A Product Market Fit Show | Startup Podcast for Founders
00:02:05 · Cosmin Nicolaescu
[00:02:05] S0: I would say so we started the company in October 24, and we had a lot of ideas and a lot of hypotheses of what we can build, but we had no idea how much of it is real, what technology can actually do in this space, and how deep you can go, and how much mode you can actually build as a business versus just solving some low hanging fruit and and then being done. I would say the last fall was supposedly about a year in, is when it felt like, okay, this actually works and clicks and all the moving pieces. Because prior to accrual, most solutions that I saw in the accounting space were very point solutions, where, like, you're taking some type of documents and extracting them or taking a client portal and showing it to your customers or or whatnot. So very, very niche things, which don't really challenge product market fit. It's not, you're not creating a category, you're not doing something unique, you're just hopefully doing something incrementally better. Accruals was started with the idea of building a platform for these accounting firms, which means you have to have a lot of these kind of components and and parts of the workflow that all click together, and you have to make sure that, like, AI actually can land things because it's very easy to demo stuff in AI. I can build a demo in the next few hours on almost anything and it will only impress people. But to actually build a product that can do it at scale and reliability necessary for production and accuracy, especially in such a regulated industry, is exceptionally, exceptionally hard. And so for us, last October is when we did our first set of returns, where we basically took very complex documents from firms like Armandino, Creative Planning, some of the largest, most complex individuals in The United States. We ran them through the entire system. We had people actually using the platform and the product, not just calling things through APIs and and processing them and interacting with the platform, understanding how the agent worked, what it did, and the amount of savings that people saw in terms of impact was just staggering. And a month before, we had no idea if it actually could work at that level. It was much more kind of piecemeal and and isolated that we we did it. So that was, I think, the first time I was like, okay.
00:04:15 · Cosmin Nicolaescu, Pablo Srugo
I think we have something here that actually could work and scale and that put us into this tax season and and it's all from there. [00:04:22] S1: And would you say, like, for I mean, there's a lot of people who have a product that some people use and even a product that some people get value from, but they don't necessarily get to, like, product market fit. Right? Like, TruePul, hair on fire solution, you know, whatever. Like, what about what was happening then felt like real product market fit to you?
00:04:41 · Cosmin Nicolaescu
[00:04:41] S0: I think the signal that we look for is the the same signal we we had early on at Stripe from folks that were using us, which is what's the excitement level with the customers? Because there's a lot of times where people are like, yeah, this sounds great, but, like, quite skeptical. Then they're kind of like, oh wow, there's something there. I think that's the next level where like, you're solving a problem, this is quite plausible, happy to continue exploring. Now we're at a stage where, and this kind of started happening in the fall where not only do they have the level of excitement and it materializes with kind of commercials, because I think that's the kind of rule that that we learned early in our careers, which is, it's one thing for people to get excited about a demo and trying something out, but until people pay for it, you don't know the true value. And once people are like willing to commit to complex large contracts, that's when you clearly have something, otherwise people wouldn't do that. But the biggest kind of reward that I think we see in terms of personal satisfaction and validation of product market fit is when people are like, can you also do x? So now your clients are pulling you in to their business to help solve more problems. That I think is the highest level they can say, which is like, you've not only solved this problem and I'm willing to work with you and and roll out your product, but also I'm now, like, eager to get you help to help me to solve other similar problems across my business. And that purely comes from, like, internal confidence that that people have otherwise. Obviously, they they would never do that.
00:06:12 · Pablo Srugo
[00:06:12] S1: How do you tease that apart from because I I agree there's something interesting in what you said. You know, there's that failure mode, which we talk a lot about about, like, one more feature. Right? Well, customer will come to you and say, if only you if you build this, then I'll buy. What you're saying is similar but different. How would you tease those two things apart?
00:06:29 · Cosmin Nicolaescu
[00:06:29] S0: Typically, people are either gravitate towards areas that look similar in terms of problem solve. And it's like, hey. What you're doing here, if you tweak it a little bit, you can apply it here, and we certainly had that. So as an example, we started with individual returns, and then people are like, could you help in other types of tax returns? Very natural kind of evolution of the product. The second type of asks are completely different, but big pain points. And so we've had customers, actually even in this past week, they're like, hey, engagement letters are a pain in the ass, we haven't found something good that helps us with that, there's a lot of these products and they're all very limited, could you actually build something there? Nothing that we've kind of like showed them or build that that has that, but there's a confidence of the quality of work that you've shown and the impact in this area is so high that we believe we could apply that same level of talent in another area that is very painful for us. We saw the same thing with audit where we've had the partner from audit in different firms be like, hey, I've heard all the wonderful things you guys are doing on the tax side, how can I start using you guys on on the other side because we have similar kind of problems with the existing tools and processing our workflows, if you guys could do something similar on the other side, that would be great? Now doing the same thing on CAS, so you can kind of see that FOMO that that trickles within your organization.
00:07:50 · Pablo Srugo, Cosmin Nicolaescu
[00:07:50] S1: And to be clear, these are not like potential customers who are saying, if you build this, then I'll buy. These are actual customers for the most part who are saying, I like your product. It's great. I'm buying. Can you also do this other thing? Can I also pay you more for this other thing? [00:08:03] S0: Correct. Yes. You're already solving this problem, and I'm rolling this out. Can you also do more? [00:08:08] S1: Yes. Which is a big difference. The other thing I wanted to dive in on is the value prop. So now we'll talk a little bit more about what your product actually does, but that's the key ingredient of product market fit. Right? It's not just they're using it, they get value. It's what value are you really delivering to your customers?