Michael Kravshik, Founder of LumiQ | How to Pivot to Product Market Fit

Michael 0:00 I look at product-market fit as a spectrum, but there is some line of cutoff that goes between this is sustainable and real versus this isn't. Pablo 0:10 Welcome to The Product Fit Show, brought to you by Mistral, a seed-stage firm based in Canada. I'm Pablo, I'm a founder, turned VC. My goal is to help early stage founders like you find product-market fit. Today we have Michael, the CEO and Founder of LumiQ, which is a platform that provides professional education for finance and accounting professionals through podcasts. They're based in Toronto, and they have about 60 employees. Michael, it's a pleasure to have you here on the show. Michael 0:41 Yeah, great to have – sorry. See, look it, I'm falling into my own trap. I'm usually in the other seat. Pablo 0:47 That’s right. Michael 0:48 It’s great to be here, Pablo, and actually, you've been on our podcast. Pablo 0:51 That’s right, so it’s full circle. Michael 0:52 This really is a – where the tables are turned. Pablo 0:56 Me and Michael, we were founders at the same time. I had GymTrack before, which is in the wearable tech space. He was working at a company called GestureLogic, which was also in the wearable tech space so going full circle many different ways. Today, what we're really talking about is how to pivot. One of the things I always admire about Michael because this is – even back to the GestureLogic days was this – I think, once you landed on this product-market fit concept, you just latched onto that as the essence of early stage and that – everything on early stage about getting to product-market fit. Then, when you moved off and started what is now LumiQ, which was Luminari early on, that was always top of mind. Ultimately, as we'll find out, Luminari worked but didn't work to that level, and you ended up finding something else, which is LumiQ, which really has taken off. That's really what we'll be talking about today. Maybe just as the first question to set context is take us back to those early days when you were starting Luminari and what that was like. What is the origin story there? Michael 1:56 Yeah, V1: Origin Story of Luminary Michael 1:57 sure. My co-founder, Adam, is my best friend. We decided we wanted to start a business together, but we didn't know what that business should be. We came up with a bunch of kooky ideas, and we just tried to validate them. As you said, going through the previous startup experience, I recognized just how, really, everything else actually doesn't matter. If you don't have product market fit, all the rest of the stuff, every business plan, every investor meeting, every – anything else you can think of is just irrelevant. When we came up with a bunch of these ideas, the first thing that we did was we started talking to people about them, and very quickly, we devalidated a whole bunch of them because they were in retrospect really silly and wouldn't have worked. What we first landed on – because I think this is —it's taking a little bit of a tangent, but I think it's really related to what we're talking about was it was like a mentorship kind of platform. We spent about four months trying to validate this thing, so we spent a good chunk of time on it. What was interesting there was that we had this perception. It was a two-sided marketplace, right? You had the mentors and the mentees, and we had the perception that if we could get the mentors on board then the mentees would be easy. Who wouldn't want to have mentorship from these great professionals? As we started to try to validate it, we kept on hearing that the mentors were down. I’ll save the long explanation of why our business model was unique in all of that, but we found that the mentors were down. Then what we did was we’re like, great, this is going to work, and we did all of those things that I mentioned that don't matter. We started building business plans, and we started navel gazing about 20 years down the line what this business was going to look like. Then, finally, we decided, well, we really should confirm our belief that the mentees are going to be down with this, and we were wrong. Pablo 3:33 Full silence, yes. Michael 3:33 That was definitely, for us, kind of – when we recognized that we were so wrong on that assumption, it was the valley of sorrows for us. We had spent four months full-time working on this, and we realized that we didn't have anything. We just decided, okay, well, we're going to take one more kick at this can. It actually came out of those discussions with the mentees where we talked to them, and they'd say, well, we don't really care about what job we get. We just want to get a job. Now, looking back on that as an experienced professional, that's a really silly way to look at it, but that's probably how I thought about it when I was a kid in university or whatever as well. That got us on to jobs, and we started going out. My co-founder was a marketer by background. I'm an accountant by background, a CPA. We started looking at these two industries and tried to understand if there was an opportunity in helping people get jobs, and we thought that there was from the early validation work that we did. We really started to feel like in accounting there was this great