Monk - V1

Big Market Rules And A Dashboard Wakeup SPEAKER_01 0:00 We had a few principles. One is like it has to be a massive market. It's gonna sound obscene, but we have to see some path to go public or to make a company that will do, you know, 100 billion top line. Not valuation, but top line. And the main reasoning for this is like smart, ambitious people want to work with fast-growing companies. There's only like so much yapping that I could do to motivate the team. People want to look at graphs and go up and to the right. What I've realized is that if you got a job at a big enough company to own this function, you kind of want to log into somewhere to see what's happening. It's like not enough for it to just happen behind the scenes. You want a dashboard. And then I lost one deal to a competitor because we didn't have a dashboard and didn't seem like we're serious. And that was kind of like a punch to the face. And so we built, we built the front end. I signed everyone I could to the point where it hurt. And one of the larger mistakes that I made is I signed a fairly large customer that was just a bad customer for us. This business required a lot of custom work. This business needed an integration that we did not have. It was a sexy company, but I made the mistake of trying to create workarounds. We should not have made a workaround. How fast did you hit like a million in ARR? You know, we actually started selling last fall and we hit a million in roughly six months. That's product market fit. Pablo Srugo 1:15 Product market fit. Product market fit. Product market fit. Product market fit. Product market fit. SPEAKER_01 1:23 I mean, the name of the show is product market fit. Pablo Srugo 1:25 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 up 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. The Fastest Product Market Fit Signal Pablo Srugo 1:39 George, welcome to the show, dude. Oh well, thank you. So you're running Among and things are going pretty fast. I mean, you started a year ago. You raised the seed late last year, you raised a $25 million Series A this year. So clearly you're you're on quite a ramp. We're gonna get into why you started it, how you started it, and and how you've kind of grown the business through this. But as a first question, because we like to focus on Prior Market Fit as much as possible, like tell me, when was the moment for you when you felt like you'd found true product market fit when things were really starting to work? SPEAKER_01 2:11 I think for us, for my co-founder at Joe, the moment was with a customer of ours today. They emailed us, I ignored, they emailed again and again, and then I couldn't do a call, so I just sent them like our sales platter, which is like a one pager. And then they said, okay, send me something else. And I couldn't do a call again, so I just sent them a loom, like a loom of me yapping, showing our product. And then they sent, yeah, sounds good. Like send me the docu sign. Let's do a pilot. Which in my experience, doing B2B SaaS, selling B2B SaaS, it takes like multiple calls, video calls. So that that was a good one for us. Pablo Srugo 2:45 What kind of ACV are we talking about? Is that 10K, 50K, 5K? 36K, 36K. So that yeah, that's like that's real money. I mean, someone's paying almost $40,000, not even really talking to them. And it's not like PLG where they're using the product, they're getting comfortable, and they're and they're ramping up. They literally just they see a deck, they get the loom, and they're like, this is amazing. I gotta have this product. SPEAKER_01 3:06 Yeah, I think some of it is because the pain is quite sharp, and we could talk about that if if you want. But the other pieces, I mean, I'm very biased, but we're very proud of our product. Like it sells itself. Pablo Srugo 3:16 Yeah, we're gonna get to all that. So maybe let's let's start there. Like this is kind of the the moment where you really felt like things were working and obviously very scalable if you can sell things that easily. How do things start? Like, take us back maybe two years ago, before, you know, what were you doing two-ish years ago that then led to you even starting Shutting Down A Small-Market Startup Pablo Srugo 3:33 this company? SPEAKER_01 3:33 Two-ish years ago, I was running a different company, we're called Gattaca, because I like that film and the scene where he swims and then he doesn't give up. But it was a different company, it was like a YOLA model to do computer vision QA testing. We became profitable quite quickly by returning the money because it was a small market. And I had a co-founder breakup. And so the big learning there was like, we're never doing a small market again. Pablo Srugo 3:54 You shut it down. Like you literally said, kid, it's just not big enough. You see, hit pause, returned to whatever capital you had, and we've done. SPEAKER_01 4:00 Yeah. We're we're friends, but someone I've known for seven years who was a founding engineer in the company that I sold, we had a breakup, and then it became clear that like QA is just not it. And I felt like I could done the world to my will. F ABC said this is a bad market. I said no. And then yeah. Pablo Srugo 4:18 Well, you know, this is I know that we're just starting, but I'll take you on a tangent even just right now because this is a classic failure mode in the sense that founders they want to feel like they're relentless, like they never quit, they never give up. And yet I've met many founders like you who gave up on a certain feature or idea or even company, but then give up being a founder, which is effectively what you did. Like, how do you think through that? When is it kind of like you're you're giving up prematurely and you should have just fought harder and success was right there? And when is it like, you know what? It's actually okay to say this is not gonna work, give the money back, refresh, restart, and go a different direction? SPEAKER_01 4:52 I think it's a tier zero question. I would not listen to anything I'm saying. That's because I'm a nobody at still figuring this out. My stance on this is following your energy. And like if you have energy and if chasing this idea brings you curiosity, then yeah. I think the question is insanely good because the valley and everything around us valorizes like theme tolerance. And you know, you read about the guys at Notion, they suffered for four years, went to Japan, suffered more, then now it's revenues half a billion. But yeah, following your energy, thinking about all the signals. That's my take. Pablo Srugo 5:21 I like the energy as a concept. I thought about that a lot myself. It's like it carries through, like, even when you think about hours work, like how all in are you? And it's like how much time are you at the desk? Like, how much are you gonna count this, you're gonna count that? But it's really all about energy. Like, where does your energy go? You wake up in the morning, what are you thinking about? At night, you're watching a movie, you