A Product Market Fit Show | Startup Podcast for Founders
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?
00:17:55 · Pablo Srugo, Keith Peiris
[00:17:55] S1: How do you do this as somebody who's running an existing business? This is the problem I have with, like I'm thinking of a founder that I'm having this discussion with and I'm like, you need to find a way to just, we're talking about next quarter and like, are we going to be plus minus 10? And I'm like, man, next quarter, like even if you hit your low, like if you hit your high, it's not that good. And if you hit your low, it's not that bad. Like it just, we're not talking about things that because you're in this situation of plateauing and I'm trying to get them like, just you need time to pull away almost. Let somebody else worry about that. How do you do that? How do you give yourself time to think the way that you're thinking? Like it's easy to do when you have no business. When you have a business happening, it's hard enough to worry about the fires. [00:18:29] S0: The honest truth is that we needed to, I don't want to say this in a cold way. We took it very seriously. We needed to cut burn really aggressively. You know, we spoke to our board and we're like, we're going to turn off the old product. We are going to dramatically cut burn. [00:18:44] S1: You did this before knowing what you were going to build? Yeah. Oh, wow. Okay. That's true. Burn the boats. I mean, that's like, holy shit. Like I got 20 million users. I'm putting that to zero. That's a big move. [00:18:54] S0: Yeah. Yeah. Yeah. We're like, we're going to go down to like seven people. [00:18:57] S1: From how many? [00:18:57] S0: I mean, Tome had 70 people.
00:18:57 · Keith Peiris, Pablo Srugo
[00:18:57] S0: I mean, Tome had 70 people. [00:18:59] S1: You went from 70 to seven? Yeah. Wow. [00:19:02] S0: And our board was great. They were supportive. They were like, look, if this is what you guys want to do, I think everyone was like, don't be half in. Like they're like, you're not going to find product market fit again by this being a side project with Tome. Like you have to burn the boats. You have to cut burn. You have to go down to like pre-seed company again. Again, so you can figure it out. [00:19:25] S1: How much did you have in the bank when you did that? After you did that? [00:19:28] S0: I don't remember exactly, but I would say we had like a solid series A worth of capital in the bank. [00:19:34] S1: Sure. Yeah. So you're like, money was not an issue. Like with seven people, you've got infinite runway. You can just like, like that's not going to be the thing that kills you. At this point, it's going to be, do you find something worth going after or not? [00:19:43] S0: Yeah, exactly. And that was kind of uncomfortable, right? You like throw away something that was sort of working. [00:19:49] S1: Dude, it's crazy. I've heard of many people pivoting and even pivoting late, but almost always when they have something else, it's like taking off. Like I almost never heard it like this. So aggressive.
00:19:49 · Pablo Srugo, Keith Peiris
[00:19:49] S1: Dude, it's crazy. I've heard of many people pivoting and even pivoting late, but almost always when they have something else, it's like taking off. Like I almost never heard it like this. So aggressive. [00:19:59] S0: Yeah. Yeah. To be honest, it was the right move because you just have so much noise in a company that's half working. Your team, it's not their fault. It's your fault. Red is the CEO. It's my fault. But the team's like, we got to find something to work on. Otherwise, what are we doing? Right? There's sort of like a, like a toxic quality in the air of like, you know, do these guys even know what they're doing? And the truth is we, you know, we, we didn't. And, you know, you're still have customer tickets and you're still have, you know, marketing campaigns and, you know, you still have your like infrabill. So at that point, my view is I have to kill the noise. Right? So we got to cut burn. We got to get everyone out of the room that doesn't want to build the new thing. And unfortunately, we couldn't get rid of this office. We had this giant office and it was kind of awkward for seven people to show up.
00:20:48 · Pablo Srugo
[00:20:48] S1: Dude, we had that. It's funny. My company different. But when I, when I had my startup, we had a decent space, let's say for maybe 40 people, not 70, but, and then we had to go through layoffs and all this stuff and different situation. But the net was, we ended up with seven people and it's so, it's sad, man. Like, it's hard to get out of that. You know, you're looking at it, you're like, can we not, you know, I'd rather be in the garage, man. Oh, you're such a selfish person. I actually can't believe how selfish you are because like, you've been listening to the show. You listened to this episode. You loved it. You've listened to a bunch of other episodes and you haven't told anyone about it. You haven't told any of the many founder friends that you have about it. Think about how many founders have helped you out when you're building your startup. So don't be selfish. Tell your friends about this episode. Tell them about the show and help me help them.