A Product Market Fit Show | Startup Podcast for Founders
00:10:55 · Dylan
[00:10:55] S0: I believed at the time and still believe that to create the best product is not just a function of resources. You don't just put a budget and people in a bottle and shake and then out comes this amazing product. You can definitely increase the likelihood of that the more resources and people you have to a point, because at a certain point, more resources and people actually becomes a hindrance. There's that software development book The Mythical Man-Month. I don't know if you've ever heard of it, but it's like the more people you add on a project, sometimes the slower it actually goes. I always felt like there was an opportunity here. Going head-to-head with a Google on a core area of their product, like search, that's a much harder task. For something that they're not focused on and they weren't at the time, the YC partner actually I saw recently wrote something about this on Twitter or LinkedIn, which was like, you're really not competing with Google. You're competing with a PM at Google that’s trying to have a successful product under their belt and that's navigating all these internal politics. Of course, if it becomes the main focus of a company, again, like search or now with Gemini trying to compete with GPT, it's a different story, but at the time and still now where we're focusing on creating our product is not within the core focus area of these larger companies. The opportunity space is around working much more closely with developers and with customers in this emerging market to understand what they need and to build the best products for them.
00:12:26 · Pablo Srugo, Dylan
[00:12:26] S1: Let's go back to that. You get into YC, which oftentimes is a huge moment, inflection point, right or wrong, I think, for startups. Is that what happened to you? Did you find there's a before and after YC and things just took off? [00:12:40] S0: It definitely became more real when we got into YC. I remember going down to YC for the first day and I was like, I don't know if I can curse on the show, but I was like, oh, shit, this is real now because I had started the company a month prior and then in YC and YC is basically a sprint to demo day. It's really just 90 days, right? It's three months. You need to have progress made and I had nothing when I started. When I was building, you can't just quickly pull together a web app. You have to train these models. You have to get data. It takes a while. I remember at the time each model iteration took a week to train or something, two weeks to train. If you think about that, if you're just consecutively training models, you have six model runs essentially, because there's two a month and YC’s three months. Startups are all about iteration, especially in the early stage and still now. My ability to iterate was pretty slow back then because I was bounded by the speed at which I could train models and iterate on the models to get them to be good enough so that people would start using them. We didn't make a ton of progress in terms of go-to market traction during YC, but we did make progress and we just got started, were able to raise a seed round after YC, which gave us the runway to hire some people.
00:12:40 · Dylan, Pablo Srugo
[00:12:40] S0: It definitely became more real when we got into YC. I remember going down to YC for the first day and I was like, I don't know if I can curse on the show, but I was like, oh, shit, this is real now because I had started the company a month prior and then in YC and YC is basically a sprint to demo day. It's really just 90 days, right? It's three months. You need to have progress made and I had nothing when I started. When I was building, you can't just quickly pull together a web app. You have to train these models. You have to get data. It takes a while. I remember at the time each model iteration took a week to train or something, two weeks to train. If you think about that, if you're just consecutively training models, you have six model runs essentially, because there's two a month and YC’s three months. Startups are all about iteration, especially in the early stage and still now. My ability to iterate was pretty slow back then because I was bounded by the speed at which I could train models and iterate on the models to get them to be good enough so that people would start using them. We didn't make a ton of progress in terms of go-to market traction during YC, but we did make progress and we just got started, were able to raise a seed round after YC, which gave us the runway to hire some people. [00:13:58] S1: First of all, you keep saying we, but I remember it was just you. Did you recruit some early people through that YC stage?
00:13:58 · Pablo Srugo, Dylan
[00:13:58] S1: First of all, you keep saying we, but I remember it was just you. Did you recruit some early people through that YC stage? [00:14:05] S0: Yeah, yeah. I hired some people through that early stage. I mean, when I got into YC, it was like, okay, you have 90 days. I can either use those 90 days or a significant portion of those 90 days to recruit a co-founder or I can try to just get really far myself and then raise capital at the end of YC and then hire people as, essentially, late co-founders. That's what I chose to do because I felt that was the better use of time. For the first month, two months, it was really just me. Then leveraged a mix of people in my network that I hired as contractors within the first couple months of YC just to get stuff going. Then after demo day when we raised, I think we raised a million dollars. [00:14:50] S1: Was that hard? What was that raise like? I mean, because you have no real customer traction. I assume the model still doesn't really work all that well. I mean, it's really just a bet on you and deep learning in a high-level thesis.
00:14:50 · Pablo Srugo, Dylan
[00:14:50] S1: Was that hard? What was that raise like? I mean, because you have no real customer traction. I assume the model still doesn't really work all that well. I mean, it's really just a bet on you and deep learning in a high-level thesis. [00:15:02] S0: Yeah, so no institutional funds invested. It was only angels that invested because a lot of the angels that invested, they saw that either through their own personal experience or their own career or other investments that there's totally an opportunity for startups to build great developer products in spaces where there's large incumbents. You've seen this, Stripe, PayPal is a great example and there's a lot of others, like Heroku. We had a lot of angel investors that invested in the first trial we did after YC that saw that there was an opportunity for us to create this company. [00:15:36] S1: What was the VC path like? I assume that you spoke to them. What was their reaction? Why did they pass?
00:15:36 · Pablo Srugo, Dylan
[00:15:36] S1: What was the VC path like? I assume that you spoke to them. What was their reaction? Why did they pass? [00:15:42] S0: It was just the, how will you compete with Google question. That was pretty much it. I was like, okay, I know the questions they're going to ask. Now, actually, every time I fund-raise, and this is actually maybe a good tip for startup founders that are fundraising, I actually write up a big document with all of the objections I anticipate to get. I write out lengthy answers to all of them. I don't share that with anyone. It's for me to make sure I'm really, really tight and articulate on all of the competitive and market questions that I anticipate to get. That has been super helpful now. I had never raised money before, right? Never raised money for a startup. The very first meeting I took at the end of YC was with Sequoia. [00:16:25] S1: Oh, no, okay. [00:16:28] S0: No experience fundraising, no real progress, don't really know what I'm doing, and just start with the most experienced investors possible, probably not the right strategy. [00:16:44] S1: Yeah, I mean, you went to the all-star game right off the bench, yeah. [00:16:48] S0: In hindsight, probably stupid. I didn't have a name, right? It'd be different if I was this PhD or this very seasoned entrepreneur and I could show that I had a resume, I knew what I was doing, but I was unknown. We didn't really have a lot of traction. Even now still you're biased to think it will be hard for Assembly to compete, but there are thankfully really brave and ambitious angel investors out there.