zone out, you're zoning out to what? Like, that's where your energy is going. That's what's pulling you. SPEAKER_01 5:41 I I I will say that like today, it's so easy to build things. It's certainly easier than it was a year ago. And I think a lot of people jump around. I jump around quite a lot. I do think you have to like commit hardcore to a thing. I don't want to say like how many months. Our stance was like at least six months to a year, like hardcore, obsess, like crazy hours, sell it, code it. I do think there's like a specific amount of like sweat you have to put into it before you can build conviction that, like, oh my god, I'm losing my energy versus oh, I'm just like, you know, I'm just tired. Pablo Srugo 6:11 Once you give the money back, are you in kind of this valley of despair or are you kind of like ready to go? Like, where are you at talking about energy? Where are you at? SPEAKER_01 6:18 Despicable, uh sitting on the floor at South Park Commons seven days a week, like reading books, rethinking my life, super miserable. I would not wish it was my worst time to me. I mean, it's kind of interesting, but but also like quite miserable because I felt like time is running out to build something epic, and then especially with the ones around us, and I felt like I'm gonna miss my window. Pablo Srugo 6:38 What year was this? Like, where were we at timeline-wise? SPEAKER_01 6:40 Well, summer fall 2024. Pablo Srugo 6:42 Yeah, okay, I did see it. There's already a lot of like AI native startups having built built and kind of growing around you. SPEAKER_01 6:49 Yeah. People are taking off, right? I was miserable. But then I met my co-founder who is incredible and an amazing human and is like one of the main reasons why I even decided to go at it again. And then we did a like a new set of discovery, which I think is your question. Like, how'd you meet your co-founder? That that's also a big one. Very lucky. I would strongly recommend uh South Park Commons. It's a community for founders, slash engineers that people just want to tinker. Pablo Srugo 7:12 We've been introduced there. And he was like, was it kind of like you were technical, he was technical, like one of these kind of compliment situations? SPEAKER_01 7:18 I feel odd saying this, but the person that introduced us felt like we're both very intense. And that was the reason for why. And then we would just spend time together. We're like trained for a marathon at the same time. We're both running a lot. And uh, we didn't even think about co-founding, we just like talked about life. Pablo Srugo 7:35 And so when does the idea come together that okay, you guys are gonna build something? Obviously, it's gonna be something in AI. Do you have any ideas of what you want to do, what problems you want to solve? Like, what's the starting Picking Fintech And Stress-Testing Ideas Pablo Srugo 7:44 point? SPEAKER_01 7:44 We had a few principles. So, one is from this cartoon, from this QA thing. One is like it has to be a massive market. We have to, it's gonna sound obscene, but we have to see some path to go public or to make a company that will do, you know, 100 billion top line. Not valuation, but top line. And the main reasoning for this is like smart, ambitious people want to work with fast-growing companies. There's only like so much yapping that I can do to motivate the team. People want to look at graphs and go up and to the right. And so a big market, B, actually use AI, not like a bolt on, not a nice to have. I thought it would be a travesty for us to build a business where we're not using what the labs are doing. And three, and I still have this in all the recruiting docs. And at the time it was about Science here and Sam, now it's Claude. But at the time I was very worried about Microsoft and Open AI. And so we wanted to pick a problem where we would not get nuked by Sam and Microsoft. We could skip the reasons for why I was worried about those two. But I would much rather compete against respectfully all the founders than the labs. And so those are the three things. Don't get nuked by the labs, build something very big and actually use AI at the application layer. And we picked fintech and we did discovery, and then we landed in this AR. Pablo Srugo 8:56 It's easy when you start with a clear pain point or a problem to solve, how you would go to try to build that company. Not to say it's easy to build the company, but the steps are clear. When you start how you started, which is top down, so I've seen other founders do that. What I always want to know is how do you go from there to the first thing? Like you mentioned fintech. How did you narrow all that to fintech, for example? SPEAKER_01 9:15 Okay, a few things, but it's messy, so forgive me. So I started my career at D Sha, which is like a hedge fund, and my co-founder went to Penn. So we had some roots, and people would people will respond on LinkedIn if I message selfishly because we have fancy LinkedIns. B, many companies are massive in fintech. Like if you can touch the flow of money, I'm not going to recite the examples. You can build a very big business. The best case outcome is you can somehow index global payments, which is what we're aiming to do. And C is just, it goes back to the second thesis. It was an incredible use case for AI. There's so much unstructured data, it is like purpose-built to use the models. And then we had a number of ideas. Some of them were derivative ideas of what's in the market already today. Some of them were quite boring, some of them were innovations. And I made a fancy Figma as if we have them all. And I went to people, like I was like, hey, Pablo, like we're building this company. It's called Atlas. We're called Apple Atlas at the time. And I already built these five products. Which one do you want to pay for? Kind of after as if we have it. Like made a very fancy landing page, made each slide as if I have the solution, and just was like, which one of these do you want to buy? I have them all. Pablo Srugo 10:25 So you like each person, it's not like you, you, you A-B tested it. Like each person you would pitch all five products to and just see which one resonated the most. SPEAKER_01 10:33 Yeah, precisely. Pablo Srugo 10:34 I'd never heard of that, to be honest. Like, and I talked to a lot of founders about customer discovery, but I'd never heard of just give like the buffet kind of playbook, right? Like here, like a five potential ideas, and just it's usually one by one. Like it's usually very serial. It's interesting you did it that way. SPEAKER_01 10:48 I don't think we're very good at discovery. What we ended up with is what I think is like analogous to customer success, which is it's a no-brainer problem. So like there's respectfully no PMF risk. What we do, we get people paid fast, we solve account receivables. Every business has this problem with just the customer support. And it's it's just execution risk. Like we're builders. But I don't think we're very good at discovery. So I would not