A Product Market Fit Show | Startup Podcast for Founders
00:24:33 · Rafael Broshi
[00:24:33] S0: Yeah, so first of all, everything looks obvious in hindsight. And we were there when it started. Nothing is obvious. And even if it's obvious, there are always risks, right? So when we decided to pivot, because we said in the insurance part, we're growing, but we're not growing fast enough. We decided to pivot. It took us months to understand what to do, even though we had that platform that helps us respond to questions of customers, real customers in a real company that does business. And even then it took us months to say what we're going to do. And just timeline wise, by the way, when is this? That was in 2023. It's like, first of all, when a wave starts, you're not sure if it's a wave or if it's just the hype cycle. NFTs. OK. Now you're going to see Twitter blowing up. You're going to see Marc Andreessen changing his profile picture and Twitter to an NFT, right? The world's going to go nuts and you're going to say, well, I don't know if that makes sense. Like I wouldn't buy the Mona Lisa as an NFT. And some people might hear this and then write emails to me of how stupid I am and how NFTs are going to change the world. Right. But it's much easier to be at this point in time with the conviction to say, I think NFTs were a fad. I could not have said that in 2021 or 2022, right? You would have been an outcast if you said it. You might not have joined, but you would have been an outcast. So when a wave starts, it's incredibly hard to understand. By the way, it's also hard right now because what's going to happen, everything in life works in cycles, right? Tech hype cycles. So now we're at a hype. What's going to happen soon is we're going to see that AI costs are through the roof. Companies aren't seeing ROI. Then a company that IPOs is going to drop by forty percent because of that. And then the hype cycle of AI will die. And obviously I do think, and everyone agrees, that it is a trend. But there's going to be a dot com time sometime in the future, right? I don't know how hard this is going to hit, but it is going to hit. So I think that's one. It's very hard to understand. But what we said is, look, do we believe AI is going to be a wave that transforms the world? Yes. If we look back thirty years in the future, will we regret not being there?
00:26:50 · Rafael Broshi
We think we're at a point of the year 1998, we're going to start with AI, ninety nine percent of companies are going to go bankrupt or blow out. There's going to be a ton of competition, but will we regret not trying to compete in this way? You said yes. OK, great. We want to go there then, going through what we suffered in the insurance space where we built something very small. We said we're not going to build something small. We're going to build something that has the potential to be huge, and it is so obvious that no one's ever going to ask us why would someone need it. It's going to be the most obvious thing in the world. What's AI going to do? AI is going to replace workforce, awesome. Where are the three areas that we think today, that was three years ago, that is going to work, OK? We didn't talk about developers and everything related to coding because we're not that deep tech and it's not us. We said, OK, that's going to be in sales, marketing, customer support sales. Well, sales is really tough and I am still not a big believer of automated SDRs. Marketing, well, interesting, but it's not really our forte. Customer support. OK, we've done customer support. The ROI is very easy to explain. It's very easy to explain to any company. Hey, you have a hundred people. We can make it so you have twenty people. Great. How much money do you save? Plus you're going to offer 24/7 service, localization, better support, better QA, blah, blah, blah. OK. Very easy. You said, OK, great. AI for customer support, and that's how it started. And since then, no one ever asked me, why would someone need it? OK. It's the exact same question. Isn't it a solved problem yet? Aren't there a ton of competition? What are you doing differently? Why would someone work with you and not with Salesforce? Like those are the kinds of questions we get.
00:28:43 · Pablo Srugo, Rafael Broshi
[00:28:43] S2: Yes, of course. And I'm curious, like at that time, 2023, I mean, this is still two years ago, three years ago. So there were, there probably weren't that many, like it was probably happening, but it's not like there were like AI customer support winners. There would have been like the 2.0, like the previous wave chatbot customer support winners. So you had that going for you, but did you find sometimes spaces appear way more crowded than they really are? And like, isn't everybody selling? And then you get into it and you talk to the customer and you're like, actually it's you and these two, like it's not thirty, right? What was actually your experience? [00:29:12] S0: Yeah. So it's pretty close to what you said when we started. We said everyone's doing it, but we haven't seen so many VC backed startups doing it because everyone thought everyone's doing it. [00:29:26] S2: Nobody's backing them.
