A Product Market Fit Show | Startup Podcast for Founders
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?
00:06:57 · Pablo Srugo, Andrew Lockhead
[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? [00:07:15] S0: I knew nothing about travel, nothing. I hate traveling. I didn't travel a lot because I was an entrepreneur, so as you know, we were living on Ramen. It's not like you can go travel the world, and I decided that it was the best way for me to just step up my game and get into that world. Think about the demo day. Think about the investor, Mendez, where they just match people together. All of this was unknown for me, so that was a great way to just get my step into it and make sure Stay22 was going to get good right off the ground. [00:07:42] S1: What incubator was it? [00:07:43] S0: It was called Travelport. [00:07:44] S1: Oh, so it was specifically focused on travel. That was one of the reasons he did it. [00:07:49] S0: Exactly. Then, as soon as we finished out of this, we came back in Montreal. I graduated from there, and we decided to apply for FounderFuel. Lucky for us, we got accepted, so we got our first check as well. [00:08:01] S1: Which is another kind of accelerator but in Montreal, right?
00:08:01 · Pablo Srugo, Andrew Lockhead
[00:08:01] S1: Which is another kind of accelerator but in Montreal, right? [00:08:04] S0: Exactly. It was one of the largest one in Canada up to a couple of years ago. Now, once more, demo day, we're raising our first seed round, about three-quarter of a million dollars, and we just decide to launch our companies out there and just scale it from there from a small team of two people to eight. [00:08:20] S1: What did you have? You're raising 750K. What stage was the product or even revenue at back then?
00:08:20 · Pablo Srugo, Andrew Lockhead
[00:08:20] S1: What did you have? You're raising 750K. What stage was the product or even revenue at back then? [00:08:28] S0: Back then, we were at a perfect product-market fit with the event industry, so we were reaching out events back-to-back-to-back. We’re scaling as crazy. A matter of 12 weeks of program, we had 7 partners, and by the end, we almost had 100 events working with us. Investors were super happy. They wanted to [unclear] the check. As soon as we got the money in, this is where we told them, “By the way, guys, we're not going to work with events anymore. It's not enough. We're going to work with ticketing platform.” “Whatever. We trust you guys, so do whatever you think is going to be the best.” We just decided to switch your company to work with ticketing because of the scale of it. Though it's a longer sales process, it's not exactly the same product. We had to redo the full process, and this is where we figured out that we were not a painkiller anymore. We started to be a vitamin. As I mentioned, it was not that much revenue for them. Yes, it was an in the user, but it was not that making of a pain point. They were more reluctant to the integration. It was taking more time, but it still was growing pretty fast. We were doing about 4X year over a year for the first couple of years, which was grade back in the days. [00:09:30] S1: Maybe just what numbers did you have? Do you remember? Was it maybe a 100K or so in revenue when you raised your seed round?
00:09:30 · Pablo Srugo, Andrew Lockhead
[00:09:30] S1: Maybe just what numbers did you have? Do you remember? Was it maybe a 100K or so in revenue when you raised your seed round? [00:09:36] S0: Yeah. When we raised, we were doing about $250,000, I believe, and after this – in total sales, and after this, we did a million dollars. [00:09:46] S1: A year? [00:09:46] S0: Give or take about one quarter, yeah. [00:09:48] S1: This is a year. Okay, cool. Tell me a little bit more about that, this painkiller versus vitamin. I mean, it's a classic dichotomy. What was it that in one case – I kind of get it, but I mean, if you could just expand on that. What is it that makes something a painkiller must-have, which is what everybody's looking for? Every founder wants to be selling a must-have versus a vitamin which still has ROI. It still delivers value, but it just doesn't have the pull that you need it to have because it's like, yeah, sure, call me tomorrow, not top priority. [00:10:20] S0: Yeah, ring me back. We always make that joke about call me back in Q5. It's never happening. [00:10:24] S1: That's right.
00:10:24 · Pablo Srugo, Andrew Lockhead
[00:10:24] S1: That's right. [00:10:26] S0: It’s part of a Google map. [ Unclear ] are like, sure, the risk is low, but the impact is low as well, so we'll see later. [U nclear] , Pablo, when we got into the incubator, for us, we came to the conclusion that we're a B2B2C, and we still need to have a great product for the end user. Otherwise, no one will be interested, and they forced us, actually, to do interview. We had to go into Starbucks and McDonald's, to hit up random strangers on the street and say, “Hey, by the way, you have five minutes? I just want to ask a couple of questions.” [00:10:54] S1: Oh, no way. [00:10:55] S0: That was so strange at first, bothering someone with – that were in the queue for a coffee, pitching them your startup, and saying, if you have a solution to help you find your next accommodation for an event, will you use it, what it should look like. Tell me more about the pain it will solve, how much it'll cost, running the full thing, but getting there was exactly where we needed. This is where we said we’re adding value. They were, oh, them. If there was such a thing I would love to be able. After this, we came to the conclusion that it was harder for us to reach them by B2C, and this is why we needed to get that strategy in there so like that B2B2C. This was one of our first learning we did in term of product-market fit.