A Product Market Fit Show | Startup Podcast for Founders
00:00:00 · Pablo Srugo, Yoav Vilner
[00:00:00] S0: Yoav, welcome to the show. [00:00:01] S1: Thanks for having me. [00:00:03] S0: Look, just looking through the profile of Walnut, I mean, you started right after the pandemic started in August 2020, if I'm not mistaken. Then about a year later, mid-2021, you'd raised a $50 million series A, which is spectacularly fast. I think most founders dream of getting from zero to one that quickly. That's really what I want to do here is just dive in as deep as possible. We're all about zero to one here. 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. I want to dive in to right as you started and then everything that you did until you really had product market fit. Maybe with that said, I know before Walnut, you had another startup, I think it was called Ranky. Maybe we can start there. If you could, just tell us a little bit about what that was about and then what happened in the years between that and Walnut.
00:01:06 · Yoav Vilner, Pablo Srugo
[00:01:06] S1: First of all, it was a series B, not a series A, but who remembers, right? It's been a while. Yeah, so I had a couple of companies in the past. One of them was one of the first companies globally to help startups with anything growth, anything marketing, anything go to market. It was a long time ago. Started off in Tel Aviv, but grew to places like London and New York and other locations where most of it started as raise a seed bound, ended up using our services for doing something with their initial funding and helping them go zero to one. Some of them are unicorn companies today and we were the first team that helped them scale. That was probably 12 or 13 years ago. Then I also was building a startup right before this one that was using AI and that was before it was cool. It was around 2017. It was building out AI models for trying to help spot the bad guys online, people that stalk children, people that are bullying kids, people that are trying to meet kids via all kinds of social networks. We had a pretty sophisticated data science ability to do that. We raised about a $15 million seed round it was. All in all, it was a great experience. With all that, I have to say, Walnut was the fastest company I've built to date. [00:02:48] S0: Maybe just walk us through the origin story of Walnut. People have been doing demos for as long as I can remember. For you to try, and let's say, crack that market with something that's quite different, where does that idea even come from?
00:02:48 · Pablo Srugo, Yoav Vilner
[00:02:48] S0: Maybe just walk us through the origin story of Walnut. People have been doing demos for as long as I can remember. For you to try, and let's say, crack that market with something that's quite different, where does that idea even come from? [00:03:07] S1: What's cool about this idea is, if it wasn't me, it would've come to anyone, right? You try to show a product when you work for a B2B company, everything breaks. There's always a problem to customize the experience. The buyer will end up getting screwed with a really, really generic sales experience and they end up not wanting to buy. You mentioned the wait list in the call we had before the recording. It's just interviewing our target audience and grow a wait list of VP of sales that wanted to let their salespeople own demos, create their own demos, not needing to talk to anyone from RND product or design to create sales demos. Then we just interviewed VP of sales, CROs from global companies. The response was insane and they started piling up in our waiting list, and only then I felt comfortable enough to go out and raise the seed round. [00:04:05] S0: Where did the idea even come from in the first place? Was this a frustration that you had personally with demos or was it more a market analysis thing? How did you even get there to even start doing, let's say, customer discovery?
00:04:15 · Yoav Vilner
[00:04:15] S1: The initial – well, personally, for me, the first time that I encountered how crappy sales demo was when I had that marketing company just told you about where I saw tech startups spending millions just to get all kinds of [unclear] to schedule the demo or to see what it's about or try and win them over the competition. Then whenever they tried showing the product, something ended up breaking. It was a really long time ago. I just carried that thought. My co-founder was a tech leader on the side of that was selling software to enterprise companies or on the side of enterprise companies buying software from small startups, and every demo that he has experienced has been completely broken. We just took that thought in mind. We interviewed the proper target audience. Honestly, when you just start turning a VP of sales or a chief revenue officer, your salespeople will not have to rely on anyone from the back-end. It was just a shut up and take my money type of moment. We built a very unappealing MVP where you could just take one screen off your entire SaaS platform, customize it in a drag and drop way, a little bit a week’s editor, just customize data and it's of course not connected to your back-end anymore, so it's not going to break or it's not going to freeze even if you have a major demo in an hour. That was the MVP also that we build out.
00:05:47 · Pablo Srugo, Yoav Vilner
[00:05:47] S0: Is that the main value prop at the beginning was just something that you could rely on or was it – because today you have different value props around the number of demos that you can do, the speed of getting a demo done and where you can maybe embed demos and these things. What was the original main value prop really at the beginning? [00:06:03] S1: It was actually twofold. I know most of the online material would say you need to have one when you're at MVP, but we had two value props for the same MVP. One of them was, it's not connected to your back-end anymore. It's not going to crash, which happens a lot during demos. The second thing is you can drag and drop your way into something customizable that contains your client's data. We still didn't raise money at that point. I think it was still pre-seed. We didn't spend a lot of time to build out a sophisticated MVP that can carry a lot of value props. It was just all derived from the same feature. [00:06:45] S0: How did you go about, I mean, maybe just walk me through the customer interview process because I always find that’s really important. How many of those did you do and how did you go about getting people to even give you the time when you didn't even really have a product ready to sell?
00:06:45 · Pablo Srugo, Yoav Vilner
[00:06:45] S0: How did you go about, I mean, maybe just walk me through the customer interview process because I always find that’s really important. How many of those did you do and how did you go about getting people to even give you the time when you didn't even really have a product ready to sell? [00:07:00] S1: I think what played out for our benefit was timing. It was the first or second lockdown of COVID worldwide and salespeople had to adjust to a new reality where they cannot fly out and meet someone face to face. Then if you just have to open your laptop and show a demo, even if it breaks, you're going to make a joke or talk about the weather and there's all ways to go around that. If everything went remote on the same day globally, then you have to have a new set of tools and products to help you walk through it. There were a lot of challenges for sales leaders in 2020. This was a major one, showcasing a product, making sure it doesn't break. Some of the enterprise clients that were design partners for us at first, they had to spend millions on salaries of pre-sale engineers and salespeople just to create mock-up demos, make sure things don't break when they go on a live call, but everything broke for everyone, so there was an immediate need. [00:08:06] S0: Were these relationships you already had or did you run a cold email campaign to just get in front of people?