PMF Observations: Why after PMF, every problem is a people problem.

We go through some lessons I learned from my own startup journey. I also go through why almost every business challenge beyond product-market fit is actually a people issue—and how to quickly spot and fix these hidden problems. You’ll learn why staying in direct contact with your customers accelerates your path to true product-market fit, and hear a powerful story of how making something radically different—even free—can disrupt entire industries and create massive competitive moats.
Why You Should Listen
- Discover the #1 reason your startup’s growth might be stalling
- Learn why staying hands-on with sales longer accelerates finding PMF
- Find out how to instantly identify if your team members are truly A-players.
- Uncover the hidden power of making your product free—even when competitors think you’re crazy.
- Understand why radically different strategies beat incremental improvements every time.
Keywords
product market fit, startup hiring, startup growth, founder lessons, free business model, early stage sales, team building, radical differentiation, founder mistakes, scaling startups
00:00:00 Intro
00:04:21 Every Startup Problem is Actually a People Problem
00:05:56 How to Identify Great Talent Without Hiring
00:07:10 Why Founders Should Stay in Sales Longer
00:09:35 Subtle Details are The Key to True Product Market Fit
00:12:24 Zeffy and the Hidden Power of Being Radically Different
00:17:00 The ROI of Being Uniquely Different
00:00 - Intro
04:20 - Every Startup Problem is Actually a People Problem
05:55 - How to Identify Great Talent Without Hiring
07:10 - Why Founders Should Stay in Sales Longer
09:35 - Subtle Details are The Key to True Product Market Fit
12:24 - Zeffy and the Hidden Power of Being Radically Different
Pablo Srugo (00:00:00):
When I started my last startup, Gymtrack. One of the hardest pieces to solve. One of the hardest pieces of the puzzle was finding the talent to actually build the thing. We had a pretty crazy idea and even to this day it's pretty ridiculous, right? We wanted to build a system that automatically tracked all workouts. This is like 10 plus years ago. We needed not just hardware, mechanical engineering, electrical engineering and apps and all that stuff. We also needed like machine learning and AI. Way before this current wave of AI, and at the time it was exceptionally hard. I mean, we were two like 23 year old's. We had no background. We really had no network. It was exceptionally hard to find somebody who is good at data science. And for a while, actually, we went around telling people our idea. And it wasn't that we just didn't have the product. We didn't even have people working on the product and building the product. Because we hadn't found them yet.
Previous Guests (00:00:50):
That's product market fit. Product market fit. Product market fit. I called it the product market fit question. Product market fit. Product market fit. Product market fit. Product market fit. I mean, the name of the show is product market fit.
Pablo Srugo (00:01:02):
Do you think the product market fit show, has product market fit? Because if you do, then there's something you just have to do. You have to take out your phone. You have to leave the show five stars. It lets us reach more founders and it lets us get better guests. Thank you.
Anyways, after many months of like looking, talking to many different people, we finally get introduced to this PhD in data science. Something related to data science. In any case, he was a data scientist. After many conversations, we convince him to kind of help us out. Work part time with us, and he's a good guy. He's a smart guy, and the only challenge is, you know, data science is very hard. I mean, you're picking up signal from a wearable like accelerometer, gyroscope that tells the acceleration and rotation. And you and you have very noisy data. And you try to pick out of there either the two things you're trying to do is classify exercises and count reps.
And we knew nothing about it. So we really didn't know what was hard, what was easy, how long things should take and so on. And in a sense, neither did he, because it was something new. And so he would tell us, Okay, well, you know, I think we'll get to this place in a few weeks and a few weeks go by. And he didn't get to that place. But in any case, things moved on. Things were progressing. Not just in data science, but across the whole company. We ended up raising money.
Long story short, many years later, we ended up hiring an entire team. We had ultimately four data scientists working on this. And once we had these four data scientists and we were seeing different progress from each of them. And not just progress, but also a difference in terms of their ability to meet their own milestones. It became clear to us that this person was not the right person for the team, and we ended up letting him go. And frankly, my co-founder for a long time had told me that this needed to happen. That we needed to make a change. That we needed to let this person go.
This person consistently didn't meet deadlines, and I fought it. I fought it for a long time for no reason other than like. Who am I to know what a deadline, you know, what the right deadline is for something like this. You know, he was a smart guy, good guy. So maybe it was just the nature of the work. But after a while, I listened and we ended up letting him go. After we did that and I look back to two years worth of emails and I found one of the first like threads of emails from back when we were working part time. And I realized it, and it was very clear. That this person had been missing deadlines from day one and missing them consistently and aggressively. It became clear to me that the biggest mistake was not letting this person go a lot sooner.
