A Product Market Fit Show | Startup Podcast for Founders
00:00:00 · Shmulik Fishman, Pablo Srugo
[00:00:00] S0: Put yourself in the mind of your client. He has to pitch it to his boss as well, and the pitch is so much easier internally when you can say I've tried this new product. It's better than the current product we're using today. Here's the price points. Here's how it works. I've done it a hundred times. I can show you it. I like it. All of a sudden, you've made the pitch so much easier for your buyer. [00:00:25] S1: Welcome to the Product Market Fit Show, brought to you by Mistral, a seed stage firm based in Canada. I'm Pablo. I'm a founder turned VC. My goal is to help early-stage founders like you find product-market fit. Shmulik, welcome to the show. [00:00:42] S0: Thank you for having me. I'm excited to have this conversation. [00:00:45] S1: You've been working on Argyle now for a few years. You're a multi-time founder. You'd started a different company before that and sold it. I don't want to go too deep into that story. I'm sure it'll have to do with the origin story of Argyle, so let's start there. How did you come up with Argyle in the first place?
00:00:45 · Pablo Srugo, Shmulik Fishman
[00:00:45] S1: You've been working on Argyle now for a few years. You're a multi-time founder. You'd started a different company before that and sold it. I don't want to go too deep into that story. I'm sure it'll have to do with the origin story of Argyle, so let's start there. How did you come up with Argyle in the first place? [00:01:03] S0: Yeah, this is one amazing accident to trace the origins of Argyle or to go back to 2014 in that moment where there was Uber for everything. I was living in San Francisco at the time, and you could click a button and get cookies delivered or get your groceries delivered. The one button that you couldn't click yet was get your car picked up and returned to you. With a co-founder, we set out to build Uber for parking, and it was a smashing success from a product standpoint. Everybody wants that valet experience. We were quite lucky. We raised about $50 million over the course of several years, but the business was very much from a unit economic standpoint not profitable. I think we had that insight early on, and we pivoted the business to an enterprise motion where we were selling software to large corporations. [00:02:00] S1: I'm curious. What was the model? What was that valet model? That was just like I leave somewhere. I just click a button. Somebody picks it up, parks for me, gives it back. Was that the idea?
00:02:00 · Pablo Srugo, Shmulik Fishman
[00:02:00] S1: I'm curious. What was the model? What was that valet model? That was just like I leave somewhere. I just click a button. Somebody picks it up, parks for me, gives it back. Was that the idea? [00:02:08] S0: You have it, you have it. I know, it sounds fantastic when you hear it. The issue with it will for always be that you need a human on every other block in a city, and you need parking spots everywhere in a city. It's just the talk about fixed cost, and so the more cars that you park, the more money you spend until you theoretically get to someplace where the numbers cross. We got the closest in Seattle, if you must know. There was a lot of density, which was the gain there. [00:02:39] S1: It's funny how these models – I think back 2014. That's when I started my company GymTrack, which was about tracking workouts in the gym, and it's also one of those it sounds awesome when you hear. Doesn't make that much sense when you try and make it happen. All these things get funded then. I guess, now what gets funded is anything with AI, whether it makes sense or not, but there's these eras, right? Back then, it was these marketplaces or quantified self. If you said that, there was money for you.
00:02:39 · Pablo Srugo, Shmulik Fishman
[00:02:39] S1: It's funny how these models – I think back 2014. That's when I started my company GymTrack, which was about tracking workouts in the gym, and it's also one of those it sounds awesome when you hear. Doesn't make that much sense when you try and make it happen. All these things get funded then. I guess, now what gets funded is anything with AI, whether it makes sense or not, but there's these eras, right? Back then, it was these marketplaces or quantified self. If you said that, there was money for you. [00:03:05] S0: Yeah. Since we're going down the tangent, I also think another thing that gets funded is product that investors like to use themselves. Every investor would love their car picked up in front of their office and dropped off in front of a restaurant in the evening, and we had that. We had a product that our investors wanted to use. It was so easy to pitch the product, and that's what really got us going. It's just the underlying business model is something I really have become much more focused on as I've grown as a founder, and sometimes and I think you're going to hear with Argyle, it's the boring stuff that makes money. Sometimes the sexy, interesting things are really great ideas, fun to use but aren't money makers, aren't durable businesses, and I think that's what we had. [00:03:56] S1: That's right. They get you like we won demo day. You know what I mean? [00:03:58] S0: That's right. [00:03:58] S1: They get you that, but they don't necessarily get you what you really want, which is an outcome.
00:03:58 · Pablo Srugo, Shmulik Fishman
[00:03:58] S1: They get you that, but they don't necessarily get you what you really want, which is an outcome. [00:04:03] S0: We had an aha moment in that business in 2016 about where – we were like, hey, we don't want to keep spending money. What is the business inside of this business that is real, that people would use, that has positive unit economics? What that was was software, being able to give fleet management software to large fleet managers like Avis, like Enterprise rental car. That was a real company. We pivoted the business. I'm fast forwarding a little bit, but I ended up in the later years, around 2018, spending an enormous amount of time at airports because that's how the fleet manager model works. You stick a lot of cars in an airport. They hub and spoke model out to the city. I became super interested in not the cars at the airport but the people driving them around, and getting somebody to actually work for four weeks or five weeks to drive vehicles around from the airport to the city is hard work. They're very fickle workers. [00:05:08] S1: This is what? This is like fleet – this is like Hertz or Avis, like fleet management? The cars end downtown, but they need to be by the airport. [00:05:14] S0: You have it. [00:05:14] S1: Just a human to go drive it, okay.
00:05:14 · Pablo Srugo, Shmulik Fishman
[00:05:14] S1: Just a human to go drive it, okay. [00:05:17] S0: I didn't know it at the time, but the problem that Avis, or Hertz, or Enterprise has is actually very similar to the problem that Chipotle, or Target, or Best Buy, or Walmart have. It's high volume hiring with people that don't last that long, and so you're constantly having to rehire and rehire your staff. The best way to do that is with software where you don't have to individually interview them. There's ways to take data to understand what's the likelihood that they'll show up for work? The gimmick that we had or the trick that we had with Avis was can we get one of these applicants to log into their Uber account or their Lyft account, and we would be able to surface to Avis, hey, Shmulik has driven a thousand miles, has driven on Uber for six months, has a 4.5 rating? This is somebody that is going to be willing to drive cars for you. That was the very early stages of what I would now consider pre-employment screening services. I know, a really wonky long term. [00:06:20] S1: This was at Argyle, or this was still at KAR Global, your last startup? [00:06:23] S0: I had Lester Adam. I was fooling around with a lot of different concepts. This was one of them. I was lucky enough to meet my co-founder, Audrius, who's now Argyle's CTO, and we had the luxury of time. We got to play around with ideas, and this was one we were super excited about. We knew contacts at Avis.