A Product Market Fit Show | Startup Podcast for Founders
00:22:05 · Pablo Srugo
[00:22:05] S0: Funny enough, that's like – that was the change in risk, right? Risk back then was piling everything back in. Risk today is like selling a dollar for – selling something, getting a dollar, and spending one 1.10 on it, right?
00:22:20 · Rob Woodbridge
[00:22:20] S1: Can you imagine an entrepreneur today? And we have this because there’s manufacturers, but think about buying inventory. It's a foreign concept right now, and shipping it to America or to Canada and then housing it in anticipation of selling it, that's how business was done. It’s not like you put it out under the internet, or you put a story out and then you order if you want, or you write some code and you sell the code. That's how it was done. Then, not only that, it takes four months for that product to get here without any communications that we have right now. The speed of business was crazy, and when he had to resolve his challenges, he'd get on a plane and fly there and wait in a hotel room for his moment to go and see them. This is the Tiger guys. It's tenacity that we don't have right now. And Pablo, you and I have had these conversations all the time about how easy it is to give up today, right? Every entrepreneur it seems has one foot in and one foot out, and the impact of giving up or the cost of giving up is so low right now. You might have a great idea, and you can say, ah, eh, don't feel it today. There's no sweat. When Phil was building this company, there was no – he was all in. There was one passage from the book where he talks about – he talks about this idea that somehow Nike permeated him every other startup. It's like the cult of Nike was in him. He would get angry that people didn't see Nike the way that he wanted them to see it or his employees didn't see Nike the way that he saw it. He wasn’t providing a Nike. He was bleeding the Nikes out, and that's what happens when you're a founder. So he was 100% in. He couldn't have extracted himself at any point, and I think that, early on in his life, when he was thinking of this idea, he was on the edge, but he quickly just fall – fell over and was completely enveloped by it. But I see that. You see that with all kinds of entrepreneurs where they are in it, and they see things that others don't. Sometimes that's like the way you look at Mark Zuckerberg with stars in your eyes. The guy can't miss for you, and I see a completely different type of guy, right? You see what you want to see.
00:24:56 · Pablo Srugo, Rob Woodbridge
[00:24:56] S0: Let’s touch on this for a second. Mark Zuckerberg I think is 35, 36, and he's on the top 10 richest people in the world. The next person up is 20 years his senior. This guy's, he's on – he's from a different planet. I'm telling you…. [00:25:08] S1: He is. [00:25:08] S0: When Mark's 55, how much money is this guy going to have? If he just even does nothing, just puts in the bank… [00:25:17] S1: He’s going to be washed up. He’s going to be like – Facebook will be this thing.
00:25:23 · Pablo Srugo
[00:25:23] S0: He's got so much juice. Here's another thing, just back to Nike that – so I was talking to a founder who was in similar space as Gymtrack was. He ultimately actually had a – he had an exit, a decent exit, nothing massive, but he was telling me about how he modeled his whole go-to market – his whole vision and go-to market around Nike, and his takeaway was – because he started with pro sports and then he wanted to go mainstream. And his thing was like, look, Nike started with pro sports, then went mainstream. That's why I did it that way. He actually never got out of pro sports, so that's why he stayed a little niche but had a real business, ended up selling it, and when I was thinking about this – the Nike story, I'm like the fact that Nike started with pro sports obviously is a thing, but I don't really think it's the thing. I actually think the thing that made Nike – besides what we talked about, tenacity, consistencies, all – and all these things, one of the things that struck me so much was the power of distribution because Nike spent – Phil Knight spent from 1964 until 1972 so eight years effectively as a distributor, selling somebody else's shoes. He did invent the product. I don't think that was a startup. That's a distribution company, but that's what he built. He built an entire – he effectively, if you think about it – and he never thought it out, so it wasn't strategic. It was just one step in front of the other, literally what bootstrapping means. He just started off with a better product. He took no product risk because the product was made by somebody else, and he knew what it was at starting and he could compare to everything else. And then the only risk he took was distribution, was just I’m going to sell this in this market, and that was the only – for eight years, he took only distribution risk, and so he just perfected a distribution engine. And that's one of the things that, for me, I think still – on the first-time founder world side of the things mainly – I mean, even repeat founders but especially first-time founders, I think that's one of the hardest things to get. More often than not, people are in love with their ideas, right? They're in love with their products, and you don't realize – it's not that it doesn't matter. Obviously it does, but distribution is the key to success.
00:27:28 · Pablo Srugo
That is the hard part of zero to one is going to market, and that's why, when Phil Knight launches Nike, in a year, he goes from like zero to three million in revenue. It's not just that the shoe was great. His shoe was great, but he had to set up infrastructure to just put this out in market, credibility, relationships. He knew what to do with it. That's the game changer.
00:27:51 · Rob Woodbridge
[00:27:51] S1: He did it, as you said, by accident but just one step at a time. If you look back or if you just took the snapshot of those eight years when he was building that up and you took his IQ for distribution on the first day of that eight years and then you took his IQ on the last day of those eight years in that period, you think about what his level of intellect, intelligence in this. It was just accumulated knowledge over that period of time, and I think that it has a lot to do with his ability to – we go back to that bootstrapping piece is that he could only grow so quickly. So he built to what it was capable of, and this is a – there's a parallel here to software companies because you hear this advice all the time is that – and I think it was the 37signals guys that that really resonated for me when they said your infrastructure in whatever you're building, so it's a software platform or whatever it might be, needs to be good enough for today. You should never over engineer your platform. You should never think about what it's going to be like in 10 years from now. Think about what it's going to be like today, and then, if it fails, add more CPU power or – and you're doing it incrementally over a period of time. In eight years from now, you've got this entire infrastructure and distribution platform that all of a sudden or not all of a sudden but you've built up over years and you've learned the lessons, but you never over engineer anything or over invests in those things at this stage.