Nov 1, 2022 · 26m · product-market-fit
How to Bootstrap Through Partnerships | Laura McGee, Founder of Diversio · PMF Show
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In this episode of the Product Market Fit Show, Diversio Founder and CEO Laura McGee shares how she leveraged strategic partnerships with industry associations and academic institutions to bootstrap her workplace diversity software platform to mid-seven-figure ARR before raising institutional capital.
How this conversation actually went
Every chapter scored 0–10 on four independent dynamics. Hover any point for the reasoning behind the score. Pablo holds 27.4% of the talking time here. How this is scored →
Pablo as informed peer 4.7 Guest teaching 3.4 Guest disagreement 1.4 Pablo pushing back 2.6
speaking balance: gold is Pablo, purple is the guest (3 minute bins)
Sharpest disagreement ▶ 8:25 Rejecting the technical co-founder necessity
Laura directly contradicts standard tech startup wisdom, asserting that coding is largely a commodity and not finding a technical co-founder was her best strategic move.
Hardest push from Pablo ▶ 15:06 Pushing on university R&D vs hiring talent directlyPablo plays devil's advocate against university partnerships, arguing that raising venture capital to hire talent in-house eliminates the friction of academic paper requirements.
Biggest teaching moment ▶ 8:31 Laura reframing coding as a commoditized startup functionLaura explains to Pablo why commercial and market fluency are vastly more difficult to hire early on than engineering talent when starting a software company.
Pablo holds their own ▶ 11:49 Pablo citing conventional partnership pitfallsPablo demonstrates deep VC domain expertise by detailing why early-stage corporate partnerships typically fail due to long sales cycles and lack of initial market pull.
the scores for every segment, with the reasoning behind each
| Chapter | Topic | Pablo as informed peer | Guest teaching | Guest disagreement | Pablo pushing back | Why |
|---|---|---|---|---|---|---|
| The Origin of Diversio | 4 | 3 | 1 | 1 | Pablo introduces the episode with clear context on bootstrapping and asks Laura to share the origin story of Diversio. Laura explains how her McKinsey background and lack of coding skills led her to leverage early partnerships like YPO Canada. | |
| Launching at G7 and Leveraging University Interns | 5 | 5 | 3 | 4 | Pablo challenges Laura on managing technical development without a technical co-founder. Laura counters the standard startup dogma by arguing that not hiring a technical co-founder was the smartest thing she never did. | |
| Bootstrapping Discipline and Attracting Top Talent | 4 | 3 | 1 | 2 | Pablo asks how bootstrapping affects company DNA and talent acquisition during competitive hiring markets. Laura outlines how bootstrapping forces mission discipline and sharp customer focus. | |
| Structuring R&D Partnerships with Universities | 6 | 4 | 2 | 5 | Pablo plays devil's advocate, asking why not simply raise money to hire R&D talent in-house rather than dealing with university partnerships. Laura articulates how academic relationships provide cutting-edge IP in exchange for anonymized research data. | |
| Criteria for Selecting Effective Sales Partners | 5 | 3 | 1 | 2 | Pablo probes how to select and prioritize sales partners. Laura shares practical rules of thumb, emphasizing that partners must pay and that founders must be prepared to do heavy lifting on marketing content. | |
| Game-Changing Partnerships in the Investment Sector | 4 | 3 | 1 | 2 | Pablo asks about breakthrough partnership inflection points and signs of product-market fit. Laura describes their Diversity VC certification expansion and near-zero customer churn. | |
| Bootstrapping vs. Raising Capital | 5 | 3 | 1 | 2 | Pablo brings up timing and asks if raising money early would have hurt the company. Laura reflects on how early funding often erodes capital discipline. |
Statements from this episode (17)
McGee: Early Investors Rejected Diversio as an Unscalable Consulting Business
“Called a few friends and said, look, I want to start this business. Here's the idea. Do you think I could raise capital and got really a hard no from everyone I spoke to? This is not scalable. It's not venture backable. It's really just a consulting company th…”
McGee: Diversio Recruited 25 Paying Companies via YPO Canada Partnership
“Went out and found about 25 companies who said, look, You know, we'll pitch in a little bit of money and in return, we'll get, you know, a consultative report. And most importantly, we'll get data and sure. We'll sign up.”
McGee: Diversio secured G7 product launch using YPO partnership
“We reached out to the G seven women's forum, which was being hosted in Toronto. And we said, look, we've partnered with this really cool organization YPO. We've got 25 companies who have raised their hand. What if we do a presentation, really a product launch …”
McGee: Skipping a technical co-founder was her best decision at Diversio
“Getting a technical co-founder was the smartest thing that I never did. And it ended up being the best decision that I made.”
McGee: Coding is a commodity and small part of running a startup
“To run a tech company, like really coding is a very small part of what you're doing. And it is in some ways a commodity.”
McGee: Startups Often Make the Mistake of Not Bootstrapping Longer
“I think like one mistake I think a lot of companies make is not bootstrapping for longer. It forces you to be very focused on the problem you're solving. It forces you to work with clients, understand what they're willing to pay for and bake in that commercial…”
McGee: Bootstrapping Forces Startups to Sharpen Non-Monetary Value Propositions
“Again, I think bootstrapping is a forcing device. Like when you don't have resources, you have to get incredibly sharp and crisp on what is your mission? What is your value prop as an organization beyond money? That's going to attract talent and that getting c…”
McGee: Diversity VC partnership brought Diversio clients like Bessemer and M12
“We created a certification program and a dashboard for their VC partners, which is now Been incredibly successful, I think. And again, it was paid, so they, Supported the development of this dashboard. And so through them, we ended up getting clients like Bess…”
McGee: Bootstrapped startups cannot afford Microsoft partnerships due to slow sales
“I think if you're bootstrapping, you don't have the luxury of trying to partner with Microsoft, frankly. We've explored a few partnerships like that and you're like, okay, it's like a year and a half long sales cycle. So unless you're going to make no money fo…”
McGee: Academic R&D partnerships saved Diversio three years of product development
“One thing that we really like, though, is, like, with the Turing Institute, like, we never would have built the kind of technology that they had spent three years building, which is a plugin that sits on Slack and GitHub and identifies bias in real time.”
McGee: Academic research partners only care about data and publications
“One thing that was a learning for us is like, what are academics after? And they're after data. And publications. Like really, that's it. That's enough.”
McGee: Diversio put academic data sharing into early customer contracts
“We built that into our customer contracts early on that like, look, we're going to anonymize all of your data, but we are absolutely going to share it with academic institutions so we can move everybody forward.”
McGee: Sales partnerships fail if partners are unwilling to pay
“If they're not willing to pay for it, don't bark at that tree. If you're not providing a service for them or a product for them that they're willing to pay for, it's not going to work. And I think, you know, sometimes we ignore that advice, whenever we ignore …”
McGee: Founders Must Assume They Will Do Most Partnership Work
“I think as a rule, always overestimate your own I would say that that kind of is true in almost any partnership including personal, like always assume you're going to have to do more work than the other person. And if you want to get it done, especially if you…”
McGee: PitchBook front-page feature generated major inbound leads for Diversio
“We were in the front page of pitch book for like a week straight, and that ended up generating a ton of leads, which created a ton of client relationships.”
McGee: Diversio has had only one cancellation out of 170 clients
“I mean, sign number one is like, I think we've had one cancellation ever out of like now, like a 170 clients.”
McGee: Bootstrapping B2B software quickly reveals whether market is ready
“If you can't survive through without making sales, like that'll give you a really good indication on whether the market is ready. Obviously it doesn't work if you're building, you know, medical technology or a lot of clean tech solutions, but in something like…”