A Product Market Fit Show | Startup Podcast for Founders
00:40:36 · Damien Lewke
[00:40:36] S0: I do just want to say I'm very grateful for our paying customers. But to be quite honest, Pablo, there were a few POCs that went three or six months or dragged out. And they dragged out really because of three core reasons. One, we were all excited but what I didn't do is set good expectations around, hey, this is how long the POC process is going to be. This is what we are doing and at this point, this will be done. The second piece, and it's just the way that we work, was also being really focused about scope of engagement. That does not mean you should pressure somebody in a POC to purchase your solution. I do not espouse the idea of like, it's two weeks, you agree to these success criteria, buy my thing. That's not cool, especially early, right? But you do want to set expectations. Hey, we're going to do this for a month. If we do things one, two, three, right? Would you move to a purchase? Which leads me to my third and the most important thing from the outset that goes back to this Fortune 500. Which is make sure that you have budget, or that they have the ability to spend money on what it is that you have built. Because there are a lot of people who are really helpful and extremely friendly, and they're down to do a POC. Sometimes they don't have budget or budget won't free up until later in the year. No harm, no foul. If you set a scope for the POC, great, you can get the tech win and move on with your life. And then you know that when the budget comes up, we have this agreed to, we can press go. The other piece that I think really helped us, and because we're an AI-native company, is really important. Is, nail your DPA, right? Have a really strong DPA, and know what it means to do data processing, and parallelize the legal paperwork. Do not do the POC and then suddenly be like, all right, hey, oh, by the way, we do data processing. They go, well, hey, wait a minute, we have our own DPA. This happened with one of our customers who I love, but we did a POC and we got to this point where it was like, great, we signed some stuff. Oh, now we have to go into procurement and some businesses will operate that way, right? And you cannot help that. That's okay. But as best as you can, it doesn't hurt at all to just ask like, hey, while we do this process, can I either do the procurement paperwork up front.
00:42:42 · Damien Lewke, Pablo Srugo
So that the POC can roll over and do a paid engagement? Or can we run these two things alongside? That will not always be the case, but it will save you time and heartache. Because the worst anyone can say is no and that's okay. You're in the spot you were in before. [00:42:57] S2: So that's the high level and I think all that obviously foots. Take one of the examples you mentioned. Some of these did take three, six, nine months. There's no point in naming names. It's not the point. But take one of those examples. Let's go deep on it. What happened? Why did it take so long? And maybe what could you have done differently? And I'm sure you now do those things differently, but you just kind of get specific on one of them. [00:43:19] S0: First of all, I love this customer and they are great. The real learning for me was I did not determine and figure out what the path to close is or was from a procurement point of view. So we spend so much time mapping stakeholders within the org and who has budget authority and all that stuff. And don't think at all about procurement, and legal process, and system. So basically we did the POC, it was a design partnership that became a POC, and they were like, yup, we love this, we want to buy. Great, let's buy. Cool, can you send us your MSA? We're going to send this to procurement. [00:43:52] S2: And you've done the work of saying, hey, this is the champion. This is who has budget, CIO has budget, blah, blah. So you knew that part of it. [00:43:57] S0: Budget agreed to, champion agreed to. [00:43:59] S2: Got you.
00:44:00 · Damien Lewke
[00:44:00] S0: All right, let's send it in for procurement. Hi, procurement, here you go and that was it, right? There was no like, hey, who should I be working with? Hey, should I, our champion was awesome. But there was also an executive sponsor that we should have worked with, right? Is there anyone I can do? So basically, what ended up happening, Pablo, was there was like this black hole of procurement. There was my champion, who is an amazing human being. Who can't push procurement, and we just had to work through their machinery, and it took weeks to get something turned around. Once we got it, we needed to make a bunch of edits and we ended up going through a few different iterations or red lines. And it just ended up dragging out. And it's because while I figured out my champion internally, what I didn't do was identify if there was another executive sponsor I could loop in and I didn't ask about their procurement process. I didn't know who the stakeholders were. I didn't know who I should be working with, you know, and who I should be introduced to. I just kind of was like, here you go. I hope this closes. There's no urgency. That was the problem and the key learning for me was, always have an executive sponsor and ask him about the procurement process. It's okay, I have been a customer before of security solutions. I was not always thrilled with my procurement process and that's not to say the procurement teams are bad. I love procurement teams. They're amazing people. But they have a responsibility to do what's right for the business and if you're an early stage company, they're going to push back. So it's important to understand who you're working with on the procurement side. That was the key learning.