opportunity, and the unique approach to it was that it was more about targeting passive candidates, people that weren't actively looking for a job. Again, I'll spare the long explanation. Pablo 5:00 I'm curious. What does that look like? When you talk about you looking at jobs and you're validating, is this – how much of it is market research and how much is it is just one-on-one discussions with accountants and firms that might hire accountants, those sort of things? Michael 5:14 Almost entirely the latter rather than the former. Market research, I don't even really know how valuable that is in the early days. Of course, that depends on how you use that word. I mean, you could put the other category of things into that definition as well, but for us, it was going and talking 500 One-On-One Discussions Michael 5:31 to CPAs. At the end of it, we ended up having over 500 one-on-one conversations with 500 different CPAs. Then we'd also talk to the other side as well, the hiring managers, about what was broken with the hiring process? What did they like? What did they not like? What we landed on was this idea of passive candidacy, that for a long time you're in a job and you don't really know what you want. You'd be open to window shopping, if I could use that word. You're not going to spend a huge amount of time on it because looking for a job is a very time-consuming thing. We figured, well, if we can figure out a way to just kind of poke people with very relevant job opportunities on an ongoing basis, then we could create a really valuable tool because this would reach candidates that a LinkedIn job board or an Indeed job board wouldn't reach. Those are only the people that are actively looking. At the same time, it could actually lead to better outcomes because these candidates would see – jump at a job that they were really excited about rather than when they get fired or they hate their job and they just need to get out of it, and you just kind of take the first thing that you see. This is what we found – I mean, all of what I'm saying now, this is some of the conclusions that we drew from talking to all of these people. I'd say the biggest insight that we came to in accounting through this process of interviewing tons and tons of CPAs was that most of them didn't know what they wanted, but they did know what they didn't want. We actually set up our system that way where you'd go – there's only a certain world of jobs that exist within accounting and finance, so if you can tell us the things that you don't want, we can probably get pretty good at telling you what you do want or at least putting something in front of you that might be interesting. I think we succeeded to an extent in, in that case. I think that, when you look at that process of interviewing people, it's not really about the specific answer that they're telling you. Do you like this, yes or no? It's about understanding why they feel that way, and that'll help you make better decisions about your product as a whole. The analogy that I like to use here is my wife hates the rain, absolutely hates it. Even if it's just like sprinkling a little bit, if she's outside, she will just be sad. You can see the misery on her face. If I want to develop a product experience for that target market and I go, well, let's have a walk on the beach, that sounds great, but if it's spitting a little bit outside, no-go, right? For other people, that might not be the case, but for my market, that is the case, in this case my wife. I try to understand the underlying – if I just know – if I put a, hey, let's go on a hike and she sees a picture of somebody hiking in the rain and goes, no, I don't want to do that, I might go she doesn't like hikes. It's like, no, that's the wrong insight to glean from that experience, so it's really about digging deeper. It's asking that why question. It's like being that annoying kid on Looney Tunes that would just always ask why, why, why, why? You really want to dig into why they feel that way, and through that process of talking to so many CPAs, that really helped us build what became Luminari. Maybe I'll stop there. Pablo 9:00 Just one question there. Yeah. One question is just why so many? You wouldn't be the first person to talk about customer discovery, obviously, on the show because it's so important, and I'll flag it. If I think back, actually, to the successful companies, the most common thing is just how much customer discovery they did. That doesn't carry through the non-successful companies that I may not have put on the show, but I would've talked to as an investor who just skipped through or just glean over that phase. Now, in your case 500 – maybe it was 300 or 600, whatever, but hundreds of these interviews, that's a big number. Don't you just at some point – like after 30, you kind of know, okay, this is the thing. What are you learning at the hundredth interview sort of thing? Michael 9:43 Yeah. If you think about it this way, for each one of these interviews, we'd go in with a questionnaire or like a – not a script so much because you want to let the conversation go the way that it goes, and you want to be able to dig in and ask those deeper why questions. We'd have a number of things that we want to cover, and what happens is, after you talk to, let's say, the