How to Pivot | Rob Boukine, Founder of Noibu

Rob (Guest) (00:00):

I remember how those words made me feel: nice to have didn't make the budget. And I swore to myself that we're never going to work on an idea or a product that was a nice to have and became absolutely obsessed with that. There was nothing else important. We didn't have an ego, we're just like, "We want to work on an idea that is an absolute necessity for these."

Pablo (Host) (00:18):

Welcome to the product-market 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 Rob Boukine the co-founder and CPO at Noibu. It's great to have you here, Rob.

Rob (Guest) (00:38):

Awesome, Pablo. Thanks for having me looking forward to talking about PMF, love this topic.

Pablo (Host) (00:42):

The crazy thing is you've gone here, fully bootstrap, as far as I understand. And I believe, and correct me if I'm wrong, that about two years ago, you and your co-founder Kailin were running effectively a completely different business. You had maybe a few dozen customers and, from what I recall, very little revenue. And then you decided to pivot and since then, everything's changed. So now, we'll dive into this pivot quickly because that is ultimately the core theme of this episode here. But just to provide enough context, so listeners can really understand what was happening. Maybe let's go back in time a little bit and talk about the old Noibu for a couple of minutes. When did you originally start the original Malibu, and what was it about what was the origin story?

Rob (Guest) (01:31):

Our first product, which ended up becoming a virtual shopping platform where a retailer can basically sign up to the software subscription, get their store 3D mapped, and then you can walk in that store and basically shop off the mannequins, and it's kind of like you're inside that store. And we really struggled with that product for quite a while. Early in that product, probably halfway through that journey, we actually recruited our third co-founder, Filip, Filip Slatinac, who became our CTO. And we got it up to, I think it was eight paying customers, 3K MRR, but it was an absolute grind. I think we were two years in and that's the only traction we got. We weren't paying ourselves, we didn't have any money, and it was painful. We were working long hours, and we weren't really seeing much traction. 

Rob (Guest) (02:27):

 The whole analogy of pushing a boulder up a mountain, this mountain was vertical. It was insane. We're kind of lifting it, it kept falling down on us. It was pretty funny. So, we kind of grinded it out. We got to a point where, I think it was winter of 2019, where we had a proposal that for us at the time was pretty substantial with a pretty big retailer. And it wasn't legal. The retailer came back to us a couple of weeks after, I think. I remember the day, this was February 27th or 28th or something like that, 2019. And we got an email saying, "Hey we actually were reviewing our budget for this year, and we had to make some adjustments. You guys didn't make the cut because you guys are below that fold of a need to have.  You guys were a little bit of a nice to have, and we might consider you for next year."

Rob (Guest) (03:22):

And I remember how those words made me feel: nice to have, didn't make the budget. And Filip and Kailin and I, we swore to ourselves that we're never going to work on an idea or a product that was a nice to have. And we instantly, it took us a day or two to make the decision that we're killing this 3K MRR, we're shooting it between the eyes, and we're going to continue the Noibu journey in the e-commerce space because we got some network, we got some customers. And that's where we began our journey towards the pivot, which I'm sure you'll have some questions about.

Pablo (Host) (03:59):

That's super interesting. So, you're working on this, and I remember because I have known you for... probably since the beginning of Noibu, really.  I've seen this journey pretty closely. So, three years, really grinding it out, getting to, interestingly, nothing, right? I mean, you did have close to a dozen customers, a few thousand dollars MRR. And so, there was always something there kind of keeping you going. And then I remember when that deal fell apart. It really made you reconsider everything. One thing I'll just highlight here because I think taking out these themes is really important, and this is something I learned in my own journey as well,  gym track, which is, you need to be a number one or number two problem. You need to be solving that level of problem for your customer.

