come from other companies who we reached out to. I was the search firm. I reached out to them and said, hey, I think you’d be interested in joining, just like they did to me back in November.
Rob Ristagno: It sounds like you have a really cross-functional team here. You have people who are selling with golf experience. You have PhDs who have to understand biomechanics. You have data scientists who are crunching all the numbers.
David Stephens: Yeah.
Rob Ristagno: It kind of remembers… As you know, I spent some time in sports technology myself and we had a big meeting with the St. Louis Cardinals to try to convince them. And our CTO asked the question in the meeting, what’s a shortstop. So there’s a little bit of kind of how do you get the scientists and the athletes and the sales team to all speak the same language.
David Stephens: Yeah, and what’s interesting… So, the scientists… So this has been an R&D company, right? So it’s all been led by scientists. The previous CEO is now my CTO. So the board really wanted to push him out. He resigned, left, and I convinced him to come back as the CTO. So the whole culture of the company has been everything’s got to be a hundred percent accurate and right and all of that. It hasn’t necessarily been commercial. That’s why the board wanted me.
So now that we’re bringing in more commercially-minded people, we’ve got to bridge that gap. We want the scientists and the mathematicians and all of that, to keep us honest with the accuracy of what we’re doing. It’s a key part of what we’re selling. We used to talk face-to-face a lot. Now I talk to them via video, so we do talk a lot.
We attract people who like doing things that haven’t been done before. We’ve got 11 patents. We can do things that haven’t been done elsewhere. We’re going to apply it not only in sports. We’re going to apply it in other industries. And we’re going to transform from being a product solution company to a data and analytics company.
So we envisage a day when you’re watching your golf on the television and we’ll be able to compare the metrics of one player versus another using our technology and why does someone hit further or do whatever? So we’re growing a database all the time of golf swings. And so, we can analyze people and player A is more like player B and here’s the reasons why. So we’ve got the Golf Channel wanting to create documentaries with us on how the human body works in golf, because we can measure it like no one’s been able to do before. So we’ve got sort of a media…
Rob Ristagno: I see why you’d want to position yourself as an analytics firm and a media firm. This means more investment. What are your plans for future fundraising?
David Stephens: So our next fundraise in first half next year… This year, at this time, we’ve raised a bit over 1.4 million pounds. We’re going to be going after 5 or 10 or 15 to really turbo-charge global growth. I want salespeople across Asia, across South Africa, across Australia, across Europe. We want to go after six sports, not two, and that’ll be on a path to also having a lot of income come from media and not just selling. So today, if you’d buy it, you get a smart suit, you get 18 sensors, with a couple of spares, you get a pod that sits in your back pocket, and you get the software to put on your device that both the player will use and a coach would use. So we are selling that. In the future, we’ll be selling data streams, as well.
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Rob Ristagno: Talking about different geographic markets, different sports, different offerings, media versus hardware. That’s a lot of complexity to start in just six months from now. How do you think through managing the complexity?
David Stephens: Well, every month is different. So I’ve got a five quarter plan that I’ve presented to shareholders just this week. We will, probably, we don’t know yet, have a golf division, so to speak. And then a baseball division, then a tennis division. We might have a separate media entity that might cut across all sports. And then we’ve got some initial thoughts there, at the moment in sales and revenue, and then we’ll sort all of that out. But that’s the way I’m currently thinking.
And the board is supportive and currently thinking about it, as well, organize around sports, with probably a media overlay. At the moment, we’re a UK-centric company. We see ourselves being a US-centric company before long and that’s why the board hired me, because I’m based here. But then, we will be a global company. But we will probably keep doing the large part of the R&D and the sports science in the UK, but our commercial and media and all of those operations be in the US.
So the future, again, next capital raise next year. It will depend obviously on what’s happening in the world economy, how well our sales grow. We’ll be then in golf and baseball. How will those be going? We may evolve into this media company I talked about. We’ve got an AI solution underway now where a golfer can come in, take a few swings, and then we’ll be able to diagnose where they’re at and who they’re like and where their biggest opportunities to improve are and if they want to look like Rob, because Rob’s a nice golfer.
Rob Ristagno: That goes without saying, but continue.
David Stephens: And so, obviously, we want to grow the value of the business and shift, as I said. And also, next time around, we really want to bring in strategic investors. So part of my role is I’ve got to frame myself up from day to day in selling and product development and all of that and be out talking to people who might be willing to write us…
Rob Ristagno: It sounds like Jack might have a question.
Jack Reeder: Jack Reeder from the…
David Stephens: Jack, do you want to invest? How much?
Jack Reeder: Well, I’m going to have to think about it, but I am curious just on one thing. If you’re talking about baseball, I think of baseball, obviously, as a team sport, as opposed to golf, which is usually pretty much an individual sport. Would this be a product that a team would invest in multiple… Could you just talk about that a little bit?
David Stephens: Yeah, no, absolutely. And that’s why it becomes attractive. So the priorities were set before my time, golfers, baseball, second, and tennis is the third. So we have a contract with the IMG Academy in Florida. If you haven’t heard of that, it’s basically a sports university. So Serena Williams went there, Andre Agassi, in tennis, and there’s all sorts of different golfers that went there. And so we have a contract with them.
In that contract, we are to develop with them golf, baseball, and tennis. So we’re advanced in golf. We’ve got baseball batting well down the way. And a golf swing and a baseball bat are similar in that your feet are on the ground. Pitching is what we’re going to do next. It’s a whole different dynamic, because you’re, obviously, moving your feet and everything.
