Pablo Srugo (00:00:00):
You know, it's funny doing these podcasts, obviously, like I'm talking to so many founders, and oftentimes I'll think back to my days as a founder at Gymtrack. And one of the things I remember pretty vividly. Actually it's like, in the early days I was, you know, I'm an Econ grad, very non-technical. My co-founder was also more like a business-minded type. So we were two. We're two business founders, like non-technical founders. And I don't remember why, but I remember I had this bit of, like, let's say, an insecurity when I was thinking about some of the best founders. Like, you think of Mark Zuckerberg, you think of, you know, Steve Jobs, you think of these big guys. And you kind of, I don't know why, because if you keep going down the list, you got Jeff Bezos. You definitely have some business founders in there. But at the time, I just remember feeling like, well, we're set for failure because we were non-technical founders, which admittedly, like when I say it out loud now, I just feel like, that's so stupid. Obviously not. There's so many successful business founders. But I do remember that that's what I felt like at the time.

Previous Guests (00:01:05):
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 (00:01:17):
Do you think the Product Market Fit Show has product market fit? Because if you do, then there's something you just have to do. You have to take out your phone. You have to leave the show five stars. It lets us reach more founders, and it lets us get better guests. Thank you.

Pablo Srugo (00:01:30):
There's so many things like that in startup land where you can easily believe, like, oh, if I'm not this, then I'm not going to be successful. Like, if I don't raise a big seed round, then can I really be successful? In my case, if I'm a non-technical founder, can I really be successful? If I'm not in the valley, can I really be successful? Like, the list just goes on and on and on. And of course, like fundamentally, this is a game of probabilities. And so some things, you know, the reality is being in the valley can increase your odds of success. There are things like that that can increase your odds of success. But while it is a game of probabilities, it's also like a game of outliers. And the probabilities, as much as they matter, oftentimes, like they don't matter, you know, that much. And that's kind of what I got talking to Jeff, the founder of Skip the Dishes, which was kind of like You know, he won't like me saying it this way, but it was kind of like the Uber Eats of Canada. And, you know, it was kind of there before Uber Eats. So it's a bit unfair, but Uber Eats did get, you know, the bigger prize. But this was the Uber Eats of Canada, started by five co-founders, believe it or not. Three of them were brothers. So, like, already you're starting in a situation that is not normal at all in, like, not even a second-tier city, like in a third-tier city. These guys are starting in Saskatoon. I'm in Canada, and I've never been to Saskatoon. So, like, you just, it's not even like I would say Ottawa, you know, is a second-tier city and Saskatoon is a third-tier city, like, in the world of markets it is tiny. But that's where they started with no funding, and ultimately Skip. They sold for $200 million.

Pablo Srugo (00:03:03):
The company wasn't fully bootstrapped. They ended up raising some money, but they didn't raise that much. So they did very well. And now, you know, Jeff went on, and now he started Neo Financial, which is a Neo bank in Canada. They've raised hundreds of millions of dollars. They're close to a billion-dollar valuation. It's a massive, massive bet. But, you know, things are going up and to the right. And I think, you know, for him, like when I asked him, you know, I actually asked him, I said, like, dude, why would you, like, you sold this first business? You made a bunch of money. What drives you to keep going? What drives you to kind of do it all over again, knowing now what it really takes to make one of these big things successful? And for him, like his thing is it's not about the money. It's about building a company that I'm proud of and it's about, in his words, putting the prairies on the map. Like, that was what was interesting to him. And I think this point is less about that. It's just more about this idea that you don't, like in my case. You don't need to be a technical founder to win. Even if the odds say that they're a little bit better, which they, to be honest. They actually kind of do. But in any case, you don't need that. And same with being in the Valley.

