A Product Market Fit Show | Startup Podcast for Founders
00:20:31 · Pablo Srugo, Dane Atkinson
[00:20:31] S1: It’s true, but it’s still I would have thought every week, you know what I mean, like you sell, but no, every day, okay. [00:20:36] S0: No, because a lot of the best companies out there you can see they drift. They get fascinated. We raised $100 plus million. You get it. There’s a whole different world that you get sucked into. If you drift too far away, it’s really hard to steer the North Star, which is at the scale, my primary job is to hold the vision for the company and try to make sure it still sees that future. But going back to sitting in a coffee shop, and I suggest our customer, everyone out there who’s starting to figure the product makes best friends of a number of their customers and gets a way to be really inside that experience in whatever visibility you have. Whether it’s watching the customers sparkle in the eye and sitting with them, or seeing how their metrics are playing out or something that’s being attached to that very important part of the process. We saw that our system wasn’t the solve, it was just part of a bigger picture, and then had to convince everybody that we’d gone down the wrong road. [00:21:32] S1: What was that like?
00:21:32 · Pablo Srugo, Dane Atkinson
[00:21:32] S1: What was that like? [00:21:33] S0: Horrible. It was rough, and I’m old. It’s not my first time. Actually, all the advice our investors gave at the time was totally true. Like they said, you’re going to screw your multiple, and yeah, sure as hell, screw their multiple. No doubt about it. We have trucks and drivers in 14 cities and <laugh> it’s bananas and it’s tough. They’re like, it’s going to be gnarly and all these things that I think were right. But from my perspective, and the company’s perspective, and even people in the company were like, I didn’t sign up to build software for a driver. I want to build AI predictive models. Even your internal culture was like, why are we swinging so far from this that it made sense? [00:22:18] S1: How many people were on the team more or less back then, like 10, 15?
00:22:18 · Pablo Srugo, Dane Atkinson
[00:22:18] S1: How many people were on the team more or less back then, like 10, 15? [00:22:22] S0: No, probably like 30 at that time. I’ve taken like 15 chokes. Another benefit of being around the block is you can get a couple people that join in yet again. Actually, we made this adjustment during COVID, which is super fun, because our industry died simultaneously to figure out a big model. The way I actually got the model through was just did it quietly, didn’t make a big deal out of it. Told the board I was thinking this worked and I just went and got a truck and got a space with one of our customers. They gave me their keys and I started driving around. Then we got a lot of other people and a lot of our team actually helped. We used our office as a warehouse, and I think the team mentioned something. We carried like 10,000 gallons of Oatly up into our little office space because we’d run out at night. [00:23:06] S1: You decided to take over all of the supply logistics part of the back-end, let’s say, of running a coffee shop? [00:23:13] S0: Yeah, because again, what we realized that coffee shops needed is that they wanted to be part of a franchise without being part of a franchise. That they needed to have the same support that the manager Dunkin’s has, or the manager at Starbucks has with the fact that they actually care about their customer. To do that, Dunkin’s not running to the deli for milk. They got a truck that comes by and loads them up. Again, the VCs try to protect us. They’re like, oh, just use the 3PL. Do anything to get. Don’t touch the truck.
00:23:13 · Dane Atkinson, Pablo Srugo
[00:23:13] S0: Yeah, because again, what we realized that coffee shops needed is that they wanted to be part of a franchise without being part of a franchise. That they needed to have the same support that the manager Dunkin’s has, or the manager at Starbucks has with the fact that they actually care about their customer. To do that, Dunkin’s not running to the deli for milk. They got a truck that comes by and loads them up. Again, the VCs try to protect us. They’re like, oh, just use the 3PL. Do anything to get. Don’t touch the truck. [00:23:42] S1: Hard assets, no, no, no. [00:23:44] S0: Oh my God, you stay away. It’s going to be really crazy. Then we had to buy companies and all. All things that scare the investor community along the way. One of the things that’s tricky for a founder, and this gets very hard too, because in my last company, I just banged my head on the same wall. Knowing when to push hard and be persevere, and knowing when to switch is a delicate thing for our founders. But in this case, my guidance soul is, I knew when the coffee shop owner was walking to their store and they had a picture of their inventory, and they didn’t have to worry about an invoice stack sitting there, and they didn’t have to worry about doing deli runs, you could see the sparkle, which is my indicator. [00:24:25] S1: Did you validate for yourself the economics and how we might look like at scale? Or did you just put one foot in front of the other and say, this is what it takes to solve the problem, let’s see what happens?
00:24:36 · Dane Atkinson
[00:24:36] S0: I did, but that doesn’t work. The problem with unit mechanics is in small companies, you can make it say anything you want. Our really smart MBA team members very easily drove it to like, you’re going to need two drivers, and you’re going to need a bigger truck. They just took my scrappy napkin map, which is about the limit my brain power to get to. They made it look like there’s no way it’s ever going to work. I’m like, I just called the guy who makes paper in Canada and he’s going to sell it to me for 3 cents a cup, and the coffee shop’s paying 17 cents a cup. We should be able to offer to them for 12 and make a lot of money. Sure, but did you count it for the cash flow unit? It didn’t work. In some miles, it didn’t work. In some miles, it did. A lot of these things, you just have to do it. That’s one of the things that makes founders, I think, amazing. Same saying for the person who’s at coffee shop, there are many friends are told every single coffee shop owner, you’re never going to make it work. Why are you opening a coffee shop? It’s a horrible business. It’s never going to happen. Something in their heart just like, I just want to see if I could make the world better. Same thing here, I was like, I’m pretty sure this could work, so I’m going to take the risk. I’m going to buy a bunch of stuff. We’re going to carry it around the office. I’m going to drive it around at night, see if it does a difference. Having done this a long time, this was – and I also encourage companies now because historically, I think the delta for success was smaller. There was so little technology in the ecosystem that you could make someone’s life iteratively better. Now, the threshold is you have to be an epic solve, particularly a small business. You can’t walk into a small business. I’m going to save you 3% on your business. I don’t care. I don’t have time. What the hell are you doing? If you’re chain stuff that’s obviously different, but at small business levels you’re not, you have to change the outcome to change their lives. This was that for Odeko. We scale so quickly. It was a life-altering moment for our customers.
00:26:28 · Pablo Srugo
[00:26:28] S1: When did you realize that that new model was working? How far did you have to take the trucks, and the warehouse, and all the hard asset side of it?