A Product Market Fit Show | Startup Podcast for Founders
00:23:42 · Pablo Srugo, Scott Stevenson
[00:23:42] S1: This was what? What was V1? [00:23:44] S0: V1 was – I don't know if you've seen GitHub Copilot but it's basically auto complete for your code. Ours was auto complete for lawyers basically. We built a word admin with a button that says draft or whatever and you could be writing a contract and you could just hit auto complete and it would complete what you were typing and that was it. That was really the first feature. We also had a feature called explain to a five-year-old where you could highlight some text and it would explain that in client friendly language. It was really the auto complete feature that took off. We demoed that to our first lawyers and it was an immediate difference from anything we had ever seen before. Their pupils dilated. NFX has this great article. I don't if you've read it, Find The Fast Moving Water. Have you seen this one before? [00:24:22] S1: No, I haven't. I'm going to check that out.
00:24:22 · Pablo Srugo, Scott Stevenson
[00:24:22] S1: No, I haven't. I'm going to check that out. [00:24:23] S0: It's an awesome blog post that came out around the same time. It talks about during these inflection points and points where really groundbreaking products come out, you actually see customers have a neurochemical reaction to seeing the product for the first time where their brain is reconfiguring to be like, holy cow, my whole life is about to change. We saw that. Just this one little feature showing it to lawyers, you could just see the rest of their career flash before their eyes and they're like, holy cow, something is actually here that's going to change how I practice. Sometimes you see a little bit of fear, sometimes you see excitement, but it was this wild moment. This was before ChatGPT. It was summer of 2022. We rolled that out very quickly to some beta users. They loved it. [00:25:17] S1: All your KPIs, the ones you were tracking, this time were in the right place, retention, usage, et cetera? [00:25:23] S0: All the KPIs were off the charts. CAC payback was below one month. There was immediate CAC payback and usage was like we had never ever seen before. [00:25:33] S1: What were some of the wording you used in those ads? How did you describe this?
00:25:33 · Pablo Srugo, Scott Stevenson
[00:25:33] S1: What were some of the wording you used in those ads? How did you describe this? [00:25:37] S0: Do I remember? That's a great question. I don't even know. Actually I can't remember. We had an ad that was riffing off of GPT for lawyers thing but this was before anyone knew what ChatGPT was. I think it was draft and review contracts 10 times faster, writing Microsoft Word with an image of the product working. It was the image or the video of the product working that I think was a big part of it. Sometimes that image or that GIF speaks louder than words and that's really important. One thing I would say is we figured out a lot of patterns along the way that went into this. It wasn't like we just struck it lucky. There was a whole bunch of learnings that we made along the way that made us build this one. We realized getting lawyers to go to web app is almost impossible. That alone is too much friction for a product for lawyers in 2024. We built the Word at it and that was a crucial decision for us. No one else did that. [00:26:30] S1: I didn't even know you could build something for Word to be honest. I don't have any plug of Word?
00:26:30 · Pablo Srugo, Scott Stevenson
[00:26:30] S1: I didn't even know you could build something for Word to be honest. I don't have any plug of Word? [00:26:35] S0: Yeah, it wasn't very popular at the time. Our developers cringed. They're like really we're going to deal with these messy Microsoft APIs. This doesn't sound like fun. That spikiness and that contrarian is part of what helped us have this big lead on the market. We knew how hard it was to even get them to go to a web app. That was crucial. The other thing we learned is you have to be able to explain what your product is in a five second GIF. If you can't, it's like no one has the attention span for it anymore. We knew it had to have that element where you have a five second video and someone's like, holy cow, what is this? We knew it had to work with bespoke documents and we knew that the time to value had to be zero. That's a huge pattern that we still use today when we launch new things is no one has time for configuration controls, setting things up anymore. It has to be, you turn the thing on and it immediately works. These things became very important to now even as we launch new features, these attributes become really important aspects for how we evaluate new features and their potential fit. If you get those right, you see actually the usage charts, which most of the time you don't.
00:27:39 · Pablo Srugo
[00:27:39] S1: I mean, this is the interesting thing and there's this broad concept like you make your own luck or however you want to talk about that. You had actually two things. One is spend a lot of time with your customers who really understood them and how they worked, but also effectively build a machine that was really good at acting on a new idea and trying to figure out delivering something really quickly and trying to figure out if there's true pull. All those things had been done for years when this moment happened and so it makes sense that it worked out in the way it did.
00:28:12 · Scott Stevenson
[00:28:12] S0: I think there's one way I would compress all our insights into a framework that I would say has enabled us to create these PMF moments way faster now than we could back then. The big thing, and this has been this amazing breakthrough on our team in terms of how we decide what to build next and how to replicate these moments; not every four years but every three or four months. There this framework we call basing the next features you build based on pattern matching, not based on verbal reasoning. I think this is how we screwed up so much and how many companies screw up and how I think you can make really good bets. What I mean by this is, when we first started we used verbal reasoning to explain what we're going to buy. Lawyers want to make more money, therefore, we're going to give them a store. These sorts of little simple narratives are so contagious at the board level, at the founder level, at the company level. That little phrase I just said, lawyers don't care about efficiency. They want more clients, therefore, we're going to build them a store. It's so easy to build these little narratives that are super powerful and super contagious and to go all in on them because everyone thinks they sound reasonable. We learn over and over again that actually that thing is actually really bad because the world is way more hyper-dimensional than that. There are way more characteristics about a feature that will determine whether it's successful or not. We learned that the form of the feature, whether it's in Word or not, actually matters more than almost the product itself, because If you're building a web app for lawyers, sorry, you already lost the game. Whether that story makes sense, doesn't matter. There's so many other characteristics. The characteristics we look at are like, is it zero time to value? Can it be explained in a five second GIF? Does it require zero habit change? Is it already in the workflow? The other characteristic we have is did someone on our team actually build this based on their own inspiration in their own time? That's a huge thing that we've noticed is almost everything that we've built that was really successful, someone was actually just inspired to go and hack on, on their own outside of our normal development cycles.