Pablo Srugo  (00:00:00):
So I was talking to Gopi, the founder of Sure Ventures. He's like a pre-seed stage VC. And I think, the you know, when I'm kind of thinking through and reading through the transcript, like the quote that really stood out to me is that the master of this game knows exactly what balls to keep in the air and, more importantly, which ones to draw. And it's a, you know, I think very important point about prioritization and deciding as a founder, what are the things that are really going to move the needle? What are the things that absolutely have to be done? And then what's everything else?

Previous Guests (00:00:34):
That's product market fit. Product market fit. Product market fit. I called it the product market fit question. Product market fit. Product market fit. Product market fit. Product market fit. I mean, the name of the show is product market fit. 

Pablo Srugo (00:00:46):
Think back to the last few months, the last few years as you've been running the startup. How many different founders have helped you out? The reality is founders help each other out. That's just who founders are. They pay it forward. So help a founder out. Take literally five seconds, take your phone out of your pocket and hit five stars.

Because the reality of being a startup founder, you know, I always like, I always laugh, like obviously I'm a VC now, I talk to a lot of VCs, and some VCs, they just seem so busy. And I get it, like depending on what market it is that you're in, it's going to be more or less competitive. But I'm always like, in the back of my mind, I'm like, man, if only you were a founder for just like a week, right? Like, you know, in those movies where people like switch bodies, like if we could just go to being a founder for a week, then you would see what busy is, and you would never again complain that you're so busy. Because as a founder, that was the one true time in my life where I really felt like I just didn't have control. There was truly too many things to do. I truly. I remember. I'm sitting at my desk at my office, which at this point we had, you know, leases like a 6,000-square-foot office. We leased above, like a Dollarama. And I remember this point precisely because it's the time I realized something. I just had so many things to do. My calendar was absolutely packed, and I was good at being productive. I was good at making lists and knocking things off the list. But it really started to feel like I was in some kind of a weird rat race. Like I would just get more and more things done, more and more things would pile on. And yet I wouldn't really move anywhere. And it was the first time I felt like I just didn't know. I didn't have the tools to play the game because, through school, I had really figured out how to master that game. It got to the point that it was easy. I graduated, not with an A GPA. I graduated with a perfect A+, 4.0 GPA. In my Econ major, I never didn't get an A+. And the reason is just that I figured out how to play that game. And it was gameable. Like you could truly game it. You could really figure out, okay, this professor is focusing on these things. These are the things to study every single day. You study what you need to. You do whatever homework you need to do. You go into the exam with, like, 100% average. And no matter what happens in the exam, you walk out with an A+ because it's all bell curve. And that just became the game. And I'd done that for many, many years even before university.

Pablo Srugo (00:02:58):
But at this point, when I'm sitting at my desk. I realize, like, this method that had worked for me for my student life is a breaking, completely breaking for me as a founder, because all I'm doing is I'm literally absorbing all of these things that I have to do and just figuring that if I just get them all done, we're going to move forward. And there's two problems with that. First of all, unlike in school, where it's structured and you have a list of things to do that you can actually get done, in the world of startups. You just don't have enough resources to get all the things that you could do done. It's actually physically impossible, no matter how efficient, no matter how hard you work.

Pablo Srugo (00:03:34):
The second thing is, the reality about startups is, when you're creating something from nothing, there's some things that actually truly matter, they truly move the needle, they get you to the next phase, and there's a lot of other stuff on the periphery. You can get all of that stuff done. You can build a nice deck, a nice website, figure out your branding, and all these other sorts of things. But if you don't get the core things done, you will not move to the next stage, and your startup will not work out. And that's what I realized in that moment. That, every single thing on my list, which were like, 50-plus things. Has to be either a one or a zero. Like, you can't. Just prioritize a list, start from the top, and work your way down. You will just run out. And by the time you get to, like, thing number 20, something else pops up and you're just stuck in this constant cycle of just knocking things out, crossing things out, and not getting any further. So you have to start looking at the things you have to do as ones or zeros. It's this crazy game of prioritization. And at any given point, it changes.

Pablo Srugo (00:04:26):
Obviously, in the first innings, it's all about finding value, finding problems, figuring out the solution, delivering that value. It, obviously, the most important thing will change at any given time. Sometimes the most important thing might be, like, finding somebody for a particular role. Sometimes it'll be like landing that one customer that's almost there. It's going to change all the time. But at any given point as a founder, you're figuring out what is. The most important thing? What's the ball that I need to keep in the air that I can't drop? And what's everything else? And then, everything else, you almost have to let drop. You almost have to let it fail because you just can't do everything at the same time. This ties actually pretty well into the second thing, which is from the ButcherBox case.

