A Product Market Fit Show | Startup Podcast for Founders
00:23:01 · Pablo Srugo, Poojan Kumar
[00:23:01] S1: Because one thing I hear a lot, and even has happened to me is you get these tire kickers sometimes where we’ll say, yeah, this is interesting. Oh, it’s free. Oh, sure, I’ll do it. Do you find that it’s maybe less common in enterprise? In enterprise, to adopt a product and give that time is maybe a bigger ass than if you’re selling to SMB or something like that where it’s like, oh sure, yeah, I’ll try it, whatever. Do you think that’s a reason why in your case, giving it for free didn’t give you false hope, these were real customers? [00:23:29] S0: Absolutely. I think, yeah, these folks, at least in the space we play in, they won’t give you the time. They don’t have the time to give you. You’re asking for real time, maybe one hour a week, installing the software in their environment, asking for feedback and all of those things. They won’t give you all of that. Don’t get me wrong, it might not convert into a sale. It might not convert into this thing because they might not have the budget. They might not have the power in the organization to influence you and all that. That should not be the goal with the early folks. The goal should be to get you from that 0.8 to 1.0. That should be the focus. [00:23:59] S1: Then walk me through that early stage between Series A and Series B. You have $11 million. How many people do you go out and hire? Is it 100% product and engineers? How do you just structure that part of it? Because it’s weird when you’re building, you don’t have the customers yet. You’re just in this build mode.
00:24:18 · Poojan Kumar
[00:24:18] S0: Yeah. In both my examples, if you’re in stealth, you’re really focused on building products. A hundred percent of the team is really engineering and products, basically. That’s all there is to it. That’s a company. It’s 15, 20 people max because you don’t need more than that, and that includes QE and everything, the entire set of folks who need to go and ship the product effectively. That’s all you should need. Then once you’ve gotten the alphas and the betas, now you decide, are you ready? Are you seeing enough of a signal in the market? Are you seeing enough repeatability? Do you want to go come out of stealth? Does coming out of stealth help you in getting more folks in your funnel and so on and so forth? This is where you go figure out the timing for that next step, which is going and investing in sales. Again, depends if you could have a PLG motion or you could have sales led in more of SLG motion. In our case, it was more SLG in both cases. Now, you’re going to go start investing in sales folks and initially, basically, tying them to essentially going and creating pipeline, and maybe beta customers, and so on and so forth. Over time, going and transitioning them into more carrying a quota and things like that. But by the time, you most likely reach the Series B stage and you’re ready to go and raise more capital to go and expand that motion that you started doing. That is the transition where you go from purely product and engineering and all of that to now started to put your toe in the water in terms of go-to market.
00:25:51 · Pablo Srugo
[00:25:51] S1: One thing that’s interesting is you raised 11 million. You only hired 15 or 20 people. Why not hire 30 or 40 and just move faster? Does that not work out? Does that break when you try and do that?
00:26:02 · Poojan Kumar
[00:26:02] S0: No. I think that’s a classic mistake. Firstly, I think I raised the $10 million, $11 million because I could. Reality is I didn’t need more than five. That was a reality. Ultimately, if you see, we pretty much – I would say if I literally use the amount of capital we burned to go through the first year and a half, two years to get that initial alpha, beta product of $3 million, $3.5 million. Right there, you can say that five was more than enough. You want to keep a buffer on top. But I think you would keep the team lean at that point because I think you need the ability to go and iterate really fast and pay work if needed and so on and so forth. That’s where it’s very important to keep it very lean, because you don’t know. You don’t know if what you built is actually good enough or would there been more iterations, or more changes, or things that you’ll have to do. This is where keeping it lean is very important. Even if you have the capital in the bank, capital in the bank is more there for like, okay, just gives you more, call it insurance or whatever. But really, I think that should not change how you think about going through that first couple of years, depending on the complexity of the product. Whatever the time period is, that should not change. Keep it lean. I would say if it’s a five people thing, keep it at five people. If it’s 20 people, keep it 20, but it doesn’t matter. Just don’t hire because you can. If at all, you can say it can slow down things and doesn’t speed up things.
00:27:21 · Pablo Srugo, Poojan Kumar
[00:27:21] S1: That’s been my experience as well, perfect. Let’s end on these two final questions that we end on. What ends up happening is you get a $40 million Series B that was preempted. Then you really start to deploy with customers. The first question is, when did you – at that point, it’s still, let’s say experimental. You have alpha customers. You have signals. But when was it that you felt like you had true product market fit? [00:27:47] S0: I think product market fit, in both cases, it’s about finding the repeatability. Can you hire a new sales rep and can you point them in the right direction, which they call, say an ICP, idle customer profile, and train them on the two or three use cases that they need to go after? That is what you need. Of course, you need to have the right enablement for it. Can you take somebody obviously some domain knowledge in the overall sector, not specifically, but your technology? At least they would have done some enterprise selling, call it. That’s it. You are able to get them onboard and enable them, and give them the ramp time, and see them predictably going in, generating pipeline, and ultimately, closing business. I think that is what it comes down to. It takes time. You get a rep. You have to give them the ramp period, six months. It can be nine months, whatever it might be. That tells you that if you can do that repeatably and you’re able to point them in the right direction, and they’re able to close business repeatably now, yes, you can go and expand that.
00:27:47 · Poojan Kumar, Pablo Srugo
[00:27:47] S0: I think product market fit, in both cases, it’s about finding the repeatability. Can you hire a new sales rep and can you point them in the right direction, which they call, say an ICP, idle customer profile, and train them on the two or three use cases that they need to go after? That is what you need. Of course, you need to have the right enablement for it. Can you take somebody obviously some domain knowledge in the overall sector, not specifically, but your technology? At least they would have done some enterprise selling, call it. That’s it. You are able to get them onboard and enable them, and give them the ramp time, and see them predictably going in, generating pipeline, and ultimately, closing business. I think that is what it comes down to. It takes time. You get a rep. You have to give them the ramp period, six months. It can be nine months, whatever it might be. That tells you that if you can do that repeatably and you’re able to point them in the right direction, and they’re able to close business repeatably now, yes, you can go and expand that. [00:28:53] S1: Having done everything you’ve done, we went through one full journey and now you’re going through another one. What would be your number one piece of advice, either for yourself as you were starting off or for a first time founder that’s just getting started today?