I say this, because I shared this story with a founder recently. In the context of, every single problem you have in your startup. Besides finding product market fit is really a people problem. If your product is too buggy, it's a people problem. If marketing can't get leads but you have product market fit, it's a people problem. Any fires that are burning in any part of your organization. If onboarding is not working well, it's a people problem. If you have a product that people don't want. You can put the best people on it. People are still not going to want the product. You don't have product market fit.
But to the extent that you have or have signals of product market fit, and other things in your organization are not working. You have to look at the people running that organization. Most of the time, you're going to think that they're actually quite solid. But the reality is if things aren't going well in that area. A great person would make sure that they are, and in this case. This founder has some great people on his team as one person specifically was exceptional. And I asked him, "What part is this person own in the organization and how that how's that part working? "And he said to me, that's the only part that consistently works well. Which made my point.
Pablo Srugo (00:04:21):
When you as a founder look around. You have to be constantly analyzing and evaluating people. And to an extent, this is one of the hardest things I would say besides finding product market fit. Because fundamentally you build relationships with people, and some people. By the way, are really great for one phase of the business. And then all of a sudden they're not as great for the new phase that you're on. They might get you from zero to one, but not one to ten, not ten to twenty and so on. And so, you constantly have to reevaluate like a great coach would, like a great manager of any sports team would.
But it's a very, very hard part. And it's especially hard, I would say, for first time founders. And especially young first time founders who, in many cases, don't know what greatness is. Because they haven't worked on that many teams in their lives. And so one of the advices that I give is, go out there if you're a founder. Especially if you're a young first time founder and you don't know. And you're not sure that you know what greatness is for any given function. One of the things you can do. Because hiring people is very expensive. But one of the things that you can do is use your network to find great people. Let's say marketing is not going out that well. But you don't know if it's your marketers problem or if it's something else in the market. And part of the problem is you don't know what a great marketer is, because you haven't worked that many teams. You haven't worked with that many great marketers in your life.
Your choice is, do you keep this person? Do you fire this person? Do you replace this person? You don't know if what you got is great and if the new person is going to be better, worse, and so on. So one of the things you can do is, you go out there and your goal is not necessarily to hire or replace. But your goal is, let's go meet with ten excellent marketers. And you tap your CEO network and you say, Hey, who's the best marketer you know? I'm not looking to hire. I'm just looking to learn. That's very easy. That's like a very low bar, very low ask.
Pablo Srugo (00:05:56):
You reach out to these marketers as a CEO and you're literally asking them for 30 to an hour of their time over coffee, over lunch. Very low bar, most people are going to say yes. And you just talk to them and, you know, you have a normal conversation. But you also tell them about your business and what's going on and what the problems are, and you just no agenda learn. And through that conversation, I mean, you've met great people before. It's not that hard to identify them. And especially after doing five or ten of these conversations about, say, marketing with ten different people. You'll start to get a very clear appreciation for what greatness might look like.
Now, granted, talking to someone for an hour is not the same as working with them 50 hours a week. But it is a signal, it's an indication, and when you can see from there is you might say, wow, you know what. The things these people are saying, all ten. There's things that we're already doing. They're thinking the way. The same way that I'm thinking. The same way that my marketer is thinking. There's nothing big. There's no big delta out there, in which case you probably have the right person on your team.
Or you might notice that three or four of these people. Are saying things that you're not even talking. They're talking in different languages. They're on a level you haven't even seen. They're telling you examples that they've done at their companies. That are so far beyond what you're contemplating. That you realize you do not have the right person on the team and that there are 10x better people. That you could fill that seat with, and in that case, it's time to make a change.
Pablo Srugo (00:07:10):
Another angle that I want to share actually is really recent. I was talking to a founder who says to me, he's really early stage doing like a couple $100K ARR and he had kind of this first wave of growth. And then he kind of flatlined for three months. And he just told me that he let his two account executives go. It's a small team, like sub 10 people. He let both of his salespeople go. And he says to me, look like they didn't work out. They just they weren't great. They were taking a lot of demos, but spinning a lot of wheels. They're signing little customers, and there was a big delta between when I talk to customers and when they talk to customers and so on.
In any case, I've also made a pivot in my business. So now I've got a new approach. I'm going after similar product with new ICP, and the question was, who should I hire? I'm thinking of hiring someone more senior. Maybe not VP level, but maybe director level. Somebody who comes in, you know, one of this person was totally junior. One person was more senior. But like, you know, I want to go even more senior than that. Somebody who can actually build a sales team. And I said to him what I say to a lot of founders at this stage, you know, a few $100K ARR. It's like the longer that you can stay at sales. As the salesperson, the only salesperson, honestly, the better.
