A Product Market Fit Show | Startup Podcast for Founders
00:22:08 · Pablo Srugo, Ali Khokhar
[00:22:08] S1: There you go. [00:22:09] S0: Done. Here's the wiring information, and they wired me $10 the next day. So now I had basically a quote unquote enterprise contract that was like, we'll buy a thousand seats at x dollar value, yada yada yada, which is like worth 7 figures at full scale. I've got a $10,000 deposit for a pilot, and I've got four solopreneurs who have paid me $500 each. So I've got $12,000 in revenue. And I have not written a single line of code, nor do I have a team, nor have I fundraised, nor do I even have a co founder and CTO at this point. That to me was the early days of like, okay, now I have built a conviction, I am solving a real pain point for people who are paying me real dollars, we have revenue in the bank with nothing to show for it other than just me talking to them. That's what then I went and spoke with a couple of I was having already conversations, I convinced my brilliant co founder and CTO now to leave his job at Databricks to come join me. So he quits, we meet in September '23, we worked together for four months, you know, I give him this entire journey, this experience, we start iterating and building for those early customers. January, first he quits. [00:23:14] S1: This is January 1, now we're in what, '24? [00:23:17] S0: Now we're in 01/01/2024 precisely. Okay. And Jan's gonna be full time, now basically we start going and fundraising. Okay. January 15, we kick off our fundraise, and we pitch a 100 investors in ten days flat.
00:23:29 · Pablo Srugo
[00:23:29] S1: You love this show. You don't wanna miss the next episode. Why would you? So hit that follow button. Trust me. It's in your own best interest. We're gonna break that down. But I think one of the things I just wanna point out is, so nine months effectively invested in true validation. And I think the way that you did it is I mean, it's it's in a sense, it's like textbook classic, but it's also for some reason, I think it's just because it's hard. Most founders are still these days today, right, don't do it. Like, lean startup is an old idea. Right? Like, you think people will be doing this, but still many people I think don't do it. And this is also what like, you know, bootstrapping is typically when you don't do it funded. But this to me is bootstrapping in the sense that you kind of, like, fake your way to the first thing so that you can how do you get a great cofounder? Like, you show them some traction. Right? And how do you get capital? You show a team and some traction. Right? And then once you have those three, you use it to get more traction, and you cleared this virtuous loop. But you have to get the things spinning, And, you know, getting people to buy in and validate through real dollars is, to this day, I mean, it's just it's the best. It's the most proven way to know that you're gonna build something that people want, which is the foundation of startups.
00:24:36 · Ali Khokhar
[00:24:36] S0: Exactly. And that February 23 to December 23 journey was purely focused on that. And even all my founder friends today who, like, recently have quit, to your point, still got into the trap of, like, I talked to 10 people, they love the idea. Let's go like, I should go raise. Right? But no no no no, because the opportunity cost is high too. It's like, yes, everybody's like, yeah, let's go raise and like get some capital. Okay. Sure. But like, if you truly truly inherently don't feel that there is value in building this, and you don't like care about, like, sort of this type of opportunity, etcetera etcetera, it just becomes a lot harder. All the struggles you'll deal with, it's a lot easier to give up, and your opportunity cost is enormous. Right? I'm gonna invest this seven to nine month window in validation so that the next five years
00:25:20 · Pablo Srugo, Ali Khokhar
[00:25:20] S1: Exactly. Because the most dangerous mix is something people don't really want with a founder who's tenacious, relentless, won't give up. You may you get that, you get five years away. So you get a bad founder, a weak founder, they'll give up in two months, so whatever. No big deal. But that mix is deadly. So let's move on to to now we'll we'll do the two segments. The first one you already alluded to, a 100 pitches in ten days. So let's start at the beginning of that. Like, first of all, it's a pre seed round. How much are we trying to raise? Like, a lot of people for pre seed specifically, they'll just meet, like, five VCs and and, you know, get a million bucks and call it a day. Like, you you made this a process. How did you think about it? [00:25:52] S0: From the beginning, it was the specific partner that I wanted, and how do I go find that person? Right? And to your point, everybody's, like, in the camp of, okay, cool. Let's just talk to 10 people. If like this thing is real, they'll give me capital. Like, no. That's not at all how it works. Because a couple of things. One is the partner that you're looking for, you might not meet them until pitch number 60. That was actually the case for us. I did not meet the person who I was like, this is the person who I want to be on my cap table. I want the first check for. [00:26:18] S1: You didn't know it's not like you knew I wanted this firm. You're just like, I'm gonna meet a lot of people till I meet somebody that clicks.
00:26:23 · Ali Khokhar
[00:26:23] S0: Precisely. Exactly. And everyone does the thing of like, here's my spreadsheet, here's all the firms, here's where I really my dream firm that I wanna raise from, etcetera etcetera. But I think at early on none of that matters because all the if you're crushing it, and if you're real and you're growing, all those firms will wanna write checks into you eventually anyway. The most important thing that matters is like who are the early folks who are betting early, who are betting on the team, who will stick with you as you pivot, right, because again they're betting on that team more so than anything, who you have a really strong relationship with and the connection is there, and aren't just like, you know, yeah cool, I like this space, I'll dump like a few checks into this space and like see what happens. Right? Because then when you pivot, it's like not a good fit anymore, if you end up pivoting, which most companies end up doing Yes. To degree. Right? And so, yeah, for us, was a couple of things. One was I wanted it to be concentrated in a short period of time because the core business is actually going and getting more customers and, like, building product, etcetera, etcetera. So I do not wanna fundraise for four months straight. I wanted to do it in a very short sprint. And then two, I don't come from a world of like really strong connections. So I'm not like I spent two years at some VC firm, I then went to Stanford MBA, and then now all my friends are at this firm, it's like easy for me to go have the 10 conversations. I come from, like, you know, I'm Canadian. I'm not even from The States. Right? So, like, coming down to San Francisco and working here was, a new experience for me.
00:27:38 · Pablo Srugo
[00:27:38] S1: It's good because it's it's more you know, sometimes I talk to founders sometimes. It's like, oh, I raised a $10,000,000 seat. How oh, I already knew, like, 10 VCs from my past. I'm like, alright. Like, I I can't learn anything from that. Nobody can learn it, so this is much better.