Scott Knowles - Co-Founder and CEO of Deep Vector: Empathy in Sales, Selling to a Competitor, and Breaking the Rules

Scott Knowles 0:00

I don’t follow the rules. If you’re following the rules, you’re not going to find your path to getting things done. Now, with SaaS, there are certain rules that you have to follow—they’re necessary for success. But if you step outside the lines just a bit, you’ll find there’s so much more opportunity waiting.

Callan Harrington 0:22

You’re listening to That Worked, a show that dives into the careers of top founders and executives, pulling out the key elements that led to their success. I’m your host, Callan Harrington, founder of Flashgrowth, and I couldn’t be more excited to have you here. Welcome back, everyone, to another episode of That Worked.

This week, I’m joined by Scott Knowles, co-founder and CEO of Deep Vector—a web-based software platform that transforms unstructured documents into actionable insights with speed and precision. Before Deep Vector, Scott founded and led Magic, a software company providing workers’ compensation and mod analysis tools for the commercial insurance industry, which was successfully acquired by Zywave in 2021.

Scott’s career is an inspiring journey of constant innovation. From solving problems at every step to building sustainable solutions, his story is packed with lessons. In this episode, we dive into topics like the importance of empathy in sales, becoming a trusted advisor, and why niching down—though difficult—pays off immensely. Scott also shared insights on navigating the complexities of selling Magic to a direct competitor, including managing sensitive questions like sales strategies and competitive positioning. It’s a fantastic conversation for anyone considering an acquisition or simply looking to level up in their career. Let’s dive in.

Callan Harrington 3:06

Scott, let’s kick things off. Can you tell me about one big transformation you’ve had in your career?

Scott Knowles 3:12

One major shift for me happened when I worked at John Deere Insurance. My boss kept saying, “Scott, you’ve got to get in their shoes.” At first, I didn’t get it. What does that even mean? But one day, it clicked. It meant putting yourself on the other side of the desk—understanding what the client is thinking and feeling so you can tailor your conversation to their needs.

This mindset changed everything. The most successful salespeople don’t sell—they converse, they understand, and they fulfill needs. That advice—“Get in their shoes”—became my guiding principle, not just in sales but in life. To this day, I think about it daily.

Callan Harrington 4:54

That’s so relatable. I started my career as an insurance agent, and in the beginning, I was just pitching products without ever considering what the customer actually needed. It wasn’t until I shifted my perspective that I started seeing success.

Scott Knowles 5:14

Exactly. Nobody likes to be sold to. People want to feel like they’re making a decision based on their needs—not because someone is pushing them into it. If you approach conversations with empathy and focus on solving their problems, you’ll see a world of difference in how they respond.

Scott Knowles 6:17

It’s amazing how even the smallest, offhand comment can completely derail a deal if it comes off as insincere or not in the best interest of the other person. Sales is all about trust, and once someone senses even the slightest hint of dishonesty or manipulation, it’s game over.

Callan Harrington 7:00

At the very least, it makes the sales cycle drag out much longer. So when you founded Magic, you already had a long background in insurance as a producer and broker. Did you start building things on the side during that time, or was there a specific pain point that pushed you into launching Magic?

Scott Knowles 7:24

Honestly, it wasn’t really about a pain point—it was more of an idea that I thought could improve my own processes. As a broker, I needed a way to educate my clients so they could make the right decisions, but there just wasn’t anything out there that could do that effectively.

In the early days, Magic wasn’t even intended to be a product for sale. I built it for myself to break into the broker world and stand out. My background was in direct writing, which meant I only sold for one insurance company, so I had a unique value proposition. But as a broker, I was competing against others who had the same products. I needed to find a way to differentiate myself. Magic was the solution—it was my tool to educate clients, and that’s all it was meant to be at first.

Callan Harrington 8:55

So, what I’m hearing is that Magic started as a way to stand out by offering your clients education that other brokers couldn’t provide. Is that right?

Scott Knowles 9:11

Exactly. It was all about becoming a trusted advisor. If clients trust you and see you as someone who genuinely cares about helping them, they’ll stick with you. I wasn’t just selling insurance—I was educating my clients, guiding them to make the best decisions for their needs.

