How I lost $6M, Why hype means nothing, Plus a dozen other lessons from our last startup

Pablo 0:00 Well we&#39;re doing something a bit different, a bit special, today. Last episode, I spoke about the story around – part of it was around Gymtrack, my last startup, but really specifically talking about how it almost got acquired. I almost became a millionaire. And then, obviously I didn&#39;t <laugh>. That actually resonated maybe more than I thought. What I decided is we&#39;ve been doing these episodes with Rob Woodridge, who was for the second half of Gymtrack. He was the CEO that we brought in. And I thought, well, why not bring my co-founder Lee Silverstone, who&#39;s the person I started Gymtrack with in the first place. Let&#39;s pull on some threads and just tell some of the Gymtrack stories because it&#39;s fun to do it <laugh>, for us, selfishly. And second of all I think there&#39;s going to be some pretty interesting observations, lessons, lessons learned, wh Lee 0:59 Man, thank you, it&#39;s nice to be on, finally. I like it. You made it, dude. This is like, I made it. This is it. This is the, this is the pinnacle of my career. I&#39;m finally on the Product Market Fit. Pablo 1:11 Welcome to the Product Market Fit show, brought to you by Mistral, a seed stage firm based in Canada. I&#39;m Pablo. I&#39;m a founder turned VC. My goal is to help early stage founders, like you find product market fit. I should say I think different perspectives now. Lee, after Gymtrack, started a few other startups. Now he&#39;s starting another startup. He&#39;s in the very early – this is pre-seed, a month into it. Rob is – Lee 1:43 Three months, three months into it. Pablo 1:44 Three months into it, three months into it. Lee 1:45 We&#39;re super far along now. Pablo 1:48 That&#39;s it. Everything&#39;s already done. Product market fit, the accomplish. Then Rob is COO of a startup. That&#39;s probably more like series A stage and then obviously me on the VC side. It&#39;ll be interesting to get different perspectives. Anyways, let&#39;s jump in, Lee. I think a good place to start, because I actually haven&#39;t done this on the show, is talking about – and this is an episode I&#39;ve done with so many other founders, we just haven&#39;t done it with Gymtrack, which is how we came up with the idea in the first place. Let&#39;s jump into that. How was Gymtrack born? How Gym Track Was Born Lee 2:17 Man, I think it was – it was honestly you and me sitting in – we lived in this house, this college house together, this university house together, which is where we started our first business together. That&#39;s where we started My Tutor. We were using it as our home slash office. Do you remember there was that one room upstairs that maybe used to be a bedroom, but then it was and we turned it into an office? We went to Home Depot when we bought this massive piece of plastic that we turned into a whiteboard. do you remember that? Pablo 2:53 Oh man, it was the cheapest whiteboard. Whiteboards were too expensive. They were too expensive. Lee 2:58 Whiteboards were too expensive. We had gone to Office Depot, and we were like that&#39;s how much a whiteboard costs. It&#39;s crazy. So we googled that. You could buy this, I don&#39;t know, it&#39;s called RFP maybe, or like, I don&#39;t know, some sort of – Pablo 3:09 It’s plastic like bathrooms or something. I don&#39;t know. It&#39;s a huge – Lee 3:11 Yeah, it was this material they would use for construction projects, but you could use it as a whiteboard also. We went to Home Depot. Actually, now that I&#39;m talking about this, remember we tied it to the – Pablo 3:23 That&#39;s what I was going to say. We also didn&#39;t want to pay for the truck to bring it, so we put on your Civic. Lee 3:29 We’re holding this piece of plastic to the roof of your car. Oh, and it was flapping in the wind like crazy. We drove back home, and we drilled it into the wall. Every single day we would sit in that office, and we would whiteboard ideas. Pablo 3:44 We would try, which by the way might be the worst. I remember listening to Paul Grant back then. His thing is you want to – and I forget the exact quote. You want to focus on things that are important to you, dive deep into problems with people that, that interest you. Like that&#39;s how you come up organically with startups. And we&#39;re like, fuck that. We&#39;re pushing our way to this. I don&#39;t care. Lee 4:00 Yeah, yeah, we&#39;re like, we are going to whiteboard our way to a billion dollar company. Pablo 4:11 That&#39;s right. Lee 4:12 We would – I don&#39;t know. We&#39;d probably have the show Entourage or something on in the background or listening to hip hop music and just whiteboarding ideas. We came up with a few. There were a few ideas that we came up with. One of them, which I think you talked about in the PMF show once before, you talked about in a LinkedIn post was this idea of doing delivery for restaurants before greet was a thing. That was one of the ideas we whiteboarded. We had the same playbook. We&#39;d whiteboard an idea, you would look at the market size and see if it was big enough. I would go print a bunch of business cards for the business. Then I would go door to door, and I would come back and report what the people said. That was our playbook. Pablo 4:52 Just to be clear because I was way too scared to call customers back then. That&#39;s plain and simple. I was like, Lee, you go knock on doors, dude. Lee 5:02 If I had business cards, I felt like I was the king of the world. I could walk in anywhere. I had a business card. Everyone had to talk to me. We were going to these restaurants doing that. I know people were like, dude, get out of here. Who are you? We&#39;re like, yeah, like that&#39;s a terrible idea. I think we talked to the guys at – I forget the one that Skip the Dishes. They were like, yeah, we&#39;re doing that exact same thing. We&#39;re like, oh no, we&#39;re going to get crushed. We dropped it. Literally, someone very high up at Skip the Dishes we talked to. Pablo 5:31 They were seed too. They were literally five, six months old, and they were unfunded. Lee 5:35 Yeah, and it was one of the founders or something. And he was like, yeah, we&#39;re doing the same thing. Get out of here. Then we did the same thing for Gymtrack. Pablo and I both go to the gym. We still do. It&#39;s still a huge part of my life. It was a huge part of my life then. It still is a huge part of my life now. I spend probably 10 hours at the gym a week. We were like, you know what sucks, writing stuff down with pen and paper. That was it. That was the impetus for the whole thing. And then it was like, well, wouldn&#39;t it be cool if you could track everything automatically? Well, how could you do that? And it just started, we just started drawing it. Pablo 6:09 Actually, by the way, you&#39;re missing one step. You came home one day and you&#39;re like, man, wouldn&#39;t it be cool if you could – people don’t know how to do exercises. You could scan a QR code and it would tell you how to do the exercise. I was like, no, that&#39;s not cool. It is cool? Lee 6:23 I don&#39;t remember that. I don&#39;t, that&#39;s funny. I don&#39;t remember that. That&#39;s awesome. Pablo 6:29 Then it became, yeah, what would be cool is not having to track your reps. The first iteration, at least the way I remember was this is what I&#39;m saying. I have an aside. One of the, let&#39;s say, findings, even just through the show, is if an idea starts with people who know nothing about an industry saying wouldn&#39;t it be cool if? Lee 6:53 It&#39;s probably – Pablo 6:54 It&#39;s not leading to somewhere that you want it to lead to. Lee 6:56 Yeah. Pablo 6:59 Then it builds because it&#39;s like, oh, QR code&#39;s not that cool. Okay, but tracking is cool. Then it was tracking on select weight stack machines. You put the pin, it goes up and down. I remember us talking, yeah, that makes so much sense. It goes up and down. I&#39;m sure you could track that, but it isn’t enough. Lee 7:16 Yeah , yeah , yeah . Rob 7:16 It&#39;d be super cool to track that, right? Yeah. I can imagine how cool it would be. Pablo 7:18 Then it was what if you could just track everything? What if you could track the whole workout? Lee 7:26 And that&#39;s one of those crazy things too that when you look back on it, not to digress from the story, but that lesson of the everything comment I think is one of the scariest things I&#39;ve ever – you&#39;ll ever hear at a startup. This product would be cool if it did everything right. It won&#39;t be good until it does. Everything is like one of those things that I think back on all the time, which is – now if I hear a startup telling me something like that, or I&#39;m thinking about a company and it&#39;s like, well, wouldn&#39;t it be great if, and then it&#39;s like, well, it has to track everything and be this like massive platform in order to derive any value from it. You&#39;re just like, yeah, that&#39;s crazy. You can&#39;t do crawl, walk, run. It&#39;s like one of those things when you look back on it. We should have been like, whoa, whoa, whoa, red flags. This is a bad idea. Pablo 8:17 Rob, what was, by the way, I&#39;m curious your perspective because