5 Steps to PMF with Rob

00:20:53 · Pablo SrugoPlay from here

Today, they actually are effectively like a , a warehouse for some really big name companies, big brand name companies like Ikea or, you know, enterprise , uh, enterprise customers. But they started off by storing students things over the summer, right? And like, how do you go from there to, to there? And , and it's because Mark was like constantly willing to listen to indications that , uh, that there could be a bigger opportunity. The other, the owner , actually, here's an , here's a really interesting one. Uh , Rodolph , who's the founder of Potluck, they're doing over eight figures in AR today. They, they pivoted like, you know, five different times, but at one point they were selling research. What they're doing is localized research and they were selling it to malls. And so the idea was like, you're a mall and you wanna know, like you wanna effectively survey the people that visit the mall. And so they have this like infrastructure that uses Facebook and Instagram and these different, different platforms to understand like who might have visited the mall and just survey them. And this is before covid, they're doing this, they're actually gaining real traction. They're getting pretty close to eight figures in a RR on the side. They start getting hit up by like actual research agencies like, like Gartner , these sort of, these sort of players that just want generic research and for whatever reason, and this is the , the difference, like focus would tell you just do malls , like forget this other stuff, right? Opportunity tells you like you're doing malls, it's going well, but here's something that you should at least maybe listen to, right? And so he did listen to it and he serviced them in a small way. Covid happens. Malls shut down <laugh> , his business literally goes to zero. He luckily has this other thing on the side with the gardeners of the world. And it turns out everybody needs surveys now because nobody knows what the hell's going on. The best founders, I will say are insanely focused on what they need to get done. And at the same time, they somehow are opportunistic enough to not have full blinders on to see where opportunities might lead them because the future's just, it's not predictable.

00:22:47 · RobPlay from here

[00:22:47] S1: The , the big focus for me is that you can be focused on the moon and you can be off by, you know, a half a degree in your trajectory and miss the moon and never come back to earth, right? Like it's just small things that deviate and they move you a little bit off and then you're never gonna be recovering. That original idea is gone, now you're heading to Mars, you're dead. Like , and that's, that's the challenge with, with focus is that if you don't take it seriously and if you don't believe in the idea, that's the other thing here is that if, if your idea, you don't have the deep belief in the idea or of the business, your focus will wane. If you're not interested in the idea or you have an expertise in the idea, your focus will wane. And that, that leads to destruction in my mind.

00:23:33 · Pablo SrugoPlay from here

[00:23:33] S0: You have to be in the market to win the market, right? And uh, I I , I posted online about , um, this idea that you have to do research, you have to start with niche markets. And somebody was like, you know , what about open ai ? Like open AI from the get go was like, you know , no <laugh>, right? Like, I'm gonna raise like a billion dollars and I'm just gonna do it. And that is legit. Like you have exceptions. You know, the idea is the vast majority of billion dollar companies start off with niche markets, which is why for me as a vc, like Tim is just not all that important. Honestly. Like I I do look at , um, back in the envelope really quickly, could this in theory become big? And that's like as far as I go at seed, right? Like later on it takes on more importance because you just never know how markets are truly gonna evolve. However, you do have examples of companies that just went big from day one, right? You got your Teslas, you got your Amazons, you got your open ai . Like these are top down founders who decided like electric big, like I'm doing electric cars or like e-commerce big, like I'm doing e-commerce store for everything, right? That was like from day one. But I guess like my thing is, you know, we said something else like for every, for every uh , thousand startups, you get one unicorn for every thousand unicorns, you get one Amazon, right? So like, I still stand by. I think you have to start generally speaking with niche markets and you have to let the market pull you over time versus trying to kind of strategize your way to success. PowerPoint, your way to success,

00:25:00 · RobPlay from here

[00:25:00] S1: The niche is, is the most important thing that you can do. Figuring out in the market who your customers are and will they pay for your pay for what you're offering, what your , what your , what your services or what your software is or whatever it might be. I think that that is the most important question that you need to have answered. Uh , everything else is all crap. You , uh, af before and after that. Like, you have to have that answer.

00:25:22 · Pablo SrugoPlay from here

[00:25:22] S0: Don't kid yourself into thinking that the way to expand is to expand tam . It's not for a long time. At some point, hey, you're doing a hundred million a RR and you wanna do 200 fine. Like, that's just not my, that's not where I place . So I don't know. But you're going from one to 2 million a RI can guarantee you the right way to do it is not by, you know, going, opening up a new market, opening up a new city, opening up a new vertical. It's by doubling down and tripling down unless you actually don't have product market fit , in which case you're kind of more in this exploratory phase. That's the first point . The other one that I'll mention , Rob, is I got an email actually just today this founder's like, you know, I'm doing this thing that you said, like I did all the research, I'm going after a niche market and you know, we actually have success in this niche market. But now when I go pitch VCs, they're like, you're too small <laugh> , your market is too small, your opportunity too small, they won't fund me. You know? And I thought I was thinking about this all day, I was thinking about it and I'm like, here's my answer. My answer is I'm not, none of these are ways to get VC money. <laugh>. Like you want to go get VC money? It was, there was something I heard, oh , I don't remember when, but it was really, really interesting, which was, so many things in life can be gained . Like if you wanna do well in school, you can gain that system. Yeah. If you wanna fundraise, you can game that system. I game that system. Yeah , right? I game school and I game fundraising because you really can build a story and a deck and a presentation, all these other things to make you better at fundraising and to actually get dollars in the door . You can't gain product market fit. You either actually get it or you don't. And that's what makes it so hard. And so all these things, if you focus on a niche market, it may turn out that your market's too small. It may turn out you're not fundable or that VCs won't see the opportunity, but at least you get product market fit. The flip side is you focus on fundraising, you gain the system, you get VC dollars, but if you don't get the product market fit, it's all for Naugh, right? So, so that's kind of my, my take on that , on that, that answer. Well ,

00:27:12 · RobPlay from here

[00:27:12] S1: You know, I , it's, it summarize like I was thinking about it . Product market fit is hard to find. It's very hard to find , uh, like you really have to, there's a lot of maneuvering , uh, to determine true product market fit. But it's really easy to give up on finding, like, you can get really lazy with product market fit where you say like, oh, I got it , I got a good enough and , and I've been in businesses where , uh, like I come into the business and that business is in seven or eight markets and flailing like different cities and uh, and haven't found product market fit. And it's all over the place. And, and the only logical thing to do is, is pull back to one city to figure it out before you expand with the , with the proper playbook. But, but it's really easy to , to trick yourself into thinking that you've got