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The no-BS podcast to scaling startups and growing revenue and businesses.
Speaker 2 (00:00.216)
comes after product market fits.
You've achieved product market fit. You've gained some traction. At this point, it's what I call getting smart.
I achieved product market fit, now I can relax. No. What's the mindset that the founder needs to have at this point?
I'm in PTSD.
Speaker 1 (00:14.336)
As they changed the approach, the ravine started coming in.
founder needs to have a certain unhealthy affinity for pain and suffering.
That's not how you leave a company.
The startups that are like unicorn status, the startups that have been there for a while usually get this right.
But I've literally seen huge organizations continuously fail at product market fit because they think they've achieved it once, they can achieve it again.
Speaker 1 (00:37.08)
This is also an interesting thing that we are now talking about, scaling businesses digitally and post-product market fit, and we are talking about cold call.
I just like to call it like a sustainable growth engine.
What's the next milestone?
Speaker 2 (00:53.794)
Welcome to the Growth Hour, the No BS podcast about growing startups and scaling businesses. I'm Blanca.
Soya.
I'm Alex.
Alright girls, today's podcast we're talking about what comes after product market fit. And I think we've talked in our some previous episodes, we talked a lot about the early stages of actually setting up, figuring out go to market and all of that. But and we mentioned product market fit and a lot of people talk about product market fit. But I think it makes sense to start talking about what is product market fit. And maybe today we can draw in a little bit more from our own experiences.
you know, dealing with startups that either validated or haven't validated they have product market fit and kind of what happens afterwards. Makes sense?
Speaker 3 (01:39.352)
how to achieve market product market fit. So like the actual definition and how to be able to understand that you've actually achieved a market product market fit and how to scale going from there.
Yeah, so before we get started, let's cheer just because now that we've set the tone.
There's actually one cool thing because I think this episode will be more interesting for those who have product market fit. So it's already a success in a way. very big step has been done.
Yes, and I think that's the point where a lot of the times people think they have product market fit, but they're actually not sure. So think for us, it's just in order for those who are watching us to understand, yes, 100 % I have product market fit. Let's start maybe with that, like, what are your thoughts? How can somebody say like, okay, yes, this and this and this, I have product market fit. What are your thoughts? We all are.
I'm opinionated when it comes to this. The first and most obvious one is tying in the metrics of users. So I think a lot of people may think product market fit, but they actually think like as long as I'm growing, it's good. But I think there are a few more things that you need to consider as part of it. So let's start with the most obvious, which is users. So in terms of how do we connect that to metrics as daily average users, monthly average users, and then looking at your revenue metrics. And the goal is over time to see that exponential growth.
Speaker 3 (03:00.82)
as you scale, build some efficiencies and so on. So that's the biggest one.
But know, I think that I agree, but at the same time as a founder who builds several startups, for me it's harder to just look at the rooms because you're always feeling like, oh, I'm on the cusp of this. And I know that that's the reason why a lot of the startup founders early stage, they focus on this whole like what superhuman came up with, which was like 35, 40 % of...
your users would feel really, really disappointed if you took away their product. Because depending on the product, sometimes it takes some time to get to a point where you are really able to say, are the revenue metrics, where are you going to. I think this whole focusing on the customer is really important. In my experience, I realized that the first time I did my...
startup in US, we were in marketing tech, I wasn't really focused on this metric because I kept not being sure whether the people, the customers that we had, always found a reason like, yeah, but you know, maybe they're not the perfect ICP. This is actually what our, we just need to get to the point where we get to the ICP. And I think I was kind of postponing that idea of figuring out and calling it whether we have product market fit.
What I think, sorry, I hear you both, but I think it's also the answer. Sometimes it's not like one thing that you can say, okay, we have a product market fit. I think you're always trying to improve the product market fit. And what you're talking about is like two stages of getting to a product market fit. first one, when you're very early stage, especially also if you're building a product that should have a lot of users, but in the beginning for you,
Speaker 1 (04:58.83)
for example, if it's an enterprise solution or large businesses, you're not targeting, looking for numbers in hundreds. Then I think that the moment how you determine whether you have a product market fit is exactly how important are you to those customers? Are they investing in order to have you help them solve their problem? And then later on, I think how you are again validating if this was just an accident that you had some really committed customers and now you're trying to see
whether it's not just a small number of companies, but if it's a large market, that's when I think you're looking for other metrics. How many users, how many of them are paying, how active they are, and also again, how much they love your products, how replaceable is your product.
was going mention it's a stage and how I started it is everybody thinks product market fit is just users and it is true. That's how you validate a part of product market fit but a big part of product market fit is looking at the entire, there's a life cycle to it. To her point it's knowing that hey if we were to remove this product how disappointed would you be? But then there's also getting users, then there's retention, then there's are your customers actually happy, are they upset? There's a whole life cycle to actually identifying product market fit that's not just revenue or
user driven. And it's not one point in your startup life.
