A Product Market Fit Show | Startup Podcast for Founders
00:23:44 · Andrew Tai, Pablo Srugo
[00:23:44] S1: We would have moments where we're sitting around and we're like, okay, this is okay. We've got a business here. We're generating real revenues. We're growing. But if we don't do something different, we can kind of see the trajectory, right? And we really thought hard about, okay, we're not going to walk away from this. As you said, it's like if it was – it'd be easier if it was just a complete failure. There was something here. And we really drilled down on what's actually working? What are the moments of delight where there's magic happening almost, right? And how can we monetize that as a business, differently? Part of this is I'm a big believer that having a customer pay for something is the ultimate validation. The one step before that, though, is – you can't just go to a customer and say, hey, what do you – not to contradict what I said earlier about really understanding the problems. But in my experience, it isn't as simple as, hey, Mr. Customer, what problem do you have to solve? And let me try to just, do that, right? You do have to have a bit of a vision to start. [00:24:50] S0: Once you had this new idea that, okay, maybe we just go direct to auto automakers and dealerships, do you – how do you start? I assume you didn't just go build the product and then try and sell it. There was probably some kind of testing or some discovery type motion there. What did that look like?
00:24:50 · Pablo Srugo, Andrew Tai
[00:24:50] S0: Once you had this new idea that, okay, maybe we just go direct to auto automakers and dealerships, do you – how do you start? I assume you didn't just go build the product and then try and sell it. There was probably some kind of testing or some discovery type motion there. What did that look like? [00:25:06] S1: Yeah, so for much of our history, we were bootstrapped, right? And so we didn't have a lot of luxury to go out there to build massive products and see if they worked. I think that's one of the things that I loved a lot about B2B and enterprise is I could go and sit with a dealer or an automaker and talk to them about the vision of where we think the market is going, what customer experience should look like when it comes to buying a car and solution with that product before it is necessarily fully evolved and fully built out. [00:25:47] S0: And so you had these conversations. How did those go? Did that kind of vision that you explained to them resonate, or with some of them at least? What was from 1 to 10 of wow, we've got the thing, or hmm, I don't think kind of – where did that land?
00:25:47 · Pablo Srugo, Andrew Tai
[00:25:47] S0: And so you had these conversations. How did those go? Did that kind of vision that you explained to them resonate, or with some of them at least? What was from 1 to 10 of wow, we've got the thing, or hmm, I don't think kind of – where did that land? [00:26:03] S1: So I think with some of them, is the accurate characterization. I think we were still early into the space. I think this – again, it's actually amazing looking in hindsight now today where we are, we're a host of companies that are doing online car buying. And it's become much more ubiquitous in the space. But we were still early back then, right? Many of these conversations we were having in 2014, 2015. Some would be able to see the light and be interested in the vision. Now, not every single meeting would be like, oh, hey, yeah, let's go do this. Some of the meetings were like, hey, yeah, what? This is never going to happen. Other meetings are like it's probably going to happen, but I'm hoping not anytime soon. So I'm not going to pay attention.
00:26:52 · Pablo Srugo
[00:26:52] S0: That makes sense. You had this vision, by the way, which is informed. It was informed from your own experience as a customer that the car buying experience had to improve, relative to everything else you saw in other industries. And then reinforced, I think, through three years of being in this market and seeing that when the thing worked, it did provide a lot of value. And so that makes sense. Then it's a question of, okay, delivery and to who, right? In terms of this life cycle, who's on the early adopter side of this curve that is going to get it; is going to be – want to – all the kind of characteristics that early adopters tend to have? What did you do with them when you found them? Did you try to get them? You mentioned paying. Basically the only signature that matters is the one on a check, right? That's the ultimate form of validation. Did you try to get them to pre-buy it, or did you make them – you talk about design partners, is that – what model did you use to kind of get them onto the next step?
00:27:47 · Andrew Tai
[00:27:47] S1: Ultimately, the goal is to get a customer to actually pay for something tangible. That's the ultimate kind of measure in my mind of do you have something of real value or not? Listen, I think that might be biased by my B2B enterprise software experience, okay? I'm speaking in that lens really only. When we started working with some of these early automakers that became our design partners, one is finding just a small number that bought into our vision that where we thought the market was going and where they should go. We worked together to come up with a solution. We hadn't built it yet. We came up with a solution, like hey, this suits your needs, is something that you would buy. We got clarity on what problem we're solving, how we're solving it, how we're going to integrate it into different systems. So we really did deeply understood with our design partners, what it actually needed to be. It matched our overall vision. And so we believed that this thing actually should exist in many of the – those cases where we asked them to pay for. And I think that really is ultimate validation on whether or not they really want it or not. But in many of those cases, our customers helped us finance our growth where they paid for a solution that we designed together. And ultimately that solution became our product. And it scaled. So yes, we're having deep customer conversations to help them shape and form ultimately what our product is. But it's our product because it aligns with our overall product vision and our vision on where the market is going.
00:29:32 · Pablo Srugo
[00:29:32] S0: On that custom software piece, it's not uncommon on the B2B, especially the bigger the customer. The more it's going to feel like custom software. As long as you're the one keeping the product and you have reason to believe that 80, 90%, let's say, of these features are going to be very relevant to kind of the next early adopters you're going to sell to, you look at the early days of Athenian, you look at the early days of StackAdapt, right? Which now is doing $100 million plus in revenue, and it was effectively custom software. I mean, it was a design partner. And you're building what that design partner believes they need, and there's guardrails. But yeah, I think that's a pretty common story. Let me ask you one thing around getting them to pay. I'm always curious on the strategies used. Because one of the things that I think founders always run into in this case is like, okay, yeah, they really want it. But they're like, we'll pay when it's ready. And what's in it for them to pay early? Did you have to use any strategies to convince them to pay ahead of it? Or what did you think incentivized them to get in early, so to speak?