A Product Market Fit Show | Startup Podcast for Founders
00:01:25 · Daniel Saks, Pablo Srugo
[00:01:25] S0: Hey, great to be here, Pablo. [00:01:27] S2: Man, I'm excited. You got AppDirect under your belt, which is a massive, massive story. We'll talk about that a little bit. I mean, multi-billion dollar, doing a billion dollar near R, close to. You'll tell me exactly, but it's at total scale. And then now you start a company called Landbase, raised a $30 million Series A. And that's in the kind of, if you think about Clay, think about ZoomInfo, it does that part of it. But it actually does the reach out as well, a little bit like an artisan and a lot of other companies that, you know, people would know that use AI to actually reach out and get you demos. So it kind of combines a few different pieces of the puzzle. So we're going to talk about that. And then what I'm really excited about is we're going to take everything that you've learned building Landbase and talk pretty in depth, actually, about outbound. Because I've got companies, I have one right now at the top of mind, that is moving from inbound to outbound. And it's just not as simple as you might think to really make that work. So you've been doing this for a long time and you've perfected it with Landbase. So we're going to talk a lot about that. So anyways, over to you. I mean, I'll ask the question we always start with, and I think maybe it makes more sense for AppDirect. But like with AppDirect, when was a moment when you felt like you'd found true product market fit?
00:02:28 · Daniel Saks
[00:02:28] S0: So what I like to describe product market fit as is the feeling of magnetic momentum. So with AppDirect, we worked at it very hard. And one of our first customers was a telecom in Canada, Bell Canada. And we launched an app marketplace to be able to sell SaaS services. This was back in 2009, 2010, in the early days of SaaS. And some of the initial apps on the App Store included Shopify, which was like a really early stage company at the time, and other Canadian apps in the ecosystem. And that was our first go. We launched it. And because of launching Bell, we had AT&T and Comcast and Deutsche Telekom all of a sudden reaching out. Because we had this one beachhead, we were able to attract others in the space. And over time, we used that same approach to enter new verticals or geographies. And we would have this strategy of going after a big player. So for example, when we wanted to get into IoT and manufacturing, we had Honeywell. And we would get them, we would evangelize that. And then we found that all the others would come to us saying, hey, we want to do something similar. So what felt like product markets fit to me is this feel of pull, where because of something that you've done here, you've done that elsewhere. And I feel in order to scale, you want to replicate these micro instances of pull or magnetic momentum and expand from beachhead to beachhead. And my belief is if you want to build a really big business, you can't just do one thing and scale it. Maybe there's a few examples of companies that have done that. But in general, you always need to be innovating. You always need to be changing. And product market fit is not something that you don't have and then you have. It's something that you always have to work for within given micro segments. So our key lesson, which we still take today at App Director, is just applicable at Landbase, is you want to look at where is there a leader or an innovator or what I call a digital hero of someone who's going to adopt the technology and everyone else is going to want to follow them because you can see how transformational it was to the company that they're at, but more specifically to the career of the individual that wanted to use your technology and drive a transformation.
00:04:37 · Pablo Srugo, Daniel Saks
[00:04:37] S2: So tell me a little bit about Bell. Like what exactly did you do for Bell back then through AppDirect? [00:04:44] S0: So this is the interesting situation with AppDirect is we spent about two years in a room with no windows, 10 engineers, and we had this vision of building an app marketplace. And we had early sponsorship from the president of Bell Canada, which was huge. We're Canadian, although we were in Silicon Valley at the time. And we would go fly to the Bell headquarters, spend time with them. And the mistake we made is we actually only worked with Bell and it was about a year enterprise sales cycle. So it took, call it a year to sell, six months to a year to implement, and then another year to figure out if it was working or not. So all of our stakes was just on this one deal, working or not. [00:05:22] S2: What is like an app marketplace in this con? I mean, you got like the Shopify app marketplace, right? Obviously iOS, Android, but like for Bell, like what's the idea?