you actually – so we met you. I mean, you became CEO in 2016, halfway through. You were VP marketing maybe a few months before that. I think you and Lee did a podcast really early days. You must have had some outside view of what are these kids doing? Lee 8:34 Remember that? You remember that? Yeah, not until just now that has, I didn&#39;t remember that for the past nine years or whatever it&#39;s been, but now I remember that. Becoming the Biggest Fish in The Small Pond Rob 8:41 It was early on. I had my own podcast, Untethered TV, and you were maybe episode two or three. I did that for 10 years. You were really early on. I found you guys through Invest Ottawa or Oak. It was probably Best Ottawa at that time. Maybe it was Oakley, which was an economic development group here in Ottawa. And you were the darling company. Every once in a while you have these startups that emerge. They get into this rarefied air where everybody wants to work for them, invest in them, and be around them. It&#39;s like this little moment of celebrity. You poke your head through the clouds, and it&#39;s sunshine. You can&#39;t do any wrong. That&#39;s where I saw you guys. I thought at the very moment, the way it was described to me. After I did the podcast with you, Lee, I literally said, there&#39;s two companies that I wish I could have been involved with in the early stages. One of them was Audible.com because I love audiobooks. The second one was Gymtrack. I love audiobooks and going to the gym and can you imagine these are two companies right in it. I fell in love with the idea I had. I got it as well. It was like this virus. Wouldn&#39;t it be cool? That is so cool. And that&#39;s what it was. Pablo 9:57 This is maybe a perfect segue because you mentioned we were, let&#39;s say, hot, right back in Ottawa, which is – this is a low bar, but hey. Lee 10:04 Hey , hey. Rob 10:05 You excelled at the low bar. Pablo 10:07 We excelled at the low bar. That&#39;s like, that&#39;s my my thing, man, big fish, small pond. I’m in. Yeah. When that happened, that happened right after Lee. I don&#39;t know if you remember it this way, but I remember it&#39;s kind of a step function. When we got into 500 Startups, we were like whatever, and then we got into 500 Startups. Then all of a sudden it was like, well, who are these guys from the perspective of Ottawa community. Lee 10:33 Yeah, I think – I mean, I remember it a little bit differently in the sense that a bunch of these accounting firms and law firms started to introduce us to angels. There was this sense and semblance of hey, these guys maybe know what they&#39;re doing. Pablo 10:48 It was buildup. Lee 10:50 Yeah. It was like – but there was no kind of proof point that we had any idea exactly what we were talking about. There was no anchoring to reality. It was just, I don&#39;t know, maybe they&#39;re the smartest people ever. Maybe they&#39;re idiots. Who knows? It was this slow burn. Then when we got into 500 Startups, that was when everything – it was this force – it was this forcing function. I remember being in the airport flying to San Francisco for the first time, and walking to the gate, and getting a phone call from an angel we had been speaking to. It was like, hey, I heard you got into 500 Startups. I&#39;m in. Let me write a check. Pablo 11:27 That’s right. That&#39;s what I&#39;m saying, yeah, exactly. Lee 11:29 Do you remember that? And I was like, hey, send him the safe in the airport on the way there. Pablo 11:35 I&#39;ve mentioned this story, but I actually didn&#39;t live it. I really want to hear from you and your recollection of how we got into 500 Startups, how you got us into 500 Startups in the first place. It started at the beginning because I almost forced you to not go on this trip. Do you remember that. Lee 11:53 Yes, you almost kiboshed it, which in retrospect maybe would&#39;ve been good for the company. Who knows? Yeah, so I remember we were – the guys at Micrometrics were a New York desk and there was an invest all in this open office space. They were like, hey, we&#39;re going to Startup Fest in Montreal. I think you were like, man, what are we going to go to like a startup festival for? How is there any value in that? I was like, it&#39;s networking, it&#39;s investors, it&#39;s whatever. You were like, no, man, that&#39;s so stupid. I got work to do. Classic Pablo wants to get things done and done. Pablo 12:22 One hundred percent Pablo right there. Just to be clear, the work I was doing was getting grants, that was for sure work. Lee 12:37 It is still valuable, but I think that&#39;s such a Pablo thing to be like, nah man, I&#39;m not going to a networking event, no way. There&#39;s no value in that. I was like, cool, like let&#39;s divide and conquer. You hang back; I&#39;ll go. He was like, all right, whatever and ended up going. To be honest, he was probably right. There was not a ton of immense value in going to network around, but it was fun. It was a good time. I remember there was a group of people surrounding this guy who was, I don&#39;t know, wearing a T-shirt and jeans or whatever. My mind, there&#39;s no way this guy&#39;s an investor. In my mind at that time, but I hadn&#39;t worked in VC yet, didn&#39;t know anything about VC. That guy was probably a startup dude or whatever. I don&#39;t know. He was doing the sound at the event or something. Someone pulled me into the conversation, and they were like, tell this guy what you do. And I was like, oh, we&#39;re working on this startup, Gymtrack. We&#39;re building technology to automatically track what gym goers do in the gym. I used to – we were talking about this before. I used to walk around with this 3D printed piece of hardware that was this smart pin that we had as part of our product in my pocket. We had it. It wasn&#39;t functional, but it had a logo on it and everything. It looked super professional. Pablo 13:54 This is the difference between you and Showing Something Tanglible Pablo 13:55 I, right? I remember you and I was like that&#39;s just a piece of plastic dude. It&#39;s literally a 3D printed of plastic that has no value, no function at all. You&#39;re like, dude, trust me. Lee 14:08 Yeah, and I think the point of that was to show people something tangible. Everyone constantly hears stories from people, but that&#39;s hard to do, storytelling in a quick little pitch. If you can visualize things for people and put something in people&#39;s hands, they can get tangible with something that&#39;s different. It&#39;s memorable. I remember showing this guy – I didn&#39;t know it was Dave McClure – this smart pin that we had. It was just this piece of plastic I&#39;d printed and put in my pocket. He was like, wow, that&#39;s really interesting. How far along are you guys? I was like, yeah, we&#39;re raising money. He was like, hey, take my card. You guys should move to San Francisco and come do 500 Startups. I was like, oh yeah. I think I&#39;ve heard of that before. I had no idea what 500 Startups was. I didn&#39;t know who Dave was. Then we walked away, whatever. Everyone was like, what just happened? There was a group. They were like, what just happened? I was like, I don&#39;t know. This guy said we should go do 500 Startups. And they were like, what? That&#39;s crazy. I was like, I don&#39;t. I called Pablo. I was like, do you know what this is? He was googling it. Pablo 15:12 That’s right, Winning and Rejecting The Prize for 500 Startup Pablo 15:13 had no idea, no idea. Lee 15:13 We had no idea. Then, yeah, and anyhow, Dave had his cellphone number on the card. I texted him. I was like, hey man, yeah, I&#39;ll take you up on your offer, meet up for a drink later tonight. We ended up having a drink. I think he was smoking a cigar. I thought it was pretty cool. I was like, okay, let&#39;s go. Let&#39;s go to this fire start. Pablo 15:28 This guy&#39;s legit. Lee 15:28 Yeah, he&#39;s legit. He&#39;s smoking a cigar. And that was it. The next day, we sat down in this little investor area. We hammered out some of the terms. We talked to Shane McLean from LaBarge Weinstein on the phone. He was like, hey guys, go and sign the documents. You guys are going to San Francisco and you&#39;re in find a new startup. You&#39;re like, cool. And that was it. Pablo 15:49 Do you remember, and I don&#39;t know if this played into that or not, but there was a startup competition at Startup Fest that you won. Do you remember turning down? Lee 16:00 Oh, and we turned it down. Yeah, we turned it down, yeah. Yeah, we won the startup competition. We turned it down because we thought the terms were bad or something because we were so full of ourselves. Pablo 16:12 Just by the way, I just – I&#39;m in Ottawa not doing nothing but taking zero risk. You’re out there pitching this company trying to win competitions, and you win it. I have the audacity to be like, dude, those terms are terrible. Lee 16:25 You&#39;re like, those terms stink. You&#39;re like, those terms are terrible. Pablo 16:28 We&#39;re not taking it. Lee 16:29 It&#39;s so funny. I remember being so mad at you. I was like, dude, what are you talking about? Someone wants to give us money, and you&#39;re saying no. I was like, how am I going to work with this guy? Pablo 