Customers Don't Care About Your AI—Joseph Lee's $200M Lesson

"I don't care if you use AI or not. What I want is to get my job done using your solution." This brutal feedback from a customer became the $200 million wake-up call that changed everything for Joseph Lee.

As co-founder and CEO of Syncly, an AI platform that analyzes customer feedback at scale, Joseph has lived through two complete AI cycles. His first company, Shoa Lab, sold for $200 million in 2019 after four years of building AI solutions for manufacturing—but not before three grueling years of zero revenue and 500 cold calls just to find their first customers.

In this candid interview, Joseph reveals the hard truths about building AI companies that actually matter: why technology should never be your selling point, how to find problems worth solving, and why the best founders sell themselves, not their products.

Joseph: Hi, I'm Joseph, co-founder and CEO at Syncly. Syncly is an AI platform that helps to understand the customer feedback at scale, so everyone in the company can get benefited from customer feedback to build a better product or do better marketing campaign. We are a recent YC company.

I started a company called Shoa Lab back in 2015. It was 4 years and we ended up selling our company back in 2019 for $200 million and started another company last year. We've been in the AI world in the last decade. I've watched how AI evolved over the course of time. This is a really exciting time for all of the AI startups, so I'm excited to be part of this journey.

Back in 2015 when AlphaGo came out, built by a great company DeepMind, and AlphaGo actually was shocking the entire world that AI can actually outbid the human beings in the space that nobody thinks of. Nobody, like not many people understood in what area AI will make an impact. To be honest, I had no idea back then. That's why I thought I should jump into AI and do the business on my hands to actually make the change.

Joseph: Manufacturing has been operated in the same way for the last 50 years. What we saw is that AI is really good at understanding the patterns. One of the patterns that the manufacturers wanted was when it comes to like analyzing or understanding defective products, it's all done by a human, but we thought that that's what AI can do really, really well.

We ended up selling our company for $200 million. The growth was crazy. Every year we grew 5 times, but it took some time to actually find the first 10 customers, and it took us almost I would say 3 years to generate the revenue.

Joseph: In the first 3 years we tested different verticals to which vertical that we can make the most impact. The first vertical we go after was the fashion industry, but we have no connection there. I'm not from the fashion industry at all. So what we do is just pick up the phone and dial the number to try to talk to who can actually make a decision in the company.

In total, we called around 500 prospects in fashion industries, and it's actually almost every company in Korea. Then after that, we just went to the factory and bring our laptops and the one pager on my right hand and left hand, so CEO, me, CTO at the time, we didn't have a product, we just have like a technology and an algorithm.

We just try to show them the end goal, try to start from there. If things work there, here are the business impacts that you will get. Give us 3 months to prove the failure from the scratch. If not, then you don't need to pay, but if you think there's a value, pay whatever you think is valuable. 3 out of 4 actually ended up paying.

Joseph: For customers, they don't actually care what technology we are using. So one day one of my customers told me that, "Hey Joseph, I don't care if you use AI or not. What I want is to get my job done using your solution."

That was actually really a big turning point for me, how we should look at AI or any emerging technology. Generative AI is definitely getting a lot of highlights nowadays. If you look at the history, the trend is always changing, evolving. AI or any other technology is just a medium to provide the value to the customers.

So I would say that focusing on the value that you try to deliver by leveraging technology makes sense, but just framing or just building something using AI that provides zero value to the customer, it doesn't really make sense. And even if you raise money by leveraging the trend, it doesn't last long that much. It just lasts like maybe 2 years, your runway, and you'll be in big danger once you cannot figure out the value prop that you try to bring to the world.

Joseph: The reason we started a new company is that we want to actually go into the new different market, a new different domain. My last company customer base was mostly focused on the Asian market, and now we're trying to make a more global product.

It's like a whole new market, a whole new customer base, and when you talk to customers in the beginning, they don't actually tell what the real problem is they have like no incentives to do that. You've got to know them really deeply, try to understand their workflow or their day to day life deep as possible, but to do that they need to trust you to tell what the root cause is, what the real pain is.

Right now we try to open up a lot of like meetups or like training sessions for our prospects to actually provide value first and help them to actually engage with the people in the same community and we try to actually provide our solution after that. So building your social proof as much as possible, maybe leveraging your VCs, leveraging your score, or leveraging your personal network, you've got to do whatever it takes to actually get to the point where people heard of you at least.

Joseph: The way we try to find hair on fire problem is we double down their workflow and what their pains are. We start with what's your goal, what does the success look like this year. There are like some bullet points that we can actually come up with.

We take the bullet points and meet the new people, try to see the bullet points, if there's something that resonates with them as well, then you can narrow down bullet points. Let's say in the beginning you have like 5 different bullet points, that could be a potential hair on fire problem. Once you talk to 10 customers, it could narrow down to 3. Once you talk to 15 customers, you will hear the one common bullet point that is hair on fire. That's how we try to narrow down the scope in the beginning.

Joseph: If you look at the market, there are like so many great products that's been in the market for 10 years, 20 years. So you cannot outbid them from a product perspective, I would say, when you started your company 4 weeks ago, but what you can do is that not like bigger companies, you can actually use your entire capability and use your entire co-founders to actually solve that issue, no matter if they use your product or not.

At least you can actually do something for them, even if you don't actually have the product to deliver. I think you as a founder who has a strong vision, you should sell yourself, not the product, to actually solve the customer's pain points in the beginning, and once customers see the value, then you can start building your product.

Joseph: Especially nowadays because people are using so many different sales tools, they are super busy to do their day to day job. Nobody want a tech stack on top of existing tech. So what we try to do is, so we hear the problem and we know what solution could work out, but the way we deliver the output is not providing our like a new 4 weeks foggy product, but we try to use the tool that they are using already.

It could be like Google Looker or it could be exist customer support platform, and if they see the value off of it, that's when we started building our like own product, own dashboard to actually provide them more granular level of details.

Joseph: The reason I ended up starting a new company with my previous CTO was that we were such a great fit to actually create something new. We've been working together for the last decade. We know how we work, who we are. Finding co-founders is almost like a marriage. You should have a great fit to each other in many different aspects.

For instance, do you care the technology first or customer first? There's a deep tech company who actually focuses on building a great technology. It's not something wrong, but if you have a different mindset in terms of your value or which one you should prioritize, it's really hard to go along with together for the longer period of time.

And the second one is that it's always better that co-founders have a complementary skill set. If you are good at A and your co-founder is good at B, it's much easier to actually work together in the long run because you guys need each other to build the best company.

Joseph: So CTO and I talked about what we can do with AI more. One of the pains we also experienced and we also noticed that other companies are experiencing is basically understanding what customers want for consumer apps and for e-commerce, this problem has been existing for many years, but the reason there was no better way was that the technology was not mature because a large language model is getting much better now. This is a great timing to actually provide this type of value.

We know that AI can change the world much more than before. We've been in the AI world for the last 10 years and we've observed the change in the last 10 years as well. So creating a new value using AI is something that I really enjoy doing. The process of running this company, the journey that I'm going right now, is, is really makes me excited.