After burning through their savings and facing 74 rejections from investors, the three founders of Loom were on the verge of giving up. Six months after launching their second failed product, they were literally begging people to use it for free—and still getting ignored.
Then came an unexpected moment of clarity. A Harvard researcher had hijacked their user testing platform, using it not for its intended purpose, but as a simple screen recording tool to communicate with his team. That single unconventional use case would eventually lead to Loom's $975 million acquisition by Atlassian and transform how millions of people communicate at work.
In this interview, Loom co-founder Shahed Khan reveals the brutal reality of multiple pivots, the art of knowing when to quit vs. when to reinvent, and how COVID-19 turned their gradual growth story into a rocket ship that went from 2.5 million to 10 million users in a single year.
Watch the full interview now on EO's YouTube channel! Below is the complete transcription of the interview. Minor edits have been made for clarity and readability.
Key Highlights:
"When we started Loom, it was actually a result of two prior pivots that we did. After we had launched the product, no one was really using it. 6 months after that, we were begging people to use our product for free. We weren't even charging it."
"One, which is even hard today is knowing when to pivot. So I think the one biggest takeaway was don't be married to the solution."
"There are 74 people that said no, that they did not want to give us money, 18 or 19 people that just didn't even respond."
"We went from 2.5 million users in March of 2020 to 10 million by the end of the year."
"It's too expensive to quit, right, because if you quit you're never gonna make it. But if you just reinvent yourself, eventually you'll figure out something, some path that will work."
"One, which is even hard today is knowing when to pivot. So I think the one biggest takeaway was don't be married to the solution."
"There are 74 people that said no, that they did not want to give us money, 18 or 19 people that just didn't even respond."
"We went from 2.5 million users in March of 2020 to 10 million by the end of the year."
"It's too expensive to quit, right, because if you quit you're never gonna make it. But if you just reinvent yourself, eventually you'll figure out something, some path that will work."
From RuneScape to Silicon Valley Dreams
Let's start from the beginning. Tell us about your background and how you got into entrepreneurship.
Shahed Khan: My name is Shahid Khan. I'm one of the founders of Loom. Loom is a product that allows you to record your screen, your face, and your audio in a single stream, and a lot of companies use Loom today to communicate with their co-workers, whether they're remote, whether they're engineers, salespeople, designers.
I grew up in the suburbs of Chicago in Plainfield, Illinois. It was a really difficult path because I'm a child of two immigrants, one's from India, one's from Pakistan, and they moved here shortly after marriage. I was also the one who misbehaved the most of my siblings. My goal was always to start something of my own. Since I was 6 years old, I enjoyed dressing up in suits because that meant that I was like a businessman.
My childhood was just kind of all my free time was spent on the computer. When I was 8 years old, I started playing this game called RuneScape. RuneScape actually just taught me so much about what I later learned in life, which is learning about economics from selling things, buying things or harvesting things and then selling them for a greater price. I would be on the computer maybe 6, 7, 8 hours a day.
I grew up in the suburbs of Chicago in Plainfield, Illinois. It was a really difficult path because I'm a child of two immigrants, one's from India, one's from Pakistan, and they moved here shortly after marriage. I was also the one who misbehaved the most of my siblings. My goal was always to start something of my own. Since I was 6 years old, I enjoyed dressing up in suits because that meant that I was like a businessman.
My childhood was just kind of all my free time was spent on the computer. When I was 8 years old, I started playing this game called RuneScape. RuneScape actually just taught me so much about what I later learned in life, which is learning about economics from selling things, buying things or harvesting things and then selling them for a greater price. I would be on the computer maybe 6, 7, 8 hours a day.
What was the turning point that made you realize you wanted to pursue Silicon Valley instead of traditional education?
Shahed Khan: That got me into high school, and that's when I started to shift my focus from games and being on forums and learning design to pivoting into technology and startups. There was a video by Peter Thiel in 2011 where he announced the start of the Thiel Fellowship. He would give 20 kids under the age of 20 $100,000 as an effective grant to either drop out or not go to college, and that really inspired me because I was never an academic. I had never really done good in school, but there are certain subjects where I was just so into that I just obsessed over.
Even though I didn't get the fellowship, that was the inspiration that I needed to know that there's a world out there, a world called Silicon Valley, where I can go to, and that was kind of like my young self's American dream, which is going to a city where there's a lot of like-minded individuals. I wanted to pursue that.
