A Product Market Fit Show | Startup Podcast for Founders
00:09:27 · Pablo Srugo
[00:09:27] S1: So here's something that I, that I see all the time, like on just on the VC side, working with founders. It's similar to what you experienced, a little different in terms of the numbers and the type of business, but it's very common to have a product, a business that starts to work. You get to a million, 2 million, 5 million, 10 million, even 20 million, right? Maybe 15, maybe at some point, but you get to a good amount of error. And you start to see that kind of, that's why I was asking about growth, right? You got to, you went like one to two or one to three, but then, you know, three to five and then five to seven. And then you're like, okay, this year we're going to do seven to 10. It's a struggle, right? Because I'm talking to these founders and I'm like, I don't have the answer. Like I don't have, hey, if you do this, you're going to double. I don't have the answer of, hey, you should throw it all away and pivot. It's always, okay, here's what we're going to do different this year on the sales. Here's what we're going to do different on the marketing. The net effect is always plus minus 5%, 10%. Like it's not going to change the whole thing. And I'm being more and more prescriptive with them or at least clear. Like if you do this, like just so you know, if you get to 10 million and you're going 20%, you're worth like 30 million. What's the point almost? But I guess the question to you is because you went through it and you had something real, 20 million users, tens of millions of dollars raised many millions in ARR. What would you say to a founder like that that comes to you and says, Keith, like I got a business, it's working, but I don't see how I can get it back to like inflection. You know, like what, what do I do? Just keep going, keep hustling, whatever. Do I do something abrupt? Like what, what are my choices? What do I do? How do I even think about it?
00:11:02 · Keith Peiris, Pablo Srugo
[00:11:02] S0: Yeah. I mean, it's, it's very personal, which is to say that, you know, if you're in that state, if you've got distribution, you could think about the next product. Right. And I know many founders that are like, our first product didn't really work, but we got some distribution. So we made the second and the third and then start, things started to work. [00:11:20] S1: Because you have a relationship with customers. Like that's when you think distribution is what you're saying.
00:11:20 · Pablo Srugo, Keith Peiris
[00:11:20] S1: Because you have a relationship with customers. Like that's when you think distribution is what you're saying. [00:11:24] S0: Yeah, exactly. Exactly. It could be that you've got the right platform, you know, with the data, you know, with the infrastructure and you can build something else. Or maybe you just got a great team, right? And that's your asset and you can figure out what to build next. But I think it really depends on like what you want out of it. Because at that time, you know, when we were adding a million users a month or two million users a month, there probably was a way to get a soft landing for the team, you know, where investors make a little bit of money, the team does okay. We all go work at some big corporation for a couple years and then come out and do the next thing. And that was like top of mind for me. But the thing that actually really pushed me, it was one of my board members, Dan, who's on the board of Lightfield now, because of this advice, he was like, these technology super cycles, they don't happen every day, right? You know, this is the sort of thing that happens like once a decade or once every two decades. And he's like, you're so early. You know, at the time, we were like two years in and he was like, you have a lot of capital, you've got an incredible team. You know, if you go and take the like, the soft landing, you're going to be stuck there for two to four years. You're going to come out and this thing will be over. [00:12:38] S1: It's over. Yeah.
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?