At some point, things are going to break, for sure. And at some point, you spending so much time on sales. It's not going to scale anymore, and so you're going to be cutting growth by not hiring more salespeople. And also, at some point, spending so much time on sales. Will mean that other parts of your business are going to blow up because you're not looking at them at all. But the reality is, you don't really have anything else if you don't have product market fit. And it's very hard to get the product market fit if you're not as close as you can be to your customers.
The beauty of being on sales is that there is zero broken telephone. If you have somebody else that's the front lines of sales. Then by the time that you hear of the issue, it's already been long. Whatever you hear, I mean, you can read the transcripts. But you're not reading all the transcripts, and so there's a delay by the time the information gets to you. And I asked. I said, honestly, if you had been the only salesperson through these last three months where you flatlined. How much sooner do you think you would have noticed there was an issue? He's like, yeah, probably would have shaved. Instead of taking three months to figure out probably would have taken one month.
Because when you're on there and you're taking the calls. And you're feeling the pain of being in those demos and either hearing no or hearing yes. But from the wrong ICP. Onboarding the wrong ICP. Like, when all that stuff is more tangible, you make changes a lot faster. Which means you're actually tightening the feedback loop between what customers say, what you hear from customers, what you understand from them and the changes that you make. The product, the engineering or even go to market.
Pablo Srugo (00:09:35):
The more that you put in between you and your customers. The slower that, all that spins. And at the beginning, the key to finding true product market fit is how fast do you learn? How deeply and subtly do you learn, right? Because it's not just speed of learning, but it's what are you learning? How close to the reality and how many details are you getting? Because the difference between a product that's probably going to fit and what that only kind of does. Sometimes is in the subtleties. Sometimes it's in the details.
Here's a maybe stupid example, but it just comes to my mind and everybody will recognize this. What is the difference between ChatGPT's app and Meta AI embedded in WhatsApp. And embedded in these apps that frankly nobody uses. Even though they claim everybody's uses? It's not that big of a difference, I mean, it's a UI. Yeah, Okay, the models are different and you could argue chat GPT is better and these sort of things. But like fundamentally, one of them chose to dedicate an entire screen to chat and the other one chose to dedicate a search bar to it. And that is a huge, huge difference in terms of usability, UX, usage, how people interact, et cetera, et cetera.
One of them understood whether by accident or not. What people really want and one did it. Again, not a perfect example, but one that everybody will kind of readily understand because, everybody's seen this and experienced themselves. The difference between true product market fit and weak product market fit sometimes is in the details. And that's why sometimes in product categories that are competitive. There's one company that emerges and there's many different factors. But that's, oftentimes what it is. Is one company emerges is way beyond everybody else, and people outside the game are like, why is this company winning by so much?
The people in the game that are using the products, don't even ask that question. Because they intuitively know it's just a better product. It just works better. It just does the thing that I want in a better way, and in order for your product to be that product. To be the product that everybody in your market wants to use. You have to get the subtleties, and in order to get the subtleties. You have to be close to customers for as long as you can.
Pablo Srugo (00:11:24):
So my advice to this founder was, listen, just stay in there. Don't hire anybody. Forget it. Keep your burner lower. You just go with two people. You're less than you were. You're 20% or so smaller than you used to be. So great, now you've just lowered your burn. You've lowered also how many people you need to manage. Gives you more time to just do customer stuff. You'll react faster, you'll learn faster, and by the way, you'll probably close more deals too. Because there's frankly at the early stages. Even if you're not the best salesperson in the early stages. The founder is almost always the best salesperson.
It's very hard to find a great salesperson, that's willing to partner with you that early. Unless you have an extensive network, and even if you do. It's hard for that person to understand, the nuance and your product and your ICP. And the vision, as well as you do in the early stages when everything is kind of fake it to make it. And so you're probably in the best position to be the best salesperson. You're certainly in the best position to learn from your customers and then take all of that feedback and knowledge and carry it down. Disseminate it to the rest of the people on your organization. So that the wheel is spinning as fast as possible to you and product, between customers and product, and ultimately gets you that much faster to product market fit.
The other thing I wanted to talk about is many years ago, I met this company called Zeffy and they pitched me for a seed round. And the way that Zeffy works is, it's a platform for fundraising that's totally free. So you think about this, you're a nonprofit. It's every single nonprofit needs to fundraise. They live on donations, and most of the software that allow them to take in money. To fundraise are somehow charging, either they're charging, say, some SaaS fee to the organization, to the nonprofit or they're charging fees to the people that donate. And so if you donate $100, not all $100 goes to the nonprofit. You've got to pay $5 or $10 or whatever it is in fees.
