A Product Market Fit Show | Startup Podcast for Founders
00:22:04 · Pablo Srugo
[00:22:04] S2: We have tens of thousands of people who have followed the show. Are you one of those people? You want to be a part of the group. You want to be a part of those tens of thousands of followers. So hit the follow button. The concern, right? Always with this stuff and again, now, maybe it's less of a concern just because everybody's doing it, but it hasn't fundamentally changed the equation. Which is how much can you really do for one customer before? You mentioned you didn't really care about scalability, but that's still on a lot of investors and I think a lot of founders minds, right? hey don't want to get stuck being this consultancy like thing. Obviously, in your case, you were able to scale it. Maybe just tell me more about, is there a middle ground? Is there a balance? Is it just a matter of, at first it takes a long time but later on you have a playbook and it's faster, or is it still really custom? How do you manage that trade off between wanting to give your customer the best possible experience, which means hand holding, means going in, embedding, et cetera. But also wanting to be able to add a lot of customers, add a lot of ARR fast, which means, you know, holding those resources back to work on kind of core product.
00:23:02 · Ben Rudolph
[00:23:02] S0: So I actually remember this moment where I told Nick, my co founder, all our engineers are integrating data right now. We can't build any product, we need some other strategy and, you know, I think in those moments, scarcity breeds innovation. And we started building this other platform that allowed people who weren't engineers to integrate data. And that was our first shift to, oh, OK, if engineers don't need to integrate data, that saves a ton of time. And so, we started building out this other function within Peregrine. Deployment strategy is what we called it and they were, think of, maybe studied computer science. Went to McKinsey for a couple years, wanted to work in technology and then they could integrate a bunch of data. Work with the customer. Partner with them to do that last mile configuration and I think we've always thought about that investment as a growth driver, not as something that needs to be optimized away. And of course, as you grow fast, you need to invent and you need to innovate in order to save time, and free up resources. That's something we're continuing to do and we always do. But I think our frame of mind on it is just maybe a little bit different.
00:24:15 · Pablo Srugo, Ben Rudolph
[00:24:15] S2: Well, because the impact is on speed and margins, right? That's usually where you would see it. Was that a problem, let's say, at least on the fundraising side back then? Again, today, I don't know that it is but back then. Was that a thing that people were like, oh, your margins aren't eighty five, they're sixty percent and whatever? Or maybe the other question is, what was the size of the ACVs? And maybe that justified it as well. [00:24:36] S0: To answer your second question first, our average ACV right now is around $250k. [00:24:43] S2: Which means, to be clear, back then it was probably smaller, right? It was probably $50k, $100k? [00:24:44] S0: Yeah, yeah, definitely back then it was a little bit smaller. [00:24:46] S2: So they're not, like we're not talking, you know, multi-million dollar deployments for the most part. Where it's like, yeah, obviously you're going to throw ten people at it. You're really playing this, you know, somebody's giving you $100k and you're putting three engineers on it for a couple of months. Like it's tight, is that true? [00:25:00] S0: I think that's true in the short term. In the long term, I'd say you probably have better, you have better margin. Because you have invested in that customer to the point where the technology is successful and if that technology is like deeply embedded in the way that organization works. [00:25:17] S2: Right, retention must be amazing, I would assume. [00:25:19] S0: Yeah, retention is very good at Peregrine.
00:25:19 · Ben Rudolph, Pablo Srugo
[00:25:19] S0: Yeah, retention is very good at Peregrine. [00:25:21] S2: That's probably two sided, one is the types of customers which probably don't, you know, they don't buy and churn technology as fast. But also just if you go through months of integration, that's some cost and the value. Frankly, that you're delivering as a result of that. So both sides of that coin probably put you in a place where you're like, I'm not doing this again in a year, you know. [00:25:41] S0: Exactly and I think it all goes back to this North Star. If a customer is receiving value that is way more than what they are paying for, then you are in good long term shape with that customer and that's the thing that we focus on. [00:25:55] S2: One of the challenges I would say with selling into municipalities, law enforcement, these non. You've got B2B, which is the obvious, the classic, and then you got B2C. And then you got business to something else, government, whatever. These non, it's not consumer where it's, you know, the sort of things they care about, just entertainment and whatever. [00:26:12] S0: Yep.
00:26:12 · Ben Rudolph, Pablo Srugo
[00:26:12] S0: Yep. [00:26:13] S2: And then you got businesses, care about making money, ROI, right? And then you got these in the middle where it's, depending on the situation, depending on the politics, depending on whatever. They have different priorities and a lot of times. At least from a startup perspective, it's always a bit of a hard mode situation. Because you're like, it's hard to scale, it's slow, et cetera, et cetera. What do you think has worked in your case? You're deep into it. This is the perspective of somebody that's outside, the thing that gets said, right? You're actually in there. What are some of the pros and cons of selling into these types of buyers? And what helps you crack it in the way that you have, and be able to actually build a scalable business? [00:26:50] S0: Yeah, and I think some of this is very much hard lessons learned over time. The go to market motion for Peregrine was a very hard one. I'd say it was one of the hardest challenges that we had to overcome in the business. We had this phase of the company where I'd say we were in the wilderness trying to find that Product Market Fit. We had that product market fit, we were trying to expand more and then getting that scale. That go to market scale, was really, really hard and that took a lot of learning, and understanding on how government processes work. It took a lot of learning and understanding on building the pipeline. I think there are little tricks in every single state and county that you have to learn. It's hard to enumerate every single one.
00:26:50 · Ben Rudolph, Pablo Srugo
[00:26:50] S0: Yeah, and I think some of this is very much hard lessons learned over time. The go to market motion for Peregrine was a very hard one. I'd say it was one of the hardest challenges that we had to overcome in the business. We had this phase of the company where I'd say we were in the wilderness trying to find that Product Market Fit. We had that product market fit, we were trying to expand more and then getting that scale. That go to market scale, was really, really hard and that took a lot of learning, and understanding on how government processes work. It took a lot of learning and understanding on building the pipeline. I think there are little tricks in every single state and county that you have to learn. It's hard to enumerate every single one. [00:27:34] S2: What did you learn? Ultimately, what was the go to market that started to actually work for you guys?