A Product Market Fit Show | Startup Podcast for Founders
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?
00:14:48 · Pablo Srugo, Chaz Englander
[00:14:48] S1: And this was the SPAC post COVID era, like late 2020ish? [00:14:52] S0: Yeah. Earlier than that, but this is like when I think the news online is late, but it was pre that, but that was hard. Like I think, you know, we spent over 500,000 legal fees and, you know, nine months of work, you know, me in the middle of the night all the time with my laptop on my knees, two, three weeks before Christmas, the whole thing just fell out of bed. And like, I think as a first time founder, what was the hardest then was picking up the phones to the shareholders and being like, look, I made a call, we went in this direction and I fucked it up. It wasn't that we made any mistakes. I think it was just that as founders, you know, and and, you know, shareholders back you to go in a certain direction, like, I I found that tough. [00:15:36] S1: And you... That was that harder for you, especially at that age, than the money you probably assumed you would make if it happened? Like, was that top of mind for you or even back then it wasn't?
00:15:36 · Pablo Srugo, Chaz Englander
[00:15:36] S1: And you... That was that harder for you, especially at that age, than the money you probably assumed you would make if it happened? Like, was that top of mind for you or even back then it wasn't? [00:15:46] S0: No. Honestly, no. I feel Arnie and I, in the grand scheme of things, have never really been, like to an extent like that motivated by money. And even if you are, it really does get boring quick and like you realize that having a purpose and kind of a sense of fulfillment like every day is just, is harder to find first of all and is way more important. It was really just that feeling of letting people down. And all I, you know, wore my ass off and we did everything correct and everyone would have made the second solid decision even looking back on it. I think as a founder, particularly as a first time founder, during that journey you just put so much weight on your shoulders, And it's difficult to then be like, yeah, I fucked up. [00:16:31] S1: How'd you go from there to exiting?
00:16:31 · Pablo Srugo, Chaz Englander
[00:16:31] S1: How'd you go from there to exiting? [00:16:33] S0: Well that was almost like maybe the perfect turnaround. You know, I won't go into too many details of the you know, who called me and when in terms of mentioning them by name, but I was I was in a seaside town in England and I got this call from this Swedish number and I ignored it and they kept calling me and calling me and calling me. I think looking back on it, what happened was they were interested in acquiring us and knew that this spark was going on. And so the second that they heard it fell through, like my phone was blowing up, and it was a much much better outcome. I I mean, I don't wanna talk financially about sort of confidential server uninvolved, but it really was for our customers, shareholders, us personally, it was a better outcome and you know, the business now is in great hands doing great things. [00:17:21] S1: Oh, so it's still operating, like this lending marketplace still exists?