necessarily like advise my like smorgasboard of slides. I think it may have been confusing to some CFOs that we spoke with. Pablo Srugo 11:18 But and yet, like, I mean, you say you say you're not good at it, and yet it got you to identify the problem pretty quickly. SPEAKER_01 11:25 Yeah, we we put in some hours and I think we're fortunate with a few meetings. We were also very deliberate about not asking for help. Like we wanted to make sure that we can do this part and like each shed ourselves. But yeah, we we got there. And then I think what got us over the top was the same like anxiety that I had sitting on the floor, which is we just felt like we have to jump off a cliff and build. Like at some point, I think you have to just like you just kind of have to go for it. Pablo Srugo 11:49 Yeah, the the stupid thing we say is like you have to be in the market to win the market, which is at some point you gotta get in there, do something in order to actually have a potential of building something big. I have two questions that I'll ask one than the then the other. The first one is you said you had these five ideas. Can you just again, because I'm always thinking of the mindset of a founder who's like, okay, I get you know how you could end up in fintech because maybe you're credible and it matches all your other checklists. Like, how do I come up with great ideas, right? So you had five. Some were better than others, I'm sure. But what was the process for just even coming up with these ones? SPEAKER_01 12:19 Yeah, I like how you were doing this because you're really teasing out whatever like Alphi have to maybe help someone in some capacity. I think it's good. I had a doc on my phone of like all these tailwinds that I think are happening in the world, everything from like nuclear to education to just like crazy things, completely our fog, and all even to fintech. And so there was a fintech bucket, and some of these ideas were married to tailwinds, uh like unstructured data and payments. Then another bucket of ideas that spawned a slide in that presentation was how do I say this nicely? Companies that I think are attacking a big market but are executing poorly. I just think I can do better. We even without LMs. Like, okay, I'll say one complete thesis. If a company is bought by a private equity firm, that typically to me means that A, it's a big market, the B people have sharks, but B, the B firm will like rip out the people, they'll go through like a period of fast growth. I'm they're gonna sell it. There's gonna be a period of like two to four years where I can pounce. Like someone already did the diligence for me, they think it's a big market. One example for this is sales tax. Like there's a company that was purchased by P from called Elivera and Sales Tax, they're $4.9 billion. And then now we have NROC and Sphere, et cetera. So we have an equivalent of that in my space. That's another angle that I used to come up with idea. Pablo Srugo 13:38 And you were just like you're you're really deducing these ideas. Like you're looking at the market one way, is who's there? Who can I who can I crush off? And then the other one is just like, okay, what are big tailwinds that we could apply to FinTech, for example? SPEAKER_01 13:49 I tried all the things. I mean, I ran a company before this, I was responsible for like 300 people the last company. I did all the things. I tried to think of like what problems did I have. And and I I I I spent 10 years in consumer. What problems did I have in my company? What problems, what would I pay for? What, you know, what brings me joy? What am I good at? Like, what are other founders that I know? All that none of that stuff works for me. I couldn't come up with anything. Like, I mean, there's like the ubiquitous stuff. Like, hiring is very hard. Like, I wish I could hire more engineers, pastor, but I didn't want to build a recruiting company. But I could never come up with anything based on like my experience and my Validation Signals That Actually Matter SPEAKER_01 14:26 personal pain. Pablo Srugo 14:26 So that's how you get this list. The other thing that I I think is really important is one of the things that I think founders struggle with until they have the experience is what does validation really look like? There's the simple one, which is here's like $20,000, go build it. Okay, cool. I'm validated, right? But there's always like a level before that where you're pitching something, it's like people always smile and nod and whatever. So you got to differentiate that from eyes lighting up, this is a real thing. What did you see? You pitched five ideas. You kind of almost had this baked-in, like you know, way to compare. The one that you went with, which I assume ended up being monk, like, what did you see? What did you hear that told you that this was the best idea? SPEAKER_01 15:06 Yeah. I'll do a fast plug for like probably a very simple book that was discussed on the show by a lot of people, and then my process. So the plug is for a book called The Mon Test. It's like a hundred pages. It's written for like someone like quite new to this. Like, I found it useful. It helps you to use, like, as you said, fake compliments, which people often give from like actual uh real feedback, and then listening to people, looking at them, and then seeing concessions. So, like the penultimate test is hey, let's sign this doc. Like, give me some of your resources, sign this pilot doc, andor you know, dedicate some resources to implement my thing. An NDA could be a good signal. And then I think a lot of it was listening, like in in my space. So we our first part automates account receivables. No one raved about their account receivable solution. Everyone was like fairly displeased to quite unhappy, and there's we're stuck with this. Pablo Srugo 16:00 It was very obvious. But do you remember like specifically what you heard? Like when you told them you would stop AR, for example. What do people say back to you? SPEAKER_01 16:07 It was a lot of I don't want to talk too much about the competitors. I respect like these businesses, they're all doing as well as they could, but it was a lot of folks being frustrated with what we already had today. So, like, yeah, we use we use X and it took CEO to implement X, and we failed to implement, and it was so disastrous that my team, my entire team, had to take a vacation after the implementation. Or like we use X and we're stuck with X. And for us to request any change in X, we have to like log a ticket that goes somewhere in a foreign country and like my thing never happens. Things like this. Pablo Srugo 16:42 So it was actually more the frustration of the problem, the status quo that you picked on than like the eyes lighting up for your solution necessarily. SPEAKER_01 16:50 Yeah. The thing that we do, which is account receivables, we manage the revenue side of the business. Is it's a hard fact that the world accepts that exists that is broken. Like everyone already has some sort of