16:38 It was like 10%, like 2 million cap. And then Harley from Shopify took your side. Do you remember that? He&#39;s like, you&#39;re right. These terms are too aggressive. Lee 16:45 Yeah, he was like, these terms suck. And then there&#39;s another story I remember of that too. We went to this private investor area because you&#39;re a psychopath. And on the call with Shane, you were like, these terms suck on the safe, or the convertible note with 500 Startups. You wanted to negotiate with 500 Startups and you made me do it. You made me do it. You weren&#39;t even there. You just were on the phone and you were like, Lee, these terms are unacceptable, go negotiate. I&#39;m 21 years old, idiot. I&#39;m sitting in this investor area and all of the team of Real Ventures is sitting there. All of the managing partners of Real Ventures are sitting there. It&#39;s me and Dave, and they&#39;re sitting right next to us. I&#39;m this kid. I don&#39;t even understand the terms I&#39;m negotiating, but I memorized what you and Shane told me on the phone. Me and Dave McClure are negotiating these terms on the convertible note and he finally gives in or whatever. I don&#39;t remember what happens. I think he gets up and walks away. Pablo 17:42 I think he did. Lee 17:42 He did give in. He was like, okay, we can accept those changes. He gets up and he walks away. We&#39;re walking away. Then the Real Ventures team stops me. They&#39;re like, don&#39;t go to 500 Startups. We&#39;ll make you a competitive offer to come do Family. We&#39;re like, no. We&#39;re negotiating that, whatever. Why would you go to San Francisco? And you know I forgot that. Pablo 18:04 I&#39;ll Serendipity Has to Play a Roll Pablo 18:05 tell you. Like, you know, so I think there are two things I noticed from there. One is, and I&#39;ve seen this so many times, the early rounds. The reality is you read a Series B or a Series C, or whatever, you&#39;re doing it methodically. You have certain numbers. You&#39;re going to go after certain investors. You&#39;re going to run a process and people are going to look at real things. When you&#39;re raising a pre-seed angel round there&#39;s probably nothing there. There&#39;s very little true signal. That&#39;s just the reality of it. Serendipity plays a huge role because you can&#39;t go out and be like, hey, here&#39;s a list of 50 angels. I&#39;m going to talk to them. I&#39;m going to run this process. You have no momentum, you have no FOMO, nothing. This idea that you basically let – yeah, you’ve got to do some stuff purposefully. Then serendipity has to play a role. That&#39;s why I think ultimately looking back – these networking events or other situations like this can create catalysts. Nobody could have predicted Dave McClure. We already had done Big Let Work getting a bunch of angel investors close to the line where they were like, yeah, it&#39;s really interesting. I like you guys. I could do something. There was nothing we could say to be like, okay, now or never, nothing until this catalyst event happened. We had that. Then we got into 500 Startups. I think we&#39;d raised half a million dollars before getting in. Back then, that was a lot of money. Today it&#39;s nothing. We were one of the most funded startups in 500 because of that mix of doing the work but then also generating situations where serendipity can help you create this kind of catalyst event. Rob 19:30 One of the questions that always comes up, especially at that stage, right, because it&#39;s the awkward stage. It is like you&#39;re 15, you&#39;ve never asked a girl out, you&#39;ve never kissed a girl, whatever it might be. Then you&#39;re thrust into the – you are right there trying to do this for the first time without looking like an idiot. You really only have one chance to not look like an idiot in front of an investor at that early stage and really hit on every note that you have to hit for them to be interested or at least show that that they want to work with you. That&#39;s ultimately they have the confidence in you. It&#39;s that first step. You&#39;re right, serendipity. There&#39;s old VC in Ottawa from the nineties, Pat DiPietro who invested billions of dollars in in the Ottawa economy in a bunch of startups in that time period. He would always tell me, always, he would say, listen, what you&#39;re doing here relies on serendipity, as you said, but it&#39;s just called shit luck. It&#39;s shit luck, yeah. What happened with Dave McClure is shit luck, but you took advantage of it. You see a lot of startups. Lee 20:35 There&#39;s two sides to that coin, right? I agree 100% it is luck. But you got to put yourself in the situations to get lucky, right? People like, oh they just got lucky. No, but yeah man, I was hustling and grinding and going to all these events. We had probably been to a bunch of events before that had no results – that yielded no results and were a huge waste of time. It would be so easy to just be like, wow, whatever. I&#39;m just going to sit behind my laptop and just type away and whatever. But I think you got to put yourself in those situations. You got to do the hard work to get lucky. It doesn&#39;t mean you&#39;re always going to get lucky, and it doesn&#39;t mean that the hard work is going to equate your results. But sometimes if you put in the hard work, you find these opportunities to get lucky. Pablo 21:16 I think that&#39;s true. I think that&#39;s true. But we optimized a lot around fundraising at that. I was thinking back to the days and I&#39;m like, man, it&#39;s true in the early days of Gymtrack. That&#39;s what I was saying before. I was working on grants. Literally, our mindset was how do we get money? How do we get money? How do we – it was all to deliver value. It was just how do we get money? One of the stories that came to mind, which I think would be good to refine a bit was going to gyms. I remember we&#39;re like, okay, we want to raise money because this is where it all started. We need validation. We really need validation. I remember coming across and I think it was just like out of Eric Re&#39;s lean Startup, this idea of a letter of intent. That just changed. And I was like, oh man, no one would sign a contract with us because we have nothing. People would sign a completely meaningless letter that just says these guys are cool, and I like the product. Why not? This is where you come in because again, I wasn&#39;t calling customers back then. Rob 22:12 What were you doing, Pablo? Pablo 22:17 I was coming up with the big ideas, man. Lee 22:19 Pablo was the puppet master. He would be like, Lee, go call customers. I would be like, yes sir, I&#39;m on it. Pablo 22:30 Lee was more than happy to do it. That was his skill set, and he was obviously really good at it. Do you remember any of those? Like specific gym – Lee 22:37 Dude, I have two funny stories. One is a hundred percent I remember that. I remember going to the gyms. It was the wintertime, and I don&#39;t think I had a car at the time. I think you had a Toyota Tercel. We were like embarrassed pulling up to these. Pablo 22:54 That was barely a car. I remember when I upgraded to a Civic . You were like, now you have an actual car because that one just floated in the winter. It would just float, truly would float. Lee 23:00 Your Tercel was like a nine – it was like a 1991 Toyota Tercel. We would pull up to these customer meetings. We were so embarrassed of the car. We would park far away and walk because you didn&#39;t want them to see a car pulling up, which is just so funny to me. I think back on this – Your Tercel was like a nine – it was like a 1991 Toyota Tercel. We would pull up to these customer meetings. We were so embarrassed of the car. We would park far away and walk because you didn&#39;t want them to see a car pulling up, which is just so funny to me. I think back on this – Rob 23:19 This is every startup cliche I&#39;ve ever heard all so far. It’s the best. Lee 23:24 Yeah, it&#39;s all together. Yeah, and we were just – we would print off these letters. I think we actually had a printer. We would print off these physical letters. We would put their logos on the top. We&#39;d walk into the gym, The Car that Floated in Winter Lee 23:34 3D printed pin, or whatever we had. We would talk to the owners, these owners, and we would say, wouldn&#39;t it be cool if it&#39;d go off on this pitch about how we&#39;re going to automatically track everything. If I think back and, and remember on it, I think we were – we made all of the mistakes that you shouldn&#39;t make. Every single mistake that you could make we made, which was – wouldn&#39;t it be cool. If not, hey, we&#39;re going to solve a real problem for you. How much would you pay for it? Is this a real pain point? Do you think about this every single day? Doing real customer interviews, we were just, wouldn&#39;t it be cool if – and on top of that we were like, would you just sign this thing? We need it for fundraising. We want to go raise money to build this thing. If you sign it, it will help us do that. We&#39;re like, sure, we&#39;ll help out these two 20 something year old kids, 21-year-old kids. Letters of intent, I think, generally speaking, don&#39;t carry a lot of weight in my opinion. I&#39;m