A Product Market Fit Show | Startup Podcast for Founders
00:10:07 · Pablo Srugo
[00:10:07] S2: And maybe, last question before we kind of go to the story. I've met many startups who close one enterprise customer and it's easy to think when you close one enterprise customer, whether it's 100K or 500K. That, well, if you closed one, you've done the hard part. You just got to do this ten times, twenty, fifty times, whatever. You're on the road already, which is not the same again. With SMB, it's like, I've got ten customers. Doesn't really mean you're going to get to a hundred, a thousand, a hundred thousand, which is what you probably need. But with enterprise there's some of that, you know, logically, if you could get one, why can't you get ten? But oftentimes it just doesn't happen. You get the one and you kind of get stuck there. In your case, you're describing this POC, this moment as product market fit. Which entails that it wasn't just the fact that you got this contract, but it was going to lead to a lot more from a lot of others. Do you have a sense of what it was about this that gave you that feeling? That gave you a feeling that not only did we win $1 million contract, which is great, but that this signifies that we're going to win a lot other million dollar contracts?
00:11:03 · Rafael Broshi, Pablo Srugo
[00:11:03] S0: It's a great question and it really depends on why you won. A lot of companies that get stuck with one or two enterprise clients. It's because they're becoming sort of like their personal dev shop and essentially think about it. Every enterprise that decides to work with a small startup, whether it's ten people, twenty, fifty, a hundred, and there are five thousand, ten thousand people company. Why would they want to work with you, right? They want the speed and they want customization, right? They know that everything they're going to ask, you're going to execute and you're going to execute fast for them. So if you won the POC versus a large, let's say vendor. Because you customized everything about your system to fit what the client wanted, well, I'm not saying it's bad. Sometimes it's needed, but that should be kind of a yellow light in your head. [00:11:58] S2: That's a risk, yeah. That makes sense.
00:11:58 · Pablo Srugo, Rafael Broshi
[00:11:58] S2: That's a risk, yeah. That makes sense. [00:12:00] S0: That's a risk but if at the end of the day, you're saying, hey, I did not have to change anything. I just had to prepare the demo in the right way, or I just had to tweak, or I just had to do two integrations to meet their requirements. Then that's totally different and if at the end of the day what you hear from them are very, I'd say generic things that they were looking for, so this was not a POC of hey, you need to create an entire pipeline that connects to our policy admin system and then to our own internal CRM, and then to this, and then to that, something that is very, very unique. But it's we want something that responds fast, that takes a huge corpus of data, that has an audit trail, that is deployed on prem, which is something we do that others don't. If you hear those kind of generic things that people always tell you when you're starting to sell to enterprise, that it's not only about your features, it's the entire kind of holistic picture of how you deploy your services. So I think that's a pretty good green flag as to maybe you have something, although working with enterprise is a lot more than the product. The fact that you need to commit to SLAs, you need a team. This is not a small customer where you can say, oh yeah, we have a bug. We'll talk in two days, right? You're getting a phone call within four minutes from their SOC team. You have to deliver, otherwise there are penalties and it's not a joke, right? Winning an enterprise contract is the easiest part of working with an enterprise.
00:13:34 · Pablo Srugo, Rafael Broshi
[00:13:34] S2: So let's go back now in the story. You mentioned you started this five years ago, so about 2021. Give me just a little bit of your background and then, maybe the origin story about what it was that you started and why you started it. [00:13:45] S0: Sure, so I spent ten years in the Air Force. I quit and then I used to work for a startup. After that, I worked for a hedge fund and after two years I decided enough is enough, and I wanted to start something. And a good friend of mine that at the time worked as a product manager. We decided to start something, bought another good friend who was a team lead and back then in 2021, and I said we started in the insurance space. There was a huge hype around crypto, around creator economy. So we created a new insurance product for digital assets. That means that if you lose your digital asset due to an account takeover due to a hack, you're getting insured for it and it was a real insurance product that we launched in the US. So that's how we started, then we started growing, ChatGPT came out, that was November 2022. We started playing around and said, hey, we're starting to scale in the US. We have many policyholders. We don't want to scale headcount. We were VC backed, but we did not have a lot of money back then. So we had to build a product that will help us service our clients while we grow and that's how the internal product started. And that's where we are today.
00:15:02 · Pablo Srugo, Rafael Broshi
[00:15:02] S2: You started in the crypto space and then you ended up now in the AI space. One way which came and went, most startups that start in one wave. Especially the first wave, doesn't really work. It's hard to ride the next one, right? So let's just go deeper on that. Tell me a little bit more about the product you build and how that, up and down went, and then we can move through that story. [00:15:24] S0: Sure, so essentially we built an insurance product, we started selling it in the US. Launched in forty seven states, in the admitted market. The insurance market has two separate markets, the admitted is the more regulated one. We had to be backed by a real insurance carrier, in this case they were out of Hartford, Connecticut. They endorsed us to be able to launch in forty seven states. So, the US is not one market. It's fifty different markets, which makes it extremely difficult to scale and what happened was that the product was great. I mean, everyone said it was great. It sounded genius. The only problem was, and that's a big problem. There was no product market fit. It means that there was no real pain that we were solving by offering this kind of product. [00:15:55] S2: This is insurance for crypto assets?
00:15:57 · Rafael Broshi
[00:15:57] S0: That was insurance for social media accounts and crypto assets for digital assets in general, and what you learn from that experience is that it's very, very, very hard. And I don't think it is a startup's job to change a market or create awareness, OK. Yes, you have to ride waves as a startup. If you're lucky, you're going to start and the wave is going to grow with you. But you need to look at a market that is opening. It's like an earthquake when you see the earth shatters and you start seeing a shift, and you start seeing a huge gap. OK, that's exactly what happens now or when we started in the AI for customer experience space, right? So something happened, new technology, ChatGPT came out, a consumer app based on that technology. That made everyone open their eyes and say, wait, I can now offer better support. I can now cut costs. I can do things that everyone tried to do for fifteen years with NLP, et cetera, but didn't work. And that, also meant that every company that has tried to do that up until this point and have poured millions of dollars or hundreds of millions of dollars. Now at that moment, there was an even playing field. Everyone that put money on that was thrown away. Obviously their distribution remains the platform, like Intercom or Zendesk. But in terms of technology, you had the exact same shot of succeeding as Salesforce or Zendesk, et cetera. So I think those kinds of shifts in the market, unlike where we were in insurance, where we had to educate the market. There were a lot of tailwinds. It's a very kind of traditional market where you don't see a lot of new insurance products going to market. The newest insurance product that went to market is probably Cyber and it went to market in like 1997 and only caught up in 2015. So I don't think that's where you should fight. So a lot of people think that starting a startup or building a new product means we're innovating on every kind of layer, right? We're innovating on technology, we're innovating on an idea and what they expect is that when they tell the idea to someone, someone would say, oh my God, this thing is genius. But in most cases, from what I've seen from friends who succeeded or you can see about it online, that's the exact opposite reaction. What you're usually getting, what we got when we were in the insurance business is, wow, that's genius.