A Product Market Fit Show | Startup Podcast for Founders
00:30:29 · Pablo Srugo, Alex Back
[00:30:29] S1: You started around 2010. When did you get acquired? What year was that? [00:30:31] S0: We started building the business in 2010. It went live in 2011, got acquired in 2018, so that conversation started in 2017. We were in business for about five or six years I guess. I mean, it felt like an eternity, but theoretically, I mean we grew pretty fast. My partner and I, we were making nice livings. Everything was going really well. Our business was growing. We had a bunch of employees and then this company came to us and asked us if we would be interested. [00:31:04] S1: Walk me through the emotions, especially the last few weeks before you actually get this deal closed because the reality starting a business and especially I think a bootstrap business where at some point you're paying yourself a decent salary, but you're always mining cash flow. Every now and then there's an entrepreneur who wants to build a business that they can run forever. I would say 99% it's about building a business and at some point selling it and then doing another. When you get here, I mean it's a huge event. What was that like? What did that feel like, those first weeks right before it and then when the thing actually happened and closed?
00:31:04 · Pablo Srugo, Alex Back
[00:31:04] S1: Walk me through the emotions, especially the last few weeks before you actually get this deal closed because the reality starting a business and especially I think a bootstrap business where at some point you're paying yourself a decent salary, but you're always mining cash flow. Every now and then there's an entrepreneur who wants to build a business that they can run forever. I would say 99% it's about building a business and at some point selling it and then doing another. When you get here, I mean it's a huge event. What was that like? What did that feel like, those first weeks right before it and then when the thing actually happened and closed? [00:31:39] S0: I've never worked so hard in my whole life during the diligence process to provide all of the things that they were looking for in the format that they were looking for them. We used a third party. I was doing big business things in my living room at night after my kids went to bed. I was educating myself at the same time about how to do them and how to put together financial statements in the way that they needed to see them and things like that. I'm super proud of the body of work that I did personally to just get us ready for that. At the same time, it was very rewarding because a lot of it was just asking and answering questions about what made our business successful.
00:31:39 · Alex Back, Pablo Srugo
[00:31:39] S0: I've never worked so hard in my whole life during the diligence process to provide all of the things that they were looking for in the format that they were looking for them. We used a third party. I was doing big business things in my living room at night after my kids went to bed. I was educating myself at the same time about how to do them and how to put together financial statements in the way that they needed to see them and things like that. I'm super proud of the body of work that I did personally to just get us ready for that. At the same time, it was very rewarding because a lot of it was just asking and answering questions about what made our business successful. [00:32:18] S1: What about the anticipation of it? Were you able to just cost and be like, well, if it happens, it happens, if not, whatever, we have our business or were you like, oh my God, let's freaking close this thing, I can't wait to close this thing?
00:32:18 · Pablo Srugo, Alex Back
[00:32:18] S1: What about the anticipation of it? Were you able to just cost and be like, well, if it happens, it happens, if not, whatever, we have our business or were you like, oh my God, let's freaking close this thing, I can't wait to close this thing? [00:32:31] S0: No, Option B, because we were – at a certain point, I think with anything you get excited. You start committing to it hardcore. We started really not counting our money or anything like that, but we were really focused on getting this done. Then we had a snag right at the end in the last few weeks that delayed us about a month which was interesting. It had to do with the difference in cash basis accounting and accrual basis accounting that we were on cash basis and they were on accrual. It materially affected how our payout and payment situation was going to work. We had to take a big one on the chin right before closing this deal. My partner who had a larger stake than I did, he was really thinking about shutting it down. I'm hopeful but also trying to manage my emotions and also trying to keep him calm and sane. I'm working all the angles at the same time. When it finally closed, like, yeah, man, what a wonderful feeling to have a climactic moment in one's life! It's like winning a game. You watch these sports games. Someone wins a Super Bowl, like, man, what must that feel like? I'm not saying this is akin to winning a Super Bowl, but it is like – [00:33:53] S1: The feeling is probably similar. Yeah.
00:33:53 · Pablo Srugo, Alex Back
[00:33:53] S1: The feeling is probably similar. Yeah. [00:33:55] S0: You close something, it's done and you can celebrate an actual achievement not just growth or something more nebulous. It's like, you didn't sell the business yesterday, today you did, and this is the day you can celebrate. Does that make sense? [00:34:10] S1: Boom, I love that. Yeah, makes perfect sense. Maybe that's a pretty good endpoint actually. Let me ask the two questions that we always close on. The first one is, I'm actually really curious how it fits in here. When did you feel like you had true product market fit?
00:34:10 · Pablo Srugo, Alex Back
[00:34:10] S1: Boom, I love that. Yeah, makes perfect sense. Maybe that's a pretty good endpoint actually. Let me ask the two questions that we always close on. The first one is, I'm actually really curious how it fits in here. When did you feel like you had true product market fit? [00:34:27] S0: I think we knew early on that we had product market fit light, I would say, in the sense that we figured out that there was a gap in the marketplace that we were filling. Literally price points and product that people were like – everybody who bought our stuff was like, oh, this is a really good value. We found product market fit initially in our curation of the right product at the right price point. Then I think it was when we started shipping nationally and realized that people outside of our word of mouth, like LA community, were actually interested in buying this product that we had. We were offering product and a service being an online business. You can buy furniture and we'll deliver it into your house and set it up for you and everything so you don't have to lift a finger, that people were really looking for at the time. They were looking for this convenience. Yeah, in 2013 when we flipped that switch and took off our little zip code checker, our first order was in Florida I remember and I'm like, oh, perfect, literally the furthest place we could go to aside from Maine. We figured it out and that was a real unlock for us.