sure some people disagree with me, but I don&#39;t think they do. Then made them even less knowledgeable because we got people to sign them under the worst pretenses. They were meaningless. Pablo 24:44 Well, I remember --, Specifically, the one I remember was this one and it – these were city gyms. City run gyms, these people have no incentives to change their gyms. This is a gym that&#39;s a club. It&#39;s got a skating rink and a basketball gym, all these other things, which are just completely meaningless to us. We walk in. We meet the manager. Hey, how&#39;s it going? Lee would&#39;ve called before, set this up. Pablo, Lee, whatever, we&#39;re building this thing, and he would start telling us about his gym. Let me give you a tour. Sure, we&#39;re just playing along because we have one goal. It&#39;s just signature, dude, signature. We&#39;re like, yeah, we would track reps, and weight, da, da, da. He&#39;s like, a lot of people skate here. I was like, dude, we&#39;ll track skating. I remember that. We&#39;ll track skating. Why not? And Lee would just be the one that say we&#39;ll track it. Funny. Lee 25:37 About that. Pablo 25:38 Just like anything that they would ever – what about like these random like noodle looking things that you like? Dude, we&#39;ll track it. Why not? Lee 25:46 Oh my God. I cried laughing. I forgot about the tracking skating. That’s so funny. Pablo 25:53 No matter what, the person would say the level of interest, if it was zero, we&#39;d still just pull it out. Listen, I get that you&#39;re probably not because I get that you&#39;re probably not going to buy this. It&#39;s totally fine. I&#39;m just trying to fundraise. It&#39;d be really nice if you could just sign this thing. Take a look at it. Lee 26:12 They’d literally be that&#39;s the worst idea. There&#39;s no value in that. We don&#39;t want that for this gym. Our only concern – and the crazy thing is in those interviews they would tell us real problems they had. They would actually divulge this real customer info of hey, here&#39;s actually my problem. Tracking&#39;s not that interesting to people. It&#39;s really interesting. We were like, okay, cool. You&#39;re an idiot. We don&#39;t care. Sign this letter. We&#39;re going to build tracking. You don&#39;t get it. Pablo 26:38 You don&#39;t get it. Lee 26:39 You don&#39;t get it. You don&#39;t know your business. We know your gym business better than you do. Yeah, and I think that&#39;s a trap of this horrible customer discovery, doing customer discovery the complete opposite way of what you should actually be doing. Again, building this all or nothing system versus building this incremental stuff that could actually provide value to customers. Early Stages Need Less Overhead Pablo 27:05 I touched on this before because obviously when you tell it, like the way we&#39;re telling it, makes it sound like we&#39;re completely stupid <laugh>. What are we doing? There was a driver, right, which was, man, we just wanted to be founders so badly. We just wanted to have a company so badly, which goes all the way to starting that whiteboard. It was just methodically trying to force fit and just push out a company. The closer you get to that and the more you invest in it, the less you want to hear anything that&#39;s going to tell you maybe this is not the thing. I&#39;m committed. I&#39;m in. We were just finding ways to validate what we were already going to do. We just didn&#39;t want to get stuck having to come up with another idea because It sucks being in that stage of what are you guys doing? Oh, I don&#39;t know. We&#39;re just like exploring ideas. We&#39;re exploring, okay, what is that? Lee 27:58 I think to our defense, I know we&#39;re telling these funny stories, but I think to our defense we did really believe at the time if we build it, they will come. Our belief was people just didn&#39;t see it. They couldn&#39;t understand it. Once we built it, all of these customers would magically appear. We would build this amazing system that everyone would have to buy it. We&#39;d have all this customer pull. I think to a certain extent it wasn&#39;t only just, hey, we want to be founders. I think we did also buy into this story that we&#39;re going to build this amazing thing and all of a sudden customers appear. Rob 28:33 You know what? That&#39;s a really important part though because visionaries, people who reinvent the future or invent the future, I would say don&#39;t listen to their customers. Steve Jobs is obviously famous for saying that if you want to invent something that people use, don&#39;t listen to your customers. That&#39;s evolutionary versus revolutionary. In the back of your head, you had to have been thinking, they don&#39;t get it. This is the future. They&#39;re just on this path. We&#39;re going to move them onto this path, which is the Trex, or sorry, the Gymtrack path. This is where we&#39;re going. They don&#39;t see it. Many times you have that train of thought that happens, that pulls companies through. I&#39;d say 99.9% of them don&#39;t materialize into something. For every one apple you have, you have a thousand or a million other companies that didn&#39;t invent the future. That&#39;s what&#39;s appealing about it. You got two young guys that seemingly more and more, as you say, Pablo, believe and believe and believe in the idea, believe and believe and believe, and then get completely invested. There&#39;s no going back now. Believe the story that they&#39;re telling. I mean it&#39;s infectious. It really was. I think that that&#39;s the story that you guys were able to tell, but then you built it. Lee 29:53 I also think like to your point, Rob, this kind of believe and there&#39;s no turning back. I actually think to this comment I made earlier about the double-edged sword of like getting into 500 Startups and raising money is that that&#39;s the negative side of startups getting validation from the wrong places early on. Startups are, Pablo, you said this, I think in one of the other PMF podcasts or in one of your LinkedIn posts, was startups are an experiment, right? They should be treated as an experiment and they should be dealt with as such. What happens when you get validation, not from customer, but VCs is now all of a sudden you&#39;ve made this promise to people and now you feel like you can&#39;t experiment with customers as much. You&#39;re stuck on this trajectory of, hey, we told everyone we were going to go build this thing, we’ve got to go build it. I think the longer startups can stay experiments without these external stakeholders and their only stakeholders are the people on the team and then the customer, the better you can run experiments and the better you could actually find value. To my earlier comment around maybe it would&#39;ve been better if we didn&#39;t get into 500 startups, I think sometimes there is truth to that for companies, if you&#39;re not really ready to accelerate growth, you&#39;re probably better staying an experiment. Pablo 31:05 I think the way I&#39;m viewing it now is the later stage of a company you are, the more it makes sense to trade overhead for resources. Yeah, let&#39;s take more money, let&#39;s hire more people so we can have more resources. It&#39;s more overhead, but we can do more things. In the early days you think that also applies, if only I had more money, if only I had a few more developers, you actually want zero overhead. The less overhead you have, the more you can twist, turn, try, which is really the thing that&#39;s going to get you to something that you can then invest into without the pressure, without the – it&#39;s like if we wanted to switch it expectations, all of a sudden, oh, it&#39;s communication to all these investors, it&#39;s communication to my entire team versus Lee and I just being like, dude, let&#39;s dump this. Let’s just do something else. That&#39;s it. Lee 31:52 Yeah, exactly. Again, if you&#39;re just two guys or two women or two people or whatever who have good rapport and you&#39;re on the same level in wavelength where you&#39;re just wake up one day, you look at each other and you go, this isn&#39;t going to work, right? Cool, super easy, go do something different or change it or go back to the customers and be like, hey, we realize we&#39;re idiots. Let us talk to you more and do more customer discovery, but man, imagine saying that to a software developer who&#39;s been working on a product for six months, they&#39;re going to pull their hair out and quit. That stuff is you want avoid that as much as possible. I agree with you wholeheartedly. This Isn&#39;t Going to Work Rob 32:29 Now, I just – I don&#39;t want to jump too far forward in the story here, but now picture this, that I have given up everything on all my other companies and I&#39;ve come to work as the CEO of this company. There&#39;s six of us in a room and we&#39;re nine months into this new experiment and I&#39;m sitting at my desk and we&#39;ve moved from that big office to the smaller office and sacrificed all the gym equipment and sold that for rent. This is where we are, right? Pablo, feet up on the desk, he&#39;s like, hey, yeah, this isn&#39;t going to work. That&#39;s what he said to me. He told me, he