It's one thing I have actually a funny anecdote about this. So when I was working as like a fractional CMO for a startup that was called first Super Sales, then it was called Between. It was during the COVID era. And it was a great idea where everyone suddenly thought all this all the e commerce is going to be done online. So we came up with sort of an app that allowed salespeople inside stores to sell online to people so they're able to like
Speaker 2 (06:48.002)
with a phone, just show around, like, this is your bag, this is whatever, the shoes and stuff. And then you're able to utilize still the salespeople without firing them, but to help users buy things online. And we thought it was a genius idea. We had a great team. We really wanted to be part of this founding team. And was like, whatever, six of us. And we really believed it. And we had really cool
clients, some bigger ones, some smaller ones. And then we were pushing, pushing, pushing until the restrictions were getting lifted, all of this. Suddenly people were like, well, actually we don't really want to invest in this. And we still didn't want to give up. at that point we had to look at how long does it take us to get one client? And we actually asked them like, okay.
you like this, but what would happen if we took this away? And we realized that it ended up being nice to have for people. It was no longer a necessity. And actually then we went through almost a year process of pivoting. And it was, I've learned the most in that part of it because we were like, let's find something where we immediately test that we have a product market fit before we even build a product. It was kind of like a weird thing. used the design sprints.
theory kind of to framework to every week test the problem market fit in a way and then to try and figure out how can we fake you know a product and see if people are going to be like yes this is what I need I need it now I'm ready to pay and to get this this this signal yes yeah but that whole experience actually for the first time in my life put such a big focus on
Can I get it fast?
Speaker 2 (08:41.357)
what happens if you are not 100 % certain that you have product market fit? Because once you're certain about product market fit, then I think you should go, go, go, go, go. And then you have a certain timeframe where you can actually grow your business exponentially, right? I don't know if that was, if you've had any experiences where you were like, oh, this is the moment. I definitely am sure that we have a product market fit. And what happened then? Like what happened?
So in terms of for me when I was working in accounting software a lot of what I was building out was the growth strategy But I would work really closely with the product team so that was what? So we do it closely with them and their whole goal was constantly to enter new markets Try to localize to different markets with new features But for me the way that you kind of have to look at product market fit is an opportunity to also get feedback to know to your point Whether you pivot or you persevere
FreshBooks.
Speaker 3 (09:35.828)
And the interesting thing is, lot of people think they look at QuickBooks, they look at the large accounting software competitors, and they think, well, QuickBooks is huge, we should be offering what QuickBooks has. But the funny thing, and it's what a lot of founders forget, is you're looking for what I like to call a niche monopoly in the market. And it's actually funny because we have the book somewhere up here, 0 to 1, that I'm reading right now, that was talking about the difference between looking at competitors versus looking at the monopoly, which is your specific opportunity in that market.
And where I think FreshBooks was excellent and where they have that product market fit is they cater to small entrepreneurs. So mom and pop shops, people who were one, like solopreneurs, people who were designers, something that was very one person, as opposed to having a large team and enterprise in medium-sized businesses. That was where QuickBooks really owned the market. And so the thing is when you're thinking about product market fit, you need to make sure that you...
Understand what your market and your pain points are and identify what that small niche could be test there and then slowly scale over time
I think that's very important. I think, but there's one thing that I would add. It's not just a niche. It's also that the differentiator. Exactly. What you are offering to that niche is much better than the competitor they've already heard about. Somebody has used it. Maybe they even used it. And I think in this FreshBooks example, it's a smaller market segment in a way that had absolutely different needs than a
than medium companies, but I think if you really build then product for exactly that user group, and that's already something that FreshBooks obviously knew because they had their ICP defined. They understood who their customers are and what is the group they're communicating with. had, I think with our guests in some previous episodes, we also talked a lot about it. What is it that the people that your first customer, so maybe even
Speaker 1 (11:35.926)
If you are on the verge of finding MVP, this is something that I saw with some of the startups I worked with, that it feels like you are there, but you are testing the customers and it's hard for you to determine. Then it's usually going and analyzing deeply who are your customers and what do they need the most, rather than building the product for some imaginative...
customer base that you draw in the beginning.
I agree. I think there is also this like what I typically notice between different and it's like I think it's a lot on the founder because there are founders who are like super confident and they might not even have a product market fit but they're like going already, know, building out marketing, sales strategies, all kinds of things. And then there are founders who are kind of more cautious and they already have the signals. They're like we have product market fit.