Pablo Srugo (00:04:00):
Sometimes I feel like if you're not building out of SF, maybe New York City, you kind of feel like you're not playing in the big leagues. You're not really playing the same game that everybody is playing, and the odds are kind of stacked against you. And again, the probabilities are that if you build in those cities. There's just more unicorns. There are more wins there. So you do increase your odds somewhat. But the reality is, when you look at the world of startups, there are so many different cases. And it's just not nearly as clear-cut as it might seem. And so, like, that's the thing, like the observation, I think, that I had there is, wow, you can actually build massive companies, not just outside of the valley, but outside of second-tier cities. You look in third-tier cities, because the reality is, like, what really matters, again, isn't where you're building, it's what you're building, it's how you're building, it's how you're executing. And those things can be done, frankly, just about anywhere in the world.

Pablo Srugo (00:04:52):
And then talking about another kind of non-Silicon Valley startup, I spoke with Koen, the founder of Polarsteps, which is based in the Netherlands. And what, like, the big observation for me out of this one was his insane focus on just, like, one metric. You know, I'm sure you've heard about this idea of like North Star metrics. And like for Airbnb, it's kind of like nights booked, right? That was a big thing for YouTube. Their North Star metric is typically, like, the amount of time watched. That's the thing that they track across the entire organization. That's what they're really optimizing everything around. You know, Koen, starts this company called Polarsteps. Which is like this consumer travel app. There's a lot of different things you can focus on. Obviously, you can focus on MAUs, like monthly active users. You can focus on retention. You can focus on engagement rate, like DAU over MAU.

Pablo Srugo (00:05:38):
There's so many different metrics that he can focus on. But what he realized was fundamentally, the only way that this startup would really work out is if he ended up having incredible word of mouth. It just needed to be a referral-based business because the value of each consumer is just not high enough for this to be like a paid ads kind of go-to-market motion. And so in order for him to truly win, he needed to drive word of mouth. That needed to be the engine that drove everything for him. And so when he realized that, he decided that he needed to make his entire business strictly about NPS, Net Promoter Score. That was the thing that mattered because the NPS question, to be clear, is how likely would you be to recommend this to someone? And then you kind of give a score of 1 to 10 or whatever it is. The thing that that's most tied to, the thing that that's most indicative of, is word of mouth, is referrals. He built his entire business about that. And he talked about the importance of not just being super maniacal about it and focusing exclusively on that, but also of getting all stakeholders fully aligned on it.

Pablo Srugo (00:06:43):
So obviously his team internally, but also investors, because the last thing you want is going into a board meeting and feeling like this quarter was solid because, you know, NPS went up, and that's the thing you're focused on. And then having people asking, about retention or revenue, not that you don't look at those things, but like having that be the focus and all of a sudden saying, Oh, but revenue is not up or attention is not up or whatever it is. But what you're trying to drive at is NPS because you think long-term that's what's going to drive great business outcomes. Then getting everybody focused on that is obviously critical. And I think, like, for me, the observation was, you know, NPS is not. I mean, NPS is obviously used pretty commonly. I see a lot of startups that use NPS, but it tends to be like one more thing. And obviously not every single business needs to be so maniacal about word of mouth. Word of mouth obviously is, like, always useful.

Pablo Srugo (00:07:27):
But, you know, if you're doing like enterprise sales, even like mid-market type sales, if you have, like, there's just different types of business models where you're Word of mouth may not be the primary dominant thing. I think, consumer, it very often is. But again, it doesn't have to be. What I think the core observation is trying to figure out. There's so many things you could track. I mean, it's easier and easier to use whatever it is, like analytics tools, amplitude, mix panel. Whatever it is and, just track a bunch of different metrics across your entire business. And you probably should track a lot of things.

Pablo Srugo (00:07:56):
But at the end of the day, I think going through that exercise of figuring out what's the one thing that absolutely has to get better over time, and that is a great leading indicator of future success. Oftentimes, the thing that gets all the focus is revenue. And in many cases, that is not really the best predictor of future success. At the end of the day, you want a business that produces free cash flow, which means you're going to want a business that produces a lot of gross margin, which means you're going to want a business that produces a lot of revenue. So revenue will definitely matter. But it doesn't mean it needs to be the thing that you fully optimize around. And I also think having just one thing that everybody is responsible for and looking at every single day, there's just a lot of power to that in terms of alignment. So that's, I think, the big observation for me. What is that thing for your business that absolutely must go up into the right every quarter, every year, and that you want all efforts, all spend to ultimately tie into.