first 10 people, you get the same answer 9 out of 10 times. You can probably be pretty sure that you have a pretty good sense of what that is. Now, there are a bunch of questions where you're going to get answers all over the place, and then you don't feel very confident that you have an understanding of what people feel about that. Leave that aside for a second. The ones that you do, 9 out of 10 or 10 out of 10 say exactly the same thing to you, you go, okay, I can confirm my understanding here, and now I'm going to move on to the next question, the next deeper question. When we started the process, it was really high level. It was like what are your pain points around looking for jobs, or on the other side, when it comes to the hiring managers, what are your pain points in hiring? As we got a sense of those things at a high level, then we started testing our ideas for solving that problem. Then it was like, okay, well, how about this concept or that concept? We’d go through this iterative process. It’s kind of like build, measure, learn from Lean Startup. I guess, instead of build, measure, learn, it's like ask, understand, and then learn. Then you go in that same cycle over and over again. If you think about it this way, you're starting really broad. Nobody can see my hands right now, but they're wide out. Then you get narrow and narrower and narrower with each new set of questions. Literally, it was over 500 people we counted because we were doing these things 9 or 10 a day in a row, like a half an hour, boom, boom, boom, the next one after the next one. It was a brutal couple of months. Pablo 11:41 Let me ask you just on that on that piece. This is the thing, right? You have to ask yourself why do so many people skip this step, even though they're – generally speaking, most founders are just pretty smart people and the idea of research makes sense. What I have to ask you is how painful is this point? Here's the thing, people love to build. I mean, it's much better. I think there's some – as a founder, I think it was Mike [inaudible] that said the thing about it is you want to be in a position where, if somebody says, hey, what are you working on – people ask, what do you do for a job? Where do you work? You could tell them, oh, I'm building this product. I've got this thing. When you're in that mode, you're in this weird research like I'm not doing anything. I'm just asking you a question. How painful is that process, and how do you get yourself to stay in it for as long as you need to? Don't Skip Research Mode Michael 12:20 That’s a hard question. I mean, it is very painful, and I think the reason that I put such an emphasis on it was my experience at the previous company where we didn't do that enough. When we actually did build a product, nobody cared. Then I started doing this in – this was in cycling. As you know, Pablo, we were focusing on cyclists, and we were doing a wearable tech product. What we found was that the output that we were giving them – I mean, these were scientists and engineers that are like you know what would be really interesting to know is this random number, and then you put that in front of a cyclist. They're like this is useless for me, but as you started talking to them more and more – I'll give you an interesting example. The engineers came and said, well, we can tell you exactly when you’re applying the most pressure on your pedal stroke, for a cyclist. I'd go and I'd show them this. They'd say, this is totally useless, but as I continue to talk to them, what I learned about cyclists is that something that's really important is what they call the dead zone, which is the place in the pedal stroke where they aren't applying any muscular strength, either quads or hams. What they try to do is reduce that to as close to zero as possible because you want consistent pedal stroke so that it's very efficient from an energy perspective. These are guys that are going on six, seven hour cycling rides up and down mountains. Conserving energy is incredibly important. We had all the inputs to do that, but the output that we were showing them was useless. By just changing the UI, all of a sudden that became the killer feature of this company that didn't end up – we didn't end up being successful in that case for – mainly because the technology wasn't reliable enough, but that feature, every cyclist, you could see it on their face once I'd show them that. Here's where you're pressing the hardest, and they'd go, meh. Then I'd say, here, I can show you where you're – not only how much you have of a dead zone but where it is in your pedal stroke, and their face just lit up. That experience of seeing the palpable reaction from the users made me recognize just how important that is to the success of a product. Even though that company didn't succeed for other reasons, that experience stuck with me so intensely that I recognize I need to be able to create that face on people when I show them my product, and in the case of Luminari, we actually did have that from one side of the marketplace. The problem with Luminari ultimately, I know I'm skipping ahead on the story a little bit, is that we didn't have it as much on the other side of the marketplace. Pablo 15:07 It’s a good segue. Let's go to that. You're having interviews, obviously, on