A Product Market Fit Show | Startup Podcast for Founders
00:09:13 · Chaz Englander, Pablo Srugo
[00:09:13] S0: Everything compounds, first of all. So like, everything seems like a really steep hill. Right? But it's like anything, you know, to get to your first, I don't know, even a 100 k in ARR when your first eye might seem huge, but when you're there, to get to like a million maybe doesn't seem that far, you know? And and I think like anything it's these little cassettes. I think the big thing is consistency. And the second thing, we mentioned Arnd and I when we did this YC interview, that's on YouTube, perseverance. So like, I think there is a big difference between blind perseverance. But if something like makes sense and you know it makes sense and you're not kidding yourself, I mean, you just gotta go at that with that all guns blazing. [00:09:55] S1: It's this weird balance because on the one hand, I've seen a lot of people spend a lot of time on something that's just like probably never gonna work and then ultimately doesn't work, and they're like, wow. I wish I made a huge change way earlier. But on the other hand, even the ones that are successful had to go through a lot of shit until they saw that success. So you've gotta figure out if the thing you're going after is, like, real somehow. But even if it is, unless you get really lucky, it's not just gonna be up into the right. You're gonna go eat a lot of shit to get there.
00:09:55 · Pablo Srugo, Chaz Englander
[00:09:55] S1: It's this weird balance because on the one hand, I've seen a lot of people spend a lot of time on something that's just like probably never gonna work and then ultimately doesn't work, and they're like, wow. I wish I made a huge change way earlier. But on the other hand, even the ones that are successful had to go through a lot of shit until they saw that success. So you've gotta figure out if the thing you're going after is, like, real somehow. But even if it is, unless you get really lucky, it's not just gonna be up into the right. You're gonna go eat a lot of shit to get there. [00:10:23] S0: An easy sort of cheat code there is like, again, slightly different now with AI, but like, if you have no competition and you've like never had any competition, it's like you still have no competition. You probably don't have anything that people want, right? And I think like, it's astounding to me, but I say it's astounding, I mean I was the same, You have this inherent fear for competition, think particularly as a first time founder. It's like you see competition, big company or small company by the way, building what you're building and there's just like this anxiety that builds up inside you, right? You're like, it's over, right? I think that what you realize second and third time is like, that is exactly what you need because there's just more and more folks validating your concept, right? And if you validated your concept, then all you need to do is execute better. And it's way easier to execute better than it is to find a concept that works.
00:10:23 · Chaz Englander, Pablo Srugo
[00:10:23] S0: An easy sort of cheat code there is like, again, slightly different now with AI, but like, if you have no competition and you've like never had any competition, it's like you still have no competition. You probably don't have anything that people want, right? And I think like, it's astounding to me, but I say it's astounding, I mean I was the same, You have this inherent fear for competition, think particularly as a first time founder. It's like you see competition, big company or small company by the way, building what you're building and there's just like this anxiety that builds up inside you, right? You're like, it's over, right? I think that what you realize second and third time is like, that is exactly what you need because there's just more and more folks validating your concept, right? And if you validated your concept, then all you need to do is execute better. And it's way easier to execute better than it is to find a concept that works. [00:11:19] S1: So going back to the storyline for Fat Lam, I mean, you get into YC. YC will make fundraising a lot easier, but it doesn't make finding product market fit easier. And this is not an easy path that you've chosen around lending, like a lending marketplace. What's that story?
00:11:19 · Pablo Srugo, Chaz Englander
[00:11:19] S1: So going back to the storyline for Fat Lam, I mean, you get into YC. YC will make fundraising a lot easier, but it doesn't make finding product market fit easier. And this is not an easy path that you've chosen around lending, like a lending marketplace. What's that story? [00:11:34] S0: So interestingly, our first two companies were both consumer. Valhalla took probably three years to find product market fit. Fancy that we sold to Go Path, you know, was like day one, day zero, right? So very different stories and we've seen them both from different lenses. And so come back to this point of perseverance, we knew deep down that what we were building, people wanted. What we didn't know was whether we could do that in a way where the uni economics adds up, right? And I think like that's hard, right? Because you know often as founders you're like well, yeah but when we scale people won't know who we are and we won't have this CAC or whatever it is, and there's always this like in the future type thing. That's a really hard spot to be in, but again we kind of persevered on the basis that we knew people wanted this and that was true and we did scale and we raised, you know, we got on YC, we raised a $12,000,000 Series A pretty quickly after that, but it took us a good year or so after our series a for the Uni Economics to add up, but we kinda knew we needed to persevere. [00:12:36] S1: How many like cities did you end up kinda scaling to?
00:12:36 · Pablo Srugo, Chaz Englander
[00:12:36] S1: How many like cities did you end up kinda scaling to? [00:12:39] S0: So it was less so the geographical expansion for us, it was more the category expansion. That was like a bit of a thing that we really need to think about. So our product, it was very simple. You lend out a camera, you know, some gardening equipment, a set of DJ decks, a guitar, it's to someone nearby and we take commission. Right? Some... It's a marketplace. That was it. You'd be insured. That was like the thing that we ended up somewhat mastering in a scrappy way to start with for sure. And so I think that what we didn't know was we knew how big it was in say film photography as a category, but we didn't know a) how big it was and how we could get into other markets using the same way that we did before. And so what happened was, it was just very unpredictable in that sense because it wasn't like we had one thing that we could knew scale geographically, had this concept of category scaling and geographical scaling. That was difficult. [00:13:32] S1: How big did it get like revenue wise more or less by the time you sold it?
00:13:32 · Pablo Srugo, Chaz Englander
[00:13:32] S1: How big did it get like revenue wise more or less by the time you sold it? [00:13:35] S0: I think when we sold it, it was about, might be speaking out of turn here, just under 1,000,000 a month in GMB, like there or thereabouts. So big as in like series B big, well no. Series A big, yeah it was good, but it also was kicking out cash. So like another thing as well, we hit Probaccafe and the business was like cash flow positive, so that was fun, but we didn't really... It was harder to then grow from them. Another thing as well is like product market fit is not necessarily static as [00:14:04] S1: well I think, particularly now in the AI world. You might have a PMF today, but [00:14:09] S0: you don't necessarily have it when you wake up. [00:14:10] S1: Well, and and the easy answer to that, mean, the market's always changing. So if the market changes, you know, the PMF you might have had no longer is true. [00:14:17] S0: Yeah. Yeah. Exactly. Exactly. [00:14:19] S1: Tell me the story. Mean, selling a company is is not ever easy and not linear. Like, how did it happen for you at Fat Llama? Who bought it and and why? Kinda what's that story? [00:14:27] S0: So not many people know this, right, but we... Pre the acquisition, we spent six, nine months exploring a SPAC where we were gonna, with a bunch of other companies, take the company public. We were kind of the lead company in that, not because I think we were the biggest but more because we had a good brand. [00:14:48] S1: And this was the SPAC post COVID era, like late 2020ish?