A Product Market Fit Show | Startup Podcast for Founders
00:38:37 · Pablo Srugo, George
[00:38:37] S1: Tell me a bit about attracting both. Like, what's your pitch? I mean, the pitch to junior, we can start that as probably the easier one, which is, like, probably just, hey. You wanna come somewhere and, like, learn incredibly fast and just be tasked with way more responsibility than anywhere else? Come here. I would assume that that's your pitch, you tell me that's the the senior one, that's the that's the harder one. [00:38:54] S0: The pitch is I have a fancy story about, you know, how we're going to improve global GDP and the we're not pitching that. We're not pitching the mission at all. What we pitch is come and do your life's work with a very talent dense ambitious group of people for meaningful relationships, work on tough problems, have maximum autonomy. That's what we pitch. We pitch the team, we pitch our DNA. I pitch a bit of my scar tissue and my experience that we're probably gonna avoid some common mistakes if I don't do anything stupid. Well, half of the team is second time founders, people get along with each other, when someone visits us, they see in people's eyes, People are very passionate about the work. We do accounts receivables. This isn't, you know, Twitter or SpaceX.
00:39:39 · Pablo Srugo
[00:39:39] S1: But, you know, what you're mentioning there, talk a lot about network effects. You used to talk more about it because it used to be like marketplace were the thing. But maybe talk about it less these days. But network effects are obviously a core emote, and I think the most powerful virtuous loop or network effect, whatever you wanna call it, is the people you hire. Because if you get that right versus wrong, the delta on what you end up is massive. Even if you just you just think about it, you're like, you're hiring your fiftieth person, and you finally got somebody rock solid. They're amazing. And you convince them, and you can pay them or whatever. And they come on board, and they meet five, ten people, they start working, they realize these are b level people, that person is not retaining. That person will not last, they will leave. Right? And then you think about the other side of it is you're hiring 50 people and everybody's rock solid. Not only is that person going to retain, but you're actually your inbound is gonna change because your word-of-mouth from the people you have is gonna be their peers. And so it's it's one of these loops that you have to work so hard to get right at the beginning, and it pays dividends for frankly years and years to come.
00:40:40 · George, Pablo Srugo
[00:40:40] S0: It's so well said, it's spot on. It's the number one network effect. People look at people for on the team, and they think that they're impressive. It's not about the founders after like the first few hires. Also, one thing that I deeply believe in is that a seven, like a seven out of 10 is actually one of the most dangerous hires you can make because this person will have enough redeeming qualities to shine, and we will be very slow about letting them go, maybe we won't, and over time they will shift the gravitational pull of the company to just a bunch of sevens. [00:41:12] S1: Did you make that mistake once? [00:41:13] S0: Yeah. So many times because I was very desperate for help and or I misjudged or didn't have the right process or it's just not a fit. [00:41:21] S1: And the outcome is what? They just obviously, if there are three, you get rid of them in two weeks. Right? But with a seven, I guess your point is they just stay for a lot longer than than they should. [00:41:29] S0: I'll just speak for myself. I'd like to think that I'm hardcore all these things. The reality is I'm not that good letting people go. [00:41:35] S1: No one is. Or very, very few people are.
00:41:35 · Pablo Srugo, George
[00:41:35] S1: No one is. Or very, very few people are. [00:41:37] S0: It's just it's hard. It's hard. At least to me, it's very hard. I wanna, like, look for a way to get a you a chance. I like to think that, like, all the mistakes have lessons. Okay. We made this mistake. That's actually a good thing. Can we just, like, remember this for future? It's this car tissue. Let's learn from this. A seminal have enough redeeming qualities where outside of mistakes, they're like, oh, like George is not that excellent, but actually this was like a good day for him. Like, this was like a decent thing that he said in this meeting, and this line of code is like pretty good. Like, let's see what next week brings. And so enough redeeming qualities where they'll just stay forever versus, a five, then I just fuck it up, and then it's easy to fire. Right? [00:42:15] S1: Tell me just a little bit before we wrap up here. The series a bar has only gone up and up. Right? I think the median series a is, like, 3 and a half million of ARR and 15,000,000 series a. You raised a 25,000,000 series a, which is probably like ninetieth percentile just in terms of size. Was that inbound preempted? Did you run a process? Like, how did that happen? [00:42:33] S0: We ran a process. Like, I made slides and we just did it. I think that the number is large and we can discuss why it's so large, and that wasn't the intention, but and it ended up being large. I think this typically happens.
00:42:33 · George, Pablo Srugo
[00:42:33] S0: We ran a process. Like, I made slides and we just did it. I think that the number is large and we can discuss why it's so large, and that wasn't the intention, but and it ended up being large. I think this typically happens. [00:42:47] S1: That wasn't the intention? That was gonna be my question. Do you go out and be like, we need 25 or did you go out and be like, we need 15 or something more closer to the median? [00:42:54] S0: Yeah. More closer to the median. I'm not a venture capitalist, but my take on this is that if you come out for the a, and if anyone is listening to Shtetl's or if you come out for the a and you say like low teens or like not even below a 10, it doesn't seem like you are ambitious and it just doesn't make sense for like VC math. I'm not the spendiest person. We're actually like [00:43:18] S1: I don't disagree, but just to be clear, does that mean you go for 20 or do you go for 15? Like, what's what what's your mindset? [00:43:24] S0: We went for 15.
00:43:24 · George, Pablo Srugo
[00:43:24] S0: We went for 15. [00:43:25] S1: Yeah. I mean, what what you're saying makes sense to me. Like, I always wonder how the companies that are getting these 25 or 30 a's, how do they go? Like, if it's preempted, it's different because then you just kinda like, what just happened? But if you go out, what do you do? Do you go out with 15 is the median. So, like, no nobody can say anything about that. It's like, listen. This is what's happened. This is the market. It's 15, so I'm going for 15. I think you're right. If you go for 10, then it just the this nuance is like, well, if 50% are more raising 15 or more, why do you not think you can do it? Right? So it's like, ugh. But you go for 15, nobody can blame you. And then maybe with, you know, momentum and FOMO, you kinda get to twenty twenty five. [00:44:00] S0: If you want, but my take is that it means absolutely nothing. In my heart of hearts, you know, how much you raised or what you're valued at means very little. [00:44:09] S1: I agree. [00:44:10] S0: I wouldn't optimize for like a large number. I mean, I I feel a tremendous amount of pressure to to deliver based on the numbers that were given, and and and we were given this mic deployed effectively. And so, like, having to just sit there is not it.