A Product Market Fit Show | Startup Podcast for Founders
00:22:02 · Pablo Srugo, Andrew Lockhead
[00:22:02] S1: It's a once in lifetime thing, but it is reflective of something bigger, which is you're never safe. You know what I mean? This is just the life that that founders choose is just the highest of highs, the lowest of lows, and you're just one thing away from something huge happening and one thing away from something terrible happening. [00:22:17] S0: Even with the money, Pablo, I could have gotten the two and a half million dollars and said you know what? Let's keep going. My investor and board could have just come back and said you know what? We don't think you got what it takes. Forget about it. Send the money back to the . It could have been a legit decision, right? They want to protect themselves. It could have been the right thing. Though, we were really lucky with our investor that did send their money. They were like you know what? Just don't burn too much. We don't how long it's going to last. We trust you. Do whatever it takes to get stronger out of this. They have a strong mentality that in every crisis there's an opportunity, and they believe that me and Hamed were able to figure out whatever opportunity we were able to size for the company. That's what happened.
00:22:17 · Andrew Lockhead, Pablo Srugo
[00:22:17] S0: Even with the money, Pablo, I could have gotten the two and a half million dollars and said you know what? Let's keep going. My investor and board could have just come back and said you know what? We don't think you got what it takes. Forget about it. Send the money back to the . It could have been a legit decision, right? They want to protect themselves. It could have been the right thing. Though, we were really lucky with our investor that did send their money. They were like you know what? Just don't burn too much. We don't how long it's going to last. We trust you. Do whatever it takes to get stronger out of this. They have a strong mentality that in every crisis there's an opportunity, and they believe that me and Hamed were able to figure out whatever opportunity we were able to size for the company. That's what happened. [00:22:56] S1: Now, let's get real, though. When that happened, so you have maybe a significant portion of your round that doesn't come through. I think, much more importantly, your revenues just crater because who's doing events in March 2020, April 2020? We'll get into what you did because you solved the problem. What are you feeling, and what kind of conversations are you having with your co-founder at that point? Was there despair, or did you never even get there?
00:22:56 · Pablo Srugo, Andrew Lockhead
[00:22:56] S1: Now, let's get real, though. When that happened, so you have maybe a significant portion of your round that doesn't come through. I think, much more importantly, your revenues just crater because who's doing events in March 2020, April 2020? We'll get into what you did because you solved the problem. What are you feeling, and what kind of conversations are you having with your co-founder at that point? Was there despair, or did you never even get there? [00:23:23] S0: It was mostly a rollercoaster, and most people think that either you get down right away or later. What happened for me, so the review went down from $130,000 US a month to 10,000. It's not enough. We don’t know how long we're going to last. We have to make massive cuts for the business. I think, during the first week, week and a half, we're also in daily meetings with the team. We’re like we’re going to get through this. Don't worry about it. We have plans. We'll find a new solution. We're running brainstorm with a team, workshop with other entrepreneur. We're doing some of working session about where can we use our product in different industry? Now we can do all of that crap, and after two weeks, I think, this is where it really hit us. I'm like, okay, it's not going to come back anytime soon. Event industry is completely dead. All of our customers had no more money, so we will not be able to sell them anything else. There's no way the pandemic is going to last for six months, so we started – it was like it might last for – I don't know, and people were like, oh, 6 months max and 12.
00:23:23 · Andrew Lockhead, Pablo Srugo
[00:23:23] S0: It was mostly a rollercoaster, and most people think that either you get down right away or later. What happened for me, so the review went down from $130,000 US a month to 10,000. It's not enough. We don’t know how long we're going to last. We have to make massive cuts for the business. I think, during the first week, week and a half, we're also in daily meetings with the team. We’re like we’re going to get through this. Don't worry about it. We have plans. We'll find a new solution. We're running brainstorm with a team, workshop with other entrepreneur. We're doing some of working session about where can we use our product in different industry? Now we can do all of that crap, and after two weeks, I think, this is where it really hit us. I'm like, okay, it's not going to come back anytime soon. Event industry is completely dead. All of our customers had no more money, so we will not be able to sell them anything else. There's no way the pandemic is going to last for six months, so we started – it was like it might last for – I don't know, and people were like, oh, 6 months max and 12. [00:24:17] S1: Oh, yeah, people were like six weeks, yeah, then six months... [00:24:19] S0: Exactly. [00:24:19] S1: ...two years. It changed all the time.
00:24:19 · Pablo Srugo, Andrew Lockhead
[00:24:19] S1: ...two years. It changed all the time. [00:24:21] S0: After two weeks, we're seeing what's happening in China, and China was the first one in. We're like, okay, everything is still shut down now. The odds of this getting back up is going to be good, and this is probably where I hit the rock bottom. I was super tired. I was depressing. I was drinking during the day. I was not feeling well at all, and I wanted to just get out. I'm like am I going to lose my time trying to survive with that business where we don't even know for how long? I think my time is more valuable than this, but at the same time, we had a great team of people so we inquire. We look at different opportunities. I was so depressed that we call a couple of competitors of ours in different industry. Are you guys interested in doing acquire? We don't care for anything for us. Just make sure that their employees ESOP will be transferred. We look at everything. We're like we might not be the right people to lead the ship. [00:25:09] S1: Did you think about maybe just giving the money back too? Was that an option or no because it would've affected your employees? [00:25:14] S0: We never really thought about giving them money back, to be honest. It was such a small amount for the big investor. We had around the table. For them, it was not going to make any change versus, oh, if there's a way actually you can use that cash to get bigger and find opportunities, that's going to be such an upside for you.
00:25:14 · Andrew Lockhead, Pablo Srugo
[00:25:14] S0: We never really thought about giving them money back, to be honest. It was such a small amount for the big investor. We had around the table. For them, it was not going to make any change versus, oh, if there's a way actually you can use that cash to get bigger and find opportunities, that's going to be such an upside for you. [00:25:30] S1: You’re going through these conversations and just none of them materialized, or did you decide, actually, we don't want to do this, or just – literally, it’s just nobody would buy you guys so you got forced to push? [00:25:41] S0: I know we actually went through a couple of conversation with this. Most of the time, it was coming back to can my employees get whatever good salary, which was not good salary back in the day? That was a checkmark all the time because every company out there can fit better than we could. The stocks, so they were not able to transfer the stocks, and we wanted for employees, my colleague, to get something out of the journey. They might have been with us up to three years at that point. We’re like let's get in, make sure they haven't got paid $20,000 for nothing during that time. They must have something in return, and we were not able to use just because, obviously, we had no leverage. We were burning the money every day. Every month we were going down. We knew for a fact we had a goalpost that was going to kill us in a couple of months, so it was super hard. [00:26:25] S1: What did runway drop to at that point? [00:26:27] S0: Without the government, we were at about six month of runway.