solution, whether that's spreadsheets or another like piece of SAS. We're not inventing that new thing. It's just that we're making the existing thing better. So yeah, everyone was frustrated. Pablo Srugo 17:10 So you take this, you know, this is where you want to go. V1 Mistakes From Black Box To App Pablo Srugo 17:12 What is like V1 of the product that you decide to build? SPEAKER_01 17:15 Awful, awful thing. So at this time we have like the basics of the cursors of the world that my co-father and I went crazy building too much stuff. So the V1 had no front end at all. It was like a back-end service only. It was a black box. And we started to sell it and we made some money in the beginning. And we've learned very quickly that finance leaders don't want like a black box. Pablo Srugo 17:37 How did that work? They would just say, Here, here are like accounts that are laid, go collect for me. Like what was the Yeah, yeah. Just connect to my systems and then like give me the money. So this is a classic like services as software play, like the way that you approached it. SPEAKER_01 17:50 Yeah, yeah. And in the beginning, I was doing things manually. We had like RLHF based on me. I was doing things manually and then automating them as I'm doing them. Were you calling customers? You're emailing customers yourself to try and collect? Like hundreds and hundreds and hundreds, super painful, crazy hours. Pablo Srugo 18:07 So you're almost like running an outsourced collections agency, except you're trying to automate some pieces of it, but that's where it starts. Automating myself out of it, yes. Gotcha. Yeah. It makes sense though, for what it's worth. I mean, I know you you all and we'll get to what the next evolution was, but like today there's just so much like services and software is a big category. A lot of professors are thinking about doing something AI native first. And it's like, you know, you either start with the product and you try to get it to here's the thing, let's think about like AR, right? They're all already outsourced collections agencies that some of these companies might be using or might have thought to use or whatever. That's a known thing. You could just max their service and do it all manually and then backfill and automate yourself, which is what you did, or you can just start with, well, it has to be tech only, and then try and get your weight to like realize the same service, but it's harder, it seems feels harder that way. SPEAKER_01 18:55 I don't know. We're still early, and I think it also depends on who you're selling to. And like our product has evolved since then. But man, if you look at like our seed slides, I even branded it as such, was proud of it. We called it RAS, results as a service, and I was like very proud of it. And then I think D VCs felt like maybe, but the customers actually didn't like it. They did not at least the customers that we're selling into at the time. Tell me more about that. It's unintuitive. What I've realized is that if you got a job in a big enough company to own this function, you kind of want to log into somewhere to see what's happening. It's like not enough for it to just happen behind the scenes. You want a dashboard. And then I lost one deal to a competitor because we didn't have a dashboard and didn't seem like we're serious. And that was kind of like a punch to the face. And so we built, we built the front end. Pablo Srugo 19:43 And they wanted to see, I think this is interesting and and generalizable. They wanted to see what, like how many tickets, this and that, or what you were actually doing. Like, hey, what are you saying to these customers? These are my customers that you're talking to, collecting from. Do they want to see that level of visibility? SPEAKER_01 19:57 Both, plus, without like dragging you through the world of AR, there are like basic reports and basic functions that you would expect. And I think people wanted to see and wanted to tinker. Now it feels like this whole results of the service thing and like selling services at Southworth is like again in vogue. Also, my conclusions are based on like a pretty small sample. Like we're visual design partners last spring. But yeah, we built the front end. So to answer your earlier question, we started with just a backend service only, and you built the front end. It became quite easy for us to build a front end because of cursor. But it was also easy to get carried away, building like crazy front ends that impress customers, but then like it's hard to build the back-end service. Now we obviously have the full app. Pablo Srugo 20:40 When did you uh walk me more through that product? This so we're talking like what March, I mean March, April, yeah, 2025-ish. Yeah. How how did you structure? Because this is another big piece of getting the product right, is how you work with design partners, who you choose as your early customers. Tell me more about that phase of the business. SPEAKER_01 20:57 Unfortunately, it was not very methodical. I felt like in main immense pressure to win. We are very late to what I think is an amazing space. We're not the first company to start this. I think we're doing something new, but we're late. And I just I signed everyone I could to the point where it hurt. And one of the larger mistakes that I've made is, and that made many last year, I'm still making them now, is I signed a fairly large customer that was just a bad customer for us. And the pilot was bad, and I ended up like what I word, firing this customer before they could even like we hear a lot about bad customers. Pablo Srugo 21:32 Like, what does that mean? How does that actually manifest itself? SPEAKER_01 21:35 This business required a lot of custom work, which is classic. This business needed an integration that we did not have. We created a workaround with this business via like an S3 bucket FTP file transfer that required people from both sides, my team and their team, to like handle the data. So now we're relying on like a random person of that team to give us the data that was not. Working no matter like how much I tried. And we had no actual way to talk to the to this business data. And my system doesn't work otherwise. It was a sexy company, but I made the mistake of trying to create workarounds. We should not have made a workaround. Pablo Srugo 22:16 What was the final product that you like? Obviously the product exchange, but like the one that you would say was launch ready that you launched with? SPEAKER_01 22:23 It's a system that either takes your contracts, processes your contracts, makes the invoice, sends the invoice, collects on this invoice using agents, like applies cash, gives reports, basic reports, and then pushes the data back into the ERP. And it was launched only with connectivity to a few banks and only with connectivity to one ERP called QuickBooks. So that customer that was a bad customer for us, outside of the fact that it was a very complex business, they wanted connectivity to like something else entirely