A Product Market Fit Show | Startup Podcast for Founders
00:12:58 · Pablo Srugo, Shmulik Fishman
[00:12:58] S1: What was hard about it? What are you building? From the outside looking in, you're like, okay, we've got this resume builder thing. It's got the main KPIs on it. I feel like somebody should pay for that. [00:13:05] S0: What is novel about Argyle, what we had to build literally from scratch is connectivity into payroll processors. Some history or some stats to make it interesting, the IRS says that there's about 6,000 registered payroll service providers, which is a really wonky term, but basically, it just means there's 6,000 entities that are allowed to submit payroll on another company's behalf. That's a super fragmented market, and in order to provide income verification, Argyle needs to connect into every one of those platforms. For any business of value to use a verification service, you need to have most of that connectivity built out. The initial wedge and, again, totally on accident just because there was this huge correlation between people that worked for Avis and gig workers, we had this natural wedge at the beginning where we were building out connectivity just into gig platforms so Lyft and Uber and Instacart and DoorDash, Lugg. At the time, Postmates was still around, and that is tough to do if you're doing it all by yourself in the very beginning. You're having to build microservices into third-party applications that you are not under the control of, and so you need to build into their spec.
00:14:33 · Pablo Srugo, Shmulik Fishman
[00:14:33] S1: How did you think about when to charge? I'm on this question because I think the lean startup methodology would tell you, as soon as you deliver a unit of value, try and figure out what it's worth, especially, as a first-time founder, what you're going in with or what you're hammered with, if you go to an incubator accelerator, all those sort of things. You didn't do that, and you didn't do that with the experience you had in your previous company. It was deliberate. Curious if you could just dive a bit more into how you thought about it back then and where you were trying to get to in that first year before you started charging. [00:15:05] S0: I'm a big advocate for having a pilot customer that you're giving the product away for or the feature away for free for a period of time. They're helping to design the first version of it with you, and we still do this today when we release new product. The first couple of people that use the new feature, we give it to them for free for a little bit because we want them to see value in it and for it to be part of – when it becomes part of a general release, then you should start to charge for it. I think it's important to get people using your product and to be able to get feedback on your product, even if it's negative, and then put the pricing part on it. That's been a big part of my strategy, and I think it works at different levels of scale as well.
00:15:05 · Shmulik Fishman, Pablo Srugo
[00:15:05] S0: I'm a big advocate for having a pilot customer that you're giving the product away for or the feature away for free for a period of time. They're helping to design the first version of it with you, and we still do this today when we release new product. The first couple of people that use the new feature, we give it to them for free for a little bit because we want them to see value in it and for it to be part of – when it becomes part of a general release, then you should start to charge for it. I think it's important to get people using your product and to be able to get feedback on your product, even if it's negative, and then put the pricing part on it. That's been a big part of my strategy, and I think it works at different levels of scale as well. [00:15:52] S1: It's funny; you talk about design partners. I was actually just watching the review of the AI Pin and also the Rabbit one or whatever, and that was the comment. These products are over MVPing, like the humane pin. It's just coming out half-baked. It's worse with the hardware, obviously. You come out half-baked with all these promises of features in the future. You've just taken the MVP thing too far, right? I think what you're saying is, especially I think with enterprise, the design partner helps you get to figure out what the real MVP is that you can really charge for. [00:16:26] S0: Yes.
00:16:26 · Shmulik Fishman, Pablo Srugo
[00:16:26] S0: Yes. [00:16:27] S1: The risk is you're building something that actually is never a top priority, never going to become a top priority. You're getting stringed along. What signals are you looking out for to make sure that there's something real here? When you decide to charge for it, the money will be there. [00:16:42] S0: To use your AI Pin as an analogy, I like building tools that are just a better mousetrap instead of something that is actually new, and I think the AI Pin is like that's a net new product, which makes it even harder to extract value out of or to price around. Everything that Argyle builds, even in the early days, is just a better, faster, cheaper, more automated version of something that a business is already paying for. Every lender already pays for income verification services and to know income by year. We're just giving you the next generation of it. I think it's easier to price around that because there's already a reference of value with a client, but they're already spending on it. They're not allocating new spend, or having to get a new PO, or get a new approval. I like to say that every business spends on income verification services already. You can go to your P&L. We do this as part of our sales cycle. How much money do you spend on this today? We're going to cut your cost. That’s a very different way of communicating with a client, with a prospect than trying to convince them that they need a widget that they're not buying today. We just have a better widget.
00:17:52 · Pablo Srugo, Shmulik Fishman
[00:17:52] S1: I think that makes a lot of sense, and it's an important distinction if you're selling B2C or B2B. I think B2B is clearer, and there's already budget allocated and being spent on something. It's not budget risk, it's not demand risk they need to solve for, which is really what an MVP does. It's actually more product and value. Are you actually going to be that much better than that other thing? That just takes time. [00:18:14] 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 or for your client. [00:18:41] S1: I think that's what – that's another thing I've heard as many times going through these interviews is – in your case, you're a repeat founder, a little bit different, but it's not that different in the sense that, as a startup, you have no credibility. I think sometimes founders forget that. You have no credibility. The larger enterprise you're selling into, the less credibility you have. [00:18:56] S0: Correct. [00:18:57] S1: Unique ways to establish that and, having worked with someone for months as a design partner, definitely can check that box.
00:18:57 · Pablo Srugo, Shmulik Fishman
[00:18:57] S1: Unique ways to establish that and, having worked with someone for months as a design partner, definitely can check that box. [00:19:03] S0: A hundred percent. Use that lack of credibility, if you can, to your advantage. You're going to be allowed to give out product that's more MVP, to get feedback in a way that the big behemoth in your space can't do, so there's a way to have some asymmetry there. [00:19:21] S1: Walk me through this first paying customer. It actually wasn't in the same vertical. It's a different vertical, a lending use case. How did you find them? Why did you find them, all the story around them? [00:19:31] S0: So many of our clients have found us via Google search. SEO optimization I'm a huge fan of, but Level found us through the internet. If you're trying to verify income for gig workers, there's a lot of search like verify Uber, gig worker income. You can run search queries against that or ads against that, and that's how they came to us. Equifax doesn't verify gig worker income, so there's this cool whitespace that we completely fell into on accident where, our gig integrations, you just could not get that data through a credit bureau. There was something cool that was just happening there organically. [00:20:14] S1: Were you optimizing for those keywords before you even had a customer in the space, or did they find you a different way and then you realized that was that was a whitespace? [00:20:22] S0: Yeah, gig income verification, those are great keywords. They still work today. If you type that in, Argyle comes up.