says, I&#39;m like, what? What do you mean? What&#39;s not going to work? He&#39;s like this, I just did the math. This isn&#39;t going to work. This isn&#39;t going to work. Lee 33:17 But that&#39;s four years into building the company. Would have been nice to have that conversation four years ago. Rob 33:20 I&#39;m like, what do you mean, Pablo? You&#39;re out of your mind. No, this is going to work. He’s like, dude, this isn&#39;t – this is not going to work. Pablo 33:29 This was V2, and this is funny because – story from there. Lee, you actually – so Lee had just, for background, Lee was what – at one point I think we brought Rob in, you stayed around for a while, and then at one point you said, you know what, guys? I think I want to go do something else and you left to do something else, right? Rob 33:46 No, the story with that is that it wasn&#39;t ready, right? I came in to do marketing and lead that and then – I mean, the product wasn&#39;t ready. Lee 33:56 Yeah, that was the first time. That was the first time you came to Gym Track. Then you were like, hey guys, you don&#39;t need a marketing team. Yeah, don&#39;t waste your money on me. You guys got to go find product market fit. We&#39;re like, okay, cool. We did that for a while. Then we were like, oh, my God, our backs are up against the wall. We&#39;re burning too much cash. We had done this pilot with Anytime Fitness in the US, which is a whole other story that we should totally talk about, but then we came back and we were like, we&#39;ve got to cut board. Then we did that and the board was like, what are you guys doing? It&#39;s like, hey, I think we should bring in a new CEO. I&#39;m not the right person for this turnaround thing. Then you came in as the CEO and then you and I had a similar conversation with [0:00:34:35], you&#39;re the CEO. I don&#39;t know what I&#39;m going to do here. Pablo was running the product side. I was like, I don&#39;t know how to add value anymore. We were like, you know what, man? Maybe you&#39;re right. Then that was when I was like, okay, I think we… Pablo 34:47 Just for context, at this point, we had gone through the near acquisition that failed. We then laid off – we went from 30 to 8 people. Obviously, the board was just super upset in general, which is why we brought – and we start – I don&#39;t even remember, but legally we&#39;re like, man, we can fight this. We could just push through. Then it was like, you know what? This is going to be so terrible to say let&#39;s bring someone else in. Rob was the only person we could think of that just made sense, knew the business, we knew him. I&#39;m like, this could really smooth things over. We did that. Then we had some money in the bank, but we didn&#39;t have an idea, right? Rob 35:23 No, you did a small round, right? You did a small round, $1 million came in from existing investors. Lee 35:28 We had done a round I think actually before doing layoffs. We had done this Anytime Fitness pilot and then we were like, hey, there&#39;s some user engagement, people are using it, but we need to build a… Pablo 35:41 Let&#39;s go through, Anytime Fitness Pilot Pablo 35:42 let&#39;s dive in because – so Anytime Fitness, just a background story even because it was a big deal. Lee 35:49 Yeah, huge. Man, this is another one of those, I don&#39;t know, just being overly confident for no reason working in our favor sometimes. We had gone to this – we were in 500 startups. We had gone to this conference where basically it was speed dating. You would meet these – you would basically sit at a table and then the VP of innovation or whatever from all these different big gym companies around the world come sit with you and you&#39;d pitch them on your idea. We pitched Anytime Fitness and they were like, this is super cool. We&#39;re going to run it up to the CEO. Just so happened, I don&#39;t know why, again, another serendipitous thing. The CEO and CTO of Anytime Fitness, which is the largest gym chain in the world. I actually was just looking the other day, they&#39;re double the number of locations that we were doing. Pablo 36:38 Thousands, it’s 5,000 now. Lee 36:39 Yeah, 5,000 or 6,000 locations. They&#39;re a massive company. They met us, whatever, we&#39;re excited. We sent them a deck, we sent them some materials, some of this promo video we had done that was amazing that everyone loved. Pablo 36:56 It was a great video. Lee 36:56 Yeah, it was a great video. It was cool. It&#39;s the power of storytelling. Pablo 36:56 That might actually be the best product that we made. Lee 36:58 Someone one time made this joke to me, it might&#39;ve been my brother, and he was like, dude, you guys should have just made a video production company instead of this Gym Track. You guys were great at it. Just this other serendipitous thing, we were at 500 startups working out of their office. It was the CEO and CTO of Anytime Fitness were coming to San Francisco for this technology tour. They were going to meet – I think it was the Fitbit people or whatever or some other startups that were there. They came to the office and they were blown away by this 500 startups office, thought it was the coolest thing. Literally in that meeting, the CEO was like, let&#39;s do a pilot, let&#39;s go. We were like, cool, I&#39;ll send you the paperwork. That was it. Pablo 37:36 Where was their product at the time? Lee 37:38 I think it was still a 3D printed pen in my pocket. I think I was do – I think I still had the pen? I don&#39;t think there was much more than that honestly. He was like, cool, this is the future. I totally get it. Let&#39;s run a pilot. We&#39;re like, okay, cool. We got to go do that now. The problem was the pilot, to go do the pilot, was going to cost us hundreds of thousands of dollars. We didn&#39;t even properly think about what a pilot to run with it was going to cost. We had to produce all this hardware at super small scale. It was incredibly expensive. We had to move an install team down there. We had to…. Pablo 38:12 To Minnesota. Lee 38:12 To Minnesota, sorry, to Minnesota, to Minnesota where they had their innovation center. We had to spend months there updating and firmware physically. It was the worst idea. It was so stupid. We hadn&#39;t even done a real pilot in Ottawa where our whole team was and we could actually learn how people use the product. We were like, no, we&#39;re going to go from a 3D printed pieces of plastic to the literally the biggest customer in the entire industry without doing anything in between. It was destined to fall flat. Pablo 38:49 To our credit, and I remember we negotiated, we had a year to deliver on this pilot. That was obviously a big clause that we gave ourselves, but yeah, the challenge I think was, if you actually think about a gym, it&#39;s the worst place for tech. All it is is metal being moved around and things we hadn&#39;t even thought about. For us it was, okay, the hard thing is AI. It&#39;s machine learning tracking reps. The hard thing is putting a thing that actually doesn&#39;t fall off a barbell. That was the mechanical engineering of it. With this pilot, I remember we were totally not ready. We pushed it three more months and at one point it was just almost embarrassing. I think you were like, dude, we have to do it. I just can&#39;t push it anymore. Lee 39:29 We were also burning so much money a month that it was like, we have to – because if you think back, the plan was raise this seed round, okay, use the money from the seed round to go launch to Anytime fitness pilot, sign a bunch more pilots and get Anytime Fitness to convert from a pilot to full paid customer and then start to roll it to the rest of the gyms. Raise a series A to go fund that growth. It was, again, this all or nothing, either this converts to a full customer or just your SOL. Back to how we got on this tangent was that was around the time we had to raise additional money because we were like, the pilot&#39;s taking longer than we wanted to and whatever. We kind of went back to… Rob Enters the Scene with Gymtrack V2 Pablo 40:08 Obviously, the pilot ends up not, let&#39;s say, fully working out. All this stuff happens with the acquisition. Rob, you come on. Then how do you – can you remind me how you came up with effectively GymTrack V2, the second idea? Rob 40:21 I mean, I came on – finishing that Minnesota story, the challenges of doing that,it was still operating when I came in the first time. I remember having to send teams down to go charge the devices. Do you remember that? They couldn&#39;t figure out how to charge it. We had to fly somebody to Minnesota to go and plug shit in and swap them out when the batteries died. Do you remember that? Pablo 40:45 That&#39;s crazy. Lee 40:45 I think when they say do things that don&#39;t scale, they don&#39;t mean that. That&#39;s way too far. Pablo 40:52 That&#39;s crazy. Rob 40:52 You had to send somebody down there to go and plug stuff in to charge them, right? Anyway… Pablo 40:58 Hardware, by the way, hardware is actually hard. If somebody said that to me maybe six months into GymTrack and I was like, you have no idea what you&#39;re talking about. Obviously, there&#39;s got to be some advantage to doing hardware. There is no advantage. There is