different. That I said I have, I didn't have it, and it was a mistake. Pablo Srugo 23:00 I actually can't believe how selfish you are because like you've been listening to this show, you listened to this episode, you loved it, you've listened to a bunch of other episodes, and you haven't told anyone about it. You haven't told any of the many founder friends that you have about it. Think about how many founders have helped you out when you're building your startup. So don't be selfish. Tell your friends about this episode, tell them about the show, and help me help them. You're doing the full end-to-end life ROI That Finance Teams Care About Pablo Srugo 23:24 cycle. Tell me a bit about the ROI and how the ROI is realized. Like, are you finding your customers are laying off a bunch of people and saving costs? Do we find they're just doing more with what they already have? Like, how do they get that? Obviously, it's nice that this is doing automated, but how does that translate into getting value? SPEAKER_01 23:41 Depends on the size of the business. So no laying off. The main metrics that we are proud of that we sort of site is like time saving slash making the team more efficient, front loading your cash. So like Pablo is owed $100 over the next year. You expect to get $100 the next year. I'll give you $90 tomorrow. So saving time, furloughing the cash, and like visibility slash reporting needs. And truly, the number one metric people care about is just money. I think that like insights and reports are nice. It's hard to quantify these things. One of the reasons why we picked the space, and like, yeah, I cited three reasons, but then we honed in on this idea besides the pain. We had other ideas that were like what I would call insights tools, which is basically only doing reads from the database. We're not doing any rights, so there's no system of action. Our product gives you money, more money sooner. Yes, it's your money, but everyone, the number one metric that every finance leader or CEO cares about is just more cash in hand. So these are the main metrics. No one gets fired, and it's not a marketing tactic. We just we prefer to talk about how we augment the people. But yeah, those are the Cold Outbound That Still Works SPEAKER_01 24:47 main metrics. Pablo Srugo 24:47 How did you launch and like what was your main like quarter-market channel that really worked at the beginning? SPEAKER_01 24:52 It was cold outbound email. And that was our only channel all of last year. No sales team, no nothing. And then finally I ate my like pride and ego, and I started to post on LinkedIn, again, learning from other founders. I found it to be very cringe. I cared a lot about my reputation, who I'm connected, what people think of me from my like past experiences. But then once it started closing on LinkedIn, and for that I had to build a bit of like a different brand and cohesive identity. We started to get inbound. So now heading into this year, we had email and then some inbound. That's it. Pablo Srugo 25:27 Tell me more about I mean, cold outbound is compelling because, well, a few things. First of all, like I think people assume that it's dead just because it gets so much spam. I certainly thought it. But I met a founder recently on the show, and he told me he got his entire first million of ARR through cold outbound, but he walked me through. It was like half a million emails, 1% reply rate, so 5,000 replies, 250 meetings booked, 40 sales at like 20k-ish ACV, million dollars AR. Is that similar? Like, I'm curious, like how many outbound emails more or less did you send? Like what kind of conversion rates? Did that have to be exact, but like more or less do you think you got? I will mess up the stats. SPEAKER_01 26:05 They were higher conversion rate, lower volume, but still mass volume. And I don't know about this person, but we have a horizontal solution. So we're industry agnostic. Pablo Srugo 26:15 That was a key thing. Like he, you know, what that was one of my takeaways was like, if you're gonna do cold email, you can't have like 10,000 customers because you're gonna blow through 8 millions. SPEAKER_01 26:25 Yeah, that's precisely right. Uh, and you have to you have to be thoughtful about your aliases and warming and domains and rotating things and and kind of infra mistakes that I made in that QA company is like never never trust the the floor and the ceiling in these larger tools. Like Apollo is a big tool that people use, myself included, to like fetch emails into outbound. Apollo told me, yeah, just do 50 a day. It burned my main.com domain. I ran roughly 15 to 20 emails per alias, no more than two aliases per domain, and like vigilantly watching all of this every day. Pablo Srugo 27:03 What would you say like to somebody that's thinking of doing this? Let's say that they got a horizontal market, they've got enough market size that they could do cold outbound. And you're you're kind of telling them like some of the big learnings, or maybe even for yourself, if you were to start over your cold email campaign, knowing what you know, what would you do differently? Like there's the technical piece, you know, use Apollo, use Lemlist, warm it up. Okay. I think people either, whether they do it right or not, like they know that high level. But what are some of the the learnings? I don't know if the copy matter, the number of uh follow-ups, the personalization, like wherever you've learned something, what what are what are some top things that come to mind? SPEAKER_01 27:35 Yep, I'm making like a list so that I don't ramble because in my head it's like uh it's like a big rule's cue. So what are the inputs? Okay, I made a list of four things. So we have rhetorical piece, we have copy, we have email strength. I'll come back to this, and then we have experiments. So technical piece, I'm not gonna go into, but there's a bunch of solutions you could use. Let me know if this is helpful. Copy and subject, I think not a rocket science insight. I think that it's one of those things where like everyone says the same thing, it's probably true. So more personalized, the better. Subject lines. I try to do things like dash dash or no subject, or yeah, I would also do, you know, Pablo and George, but I'll also just do like random subject lines to try to get people to open because it's an equation. Like if they can't open, it doesn't really matter how good my copy is. And then for copy, you know, plain text, no links, no images, doing things like set from iPhone, lowercase. They cannot know that it is AI or spam, especially today. Like there's so much email. There's like 50 guys that are smarter than me that are doing outbound. So the more plain text average copy it is, the better. As far as sequence length, I've tried everything. I've tried like, I was inspired by Ramp in many ways. I've tried like nine-step sequences and I've tried three-step sequences. I haven't really found a huge delta between them. But whatever the sequence is, just keep it as if it's like a casual email