A Product Market Fit Show | Startup Podcast for Founders
00:15:42 · Pablo Srugo, Hermann Frank
[00:15:42] S0: This is what I always find especially challenging when an idea depends on you bringing large enterprises into play. As a tiny, you know, little startup with no credibility, no name, you know, relatively no funding. What you need to do is clear. The opportunity is relatively clear. What's the first step? Like, how are you gonna go and knock on, you know, I don't know who you need to to get AT and T, whatever the the big, you know, telcos that you need to get to play with you? How do you even approach them, or is there a step before that step? [00:16:10] S1: So when we started telling people that that's what we wanna do, like, and we started talking to first investors, we got noes left and right, because they didn't talk to their buddy at like AT and T, or to telecom, and Vodafone, they said, yeah. No carrier will ever let them do this, right? Like this is this is not possible, people have tried, and yada yada. So we kind of had to chew our way through it. It's like the way we actually got our first deal done was not even with a carrier, because they wouldn't talk to us. So that part was actually true initially. We found an aggregator that was behind on their commitments with the network. And we integrated there, and we built the first version of a product on that aggregator with terrible economics, frankly. It didn't make any money on the... [00:16:55] S0: That'd probably not sure what what that means. Who is... Like, what what's the aggregator?
00:16:55 · Pablo Srugo, Hermann Frank
[00:16:55] S0: That'd probably not sure what what that means. Who is... Like, what what's the aggregator? [00:16:59] S1: Aggregators are these actors in the marketplace that they get a deal with a carrier, and then they find smaller customers to basically split this pool because their customers are too small to get served by the carriers themselves. Or in our case, too small and slightly undesirable. [00:17:20] S0: So they had pre negotiated, let's say, MSAs with with several of these telcos already, and you kinda just absorbed that? [00:17:26] S1: Exactly. We were just able to plug into the same integration that they had. And for the first use case we had, it worked fine. Like, it would never work for, like, what we're doing today, but, like, it worked fine for that kids smartwatch use case. And then we started onboarding customers there, and we we went to the network and said like, hey, we build a product like on your network, and like here's what it does, and here's like where we are. And they saw the growth. Like they were wondering where is the growth coming from. It's aggregated, like it was like relatively flat. So that got us into the door to get our very first deal with the carrier. And lucky for us, it was AT and T, one of the largest carriers in the world.
00:17:26 · Hermann Frank, Pablo Srugo
[00:17:26] S1: Exactly. We were just able to plug into the same integration that they had. And for the first use case we had, it worked fine. Like, it would never work for, like, what we're doing today, but, like, it worked fine for that kids smartwatch use case. And then we started onboarding customers there, and we we went to the network and said like, hey, we build a product like on your network, and like here's what it does, and here's like where we are. And they saw the growth. Like they were wondering where is the growth coming from. It's aggregated, like it was like relatively flat. So that got us into the door to get our very first deal with the carrier. And lucky for us, it was AT and T, one of the largest carriers in the world. [00:18:08] S0: Yeah. The big one. Before moving on, actually, if you don't mind, let's let's just dive a little bit deeper on that because you find the aggregator... First of all, just in terms of timelines, started 2018 with the first idea. When does this kind of Stripe for Telco's idea come, and and how long are you in this exploratory phase until you discover this aggregator?
00:18:08 · Pablo Srugo, Hermann Frank
[00:18:08] S0: Yeah. The big one. Before moving on, actually, if you don't mind, let's let's just dive a little bit deeper on that because you find the aggregator... First of all, just in terms of timelines, started 2018 with the first idea. When does this kind of Stripe for Telco's idea come, and and how long are you in this exploratory phase until you discover this aggregator? [00:18:24] S1: So the Geeks idea came, like, I'd say, mid twenty twenty. Then we spent a couple months, like, talking to market, understanding, building a real thesis around it. And then we applied to YC, like, at the end of twenty twenty. And we got into YC for the winter twenty one batch. So we... Like, January to March, we did we did YC, and that's where we started building the product for real. And we launched commercially at the end of twenty one. And when did you land this aggregator? That was at around that time. [00:18:56] S0: Okay. So for... You actually... You went over a year at, like, stuck at idea stage effectively because you couldn't you couldn't really deploy anything. [00:19:04] S1: Yeah. There was like a a a short phase before that where we were like playing around with like Twilio setups and so on, but like that was not feasible at all. It's like it's not the same type of product, but it allowed us to basically sandbox certain parts. But yeah, it was not a product we could have taken like online commercially.
00:19:04 · Hermann Frank, Pablo Srugo
[00:19:04] S1: Yeah. There was like a a a short phase before that where we were like playing around with like Twilio setups and so on, but like that was not feasible at all. It's like it's not the same type of product, but it allowed us to basically sandbox certain parts. But yeah, it was not a product we could have taken like online commercially. [00:19:21] S0: And then how do you... So that's the first half, which is, okay, you get this aggregator, like, finally, I have access to some some amount of these networks, some subset in terms of functionality or whatever. And then the smartwatch market, like, where does that... You know, tell me more about that. Where does that come from? [00:19:35] S1: So, yeah, that was like a really random introduction we got from one of our advisors. He's like, oh, yeah. I'm on the board of this kid's smartwatch company. You should talk to them. They're they're having massive problems with the... With, like, SIM cards. And what happened is they were selling these watches on Amazon, and people would order them and put a random SIM card in. [00:19:54] S0: Like a physical, like it had room for a physical SIM for whatever country. Okay.
00:19:54 · Pablo Srugo, Hermann Frank
[00:19:54] S0: Like a physical, like it had room for a physical SIM for whatever country. Okay. [00:19:58] S1: Physical SIM. And then the SIM wouldn't have a PIN, but the watch would get blocked because of the PIN. Or the carrier locked the SIM to only work with smartphones, and then so it wouldn't work with a smartwatch because the plan was not designed for a smartwatch. So all these things would happen, and people would think, hey, this smartwatch sucks. But it wasn't the smartwatch, it was they put it in the wrong SIM. So they were looking to just launch their own mobile service. And what we did is we embedded the SIMs at the factory into the device. And when you were activating the device, like in the parental app on the phone, you could just subscribe to the service. You pay, and instantly activated the subscription. And it solved all their problems at 3040% returns on these devices on Amazon. Right? It created a subscription revenue stream, and they started started growing much faster. [00:20:53] S0: And did you enable this globally? Like from day one, that aggregator, was that global coverage that you had or which markets? [00:20:58] S1: That was The US first, and then since we have expanded into more markets with them. [00:21:03] S0: So that's your first kind of customer, and then you dive deeper into this... Was that was that even a market? Like the smart... Was kids smart wash? Was there several companies that face the same issue?