I was really passionate about product design. When I was 15 years old, the first logo that I designed, I got $25 on PayPal. That was going to buy me digital coins in the game that I was playing at the time. It just slowly escalated from there. $25 turned to $100. I was like, now I have lunch money for the next month.
Even though I didn't get the fellowship, that was the inspiration that I needed to know that there's a world out there, a world called Silicon Valley, where I can go to, and that was kind of like my young self's American dream, which is going to a city where there's a lot of like-minded individuals. I wanted to pursue that.
I was really passionate about product design. When I was 15 years old, the first logo that I designed, I got $25 on PayPal. That was going to buy me digital coins in the game that I was playing at the time. It just slowly escalated from there. $25 turned to $100. I was like, now I have lunch money for the next month.
The Journey West and Finding Co-Founders
How did you convince your immigrant parents to let you skip college and move to Silicon Valley?
Shahed Khan: When I graduated high school, I got an offer to go work at a company called Backplane. The idea was always that I would go to college. But at Backplane I actually met Vinne, who's my co-founder at Loom. I was a designer. He was an engineer at Backplane.
At the end of my internship, I got an offer to go work at a company called Weebly. I showed the offer letter to my parents who are very conservative parents, so in their eyes it's kind of always this temporary thing where they're like, OK, it's only gonna be one year, we can skip one year of college for him to go learn. They took a bet on me. They allowed me to move to California initially just for the internship and then it turned into 1 year and then that year turned into 2, turned into 4.
At the end of my internship, I got an offer to go work at a company called Weebly. I showed the offer letter to my parents who are very conservative parents, so in their eyes it's kind of always this temporary thing where they're like, OK, it's only gonna be one year, we can skip one year of college for him to go learn. They took a bet on me. They allowed me to move to California initially just for the internship and then it turned into 1 year and then that year turned into 2, turned into 4.
How did you meet your other co-founders and decide to start a company together?
Shahed Khan: I wasn't there to have a cozy job with good salary where I'd go home at 5 p.m. I was fortunate enough that by surrounding myself with engineers and designers in San Francisco when I lived there, Vinne, who I mentioned, my co-founder at Loom, he worked with me at Backplane. Joe, my other co-founder, I lived with when I was working at Upfront.
That ultimately led to one night we had dinner, we kind of just passed the question around where I was getting ready to leave Upfront and I wanted to start a company. We're like, we all have a unique set of skills. I'm a designer. Joe was leading product, and Vinne was an engineer. So the three of us kind of came together. We're like, let's just write down a bunch of ideas on a whiteboard. I think we wrote down maybe 6 or 7.
That ultimately led to one night we had dinner, we kind of just passed the question around where I was getting ready to leave Upfront and I wanted to start a company. We're like, we all have a unique set of skills. I'm a designer. Joe was leading product, and Vinne was an engineer. So the three of us kind of came together. We're like, let's just write down a bunch of ideas on a whiteboard. I think we wrote down maybe 6 or 7.
The First Two Failures: OpTest and the Painful Pivots
What was your first startup idea and how did it perform?
Shahed Khan: The first one was my idea, which was a user testing platform. You can get advice from experts. If I'm building an e-commerce store on Shopify and I want feedback from someone who's built Shopify products before, I would basically hire them through this platform that we had started called OpTest and I would pay $100. What I would receive back is a video with a circle on the bottom left, which is the person's face and their audio and of them walking through, say the checkout process of my product.
After we had launched the product, no one was really using it. I think we might have made $400 which means we had 4 tests that were purchased on the platform. So then it was time for us to pivot.
After we had launched the product, no one was really using it. I think we might have made $400 which means we had 4 tests that were purchased on the platform. So then it was time for us to pivot.
What feedback did you get that led to your second pivot?
Shahed Khan: The feedback we got back from people at Facebook and Twitter at the time was they have the experts in-house. They pay these big comp packages because they have the experts in-house. They told us that the thing that they would be interested in purchasing was the ability to run a user test and segment to a very specific cohort within their user base. They wanted to collect feedback from their own users and then we pivoted one more time because 6 months after that we were begging people to use our product for free. We weren't even charging it.
There's no brand recognition that OpTest had at the time. People turned away because they didn't see big logos on our home page, they didn't use the product.
There's no brand recognition that OpTest had at the time. People turned away because they didn't see big logos on our home page, they didn't use the product.
What's the hardest part about knowing when to pivot?