but they're not ready yet to commit to anything that helps them build a long-term strategy. I know if you've noticed this, but I've had a lot of founders I worked with who were like, well, I'm not going to now invest in sort of building out a marketing team. I just need one who's going to be like hustling. And they find it hard to switch to this like growth mentality. And I think we were talking about this before in one of our previous episodes that
they are not sort of ready to spend money to earn money. They're still in this sort of scarcity sort of mentality. And I think that if we're talking about what needs to happen after you've figured out that you have product markets fit, besides like tactical stuff, I think there needs to be a shift in mentality where you're like, okay, if I have the money in the bank, I need to go and invest in that. Yes, I need to go spend it smartly. yes, you need to sort of
Speaker 2 (13:33.406)
build out some of the foundational things. You need to invest in the long-term things because at the point where it might be too late, in like a year's time, it might be too late to invest in things that are foundational, SEO, know, even like the messaging stuff, like value proposition stuff. Like you need to, I think a lot of what you were saying about, if you have a particular idea of like who your customer is or customer persona is, then you can build out
different sort of value prepositions, use different channels, test different things, but you need to have an idea, okay, I'm gonna give myself six months to build this out, test it, see results, change things immediately, not wait until like six months and be like, what happened? But I think that a lot of times I see people trying to have this growth hacking mentality where they're like, oh, in two weeks, didn't work, whatever, let's move on, we need to prove that we have.
a channel market fit, but I'm like, can't, sometimes you can't really tell that you have this.
Sometimes, especially I think the two of us worked a lot with early stage entrepreneurs. And sometimes it's really hard to always be like, no, I have to find my product market fit and now I have to focus on this. Because what you also feel like you need to focus is on getting some revenue, getting your customers. And I think especially in this B2B segment, I see a lot of startups in this early stage trying to make a sale. Never mind whether that sale is...
to the somebody they think is their customer or it's somebody completely different, but they're trying to get some revenue in the company. And I think, I would say that I saw it going terribly bad because at some point you have three completely different types of users and you are not really sure why they're using your product just because you sold it at that moment of time, but they are not like, you are unsure what your true value is. But on the other hand,
Speaker 1 (15:35.054)
I've also seen when startups go and sell, that at some point they sell to different audiences, let's say it like that, and then they suddenly see an audience they weren't even aware of before. And that's where they understand, okay, this is something that they have in common, which I couldn't even see in the future or predict in the past or predict. this is something where I... So I think it's very like...
We can talk about it being scientific, but I've really seen a lot of different options and things that work and work not. But I think the only thing that when it comes to product market fit that I only, unless you're extremely, extremely lucky, is when you're looking at the data and you're trying to be scientific about it as much as you can. It's not like, look, we have three customers, which means we have a product market fit, but you're open to you not having a product market fit.
but are still trying to get those customers and then figuring things out.
So I actually think product market fit is a long path. I don't think it's something that ends, to be honest. So I'll give an example of kind of how we went from that scientific approach to what we did to actually achieve product market fit. Awesome. So again, the example is FreshBooks, accounting software, so B2B. And with them, what was really interesting is...
Part of what my role was as a growth manager, I owned the North American market. And so basically what that means is every single day I'd be in dashboards looking at the entire channel. So every channel from acquisition to partners to sales cycle, everything basically I would own in a sense where I'm basically driving the growth strategy. So what I want to say is we're going into the dashboards, we're looking at data, we're looking at retention, we're looking at acquisition metrics, we're looking at everything to find opportunities. And what I'm realizing now is we're essentially trying to validate the consistent product market fit, which is
Speaker 3 (17:26.24)
Are we actually targeting the right people? Do we have the right type of leads coming in? We're scoring the leads. We're basically putting that feedback back into the essentially growth engine. And what we realized is we had a lot of great features. We had really good products and feature adoption, but there was still an opportunity to optimize some of those channels. And so one thing that I found was really, really successful is you would think a company at this point that was like one of...
like I think the 14th unicorn in Canada at this point, just for context, that even at this point, they're still considering whether or not they have product market fit. At one point, I moved from growth to brand, which was a very interesting change, going from metrics to trying to build a whole new growth channel. But what we did is we actually sat down with customers and we had focus groups for an hour. And we dedicated an entire quarter almost to talking to customers. And we sat and we had long conversations that were like...
hey, why did you actually even come to FreshBooks? Why didn't you choose QuickBooks? And so you start understanding a little bit more about the dynamics, you start understanding the behavior, and you start understanding, hey, are we actually built for these customers? Do we have the right features? Then you start realizing that the reason you're seeing those metrics when it comes to adoption and those retention metrics, why they're going down, is because you offered a lot of different things that people actually aren't using. And when they're price sensitive, because we're talking about small entrepreneurs who are small and they have to pay for bills and they're not big enterprises,
they're very price sensitive. So for them, they're constantly looking at, am I getting my money's worth for the 20, 30, $40 that I'm paying every single month? And it becomes a conversation of pricing. It becomes a conversation of what are you offering? And then it becomes, are you even sure that this is the right market that you want to be focusing on? And to answer all of that, it is, because if you adapt your feature and your value prop and your offering to make sure it hits those actual pain points of the customer, you look at the rest of the market, the rest of the market isn't offering those things to them.
they're offering it to everybody else. QuickBooks is, like I said, it's a much bigger competitor they're offering. They have way more to offer, but your niche is to those small solo partners.
Speaker 2 (19:26.944)
That's going to be one thing for our listeners is talk to your customers. think that's one thing that we... All the time.
time.