I sent to someone else. Email strength is important. So like it's not necessarily part of the tooling, but you have to make sure that you're outbound into the right aliases and whatever source you're buying them from, just because you got a bunch of emails from polo doesn't mean they're real. And you can actually burn your domains or have bad examples. And then yeah, experiments just need to be not complacent. So what I think I did wrong in the beginning is I like spent a weekend obsessively building all this stuff and I loaded it and then you didn't get a result. And then I just kind of like said, yeah, this is this is broken. But I think a better version is to like keep trying. Pablo Srugo 29:33 Like that's kind of my take is the copy is like, you know, because you got you see these things on LinkedIn and it's like, oh, look at this like insane rage bait stuff. I want it was like, you know, like just anything for them to click on it and and you know, go might go viral on LinkedIn. I don't think it's it gets results. Well, my learning seems to be like, frankly, pretty simple. You try some few things in the subject line, but it's not, you know, rocket science stuff. Like you said, you know, find a way to make the thing just personalized enough that it's maybe that person at least somewhat thinks, did they write this to me? Like that, that's it, that's good enough, sort of thing. And then volume. I mean, it just feels like it's volume, you know. SPEAKER_01 30:06 I was in all the Slash channels trying to like absorb any sort of alpha discord groups, trying to learn. I'm seeing all these crazy campaigns. Oh my god, like 5% response rate. I feel super dumb. I don't know if these are real and if they are like good for them. I think it's volume. And then you didn't ask, but one thing that did not do, and I'm still not doing, but I have a lot of sources that say this is like a killer way to do it. Like I should probably be doing this now is LinkedIn. People are showing founders that I respect are sharing how LinkedIn is working better than email. They're leading voice notes on LinkedIn, they're sending photos on LinkedIn. This is cold, cold outbound through LinkedIn. Cold outbound LinkedIn. I wish I did it last year. We're still not really doing it, but that's that's a miss. And not the sources tell me it works. How fast did you hit like a million in ARR? You know, we actually started selling last fall, and we hit a million in roughly, I don't know, six months. Pablo Srugo 31:02 Let's walk it into some of the kind of more tactical areas that we're gonna go kind of deeper on. Designing The Company For AI Agents Pablo Srugo 31:07 The first one, everybody's talking about being AI native, being an agentic company, obviously creating agents, selling agents. You told me that you're designing your company for agents, which to be honest, sounds amazing, but I don't really know like what that means. Tell me more about that. SPEAKER_01 31:22 More disclaimers, only because I really feel like I'm figuring this out as I'm doing this. I don't want to come off as someone that like figured this out. You know, we're not Lagora, we're not Harvey. A few things that we're trying, or like literally believe in. Number one, write a lot. Write a lot and write cleanly. One of our values is clarity. I like to call it ambient signaling. You write in Slack cleanly and precisely, and in a way that if I write something, you can immediately act on it. And it has all the context. This is something that I took from my last company, and it was good during the pandemic when people were remote, and now it's like incredible for agents. So the more context there is and reasoning for the decisions, the better. It's also just polite to the rest of the team. Like, why have a 10-step Slack thread if you can just act? If you just spent like five seconds more writing the message to Pablo, maybe I would act faster. So good written culture, no product managers. I was always bearish on the role, and now more so. I don't think you need a conduit of information anymore. And you know, I think engineers should work with customers. And yeah, if someone has good design sounds, just code. Pablo Srugo 32:25 On the writing side, do you use like Whisperflow or something like that to just like get get the stuff out? Does that help or hinder? SPEAKER_01 32:31 Whisper, yeah. People want to use Whisper, use Whisper. If not, just like write and Slack as much as possible in the open. Pretty much outside of like deeply personal issues. Every single DM that my co-founder and I get, we like politely ask and turnaround to share this in the open with the team. And I track as a Slack admin, I don't have a way to see detail stats, but I see like macro things and I track how many DMs versus how much is in the open. And I want the open to be like a much higher ratio than DMs. Are you remote by the way? Pablo Srugo 33:03 Are you guys in person? SPEAKER_01 33:04 In person. Pablo Srugo 33:04 And even still you use Slack that much? SPEAKER_01 33:07 Yes. We're in person, we're no meetings. We do three meetings a week, all on Monday, and then there's zero meetings, we just work. We don't even do stand-ups. We do all hands every morning at 9 a.m. We discuss everything, like what I see in the market, customers, what we're gonna build, what we're gonna sell, et cetera. All hands, customer meeting, sales meeting. Three meetings and then just like flow state. How long does each meeting? Pablo Srugo 33:31 Half an hour. Okay, that's it. So maybe two hours worth of meetings a week. Yeah. How many people are you? 14. You think this scales? I mean, or are you just leaning into there's an aspect of it, it doesn't really matter if it scales because you're a startup, right? You have pros and cons. The con is you don't have that much money compared to a big company, you know, you go to market, all these sort of things suffer. The pro is you actually can do these things, right? A big company can't. So maybe there's an element of it, it just it doesn't matter that it doesn't scale. But I'm wondering if you've thought about when you're a hundred people, you know, can you still operate this way? SPEAKER_01 34:00 I've done something similar in the previous company. We're doing, you know, 58 million RR, 42% you beta business, roughly 100 people. But I don't think it's going to scale, but I'm going to hold on to this with my dear life for as long as I can because I think that I really believe in like flow state and I want to give the builders the time to do it. Just so you know, like we do have meetings. Like we'll meet, but they're ad hoc. I just hate recurring meetings. Like if we need to burn down like a problem, like there's like a visceral issue with a customer, or like, you know, I made a I made a big mistake that like we need to fix, then we'll have a recurring meeting maybe until it ends, but no recurring meetings otherwise. And it's totally back to the product managers. I typically find that product managers are actually the creators of