Pablo Srugo (00:05:04):
So, Mike, it's actually a pretty crazy story. So, Mike mentioned this, like he raises $30 million for his first venture over multiple rounds. like masters the VC game, the FOMO game, and completely fails. Like his startup completely falls flat, zero, bankrupt. And then on his second venture, he raises no money. He puts in like $10,000 of his own money. Today, that second venture is doing over half a billion dollars in revenue. And so the big insight from there is like, product market fit is the one thing you can't gain, which goes back to that first thing I was talking about. Like if you think about school, you can game school. It's gameable. What does that mean? I mean, you could look at school and say school is about learning. So what I'm going to do is I'm going to go to class. I'm going to really pay attention. I'm going to read my textbook. I'm going to learn these things. I'm going to absorb these things. And then, sure, at some point there'll be a test or an essay or a quiz or whatever it is. And because I've learned the material, I will just do as well as I can on that. And if I learn it really well, I'll do really well. That's one way to attack school. But that's not gaming school.

Pablo Srugo (00:06:09):
Gaming school, playing a game of school is deciding, you know what? School is not about learning. School is about getting grades. It's about getting A+. Like, that is what school is designed for. You think school is about learning. It's a joke because if you really want to learn, you've got YouTube, you've got books, you've got so many other ways of learning. School is a way to get a beautiful transcript. And the more beautiful the transcript is, the better it's going to lead to, whether it's more schooling or that premium job you want or whatever it is. So if you think of school that way, you can game it because all of a sudden you realize, wait a second, I don't have to learn everything in this class. If the professor is not spending time on this particular subject, then he or she is probably not going to put it on the exam. So I don't need to learn it either. The professor tells you that, for example, the final exam is going to have like three long essay-type questions. You can pretty easily figure out what to do, like, OK, there's only so many topics, and professors spend enough time on that could be part of those three questions. So that's the only thing I'm going to learn. So you can kind of invert the situation and all of a sudden find ways with a lot less effort to still get the A+.

Pablo Srugo (00:07:06):
Venture, VC, raising money is also gameable. The non-gameable version of this would say the best businesses raise the most money. If you have a great business, then you will raise more money because the whole point is for capital to be allocated where it's most needed, where it's most useful. The reality is VC is 100% gameable. You can go and raise a lot of money. Whether your business is really good or not. Obviously, just like in school, if you learn material, if you know the material, it's going to be easier to do well. If you have a great business, it's going to be easier to raise money. But one thing isn't equal to the other. You can go after the fundraising without necessarily having the great business, which is exactly what Mike did in his first venture. Like he had this kind of marketplace model. Right when marketplaces were hot, he leveraged FOMO like crazy. He went after West Coast VCs while he was in the East Coast to make East Coast VCs jealous. And then that actually helped him. He put up kind of top-line metrics that showed, you know, big up into the right slopes, even though the unit economics were broken. And that, with minimal diligence, got him even more funding raised. So you can really game that.

Pablo Srugo (00:08:09):
Here's what you can't game. You can't game true product market fit. You can't game it because you can't go and convince customers to not only pay you actual money but to keep paying you that money, to be happy with your product, to refer others. to close quickly on demos, et cetera, et cetera, to expand later on. These are all the signs of product market fit. And you can't just gain that. You can, like, hoodwink your way to one or 10 customers, but it's all going to fall apart soon enough unless you actually have true product market fit. And that's what makes product market fit, on the one hand, so hard. And yet, also so important because it's one of the very few things in life that you can't game. And that's exactly what Mike learned.

Pablo Srugo (00:08:47):
In his first venture, he went after everything else except product-oriented fit, and it failed. In the second one, he went after nothing else. He went after just finding a way to deliver true value. He had this idea about selling, frankly, like grass-fed beef, funny enough. Grass-fed beef in a box, right? Like by delivery.

And that was his idea. And he went and tested it out. Found that there was true demand for this. And he served that need. And with no funding, you know, 10 years later, he's at half a billion dollars in revenue. You can't fake that sort of growth. You can't fake that sort of pull. You cannot gain product market fit.

Pablo Srugo (00:09:22):
Aragon and Wesley at Aragon is actually, it's a crazy story, man. This guy goes from zero to $10 million ARR in like two years, on this AI headshot product. So it's literally a product, you submit a picture, a couple selfies of you. It uses AI to generate professional-looking headshots. Very simple-sounding product. Zero to $10 million, two years. He raised a little bit of money, like a couple million bucks, spent none of it to get there.