Pablo (Host) (04:40):

And it sounds to me what you're saying is that you probably already had an inkling that this was the case, but when they said it to you, as straightforwardly as they did it, there was no other way to look at it, which was, we are not solving a number one or number two problem. So, then at that point... first of all, how big is the team? Is it just the three of you, and what is the thinking? So, you get those news and at some point you end up pivoting, but what happens in between that time, where you get the news, and you're like, "Wow, I can't believe that deal just fell through because of that" and the pivot what's going on in the org?

Rob (Guest) (05:18):

So, it's myself, Kailin, who was responsible for sales and Filip, who was our CTO building the product, and then we had a co-op student, software engineering, and one full-time software developer. And I remember this vividly because we were working at the university of Ottawa incubator and our co-op and software developer were sitting at a desk with us, and then they would see Filip, Kailin, and I going into a room, kind of like a boardroom, to go and strategize. And all they would hear is us yelling back and forth at each other, in a friendly manner, but obviously stressed out of, "What are we going to do? Come on, we gotta, we gotta shoot this thing between the eye eyes."

Rob (Guest) (06:11):

And, I think we deliberated on... it took us maybe two to three days to weigh the pros and cons. And then we made the decision that, hey, we're going to be real with ourselves, we're not solving a 1, 2, 3 problem with any of these retailers. It's a nice to have, it's a vitamin, it's not a painkiller. And we're very much still motivated and have gas in the tank, and we want to build a legitimate business and e-commerce, but we need to get real with ourselves and work on something that's meaningful for our clients. At that point in time, we kind of took, I think it was a week or two to... maybe a full week where... and I played a good part in this, in terms of just researching how to do proper customer discovery.

Rob (Guest) (06:59):

What is the difference between a vitamin and a painkiller? What is a good start-up idea? What does an idea with product-market fit look like and basically consumed tons and tons of content to understand what was a good idea to pursue and stumbled upon a a few good resources. One in particular was Stanford lecture with Emmett Shear from Twitch. And he basically did a deep dive on how to conduct user interviews and how to validate your idea. And there's one thing that really stuck out there, it was the process of validating a student notetaker, and he actually brought a student up, and he mentioned to the student, "Hey, okay, let's do some discovery on this note-taking idea." And he basically walked through a few questions. And the main takeaway at the end was it seemed like the student doesn't really have much issues with taking notes.

Rob (Guest) (08:02):

There was a little bit of pain point, but the student wasn't getting emotional, they weren't getting frustrated, they weren't seeing a huge reaction from the student. And he's like, "That's when you know that you really are not onto something when people are not really getting excited about what you're talking about." And I find that really helped us through our transition to the new product and the new direction that we're taking, which I'm sure we'll get into in a little bit. But long story short, we spent a lot of time... it didn't take us too long to shoot it between the eyes because we knew we no longer want it to struggle with an idea that didn't have product-market fit or didn't have potential towards getting there. And we basically committed to working on something that was an absolute necessity and need to have and became absolutely obsessed with that. There was nothing else important. We didn't have an ego, we're just like, "We want to work on an idea that is an absolute necessity for these retailers."

Pablo (Host) (09:01):

That's great. And maybe let's take an aside here for a second, because I think in today's entrepreneurship days, this idea of lean startup is one that is well appreciated and the vast majority of founders are building an MVP, putting it out there as soon as possible, iterating Alec Reeves and Steve Blank, and so on. But one of the things that I see still missing a lot is really tackling what I call research mode properly.  So, the stage that you were at at that exact point was very much research mode. You abandoned your old idea, and you said, "I'm going to go figure out what's really worth working on" through genuine customer discovery. And I do find founders skip this step. My first question to you is, did you skip it with the original Noibu? And the second kind of follow-up is, what impact do you think customer discovery had on what Noibu is today? How important was that phase?