zero advantage for a startup to do hardware. It&#39;s just harder, period, and you get nothing for it, nothing. Lee 41:15 I mean, you do, you do get a moat. You do get a moat because it&#39;s hard, but yeah, I would say it’s, if anyone asked me today, do you want to go do a hardware startup? I would fall on the ground laughing and just walk away. Pablo 41:30 The trade-off is not worth it. It only gets easier and easier to replicate and cheat. Whatever RND costs you went through and all the shit you went through, everybody gets that for free. It&#39;s like… Lee 41:40 Yeah, and I think there&#39;s tons of examples now. Even if you just choose fitness of hardware companies being terrible, Peloton, Mirror, all of these ones that are you need the hardware to build the future. It&#39;s like, actually no, you don&#39;t. You just need an iPad with software on it. It&#39;s the same thing. I think there&#39;s tons of examples of why building hardware isn&#39;t… Rob 42:02 They all started with wouldn&#39;t it be cool? Lee 42:04 Yeah, exactly. Rob 42:08 We were trying to figure out what the next iteration of this was. When I came on, I said, okay, we&#39;re going to look at – we&#39;re going to really assess this platform and its viability over the next 90 days. I went down to Minnesota and I met with them. I remember them saying, please take this out of our gym. That&#39;s what they said. Lee 42:33 Oh, God. Pablo 42:34 [Inaudible] zero, right? Lee 42:34 Just negative 10, right? Rob 42:41 I think people are leaving the gym because of this. Could you please, could you please take it out? It was a shock to me clearly. I was like, okay. Then I brought that back. We were trying to figure out, okay, what&#39;s the next model? Then Lee, you and I went to one of those resorts and we went off to – I think it was… Lee 43:05 To CYDEC. We went to one of those speed dating things to talk to customers, yeah. Rob 43:08 We talked to them and we&#39;re saying like, okay, so we were pitching ideas and the idea was this last thing – and it was [inaudible] who was like, sensor, sensor, sensor, simplicity, simplicity, simplicity, right? It was our lead scientist, I don&#39;t know, who was building all this. We went with that idea in mind and then we started pitching some of these gyms and they, again, differently. We weren&#39;t saying, wouldn&#39;t it be cool if. We would ask them what their challenges are with equipment and equipment breaking. We had really structured questions. We were a little bit smarter, but we also heard what we wanted to hear and ignored what we didn&#39;t want to hear. Then we took that back. We pivoted to this idea. We went through the 90 days and we didn&#39;t kill GymTrack 1, but we just put it aside. We thought, okay, what&#39;s the easiest way to get into the gyms something low lift, low barrier, low cost, easy to install, they could do it themselves. We created this thing and it ended up being that sensor that tracked gym equipment activity, not the person&#39;s activity, because nobody – we realized there&#39;s nobody going to pay for that. We said, okay, now what about understanding your utilization of your equipment? That seemed to resonate enough with the gyms. We knew who the customer would end up being, which was the gyms. That&#39;s really what went down there and then the production cost of those devices were so low that we could manufacture. Pablo 44:47 Yeah, I think there was a few steps. First of all, let&#39;s talk about the spectrum of great customer discovery from Zero, which is GymTrack V1 to 10, which is we never did it. We were like, we moved to three or four, right? There&#39;s a few steps towards it. First of all, what we looked at, and I remember this distinctly, actually Lee would remember maybe this, too. Ken MacAskill, our CFO, who had been in software for a long time as we&#39;re thinking through this change that we&#39;re going to have to make, these cuts, he&#39;s like, who do you want to leave on the team? What do you want to go do? We&#39;re like, well, our edge is a hardware, so let&#39;s stick with the hardware team. Ken was like, are you sure? You guys don&#39;t want to just do software? Lee 45:27 Yeah, he was like, why don&#39;t you guys just go and build an app? We were like, no, that&#39;s stupid. Pablo 45:31 That&#39;s silly, right? Lee 45:32 In that conversation too, I don&#39;t know if you remember this, but there was one time where I came to the office and I was like, Ken, Pablo, I need to talk to you. I know what the pivot is. I was like, we&#39;re going to do GymTrack, but for people&#39;s homes. My idea was we were going to build Peloton but for weightlifting and whatever. There was all these ideas around it. You guys looked at me like, what the… Pablo 45:55 Yeah, I shut that down quick. Lee 45:56 I don&#39;t even think anyone said anything. You guys just looked at me for a while and I was like, thoughts? Just there was silence. I was like, okay, I guess that we&#39;re not doing that. The Missed Opportunities Pablo 46:07 Point made, but this is the thing. My first point is the missed opportunity was we still started from, okay, what do we have? What can we do? Versus, okay, we actually met with all these gyms. We could just do real research. We skipped that. By the time Rob came on, we already had this hardware type team. It was clearly we needed some hardware device. We wanted it to be simpler. That&#39;s why we did what we did. The other thing that happened is that original conference where you met a bunch of different gym owners, we thought it was really smart to pre-sign for a year ahead because we got a 20% discount. Now comes that time where we&#39;re trying to cut costs desperately and it&#39;s a $25,000 bill. We&#39;re, hey, we&#39;re not going to go this year. We&#39;re not going to pay. They&#39;re like, you&#39;re paying. Lee 46:49 We agreed to go, but we signed a contract but didn&#39;t pay. They were like, you&#39;re coming. Pablo 46:54 We&#39;re like, but listen, we have no product. We have nothing anymore. It&#39;s like, well, you’re paying for it. We&#39;re like, okay. We started working backwards from that. It was like, okay, well let&#39;s get something together, presentation together that we could at least pitch to these gym owners. We moved up a little bit because all of a sudden it was like, okay, let&#39;s at least have these real conversations. Let&#39;s ask them what they think. Let&#39;s really care and listen. Let&#39;s go through pricing, which is another thing that we went through, but the problem was we still jumped the research phase. We actually didn&#39;t do any real research. We had our idea and we were just validating the idea. What happened was, Rob and I go, we meet 20 gym owners and of real chains, solid people. Everyone loves it. I don&#39;t know if you remember, Rob, I was elated after Day 1 because every meeting was like, oh, this makes total sense. I don&#39;t know what equipment – the idea was to be clear, these little sensors, they go on every piece of equipment. They can measure when it&#39;s used or not used. Then they can report a dashboard to gym operators so they can buy equipment more intelligently instead of buying it blind, right? Our motto, by the way, this is total tangent, but it was called “Free the Reps.” They’re stuck in your treadmill. You’ve got to get them to the cloud. Free the reps. We make shirts. I still have it. I still have it. I still have them. Lee 48:11 I&#39;m going to get a T-shirt that says Free the reps. Free the reps. I got to get a T-shirt that says... That&#39;s so funny. Pablo 48:17 Anyways, the real, the important part of that is… Lee 48:20 I forgot about that. No, that&#39;s the important part. The important part is the “Free the Reps” motto. Pablo 48:25 That&#39;s a win. That&#39;s a huge win. Then by the second day, to the point that we sit down with people and they&#39;re like, oh, you&#39;re the GymTrack guys. X, Y, Z told me about it yesterday over drinks. Super interesting what you guys are doing. This makes total sense. We walk out like, man, we&#39;ve got it. We really nailed it. Dude, we got I think exactly zero sales, maybe one, maybe one pilot out of that, 20 people being like, yes. Rob 48:52 The University Of Calgary, they were interested in it. That&#39;s what we – that was the follow-up. Pablo 48:55 Why do you think that is? Why do you think, when you sit down with customers, they want to tell you this stuff to your face? What&#39;s the lesson? Yeah, so When You Skip Research and Go To Product Instead Pablo 49:02 here&#39;s the thing. When you skip research and you go to product, obviously we thought it through. It&#39;s not like it was a stupid thing. It was like, listen, you have 30 treadmills, it costs you $10,000 a treadmill. That&#39;s $300,000 and you could have bought 25, you could have bought 35. You have no idea. That makes a lot of sense. When you go to somebody that&#39;s a gym operator and you&#39;re like, doesn&#39;t that make sense? First of all, they see all the work you&#39;ve put into it. They&#39;re just predisposed to be like, yes, but you know what? It does make sense. They&#39;re like, dude, that actually makes a lot of sense. I should really pay for this. Then when you call them and you&#39;re