And when you hear his story out, honestly. A lot of it sounds like luck because what happens is he gets fired. He gets fired from his job. He and his co-founder start just kind of like playing around with different things. They're looking at climate tech. They're looking at ag-tech. They're looking at completely different things. AI comes along, just happens to come along. They start digging into that. They stumble upon this paper that has. You know, basically talks about the way you could use AI. And one of those ideas is, you know, image generation and potentially headshots.

He goes into, like, he builds the product. He's one of the first ones to build the product. And he even mentions at what point. That he had an affiliate program and one blog. Somebody wrote a blog about, like, the 10 best AI headshot products.

Pablo Srugo (00:10:34):
And they were ranked number one. And that was generating 150% of the revenue from this one blog. I asked him, did you go get that blog? Did you do something to get it? No, it kind of just happened. So when you look at it all like that, you're like, man. This guy just got dumb-ass lucky. That's really what it feels like. I would look at it a different way. Obviously, luck plays a role in all of these things. You think about a super high level, like where you're born is pure luck. Your parents are pure luck. So, you know, your genes are pure luck. So, you want to go high level, like luck is obviously a huge part of it. But that's neither.

Well, it's not, you know, it's kind of interesting, but it's really not that useful. I think what is useful, we've talked about this before, is this idea of positioning. And if you go and you pull a few different ideas here, you know, Paul Graham talks about the best way to build a startup and the best way to come up with an idea. And he kind of has this concept of find people you really like and build stuff you're passionate about with them and just kind of play around. That's kind of his idea. And it's not super satisfying as an answer. Somebody says, how do you come up with a great idea? And it's like, well, just find somebody you like and build things you like together and explore things. But there's something to that. And what I think there is, this idea of positioning. When you're in that mode and you're with somebody that you can build with and you can partner with, and you're just exploring and building stuff, you're putting yourselves in places where you're watching changes and you're open and receptive and ready to move on those changes. And that's exactly where Wesley and his co-founder were when AI came. Now, obviously, AI is a massive inflection point, once in every 15 years. And so the fact that it happened right when they were doing that exploratory phase is luck. But two things. One is every year something else is happening. It wouldn't have been as big as AI, but other things are happening that they easily could have found and latched onto. The second thing is AI happened, and a lot of people didn't become. Zero to 10 million in two years. They did. And that's because they were in that right place, right time. But more than anything, because they had, I don't think it was fully conscious, but like they really have positioned themselves perfectly. And that's, I think, the point.

Pablo Srugo (00:12:39):
If you want to build the next best startup, it's really hard to force that out. It's more about stumbling upon a problem. And so then the question becomes, and some people, to be fair, and I've heard these stories as well, where they really go out and they do it. But most of these stories are really about stumbling upon a problem. And so the question is, how do you stumble upon a problem? And I think the answer is, it comes down to positioning. Finding a way to position yourself in a place, in a state of mind, and with people. Where you are able to actually dig into things that you think are interesting, build different products that might work out or might not work out, and, in general, be open-minded and receptive so that when a potential opportunity opens up, you're there and ready to jump on it. And that's exactly what happened to Wes.

And then the story of 7shifts is totally so different. It's actually polar opposite, like 0 to 10 in two years. And Jordan at 7shifts, like his story was a slow, slow burn. He started as a side project. He was building, like, scheduling for restaurants. And I don't remember the exact numbers, but I mean, these guys took like three years to hit $1 million in ARR. West went from 0 to 10 in two years. So it's a completely different type of situation. But today, 7shifts is used by one in 10 restaurants in the U.S. It's got 50,000 customers. So it's become absolutely massive. Tens of millions approaching $100 million, revenue. And I think they're one of the elements that come, you know, there's this kind of concept of founder market fit. You know, there's product market fit, but before that, there's founder market fit. The idea being, like, you want a founder that is the right founder to take on whatever market opportunity is presented. And in Jordan's case, he's building scheduling software for restaurants. How did he get into that? Oh, his dad owned a bunch of Quiznos franchises. And I think, like, his grandfather owned Booster Juice. Like anyways, he was in that world for a long time, and he started building scheduling software to help his dad out with problems that he was seeing.