one side, the applicants. You're having interview on the firm side. What's that like? You talked about some of the learnings being that people don't really know what they want and they want to be passive. They don't want to spend a lot of time. That's on the applicant's side. What were some of the learnings on the other side of that marketplace? The Devil is in the Details Michael 15:26 I mean, you know, some of the things that we didn't figure out until a little bit later were just how important integrating with their current tech stack is. When you go and you talk to a big company that's hiring a lot of accountants or anybody, they've got an LMS, a learning management system in place. They have their standard process for screening hundreds or thousands of candidates. By being something that was outside of that ecosystem, it made it incredibly difficult to convince them to use us, and so we started going after smaller companies, SMBs that didn't have processes in place. That was where we got some success. I mean, the thing that I would talk about or I would like to say about Luminari is that we were in probably the worst place when it comes to product market fit. When you have no product market fit, it's obvious. When you have real product market fit, it's obvious. Where we were was kind of in this gray area where we had just enough product market fit to fool ourselves into feeling like it was enough and feeling like if only we iterate a little bit more. If we just tweak this, or change that, or do this, we're going to get all the way there, but it wasn't ever enough. We built an okay business doing that, but it wasn't scaling or growing in the way that we wanted it to be a real startup. Pablo 16:51 That's the million-dollar question I get often is how do you know when you should keep doing this? Maybe the next feature will cure it and get us there versus the let's just start over and look at something else, especially when you have some traction. Again, it's easy on the extremes. As you were going through that, what were some of the signals you started seeing that told you, you know what? It's not about this next feature, this next thing? It's more of a restart. Michael 17:16 Yeah, I mean, this is the million-dollar question or the billion-dollar question because it's incredibly challenging. I would say that there are – okay, there are a couple of things. Number one and this is the thing – this really pissed us off when we were on the other side of this, but I'm going to say it anyways because we recognized how true it was now that we're on this side of it, which is you know it when you see it. We were like, well, we see some of it. It feels like we're pretty – that means no. That's really hard because you're seeing all these positive indicators that are pushing you towards yes, but it's not a yes. Again, I don't think that there's a rule there. It’s this feeling that started bubbling up the more and more that we were – I mean we built that business, Luminari, for two and a half years before we really decided to make a big change with the mentorship platform that I mentioned. I mean, it was pretty obvious. There were probably some entrepreneurs that didn't have the benefit of my experience at the previous company that would've pressed on with it and convinced themselves that it was great. I mean, this is one of the big challenges is that you kind of get married to your ideas. You fall in love with them. You believe that they're amazing, and just because your mom thinks it's really cool, that doesn't really matter at the end of the day. Pablo 18:40 To be clear, you got – Luminari got to what, half a million, a million in revenue or so? Michael 18:46 Yeah, we were three-quarters of a million. Pablo 18:48 It was a real – I mean it was an ongoing thing. You had real customers. People were getting true value. Michael 18:53 Yeah. Some of those key metrics that you would look for – I mean, the one in Luminari’s case, it was return customers. We have customers that even had, literally, the optimal experience. They posted on Luminari. Within a week, they got a bunch of really great candidates. They hired somebody that they love, and the next time they went to go look for a new person, we wouldn't get the call. The funny thing is is it wasn't like they were saying, well, we didn't like the experience, and we don't want to return there. It's just they just went through the regular process like they always do. It's just a habit. Oh, we’ll put it on our LMS. It'll go onto Indeed. It'll go onto LinkedIn. We just couldn't really break into the mindset in that way. The product experience wasn't wow enough for them to push away their old experience. You know what I mean? I mean, there's different definitions of product market fit. One of them that constantly comes up is is the market pulling for your product? We were pushing. It wasn't being pulled. Pablo 20:01 That's the other thing about Luminari. I know the company well enough to kind of think this is. It makes so much sense. A, looking for passive candidates as a firm just makes tons of sense. B, as a passive candidate it makes – I'm still wondering why didn't it work? Now, you've been far – you've gone a few years moving onto this new platform. You have time to think back. What really is the thing