A Product Market Fit Show | Startup Podcast for Founders
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.
00:16:48 · Dylan, Pablo Srugo
[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. [00:17:13] S1: That's right. That's why they’re called angels for a reason. [00:17:16] S0: Yeah, exactly, and still investors, our investors now, I mean, Steve and Sarah at Accel and Rebecca at Insight, and then the more recent investors from Smith Point, like Keith Block, they all believe too. I think when you're raising capital, the biggest thing is just finding people that believe in the opportunity and that are excited about it. It's a bit of a numbers game, so you have to just meet as many people as possible to find that. It's like dating, right? I mean, you're not going to find your soulmate on your first date.
00:17:16 · Dylan, Pablo Srugo
[00:17:16] S0: Yeah, exactly, and still investors, our investors now, I mean, Steve and Sarah at Accel and Rebecca at Insight, and then the more recent investors from Smith Point, like Keith Block, they all believe too. I think when you're raising capital, the biggest thing is just finding people that believe in the opportunity and that are excited about it. It's a bit of a numbers game, so you have to just meet as many people as possible to find that. It's like dating, right? I mean, you're not going to find your soulmate on your first date. [00:17:47] S1: I think that's totally true, and especially for the early rounds. In later rounds, you have numbers, you have traction. You start fitting in specific boxes. There's still a numbers game element to it. I think in the early days, you're totally right. It's really about just finding believers. If somebody doesn't get deep learning, doesn't care about building platforms, doesn't really matter how great your story is, they're probably not going to be the right fit for you. That's really what you're looking for. Okay, so moving along, you raised that round. You have, I mean, even a million dollars, it's not a lot of money. I guess you hire a few handful of people or five people or so at that point?