A Product Market Fit Show | Startup Podcast for Founders
00:01:54 · Pablo Srugo, Andrew Lockhead
[00:01:54] S1: What was your co-founder doing before? What was his B2C idea? [00:01:58] S0: It was also in travel, something similar to TripIt so kind of a metasearch but for short-term rentals, kind of like Airbnb merged with Vrbo and [ unclear] and all of those short-term rentals. [00:02:08] S1: What you shifted to was like – if I understand correctly, it's like somebody's doing a big event, and then on their own website they embed your platform so that people can find accommodations near the event easily? [00:02:19] S0: Exactly. This was one of our first idea. We came up with an API for them to embed on their website or ticketing platform, which was a big mistake. No one wanted to integrate API. It’s too complex, take too much time, and the sales cycle was really low because of that. We came up with a new solution called a map-based solution. Now that was taking five minutes, the embedded live frame on their website, and they were able to just show where their events was taking place, all the live abilities with prices for destination nearby from Airbnb, Vrbo, Hotel, Booking.com, Expedia, and so on. [00:02:50] S1: What's the rev share model? How do they win? How do you win? [00:02:53] S0: It depends. With that first customer base we started with, we were more of a painkiller for them, so that was great. They didn't need any type of rev share. They're just like you know what? You're solving a problem for me. I can focus on my events. I don't have to worry about finding accommodation for my guests. You keep everything, and I'm happy with this.
00:02:53 · Andrew Lockhead, Pablo Srugo
[00:02:53] S0: It depends. With that first customer base we started with, we were more of a painkiller for them, so that was great. They didn't need any type of rev share. They're just like you know what? You're solving a problem for me. I can focus on my events. I don't have to worry about finding accommodation for my guests. You keep everything, and I'm happy with this. [00:03:12] S1: What did they do before? What was a pain point for them? [00:03:14] S0: It was such a bad experience. They need to reach out to hotels. They need to negotiate deals after this. They need to fill the block. If they don't fill it, they're going to be on the payroll, so they have to pay for whatever room people don't fill out. It's just such a pain for them. They don't want to waste time on this. It's not adding value for the event, so they just decide to use solution like yourself. [00:03:32] S1: Tell me a little bit more about the starting of that. Once you partner up with your co-founder, you decide to go B2B. Do you just start building right away? Do you raise money? Do you talk to customers? You done it before. You weren't starting from square one either.
00:03:32 · Pablo Srugo, Andrew Lockhead
[00:03:32] S1: Tell me a little bit more about the starting of that. Once you partner up with your co-founder, you decide to go B2B. Do you just start building right away? Do you raise money? Do you talk to customers? You done it before. You weren't starting from square one either. [00:03:45] S0: My previous business was bootstrap. For this one, I'm like you know what? I was 28 at that time. I'm like I want to go for the VC path. I want to go fast. I want to break things. I want to see what it's like, so we decided to jump into the journey and jump into another incubator in Denver, Colorado. Me and him barely knew each other for a couple of weeks where we're building stuff in a basement, and we decided to move to Denver, Colorado for four months. [00:04:08] S1: Actually, maybe just before – how did you meet him then? Why did you start working with him? [00:04:12] S0: Startupfest. Startupfest in Montreal is a big event made for entrepreneur people that want to gather around, test idea, shares. There was pitching contests as well, so that was a great place for just meet fellow-minded entrepreneur. [00:04:24] S1: Okay. You met him, and you liked the idea so much that you're like, yeah, yeah, let's do this together?
00:04:24 · Pablo Srugo, Andrew Lockhead
[00:04:24] S1: Okay. You met him, and you liked the idea so much that you're like, yeah, yeah, let's do this together? [00:04:28] S0: Yeah. My previous company was in ticketing. I'm like, “I know what you're trying to do in B2C. It's never going to work out.” He’s like, “Don't worry about it. Build it and it will come.” I'm like this is the boldest idea ever. What we're going to do is we're going to create a good go-to market strategy, find a way to have people to distribute to inventory, and it's going to be so much easy. That is exactly what I did in my previous business, so I knew for a fact it was going to work. [00:04:50] S1: What was the previous business? [00:04:51] S0: Ticketing platform for students. I was not the one selling those tickets. I was selling the platform for students union. They were the one doing the marketing, the promotion, handling the registration, payment, everything, and I was the one cashing in the money every time there was a transaction made. [00:05:06] S1: Like an Eventbrite? [00:05:07] S0: I knew exactly the go – yeah, like an Eventbrite. [00:05:09] S1: You knew this new play, like that go-to market, and so you just jump on. [00:05:13] S0: Exactly. I can pick up the call phone, call my previous competitor and tell him, hey guys, I'm not into the ticket anymore, but I got a great way for you to enhance your user experience, generate revenue out of it, and get more data. Are you in? Obviously, the answer was much easier. [00:05:26] S1: Who would've been your competitors back then?
00:05:26 · Pablo Srugo, Andrew Lockhead
[00:05:26] S1: Who would've been your competitors back then? [00:05:28] S0: Back then it was exactly the Eventbrite, the in Quebec. There were so many companies outside in Canada as well in United States that was doing students ticketing platform, so I could just reach out to all those general admission and so on. [00:05:40] S1: How do they fit into this, like the short-term rental space? [00:05:42] S0: They all have the same problem, right? They have user that want to attend events, but if they live more than 100 miles away, they don't know for a fact if they're going to go. It’s going to be complex. We tell them, after a transaction take place or before, show them all of the accommodation nearby. Maybe they'll see that the accommodation is only the $100 a pop instead of, whatever, 500 they might be expecting. That's going to be dropping down the cost of travel for them, and they're going to be more inclined to book a ticket. [00:06:06] S1: I see. There was two sets of customers, if I'm understanding. There's the events themselves, like South by Southwest. They put it on the website, but there's also Eventbrite or whoever else is managing the ticket sales. They want to sell tickets, and this is almost a way to lower friction.
00:06:06 · Pablo Srugo, Andrew Lockhead
[00:06:06] S1: I see. There was two sets of customers, if I'm understanding. There's the events themselves, like South by Southwest. They put it on the website, but there's also Eventbrite or whoever else is managing the ticket sales. They want to sell tickets, and this is almost a way to lower friction. [00:06:18] S0: Yeah, you got it right. We started with event at first because we needed to get a go-to market and see if it works working for them. As soon as we saw it was working, we're like cool, but one event a year is not going to work out because you had to wait another 365 days before the next edition. Let's go for the bigger one. Ticketing platform, we're having tens of thousands of event per week. They were the one doing most of the distributions for us at that point. [00:06:40] S1: Was the pitch like, hey, you can make more money, or was the pitch just you can sell more tickets because this is why people don’t… [00:06:46] S0: Sell more tickets and then as a user experience for them, get more data. This was a pitch. Money for them is – it was not a big deal. It's a small amount of money, so for them, it was a little bit more about the experience of the user. [00:06:57] S1: Okay. Back to the story. I mean, you move to Denver for an incubator, a first-time founder. You do the accelerator. You do the incubator because you need the network. You don’t know what you're doing, whatever. In your case, you'd been through before. It was bootstrap, not venture backed. Still, so what made you decide to even go to an incubator in the first place?