Keep Keep talking of your business. Even if you achieved unicorn status, you want to make sure that you're still talking to your customers because that's what we have called as like being in the ivory tower. If you're too high up and you're thinking you know best, your competition will change, but your market dynamics will dictate whether or not you actually have product.
But what I love about this example is, we're talking about a unicorn company, which then dedicated a whole quarter talking to customers. But I think this is also something that we see with startups that get to this product market fit, and then they feel, okay, we nailed it, we understand, we talked to the customers. Now we don't have to talk to the customers. Now we know their problem. And I think this is the maybe one rule. No, you still don't know your customers. You managed to get them in.
But then now to make them stay happy, stay satisfied, you need to keep on the communication, whether through interviews or creating a community of customers or great support.
Speaker 3 (20:35.703)
There's too much focus on looking at your competitors and not enough focus on actually talking to your customers and knowing your market and chasing those market changes.
Yeah, I think that it's also important to understand, obviously depends on the area, the industry, what type of product you provide, especially, I would say in cases where you are in the sales cycles, where you have sales team, you have an opportunity to actually talk to your customer and give this feedback loop back to the business. In situations when you're going with product-led growth and you are relying on your
product selling itself, basically. You need to find ways to always have that feedback loop from a customer. And yes, sometimes it's going to be scheduling interviews, talking to people. Sometimes it needs to be within, whether that's customer support within the product, you need to constantly be gathering information from your customers and then have a way to analyze it. How can you use this in product? How can you use it in sales? How can you use it in development? How can you use it in marketing?
And I think that that's something that the startups that are like unicorn status, the startups that have been there for a while usually get this right because if you're not constantly having that feedback loop, eventually you're building a product that is no longer has product market fit. I think that that's the idea.
There's this other thing, for example, if you already have, let's say, there is a high percentage of confirmed product market fit. At that point, you're growing. You're looking, you're growing much faster than you did before. So your customer segment, although it's very similar, it's very different because let's assume the first customers you got were early adopters, those whose...
Speaker 1 (22:28.366)
problems were like most likely you'd share, they care most about the problem, then you're increasing this target audience, which means you are now meeting, you're meeting people who are a bit different than your first customers. But also if you continue growing, you're probably going to different market. It could be a different country. It could be you were selling to, I don't know, sailing boats and now you're focusing on motor yachts.
or something like that. you're also changing the lid. But I'm thinking like changing between industries or changing between specific segments in your industry. So you are, if you are growing, your customers are changing. And I think this is something that you need to be doing once you confirm the product market fit. You can't be, okay, I have a customer segment. And then how do you move from one customer segment product market fit to another one? That's the question. How do you actually grow?
Yeah, well.
Speaker 2 (23:26.604)
And actually I'm curious because you have a lot of experience working with, let's say, regional startups in Serbia and you as one of the pioneers, you here you worked with early stage startups, I think with a little bit later stage startups. Do you have any concrete examples of somebody that has done it really well from Serbia to launch them to other European or like North American countries?
I think that the most I think we talked about it in our first episode actually, but I think most of the startups that did succeed from this region or any other smaller region, I think most of them succeeded by not focusing on the region. So they had to go immediately global. actually, most of them didn't go like, okay, what I see often with startups is like, we are global. So that means we are immediately present everywhere. No, you're actually focusing.
on specific markets. what I see, startups from here usually, for example, starting with the dock region, so Germany, Netherlands, Austria, this is something where they have, that's usually where some of them start from. And then I've seen...
of the Serbian diaspora or what?
I think it's large enough market. think there is this connection of Germany, Serbia, there's this different types of relationships in the past, but there's this strong economic bond. Of course, there's a huge amount of people from the Balkan region who live in these areas, but this is what I see often and another thing I see is going directly to the US.
Speaker 1 (25:16.182)
which often turns out to be much more expensive than they were hoping to be. But one great example, I think, is always Fishing Booker. They were in our episode, so we had a special episode with them. from the startups that I worked with, I think they are the ones that really nailed this product market fit approach. And I think we didn't even talk about it in that episode, but how they tested
for their product market fit is a great story because they were really looking to get feedback and get data right away and they started with offering boats in Tampa Bay. So it had nothing to do with the region or something like that and they didn't even travel to Tampa Bay to start.
I think that's actually oftentimes even in the US you have a lot of products that everyone uses but they don't the people are not aware that those are not American companies you know Miro is a great example. You have Klarna which is I think a Norwegian Swedish Scandinavian you have a lot of startups that actually started in the US like PandaDoc is another thing that they
I
Speaker 1 (26:33.774)
You're from Australia?