like, hey, let&#39;s move forward, they&#39;re like, well, I got to open up a club today, so sorry. Well, this thing happened with my members, sorry. What you didn&#39;t discover because you started at the idea instead of at the problem, whether it&#39;s, yeah, it&#39;s a problem, but it&#39;s Problem Number 10. That&#39;s the problem is that you&#39;re solving Problem Number 10 and you keep hearing next quarter, come back next quarter, come back next year until they just ghost you because they&#39;re just like, whatever. I&#39;m not interested anymore. Lee 49:58 Because there&#39;s always going to be, in any business, there&#39;s always going to be pressing issues. There&#39;s always going to be new issues that come up. If you are not this severe pain point that they have, you&#39;re always going to get pushed to the bottom of the pile. It&#39;s going to happen over and over. Pablo 50:15 Customers don&#39;t buy any ROI, they buy the best ROI they can get. If you are ROI Number 10, but they got one, two, three, they&#39;re always going to go back to one, two, three, one, two, three, one, two, three. Lee 50:25 Yeah, that&#39;s why a lot of times, when you&#39;re thinking about a competitive landscape for a product, there&#39;s a whole other set of competitors, which is they&#39;re solving problems for their customer that you&#39;re not even thinking about, right? They&#39;re not direct competition, they&#39;re just competition for dollars. Pablo 50:39 For wallet, yeah, 100%. Lee 50:40 Yeah, for wallet and for mind share, wallet share. They&#39;re not direct competitors at all, but they are because they&#39;re solving a bigger problem for the customer. Pablo 50:47 The big revelation was of… Our Mistake was Looking at Competitors Rob 50:50 There was three other – two other companies that were doing similar things, right? Remember that we had competitors out there and they were doing it very – it was very costly to implement them and their technology was very costly to maintain or they were doing it manually. There was one guy who would go to all the gyms and sit there with a checkboard. Remember that? Lee 51:10 Oh, I forgot about that guy. The consultant, yeah, yeah, yeah. Rob 51:12 We got friendly with him and he was a nice guy. We were trying to sell him our sensors to make his job a lot easier. We were looking for ways to partner but we looked at the competition as well. Here&#39;s another lesson not to do. We were saying like, how can we make it cheaper and easier than what they&#39;re doing, right? We had this idea of what it was we did. We got to three of ten in research. We got the feedback, the visceral feedback from the conference. Then we came back and we started looking at the competition. We said, okay, we&#39;re going to make it cheaper and easier and we did. We made it cheaper and easier to use our technology, but the problem was that the total market for this was just those two guys and their three employees. We didn&#39;t realize that it wasn&#39;t as big a problem. Can you imagine going to a gym and saying, we&#39;re going to put all these sensors on and we&#39;re going to tell you how much you overspent on the equipment you already bought. That&#39;s what we were telling them. Lee 52:08 It&#39;s also true. It&#39;s not like it’s sensors for a restaurant to tell them how much produce to buy on a daily basis that they&#39;re constantly doing. A gym buys equipment and that they never buy equipment again for 20 years. If you don&#39;t understand your customer intimately, it&#39;s so easy to make these logical – come up with these logical fallacies in your mind that you&#39;re just like, take these leaps that make no sense at all. Rob 52:32 How many times do you open your fridge? That&#39;s what we were basically solving for them. It didn&#39;t make a difference. Pablo 52:39 For me, the part that really hit it home was when we finally get a pilot somewhere or somewhere in I think it was in San Diego, or San Jose I think. We get a pilot in San Jose and massive club. Finally, so much work for $3,000. We&#39;re going in and we have to install, by the way, we have to go – just the plane tickets there were already negative LTV something, but… Lee 53:03 What&#39;s your cocktail LTV? Don&#39;t ask. Don&#39;t ask. Pablo 53:05 Don&#39;t count the flights. We&#39;re good. We&#39;re installing the things and I&#39;m talking with the operations person and he&#39;s taking me around the gym as they always do. They show us everything and the guy&#39;s like, yeah, actually over here, I just got four new leg presses and four treadmills that are on the way. I&#39;m like, oh, how much you spend? He&#39;s like, $80,000. Man, that&#39;s what we&#39;re supposed to solve. You just spent $80,000. Today, you woke up and you were like, man, we need more – and you spent $80,000 and I&#39;ve been hustling for months for three and I have to come here and install it? Dude, we&#39;re doing something wrong, right? That was just… yeah. Rob 53:43 That&#39;s when I said, shove that voice down your throat and keep going, Pablo. Pablo 53:50 Don&#39;t think. Rob 53:51 Then we did a pilot in Ontario with MOVATI as well. We started to get – the problem was we got that momentum and I go to the MOVATIS here in Ottawa and I still see our sticker on all the equipment every single day. I see it every day and I&#39;m like, there&#39;s legacy there, right? The Middle Zone Pablo 54:07 A reminder of what could have been, yeah, but that&#39;s the thing. That&#39;s the danger is when you actually get – if you put something out and you get nothing, it&#39;s easy. You crush it. It&#39;s easy. When you&#39;re in this middle zone, you gain some traction, but it&#39;s not enough, that&#39;s where you can just spend tons of time wasting it, but I think ultimately the question is, and you&#39;re not always ready to answer it, but it&#39;s, am I truly solving a Number 1 or Number 2 problem? If I go to my ICP within that gym, which is the operations lead, and I ask him or her, what do you think about every day? Do they really say the problem I&#39;m solving? That&#39;s the thing that you always got to come back to I think to ground yourself. Rob 54:44 We would even look at these dashboards that we were making. They were web-based dashboards and we would look at utilization stats, not the gym equipment, but how many times people logged in and it was next to none. Never did they log in. Then Pablo would spend a day writing these reports on most used equipment and we would send them individual. Remember that as well? We would send these reports, never opened. There was telltale signs there. Lee 55:11 I think because if someone, if the gym owner or the gym operators in the gym every single day, they don&#39;t need sensors. Their eyeballs work better than the sensors. The pen and paper or an app on your phone works better than GymTrack V1, right? It&#39;s this whole thing of, again, if you build it, they will come. No, they&#39;re already doing something. That thing probably is better than what you have. I think again, Pablo, you&#39;ve talked about this before. If your customer is using pen and paper to solve their problem today, your competition is not the ten other software companies trying to solve it. Your competition is the pen and paper. You’ve got to be better than that. Yeah, status quo is the competitor. How can you be better at that? Pablo 55:52 Let&#39;s shift gears. I think we&#39;re getting close to the end here. I want to end on something that you&#39;d probably get zero value out of, but it&#39;s funny. So let&#39;s do that. Here&#39;s my intro, okay? Lee 56:02 I&#39;m here for the – I&#39;m here for the jokes. I&#39;m not here to give anyone value. My assumption. This is the comedy podcast, right? Pablo 56:08 That’s what we&#39;re becoming. Over time, I realize people just want entertainment, so give them entertainment. Lee 56:13 Give them what they want. Pablo 56:19 Elizabeth Holmes, founder of Theranos, gets on Forbes, jail, right? SBF, founder of FTX, gets on Forbes, jail. We get on the cover of the Ottawa Citizen, bankrupt. Is there a correlation there? Lee 56:30 Thank God it&#39;s just bankrupt, right? Yeah. Pablo 56:38 Do When PR is at Max, It&#39;s Negative Value Pablo 56:39 you remember – I don&#39;t know what it is, but there&#39;s something to that. When PR is at max, company is at bottom, right? The Ottawa Citizen, which is this mainstream local for Ottawa, but mainstream newspaper that your mom and dad reads sort of thing. They come to us and they&#39;re like, we&#39;re doing deep dives on startups in the region and you guys are the top. We want to do in-person interviews, video interviews, a multi-page front cover. Lee 57:07 They came to my house. They were in my bedroom. I mean, it&#39;s like, why are you here? Pablo 57:12 We&#39;re like, oh, this is awesome. Love pr, so value zero. We&#39;re selling to gyms. I just don&#39;t – zero. We’re selling to gyms outside of Ottawa, so there&#39;s actually zero potential value. We&#39;re not trying to… Lee 57:26 Actually negative value. Negative value in doing it. Not zero value. It was detrimental. Pablo 57:31 Then we go through it and right maybe a few weeks before they&#39;re going to publish, we have to do layoffs. We