From Weekend Project to Fortune 10 Adoption — Reducto's Path to Product-Market Fit

Adit Abraham, co-founder and CEO of Reducto, shares how he closed millions in ARR and a Fortune 10 customer with no sales hires.

Outline

It’s a simple, but effective instrument for keeping a pulse on customers, as close to sidling up to their desk as an early-stage startup can get. Abraham credits it as one of the most powerful tools in the young startup’s toolbelt.

“But in the beginning, it only matters whether or not people are using your products.”

He likens novice founders to newbie exercise enthusiasts — they both tend to overcomplicate things:

If you ask a bodybuilder for advice to get fit, they would tell you very simple things: Focus on your nutrition, go to the gym, prioritize sleep. But you see folks trying to get into fitness will instead agonize over figuring out the perfect training regimen and complex routines.

Before we dive into the nitty-gritty of how they made it all happen, a brief explainer of the problem that Reducto is solving: 80% of the world’s business data is in unstructured file formats (like PDFs or Excel spreadsheets). If you’re trying to build a reliable AI application for handling, say, insurance claims, health records or financial statements, you’ll find that even the best LLMs start to hallucinate trying to read these unstructured documents.

Early brushes with entrepreneurship

Abraham’s entrepreneurial ambitions can be traced back to perhaps an unlikely place — the mobile game Flappy Bird. “Games were the thing that drew me to computers and Flappy Bird was what made me interested in programming,” he says. So as young, ambitious high schoolers, Abraham and his friend started making their own apps.

The duo spun up a goal-setting app, and while it didn’t make Abraham a newly minted app mogul, it did launch something of a side hustle. “I learned more about marketing than I did about building apps. We started making Instagram pages to promote the app, where we would post summaries of books like ‘How to Win Friends and Influence People’ and those pages started taking off.

Abraham went on to M.I.T., where he eventually joined the Accelerator program and started building Sidewalk, a Shopify plugin that would recommend products from other stores during the checkout process.

The team up

Abraham, then a junior at M.I.T., had walked into the first day of a graduate-level ML course with a heavy dose of undergrad imposter syndrome. The two struck up a friendship, joined the same living group at M.I.T., and stayed in touch after Abraham graduated. After running Sidewalk for a year, he joined the ads team at YouTube. They started applying to hackathons together.

After a few of these hackathons they finally broached the topic: Did they want to start a company together?

The initial idea

Their initial YC application was a long-term memory solution for language models.

The pivot

“One of the most common feature requests for Remembrall was, ‘Hey, you’re managing my user’s chat history, can you manage the files that they’re uploading as well?”

So the co-founders built a very simple solution — they would upload the docs, parse them using an external parsing solution. “It’s embarrassing to look back on it now, it was a very ugly Streamlit app with a super simple document segmentation tool. It would do nothing other than split your documents into little boxes of content.”

The MVP

Reducto has six different vision models to ensure accurate outputs with any document, but they started with just one. They trained the first model for layouts, breaking down a document into sub-regions.

The first customers

They wanted to focus their attention on an ICP that felt the pain most acutely. Industries where accuracy was imperative — like finance, legal, or insurance.

Pricing for acute pain

To sketch out their pricing model, Abraham balked at the more expected usage-based approach and instead went with a tiered system that starts at $300/month.

Enterprise comes calling

“A Fortune 10 company actually tried out the playground and signed up for a demo call,” Abraham says.

Founder-led sales: Relationships matter

Reducto only recently opened up a search for the first sales hire — after Abraham closed millions in ARR as a one-man GTM band.

The Benchmark: Show, don’t tell

Building a comprehensive benchmark took about three weeks. Reducto employed a team of PhD-level human labelers who manually annotated 1000 complex table images from a diverse set of publicly available documents.

Growing fast, hiring slow

Reducto has intentionally kept the team extremely small — they crossed $1M in ARR when they were just a team of four.

The roadmap

While Reducto briefly toyed with the benefits of a more verticalized go-to-market strategy, they stuck with a broader appeal.

The path forward

“If you asked us two years ago if we would be excited to work on PDF processing, the gut reaction would probably be no. But as we’ve gone deeper, we’ve found a love for what we’re doing. The moments of pride where our customers put us head to head with competitors and say that our app is 10x faster — that’s enough for us to want to work on this for who knows how long,” Abraham says.