No, no. Pantadoc founder is Belorussian. But they started US first and then they went... Actually, another episode we also talked about, this is something that is interesting to me that if you do it right, then you don't have this disadvantage as a sort of business that's starting from somewhere else. If you get right what is needed for this market, what's that product market fit, what's the messaging market fit.
then you're not being presented as a business that has gone from Europe to the US. I actually have a personal example. It was like a startup within a bigger company. I worked for a company that was called Thomson's and then the product was actually called Darwin. They're now sold to one of the biggest like benefits, employee benefits provider in the US.
and they're originally a UK company and they existed by that time for 10 years in the UK and they were super successful. And then they actually went and sold to their employee benefits software, which was global. So basically all the employees outside of the US were using their HR software and then, you know, introduced them to
And somehow within like a months, they got the biggest players in the Silicon Valley. And that's actually how I joined. I joined as the first employee in the US to lead that global team. So they separated, they had a business in the UK and then they had a global business. And I was like, okay, it's interesting because you feel like a startup, have to figure out complete new messaging, you have a slightly different now product, you have to figure out how to do this, you know.
Speaker 2 (28:27.618)
globally and what are the markets and then obviously you're focusing on the US and you need to create a brand and a brand narrative that this is a business that's been for a while, but not for a while in the US, but you have to somehow figure out how to present it as a US company. And it was a very interesting case and we did the traditional stuff. We went to all the events, all the expositions because that's where all the HR tech people went apparently at that time. But we also,
tried to focus on building those relationships with the key players. And the word of mouth obviously was a big thing. Obviously, the UK is not that big of a difference as in the US mind. It's not the same as coming from Serbia, Russia, or wherever. But that case to me actually showed that once you have a strong product market fit, a strong pain point and need,
If you do things right, you can actually grow really quickly because within a year we got almost everyone. I think in a year and a half we even got **** which is just the biggest employer. I'm not even sure if I can say some of these things but hopefully nobody will.
I actually have a little bit of a different take just because I come from like a... My industries have been so random in a sense, but also very limiting. So I'll give you an example. FinTech, telehealth and HR, but payroll. So those three industries are very difficult to scale internationally. And I'll give you examples. So payroll, obviously there's taxation there, there's all these different things that are really, really complicated. It's hard to be able to scale that. But when it comes to FinTech, like I said, at FreshBooks,
I actually was closely working with the team because I owned North America, the other two girls that I worked with, also growth managers were doing Asia and European markets. And I can tell you that this is an incredibly hard thing to be able to scale because there's something we call localization. So you got to look at how different, like the US on its own has different taxation based on the state that you're in. So imagine how complicated it is to scale just in the US, coming out of a Canadian company to do the US. Now imagine scaling to the EU, now imagine to Asia where it's...
Speaker 2 (30:31.139)
Yeah.
Speaker 3 (30:40.322)
completely different taxation. We have to localize the language. have to change all the different types of metrics. Like everything completely changes.
But it's actually not just that. That's true. But you reminded me of one thing, because obviously in this case I was talking about, we were doing enterprise sales. The sales cycles were like six months minimum, but the deals were, you know, like one, two million dollars. So it was worth it. But actually our localization was to a point where we hired sales teams in the U.S. where depending on the region, you had to have a person with
like local accent and everything because people did not want to be sold to like they could handle British and like we had like the Midwest for example our head of sales all the women loved him it was and it's also HR people so it's mostly women and so in that sense it was an advantage but if you want to sell in the South States you have to have a southern accent if you want to sell to Texas you want to have a Texas accent
And it's not even the point that they don't understand, but oftentimes if you do like cold calling and like our inside sales teams, like it has to be like they didn't want to listen to somebody who had like an American Asian accent or like a California accent, which was different. For example, in New York and in California, they didn't really care as much and there you could do whatever and they were less.
focused on that. So was interesting for us to learn how to sell differently to a friend.
Speaker 1 (32:13.806)
This is also interesting thing that we are now talking about, scaling businesses digitally and post-product market fit, and we are talking about cold calling. But it's really one of the things that I always... I just recently am working with one startup that has, let's say, a lead generation tool, but they made it so it's...
for traditional industries, so for sales people who are not in industries that are generally very high tech, high digital. And then it started with him, the CEO, he's a very good salesman, very like doing a good job and has this grit, but it started with him, you know, like doing the handling all the cold emails, different outreach digital, but it just didn't work.
And then at some point, very quickly, I must say, he figured out, those people are not going to buy a digital product because they are not in this digital realm. So it has to start with a short call with some kind of an offline connection. I remember exactly.
are just used to being sold. They don't need this product-led growth. Oftentimes enterprise level companies, they're like, let somebody call me and tell me what this product is about.
And for me, but there's this one thing that was interesting. Immediately as they start, as they change this approach and they're completely bootstrapped, as they start change the approach, the revenue starts coming in and the, I would say not small amounts of revenue, which is a recurring revenue. And you know, even in larger companies, when something works, they, salespeople share tips and tricks and everyone wants to invest in sales.
Speaker 1 (34:09.742)
But it was interesting because he was pitching for some competitions, accelerators and a lot of feedback he got is like, but your sales funnel is not digitalized, it can't be scaled. Although you see the results and in some way it's scaled because it's recurring revenue, the ones are even increasing.