have to lay off two thirds of the staff. They were already going through it. It was almost done. I remember asking Ken, Ken, do we need to tell them this? He&#39;s like, yeah. We got to call them up and be like, this story, this profile you&#39;re doing super positive of GymTrack and just don&#39;t publish it. They&#39;re like, we&#39;re publishing it. Lee 58:01 I remember them saying – it was this younger reporter. I remember her being like, sorry, too bad. We&#39;re running the story. I spent time on running the story, deal with it. Pablo 58:12 Your profile on it came. It was pretty great. Lee 58:17 Oh, my God. I think if there was one thing in my life I could go back and change, it might be doing that interview. It haunts me to this day because the internet is this archive of everything that&#39;s ever happened in your life if it&#39;s public. People still to this day when I meet them for the first time are like, oh, I read this article about you. I&#39;m like, okay, nice to meet you. See you later. Pablo 58:40 Your quote was ingrained in my brain, which was, look, sometimes I don&#39;t sleep at night and I can see the office right there, the office. Lee 58:49 I just go to the office and work. I remember…. Rob 58:49 Do you remember the pictures? The picture of Lee. Lee 58:49 Which is – but also screw them. There were so many pictures they could have used and, I don&#39;t know, I still do that to this day. I still put my hands on my head. It doesn&#39;t mean I&#39;m – it&#39;s not bad body language, but I remember we told Janet Banister, Janet Banister was one of our board members. I remember we told her we were doing the story and the look on her face. She hadn&#39;t even seen the story yet. She hadn&#39;t even seen it, but she just looked at me like, oh no, what are you doing? I was like, what? Isn&#39;t this good? She was like, oh no. Why, guys? She understood what we didn’t, which is that, oh, my God, this is a huge distraction if you&#39;re going to start super messy. They&#39;re reporters. They&#39;re going to try and tell a compelling, interesting story, not show you in a good light. They want to tell the true story of what it&#39;s like being in a startup, which means trying to show your skeletons and trying to show the reality of it. I have no idea what compelled us to think that that was a good idea, but it&#39;s a terrible… Pablo 1:00:02 Hype man. Our mind was in pure hype. Then I fast forward a few years later, I&#39;m in this board meeting with one of our portfolio companies and the other board member is this guy Jeremy Levine, who&#39;s still on the board of Shopify. He backed Yelp, Pinterest, really, really big dude. The founder just raised a series A. He’s like, I&#39;m thinking of doing PR. What do you guys think? Should you do PR? I&#39;m not replying here. I&#39;m staying quiet. Jeremy Levine says, listen, you can do what you want. I&#39;ll just tell you this. Every single break company that I backed, they didn&#39;t announce their series A. I&#39;m just like, alright. Lee 1:00:37 Because if you spend your time doing that, you&#39;re spending your time doing the wrong things. I think it&#39;s a symptom of a broader issue within a company to spend time talking to reporters that are not industry specific reporters that are going to get you more customers. It&#39;s a symptom of broader failures within your organization. Rob 1:01:01 You definitely want it to be – you want any PR to be based on merit, right? Based on accomplishment. You would typically, and it takes a while to learn that because I went through it in my twenties as well. It&#39;s about me, right? It is about is this ego. Lee 1:01:21 Also someone should have given us media training. If you are going to go, always bring it back to the product and the company, don&#39;t tell stupid stories about your life. That&#39;s that. Rob 1:01:30 No, not at all. Make sure that you have control over the callouts. I have a similar story. This was one of these times where I won an award once for next generation CEO. Pablo 1:01:43 You won an award, dude? Rob 1:01:45 I did, I did. It was a merit badge. It was a next generation CEO of the year award, right? I remember that I was up against people that were way more deserving, but I&#39;d been a part of the community for much longer. I&#39;m not saying this was nepotism whatsoever, but I do remember winning this award and it was such fraud. That&#39;s what you end up feeling like when something goes down, when it goes wrong. Lee 1:02:11 Oh, yeah. Oh, God. Rob 1:02:12 I got up on stage and I knew. I was running a company, a software company at the time, and I was doing layoffs the next day, so 9% layoffs, seven employees. One of them, his wife, was about to have their second child. She wasn&#39;t working and I&#39;m about to lay this guy off, right? This is in the back of my head. They don&#39;t tell who wins, but you have to show up. I showed up and I didn&#39;t bring any of my family, not my wife, nobody at that time. I brought my controller Kim and she started the day before, right? That&#39;s who I brought. She&#39;s like, what do you mean? I&#39;m like, you&#39;re coming with me because I can&#39;t. It&#39;s a fraud. It&#39;s fraudulent what I&#39;m about to do. I&#39;m like, please God for the life. Don&#39;t win, don&#39;t win, don&#39;t win, don&#39;t win, please don&#39;t, don&#39;t call my name. They call my goddamn name, right? I get up on stage and you know this is – because that&#39;s what being an entrepreneur is. It&#39;s like, you&#39;re a fraud until you&#39;re something and then you don&#39;t believe you&#39;re something so you&#39;re still a fraud. I got up on stage and I had to accept this award and Paul Lem, who&#39;s a well-known guy in Ottawa, was the other guy on the other side who lost to me. Paul Lem lost to me. Pablo 1:03:24 Saves lives, yeah. He detects early diseases. He&#39;s a scientist. Rob 1:03:37 He&#39;s this – anyway, he got up and I&#39;ll never forget it because the story was the guy who was doing the introduction was the dean of the business school for University of Ottawa. He got up and he had this long rambling opening for Paul. He&#39;s like, this guy is this scientist, he&#39;s this, he&#39;s this, he&#39;s done this. By the way, he just wrote a book that he&#39;s released on how to be productive, productive book and going on about Paul, I&#39;ve known this guy my whole life, my whole life, blah blah. It was a nine-minute introduction about Paul. Then he’s like, and the other contender, oh, wait, what? You could see it. He&#39;s trying to think of, oh, okay, what can I say? What can I say? What can I say? I have nothing to say about this guy. I have nothing to say. He&#39;s like, Rob Woodbridge, I knew his father. Alright, let&#39;s go. That&#39;s what he said. Then I won. You should have seen, he&#39;s like opening it up and he&#39;s like, wait, wait. Lee 1:04:28 There&#39;s a mistake. Pablo 1:04:29 There&#39;s a wrong name. You have that moment. It was wrong. It was terrible. Lee 1:04:36 You’ve got to stay away from that stuff, those accolades. Again, back to what we talked about in the beginning, this validation from the wrong places. Who cares how many articles are written about you? Who cares how many awards you win? Who cares about any of this? Who even cares how much money you raise? That&#39;s not even the end goal. All of it is useless. It&#39;s useless. The only thing that matters is the customer and is, are you solving a problem for a customer? Are they willing to pay you to do that? Can you scale? If you&#39;re not doing that, the rest of it is just vanity metrics and it&#39;s useless and is going to, at the end of the day, come tumbling in. I think that&#39;s the takeaway. Pablo 1:05:15 Full circle right there, isn&#39;t it, guys? Let&#39;s stop it there. I think, look, if you listened through this whole episode, there&#39;s no doubt that we&#39;ve helped you become a millionaire because either we&#39;ve helped you with your startup with all the lessons, but even if you get nothing from that, we gave you a full proof way to make money in the stock market. As soon as a company gets PR, pull that stock. If you listened to this episode and the show and you like it, I have a huge favor to ask for you. Well, it&#39;s actually a really small favor, but it has huge impact, but whichever app you&#39;re listening to this episode on, take it out, go to Product Market Fit Show and leave a review, please. It&#39;s going to help. It&#39;s not just going to help me, to be clear. It&#39;s going to help other founders discover this show because the algorithms, whether it&#39;s Spotify, whether it&#39;s Apple, whether it&#39;s any other podcast player, one of the big things they look at is frequency of reviews. It&#39;s quantity of reviews. The reality is, if all of you listening right now, left reviews, we would have thousands of reviews. Please take literally a minute. Even if you&#39;re just writing “great podcast” or “I love this podcast,” whatever it is, just write a few words. Obviously the longer the better, the more detailed the better, but write anything, leave five stars and you&#39;ll be helping me, but most importantly, many other founders just like you, discover the show. Thank you.