A Product Market Fit Show | Startup Podcast for Founders
00:32:10 · Scott Stevenson, Pablo Srugo
[00:32:10] S0: Yeah, that's a good question. I think ideas can come from anywhere. They can totally come from the verbal reasoning. The characteristic framework is the gut check on validating could this actually work? Ideas can come from stories totally. They can come from all sorts of weird places. You also need stories to motivate a team. A team is not motivated by staring at a spreadsheet of numbers. [00:32:32] S1: To be clear, it's not like you have a framework where you have these characteristics and you're somehow able to go from that to, oh, maybe this feature will work or do you, because that's hard and unintuitive? [00:32:42] S0: Yeah, no, we don't use it for idea generation. It's more so we have a list of 50 things we could do, how do we rank which one to actually do? Yeah, but it's tough. We have to be good storytellers. I always call the storytelling power as this dark magic and you have to be very careful because it can screw up your own radar if you use it in the wrong way. [00:33:03] S1: The worst part of being a good storyteller is you believe yourself. [00:33:06] S0: Yeah, exactly. I have become more skeptical of simple stories though generally as like, because they're so contagious and because people rally around them so quickly those are the ones where I apply the framework more intensely because I'm like, okay, hang on, this is it.
00:33:06 · Scott Stevenson, Pablo Srugo
[00:33:06] S0: Yeah, exactly. I have become more skeptical of simple stories though generally as like, because they're so contagious and because people rally around them so quickly those are the ones where I apply the framework more intensely because I'm like, okay, hang on, this is it. [00:33:23] S1: I love it because the way I see it happen from my vantage point is this is more – I mean it's important across the board but it's so common in pre-product market fit because we're trying to find something that could work. You'll have the founder tell you, so actually what we're going to try now is this thing, here's how we came up with this and here's why it makes sense and you think – what I end up thinking to myself is because I've seen it so many times, I'm like, yeah, it makes a lot of sense, I guess we'll see what happens because I don't have – but your thing is like, that makes a lot of sense. You put it against this thing and it's like actually it is likely to succeed or no, actually it's not likely to succeed. It gives you that extra data point because that's what it's all about is you have a lot of ideas, but you only have limited time. Even if you're the fastest team possible, you still are not going to get through all them and you certainly don't want to get through all of them if you don't have to. Finding a way to reorganize these not on who has the loudest voice in the room, which one is the best story, but something a little bit more that's quantitative hard data. That's great. Honestly, I hadn't heard of that at all before, so I'm really glad you shared it.
00:34:34 · Scott Stevenson, Pablo Srugo
[00:34:34] S0: Humans need stories to communicate and operate and be motivated. You need it to some level. You have to have an inner circle and your board meeting has to be this place where you actually are really careful about this drug. Actually it's a drug. It screws up your perception of reality. I know there are lots of board meetings that are driven by these stories and people nodding their head to me like, yeah, that makes sense. I think you have to create this somewhat story free zone or this safety zone where we think about things a little differently. Otherwise, it's too easy that for the boardroom to become this storytelling place where we all convince ourselves of things that are really a little bit too simplified and not really digging into the data and stuff. [00:35:20] S1: My next question is, when did you – there's a difference between a new feature and changing the company's name and going all in on this. How did that transition happen?
00:35:20 · Pablo Srugo, Scott Stevenson
[00:35:20] S1: My next question is, when did you – there's a difference between a new feature and changing the company's name and going all in on this. How did that transition happen? [00:35:29] S0: Yeah, so we actually did it out of the gate. One thing, I've become very cognizant of how simple is it for the user to grasp this? I thought that by splitting this out as its own website and brand, it would just be simpler to communicate what it is. Whereas if it's like, oh, Rally launch is an AI feature, it's immediately just info overload like what's Rally? What's all this other stuff? How does this fit in? It's so confusing. If I had my time back, those a hundred landing pages, I wouldn't have put under Rally. I would've been like, spin up a new domain names. You get this feature craft and your feature list growing is actually not a good thing. It actually overwhelms customers. It starts to feel like it's overlapping with other products they're using. This is actually the first time we're like, you know what? We're just going to split it in a totally different brand and test it that way. [00:36:12] S1: That's so smart. Actually I haven't heard of that. I mean, every now and then somebody spins up a new product, but just the idea of almost every new meaningful feature in this pre-product market fit phase, obviously it might as well just be a new brand. You might as well just start from zero, take all the sunk cost out and be as clear as possible. You give it the best chance of success. That resonates. That makes a lot of sense.
00:36:33 · Scott Stevenson
[00:36:33] S0: Exactly, because the growing feature list weighs down your new thing so much. Also figuring out how you're going to integrate this new thing and everything you already do and make it all make sense, it's like it's not supposed to make sense. You're trying experiments. You don't have to combine all the work you did together. Get rid of the sunk cost. All you're looking for is lighting a bottle. All the failed experiments, you don't need to keep them. Yeah, we did that. Then we also eventually changed the company name. That took a little longer to fully go all in. I remember the first time we brought these results to our board because we had not talked about this after this point. We had started experimenting this. It was just an evening, a weekend experiment. We had other stuff going on. We came back to the board. We're like, hey, we launched this little thing and here's the growth chart. It's like this is going to eclipse all the work we did in the past three years within three months. Everyone was just like, wait, what? What's going on? I think you had some element of confusion and worry like, does this company know what it's doing? You never told us about this. Where did this come from? I was like, I think we got to go all in on this. It's just like, oh my God! You built up all this context over years of what the product is and then all of a sudden you're saying leave all that behind. I had been communicating with our investors in the background too, so it wasn't complete surprise but it was a weird moment of like, hang on a minute, this is strange. Then it didn't take very long for our team and board to come to a consensus like, yeah, you know what? These are absolutely stellar growth numbers and this is going to eclipse everything we've done over the last three years.
00:38:03 · Pablo Srugo, Scott Stevenson
[00:38:03] S1: What did you do with your customers on Rally? Did you just abandon Rally or did you still have it and it's just in the background? [00:38:09] S0: No, we still have it. We still sell it and we're still – I would say the value prop of templates still exists within our ecosystem of Spellbook. Spellbook we want it to be the ultimate AI assistant for corporate and commercial lawyers. Templating is still an aspect of what our customers want to do for sure. That templating engine will roll in slowly into Spellbook as a feature because it is actually useful for certain things that lawyers want to do. [00:38:35] S1: I know obviously mid-2023, you raised about 10 million and then six months after that, so earlier this year you raised another 20 or so, so clearly there's something going on. Can you give a sense of scale, like number of customers? Maybe just curious what Rally was like at that time and then how fast and how big Spellbook has gone? [00:38:54] S0: Yeah, so Rally we had around 100 law firms. Now we're close to 2000 law firms on board around the world. [00:39:00] S1: Wow! That's insane. [00:39:00] S0: Yeah. A little over a year to year and a half, we went to 2000 law firms. [00:39:10] S1: That's product market fit. [00:39:13] S0: Yeah, exactly. We're in a lot of different countries. We see one and two million contracts a year right now go through our system.