But it's hard to, and this is something that I think this region, for example, and other underdeveloped regions are missing, that once you get to this product market fit, you should invest in the channel that makes you more, money, not the one that's most scalable, shiniest, or you all know what would be the perfect channel, you you just click and you have a constant.
I think that it's like with specifically if we're talking about sales because we haven't talked about this much but there's like in the US you have this sort of traditional sales approach right that it does require it's very expensive sales people are expensive good people who are cold calling are also kind of expensive and you definitely at that point need to invest in sales operations and somebody who's gonna like focus on the CRM on cleaning up the system so that you're not
cold calling the same person 200 times.
giving me PTSD because I literally, the payroll company I owned, I don't know if I ever told you this guys, I ran a retention cold calling business, like the entire portfolio. 12 callers from the Philippines. So basically like to your point, the language barrier, like all of that was basically there. it's like, it's to your point, it's very expensive to have a proper team. So oftentimes companies, larger organizations will go and outsource, which is not the right approach. Cause I was on the end of those calls doing call listenings and quality control and hearing
Speaker 3 (36:01.755)
The response that people had. So please do not outsource your team immediately.
And I mean, it's also like, I would say that a lot of the businesses fail because they go down the sales route and they shouldn't. Like in my case with the British startup, when the deal is a million, two million and more, you can invest, you should invest in the sales team. But even there, we had a big process of aligning marketing and sales. I actually, because...
Even though I had a team that was in the UK, I had some people who were in Singapore. I didn't have, only later I got like a few people who were on marketing team in the US. Actually, I worked mostly with the sales team and it was the best. We were so aligned. We would, you know, from hanging out together at events to going, I actually was demoing the product and I would hear feedback about from different meetings all the time because for us there was a
there was not an infinite pool of companies. There was a very definite pool. And if you think about big companies that have a employee sort of pool outside of the US, it's a very, you know, like, I don't remember what the list was, but it was not thousands of companies. So for us, it was very important not to break that relationship with the customer. And so we were very specific and meticulous of like,
how many touch points we have, when we call them, how do we try to get them? And you get creative and for that you need really good quality people and you have to have systems in place. Your data needs to be super clean. So that's something that I think often as well. Another tip for our listeners is to it regularly.
Speaker 3 (37:53.026)
Invest in a good CRM system.
Speaker 1 (37:57.814)
that startups and even VCs especially, want every startup to be the unicorn potential. And sometimes during the product market, looking for a product market fit, you realize that you might not have the unicorn potential in the sense of that you will scale. Exactly, but you can still build a profitable business. And I think at that point, I think the founders should really...
still be a profitable business.
Speaker 1 (38:23.544)
think hard, what's their next step? Because if they are going, what I see happening is if you have like a potential profitable, sustainable business, rather than extremely scalable startup, but if you continue seeing yourself as this scalable startup and you can start going to meeting investors, VCs, what you get is people telling you you're not good enough, which is very bad for the motivation.
And if you at some point sit down with yourself and look at your numbers and say, okay, these numbers are really good, I'm making money, I got already one investment, but I don't have to get another one because I can make it into sustainable business. At that point, you become a sustainable business which can grow, which can even be scalable, but it might not be the 100x, doesn't have a 100x potential. And I think that's a very...
important conversation for every founder to have with their team.
That's actually a good point. have a question to you guys. So we were talking about, we were talking generally, like what needs to happen after product market fit? What's the next milestone? What's the thing where, so like, you know, because product market fit is sort of a milestone in a way where you figure out, okay, I have a product market fit. What's the next thing? Are we talking about, you know, you need to have 2 million ARR?
there should be 20 % year, month on month growth. What is it that we would say is the next milestone that you would need to, like what's your North Star at the point?
Speaker 3 (40:02.286)
Actually, I have this one story I was going to quickly just mention. It's a little bit different from our regular kind of SaaS and B2B, but I wanted to give an example of an e-commerce business that I was working with really closely. Like I was running their retention portfolio and we're closely with the growth. So every Monday we'd have our executive meetings where we would sit down and run through all the dashboards. And they were at a point where they had incredibly good product market fit in Canada. I can't talk about off, I can't really.
talk about it.
Speaker 3 (40:27.242)
I can't really say, I ended up being a contractor for them, so I can't go into details, but who they were. But they had incredibly good product market fit in Canada. And then through pressure, they wanted to then scale to the US. But being in the numbers, and the second milestone that I wanted to bring up through this example was knowing your business and understanding your numbers and understanding your profit margins. Because especially if you're e-commerce, it doesn't matter if you're e-commerce, if you're a B2B SaaS, you need to know your numbers and you need to know what your business can actually withstand when it comes to scaling.
Oftentimes they think, okay, the next steps, whether it's investor pressure, whether it's whatever reason, they want to scale into the US because of economies of scale, because they have bigger opportunity. But the reality is there's more overhead costs, especially if you're e-commerce, especially if you have cost of goods sold, especially if you have all these inventory that you're holding on to. So these are things a lot of businesses forget that there is a huge cost to your business to localize, to bring on consultants, to do the market research.
