This is the second installment of “The Comeback,” the story of one team’s search for a good problem, and the lessons learned along the way. Read part one: Wrecked, here.
Sanja Smrzlic was burnt out.
Years of grueling shifts as a psychiatric nurse had drained her. The constant flip between nights and days left little room for the things she loved—sports, time with friends, and a sense of normalcy. She knew it was time to quit.
She took some time away with her best friend to recharge, but soon enough, reality set in. She needed a new direction. That’s when she stumbled upon a Reddit job posting—a startup called Shoelace was looking to fill a generalist role.
“I applied on a whim, and just said, ‘Hey, I don’t have any skills that you’re looking for, but I used to be a nurse, and I’m good at dealing with angry people, so I think I’d be great with customers,’” Smrzlic recalled.
She started at Shoelace in customer success in 2016. She would mostly focus on troubleshooting for customers, but her curiosity soon drew her to the technical side. With her background as a nurse, she wanted to address problems at their source, not just apply Band Aids.
In 2019, she expressed her desire to become a developer. Shoelace CEO Reza Khadjavi and the rest of the team supported her decision, encouraging her to take night classes and learn on the job.
“The founders put a lot of weight on what you actually do,” she said. “It’s not so much about your qualifications or where you came from. They just care that you can do the work and that you have that risk-taker mentality.”
Smrzlic was on her way to finding her new calling. But Shoelace was also working to identify a new direction of its own.
After two years of internal struggle, driven by Facebook and Shopify strengthening their integration and solving the very challenges Shoelace’s platform had been built to address, Khadjavi made the tough call in late 2019 to shift Shoelace from a product company to a full-service agency for growth marketers.
The company started making money almost immediately. But Khadjavi was still grieving the death of Shoelace as a product business.
“I think it was so existential to Reza, because, in his soul, he wasn’t okay with operating a services business,” said Evan Lee, who joined Shoelace as a performance marketer in 2018.
“I was completely in love with software,” Khadjavi added. “I wanted to build something that people would use, and I viewed the pivot to being an agency as a personal failure.”
A new problem
Much like Smrzlic, Khadjavi wasn’t professionally satisfied running a service business. He wanted to build something. But first, he needed to understand why his first product had failed.
“The thing that we had missed with Shoelace was that if you solve a problem that is not really high priority, then chances are people are not going to have a lot of time for you, they’re probably not going to pay a lot of money for it, and they’ll be more prone to churning,” Khadjavi said.
“Solving a high-priority problem can be very intimidating, but it actually doesn’t take a lot more time or effort compared to solving a low-priority problem,” he added. “In fact, people will give you a lot more of their time and attention.”
That high-priority problem was already beginning to take shape, as during that time, big changes were brewing in the wider digital advertising landscape.
Creative becomes king
Before 2020, most advertisers spent their time trying to get their ads in front of the right people. Audience targeting was an important revenue lever, allowing brands to optimize their ad spend by reaching specific demographics and maximizing conversions.
But when Apple released iOS 14 in September 2020, it introduced the App Tracking Transparency framework, requiring apps to get user permission for tracking. This update drastically changed the landscape for advertisers, as they could no longer rely on the granular data they once used to identify user behaviors and preferences. With less access to user data, the precision of audience targeting dropped, forcing advertisers to rethink how to best engage their customers.
At the same time, algorithms on platforms like Facebook also got far better at targeting and distribution, which meant brands were often competing with each other for the same audience. Advertisers had to adjust their game plan.
“All signs began to point towards the ad creative—whether it was the visual asset, the image, the video, the content, or the messaging—becoming, by far, the single most important factor influencing revenue for brands,” Khadjavi said.
Ad creative—comprising the visuals, messaging, and overall content of an advertisement—is what communicates a brand’s message, grabs attention, and engages the audience. With targeting becoming less effective, the success of a campaign shifted to rely more heavily on the quality and appeal of the creative itself, making it the key driver of ad performance.
Thanks to Shoelace, Khadjavi had already built strong relationships with performance marketers and agencies, many of whom were feeling the impact of this challenge. The founders were in frequent conversation with these customers, which allowed them to gather key insights from their target audience that would help them identify the next big problem to solve.
“Probably by the first five or six customer calls we had, it was very obvious that we were going to build something around creative,” he said.
Khadjavi heard from his contacts that creative teams were under pressure to produce more content than ever before. Because audiences had increasingly short attention spans and crowded social feeds, the pressure to regularly update organic content was intense. Ads also had a very short lifespan—often just a few days to a couple of weeks—so brands needed to drastically ramp up their creative production to keep up with effective performance marketing.
This meant creating hundreds of new visuals each month. To decide what to include in these products, brands naturally turned to past performance data to guide future creative decisions.
But creative team members—who are more focused on visual storytelling—often struggled with interpreting data-heavy reports, as they tend to avoid working with spreadsheets and numbers.
This disconnect led to friction between a company’s creative team and growth team, who relied on data for decision-making.
Khadjavi discovered that what creatives really needed was a tool that incorporated performance data into the visual content they had made, allowing them to actually see what was working and what wasn’t.
“Since the beginning of the Internet, there’s been no shortage of analytics tools and business intelligence platforms like data visualization,” he said. “There’s a never ending list of software companies like that. But no one ever thought to build an analytics product that was designed for creative teams.”
He had finally found a problem that could be solved with software. And now, with a core team of trusted collaborators—including Smrzlic—they were poised to build the solution.
Coming up: In the third and final chapter of The Comeback, discover how a founding team reassembled its talent, developed a new product, and quickly gained momentum with customers and investors.
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All images provided by Reza Khadjavi.