Shahed Khan: One, which is even hard today is knowing when to pivot. I think the hardest thing, especially when every single day, 7 days a week, you're just obsessing over one idea and after 4 months, 5 months, you're too married to that idea to let it go because it's all you've been thinking about building, designing for the last 4 or 5 months. So I think the one biggest takeaway was don't be married to the solution.
I remember there was this one evening we were burnt out, we had spent collectively all of our money because we were bootstrapping at the time, we were also fundraising. I remember to this day there are 74 people that said no, that they did not want to give us money, 18 or 19 people that just didn't even respond. They opened the email, they didn't respond, and that was kind of a chip on our shoulders to find something that worked and just completely obsess over finding something that people wanted to use.
I remember there was this one evening we were burnt out, we had spent collectively all of our money because we were bootstrapping at the time, we were also fundraising. I remember to this day there are 74 people that said no, that they did not want to give us money, 18 or 19 people that just didn't even respond. They opened the email, they didn't respond, and that was kind of a chip on our shoulders to find something that worked and just completely obsess over finding something that people wanted to use.
The Breakthrough: From User Testing to Communication Tool
What was the moment you realized you had found the right direction for Loom?
Shahed Khan: Our final pivot turned into Loom. There's one person, I believe it was Harvard's research lab, that had adopted the product because they're running a case study. They're running research on a segment of users and wanted to use a platform like OpTest to collect that information. What we had realized was they used the product the way that it was supposed to be used, but the person that set that test up used the exact same extension that was built for people to give feedback, but recorded a video of himself summarizing all of the feedback that he had collected.
The spotlight went off in our heads at the time. We realized that there's a world that we haven't been thinking of where people could use this not just limited to user testing, but they could use it as a means of communication. They can record a video of themselves and whenever they're done, they click on the extension again, the video is completely uploaded, the link to the video is copied to their clipboard, and they could share that in Slack, email, wherever, and it would expand into a video.
The spotlight went off in our heads at the time. We realized that there's a world that we haven't been thinking of where people could use this not just limited to user testing, but they could use it as a means of communication. They can record a video of themselves and whenever they're done, they click on the extension again, the video is completely uploaded, the link to the video is copied to their clipboard, and they could share that in Slack, email, wherever, and it would expand into a video.
How quickly did you pivot to this new vision?
Shahed Khan: So we quickly stripped the extension out of the existing product, rebranded the product from OpTest to OpenVid because we didn't have time to come up with a good name, and launched on Product Hunt June of 2016. We quickly became the number one product for the day because it resonated with a lot of people in the community and I believe on our first day we had about 2,499 people more than we previously had on our platform. People were sharing it. It was a great product.
But we ran into one unique problem which was people would download the extension, they would start recording a video, and then typically their first video would be a test video. After that they would stop using it because they didn't know what they could use it for. They're like it's a really cool tool, but where do I incorporate this into my daily workflow.
But we ran into one unique problem which was people would download the extension, they would start recording a video, and then typically their first video would be a test video. After that they would stop using it because they didn't know what they could use it for. They're like it's a really cool tool, but where do I incorporate this into my daily workflow.
Finding Product-Market Fit and The HubSpot Success Story
How did you solve the problem of people not knowing how to use Loom in their workflow?
Shahed Khan: We know that we've landed on something that people resonate with, and now we have to figure out how do we find product-market fit, which is the biggest question. That's where we started to build a very cohesive onboarding. We built use cases, we built personas, so sales people use it for these purposes, engineers use it for code reviews, designers use it for design handoff.
Then our seed round was, OK, now we have users and they're referring it, they're coming back, whether they're coming back weekly, whether they're coming back daily, we know that there's usage here, so we're getting closer to product-market fit, and that was our pitch during our seed round.
Then our seed round was, OK, now we have users and they're referring it, they're coming back, whether they're coming back weekly, whether they're coming back daily, we know that there's usage here, so we're getting closer to product-market fit, and that was our pitch during our seed round.
Can you walk us through how Loom spread organically within companies like HubSpot?
Shahed Khan: I'll use HubSpot as one example because they're the poster child company within Loom that had grown on Loom so quickly. I remember when we launched on Product Hunt in 2016, we had someone from the marketing department at HubSpot sign up to use Loom, and this individual lived in San Diego and HubSpot's headquarters were in Boston. This is when the company had a couple of distributed employees, but not as distributed as that company is today.
