A Product Market Fit Show | Startup Podcast for Founders
00:18:44 · Pablo Srugo, Colin Zima
[00:18:44] S2: You also like macro timed it perfectly. I don't know if you would have gone $30 million like January '23. [00:18:50] S0: We got very lucky. Honestly, even in March of '22. It was a little bit more dangerous than February of '22. [00:18:56] S2: That's right but you got it May and August, you said, '22? [00:18:58] S0: We did but this is also the nice thing about working with people that you trust. These were people that were on the board at Looker for the last ten years with us. That we knew really well, that wanted to come take this bet with us and they were sort of just like, we trust you guys. Go build. [00:19:13] S2: So I mean, look, raising that much money early is obviously awesome and a lot of people would be jealous of it. There are problems, there are challenges with it. The most common one that I've seen of people that get to raise. Let's say anything, I would say anything above $10 million at idea stage. The challenge is, do you spend a lot of time and money on the things that don't matter? Do you build a lot of polish? Or do you still somehow find a way to stay focused on the thing that's really going to move the needle because you still got to de-risk them. You still don't know. This is somebody gives you $30 million doesn't mean it's going to work, right? So how did you structure it after you raised that money?
00:19:49 · Colin Zima, Pablo Srugo
[00:19:49] S0: I think that just generally we're on the very stingy side of how we operate and we're kind of old guys as startups go. So we obviously spent some money early, we had ten engineers with no customers. But we were very focused on the economics from a very, very early point, like mapping things out. We didn't just spend money. We didn't get an office for a year. We tried to be really, really thoughtful about our spend. Because we do want to minimize this stuff. At the same time, we knew we were playing the venture game. When you go raise money that is now an expectation that you need to hurdle and so you need to understand the game that you're playing and we wanted to play the venture game. It's a crowded space. We needed to invest in sales and marketing. We needed to invest in products and engineering. We got to go build for a year and a half to go do these things. [00:20:35] S2: How many people did you say you were, before revenue? [00:20:37] S0: Before revenue, we probably got up to twenty people. So relatively large. [00:20:43] S2: Decent amount. Because at twenty, like at five is where you have to do zero management, zero overhead. Once you get to twenty, you've got at least some communication, let's say overhead. if you want to call it, at least that. Even if everybody's a self-starter. [00:20:58] S0: I would say a little bit, we're a trio of founders. Which helps a ton and out of those twenty people, maybe fifteen of us had worked together at Looker. [00:21:04] S2: I see, yeah
00:21:04 · Pablo Srugo, Colin Zima
[00:21:04] S2: I see, yeah [00:21:07] S0: I want to say it was like fourteen Lookers and five people that had worked with Chris at Stitch. [00:21:11] S2: OK. [00:21:07] S0: So it was twenty people, but it was twenty people that had ten years of history on average. [00:21:16] S2: There you go. [00:21:17] S0: And that just increases the bandwidth really significantly. We were just really light touch on management. We just sort of had smart people and let them go build in their areas. So we just got to sort of operate very exceptionally in terms of how we built. We knew that everyone was going to contribute. We knew the types of people that were sitting around. We all kind of trusted each other and I think that just let us move quick in terms of building. [00:21:40] S2: So in a sense, the hiring was relatively easy because it was at a network. The fundraising was relatively easy because you had the relationships. The product idea was relatively easy because it came from the history that you built. What did you do on the go to market side? How did you play that game, especially as you're building and you have a pretty clear idea of what you want to build? I don't think you want to do it, especially with this type of product. These MVP kind of throwaway products that you're trying to put out, right? So how did you structure that first year of heads down building with go to market?
00:22:09 · Colin Zima
[00:22:09] S0: Yeah, I just tried to do as many demos as we possibly could. We would try to show the product to every single person that would sit down with us for an hour. So I just pinged every single person that I knew that had used Looker in the past, that was a data person, literally anyone that would take a conversation. I would try to show the product and part of it was just that I was excited, and kind of wanted to show people the product. I learned how to demo much better. Sales is a technique that people need to learn. You need to ask for things. You need to do discovery. You can't just show them your product and be like, this thing's awesome, isn't it? But we did a lot of demos, and it helped both shape what people understood about the product and what they didn't understand. It also just helped us validate our assumptions of, is this idea good? Do you have this problem? Do you want to write SQL and have a data model? Sounds like a very simple question, but it's another thing to say, is that enough to delete your other tool and come to this other tool. And we got a lot of, no it's not enough yet, it's not enough yet, it's not enough yet, until it was enough. And then it was great, now we have a product that we have sort of convinced a handful of people is real. Now we just need to sort of keep sizing up those companies and keep making the product better. Because we also get to continue to improve the product and when you're in these big established spaces that are really crowded. Even though our team was maybe twenty people at the time, our engineering team was moving faster than the incumbents and that's an enormous advantage. Because people want to both buy you for what the product's doing today, but they're buying you for the slope too. They can see your progress and they want to buy that progress also because the beautiful thing about SaaS is we want them to be a customer for the next twenty years. So they're not buying the product today either. They're buying the trust that you will have the best product over the next period of time.
00:23:57 · Pablo Srugo, Colin Zima
[00:23:57] S2: Especially for a product like BI or really any product where you're not switching every year. You're trying to build a repo of charts and databases, and connections, and all these sort of things. And you don't want to be like every year, oh this is the next best thing, let's just switch out of it. There's some tools where you can do that a lot more easily, BI is not one of them. So for those sort of things you're definitely thinking about, we're going to be building visualizations and data analysis. We're going to do that for a long time. So who do we partner with? [00:24:24] S0: Which is also where selling trust is a big deal. I know it sounds silly for a tech company to talk about sort of selling the human side. But if you are establishing a ten year relationship with a vendor. In your mind, you want someone that you trust is going to operate well into the future and you can either buy a brand that is doing that, like I know if I go buy Coke that they will operate in a long period of time, or you can buy the young version of that. Which is, this is something that it's developing and they're excited about what they're doing and I want to be part of that excitement. And so, I like buying young products also because I know that the person on the other side cares deeply about it. You also just need to convince them that your company is going to be around enough that that's not going to be a painful relationship.
00:24:24 · Colin Zima, Pablo Srugo
[00:24:24] S0: Which is also where selling trust is a big deal. I know it sounds silly for a tech company to talk about sort of selling the human side. But if you are establishing a ten year relationship with a vendor. In your mind, you want someone that you trust is going to operate well into the future and you can either buy a brand that is doing that, like I know if I go buy Coke that they will operate in a long period of time, or you can buy the young version of that. Which is, this is something that it's developing and they're excited about what they're doing and I want to be part of that excitement. And so, I like buying young products also because I know that the person on the other side cares deeply about it. You also just need to convince them that your company is going to be around enough that that's not going to be a painful relationship. [00:25:11] S2: So give me maybe some timelines. So you start February '22, you raise your seed in May, you're A in August. When do you have a first customer live? When are you doing these demos? Maybe just walk me through that side of it.