A Product Market Fit Show | Startup Podcast for Founders
00:27:48 · Ali Khokhar
[00:27:48] S0: Precisely. Exactly. I effectively did not know anybody in the space. And so I was like, oh, great. Like, what am I gonna do? I did what I did the first time around when I was, like, validating my ideas. Let's go talk to folks. But talk to them in a very concentrated period of time with a wall scope thing, with a good sense of, like, here's who we are, here's what we're building, here's a long term vision, here's why it's exciting for us, and like, we have the alignment or not. Right? And so we went through the sprint, flew to New York, stayed at a tiny tiny like bunk bed style situation, because again my father and I were like, we haven't raised anything at this point. Right? And basically just spent 9AM to 5PM pitching, 5PM to midnight building. It's like we'd like continuously would take the day's feedback and learnings of like, what are interesting demos to showcase some of what we're saying. Right? John, my CTO would basically like start building after dinner. I would pitch all day and we'd talk essentially. It was like, you know, fourteen, sixteen hour days with no sleep, and we just went through the cycle for two, three weeks straight. At the end of which, we then went and got multiple term sheets, ended up with a partner that we really really wanted, our top choice partner, we got a really good fit for them, and then started. And once we closed that round, we ended up then like everything that's said and done, legal, all that good stuff, the round closed five days before my one year anniversary of quitting my job. So it was like a full, like almost end to end one year journey from the day I quit. And I actually, you know, I'm I have an immigrant dad who was like, what are you doing? Why are you quitting?
00:29:08 · Pablo Srugo, Ali Khokhar
[00:29:08] S1: He's insane. [00:29:09] S0: You know, you're on a visa, you're gonna lose your, you know, TN visa in The States, and are you kidding me? Like, at the time, if you also remember February 23, like layoffs happening, interest rising post WARP era, it was like a very chaotic world. Even my my two previous managers were like, are you insane? This is the worst time to quit. What are you doing? I was like, no no no, I'll figure it out. Don't worry. What's the worst case? In a year, I'll go back and try to get another job, like okay, no big deal, but I wanna take this swing right now. And so I told my dad, I was like, give me a year. If in one year I can't figure it out, I'll think about what's next. Am I in the wrong space? Am I like fit out cut out for this? You know, have I spent the time validating the thing I wanna build? If I don't get to conviction on something, it's fine, you know, I'll try to get another job, it's like not the end of the world, I've done it a couple times now. And so that like five days before the one year is an important milestone for that reason, because I had mentally given given myself a year to like, ideate and come to conviction. And I already had some initial signals based on my previous roles, but, yeah, we when the when the wire hit for that first pre seed five days before the one year, I went on a dad with my I went on a walk with my immigrant dad. I was like, look. It's real now.
00:30:13 · Pablo Srugo, Ali Khokhar
[00:30:13] S1: It's crazy how the power of deadlines. Tell me you know, we'll go through a few kind of deeper questions on on the fundraise process. The first one is the hardest part I find of trying to run a tight process is in the first place, just getting the meetings. Right? It's easy enough. Obviously, you go online, you find a bunch of firms. Today, you ask Claude, it'll spit out a 150 names. That's the easy part is building a list. Did you go cold? Did you get intros? Like, you weren't really well networked. How did you do those initial reach outs to whatever, a 100 firms or however many it was? [00:30:45] S0: I would say it was 80% through warm connections. And so, yes, I personally didn't have the network, but I had built enough of a friend group, a network, a professional network, where I could ask and I had built enough trust and credibility with those folks who were then willing to make interest for us. And how did you do that specifically? Did you just go out and be like, hey, who do you [00:31:06] S1: know that you can intro me to? Or did you do the work of saying like, I see you're connected on LinkedIn with x y z firm, can you make the intro?
00:31:06 · Pablo Srugo, Ali Khokhar
[00:31:06] S1: know that you can intro me to? Or did you do the work of saying like, I see you're connected on LinkedIn with x y z firm, can you make the intro? [00:31:13] S0: It was a lot more of like, here is the people that I want to go meet, who is connected to those people that I know, either through first or second degree connection, and then you know giving them, doing all the hard work of creating the blurb for them, forwardable emails, yada yada yada, having a spreadsheet, mapping things out, tactically of course that's just baseline, right? We did all that good stuff, and then used a lot of sort of like, can I get in front of somebody? Again, I don't personally know them, but part of it is this, Just as a founder CEO you're selling, that's your only job. You're selling to candidates to come join you, you're selling to investors, and to believe in your vision, you're selling to customers. And so part of that is like finding the right way into those conversations where you come into them with some level of trust and credibility built built up. Right? And so I found that doing it this way was much better than cold out
00:32:00 · Pablo Srugo, Ali Khokhar
[00:32:00] S1: found it. I'm a big believer that these especially these early rounds, but potentially all fundraising rounds are fundamentally about FOMO. Like, that is just the number one driver of getting a round done fast, on good terms, and ideally with people that that you like and believe in. Whether you build relationships before or not, you still need FOMO to just get that deal done quickly. And if you come in cold, it's just gonna be hard to get the response rates you want, get the attention level, even if they respond, maybe it's in three days, maybe they put you out in two weeks, you're not prioritized. Whereas if you come in warm and ideally in a perfect world, the person making the intro is saying not just, hey, here's somebody raising, but, hey, I know Ali. He's a really solid founder. You should really meet him. They're putting that social cred behind you. It's just way easier to kind of build momentum and get a 100 meetings in a week or two versus in a, you know, stretched out over two months. [00:32:51] S0: Yep. Exactly. Yeah. The FOMO thing is real, by the way. The second we had our first term sheet, everything else fell into place. Like, many people came. The the crazy thing I'll say is I had people cold, like investors, cold DM me on LinkedIn saying, hey, heard you got a term sheet. I will also contribute a 150 k. [00:33:11] S1: This is for your pre seed round? [00:33:13] S0: This is not for my pre seed round. It's the power
00:33:13 · Ali Khokhar, Pablo Srugo
[00:33:13] S0: This is not for my pre seed round. It's the power [00:33:15] S1: of FOMO. Like, I just wanna point that out. You are, at this point, an unproven founder. You have basically no traction, and VCs are DMing you, like, please let me into your round. [00:33:23] S0: And they're saying, don't even need to meet you, by the way. It's like, I have heard through the grapevine that you have a term sheet or multiple term sheets, and, you know, I've heard sort of what you're doing. Just I don't need to see your debt, I don't like just I'll where do I wire the money? It was insane to me, somebody who was like, at the beginning of the fundraise like, I don't really know anybody that well, like how am I gonna be able to do this? You know, we had 47 no straight before our first yes as an example, like it was a lot of like no no no no no. And then at the end of by the end of the journey, it was like, hey, yeah, I'll wire you the money without meeting you. [00:33:56] S1: The $1.80. Yeah. Like, what where were you two weeks ago? [00:33:59] S0: What has possibly changed in the two weeks? Nothing other than to your point, Fomo.