A Product Market Fit Show | Startup Podcast for Founders
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.
00:21:33 · Keith Peiris, Pablo Srugo
[00:21:33] S0: It's so funny. When you're in that state, you get all of this feedback about stuff that matters. You know, there are definitely people that were like, hey, can we get a new office? You know, or hey, should we pay everyone more to stay? Or, you know, various things. And the truth is that those are symptoms of the bigger problem. The bigger problem is you don't have direction, you know, and you don't have traction. We just ignored all of that. We were like, look, we need to figure this out. You know, and I think to the team's credit, we all sort of realized together, hey, the only play in this space that we would all be excited to spend the next 10 years of our lives on would be to like, go and reinvent the system of record. [00:22:12] S1: Where does that come from? Like, how do you get to that conclusion? [00:22:14] S0: Yeah. One, I think we wanted to build a business with leverage in the future. You know, so we felt like if we're going to be in this space, we have to... [00:22:22] S1: When you say this space, what space do you mean?
00:22:24 · Keith Peiris
[00:22:24] S0: I just mean being in go-to-market in general. Okay. We're like, we need to own and index proprietary data. No question. Second, we're like, look, we're productivity tool people. You know, and I think we all got excited about the technical challenge of building, you know, an agentic system of record. We're like, this sounds super hard. You know, even though there's people talking about vibe coding a CRM, you know, to build an automatic agentic CRM that works for like a thousand people, you know, in terms of API data model, we're like, we would enjoy doing this. And then I would say that it feels like one of those strange go-to markets where it's sort of hard to pull off. Let me explain it. You know, ripping out systems of record, it's incredibly hard historically, a little easier now. We're starting to do it now. But the first couple of years of the company, you have to go Greenfield, right? You have to go be new companies for CRM. And then, many have to build fast enough so that when their company works, they don't go to Salesforce, right? We're like, that seems like almost crazy enough of a company that there aren't going to be that many people that try, you know, which is to say it's a huge build out. You're working on a small ICP, super churny, and then for you to hold on the best ones, you need to run as fast as you can. And actually, that difficulty made us excited because we were like, we'd rather tackle a difficult problem than tackle an easy problem and have like a thousand competitors. So that sort of got us excited. And then I think maybe the last part is that it felt like a company-wide problem. And I think that that got the founding team really excited. They're like, look, if you imagine how a system of record works in the future, people that work with customers fill it, everyone benefits from it. You know, engineers should use it, finance should use it, you know, forward-to-play engineers should use that. And we're like, we're actually excited about that to have a small hand in shaping how future companies get built. And we're like, we could all work 14 hours a day on that. So it actually felt like a very personal decision.