Rob (Guest) (10:01):

 So,  to answer your first question, we skipped it for the first product. Kailin and I had no idea what we were doing. We found a solution, and we started shoving a square peg down a circular hole, essentially. And it was a grind. We started with the solution. We were not doing proper discovery. We thought the product was cool and had a lot of innovative potential, very much buzzwords that you hear in entrepreneurship. And it was a fatal mistake. We basically struggled for two years or two years in a little bit because we didn't do proper validation and discovery. And I think that was more so a lack of experience as being entrepreneurs. And we almost had to make those mistakes, I think for at least for our journey specifically, to be able to understand what it actually takes to build build a company with a legitimate idea.

Rob (Guest) (11:01):

I don't think if we experienced that pain, and I'll speak only for myself, Kailin, and Fil, if we would have been able to have that drive to do the necessary research on how to actually conduct proper interviews and do the proper validation and discovery. I find for first-time entrepreneurs specifically like myself, I got very excited by the idea of entrepreneurship and building a company. And I just wanted to just get right in. Yeah, for sure, this idea will be good, let's just start building and working hard. And you can work really, really hard, but it doesn't really go anywhere. So, for your first question, didn't do any sort of validation or discovery user interviews, just kind of went for it. And two, for the new product, we did a ton of it.

Pablo (Host) (11:54):

So, you decided you want to do is pivot, you want to do customer discovery. What did that look like? What did you do?

Rob (Guest) (12:00):

So backtracking just a tad, we made the decision that we're shooting this product between the eyes, that it was a nice to have, the virtual shopping platform. And we're going to do an inline pivot. What I mean by that is we had a handful of customers inside of our grasp, which we were very fortunate to have. So, our approach was, let's leverage these eight customers that we do have, interview them extensively with a proper discovery process in place. And let's find out what are their top three pain points or top two pain points. And let's see if it's feasible to build software, to basically solve those pain points and see if there's a business there. So, that was kind of our thinking, let's stay in e-commerce we built a network, we built a good client list, and we had a good sales pipeline on the old product.

Rob (Guest) (13:00):

And the founders gained some level of of knowledge of the e-commerce space. And we basically created a a framework to basically go through these eight customers and put them through a series of two interviews. The first interview was very much designed to unlock certain insights and pain points that these retailers were having it. We had very open-ended questions and the goal was really to basically identify a potential idea to work on. So going into this first set of interviews, we had no idea that we would be doing error monitoring. It was actually discovered through this first set of interviews when a client actually began talking about that. 

Pablo (Host) (13:53):

What were some of the... do you remember some of the questions that you were asking just as examples?

Rob (Guest) (13:58):

Yeah. A hundred percent. So, that first set of interviews, some of the questions that we were asking were, obviously in the first part of the interview, "Tell us about your day to day. What does a day in the life of an e-commerce manager look like? What are your business objectives? How are you measured in terms of performance? Do you have a sales target for your e-commerce website? What is hindering you from achieving these sales targets?" And then we would drill very, very deeply on that particular question. That one was a really good one. "What's preventing you from hitting your targets or your business goals?" and people would go on and on and on. And we just continued, "Tell me more about this. Tell me more about this." Just so everyone knows, we were recording these interviews so that we can go in and dissect them almost like mad scientists after, and take out snippets and stuff like that.

Rob (Guest) (14:49):

So, that was a really good question. and then we would ask things like, "What keeps you up at night in regards to your business? Tell us about your biggest pain right now. What are the top two things that keep you up at night? What are the top two things that annoy you the most?" All are all open-ended questions that we would continue to dig upon in terms of understanding what are their legitimate pains and where we got excited was when they started getting really passionate or really deep into a particular pain point. And there was one client in particular. I'll give her a shout-out. Her name is Kenza, and she works at [inaudible] as the creative director. She was actually our first client on our old product. She really went deep in terms of her pains and her blockers to the business and unlocked this insight of errors and how errors prevent sales on e-commerce websites.