Because they were in a distributed role, they were an individual contributor. They wanted to use new tools to communicate more effectively, they installed Loom, started using it, and they shared that video within their Slack, and other people within the marketing department started to adopt that tool naturally because they're like, I see you using this tool. I want to use it as well to record my presentation.
That individual is what we call the champion within an organization. He would record a video, I believe it was like a quarterly presentation, and he would send it to his entire team. And now that champion to influencer line drawn, we knew that if we could replicate that use case that we could quickly adopt usage within each company that we're growing inside of.
Because they were in a distributed role, they were an individual contributor. They wanted to use new tools to communicate more effectively, they installed Loom, started using it, and they shared that video within their Slack, and other people within the marketing department started to adopt that tool naturally because they're like, I see you using this tool. I want to use it as well to record my presentation.
That individual is what we call the champion within an organization. He would record a video, I believe it was like a quarterly presentation, and he would send it to his entire team. And now that champion to influencer line drawn, we knew that if we could replicate that use case that we could quickly adopt usage within each company that we're growing inside of.
The Monetization Challenge and Series A
When you raised your Series A, what was the plan for monetization?
Shahed Khan: For our Series A, we had users, we had usage, we had good metrics. We were raising our Series A to start to basically turn on monetization, but our plan all along was how do we become ubiquitous within the companies that are already using Loom. When we had shown that to our investors, they were aligned with us that growing freely was probably the best path for Loom.
And then we got to our Series A, we started to monetize and we launched Loom Pro. It didn't have the big aha launch that we thought it would, we thought people would immediately convert over, but we didn't really give them a reason to convert. The free product was good enough for them, and we were monetizing on new features.
And then we got to our Series A, we started to monetize and we launched Loom Pro. It didn't have the big aha launch that we thought it would, we thought people would immediately convert over, but we didn't really give them a reason to convert. The free product was good enough for them, and we were monetizing on new features.
What features did you add to try to get people to upgrade to Pro?
Shahed Khan: I remember we had launched our desktop app and you had the ability to draw on the canvas and point to things there, there were just so many features you were able to append a CTA, a button at the end of the video. So if you're a sales rep and you're like, hey, I drafted up this contract, I attached at the end of the video, just go ahead and click there, it'll take you to the DocuSign.
We had launched these features thinking that it would get people to naturally upgrade, and it did for some, but I don't think it was in the general realm that we thought it would be. So that's when we went back to the drawing board and we're like, how do we convince all of our active users to seriously consider the pro product. What does it have to look like? How often do they use it? Where would they feel that they're hitting the ceiling of their usage where they're like it makes sense for me to just upgrade because I get so much more usage.
We had launched these features thinking that it would get people to naturally upgrade, and it did for some, but I don't think it was in the general realm that we thought it would be. So that's when we went back to the drawing board and we're like, how do we convince all of our active users to seriously consider the pro product. What does it have to look like? How often do they use it? Where would they feel that they're hitting the ceiling of their usage where they're like it makes sense for me to just upgrade because I get so much more usage.
How did you figure out the right balance between free and paid features?
Shahed Khan: For any company, their goal is to find what is the amount of restraint you can put into the product where it's just enough, it doesn't necessarily ruin the free experience because then people will just be mad and angry and will leave, but it's just enough constraint where they're like, I think it makes sense, it's well worth the $8 or $10 I pay per month. Let me just go ahead and convert.
After we had launched Loom Pro the second time, there was a resoundingly positive response to that, and then we had launched Enterprise. Sequoia Capital invested in Loom in November of 2019, they gave us $30 million because they're very bullish on where Loom was going. I remember Andrew Reid, who's the investment partner from Sequoia, had seen people at Figma using Loom. So I think that naturally led him to reaching out to Joe, Vinne and myself at the time.
After we had launched Loom Pro the second time, there was a resoundingly positive response to that, and then we had launched Enterprise. Sequoia Capital invested in Loom in November of 2019, they gave us $30 million because they're very bullish on where Loom was going. I remember Andrew Reid, who's the investment partner from Sequoia, had seen people at Figma using Loom. So I think that naturally led him to reaching out to Joe, Vinne and myself at the time.
COVID-19: The Unexpected Rocket Ship
How did COVID-19 impact Loom and what decisions did you make during that time?