that never got it to truly take off? Luminary's Failure to Take-Off Michael 20:28 There's a lot of different answers to that question, I'm sure, and probably some that I'll never really know the answer to. A couple of things that come to mind are, number one, like I said, people get into this process – and the process of hiring, usually what people do is they're not backfilling. What they're doing is Susie quits and it's like, shit, I need to replace Susie immediately. I'm just going to try everything I can as quickly as I can. It's not really a deliberate, thought-out process. That's what happens at smaller companies. At larger companies, it's this very deliberate, purposefully thought-out process that is very hard to break into. For both of those groups of people, it became really challenging for us to sell into them. I think, also, it comes down to that pull factor. Yes, when they posted on Luminari, they would get good candidates and they might hire somebody and that would work and that was great. That experience wasn't 10x better than what they're getting somewhere else. It was maybe 2x better. That's still better and we still got a lot of people to pay us for it. Yeah, I mean, I think those are probably the two main things. Pablo 21:48 That's helpful. Michael 21:48 Again, I'm not sure I even know all the answers. Pablo 21:50 Maybe fast-forwarding a little bit, you're getting there. You got three-quarters of a million revenue. Things are going, but you're starting to feel like you don't have that pull. What do you start doing? Is it still pre-pivot? What do you start doing or what insights are you starting to gather? Michael 22:04 It's going to make you laugh, but 500 again. That was literally what we did. I don't know why that number ended up being the number, but that was roughly what it took for us to be very confident about Luminari. That includes after we started building it and we put early versions of it in front of people and watched them click through it and stuff like that. That iterative process really brought us from vague idea all the way to specific solution. So we went back out and we started talking to accountants again. We started at broad. We said, “Well, okay, what are your pain points?” A couple of different things came up. The one that ended up sticking was professional education and the pain point around that. There were, at the time, I want to say something like eight to ten ideas that we were playing around with. We actually started to execute in little ways on some of them. Some of those things ended up rolling into what LumiQ became. As an example, people wanted to hear from experienced finance professionals, so we started doing a couple of live events. We took the Sam Altman, do things that don't scale mentality. We said okay, let's try this out. It'll, at least, build our community. Maybe it'll help our sales on Luminari and we'll learn more. That was really successful insofar as live events can be successful.It's really hard to build a big business on live events. There's a lot that goes into that. It's not a software business. There were a number of these things. We went out. As I said, we did product market fit interviews. Internally at LumiQ, we use PMF, product market fit, not just as a noun. Is that the right way of saying it? We use it as a verb. We say we're going to go PMF somebody, which means like we're going to go interview them to try to understand what they think about a product or the feature or whatever it is. We PMF'd another 500 people and we went out. Some of them were the same people. Beauty with our market is that all the CPAs actually put it in their title on LinkedIn. So we just go and add thousands of them to LinkedIn and reject them. People are very nice and generous with their time. Over and over again, as we were going through this, we took those eight or ten ideas that we got from that first round. You said well, why 500? The first probably 25 to 50 of them were, what are all these eight to ten ideas? Then the next probably 50 of them were, let's whittle down these eight ideas or ten ideas to two or three ideas. Then the next 50 of them were, let's whittle down that three ideas to one idea. Then the next, whatever's left, 350 of them were, okay, now that we know that professional development is what we want to focus on, what should we do in that space that'll actually solve their pain point? It's this iterative process of going broad to narrow. Pablo 25:12 Here's maybe an annoying question. I'm sure you've thought about it. I'm curious what the answer is. You went through 500 interviews of CPAs in the early days. You came out with Luminari. Then you did another 500 interviews, and that worked. Then you did another 500 interviews and you came out with LumiQ and it really worked. Why didn't you come up with LumiQ in the first place? I mean, what happened? Could that have been skipped? Or was that actually a critical part of the discovery process, so to speak, is just to be in the industry? V2: Insights That Led to LumiQ Michael 25:38 Yeah, it's a good question. Maybe this is me just justifying it to feel better about it all. In retrospect, I look at it and I go, one of our key competitive advantages as a company is that we just understand our market better than, I think, pretty much anybody