00:29:27 · Rafael Broshi
[00:29:27] S0: And it's like, when I ask people, I want to. I'm asking them about their idea or people want to consult with me and say, well, I don't, I don't want to launch. I don't want to tell people what I'm doing and I said, look, if you were in a coffee shop and you heard someone talking about an idea, that they're actually executing on. A startup three years, three months ahead of you, that they're actually building something and when you hear it, you understand that's exactly the product you want to build. Would you be happy about it saying, oh my God, I can learn some stuff, or will you be completely bummed about it? That someone beat you to it? He said, of course, I'll be bummed. I said, so why don't you want to tell about your idea, right? Put it everywhere. No one's going to want to do it. So I think that's what happened. So what we saw were either larger companies from past generation, OK. Salesforce, or that was Zendesk and Ada, and other companies like that. That either had older chatbots going into the AI era, or we saw those kind of solopreneurs. The kind of people that did chat with PDF when ChatGPT started, and you heard stories of people making $5 million in two months with PDF. Before ChatGPT killed that and just added the option to add a PDF. So same thing, you know, you saw small companies like that building those fast chatbots, doing a quick buck. But then we said, OK, there is no way they're going to be able to compete long term with the VC backed startup. It's just not going to happen and then you saw in the same time that we did that, there were the larger companies in stealth mode in the US, right? The Sierras, the Decagons, et cetera. But that's what we saw in the beginning. What we're seeing now is the second part of what you said, the area is not that crowded. There aren't a lot of players out there that can deploy on prem with a company in a regulated space, to have the kind of capability that they would require with the same level of compliance and security. And being able to meet their SLA and data requirements. There aren't a lot, OK. We're seeing the same players over and over again. It's not seventeen players, it's not. OK, you can count them on one hand and also the horizontal players, we don't see them that often as well, right? So when you verticalize yourself, or it doesn't matter what you do, right?
00:31:44 · Rafael Broshi, Pablo Srugo
But when you pick a specific kind of box to play in, we feel that at this space, we don't see many. Now, if we're going to go down and we started before going to financial services. When we built the product in 2023, we started selling to e-commerce and in e-commerce. Obviously we saw more players, but smaller players as well. But again, same few names popped up and I know you have the competition is for losers by Peter Thiel, et cetera. And again, who am I to say something different? But I'll say I don't think competition is what kills startups at our stages, right? It's competition makes you do stupid things like copy other players or go toward the second different direction. Say, oh, those guys succeed there. Let's go there. Oh, they're doing this. So it must be good. But no, those guys are exactly like you. They have no idea what they're doing. Everyone in the space has no idea what they're doing at this stage. So competition makes you do stupid things, not because it forces you, but just because it's part of our nature. [00:32:45] S2: I mean, I find it's almost guaranteed that you're either going to have to fight status quo and people just not wanting to change or move. Because they don't really have a burning need, or you're going to have to find competitive vendors. The odds of you being in a place where everybody wants to buy and you're the only one selling. I mean, you know, if you're there, that's awesome. But, I just don't know how you could manufacture that situation.
00:32:45 · Pablo Srugo, Rafael Broshi
[00:32:45] S2: I mean, I find it's almost guaranteed that you're either going to have to fight status quo and people just not wanting to change or move. Because they don't really have a burning need, or you're going to have to find competitive vendors. The odds of you being in a place where everybody wants to buy and you're the only one selling. I mean, you know, if you're there, that's awesome. But, I just don't know how you could manufacture that situation. [00:33:11] S0: Me too. If you're going for an area where there's a gaping demand right now and the demand is growing by 100x a year. There's going to be competition there. There was competition in the dot com era. There's competition now, there's going to be competition in the future and if you look at the dot com era versus now, information flow is so different than it was, right? You can't compare what you're seeing now in terms of competition, but you also cannot compare the level of exposure you can get as a startup as well, right? I can reach any company I want anywhere in the world pretty easily. I'm not saying I'll be able to sell to them, but everything is much easier now. So it's like everything works together, more competition, more market opens up, the market grows faster. But I agree, it's all the same. It's like human nature. The easiest thing is to build something that is so complicated and so amazing that you don't have to talk to any potential customer ever and just keep building it, right? That's what everyone would want. That's like the dream but unfortunately, that's.