From Pivot to Fortune 10 Customers, How Reducto Powers Your Favorite AI Products | Co-founder and CEO Adit Abraham
Timestamps are as accurate as they can be but may be slightly off. We encourage you to listen to the full context.
Podcast Summary
In this episode, Turner Novak sits down with Adit Abraham, co-founder and CEO of Reducto, a company that transforms PDFs and physical documents into structured data with human-level accuracy. (03:00) Reducto has processed over 1 billion pages, grew 6x in the past five months, and recently closed a $75 million Series B led by a16z while only burning $1 million in capital to get there. (00:42)
- Core focus: Building the most accurate document processing infrastructure for AI applications, serving industries from legal and finance to healthcare and logistics where accuracy is mission-critical
Speakers
Adit Abraham
Adit Abraham is the co-founder and CEO of Reducto, a company that processes unstructured documents for AI applications. He has a finance background and learned sales through founder-led selling, taking the company to $5 million in ARR before hiring their first salesperson. Prior to Reducto, he competed in AI hackathons and initially worked on long-term memory for language models before pivoting to document processing.
Turner Novak
Turner Novak is the founder of Gelt VC (formerly Banana Capital) and host of The Peel podcast. He focuses on early-stage venture capital investments and interviews founders about their startup journeys and scaling strategies.
Key Takeaways
Focus on Being the Best at One Thing Before Expanding
Rather than trying to support 35+ file types like competitors, Reducto initially focused solely on PDFs and images - the 95% use case for most customers. (38:00) Adit explains how they would actually turn away customers if they couldn't solve their specific use case perfectly, preferring to build incrementally and ensure they were the absolute best at each capability before expanding scope. This approach led to much stronger customer satisfaction and word-of-mouth growth compared to competitors who offered broad but mediocre solutions.
Make Your Product So Good It Sells Itself
Reducto landed a Fortune 10 customer as a two-person startup simply because their product worked when others failed on the customer's "gotcha documents." (32:00) The company built a playground where prospects could test the product immediately, letting the results speak for themselves rather than relying on sales tactics. This product-first approach enabled them to reach $5 million ARR with founder-led sales before hiring their first salesperson.
Demo Early and Often as a Technical Founder
Contrary to traditional sales advice about not demoing on the first call, Adit found that technical founders have a unique advantage in being able to showcase product capabilities immediately. (65:46) He focuses on getting prospects to the "inspiration phase" - where they genuinely want to buy - as quickly as possible, often on the first call. This approach led to prospects bringing in C-suite executives on second calls because they were so excited about what they saw.
Solve Systemic Problems with Iterative Approaches
For complex challenges like chart extraction, Reducto didn't just train better models - they created an environment where AI could iteratively catch and correct its own mistakes. (21:37) The system renders charts, identifies errors, edits individual data points repeatedly, and uses a verifier model to ensure accuracy before delivering output. This systematic approach to hard problems demonstrates how to tackle challenges that can't be solved with a single-shot solution.
Strategic Fundraising from Position of Strength
Reducto raised their Series B in just 48 hours because they built relationships with investors over time and only raised when they had genuine conviction about the value-add, not out of necessity. (56:00) They approached only two firms they were most excited about, ran a tight process, and focused on finding the right partner for their next growth phase rather than maximizing valuation. This approach worked because they had strong metrics and existing investor relationships.
Statistics & Facts
- Reducto has processed over 1 billion pages and if stacked would equal approximately 9 Mount Everests in height, growing from 3 Mount Everests just 5-6 months earlier. (11:01)
- The company grew 6x (or 5x as mentioned elsewhere) in the past five months and has only burned $1 million in capital since incorporation in September 2023. (00:42)
- For large insurance companies, they receive 10 major claim submissions but only have enough human capacity to review 3 of them, meaning 70% of potential opportunities go unexamined. (09:34)
