A Product Market Fit Show | Startup Podcast for Founders
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?
00:21:03 · Pablo Srugo, Hermann Frank
[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? [00:21:13] S1: Yeah. There's there's quite a range of companies, and like, I think today it's like a mid eight digit like ARR volume for us. So it's it's not a it's not a tiny market. They compound, they grow at like a 150% NRR. So like it's a... Yeah. It's good business. It's not the business that will grow build a $100,000,000,000 company, but it was the perfect niche. Right? Like in Westy or also Told. Like you need to find the one group that, like, needs a product more where you can specialize, and that was it. And that allows us to build a much more resilient, scalable platform that is ready for smartphone use cases. Right? Where you are powering the primary smartphone subscription of an individual that, like, if there's anything wrong with that subscription for a second, you're you're kinda screwed. And the other case, like, you had a lot more leeway. It was way more forgiving.
00:22:04 · Pablo Srugo, Hermann Frank
[00:22:04] S0: But it's also... While it is more forgiving, it's also the perfect example of what you kinda mentioned there, which is this this smaller niche market, but that has a very sharp pain point. I mean, you're dealing with 30 to 40% returns, your business is not working fundamentally. You'll do anything to... You'll try anything, frankly, to solve that, which is different a little bit than kinda where you're gonna move to, and we're not gonna talk about that now. But, you know, you're... You become an enabler. You're right. You're like, hey, I'm a fintech. You wanna have a new revenue stream. You plug gigs in and and you kind of sell this this mobile service, and the market is much bigger. But at least at first, I don't know if the pain is as sharp as this smartwatch thing, which which you needed because probably your product at that point was not at the same level in terms of production and in terms of, you know, feature rich and whatever. So it was, like, good enough for them, maybe not good enough for everybody else, but really got you going. [00:22:51] S1: Yes. It good point. [00:22:52] S0: You love this show. You don't wanna miss the next episode. Why would you? So hit that follow button. Trust me. It's in your own best interest. What's the next step at... Like, then you're kind of end of twenty one, you launch. Is this now the time when you go out and then you've got some traction? So I assume you got in kinda raised some funding?
00:22:52 · Pablo Srugo, Hermann Frank
[00:22:52] S0: You love this show. You don't wanna miss the next episode. Why would you? So hit that follow button. Trust me. It's in your own best interest. What's the next step at... Like, then you're kind of end of twenty one, you launch. Is this now the time when you go out and then you've got some traction? So I assume you got in kinda raised some funding? [00:23:06] S1: Yeah. We grew to like a million ARR. Right? Like, this is pre AI, million ARR in three months, like, which was like quite amazing growth. So we raised a serious AI on top of that. And like that basically buys us the ability to like build the platform we actually set out to build. So we keep scaling with kids smart watches, and then we start graduating to like feature phones, and then smartphones, and just like powering a range of device customers. [00:23:34] S0: Still on top of the aggregator, or now you're going direct? [00:23:36] S1: That was still on top of the aggregator. Like, it took us actually quite a while, like, to get the first deal done and to migrate. But we kind of improved the aggregator connection meanwhile. Like, we had like very first smartphone use cases on on the aggregator still. The economics were just terrible. And like, you didn't have like full feature set, but it was pretty pretty decent in terms of like the the SIM card functionality. The aggregator's feature set was like not not not very versatile.