mini meetings, which is like not good for Eng. Pablo Srugo 34:48 What's the split? Like 14 people. How many are engineers? SPEAKER_01 34:50 Half and half. Half sales marketing and half engineers. I mean, most of the team is like a few months old. Everyone's sort of new, but it's like Eng and then like post-sales marketing. Sales team is just blowing up right now. Pablo Srugo 35:03 And do you have agents running inside? Tell me maybe more about that. Like on the agency side, internally, what are you using agents for? What are agents doing for you guys as a company? SPEAKER_01 35:13 So we're actively trying to kind of AI build a company. I think Ram again has done a nice job there. Quickly, you know, we tried terminal for everyone. It doesn't really work. So I think Claude desktop with connectors and everyone has a connector set up and a prompt that I set up as good. As far as agents, there's two things. There's like team-wide things, and individually, people are encouraged to build their stuff. So I can speak to mine, for example. I mean, I have email digest, I have a thing that looks at security. So I have a thing that pulls every single one of my subprocessors and sees that there's an issue and things me in thread. I have another agent that looks at all the sales calls and kind of grades them and spits out like a rubric in common Slack. These are my main ones. We have a we have a nice one for spend, but I think it's pretty basic. A call ramp and spit out like all the deltas and where the variance is at, just so we don't get caught with like a bigger recurrent expense report. And then people have their own agents, but I don't really know what their setup Hiring For Judgment And Avoiding Sevens SPEAKER_01 36:11 is. Pablo Srugo 36:11 The other thing I want to talk about kind of as a bit of a segment. Like we talked about, you know, management and organization and just writing things a lot, building this culture where things are written so that you can have more context, not just for people, but for the agents. The other thing is people, like especially these days. I would say, I mean, execution was always obviously super important in the world of startups. But you know, the argument today is if everybody can build anything, like then the people you have matters even more because they're gonna decide what to build and they're gonna get you that go-to market which you need, right? So getting great people is just critical. You told me about one actually mistake that you made on recruiting. Maybe we talk about that kind of mediocre hire and how that happened, and then how you think about recruiting today. How do you, as a small startup, yeah, you're doing well, but you're small. How do you get the best people on board? SPEAKER_01 36:52 Tier zero question. All of our time right now is spent on this, just to harp on this. Everyone is using the exact same endpoint from Anthropic. It's just like what you do, this endpoint, like how hard you work, what's your judgment on the product? I mean, that's that's the reality, right? Uh so I think it's it's all about the people. The question is like how we think about building it, you know, like what we look for. Pablo Srugo 37:13 Yes. How do you attract? What do you look for? And then how do you get and attract those types of people? SPEAKER_01 37:18 The main things that we look for is like incredible judgment, like raw smarts and judgment, because we want to trust the person, treat them as a founder, give them a ton of equity, and like give them chunks of the company to run, especially with LMs. I think that a person with great judgment that is hardworking is unstoppable. Judgment slopes slash like the rate of learning, how quickly do they learn? And we look at this throughout their career, but also throughout the interview process. Basic things like, you know, we can be with this person, you know, five, six, seven days a week. We are making a bet on folks that are early in their career. This is a very calculated bet that requires a big leap of faith, but also a technical investment because you have to prepare the code base for folks that are junior in their career. And there's like a lot of work that goes into this. But I think it's going to pay off for us because the competition for talent is insane. I lose people to the labs, which is a no-brainer. I can never compete with the labs. And then some of the best people want to start companies. And so I think that the supply of engineers is constrained, but the demand is quite high. Like there's 10 guys like me looking for engineers. So the other thing that we do is yeah, we place bets on folks that are coming out of school. And so I think that like at least the way that we're gonna build this company is gonna be a barbell. We're gonna have senior staff and we're gonna have folks that are possibly gonna be brilliant, but they're early. Pablo Srugo 38:37 Tell me a bit about attracting both. Like, what's your pitch? I mean, the pitch to junior, we can start with that is probably the easier one, which is like probably it just, hey, you want to come somewhere and like learn incredibly fast and just be tasked with way more responsibility than anywhere else, come here. I would assume that that's your pitch, but you tell me that's the senior one, that's the that's the harder one. SPEAKER_01 38:54 The pitch is I have a fancy story about you know how we're going to improve global GDP. And we're not pitching that. We're not pitching the mission at all. What we pitch is come and do your life's work with a very talented dense, ambitious group of people for meaningful relationships, work on tough problems, have maximum autonomy. That's what we pitch. We pitch the team, we pitch our DNA. I pitch a bit of my scar tissue and my experience that we're probably gonna avoid some common mistakes if I don't do anything stupid. Well, half of the team is second-time founders. Uh, people get along with each other. When someone visits us, they see in people's eyes. People are very passionate about the work. We do accounts receivables. This isn't, you know, Twitter or SpaceX. Pablo Srugo 39:39 But you know, what you're mentioning there, talk a lot about network effects. You used to talk more about it because it used to be like marketplace for the thing, but maybe talk about it less these days. But network effects are obviously a core remote. And I think the most powerful virtuous loop or network effect, whatever you want to call it, is the people you hire. Because if you get that right versus wrong, the delta on what you end up is massive, right? Even if you just you just think about it, you're like you're hiring your 50th person and you finally got somebody rock solid. They're amazing, and you convince them and you can pay them or whatever. And they come on board and they meet five, 10 people, they start working, they realize these are B-level people. That person is not retaining. That person will not last, they will leave, right? And then you think about the other side of it is you're hiring 