because we spent so much time with them. The wife example that I gave you, I know what my wife wants. I've spent enough time with her, talked to her enough that even if I don't gauge her opinion on something, I can probably take a pretty good guess as to whether she'll like something or not. So if you think about that, how well do you know your significant other, or maybe one of your siblings or your best friend or whatever, and you understand all of those interactions that led to you understanding that I know that Pablo's probably going to enjoy Thai food more than he enjoys, I don't know, hamburgers. How do I know that? Just from spending all that time with you. I probably don't even need to ask you. If I say hey, you want to go to that Thai restaurant or that burger shack, you're going to say that Thai restaurant. So you can start to actually skip some of those steps. Why didn't LumiQ come up in the first place? I think primarily because we were – in the Luminari days, we were already focused on solving recruitment. So we were trying to solve that problem and all of the questions were very specific to the recruitment process. At no point did we say well, what else are your pain points? That's probably the biggest mistake we made back then. Some founders start with this is the problem I want to solve, and then they go at it. We weren't really like that. We got ourselves into that trap through the whole mentorship platform and the path that I mentioned. Pablo 27:33 Well, that's the question, right? It's almost a philosophical question, because if you look at the Steve Blank stuff, it is like you're supposed to have an epiphany and then you go out and you test that against the market. If you look at Lean Startup, it's always post-epiphany. Before that, there's this research mode element to it that I talk about a lot. I guess the question is, how broad can you go? Can you really go to 500 CPAs and say, hey, tell me what your day's like; what are your big problems? Then you come out with LumiQ? Do you have to go with some opinion and test against it and maybe “waste a bunch of time” building something that's not – do you think, knowing what you knew back then, which was very little about – you were a CPA but you weren't in the game selling to them, but you could have just gone super broad and professional education would've just come out? Michael 28:22 I do think so, actually. I think had I asked those broader questions right from the start and if I wasn't blinded by my own biases – that's one of the biggest problems with PMF'ing people is that you walk in with your own biases. Actually, the cycling product that I mentioned, one of my greatest strengths in that experience doing it was that I knew nothing about cycling. I was not a fan of it. I know how to ride a bike. I like riding a bike, but anybody who cycles will tell you that riding a bike is not cycling. Those are two different things. I didn't know anything about the sport of it and what these people care about. So I was a total blank slate. That was actually an advantage. Now, there's a different advantage by being an expert. I don't know if I'm really an expert in accounting, but I am an accountant. I had a personal experience, which made me biased in some ways and not. The nice thing was my co-founder isn't a CPA. Between our two perspectives, I think we could build that. The short answer to your question, yeah, I think had we been more broad, we probably would've come to this faster.. Pablo 29:34 Now you are where you are and professional development comes up. What's your next step after that? The First Step: Identifying Pain Points Michael 29:42 I think the first step is always what are the pain points? I think that's the best place to start, because people don't buy new products because something is slightly better. People buy new products because they're pissed off at their current product. Why did I switch to Mac? Because I had three PCs in a row that broke down and were stupid and annoying. I was like, there's got to be a more reliable computer out there. I was like, okay, I'll incur the switching costs to go to a Mac. Now that I'm on a Mac, I've never gone back. I think pain points is the place to start. Ask people what pisses them off. The nice thing, I tell this to everybody in on our team that's going out and doing these kinds of sessions, is no matter what language anybody speaks, everybody has the same favorite word. That favorite word is their own name. Everybody likes to hear themselves talk. Everybody likes to feel valued. Everybody likes that. By going to people and just saying, hey, I want to hear what you think. Your opinion is incredibly important to me, people are very receptive to that. By going there and then doing the second best thing after that, which is asking people what pisses them off, you'll get a lot out of that because people are not shy about what bugs them. Pablo 31:01 So you figured that out. How do you come to this, getting closer to what LumiQ is today, which is this kind of passive podcast type, fun way of getting professional development? Michael 31:15 Well, when we went and asked those questions, what are your pain points, generally, two things came up. It's boring as hell and the way of delivering it was just stuck in the '90s. Most professional