Yeah.
Speaker 3 (41:22.35)
to bring in the person from the US who handles all of your operations. That is a huge cost. It's incredibly, incredibly costly. So oftentimes that growth that you see to a new market, or even it could be to a different product category, has immense, immense implications. So a lot of these businesses that I've actually consulted on do that mistake where they think, I scale, now that I've had product market growth, they take that almost like energy and they start flinging it out.
go up seven.
Speaker 3 (41:50.306)
feature, feature, product, service, like everything starts throwing things out. So it doesn't just mean like scaling to a new market, but I've literally seen huge organizations continuously fail a product market fit because they think they've achieved it once, they can achieve it again. And then they start throwing out products that are not.
Do you think they start doing it again at a different market or in a completely different product?
Both. I've seen in the same market, they threw completely new products that are not relevant at all to what the market's looking for. And then going into new markets that they can't sustain like profit margins with because they don't like again, it all goes back to that milestone, which is after product market fit, don't get, don't get confident. Don't have an ego. need to, at this point, you're now trying to achieve profitability. You're trying to do growth sustainably. And once you have, and this might be controversial because I know a of founders don't think this way.
Like, tall.
Speaker 3 (42:40.684)
But coming from a data background, and I worked in data analysis and business strategy and planning, I've seen so many portfolios tank because of this. You need to know your numbers and you need to have a strong basis and you need to have a maintenance. Once you have maintenance in one market, one product category, one area, then you can start reinvesting some of those resources, money into a new market, into new product. And I'm not going to mention which companies, but I've seen enough that I've actually tanked because of this.
So what we are talking about is that we want, once you get to the product market fit, you should ensure that you are safe there. Like that everything is working, that you have...
Whichever growth, product-led, sales-led, marketing-led, doesn't matter.
At least at some point it can get in a way as automated as it can be and work.
I just like to call it like a sustainable growth engine. Once you have some sustainability and you're in the green, because so many of these operate in the red for such a long time, you think, know what would be really smart? Let's go to the US. Let's destroy
Speaker 1 (43:37.352)
I understand that point, but I have to like counter, do a counterpoint at some. I think that sometimes growth can be really messy. And I think that's something that you founders and everyone involved should really care not to be that messy and should worry if it's all working correctly. But at some point, I think it can't be avoided. Like if you are
growing from, let's say, from 10 people to 50 people in several months, it's mess. It's a completely different company. Then if we're going from 50 to 300, that's another completely different company. need different people, different processes, and it has to be messy.
It's organized chaos. You try to balance between doing things and testing things and trying new things, but also sustaining something. Because if you're just depleting cash and you're just trying different things, it's the same thing with channels.
But I'm just saying that sometimes even that mess when you're inside of it, it can look like, my God, everything's wrong, we should hit pause and everything. But sometimes when you look at and of course things can go terribly wrong. I've seen it more often than I didn't. But when you are in this high growth phase of a business and if you are going towards this, let's call it, my God, I'm saying it for the fourth time, unicorn path.
When you're going towards it, at that point, you have to get comfortable in it being a mess. sometimes it's definitely wrong, but sometimes it's just something that you have to do.
Speaker 2 (45:14.702)
All right, in order to wrap up this whole area and chapter, last thing I want to just quickly for all of us to talk about is what's the mindset that the founder needs to have at this point? usually you work in a certain mindset to get to product markets hit, and then you need to, as I mentioned before, you need to shift gears and adjust.
hire a different team or expand the team. What's in your experience the main things that need to be changed in the mindset of a founder and the team?
This may be little bit controversial, but because I come from an LTV and a retention background, you guys are like, of course. When it comes to growth, think the next stage is actually considering re-engaging those users that you already have and using them to your benefit to create brand advocacy and creating different channels that are organic channels. I'm not going to go crazy into detail, but a lot of people at this point, they jump to start doing paid ads, throwing money into channels that are very expensive, and that's fine if you can validate that it works for you.
But I think oftentimes when it comes to that next stage, once you've achieved product market fit, you've gained some traction. At this point, it's what I call getting smart. It's start looking at those different channels and focusing on the ones that actually you can optimize and grow with. And I've noticed an experience working with very different clients that retention and loyalty needs to be one of the key channels.
I think that one thing that I was getting to because I always question why some founders who have good idea and even maybe have product market fit don't really achieve growth. Why don't they, know, just the other day we were talking about some startup where you said that the founders just get tired. know, tired of growing, of trying to grow the business and
Speaker 2 (47:19.714)
Probably one of the best sort of ideas I had in the last whatever year or two was from my favorite All In podcast, obviously, where they're talking about that a founder needs to have a let's say unhealthy affinity for pain in suffering. And maybe it doesn't have to necessarily be affinity, but it needs to be something you're comfortable with. Your kind of your comfort is in discomfort in a lot of ways where...
