A Product Market Fit Show | Startup Podcast for Founders
00:07:34 · Rob Woodbridge, Pablo Srugo
[00:07:34] S1: But I think that that's the little taste, right? There was always just enough. In those early years, there was always just enough and then there – something happened that made it not just enough. It's so weird that they – it was just enough always, and then they would grow a little bit. And then something would land on their lap that set them back. So distributors would say, “No, we're out,” or the tire distributor would say, “No, we're going with somebody new.” And it was always something that just when you think that you're about to climb that hill it's the false summit. You get up there and you're pulling yourself up and you look over. You're like, oh, my God. I'm a third of the way up. I still got all this to climb, and I'm exhausted. That was Phil Knight. [00:08:22] S0: I mean, that's what I admire most because I haven't been on the other side, on both sides of the fences. It’s like I'm telling you, I'm too probabilities driven. You almost can't calculate the odds of success when you're in it. Yeah, after every one of those punches would've been a pretty – perfectly suitable time to be like, okay, this – realistically not going to work. [00:08:46] S1: Somebody’s telling me no. [00:08:47] S0: Call it quits. But yeah, no, I mean, I think that's almost the defining kind of feature of Nike is just him just continuing and continuing and continuing through it all.
00:09:00 · Rob Woodbridge
[00:09:00] S1: Maybe there's a little piece of necessity there, and I echoed with Phil Knight. I can't compare myself to Phil Knight. I just want to be really clear that there's no comparison between Phil and I when I say this whatsoever, except for this one thing. He probably had no other option. Maybe he did, but he didn't know what he wanted to do or be in his life. So this was a natural thing. He was young enough. He was unencumbered. He had gone to school. He had a job, but the key for him was that this is the time. So you hear that a lot about young founders, but the one thing that really resonated is that he had no idea what he wanted to do with his life. And it's kind of like that was – to me, when I was reading that about him was that it was just a clear indication that he was born to create something. Now, I had no idea what I wanted to do with my life, but that was just because out of pure necessity that I started my first company because there was nothing else out there. But I think a lot of entrepreneurs have that feeling is that you want to create something. But you don't fit in anywhere, and so you have this world. You don't fit. I'm not going to be a lawyer. I'm not going to be an accountant. I'm not going to be here. So where do I fit in this world? There's no vocation. So it's entrepreneurship, and then you find out if you have it or not. But Phil had it, man, and it is in his blood. And I think that he absolutely – maybe not absolute but I feel that he had nothing to fall back on if this failed.
00:10:35 · Pablo Srugo
[00:10:35] S0: I think a hundred percent. There's kind of a burned all boats, and the other thing on that note I think that was – and especially important today because today it's so hard to fundraise, right? Two years ago, everybody was raising $5 million pre-seed grants. Now it's tough, and there's power to constraints, which is part what you're saying. He’s constrained on one hand because he is like what else am I going to do if I don't do this? So I might as well keep doing it. He's also constrained on the other hand because he doesn't have VCs that have backed him for 5, $10 million where he can just start trying this out, trying that out. He's just got to grow with the rate that he can grow, and he actually talked so much about how he couldn't get enough funding. And so the fastest he could grow is effectively like a 2X, and that was what he did. And I thought to myself – because this whole WeWork thing came out. They’re filing for bankruptcy, which is a whole other tangent I want to touch on in a minute. I think to myself what if Vision Fund existed in the ‘60s, and what if this guy went and somehow secured $10 million way too early? What would that have done? Part of me believes – because I've seen so many founders I've spoken with who told me – these are billion-dollar founders who were like I bootstrapped early on where I raised like 200K, really, really small, and it was such a blessing at the end of the day. Most of them, by the way, try to fundraise. They just couldn't. They were like, ultimately, it’s not like they wanted to, like they were thinking, oh, I really should bootstrap. It was like I'm trying to fundraise and I can't.
00:11:54 · Rob Woodbridge, Pablo Srugo
[00:11:54] S1: No, no, no, keep your money. [00:11:54] S0: But then they look back – exactly. Don't let me pay myself so I can eat. But when they look back, they're like the fact that we were bootstrapped helped because, again, there's power in these constraints. And so I think about the Phil Knight story, and I go back to this kind of analogy. What if there was Vision Fund? What if there were VCs back then? What if he would've raised 5, $10 million because he had this big idea about how he's going to disrupt Adidas and Puma or whatever with this strategy of whatever? What would've happened? There’s an argument to be made that the market was tiny back then. It was only going to grow at a third rate. He only could have pushed so much harder, and there's a huge argument that Nike might not exist today because he could have over hire, try to push on things that don't really exist, try to have this idea of the market's going to move at the rate it's going to move. Of course, you can pull on it a bit, but only so much. And if you think I've raised five million, now I'm going grow 5X instead of 2X and you don't, things get complicated, right? And that could have been a reason for him to give up.
00:12:58 · Rob Woodbridge, Pablo Srugo
[00:12:58] S1: I don't even think that – you're right. If he had had money, I don't think that he would've built his – made his own sneakers. I think that that was out of – born out of necessity because he couldn't – it's a funny thing, though, that – I mean, you can never know what happens. You've seen many shoe companies come and go in that period of time since Nike was built. He ostensibly created the industry. He built this industry, and so you're right; I don't think that he would've been able to do it. I don't know. Money clouds everything, and I think, all those founders that say, oh, I'm so glad I bootstrapped, it's a load because they were forced to. And in hindsight, they understood, and I think that that helps for their next company or the next company because they understand what it takes to build a company. There's nobody that wants to be in this situation where every dollar… [00:13:52] S0: No, of course, you don't, but I mean it. Here's the opposite side. I've seen founders who they went – they had their exit, right? Now they're on Round 2, and especially last couple of years, I mean, if you were a proven founder with a cool story, you raise money, 100%. And I can tell you what happens when you raise more money than you actually can deploy is you get fat. Whether it's you hire a bunch of people… [00:14:14] S1: Lazy, man.
00:14:14 · Rob Woodbridge, Pablo Srugo
[00:14:14] S1: Lazy, man. [00:14:15] S0: Lazy. You polish everything. Why wouldn't you do it? You have the money to do it. I think it was Jack from Clio, CEO of Clio who – one of the things he said to me was, “Because we – just think about the overhead when you start hiring. You think that, if you have 2X to developers, 2X to marketers, you move 2X fast. But if you don't even really know where you're going or if the market isn't ready to take that growth rate, it's not just wasted effort, wasted dollars, it's actually decreasing productivity. Because when you're smaller, there's no communication overhead. It's you. It's three other people. You're on the same boat. You're swimming the same way. You don't even need to talk about strategy because you know it, and so these are the things I think about back then. I'm like, man, this is a $100 million, $200 million market in shoes. There were these competitors that had market share. You’re only going to grow so fast. The fact that he was constrained and had to just do what he did and take it kind of slow – and by the time that Nike come – came out, as you said, out of opportunity, out of necessity, he had a whole distribution company built out. Never planned it, but organically, that's what happened.