A Product Market Fit Show | Startup Podcast for Founders
00:12:38 · Pablo Srugo, Keith Peiris
[00:12:38] S1: It's over. Yeah. [00:12:38] S0: All the great companies, what we made. He was like, dude, why not just burn the boats and go build the thing that you have conviction in? [00:12:46] S1: Was there a third path of just keep optimizing your business until you kind of cracked it and NDR went from 20 to 40 and you just kind of kept growing that or whatever? [00:12:53] S0: I think there was that path. My strong view on this is that you can't take the same product and take NDR from 20 to 40. I think you almost like inherit retention based off of the core product and then you can make it a little better but like, it's not going from 20 to 80 ever, you know, with this kind of product. So I was almost taking for granted that like, retention would be about the same but I could play with acquisition. I could play with selling the next thing.
00:12:53 · Keith Peiris, Pablo Srugo
[00:12:53] S0: I think there was that path. My strong view on this is that you can't take the same product and take NDR from 20 to 40. I think you almost like inherit retention based off of the core product and then you can make it a little better but like, it's not going from 20 to 80 ever, you know, with this kind of product. So I was almost taking for granted that like, retention would be about the same but I could play with acquisition. I could play with selling the next thing. [00:13:20] S1: I think that's true of most metrics, by the way. I don't know if I want to go extreme and say that's always true of all metrics but like, like if your demo to close, making it up, right, is 25% could you optimize to 30? Yes. Could you optimize to 50? Probably not unless maybe you materially change the ACV or something like that and you go after a completely different set of customer but like, you're probably not that bad, you know, at showing a demo and it goes with the same like, if you only get so many demos booked in a week at a certain, like, I'm sure you've tried the low-hanging fruit for almost all the metrics that matter as a smart founder that's been in market for two years, let's say I'm making it up. You've tried all the obvious stuff so the odds that somebody's going to come in and make such a big change on a metric that it's going to take, you know, re-inflect your business, it can happen but it's, a lot of it is kind of false hope, right? I'm with you on that.
00:13:20 · Pablo Srugo, Keith Peiris
[00:13:20] S1: I think that's true of most metrics, by the way. I don't know if I want to go extreme and say that's always true of all metrics but like, like if your demo to close, making it up, right, is 25% could you optimize to 30? Yes. Could you optimize to 50? Probably not unless maybe you materially change the ACV or something like that and you go after a completely different set of customer but like, you're probably not that bad, you know, at showing a demo and it goes with the same like, if you only get so many demos booked in a week at a certain, like, I'm sure you've tried the low-hanging fruit for almost all the metrics that matter as a smart founder that's been in market for two years, let's say I'm making it up. You've tried all the obvious stuff so the odds that somebody's going to come in and make such a big change on a metric that it's going to take, you know, re-inflect your business, it can happen but it's, a lot of it is kind of false hope, right? I'm with you on that. [00:14:10] S0: Yeah. That was one of the realizations I had. I agree for a lot of metrics. I have so many friends who are founders and they're like, my CAC has not changed in eight years. It's like maybe gone up or down 20, 10, 20% but it's not changed. I can make ACVs go up, you know, I can build more product, I can make my sales process a little more optimized but it's sort of like what you have in year one is probably roughly what you'll have in year five, you know, and you have to decide is this the game you want to play?
00:14:10 · Keith Peiris, Pablo Srugo
[00:14:10] S0: Yeah. That was one of the realizations I had. I agree for a lot of metrics. I have so many friends who are founders and they're like, my CAC has not changed in eight years. It's like maybe gone up or down 20, 10, 20% but it's not changed. I can make ACVs go up, you know, I can build more product, I can make my sales process a little more optimized but it's sort of like what you have in year one is probably roughly what you'll have in year five, you know, and you have to decide is this the game you want to play? [00:14:41] S1: It's the nature of the beast. Like it's the nature of the business that you're in, the metrics are a fallout of that for the most part. [00:14:46] S0: Yeah, exactly.
00:14:47 · Pablo Srugo
[00:14:47] S1: Now one thing that you said that I want to dive into and I'm going on this point because the pivot ultimately leads to the problem for you said you have distribution which is I think taken for granted like if you think about it you're starting from zero, you're starting from scratch in a new industry unless you're a domain expert or whatever, even if you are but especially if you're not, you've got to go and get people's attention. Like you've got to go and get people to know that you exist, be willing to give you a shot, give you a chance which is spending on ads, going to conferences, doing all this stuff and it takes a long time. If you've got a business that's doing two, three, five, 10 million in revenue, you've got hundreds of customers that you actually have like a real relationship with and you have whatever team and cash that you have, right? But that's a big edge like trying to leverage that to find, like in your case, you found a completely different problem to solve if I understand correctly for the customers that you had. So I'd love to go deeper on how you did that because I feel like that's a playbook or a path whatever you want to call it that's open to anybody. I mean anybody in this situation could say, okay, you know what? It's true. I have these relationships with these customers rather than thinking from the product what more feature could I add? What else could I do? or limit myself to saying we're a company that does X so we can only do X. You did something different. Like let's go deep on what you did there.
00:15:56 · Keith Peiris
[00:15:56] S0: Yeah. And I think, you know, hindsight's 20-20. To be honest, we had way more consumers than businesses and I think it actually would have been a more direct path to build a second consumer product. You know, we could have built like a, you know, what are these code generating tools or something and I think that would have been a shorter path. I think deep down, you know, Henry and I wanted to build a B2B product. We wanted to build something that like people used every day and cared about and that's probably what steered us. I'd argue it actually steered us initially in a much darker place because it steered us towards sales and marketing. As you know, like GTM tech is so crowded. It's brutal, right? It's super crowded because I would say most sales teams are willing to try something new, see if it helps them be more successful. But the sort of pilot conversion rate is super low. You know, most of these companies don't have proprietary data, right? So it's just a race to the bottom, right? If you have got like 30 tools in every company and they're all trying to offer roughly the same thing because they don't have the data, they don't have the model, right? And it just turns into a commodity game. And that was kind of the, I think the dark thing that we were trying to navigate in the, call it like mid pivot, where we're like, all right, we're here. You know, we've got these customers where we're building these tools. This also isn't going to lead to a very good business, you know, because we're just this layer that sits on top of Salesforce and Snowflake and we're not an LLM company, you know, so we're also just paying Anthropic or OpenAI. We've found some problems to solve, but like this, you know, at the time we were like, this is probably a worse setup than Tome. I think that that took some distance from the problem. You know, we started to sit back and be like, did any of us really wake up to build like this point solution, GTM piece of tech that's like hard to sell, hard to convert? I think we actually just needed some space from the problem to think about like, well, how's the world going to change? What's going to be different? And what do we actually want to do?