Pablo Srugo (00:09:02):
I was talking to a founder that I work with, like a founder whose company I've invested in. And, you know, we were talking about growth this year. He's trying to double this year. He's trying to go from, like, you know, low single ARR digits to, you know, 2x that, like mid- to high single ARR digits sort of thing. So he's kind of in that, you know, 5 to 10, let's say, ARR range. And, you know, we're talking about what are the things that are going to keep driving growth? How do we go from kind of linear growth? Where we add the same amount of revenue every year, to more of a compounding growth where the amount of revenue we add each year itself grows so that your growth rate stays constant?

Pablo Srugo (00:09:37):
If you just think about basically, like, if you want to do 100% year-over-year growth, you know, on year one, you go from one to two, you need to add a million. On year two, you go from two to four. You need to add two. If you keep just adding a million every year, you've got linear growth. You go from one to two to two to three and so on. And so I'm talking about it, and kind of this idea of this silver bullet comes up, and he says something like, you know, I just, I don't know if there's going to be a silver bullet. Like, I haven't found that silver bullet yet that I can just be like. That's the thing that's going to drive growth. And, you know, it struck me because I think that's very common. Like, I think many founders are kind of looking for that viral moment, that silver bullet. I see it even in, like, whether it's podcasting or YouTube or whatever, like people expect you do something for one time, and all of a sudden it just takes off. And there's something to that, like Malcolm Gladwell wrote this tipping point book. And I think in it, he said that, you know, that's how some things work. And maybe it does work that way sometimes. In my experience, it rarely works that way. It's actually more of a consistency story. A lot of these successes. Yes, in some ways there are some big catalyst events. But when that does happen, it's actually more just like, you know, maybe good positioning and a lot of luck than anything else.

Pablo Srugo (00:10:39):
The other stories, and I think the more common story. Is one where things just kind of keep going up and to the right and slowly improving, you know, each time. And you look at Jobber. For example, his co-founder Forrest joined us and told the story. And it was holy, like you want to talk about a slow burn, like that was a slow burn. I mean, this guy with Sam, the other co-founder, they, you know, they kind of, they’re developers. They’re building custom software for different companies. They come across, like, a painting company, you know, kind of in this home service space. And they just start to find a bunch of different issues in their business, issues like things that are inefficient, things where software could come in. And this is, we’re talking a decade ago or so, where software could come in and really make a difference. And so they start building. And they start testing. And he’s like, it took us six months to make the first sale. Like, you know, literally, they would pitch customer after customer after customer. And they would just keep getting no and no and no. And finally, six months. And they get the first yes. Six months after that, they just have three customers. So a year into this venture, Jobber, you have three customers. It's just insanely slow. And, you know, he said, like, there was never a silver bullet, like nothing ever happened that became a massive inflection point. It was just constant improvement after constant improvement, consistency, and time. But now you fast forward, they're over $100 million ARR. And he said that in one month, like last month, they added as much revenue as they did in their first seven and a half years of operations. That's compounding growth. That's the effect of just being 1% better every day. And I think, because I asked him, I'm like, man, six months, one customer, 12 months, three customers, like, why wouldn't you just, like, I'm sure people were telling you, like, you're a fool for spending your time on this. Like, why wouldn't you just give up and try something else? And his answer was that, you know, when he spoke with customers, like, this is where the qualitative piece is so important.