Rob (Guest) (15:54):

And she basically mentioned to us that this was such a pain. And, she didn't know how to code. She had customers calling in saying they can't check out, but it's just the complete gong show. And she knows factually that she was losing money from bugs and errors. So, we did the first set of interviews with the eight. We recorded everything. And then the three founders began listening to all of these calls, and we basically had three ideas coming out of those interviews. The first one was a pain point of error monitoring or errors specifically causing lost sales. One of them was aggregating Shopify Analytics with Google Analytics and other e-commerce reporting dashboards to create one view. That was apparently annoying. And then there was a third one related to inventory management, inventory sinks and stuff like that. It didn't take us very long to be like, "Yep, this is the idea that we should try to validate." The other ones were decent, but this one, the client was almost in tears talking about it. It was very clear that this was a massive pain point and that if solved would make her life 10X better, essentially. She was getting emotional about this pain point,

Pablo (Host) (17:18):

Just to pause on that, how much... because part of the reasons you'll build a solution for... so you have these three problems. And I would think the quadrant is okay, how important is it? But also, can we solve it? And also, what would the business model be? And, how could you track money with the ROI? And all these sorts of things. Did those even factor in at that stage? Or was it really more just look, this is the one people are passionate about. Let's just go deep on this one. Did you even consider these other factors?

Rob (Guest) (17:47):

No. Our goal for caller number 1 was... the interview set number 1 was identify massive pain point. So, we didn't think about technical feasibility, business model, market size, anything like that. We just had one simple goal, identify massive pain point. And I think YC talks a lot about this. If you can find one person with a massive pain point, ideally that person being yourself or someone that you know, there's probably other people out there like that. So at that stage in interview round number one, it's critical to just find the pain. Don't worry about everything else, you're going to confuse yourself. It's so hard to find a pain like that, so you should just focus on doing everything you can to finding out an opportunity like that. And then in interview number 2... So remember I said, we did two wet rounds of interviews with the same folks and interview number 2 was where we went to validate this idea to see if we're going to pursue this idea any further. And how we did that was we set up interview follow-ups with every single eight of the customers again,  and we would ask questions that did not lead towards this product idea or problem statement at all. 

Rob (Guest) (19:14):

We would just ask open-ended questions to discover that problem a little bit deeper. So for example, "Can you tell me the process of how you, how you detect issues today? Can you tell me how you resolve issues today? How do you find that process? Is it difficult? What happens when a customer calls in?", and basically just learning and then trying to gauge if they were like, "It's terrible. It's a terrible experience. It's gong show. I don't know how to code. So, I'm at a loss. I'm talking to my developers, they're telling me I can't reproduce." So, you're basically trying to identify if, when you're asking those questions, they're just like, "Yeah, we do this, and it works pretty good. It's not really a pain point."

Rob (Guest) (19:59):

If you're not getting that pushback on the process that you're trying to improve and solve, it's not a good idea to pursue. And I got that from that Emmett Shear user interview that I found from Stanford. And never there were we leading. Only at the end, we asked, "How much would you be willing to pay on a monthly basis to be notified of critical bugs on your website?" And the range of answers was from $100 to $1,000 a month. No one said zero. And we actually got two of them to, on the spot, sign-up to a service that did not exist for 20 bucks a month or something like that. And we basically, with those two clients began manually QAing their website and trying to find issues on their site. We didn't know if we would find any, but we actually ended up finding things.

Rob (Guest) (21:00):

And you mentioned things that don't scale earlier. We didn't know if we were going to find issues, but we basically spent hours on these sites. And then we would create these PDF reports for 20 bucks a month. And that did two things. The interviews validated that the idea was worth pursuing because it was a legitimate pain. And then once we signed up those two customers without any software, that helped us understand that we can actually identify some issues somehow and start building software to automate that process.