education is either in a classroom which has different benefits, obviously, of being in person. It's kind of old school classroom lecture style stuff, or it's on a '90s-era webinar platform. I'm sure anybody who's had to do any of this stuff, this will resonate with them. Generally what people would do is they'd bring it up on a screen, they'd press play, they'd forget about it, come back an hour later and try to answer the quiz questions to get their credit for it. Now, of course, all of them are coming up with sneakier ways to do it where they ask you questions in between to make sure you're paying attention and stuff like that. We figured okay, if we can solve the delivery mechanism point – that's not really innovation. We love podcasts. We thought podcasts are great because you can do them when you're doing something else and you don't need your eyes or your hands to do it. So let's try podcasting as the way to solve that pain point and have a modern mobile platform and all the things that people in our industry just don't have. If you look at our app, it's a hundred times better than what you see in our industry, but it's roughly the same as you would expect from Spotify or Apple. We haven't reinvented the wheel there. On the making it interesting and – I mean, I should say it the other way, which is really what it is: not making it boring, start there. That was the baseline. Then it's like, can we go even higher than that? That was a harder challenge to solve. We spent a lot of time trying to understand what would it take to make this not boring? The other piece to this is the accountants are the ones that suffer through it, but they're not really the ones that pay. What did the discussions look like with the true customer, which I guess is the company that hires these accountants most of the time? That is true. Now, as we've gone upmarket to more enterprise companies that have L&D, learning and development, full-time people that are responsible for that, that is a bigger challenge. When we started, we started going after small/medium businesses. Who's making the decision? It's the director of finance, or the VP of finance, or the CFO, or somebody even more junior on the team that has been given the responsibility of finding a professional development provider for them. What's interesting was that almost every company supports their CPAs or other designated accountants in their professional development, but very few of them have a company-wide solution. Mostly it's like, go out, do whatever you want, come back and expense it to the company. The budget line item was there, but people weren't used to buying it as a team. So that was one of the things that we really pushed for was get it for your team because this is a great team tool. That was very successful, as it turned out. The basic answer to your question though, was that we made the product awesome. Once they tried the product, they were the buyers. It was easier selling in that way. I think the last thing that I'll say on that is we've always bet on our product. The one thing that we have, I think, really internalized is if the product is great, then people will want to get it. That's where all of our focus goes. Our sales pitch and everything, usually it just revolves around us demoing the product and getting people to try it. Pablo 35:12 To be clear, and specifically in those early days – I know it's different now. The accountants who would've loved the product and tried it, they would've paid and then expensed it? Or did they get their company to do it? Michael 35:26 Some of them do that but by and large, it's the other way. They like the product so they buy it for their team . We get in touch with the VP finance of XYZ Corp. Pablo 35:37 Oh, right, because they're users as well. I get it, okay, yeah. Michael 35:39 Exactly. Pablo 35:39 That makes sense. Michael 35:39 Yeah, exactly. Pablo 35:41 Alright, perfect, so how does that launch go once you have something that's sellable? First of all, did you pre-sell it? And then how did that all go? How did launch go? The Launch of LumiQ Michael 35:52 We didn't really pre-sell it. We recorded, I want to say, 15 or less than 20 podcasts. So there wasn't much on there. We released a little beta. We did it for, I want to say, two months. We put it out there. It was crummy. The UI was terrible and all of that, but it worked. You could go on an app, you could press play and listen to a podcast. In that two months, it was just that palpable response where you can just see it. Again, I'm going to be that annoying person and say you know when you see it. It's like you can just see it on people's faces and the way that they responded to it. They were passionate about it. They were energized by it. And they were like, oh, this is amazing. Oh, I wish I could get all my hours this way. You hear those kinds of things. So then we built the full product. We were still running Luminari, the job board, throughout all of this. Once we launched the full product, it was immediate. We were going and making $20,000 annual recurring revenue sales in two half-hour meetings when it used to take us five of those meetings to sell like a $800 job post. I was like, whoa, this is such a better business. Pablo 37:17 Did you shut down Luminari at some point, or do you still