A Product Market Fit Show | Startup Podcast for Founders
00:27:03 · Pablo Srugo, Rand Fishkin
[00:27:03] S0: I gotta ask some questions on, 'cause I think that's, that's super interesting. First of all, like how much was like the whole base scan , 37 signals, like was that an inspiration for the way you're, you're kind of setting things up now, let's say it sparked Toro . [00:27:15] S1: Oh, interesting. You know, there was a time when I was sort of had a, had a very high opinion of those guys, I think like in the, the mid two thousands, [00:27:24] S0: Because I remember they put out a book called Rework. Yeah . I don't remember when I read it, but it was like this anti VC and anti like, really, which was like just, Hey, the debate is all over here. Like, here's this other thing we're doing, by the way. And it was working <laugh>. And so that was , uh, refreshing. I [00:27:38] S1: Would say for me it was a different one. There's a book called Small Giants. Okay. Um, and I read that book. It has a bunch of different , um, examples. I'd, I'd urge folks to check it out. I think it's a , a great sort of community. And, and it's, it's called, I think the subtitle is Companies That Choose Choose to Be Great instead of Big.
00:27:38 · Rand Fishkin, Pablo Srugo
[00:27:38] S1: Would say for me it was a different one. There's a book called Small Giants. Okay. Um, and I read that book. It has a bunch of different , um, examples. I'd, I'd urge folks to check it out. I think it's a , a great sort of community. And, and it's, it's called, I think the subtitle is Companies That Choose Choose to Be Great instead of Big. [00:27:56] S0: Well, I'll put that in the, in the show notes, I guess. So let , let's do some kind of quick, 'cause just want to dive into this, this SparkToro thing. I don't know how much you're comfortable sharing, but my quick math in the back of my head kind of says, okay, there's four of you. I don't know if you're all like, like, you know, 25% or three of you spark Toro . Is that right? Okay. So I'm thinking, okay, like you each draw, I don't know , 200, $300,000 salary and you still have like a million dollar in , in let's say net profit . 'cause I'm sure it's a super high gross margin business. Is that like roughly back the envelope about Right. [00:28:25] S1: It's, it's close. Yeah. Okay . That's pretty , pretty close to accurate. Um, good , uh, good guessing there. I so
00:28:25 · Rand Fishkin, Pablo Srugo
[00:28:25] S1: It's, it's close. Yeah. Okay . That's pretty , pretty close to accurate. Um, good , uh, good guessing there. I so [00:28:30] S0: That, you know, that sounds like appealing and you work 30, 30 to 40 hours a week. So like, that sounds appealing to I think anybody listening, here's the fir first question that comes to me is , uh, and you hear this like with the people i I work with, right? Which are founders that are into this VC game, it's like, man, if we don't hire more people, if we don't build faster, like we're not gonna compete. Like, how could you possibly compete with three people tomorrow? Somebody sees the opportunity, they raise 2 million bucks, they hire 10 15 when they crush you. I
00:28:52 · Rand Fishkin
[00:28:52] S1: Mean, this is, this is what's great. I remember , um, with Moz, like over the years, we'd look at competitors who got venture funding and we'd be like, oh no. Oh no. And then of course the venture odds came into play and it was like, oh, oh no. They, they all, they all die, right? Until one of 'em , SEMrush had success, but even they raised money very late, sort of after they had built a nearly Moz size business. Bootstrapping Ahrefs is entirely bootstrap, never fundraised . They're, they're well over a hundred million in revenue as well, right? So, I mean, the frustrating part of that, you know, that whole journey is like, oh my God, that ecosystem could support multiple hundred million dollar plus businesses and Moz just for , took its eye off the ball at the worst possible time. And , um, the , uh, but the reality I think with, with SparkToro is I don't even see anyone enter our field. And I think that's because everyone believes it's too small. No venture capitalist looks at Mo , uh, you know , looks at SparkToro and says, oh, that nice little $2 million a year business, let's go disrupt that field. Mm-Hmm . <affirmative> , they don't care. And that's the beautiful thing. This is the amazing part about businesses where you think you could, you know, very reasonably build a two to 20 or even $50 million a year business venture capital is gonna stay far away from them if they don't think there's a billion dollar opportunity, a hundred million dollar a year opportunity for, for hopefully a few companies in that sector, they're not gonna invest. And so those small markets are absolutely beautiful for entrepreneurs who are looking to build something that is great instead of big. And I , I would encourage founders who are looking at SparkToro style , you know , businesses or snack bar style businesses to, to pursue those sort of <inaudible> markets, right? Small to medium sized markets are absolutely outstanding. There's a hundred times more of them than there are in markets .
00:30:44 · Pablo Srugo
[00:30:44] S0: That's what I was gonna ask. You think there's a lot of these opportunities.
00:30:45 · Rand Fishkin
[00:30:45] S1: Oh my god . I mean, there's probably , the number is probably literally tens to hundreds of thousands of times more, you know, $20 million a year opportunities than there are $200 million a year opportunities. It's not a linear scale at all. I, I don't think anyone in economics would argue that it is, and this is, you know, this is true because of geography. It's true because of of field size. It's true because of, you know, hey, interior designers in Los Angeles really need a this, and one's in New York needed that. And there's only a few things that they both need, or, you know, that every interior designer around the country needs. And so if you can build a business that targets these fields, right? There's a lot of spend, there's a lot of rich people in New York and LA want their houses designed, right? And so you , I just think the, the quantity of business opportunities there is completely overlooked. And that also makes competition way easier. Hmm . Right? Entering those markets, serving that small group of people really well. Hyper targeting marketing to those people is far cheaper. Cost of customer acquisition is gonna be cheaper. Networking in that field is gonna be easier. Advertising to that field is gonna be less expensive. Onboarding those people and keeping them because there's less competition, all those things are just made simpler. Building a small team is easier than building a big team because you don't have to hire and manage as many people , uh, contracting and outsourcing is easier. What about