The moment you feel comfortable and everything is like, I achieved product market fit. Now I can relax. No. I achieved sort of certain revenue goals and now I can relax. No, there is actually. Yeah, there's no relaxing. And when we're talking with Fish and Booker and the guy was saying like to this day, like they've been about it for 10 years, they still feel like they're failing every day. And if you think about it, you know, we listen to it, we hear it and we think like, OK, well, you feel like you're.
Thanks.
Speaker 2 (48:14.286)
It's so hard. Like, I know, like, I now now have an offline business. And to me, I still every day think, why am I doing this to myself? Why am I going through this suffering all the time? Because you feel like they're, oh, I'm going to achieve this. I'm going to become a unicorn. And suddenly I can relax. No, because at that point, it's actually even more work. It's even worse. You have so much pressure. You have people that are dependent on you. You have investors that expect you to grow.
The pressure just keeps building and building. So I wanted to actually talk about this because if we start talking about growth, actually that's where the hard part starts. People often think that coming up with the idea, thinking, getting to product market fit and this stuff that suddenly then, these are all these wonderful stories where suddenly it was propelled to success. But no, actually that's where you need to get your hands dirty and start building.
If you have employees and people to pay, then it's a complete...
But I think like if you're an entrepreneur, any type of entrepreneur, it's hard in every phase. You constantly are moving from one phase to another and you are trying to survive one hardship. You get on top and then immediately a new crisis. Exactly. But I think it's the...
Why not everyone does it?
Speaker 2 (49:32.238)
You need to know going in because if you're a first time founder, you start thinking, if this is this hard, maybe I shouldn't be doing this.
Wait, have you ever met a founder with whom you talk, for me not, that told me this was as hard as I thought it would be? Everyone says, my God, it was much harder than I thought it would be. And if I knew how hard it was, I'm not sure I would do it. So in that sense, I think it's a normal thing. But I think I completely agree with what you said. I would just...
slightly change it to the, that I don't think every founder needs to be ready to be all the time, all in. Because it also depends on your life stage, on your own motivation, on what you want to achieve. So I think that if at some point you get to, you did the product market fit, then you are moving into the growth stage and at some point you want to relax a little bit and stop working.
to you.
you either find a different CEO or you find a model in which your business doesn't have to grow as much as it can or you sell the business. this is, I think entrepreneurship is very hard, especially starting startups. But I think I would just not like to discourage people from not telling us it's very, very, very hard because there's an exit once you get tired. The founder that we just were talking about yesterday or the day before, I...
Speaker 1 (51:04.82)
I that's not how you leave a company, like when you raised a lot of money and got some, and you are in this deep tech space. If you're entering the deep tech space, that's when you know it should be hard. It's really hard. It takes long from a lot of different aspects, which are beyond like marketing. But I think in many other situations, there's a way for you to exit. You can hire a new CEO, one of your co-founders can step up, you can sell the company.
You can find like so many ways.
think that's also the important part to mention because I think for founders it's so hard sometimes to accept that they need to step aside. they are not aware that they're tired or they are no longer... Like they were a good starting founder but they're not the one that's gonna take the company to like really grow. And like a good example of like Uber, so Travis, like he was kind of outstead in a way but there was a need like he was...
not a good fit at that point for a company and for what the investors want and stuff. Who knows where Uber would be and what their IPO would look like if Travis was still there. Maybe it would actually be better. I don't know. But those are decisions and I've had several startups I was a part of where there was this change in leadership because they realized that the CEO actually would much rather be a CTO because he was a technical founder.
and they need somebody else to run the business because they need to grow faster and he's not able to catch up and he doesn't maybe want to. He doesn't want to focus on these things. So I think it's important to know that once you achieve product market fit and you start scaling and you start growing, you need to A, be prepared, it's going to be hard. And then B, you need to know when to either step aside or change the model in a way where you have somebody who is...
Speaker 2 (53:00.628)
able to be in the trenches all the time and grow the business because at that point you already invested a lot and you have a lot of dependence. If you're going into it to build a great business you need to do everything possible even if means you have to step away.
talking about guys in the US that refinance their homes three times in order to be able to run businesses. That's the psyche behind.
But to that point also, I think the founder might not grow as fast as the company and the company's needs, which often happens. But also another thing, like the rest of the team might not be suitable. So I think the team that gets you from the first users to the product market fit might not be the same people that will get you now to create...
like a process around it. Or for example, you got to what you just mentioned. Now, if you think that after the product market fit, you should focus on organic channels and creating brand loyalty, that might be a completely different team that was helping you get first users when nobody knew who you are. So what to do then? That's a big part.
That's a topic for another podcast. I think that actually there are some really good tidbits we discussed today. Thanks so much for sharing different anecdotes from your experience and your experience. So I think that on that we finish our episode. Thank you so much.
Speaker 1 (54:25.645)
your ex.
Speaker 1 (54:35.844)
Mr.