Pablo (Host) (21:33):

So let me dive in there because I do think identifying the problem is such an important piece of building a successful startup, and surprisingly overlooked. And the reason is human nature.  Once, same thing that happened to you guys happened to me, happens to many, many founders out there. You want to get going, right? And discovering a problem, it's kind of this academic process, frankly. It's not this entrepreneurial go build stuff and make sales and so on. And so, people tend to kind of gloss over it, but it's absolutely critical. So, the first question maybe is just you went out, and then you did identify this problem, and I'm trying to figure out how to work this, but in a sense, it might sound too easy. Which is, Hey, if you want to sell software to industry X, just find 10 people in industry X, ask them 30-minute interviews about what problems they have, figure out what's a big problem to go solve it. And there's a billion-dollar company. And it just can't be that simple. So, I guess the question I have is, is there a possibility you found nothing worth solving? How much did luck play a role into that? Or do you think that if you just ask the right questions properly to the right set, to any given set of industry people, you will uncover something worth building software for?

Rob (Guest) (22:48):

So, very good question. I think anyone that says there's no element of luck is full of BS. So, there's a large portion of luck in terms of, we stumbled upon through discovery a pain that is so large that people are willing to pay a lot of money for it, as you know now. And the fact that it was technically feasible at a certain point after several iterations, the stars aligned. But here's what I'll say, I'm in the camp of more times than not, you'll find a pain that's worth pursuing and validating. Just because you've identified that pain doesn't mean there's a business there, or that it's going to be technically feasible. But if I'm an entrepreneur, I'd rather start with a legitimate pain and pain point that people are willing to pay a lot of money for and are actually willing to put money down very early before there's a product, than work on an idea that is maybe feasible or cool or has a good business model from an early-stage ideation standpoint.

Rob (Guest) (23:54):

And then do that process several times. So let's say, in hindsight, this idea didn't work out because of maybe the technical feasibility, just the technology, wasn't there to support what we're doing. I would have went back and then try to, within maybe a one-month process, do it again, launch some sort of MVP, see if we're getting any sort of traction, and then if it's complete [inaudible], go back and try to go with that. That's just me, it's one opinion, but now that I've seen this work for ourselves, for my next startup, I'm going to do the exact same thing. And if that idea doesn't get traction right away, I'm going to build an MVP in two weeks max, validate it, see if there's any reasonable, positive indicators for the hypothesis that we set and then either double down on it or come back and just try that process once again and once again, I'm never going to strategize some idea or solution or market arbitrage. I'm always going to start with customer discovery and proper validation because you can get a pain point that's worth solving. Now, whether it's technically feasible and a business is the question marks that need to be validated in the next stages.

Pablo (Host) (25:10):

You're trying to figure out, are there real bugs? Obviously at some point because you have a business now, I can assume you've found some real bugs. But when did you really start to say, "Hey, you know what? We're really onto something real that's worth starting to build around." What were the signs you saw that this was the pivot pit to make?

Rob (Guest) (25:29):

It's a great question. So, shortly after we got those two paying customers and we started doing the manual process, I think when we found the first few bugs, we saw just how critical they were. And that was really that first aha moment where it's, holy crap, there is legitimate issues on websites. And I could logically deduct that this is costing this retailer money. So, I think that was that first moment where, not only was it an idea, but we were actually able to validate from that service that we were offering, that we can actually identify critical issues. That was probably that first aha moment of, this is worth pursuing and doubling down and using all hours of the day to continue.

Pablo (Host) (26:16):

Perfect. Okay. Well, listen, Rob, I think we'll cut it there. In summary, you started off with as many first time founders do, a drive to build something. You had a solution in mind, you tried to push it out to the market. The market didn't react all that favourably. There was this big catalyst event that made you really think through what you were doing. You went back to square one, you did real customer discovery. You identified a very meaningful pain point, built a solution for it. You tracked product-market fit. And now, only two years later, and that's pretty crazy thing, with no capital infusion, you're at meaningful scale and the mid-seven figure ARR, a couple of hundred customers, so, quite an incredible journey. Thanks so much for taking the time. Rob, really appreciate it.

Rob (Guest)  (27:10):
Thanks, Pablo. It was super fun.

Pablo (Host)  (27:12): 
Thanks so much for listening. If you want to see more content, check out pmf.show.