00:45:31 · Pablo Srugo
[00:45:31] S2: I love that example. I think especially founders who have never worked at large companies forget just how large companies work and the fact is, first of all, obviously not everybody knows everybody. Second of all, not even everybody is a friend. They're not all swimming in the same direction where it's like, oh, if John really likes it, I'm in procurement. You know, I love John. I'm going to help John make this happen because that's my job. It's like, my thing is this thing. I'm interested on this thing over here. So you as the founder have to basically figure out, okay, the champion is the thing I think that we've all collectively learned. We know you need a champion in order to close an account. Cool, great, I've heard this thing from somebody that does enterprise. Who's the anti champion? Who's going to be the person, whereas the thing moves ahead, they're going to be like, nope, we're not doing this because whatever and how can you pre block that, right? So procurement is one obvious one. Legal is another one. IT, these are three buckets of people who, generally speaking, tend to be, let's say, or are potentially going to be on the other side. Being this person saying, wait, but it's an early stage company. It's risky, wait, but they don't have SOC 2. They don't have this, they don't have that, whatever. It's a cyber issue and go figure out how you can get that intro instead of six months down the road when you're like, okay, this is going to close next week. As early as humanly possible and go make friends. Make friends in as many possible places, right? So that the thing gets pushed through.
00:46:43 · Damien Lewke, Pablo Srugo
[00:46:43] S0: And this is why it really helps. For our first, I think our first like eight customers. I flew to meet them before we decided to send in the PO. Genuinely, it's funny, you know, I like my blank and blank. I did a five and five. I did five cities in five days. I flew to the West Coast, down the West Coast, back to the Midwest, and then back to the East Coast, right? I did like a cross country marathon to meet with customers. Because it allowed me to have these kinds of conversations and, again, build real relationships. That is another core piece. Again, early stage, people are investing in you because they trust you. It is your responsibility to be genuine and build real relationships. [00:47:25] S2: And so now are you doing this? Going to what works? And besides just having, you know, saying, okay, the pilot is like this, it's this long, et cetera, et cetera. Do you then go out and meet? Have you identified kind of every department that could block it and you're going in, and meeting them. Whether it's in person or virtual, whatever, and just trying to figure out who the key stakeholder is going to be along the entire way from zero to, you know, signed full contract?
00:47:25 · Pablo Srugo, Damien Lewke
[00:47:25] S2: And so now are you doing this? Going to what works? And besides just having, you know, saying, okay, the pilot is like this, it's this long, et cetera, et cetera. Do you then go out and meet? Have you identified kind of every department that could block it and you're going in, and meeting them. Whether it's in person or virtual, whatever, and just trying to figure out who the key stakeholder is going to be along the entire way from zero to, you know, signed full contract? [00:47:47] S0: Yeah, as best we can, right? You're not necessarily going to understand everything in every capacity, but if I can't meet you in person. I will take the time to catch up with you one on one. We now have an amazing sales leader and sales team that we're building, and scaling. It's a whole thought process around kind of when and how, and why I hired salespeople when I did. But yeah, I mean, I flew to meet a customer for 24 hours last week, right? Got on a late night flight, got back on a late night flight and every bit matters. And it was with the team and we got them lunch, and we spent some time with enablement. And also just spent some time asking about their lives, and how they're doing. And at the end of the day, we're all just people and I care about what we do and that we can make people's lives better. So it was important to build that relationship and I'm still getting on planes, Pablo. [00:48:30] S2: And for context, what kind of ACVs are we talking about? That you're doing all this work for?