50th people and everybody's rock solid. Not only is that person going to retain, but you're actually your inbound is going to change because your word of mouth from the people you have is going to be their peers. And so it's it's one of these loops that you have to work so hard to get right at the beginning, and it pays dividends for frankly years and years to come. SPEAKER_01 40:40 It's super well said, it's spot on. It's the number one is the network effect. People look at people four on the team and they think if they're impressive. It's not about the founders after like the first three hires. Also, like one thing that I deeply believe in is that a seven, like a seven out of ten, is actually one of the most dangerous hires you can make because this person will have enough redeeming qualities to shine and we will be very slow about letting them go. Maybe we won't. And over time they will shift the like gravitational pull of the company to just a bunch of sevens. Pablo Srugo 41:12 Did you make that mistake once? SPEAKER_01 41:13 Yeah, so many times. Because I was very desperate for help and or I misjudged or didn't have the right process, or it's just not a fit. Pablo Srugo 41:21 And the outcome is what? They just obviously, if there are three, you get rid of them in two weeks, right? But with a seven, I guess your point is they just stay for a lot longer than than they should. SPEAKER_01 41:29 I'll just speak for myself. I'd like to think that I'm hardcore, all these things. The reality is I'm not the good letting people go. Pablo Srugo 41:35 No one is, or very, very few people are. SPEAKER_01 41:37 It's just it's hard. It's hard. At least to me, it's very hard. I want to like look for a way to get a do a chance. I like to think that like all the mistakes have lessons. Okay, we made this mistake. That's actually a good thing. Can we just like remember this for future? It's this cartisha, let's learn from this. A seminal have enough redeeming qualities where outside of mistakes, like, oh, like George is not that excellent. But actually, this was like a good day for him. Like, this was like a decent thing that he said in this meeting, and this line of code is like pretty good. Like, let's see what next week brings. And so, enough redeeming qualities where those just stay forever versus like a five are gonna just fuck it up and then it's easy to fire, right? Running A Compressed Series A Process Pablo Srugo 42:15 Tell me just a little bit before we wrap up here, the series A bar has only gone up and up, right? I think the median series A is like three and a half million of ARR and 15 million series A. You raised a 25 million series A, which probably like 90th percentile, just in terms of size. Was that inbound preempted? Did you run a process? Like, how did that happen? SPEAKER_01 42:33 We ran a process, like I made slides and we just did it. I think that the number is large and we can discuss why it's so large. And that wasn't the intention, but and it ended up being large. I think this typically happens. Pablo Srugo 42:47 That wasn't the intention. That was gonna be my question. Do you go out and be like we need 25, or did you go out and be like we need 15 or something more closer to the median? SPEAKER_01 42:54 Yeah, more closer to the median. I'm not a venture capitalist, but my take on this is that if you come out for the A and if anyone's listening, should take Liz Randall. If you come out for the A and you say like low teens or like not even below a 10, it doesn't seem like you're ambitious and it just doesn't make sense for like VC math. I'm not the spendiest person. Pablo Srugo 43:17 We're actually like I don't disagree, but just to be clear, does that mean you go for 20 or do you go for 15? Like, what's what's what's your mindset? We went for 15. Yeah, I mean what what you're saying makes sense to me. Like I always wonder how the companies that are getting these 25 or 30 A's, how are they going? Like if it's preempted, it's different because then you just kind of like, well, it just happened. But if you go out, what do you do? Do you go out with 15 is the median, so like no nobody can say anything about that. It's like, listen, this is what's have this is the market. It's 15, so I'm going for 15. I think you're right. If you go for 10, then it just the this nuance is like, well, if 50% or more raising 15 or more, why do you not think you can do it? Right? So it's like, yeah, but you go for 15, nobody can blame you. And then maybe with you know momentum and FOMO, you kind of get to 2025. SPEAKER_01 44:01 If you want, but my take is that it means absolutely nothing. In my heart of hearts, you know, how much you raised or what you're valued at means very little. I agree. I wouldn't optimize for like a large number. I mean, I feel a tremendous amount of pressure to deliver based on the numbers that were given. And and and we were given this mic to deploy it effectively. And so like having to just sit there is not it. Pablo Srugo 44:21 I think the only counter to that today, especially with something like what you're doing, but I'm seeing a lot of companies like this. I'm finding, especially if you have part of market fit today, you're also in a very competitive dynamic. Like you're rarely the only one, especially if you're at the app layer. And so, you know, I don't know that if you have 25 and they have 20, it means you win. It doesn't, but frankly, if you have 25 and they've got 10, it does give you an extra edge, more events, more go-to-market, more everything, right? SPEAKER_01 44:45 Yes, agreed, spot on, agreed. It helps with everything. Also, we talked about this earlier, but like great people are expensive because of the labs because there's so much money. And so there's a lot of money, there's a big amount of money chasing a finite full of people, and so salary is a bit up. You need the cash. Pablo Srugo 45:00 So did you run a full process? Did you meet like 500 VCs or how how fast was that? SPEAKER_01 45:06 Yeah, I 50 VCs in like two weeks, try to compress it, stop coding, stop selling, just like super aggressive, try to do as much as I can in as little time as I can so I can get back to work. Pablo Srugo 45:21 Uh, and I found that if you compress it, it helps. Listen, George, thanks so much for jumping on the show, man. This is this has been great. I think we covered a lot. I think we delivered a lot of value for founders. So thanks for sharing all that with us. Of course, no, thanks for having me. Thank you about the law. You remember like the first person who told you about Bitcoin? The first person who told you about Uber. You want to be that person because being first is cool. So be a cool person and tell your founder friends. Send it to them on WhatsApp, put it in a WhatsApp group, put it on a Slack channel, let people know about the show, let people know about this episode. Don't let somebody else beat you to the punch and share it with your founder friends first. Remember what Ricky Bobby said if you ain't first, you're last.