A Product Market Fit Show | Startup Podcast for Founders
00:33:00 · Dane Atkinson
[00:33:00] S0: Yes, and be there. Show that we care. If we won one of our first customers, we screwed up and didn’t put the order in for pastry. I went and cleaned out all the other bakeries, and then brought the pastry. Luckily, having to run into the owners, walking in with all the replacement pastries and like, okay, they really wanted to work. Those customers, I have them still as friends from the last five companies, and the friends I made here are really valuable and I hope to have going on. Then you have the customers right afterwards, which is like, just see if the solution sells itself, and it actually doesn’t auto sell. The way that I thought it would [unclear] could be like, it’s amazing. I’m going to get rid of everything. I’m just going to move on to this. I’m going to save money everywhere. No. Are you sure this works? Really? It would steal stuff. Something’s going to happen. There’s going to be a technology service fee for two grand that I get billed like six months later. They’re like, there’s got to be a gotcha. The customers would move over two vendors and watch us, and then they’d move over three vendors and watch us, and four vendors and watch us. They had a different behavior than I expected, but it still had that impact. It ended up selling itself. The thing that we thought would sell to was the technology on its own. Nope. You gave me an amazing portal, like don’t have to go through 300 invoices. Have it all consolidated here. No way you’re spending your money. But when you go and you’re like Oatly [ph] is cheaper, oh yeah, cool. Then when they’re using the technology, like, oh, it’s super easy and it works out great. I love the portal. Can you add this button to make the- they love it afterwards.
00:34:30 · Pablo Srugo, Dane Atkinson
[00:34:30] S1: Why do you think that is? [00:34:31] S0: It’s unrealistic to expect someone who’s holding the whole world together with their own time and energy to figure out the returns, and if you’re telling the truth. So many people pitch small business, it’s absurd. They literally get piles of emails, and mails, and everything today being like, I’ll save you this, and you do that, and everyone thinks it’s all lies. I still have small businesses, and I think all those spams are lies. But when someone says, I can get rid of this bill from the IRS, okay. If you actually can, okay, I can make your Oatly cheaper, because it’s an instant return. No, there’s no long-term calculations, no inference that a large enterprise can actually spend the time to figure out small businesses can’t. I’m always encouraging when you develop your model to try to find out how it is. Replace them of existing cost or something very provable so the business doesn’t feel like they’re exposed in the risk, and that you’ve taken that on yourself.
00:35:26 · Pablo Srugo
[00:35:26] S1: The other way I’ve heard this expressed is you want to meet customers where they are. The reality is if you think about the average coffee shop owner, are they thinking about putting all of their invoices in one system to see them all? Not really, but are they thinking about something they bought yesterday that they wished was 5% or 10% cheaper? Or are they thinking about switching vendors? Yeah, they are. When you speak that language, you’re right away talking about something that, like you said, clicks. It’s top of mind. It’s the language they already get. You can save me 10%, 20%, and it won’t affect quality. They have a no-brainer, let’s go. Then the other value is why they stay, but they see that later.
00:36:09 · Dane Atkinson, Pablo Srugo
[00:36:09] S0: Yeah, 100%. A small business doesn’t know how to factor their time. They don’t want to calculate all that in. If you come at them with an extrapolated return, it’s unintelligible. You come at them getting rid of the problem they have in a way they can access because most people go into small business, particularly coffee shops and ice cream shops, and the customers we have because they want to make people’s lives richer. They want to make the community richer. They want to spend time with the customer, and their staff, and inventing the next ice cream or the next kind of thing. Don’t want to be worrying about their supply lines and their choices. To them, that’s all just muddle, and it’s an ugly muddle that I want to deal with. If it’s cheaper and I know I’m saving money, and now I’d take that five bucks I saved in that Oatly and I’d put it into my kids’ college fund, or I replace the light bulbs in the bathroom. I can instantly get return off that. [00:37:00] S1: Before we close here, I want to touch on one more story that you’d mentioned earlier, and maybe you can walk us through it. But my understanding is there’s a point at which you maybe overhired or just hired a lot of junior more interns and used them to fix a lot of different things that weren’t working all that well.
00:37:00 · Pablo Srugo, Dane Atkinson
[00:37:00] S1: Before we close here, I want to touch on one more story that you’d mentioned earlier, and maybe you can walk us through it. But my understanding is there’s a point at which you maybe overhired or just hired a lot of junior more interns and used them to fix a lot of different things that weren’t working all that well. [00:37:14] S0: Potentially better now because the capital’s gotten much more constrictive, but it’s certainly a red flag as a technology company. What happened to me in this scenario was we were scaling, and this is even the AI chapter, and I walked by one of the conference rooms and there was like nine people in there all hammering away. They’d had to hire interns to fill in orders and get things clarified. That was, oh, shit balls. First, we’re burning money. We’re solving a problem with money. We’re literally duct taping the world over with money, which is very hard not to do when you have a lot of money as any kind of human being. Second, there’s something fundamentally wrong with a solution when you’re trying to make everything automated and successful and you default into this process. That means that you’re culturally. [00:38:04] S1: Was this, by the way? Where were you in your journey? How many people? How much did you raise at this point?
00:38:04 · Pablo Srugo, Dane Atkinson
[00:38:04] S1: Was this, by the way? Where were you in your journey? How many people? How much did you raise at this point? [00:38:08] S0: Probably raised another 10 million at that point and we were still small, maybe 30-person, 40-person team. We came out of COVID with 15-person team because we didn’t know if the industry was going to be around. We started with 50 customers in 2020 and had 600 by the end of the year. It was mind-boggling. But at that point, actually we didn’t have interns. We’d used COVID to build technology and we saw our mistakes a year back when we were trying to do all your tech. I’ll say this for operators, like it’s very tough as a founder, you get this imposter thesis. Why am I here? That also affects the way you make decisions, and sometimes you get swayed by your team. I would encourage, whenever your instincts feel like something’s wrong, because sometimes that’s all you’re going to have is your instinct is that you not aggressively scream at people and all the rest, but you ask questions. You try to figure things out because those little nicks add up and they weigh you down as [unclear. You have to get on things as fast as you can as an operator. [00:39:05] S1: Let’s end it there. Let’s end it on the two questions that we always end on. The first one is, and this is for Odeko specifically, when did you know that you had true product market fit?