Pablo Srugo (00:12:39):
Cause, yeah, you can look at just a chart and you see three customers in a year and you're like, this is garbage. Like, this is just a non-business. But the qualitative thing is so important, and this is where. The founder is just the only person that really understands what's going on because you can't see, in a spreadsheet. And what he felt was, when he spoke to these customers, the problems that they wanted to solve were real problems. These customers were truly affected, constrained, and handcuffed. By the inefficiencies that they were facing. It really was a detriment to their business. It was preventing them from growing when everybody wants to grow. So he was a true top-of-mind problem. What was happening is that often the product, the way that Jobber was coming, like the way that Jobber was approaching it, their initial solution wasn't really clicking. It wasn't really the thing that these customers wanted, but they felt that they could get there. And so what I think he identified correctly, obviously in hindsight, is a real top-of-mind problem. A massive market, and maybe the massive market, like I said, is maybe less important, but obviously, like if one painting company has this problem, you see that 10 have it. There's thousands and hundreds of thousands of these painting companies. And then you look at home service companies, like, it's clearly a big market. You don't need to do a lot of research to understand that. So you have a big market. You have a top-of-mind problem. And you have a solvable top-line problem. It's not like they needed some revolutionary new technology to come out, and they were hoping. It's just like you can solve this, but it took them a long time to build effectively the right product. And so that was what was preventing growth.

Pablo Srugo (00:14:13):
When you're kind of pushing on a string and you feel like the thing that you're telling people you're going to solve is not even that important, that's where you really have to pause and say, wait a second, what am I doing? Maybe the slow burn is. Never going to turn into something that compounds over time because there's just nobody who really cares. In their case, people definitely cared, but the solution just wasn't there yet. So I think my point, my observation there, is just like there really oftentimes is no silver bullet. There might not even be a point of looking for a silver bullet, but there is very much a point in making sure the problem you're solving is a top-of-mind problem and then making your product 1% better every day. And then the last founder I'll mention is Jannick from Public.com. And that's it. It's an interesting story, right?

Pablo Srugo (00:14:55):
So Public.com is this. It's kind of like a Robinhood competitor. Again, like you wouldn't like that comparison, but it kind of is. I mean, it's an app that helps people invest. It's got a big, like, social element to it. Where you can kind of, you know. You have a community. You can see what other people are buying and trading, and it also has this big emphasis on fractional shares. At least that was kind of the wedge that made them popular, was they're one of the first to do fractional. You could buy fractional shares and trade them in real time. My biggest observation of all of that, though, was actually before. So Jannick had a different startup before in Fintech, which was successful. And then after he sold that one, he took some time off. And what he did in that time was very unconventional. Like, most founders that exit, there's kind of a few paths, right?

Pablo Srugo (00:15:47):
Path one is, and in order of likelihood, right? But like path one is you start another company. Path two is you take some time off, you travel, you know what I mean? Like you just, full leisure. Path three, like maybe some of them, you know, go into investing. They become a VC, right? And maybe path four, some of them, depending on the size of the exit, maybe they become an executive. Those are typically the four paths. Jannick did something completely uncharted, very different. He realized the thing that he really liked and hadn't been able to do for a long time was design. He loved designing products. And obviously, as his last business matured, he was spending less and less time doing that. And so he just started for six months. He finally just became a designer employed by contract. Here's a guy, a founder, an exited founder, very successful, and he's getting hired out to do product design, right? Like on Figma. That's what he's spending his time doing. But for him, this was how he got into that flow state. Like, this was the activity that he just loved doing. Like he was passionate for, doing product design. And it was through that he actually came across this problem. Obviously, he knew enough about fintech, so that was not foreign to him at all. But that's where he started to somehow stumble upon, I would say, this problem of a lot of people he mentioned, a lot of people that he knew that were not financially oriented like him were not nearly as invested in financial markets as he would have thought. Like he just assumed everybody owned shares. But he realized a lot of people. They were sitting on $20K, $40K, and $50K of just like cash. And they just didn't really know where to start.