Pablo Srugo (00:14:38):
There's two parts. At least two parts of founder market fit and why it's so important. One of them is the obvious one, which is you want that founder market fit because that founder is so much more likely to understand the market, the ICP, the customers. All the subtleties that are necessary to build a great product. And that's why you want founder market fit. And that is critical. But here's the thing. If you're an obsessive type of founder, and that's a good quality to have, to be clear, you can find a new market, go crazy deep, have hundreds of interviews, and get up to speed relatively quickly. You can go and live with customers, work with customers. I had somebody on the show that wanted to build for coffee shops. He spent a week working as a barista. You can go even more. I got somebody else who wanted to build for customer service. So they spent a year working as customer service agents. I've heard that story many times. And so it's something you can do. So you can get that without necessarily having, you can kind of like force the founder market fit. 

Pablo Srugo (00:15:36):
But there's a second reason why founder market fit is so important. And that is where passion comes in, interest comes in. Innate interest comes in. Think about this case, like, three years, I think two years in, two and a half years in, you had like half a million in revenue, something like that. Like, it's not a lot. A lot of people in those circumstances might have given up, or they might have pivoted away, changed courses completely, because you're kind of in this gray zone. You're kind of in this, like, I don't know. I mean, it's kind of working. It's not really taking off. I'm seeing all my, not all, but like, I'm seeing many of my, let's say, colleagues or other founders in the ecosystem grow way faster, raise way more money. Like everything's moving. Something's not right. And yet, he stayed on course, and look at him now, right? Serving 50,000 customers. Why did he stay on course? He stayed on course because he had true founder market fit. And that's the second reason that founder market fit is so important, which is when the right founders approaching. Attacking the right market opportunity from a place of intrinsic desire to solve that problem. Versus just opportunistic, it allows that founder to, frankly, withstand more, take more time. I don't mean take more time, like go slower. You always want to go as fast as possible, but spend more time on it before changing course because the investment is that much higher. And that can be, I mean, it can't, like, frankly, you know, going too long on something that's not going to work is not positive. But staying the course with something that's just going to take longer, like Olos and other ones, a billion-dollar public company today, it took seven years to hit a million ARR. There's so many of these slow-burn scenarios. And you kind of need that strong founder market fit for those to work because otherwise, the founders that are just in it because they thought it was interesting, six months, 12 months later. They don't have the numbers. They're going to go do something else. So those opportunities are there for the founders with clear founder market fit.

Pablo Srugo (00:17:28):
And like when I'm looking at all these four episodes, right, like you've got, they're so different. You know, you've got 7Shifts, slow burn. You've got Aragon, kind of this kind of new age AI-first companies. You ordered 10 million in two years. You've got ButcherBox, which is something like, you know, meat in boxes on delivery. I mean, it's not even, it's tech-enabled, you know, not truly a tech company. And then you've got, you know, the Sure Ventures with Gopi interview, which is, you know, from a VC. The one thing that does strike out, at me as being pretty common across all of this is just, like, the importance of just putting one foot in front of the other. You know, I've said this before, like you have to be in the market to win the market. There's so many kind of different ways, you can think about all of this. But I think especially as an early-stage founder, like a lot of the times when you hear the big, the great founders. They have such visionary ways of talking about things. Their stories are so polished. It almost seems like a lot of these things were understood at the beginning.

Pablo Srugo (00:18:22):
Like these founders had these grand visions from the very get-go, and all they did was just fill that out as they moved through time. My experience in talking to these people is it's less like that. I mean, the vision does help and kind of becomes clearer over time. But you, really, it's more of, like, this kind of one foot in front of the other, building scheduling software as a side project, getting a handful of customers, you know, in his case, they're calling him in the middle of the night or at 7 a.m., I should say, in the morning and complaining and swearing to them about why the product wasn't working and fixing those problems or just exploring different areas until something interesting happens. Or in the ButcherBox case, like the reason he even went after this grass-fed beef was like he and his wife wanted grass-fed beef because they were on some diet and they couldn't find it.

Pablo Srugo (00:19:10):
Just one foot in front of the other, in front of the other, in front of the other. And I think that's way more important than any kind of grand vision. Grand plan that you might build out. It's so easy to theorize. It's so easy to sit back. And just think about, well. This happens, and that could happen, and that could happen. And then we could do this. And like, you have all these answers planned out, and it kind of doesn't matter because you're stuck in thinking lane. You're stuck in dream lane. Like the goal, the game is the people that succeed, they're in action lane. They're just getting shit done. They're making things happen. They're moving with speed. And the most important thing is they're putting one foot in front of the other, figuring out at any given time what is the most important thing to do, and getting it done.