have it? How did you think through that? Michael 37:20 Yeah, no, we did. We kept Luminari going throughout as we were building. Originally, LumiQ was supposed to be an add-on to Luminari. One of the things that I should say is we weren't ballsy enough maybe, if I'm allowed to say that, to go and just shut it down and totally pivot. We built up LumiQ and we were testing out some of these other ideas at the same time. It was a process. It wasn't like a binary on or off. We still had Luminari running until about, I want to say, five months after LumiQ launched. After we launched LumiQ, in our first six months, we got to half a million in recurring revenue which was almost as much as Luminari had done in three years. It was better customers, easier sales. And on top of that, there's just an excitement around the product from our own perspective as well. I'm a big nerd. I love learning. This is really fun and cool. I get to interview people on a podcast and that's now my job. Isn't that cool? All of this came to fruition. We were like okay, it's time to shut down Luminari. Pablo 38:31 Perfect. Okay, well, that's probably a pretty good endpoint for how to pivot story. The last question I'll ask is when did you know that you had true product market fit? The Product Market Fit Spectrum Michael 38:45 I look at product market fit as a spectrum. There is some line of cutoff that goes between this is sustainable and real versus this isn't. Luminari was farther along that line, for example, thank the mentorship platform, but hadn't crossed – sorry, farther along that spectrum, but it didn't cross that line. I think the first version of LumiQ – how we knew we'd crossed that line – and again, I feel annoying saying it, but you know it when you see it. You see it on people's faces. They smile when they talk about your product. You can hear the elation, even if you're not looking at them. You know you can hear a smile on the phone or over a podcast? You just hear it. You know it. You're like, wow, oh my God, people really, really love this product and this idea and this concept. I think what we've now been doing over the past three and a half, almost four years since launch is we've just tried to push it farther and farther along that spectrum. There is some line that's the difference between knowing it because you see it and not being really sure. I would probably suggest, as I said earlier, that if you're not sure, it's probably a no. It's like dealing with a VC. They'll give you a slow no. They're like, well, maybe not now. That means no. It doesn't mean maybe; it means no. It's hard to accept that sometimes, especially when you've poured your life into something. It's a no and that's okay. It's better to get a fast no than a slow no. Recap Pablo 40:17 Perfect. Well, appreciate all that. Just to recap, you started off, actually, at Jester Logic, learned really the value of product market fit. You took that into your startup and you worked through a few iterations and mentorship platforms for a really short amount of time, Luminari for a much longer amount of time and got some real success, but never crossed the line of true product market fit as you call it. You kept iterating. I think you kept searching. You just never really stopped searching for product market fit. You never put yourself in a state where, okay, this is the thing. We're just going to put our head into the same sort of thing and just drive it as far as we can. It was always what's more, what's more, what's more Michael 40:51 until you really felt that you got to the other side, which you did with LumiQ, and ultimately shut down that other product and just went all in on this. And that product, that platform that you've built has just continued to grow ever since. I'll mention you have raised some money, but you've gone into where you've gone on little funding. This is just true customer value that's moved the business forward more than anything, which is awesome to see. So thank you for taking time – [Unclear] more than anything. Pablo 41:23 [Unclear] more than anything. Michael 41:25 The last thing that I'll say, just to end on this, is that this process is not over. We are still PMFing customers. My product team, one of their OKRs is 15 of these every month at least. This is just an ongoing thing. We continue to invest in it because no product is perfect. Things change; people's desires change. We have new market, new segments of the market that we're going after, whatever it is, new features that we're building. We're doing this for our content. We're doing this for our product. It's ongoing all the time. Pablo 41:59 That's perfect. Again, that is something that I've heard before but is not well understood, which is product market fit isn't a zero to one. It's not only a spectrum but something you got to keep – every feature has product market fit. Even if you've not launched some features, the market's changing. Just time alone demands you to continue to test product market fit. So thanks for that. Thank you, Michael, for taking us through this, super helpful. Michael 42:22 Yeah, thanks for having me. And if anybody is interested in checking out more, it's lumiqlearn.com, L-U-M-I-Q learn.com. Pablo 42:30 Thanks so much for listening. 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