Yes, and then selling it, we will be selling to baseball teams. We might be selling a million dollar sale. We haven’t quantified yet to a baseball team as opposed to selling $15,000 to an individual golfer. Now, when we sell to a university, like Florida State University, we sell a package of suits. So baseball is attractive, from that point of view. I’ve only been to the IMG Academy once, at the end of February. We were working with golf and baseball down there. There was a Cleveland Indian batter who was there and he got in the suit and was just absolutely blown away. He was saying, wow, we will clamor for this. It’s so competitive, 36 teams wanting to win the World Series. I know it’s called the World Series, because every country in the world plays it. I know that.
Rob Ristagno: At least there’s one team in Canada. Come on.
David Stephens: Yeah. Yeah. I guess that makes it world, fair enough. It’s such a competitive market. So we’ve been talking to baseball’s innovation group. And so whether our first sale would be to the Red Sox or Cleveland Indians or whether it would be to a minor league team, we’re not sure yet. But, yes, we will be able to sell to a whole team and it will be attractive for us, from that point.
Rebecca Donahue: This is Rebecca Donahue. I wanted to say, I am so excited about this. I golf and I started playing tennis again. I was seeing a documentary last night on Serena Williams and bodies change, right? So golfing, your bodies change over time. So to actually be able to have something that can critique you as the body moves is fantastic. You don’t have it for skiing. Now, I really need help there.
David Stephens: But [crosstalk 00:23:08] the US Olympic ski team coming. When can you work with us?
Rebecca Donahue: That’s great.
David Stephens: So that’s something… We can’t do everything at once, right?
Rebecca Donahue: Yeah.
David Stephens: [crosstalk 00:23:15] We’ve got to make one sport work at a time.
Rebecca Donahue: Yeah. Well, the minute… Yeah, to your point, once you get that media coverage where you start getting that, yeah, that chatter, yeah, the consumers they’ll be thrilled for it. That’s great. Congratulations on a great concept.
David Stephens: I don’t get any credit for that, right? I walked in long after the concept was created, but I’ll pass it on to others who’ve created it.
Rebecca Donahue: Great.
David Stephens: We’ve got people in medicine and rehabilitation, right?
Rebecca Donahue: Mm-hmm (affirmative).
David Stephens: Even injury prevention. How fast can you push a baseball pitcher before they pull their arm out of their socket, or whatever. How can you really measure that? And then, if someone is injured. I had a friend who had died, sadly, of Parkinson’s recently. Rehabilitation and body movement. There’s all that type. We’ve had musicians say that, well, this could really help in orchestral stuff. Every time we sort of present this, people say, oh, you should do this, you should do that. Now, one day we will, maybe, but, at the moment… And so, once you put this sensor on, you can measure anything you want about what a body can and can’t do and compare it and all of that stuff.
Rob Ristagno: So, David, all of this has happened. You’ve been on the job you’ve been through COVID. What lessons have you learned?
David Stephens: So my lessons learned, I’ll just go back to that. COVID came along. Great, I had to believe whether COVID was going to be here three months or six months or a year and a half, it will go, so would be temporary.
Be transparent. I had to tell the employees I want you to take a voluntary 20% pay cut. Otherwise, I’m going to remove more people from the business. We had to be transparent with investors, our partners, IMG Academy, all of those people. No one knows how long it’s going to last. I can do different scenarios of financials.
Investors want personal conviction. We’ve got 60 of them now. They put a decent amount of money into the fundraiser over the last couple of months. They want to know that you’re personally convicted. Necessity is the mother of invention. As I said, we had a whole plan to hire people in the UK and to meet them face to face and to make big sales. Well, all of a sudden, we have to do it with digital. All of a sudden, we had to change country from the US to the UK. We had to do it. So we made it work.
Rob Ristagno: David, if people want to get in touch with you or learn more about Guided Knowledge as a customer, investor, strategic partner, or whatever, what’s the best course of action for them?
David Stephens: Well, you can give them my contact details, obviously. Go to the website, have a look. There’s more and more content being put up there. We will do a major refresh of the website in the next couple of months. Looks a little bit old now, but it still works. So I am based in Boston. And one day, I’ll be spending half my time again back in the UK. But it would’ve been much worse if this happened in the middle of January, because I wouldn’t have never met my team. So I’ve met them all.
Jack Reeder: David, I may have missed it, but have you thought, I’m sure you’ve thought about it, what is the consumer price that you’re thinking about for the consumer version?
David Stephens: Yeah, we haven’t set that yet. We know what K-Vest, the simpler… K-Vest is a rickshaw and we’re a Mercedes. Sorry, I use lots of analogies, right? So we will develop something that’s a Ford, rather than a rickshaw and we’ll price it… We’ve got a huge margin in what we do now. We’ve got an unbelievable margin. So we have not set a price yet. That’s work that we’ve got to do. We haven’t even decided exactly what features we want to dumb down. Is it the speed that it operates? Is it the number of sensors? Is it the number of measures? Is it 500 minutes, which is the cheapest sensors. So that work is underway. So we just don’t know yet, jack.
Rob Ristagno: Thanks, David. We’ve learned a lot about your technology, your process, your company, your team, your R&D. What strikes me, though, is you’re not selling a vest. You’re selling performance. You’re selling success. You’re selling wealth. And as you expand into the healthcare market, you’re selling health and wellness. Thanks again to David Stevens, CEO of Guided Knowledge, for joining us on today’s CEO Campfire Chat.
To listen to more episodes, receive the email companion, or to take a two minute business growth assessment, visit us at ceocampfirechat.com. This is Rob Ristagno and I’ll see you again Fireside.
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