Pablo Srugo (00:17:27):
There was a lot of hype around, like, maybe stock trading, but not so much knowledge of actually investing. He started to kind of analyze that. He did customer interviews, trying to figure out why. And, you know, ultimately landed on these two ideas, one of them being the social piece, being the fact that investing can be scary for some people, and it's easier to do things with others than alone. So if you could build these communities that connected people together, maybe it was their friends and family, maybe it wasn't, but you could see what other people were doing. That would be an easier way to get into the game. And then the second thing he realized was there. Is this, of course, like diversification is super, super important when you go into investing? And yes, there are ways to diversify today. Like, you can just buy an ETF that gets the whole S&P 500. You can buy different types of ETFs for different sectors. But what he felt was like there's a psychological element. And people want a little bit. They kind of, they want to diversify, but they want more control. They want to be able to say, Yeah, I want to diversify, but like, I want to own, you know, Amazon and Microsoft and Google. And I don't want to own all these other shares that are part of this ETF bucket. I also, you know, I can buy an ETF, but they're going to choose the concentration. I want to choose the concentration. So there's a cycle. Part of that is real. Part of that is just, you know, maybe user psychology that, you know, feels like you want to diversify, but you still want to be the one making the picks. And you kind of can't do that well unless you have a lot of money, because some shares cost $100. Some shares cost $2,000. And so if you only have, let's say, $10,000, and you want one of the shares that cost $2,000, the minimum you can put into that from a portfolio allocation perspective is 20% of your portfolio. And so his idea was to do this fractional sharing, which had been done in a few different ways before, but anyways, he was able to do it in real time. And you know, a bunch of different things played out. And anyways, it totally took off.

Pablo Srugo (00:19:08):
It was a massive company now. But the piece of all that, like I share all that story, but what's important here is how did that all happen in the first place? And what is really important when it comes to a trading app, a consumer app? Like, how important is product design? And I would say it is paramount. Like, if you're doing B2B SaaS, design is important. Like, it's always going to be important, but it's not that important. There's other things that are more important, like integrations, like pricing, like salesmanship. There's just workflows that you set up, like actual functionality, like how much functionality you cover. There's all these other things. But when you think about a consumer app, ease of use, polish, like literally aesthetics, how well, how nice it looks. These things matter to people who, you know, are using a product or choosing to use that product over another product. And even more so, like, a product that they need to consistently engage with that you want them, you know, quote-unquote addicted to. The reason that he was in this kind of right place, right time was because he allowed himself to go where his interests lie. That was my big observation. This guy could have done anything and decided to become a product designer again because he liked it. Like there was no other thinking behind it. There was no big vision or big master plan. It was just, I like product design. I haven't been able to do it in a while. I'm going to do that. That's what I'm going to spend my time doing. And because he did that, two things happened.

Pablo Srugo (00:20:41):
One is he landed on this problem. But two is when he did. His design skills were fresh because obviously the tooling is changing all the time. The requirements are changing all the time. The user expectations are changing all the time. So if you're not refreshing yourself as a product designer, you get stale pretty quickly. But he wasn't stale. And so when he started to feel this problem and lean into it, he was saying he was so in tune with the product design of that era, of that time, that he was able to just build an app exceptionally quickly. And obviously an app that worked and truly resonated. So I think that ability of figuring out what you really care about, what you can be great at, and kind of just taking the time to master that craft can lead to, it did in Jannick's case, but it can lead to outcomes that are very much unexpected. You know, there's power to becoming really great at something. There's power to going deep on something you really care about. And what can come out of that is really hard to see at the time. And it's probably not the right reason to do it in the first place. But doing something because you're great at it and you love it is a good enough reason in of itself. 

