A Product Market Fit Show | Startup Podcast for Founders
00:10:36 · Pablo Srugo, Scott Stevenson
[00:10:36] S1: Why do you think that resonated? [00:11:15] S0: It resonated because lawyers want to make money. They want clients and they want customers. That's one of their biggest pains is where's my next dollar coming from? Where's my next customer coming from? The idea of having a digital storefront was really compelling. How we knew this worked? First we ran ads and people were clicking those ads and we were looking at the cost per click and the cost per conversion into our demo meeting. What's the cost to get a lawyer into a demo meeting? It was way lower than anything else we had run before. We knew that within two weeks of running these ads. We had so much data. We threw up an ad, threw up a landing page. What is the cost to get someone into a demo? We were like, "Wow, this is 90% lower than anything we've run before. They love this." Then we took that and then we were able to go and say, okay, let's take this experiment to the next step. Let's actually roll this feature out to all these customers, implement it and see how it goes. This is where the problems started with that value prop. Again, the time to value issue, getting connected into their website. Lawyers could get this thing up and running, but they had no idea how to drive traffic to it. They're chasing this mirage of – and I'm sure Shopify has this issue too. They probably have tons of people setting up stores and no traffic going to those stores. That was actually a killer problem for that direction for us.
00:11:49 · Pablo Srugo, Scott Stevenson
[00:11:49] S1: It's again this notion that reality doesn't meet the idea? People expect, oh my God, it's going to drive all this traffic, but then the work it takes and all the nuances around it don't let them realize that value? [00:12:01] S0: Exactly, and that passed the CAC payback test. I think our CAC payback was probably six months on that whole motion or less, but it didn't pass the retention and the usage test. We looked at usage retention cohorts a lot. [00:12:15] S1: How much time? That one's tougher because don't you need months of data to see if it flatlines or do you get to see it faster somehow?
00:12:15 · Pablo Srugo, Scott Stevenson
[00:12:15] S1: How much time? That one's tougher because don't you need months of data to see if it flatlines or do you get to see it faster somehow? [00:12:22] S0: In this case actually – I'm probably over-explaining it because in this case, I think you could see what we call the wiggles of death, which is the customer size of the product. You see those first like, oh they logged in, oh they did something and you see a couple wiggles and then nothing. At our company we say actually most things you launch, that's the pattern you see with the wiggles of death. The user is like, "Oh, there's a new feature, I'll play with it." You see a couple little spikes of people using it and then nothing. In my mind that is the default for most companies when they launch anything. I was talking to another company the other day. They built this amazing customer portal and they were amazed that after months of hyping up this portal selling it to customers, they looked at the logs and no customer had ever logged into this portal almost anytime. It had all been their own internal users using it and they thought people were using it. I was like this is normal. This is actually what I see. This is the dirty secret of SaaS is actually getting anyone to use anything. Especially in 2024 when you're so distracted, there's so many other more exciting things to look at, getting anyone to even log into a web app is excruciatingly – [00:13:29] S1: Reminds me of my my usage of threads.
00:13:29 · Pablo Srugo, Scott Stevenson
[00:13:29] S1: Reminds me of my my usage of threads. [00:13:34] S0: Yeah, exactly. Yeah, I logged in once or twice. The wiggles of death, that was my exact usage pattern. I logged in, I went there twice. [00:13:41] S1: That was one experiment. What were some of the others? [00:13:44] S0: It's quite a lot. I think client questionnaires was something we focused on a lot. We had this idea of taking info from a client and feeding it into a template, but actually the questionnaire in its own was useful as a product because when you're onboarding a new legal client, you need to figure out do they conflict with any of your other clients? There's a whole bunch of KYC information you need. We also had this client questionnaire angle of like, watch your lawyers, watch your client questionnaires. That was one that did pretty well. It didn't have that amazing physiological reaction from the customer on it. Some of the others, more advanced types of templating, we even went in terms of – client portal is also something we launched like, hey, lawyers, now not only do you have all these templates on this stuff, you also have a portal that your clients can log into.
00:13:44 · Scott Stevenson, Pablo Srugo
[00:13:44] S0: It's quite a lot. I think client questionnaires was something we focused on a lot. We had this idea of taking info from a client and feeding it into a template, but actually the questionnaire in its own was useful as a product because when you're onboarding a new legal client, you need to figure out do they conflict with any of your other clients? There's a whole bunch of KYC information you need. We also had this client questionnaire angle of like, watch your lawyers, watch your client questionnaires. That was one that did pretty well. It didn't have that amazing physiological reaction from the customer on it. Some of the others, more advanced types of templating, we even went in terms of – client portal is also something we launched like, hey, lawyers, now not only do you have all these templates on this stuff, you also have a portal that your clients can log into. [00:15:08] S1: Maybe one question that comes to me is, everybody talks about you just run a lot of experiments, that's how you're going to have higher odds of finding something that has true product market fit. The other current is that even there's outside pressure, but even most founders I speak with, they just want something that works. They just want something that scales. You have this like, yeah, you would want to just run experiments endlessly until something just takes off but also you just want to find something that works and scale it. How did you manage staying disciplined and what just was that process like while you're running all these experiments?
00:15:49 · Scott Stevenson
[00:15:49] S0: It was excruciatingly hard. We had very high conviction that product market fit should feel having an almost physiological response from your customers where when they see the product their pupils are dilating, there's a neurochemical reaction happening. I remember reading a quote. I can't remember exactly where it was from. I can't remember. You might know. It was a quote that basically said, if you have product market fit, it should feel like basically the product is being pulled out of your hands faster than you can provide it. Your servers are on fire; your salespeople are burnt out. That's what it should feel like. I can't remember where I had read that but it really stuck in our heads, true product market fit. This obviously doesn't always happen, especially in enterprise sales, sometimes it's just to grind the whole time. We decided we're not scaling the company, we're not upping our burn and we're just staying incredibly lean and agile until we have a product that people are pulling out of our hands faster than we can provide it and we're having enormous growing pains and everything's on fire. I would say that to our board. Our board's awesome. They've been very supportive but they are very skeptical about this. Everyone so wants to believe that the thing that they're doing is the right thing. Everyone so wants to move on to the next stage and to start scaling, moving on to the next thing, hiring people after you raise money. There's just a lot of pressure to put that capital to work as quickly as possible and scale the thing and everyone wants to believe that you already know what the thing is.