00:05:28 · Daniel Saks
[00:05:28] S0: Our technical co-founder, Andy Sen, had built the Salesforce AppExchange, which was really the first B2B app marketplace of the time. And he joined us early on at AppDirect with the vision of building the app exchange for every other company. And our belief was every B2B business needs an app exchange. And that has truly come to fruition. And AppDirect is grateful to power, you know, a big majority of these marketplaces in some capacity. So whether it's marketplaces like SAP and IBM, or whether it's marketplaces like AWS, that's really the power. And what we found in telecom is they had these big business bases. So essentially, Bell had 500,000 business customers in Canada. AT&T had 4 million in the US. These businesses wanted to look to their telecom for other value-added services. So it could be security. It could have been, call it collaboration tools. So what we did is we enabled the telecoms to resell all these SaaS services to their client base. And today that generates upwards of $10 billion in gross merchandise value, meaning the transaction volume of our customers. But in the early days, we said that GMB is our number one metric, but it took us probably five to seven years to figure out how to really get the flywheel going on GMB. So you brought up this Bell case with us. We launched the Bell App Store, and we actually didn't succeed with it. So we learned a lot, and we had very strong conviction in our vision. But while we got this big enterprise behemoth, it actually didn't work. I remember leading up to the launch, 72 hours ahead, we were trying to recruit all these apps. We had all these different apps, and we worked aggressively to get these in for the Bell launch. And I remember the head of Bell saying, this is going to be on billboards, this is going to be in airports, there's going to be so much that it's going to break the site. You've got to have the infrastructure to make this work. And after crunching to get this thing launched, we launched on time. It was like crickets. No one came to the App Store.
00:07:21 · Pablo Srugo, Daniel Saks
[00:07:21] S2: Wow. Just the worst feeling. [00:07:23] S0: Yeah, the worst. And in fact, Harley from Shopify came to me a few weeks later saying, WTF, the Bell Business App Store has less traffic than my intern's blog. So it was pretty challenging at the time. But what we did is we learned from that experience, and we were able to figure out the right ways to commercialize on behalf of our customers. And that way, when Deutsche Telekom and AT&T launched, they saw very strong success. And it did take a while. [00:07:51] S2: What was the learning? Because I would have assumed that they would have done some amount of marketing, and as much as it might not have been, let's say, perfectly effective or efficient, it should have been good enough if the value was really there. But it sounds like it wasn't. It sounds like there was really some kind of optimization that you could figure out. [00:08:05] S0: I think what we've learned with B2B technology, and this still extends today, is that businesses want to buy from people they trust. So brands of trust where they have the right to play. And what we found is like telecoms have a lot of good reason to sell telecommunication services, video conferencing, security, but maybe they're not the best to sell zero accounting or something else. [00:08:25] S2: So it was a matter of figuring out what should be, what actual products should be in that marketplace.
00:08:25 · Pablo Srugo, Daniel Saks
[00:08:25] S2: So it was a matter of figuring out what should be, what actual products should be in that marketplace. [00:08:29] S0: Exactly. It's the merchandising strategy. And then the other component is the reason why someone trusts, call it AT&T or Dutch telecom in a business capacity, is that they've worked with them for many years. So the other insight that we had was instead of just believing that you can get people from a billboard to go on a website, the better strategy was to actually enable the sales channels and the relationships that already exist. So once we started training the physical human sellers at these companies, they were able to articulate the value prop. And that's really what drove a lot of the success and the momentum. [00:09:04] S2: And how, the other question I had, we're going to talk a lot about Outbound, like how do you get Bell as your first customer? How does that happen? Yeah. [00:09:11] S0: So we had a chicken and the egg problem. Our vision was like AppDirect. We want to build an app store and sell cloud services to the world. But in order to get the best apps, we needed to showcase that we have customers. So we had this idea of going to the telecoms, because if you have all the global telecoms, then they represent almost every B2B business in the world that's connected. And the way we got into Bell is we did have an investor relationship. We had an opportunity to pitch. I remember on pitch day, we were pitching against IBM and all these bigger companies, Laszlo Systems and enterprise companies.