A Product Market Fit Show | Startup Podcast for Founders
00:31:19 · Pablo Srugo, Shmulik Fishman
[00:31:19] S1: Just to be clear, these are companies using paper, or this is – who's using paper? How does that generate 8 billion in revenue? [00:31:26] S0: Yeah. It's the cost of all the staffing agencies that pick up phones, that send out emails, but it's also a lot of servicing companies. There's a great partner we have today. There's also part of this analysis called Ocrolus, and the only thing that Ocrolus does is scan PDFs and give you the OCR data of them, right? It's a huge business because there's so much paper out there. There's all these sort of businesses that are just providing incomes verification for paper-based models, and that's what the $8 billion is. [00:31:58] S1: That was -- your story was, listen, if we can just tie into all the payroll, we'll have all the data, and then we can just automate the whole thing. No need to call. No need to email. It'll all be verified. [00:32:06] S0: Just a great formula is find a better mousetrap. Build a product that's just a better version of a product that already exists. First, it's a lot easier to sell. There's a bunch of people that already buy the product. It's a lot easier to invest in because it's just like here is the higher margin version of something that's already out there, and that's the formula we were using.
00:32:06 · Shmulik Fishman, Pablo Srugo
[00:32:06] S0: Just a great formula is find a better mousetrap. Build a product that's just a better version of a product that already exists. First, it's a lot easier to sell. There's a bunch of people that already buy the product. It's a lot easier to invest in because it's just like here is the higher margin version of something that's already out there, and that's the formula we were using. [00:32:28] S1: That's actually a question for me which is, when you're selling to these companies, whether the lenders or whoever they are, are you selling an ROI story, or are you selling just a replacement story? Hey, today you're paying X thousand dollars a month for verification. Pay me half of that. I'll do the same thing. Is that more the pitch? [00:32:45] S0: It's both, but we lead with the latter, which is we're a way to reduce costs. We're a more automated solution. You're going to need less staff. I know some people are worried about saying that out loud. Argyle means you have to have less personnel internally or externally. There's less manual review. You're going to just spend less on verification services. [00:33:04] S1: One thing that I find is hard is when you go in and you say you're going to save X hours, right? Do you make that a dollar value? How do you get as hard as possible on the clarity of the savings?
00:33:04 · Pablo Srugo, Shmulik Fishman
[00:33:04] S1: One thing that I find is hard is when you go in and you say you're going to save X hours, right? Do you make that a dollar value? How do you get as hard as possible on the clarity of the savings? [00:33:15] S0: Again, with Equifax, they have a rack sheet, and we've, in a non-sophisticated way, given pretty big discounts against the Equifax rack sheet. We can just articulate savings against your Equifax bill. Another thing that we would do in the early days and we still do it today is we would ask our clients share with us. What are you spending on verification services every year? You spend it already. The reason why we're asking is because we want to reduce your cost, right? Tell us what you're spending. We want to give you a proposal that's cheaper, and it's also a great way to get market intelligence on what price points are, what people – what businesses are spending on this product. [00:33:52] S1: Those are the two things and you're selling B2B is, one, find a way to kind of get credibility, which is this idea of, obviously, if you're from the space, from the industry, but otherwise, design partners, getting things for free and just being able to get the product to a certain level. The second piece is proving out clear ROI, whether you're adding revenue to them to – or you're affecting KPI of that department or reducing costs, but the harder the better, right? The softer, oh, it's efficiency. Oh, it's time saving. It's four hours a week, whatever. It's just hard to rise to the top of the list and get the adoption you’d need.
00:33:52 · Pablo Srugo, Shmulik Fishman
[00:33:52] S1: Those are the two things and you're selling B2B is, one, find a way to kind of get credibility, which is this idea of, obviously, if you're from the space, from the industry, but otherwise, design partners, getting things for free and just being able to get the product to a certain level. The second piece is proving out clear ROI, whether you're adding revenue to them to – or you're affecting KPI of that department or reducing costs, but the harder the better, right? The softer, oh, it's efficiency. Oh, it's time saving. It's four hours a week, whatever. It's just hard to rise to the top of the list and get the adoption you’d need. [00:34:23] S0: People like analysis that has dollars and cents in it. There's no reason to get more fancy. [00:34:28] S1: Let me finish off on these two questions. You raised a Series A. You start building out all these APIs. When do you have a sense that the – it's still a bit of an idea? I mean, obviously, you have customers. You have some revenue, but it's a bit of a thesis. I'm going to invest in all this infrastructure, and revenue will come out the other side. When do you start to get the feeling, okay, know what? This is actually working. My idea that I had on paper is becoming reality.
00:34:28 · Pablo Srugo, Shmulik Fishman
[00:34:28] S1: Let me finish off on these two questions. You raised a Series A. You start building out all these APIs. When do you have a sense that the – it's still a bit of an idea? I mean, obviously, you have customers. You have some revenue, but it's a bit of a thesis. I'm going to invest in all this infrastructure, and revenue will come out the other side. When do you start to get the feeling, okay, know what? This is actually working. My idea that I had on paper is becoming reality. [00:34:58] S0: Once SoFi and LendingClub and Checkr and Newrez and Fannie Mae – once we started to get these sort of logos just piloting with us – and the reason why we are where today is because of these investments with clients we made several years ago. It takes 12 months, sometimes 24 months for a client to really use us for their main verification flow, but once these enterprise names start to use our service and give us positive feedback, it was happening in the 2021, ‘22 timeframe. That's when I was like, okay, we have a real business here. It's still subscale. In many ways, Argyle is subscale today if you're comparing us to Equifax, but I think, once those logos started to use us, it wasn't a – the game got much more serious. [00:35:53] S1: Would you say that's when you felt like you had true product market fit?
00:35:53 · Pablo Srugo, Shmulik Fishman
[00:35:53] S1: Would you say that's when you felt like you had true product market fit? [00:35:57] S0: The product market fit I felt pretty early, even in the gig space, because it just was such an addictive product. Even with Level Goals, you just – they just wanted to use it for every loan they transacted with. I didn't realize how big the business was until we exited the gig space or until we went to all types of income. A good way to know product-market fit is if you have a lot of clients that are addicted to using your product and keep using it day after day, and that we had. [00:36:28] S1: Perfect. Then the final question we like to end on is, if you could go back, whether at the beginning of this startup or the beginning of your first startup, with one piece of advice, what might that be?