Callan Harrington 9:31

And did that approach work? Did your production go up as a result?

Scott Knowles 9:36

Absolutely. I had a lot of success as a broker, particularly in my niche, which was insuring car dealerships. That was my primary market, and I built strong relationships there. Staying focused on one specific market made a huge difference—it’s much easier to stand out when you specialize.

Callan Harrington 10:03

Car dealerships are known to be a tough market—highly competitive and often price-driven. Was that why Magic became such a key tool for you?

Scott Knowles 10:15

Definitely. In a commoditized market like insurance, you need something that sets you apart. I used to tell my clients, “Do you want just any insurance agent, or do you want someone who truly understands your business and cares about helping you make the right decisions?” I’d make it clear that I wasn’t focused on price—I was focused on representation and building a strong, long-term relationship.

Callan Harrington 10:55

So, you were seeing success with this approach. Why take the leap to turn it into a company? You were already achieving your goals—what pushed you to take it to the next level?

Scott Knowles 11:05

It’s funny—it wasn’t even my idea at first. I was taking a lot of business from other brokers, and some of them eventually reached out to me. They were like, “What are you doing? How are you winning all these clients?” When I showed them the tools I was using, they asked if they could buy it. At that point, it clicked that I might have something bigger here.

Around the same time, my business partner Wes and I started talking. He worked in software, and I mentioned that I’d been approached about turning my tools into a product. He took a look at what I’d built, and we decided to partner up to bring it online. It started small and grew organically from there.

Callan Harrington 12:58

How long were you working on Magic as a side project before you went all in?

Scott Knowles 13:02

It was a side project for years. I only went full-time about two years before we sold the company. Once I focused on it exclusively, the growth really took off. Looking back, I could’ve gone full-time much earlier and accelerated the growth, but everything happens in its own time.

I learned a lot from that experience—especially about listening to customers. So much of building a successful product comes down to listening: What do your customers love? What do they hate? What would make their lives easier? It’s all about learning and iterating.

Callan Harrington 14:39

You’ve mentioned that Magic was bootstrapped. Did you ever consider raising capital, or did you intentionally choose to go it alone?

Scott Knowles 15:05

We intentionally bootstrapped. Part of it was financial—we wanted to maintain control and not take on unnecessary risks—but it was also about independence. I’ve always been a bit of a rule-breaker, and I didn’t want outside investors dictating how we built the company. That said, I recognize that bootstrapping isn’t for everyone—it worked for us, but there’s definitely a trade-off in terms of speed and resources.

Callan Harrington 16:06

I want to go back to something you said earlier about not following the rules. How do you balance that mindset of thinking outside the box with the need to implement scalable processes for a SaaS business?

Scott Knowles 16:18

For me, it’s all about partnerships and leveraging the strengths of the people around me. My business partner and I have been working together for 14 or 15 years, and we balance each other out. I tend to challenge the status quo and push for creative solutions, while he’s great at ensuring structure and stability.

Building scalable processes is key, but it doesn’t mean you can’t experiment and adapt. I’ve learned to embrace failure as part of the process—it’s how you figure out what works. For example, we’re constantly evaluating our pricing models, commission structures, and onboarding processes to see where we can improve. When we can’t find a tool that fits our needs, we build it ourselves. That mindset of constant iteration has been critical for us.

Callan Harrington 17:25

You sold Magic to Zywave, which was a direct competitor. What was it like going through that process? How did you manage the anxiety and stress that comes with selling your company?

Scott Knowles 17:34

The process was intense, to say the least. The due diligence phase alone was grueling—there were endless questions about our financials, sales strategy, competitive positioning, and more. I didn’t sleep for a week leading up to the closing.

Beyond the stress, there were emotional challenges. I worried about how my customers would feel about the acquisition. I had built Magic with them in mind, and I felt a deep sense of responsibility to ensure they’d be taken care of after the sale. Selling to a competitor is tricky because there’s always the risk that your product will be phased out. Ultimately, though, I believed the acquisition would lead to something better for everyone involved.

