A Product Market Fit Show | Startup Podcast for Founders
00:00:00 · Tushar Mishra
[00:00:00] S0: The first mistake we made was launch our app and our assumption was we make it free. We sign up a bunch of customers. They start running a few checklists. As they get addicted to the app, now we turn on monetization and then our revenue would go like this. So we quickly got traction, so we got even more excited. Now we just need to turn the faucet on. And that moment never happened because since the customers were not paying anything, they did not have a lot of skin in the game, then we would see there's actually nobody using the app in these businesses. It is really hard. Like, that is the moment. Like, when you sell, you have whoever is buying the product. If you don't do anything in the next two to three weeks, like set them up, get them excited. Anything after that is 10x harder. Basically, you have to go through the whole sales cycle all over again and you're setting up yourself up for failure. It's increasingly becoming easier to build software so that barrier is like getting eliminated now which means that that focus on PMF becomes even more important, which is, okay, how do you actually stay disciplined? How do you have a thesis around what you're building? How do you keep active, which is resilience? And then there's so much noise around, which is, hey, this company started in four months, they hit 100,000,000 naira. Right? So we... Like, people saying, like, that's normal. Those are outliers. That's product market fit. Product market fit. Product market I called it the product market fit question. Product market fit.
00:01:23 · Pablo Srugo, Tushar Mishra
[00:01:23] S1: Product market fit. Product market fit. [00:01:26] S0: I mean, the name of the show is product market fit. [00:01:29] S1: Do you think the product market fit show has product market fit? Because if you do, then there's something you just have to do. You have to pick up your phone. You have to leave the show five stars. It lets us reach more founders, and it lets us get better guests. Thank you. Tushar, welcome to the show, man. [00:01:45] S0: Thank you, Valdo. Great having to share my insights with the... With your audience. [00:01:51] S1: It's gonna be a good one, man. So, I mean, you're... You founded Delight Tree. Just closed the $25,000,000 round from Excel. Raised about $50,000,000 total so far. And you're... You've built this kind of AI powered software for franchises. So if you think... I mean, the way I think about it is if you're a franchisor and you, you know, you're gonna sell franchises over time and people are gonna open up different franchises and you're want them to run a certain certain way, you need a playbook for the franchisees. And in the past, that was like a PDF document and a bunch of different things. Now it's all powered by Delight Tree.
00:02:20 · Tushar Mishra, Pablo Srugo
[00:02:20] S0: Absolutely. Yeah. That and much more. Even though franchising is a massive industry, I'll talk more about it, but most people think of like Subway at McDonald's. So imagine your local McDonald's. When you go to your local McDonald's, there's usually a lot happening there. So there's... You need to train the employees, you need to make sure the stores run exactly the same way no matter which one you go to. You want to run like LTOs and new campaigns that you want to do across hundreds of locations. So how do you coordinate between all of that? How do you make sure employees have the best experience? How do you keep your team trained, answer all their questions? And essentially these franchisees are the brand's customer. So if you open a local McDonald's, you're essentially paying royalties to McDonald's every month from your top line. So you expect more support from them to help you be a better operator, to help you make more money. And so all of that support that you expect, we basically enable brands to deliver that to franchisees and frontline employees working at those locations. [00:03:18] S1: So let's start where we always do with the the PMF moment. You you were telling me that, you know, at first you were selling to kind of smart... Small locations, you know, franchises with like three to 10 locations sort of things. And then you landed a really big one. Maybe walk us through kind of what happened there and why that was PMF for you.
00:03:18 · Pablo Srugo, Tushar Mishra
[00:03:18] S1: So let's start where we always do with the the PMF moment. You you were telling me that, you know, at first you were selling to kind of smart... Small locations, you know, franchises with like three to 10 locations sort of things. And then you landed a really big one. Maybe walk us through kind of what happened there and why that was PMF for you. [00:03:32] S0: So essentially, we were sending out like a bunch of these emails and we got one brand which had about 50 locations back then and was growing really fast. They got interested. We signed them up, onboarded them on the app, they started using it. The moment that I knew that we have Product Market Fit or it was working was when the CEO called me. She invited all of her HQ team members to an Airbnb, this was in Dallas, and invited me there and wanted to do a full day session of how they're using the app, what all we can do to make their experience better. And in her own words, they had assumed they would need to hire more people to sort of ask their opening more location. But because of the light sheet, they were able to do it with the current capacity that they had. So they wanted to go really deep and start to use more and more of the app. That's when we knew that something is working. Somebody is actually willing to spend their time and not just their time, but all their corporate team members in trying to help this little tiny startup and is actually seeing real value to their business.
00:03:32 · Tushar Mishra, Pablo Srugo
[00:03:32] S0: So essentially, we were sending out like a bunch of these emails and we got one brand which had about 50 locations back then and was growing really fast. They got interested. We signed them up, onboarded them on the app, they started using it. The moment that I knew that we have Product Market Fit or it was working was when the CEO called me. She invited all of her HQ team members to an Airbnb, this was in Dallas, and invited me there and wanted to do a full day session of how they're using the app, what all we can do to make their experience better. And in her own words, they had assumed they would need to hire more people to sort of ask their opening more location. But because of the light sheet, they were able to do it with the current capacity that they had. So they wanted to go really deep and start to use more and more of the app. That's when we knew that something is working. Somebody is actually willing to spend their time and not just their time, but all their corporate team members in trying to help this little tiny startup and is actually seeing real value to their business. [00:04:40] S1: So I think if I kinda say back to you, like, the key piece of all that, yes, it was a big customer, but it was the fact that they were making it core to their operations that felt like product market fit you? [00:04:49] S0: Absolutely. So they were not just making it core to their operations, they were making it a part of one of their key strategies on how they would grow. [00:04:56] S1: And when was this, by the way?
00:04:56 · Pablo Srugo, Tushar Mishra
[00:04:56] S1: And when was this, by the way? [00:04:57] S0: Like, what year? This was 2023. [00:04:59] S1: When did you start the business? [00:05:00] S0: We started the business late twenty twenty. [00:05:03] S1: Okay. So it's like two and a half, almost three years into the business when you have this big product market through moment. [00:05:08] S0: Absolutely. [00:05:09] S1: Where were you at before that? Like, what what kind of customers were you selling to and kinda how are they using the product? [00:05:15] S0: So before that, we were doing a lot of iterations of the product. So we would launch a product and then we would try to improve it. Most of our customers were six units, somebody who was using in California. They had a small restaurant. [00:05:29] S1: And was that still like franchisors or this was somebody that just owned like six restaurants, they wanted their managers to kinda like use the app? [00:05:36] S0: It was a mix. So it was still not completely focused. So some of them were non franchisee. They just had six restaurant. They wanted the managers to use it. We had one or two like franchisees, but none of the brands. So this was the first brand that we really got. [00:05:51] S1: How did you close this brand? Walk me through the kind of sales process. It's always hard to get your first meaningful logo.