Pablo Srugo (00:21:49):
You know, when I look at all these four episodes, like you look at public, we just talked about Jobber, Skip the Dishes, Neo Financial, and Polarsteps. One of the things that really strikes out of me is like a kind of meta-observation to tie it all together is how every single one of these founders did something unconventional. And I don't know that you have to do something unconventional to be successful. Maybe you do, maybe you don't. Not sure, but I will say that there's a reason why no playbook exists and probably will ever exist when it comes to finding product market fit. There are certainly, like, best practices to follow. And there's a lot of learning you can do from other examples. And that's the whole point of the show, is building that expertise, building that muscle. But there is no playbook for finding product market fit. You know what? It's kind of like there's no playbook to winning a game. I play soccer, right? Like, there's no playbook to winning a game. There's strategy. There's best practices. Here I pass. Here I shoot. Here is formations. You know, this team is playing that way. You should do it this way, et cetera. But there's no playbook that says, If you just follow this playbook, you're going to win every game. The world just doesn't work that way. There's way too many variables, way too many factors. Like, obviously, luck plays a role, but you have the dynamism that plays a role. And so, anyways, like for obvious reasons, it just doesn't exist. And it's the same thing for product market fit. But I think because of that, it leads to a situation where every startup is so unique that you almost have to, as a founder, part of your whole job is to figure out when the conventional wisdom applies. And frankly, it probably applies most of the time because there's a reason why many things, like take lean startup principles as an example, like there's a reason why those have become so widely adopted. And I would argue that most of the time. They apply, and that goes for most things. But I think what you have to decide is where it doesn't apply. Like, there's a lot of the alpha, let's say, that you're going to get from building a startup. A lot of the reasons for your success are going to be about figuring out. What of those conventional wisdoms you don't need to follow in your case for your specific reasons. Like, you go through the list. Right. Like you're supposed to build in the valley or tier-one cities.

Pablo Srugo (00:24:07):
Here's Neo Financial that purposefully didn't do that. And if you look at Skip, it won because of that. Like, the reason they were able to do anything was because they built across Canada. Nobody was tackling and in second-tier and then third-tier cities where nobody else was playing and finally got to the first-tier cities. And then Uber Eats comes in. And obviously that was a challenging kind of situation, but they'd already built enough that they still had a solid acquisition. If they would have gone after New York City, they would either have to raise as much as Travis did, or they'd be another kind of, you know, dead startup that nobody would know about. But instead, it's a successful company, specifically because he did something unconventional, built in an unconventional place.

Pablo Srugo (00:24:50):
You look at Polarsteps. Like normally when you build a consumer app, you care a lot about retention. You care about monetization. You care about DAU over MAU. I'm not saying he didn't care about any of these things, but he purposefully deprioritized these things, went all in on just word of mouth about NPS. That was the one thing that he cared about. And that's not conventional. Again, using NPS is conventional. Making NPS your number one metric above all else is unconventional. And it worked for him. He grew that to $10 million ARR in travel, by the way, where a lot of companies died during COVID. And he actually was able to, he was flat during COVID. Like most companies, fell 80%/90%. Travel companies fell 80%/90% during COVID. And he was flat, which being flat doesn't sound great. But when your peers are down 80, 90% and you're flat, that's huge alpha. And a lot of that was because he had that solid kind of engaged community because he'd focused so much on word of mouth.

Pablo Srugo (00:25:41):
Even like Public, which focused for six months on product design before jumping into his next venture, or Jobber, which was in this super slow-burn industry when you're supposed to be in this home-run industry that is venture. And both of them are building massive businesses. Like I said, Jobber is over $100 million in revenue. These are unconventional things that make sense for their case. Like for Jannick, it made sense to spend so much time in product design if ultimately, you know, given that ultimately he built a consumer app where product design is so important. And for Jobber, it made sense for him to not necessarily mind that slow burn because, it was frankly, home service companies are not like early adopters. So it made sense for that industry as well. And so I think that's kind of the meta observation here is you have to decide as a founder. You're going to get so much advice. Like you get advice from, frankly, anybody that you talk to is more than happy to give you their piece of advice. Some of it is just plain wrong. But even the advice that is solid advice, you then have to decide which one fits for your company. Which one doesn't? Where are you going to follow the road of best practices? And where are you going to intentionally, purposefully do something very different? Be unconventional because that's what's best for you.


Wow, what an episode. You're probably in awe. You're in absolute shock. You're like, that helped me so much. So guess what? Now it's your turn to help someone else. Share the episode in the WhatsApp group you have with founders. Share it on that Slack channel. Send it to your founder friends and help them out. Trust me, they will love you for it.