Callan Harrington 19:31

You mentioned earlier that you were hesitant to share sensitive information with Zywave during due diligence. How did you navigate those conversations and protect your competitive edge?

Scott Knowles 19:38

At first, I flat-out told them I wasn’t interested in selling. But as the conversations progressed, I realized there were opportunities to negotiate the terms. We set clear boundaries around what they could and couldn’t ask. For example, I refused to provide detailed information about our sales strategy, as it was irrelevant to the deal. If they were going to phase out Magic, then how we positioned ourselves didn’t matter.

We also leaned on trusted advisors and attorneys to guide us through the process. They helped us ensure that we weren’t giving away more than we were comfortable with.

Callan Harrington 21:29

You didn’t use an investment banker for the sale, which is pretty rare. Looking back, do you think that decision worked in your favor?

Scott Knowles 21:33

It worked out for us. We were bootstrapped, so we didn’t have outside investors pushing us to maximize the sale price. Plus, we already had relationships with the key players in our industry, so we didn’t feel the need to shop the company around.

That said, I can see how an investment banker would be valuable in other situations, especially if you’re trying to attract multiple bidders or navigate a more complex sale.

Callan Harrington 22:35

You’ve mentioned that working for Zywave after the acquisition was an adjustment. Was that experience what pushed you to start Deep Vector?

Scott Knowles 22:49

Yes, in part. While I appreciated the opportunity to work with a larger company, I realized pretty quickly that I missed the agility and creativity of the startup world. My partner and I already had a few ideas for our next venture, and Deep Vector grew out of that.

We focus on solving specific, complex problems, starting with loss runs in the insurance industry. Our algorithm processes unstructured data with incredible speed and accuracy, and the potential applications are huge. We’ve already started expanding into other industries, but we’re taking it one step at a time.

Callan Harrington 25:26

Unlike Magic, you decided to raise capital for Deep Vector. What led to that decision?

Scott Knowles 25:36

The market for InsurTech is moving fast, and we needed the resources to keep up. Bootstrapping worked for Magic, but with Deep Vector, we wanted to scale quickly and explore new markets. Raising capital wasn’t just about the money—it was about building relationships and gaining access to opportunities that would have taken years to develop on our own.

For example, after attending ITC (InsureTech Connect), it became clear that we had a window of opportunity to establish ourselves as leaders in this space. To do that, we needed to move faster than we could on our own.

Callan Harrington 27:24

It sounds like you’re playing the long game with Deep Vector, especially given the flexibility of your core technology. What’s next for you and the company?

Scott Knowles 27:40

Right now, we’re laser-focused on perfecting our product and expanding its applications. Loss Scan, our current product, is just the beginning. The algorithm we’ve built can be adapted for use in financial services, healthcare, government, and beyond.

Our goal is to be the go-to solution for extracting actionable insights from complex documents—regardless of the industry. We’re also looking to strengthen our partnerships and continue listening to our customers to ensure we’re meeting their needs.

Callan Harrington 30:47

Scott, last question. If you could go back in time and give your younger self advice, what would it be?

Scott Knowles 31:26

It would be to embrace failure and never stop learning. Failure isn’t something to fear—it’s an opportunity to grow. I’d also remind myself to stay focused, be kind, and always act with honesty and integrity. That mindset has been the foundation of my success.

Callan Harrington 32:02

I love that we came full circle with the idea of “getting in their shoes.” It’s such a powerful principle, and it’s clear that it’s guided so much of your career. Thank you for sharing your journey—it’s been inspiring.

Scott Knowles 32:15

Thanks for having me, Callan. This was a lot of fun, and I look forward to staying in touch.

Callan Harrington 32:30

Thank you, everyone, for tuning in to my conversation with Scott. I hope you found it as valuable as I did. If you enjoyed this episode, please leave a review on Apple Podcasts or Spotify. You can also connect with me and Scott on LinkedIn—the links are in the show notes. Thanks for listening, and I’ll see you next week.