Shahed Khan: Once that deal had happened, there was this thing around the corner that no one was really expecting, and it was COVID. I believe we're close to about 2.5 million users globally, and when COVID started, the world kind of shut down, and people were forced to work from home, so they're scrambling to find tools that would enable them to have that same rapport with their coworkers and be able to get the quality of work done that they did when they were face to face in an office.
We basically made the product free for teachers because even schools, students had to hop online from home in the morning. So how do you grade papers? How do you have that rapport with your students the way you did in a classroom, so teachers would start using Loom, but we didn't want to charge them. We made the product free for students and we actually made the product free for K through 12.
We had also delayed our monetization during COVID because we wanted to onboard these users and these people and these employees to Loom. We didn't want them to think about pricing and upgrading and it just seemed like a weird time to introduce that, especially in a world where there's just fear of what's going on, so we made the product free.
We basically made the product free for teachers because even schools, students had to hop online from home in the morning. So how do you grade papers? How do you have that rapport with your students the way you did in a classroom, so teachers would start using Loom, but we didn't want to charge them. We made the product free for students and we actually made the product free for K through 12.
We had also delayed our monetization during COVID because we wanted to onboard these users and these people and these employees to Loom. We didn't want them to think about pricing and upgrading and it just seemed like a weird time to introduce that, especially in a world where there's just fear of what's going on, so we made the product free.
What kind of growth did you see during the pandemic?
Shahed Khan: It had a net positive in the long term for the company. I would say that year was probably the most eye-opening year from a growth perspective for Loom where we went from 2.5 million users in March of 2020 to 10 million by the end of the year.
Lessons Learned and What's Next
Looking back, what were the biggest lessons from building Loom?
Shahed Khan: When we started Loom, it was actually a result of two prior pivots that we did, but the general thesis still remains the same today. It's how do we allow people to communicate something that's rich in context to either a single individual, make it very personalized, or to a broad audience.
When we started the company 8 years ago, the notion of remote work was relatively new. There were maybe only 2 or 3 companies in Silicon Valley that were fully remote or fully distributed. I think the biggest thing that we learned was we weren't really chasing this remote environment. Our thesis was how do we bridge the gap of communication and do that through a rich medium.
The other big wave that we rode was this product-led growth idea. It was that you build a product so great that it ends up compounding where people want to share with others so that they could also be efficient in the way they communicate.
When we started the company 8 years ago, the notion of remote work was relatively new. There were maybe only 2 or 3 companies in Silicon Valley that were fully remote or fully distributed. I think the biggest thing that we learned was we weren't really chasing this remote environment. Our thesis was how do we bridge the gap of communication and do that through a rich medium.
The other big wave that we rode was this product-led growth idea. It was that you build a product so great that it ends up compounding where people want to share with others so that they could also be efficient in the way they communicate.
What advice would you give to other founders going through the difficult early stages?
Shahed Khan: So I think those are probably the biggest takeaways. The journey is hard in and of itself. Find co-founders that you can work with that you have a good rapport with, and I think that made things a lot easier that made the speed bumps less bumpy. When I'm down, Vinne would lift me up or when Joe's down I would lift him up. There was never one moment where all three of us were just exhausted to the point where we wanted to quit.
And final takeaway from the pivots is it's too expensive to quit, because if you quit you're never gonna make it. But if you just reinvent yourself, eventually you'll figure out something, some path that will work, and Loom had to reinvent itself twice before it could become Loom.
And final takeaway from the pivots is it's too expensive to quit, because if you quit you're never gonna make it. But if you just reinvent yourself, eventually you'll figure out something, some path that will work, and Loom had to reinvent itself twice before it could become Loom.
What's next for you personally after the Loom journey?
Shahed Khan: I've only hit my first 10 years. This is my first decade. People in this industry have been here for many decades, and I hope to find my next journey beyond Loom. I'm really excited to explore new opportunities, new problems, and continue to give back to other founders. And I try to do that through means of, I invest in startups, speak at conferences, I'll do interviews like this.
What inspired me were videos of people speaking at TechCrunch Disrupt announcing the Thiel Fellowship. You just need one person to kind of shine that light. For me it's really professionally it's to find the next frontier, the next company that I want to build, but also to inspire many others that are coming after.
What inspired me were videos of people speaking at TechCrunch Disrupt announcing the Thiel Fellowship. You just need one person to kind of shine that light. For me it's really professionally it's to find the next frontier, the next company that I want to build, but also to inspire many others that are coming after.
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