So what Zeffy was doing was very simple. It was like the same product in essence. I mean, you know, better UX, all these sort of things. But high level, same product, and it was free. That was the only thing. What do you mean it was free? It was free, the way it works is they charge nothing to the nonprofit, and on top of that, they charge zero fees to the end users. I'm talking zero, not just no fees, no processing fees. So if you donate $100, $100 goes to the nonprofit.
Pablo Srugo (00:13:28):
How do they make money? They ask for tips. So literally at the point of donation, they say, listen, you're donating $100 to this nonprofit. 100% of your $100 is going to this nonprofit. And the reason is that we Zeffy don't charge any fees. But if you liked the experience, if you thought it was a good product, then donate whatever you want. And it turns out at that stage, people were donating something, like, 5 to 10%, 5 to 7%. Don't quote me on this, but it was a high amount. It was higher in many cases than what they would have gotten if they charge the market rates.
I looked at this. I knew nothing about nonprofits. Not a world that I knew, but I looked at it. There was something interesting here, but ultimately ended up passing out to talking to some people. Because part of the thing was like free is not a moat. Anybody could make something free and free is not a moat. Fast forward three years later and I'm completely wrong. So far it looks like they're absolutely crushing it. I can't disclose the revenue, but let's just say they're doing exceptionally well and I've missed for sure.
There is actually a lot of power in free, and more broadly. There's just a lot of power in being different. When everybody in your market is doing one thing and you can do something so different. That alone drives reach, distribution and word of mouth. And those are some hard things to get. Otherwise, they cost a lot of money to get otherwise. And when the market is noisy and differentiated. It's very hard to get any sort of escape velocity unless you spend so much that it's no longer worth it.
Pablo Srugo (00:14:48):
Now, in this case. On top of that, free is insanely powerful, and it's powerful in two ways. In the obvious way, which is that free drives crazy distribution and word of mouth. Who says no to free? First of all, just think about any outbound campaign. And you say to someone, what are you using to raise money? Whatever it is, you're paying something. This thing's free. It's not half the price. It's not 30% cheaper. It's 100% cheaper because it's free. It's a bit of a no-brainer.
That's the obvious thing. On top of that, you have people that talk to other people. And just the idea of the fact that it's free and so different is going to drive word of mouth, because people are going to say, I use this thing. It's called Zeffy. When they talk to each other. These nonprofits and it's free, they just can't believe it. So it's just something to talk about. If you were 30 percent cheaper, it's not that interesting to say I'm using this thing and it's 30 percent cheaper. But if you're using something that's free when everybody else is paying, that's a very interesting thing to talk about, and people will talk about it. It'll drive more word of mouth, and in the way that it's interesting in the most non-obvious way. Which is what I really miss, is that while it free doesn't seem like a moat at all. Because it seems like everybody could just make their thing free.
It's an absolutely massive moat. Because it's very hard for incumbents to lower their prices, and it is insanely hard for incumbents to go free. And in this case, you can't just take what somebody else does and think it's going to work everywhere, right? If you just think about it here, people are in a donating mindset. They're already donating, say, $100, and you're asking them for a tip. So their likelihood to donate, they already have the credit card out. They're already donating. What's five more dollars? What's ten more dollars? So obviously they're in a world, where making money from tips instead of charging an actual fee makes a lot of sense. But that's their specific case.
The broader lesson here is it pays to be free, and even broader is it pays to be different. But talk about free for a second. I mean, take any incumbent or growing company in the space that's doing $10, $20, $30, $50 million in ARR. What does it take for them to take the risk of going free and, crossing the fingers and, hoping that the tips are somehow going to take them back to where they were before. It's such a massive risk that nobody's going to do it until they're 100% sure that it's going to work. Literally 120% sure that it's going to work. For a long time, they're going to say they're not going to know about it.
By the time they know about it. They're going to say, Oh, it's a small startup. They're just taking like the long tail of the market. They're going to say, Yeah, okay, maybe we're taking mid market, but we're just living in enterprise. Enterprise never going to go for this. And by the time that they decide, holy, I need to do this because this is just a new model that took over. Well, guess what? It's too late, and now you're an incumbent finding an incumbent. Instead of a tiny little startup finding a big monster.
So there's, actually huge power and free. And if you can find ways to make part or all of your product free. And obviously you've got to find ways to make money elsewhere. But find the vector that everybody else is charging on and find a way to make that vector free. That can be huge. Now, granted, in most cases, you can't do that. But the other thing that you could do is you could find a way to be radically different, and that alone will have huge ROI.
Pablo Srugo (00:17:46):
Wow, what an episode. You're probably in awe. You're in absolute shock. You're like, that helped me so much. So guess what? Now it's your turn to help someone else. Share the episode in the WhatsApp group you have with founders. Share it on that Slack channel. Send it to your founder friends and help them out. Trust me, they will love you for it.