PMF Observations: Speed is the only startup moat—& why most founders lose it.

Pablo Srugo (00:00:00):
Put speed at the top of the pedestal. Because if you are the fastest, if you get the most reps, the most cycles, your odds of winning go through the roof. Nobody knows what's going to work, but the best founders are able to try out, so many things, so fast that they're almost guaranteed to find it.

Previous Guests (00:00:20):
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 (00:00:32):
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 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.

I listened to the Arnold Schwarzenegger biography, actually a while ago and I mean, this guy is pretty crazy if you just think about it. The guy was like all time champion at bodybuilding and then became at one point he was the highest paid actor in the world. And then of course, as we all know. He's now governor or was governor, I should say and so he mastered, like completely mastered. Three different hyper-competitive fields and the thing that struck me from what he said. One of the things that he kept coming at over and over again. He would say this phrase, reps, reps, reps, obviously came out of bodybuilding, but he wasn't, you know, he didn't like. This guy wasn't from the US.

He's from Austria. He started lifting not weights, but like buckets of water. He was not set up to become the all time best bodybuilder. But what he did was he just went all in, and he did reps, reps, reps. And that got him to where he got him in bodybuilding. He was not an actual actor at all. Same thing, he started off with complete failure and the way that the way that he described the story is that practice makes perfect. And I mean, this is something that we obviously all know. But when it comes to startups to early stage startups, especially. I think the way it's manifested is not totally obvious and it really it comes down. And I think this is actually the only moat left for early stage founders. And frankly, might have been the only moat this whole time. Because everything else like network effects or brand or whatever other moat you might have, usually just plays out over time.

Pablo Srugo (00:02:18):
You have to get big and then it becomes a moat. At the beginning, you don't really have it. But the one thing you do have, and the one thing that really matters at the end of the day is speed. And this is where these two things tied together. I actually was speaking to a founder that I'm working with very closely. Where I'm investing in a startup and this is something that struck me. I was talking to him and one day we meet like we do, regularly. And he tells me about this new idea that he has. Where he wants to use a white label approach to power his go to market.

Nothing revolutionary, but something different in his vertical, in his space that other players weren't really doing and this involves. I mean, involves go to market, involves sales marketing, involves product and also a bunch of different things. Anyways, he shares his idea. I thought it was a good idea. A month later, less than a month later, actually, we talk again and the idea is not just implemented. He's actually acted on it and has convinced resellers to white label his product. He did that in like three weeks.

And it just struck me how different that level of velocity is, than so many of the other founders that I've seen. Where they'll have an idea that's equally as good, but the time from idea to execution. Some version of execution, not perfect execution, but some version of it. Effectively an MVP is three months, is six months and it all comes together, because if you think about it. The delta in quality of ideas from two different founders is not going to be that big. I mean, maybe one founder is ten percent, twenty, thirty percent. Let's say, better ideas than another founder. What really does change a lot is how many ideas, how many reps a given founder can do.

Pablo Srugo (00:03:48):
You think about it, it's like cycle time. You have an idea, how fast can you put that idea out into the world and get some feedback into whether that's the good idea to double down on or if it's a garbage idea that you want to throw away. And you really don't know that at inception. It's easy enough to craft stories, to craft theories. Frankly, all most founders are pretty good at that. Most intellectual people are pretty good at that, but the difference is how fast can you put that into the world? And this idea of an MVP is nothing new.

But what I find is, when you're just starting and you don't have a product in market yet. Everybody knows you have to start with an MVP, you have to start with an MVP, but the problem is. Once you have a product in market, I think a lot of founders just forget this and all of a sudden. Every new feature, every new thing that they want to do becomes this epic, this monster thing that needs to be at a certain level of perfection before it goes out. For whatever reason, there's always a reason for it. To be clear, there's always a reason for why things are executed in this manner. But the problem is that the other founder that's competing with you,

That's willing to put things out at MVP level, all of the time for every single feature for every single new launch is always iterative. Until maybe, yeah sure, when they're a massive monopoly sized Shopify sized business. You can take your time to put out something new and really have this massive launch event. Because you have such a strong moat that you have that luxury. But when you're an early stage founder, early stage startup, even if you have a product in market with $1, $2, $5, $10 million ARR, you don't have that luxury at all.

Pablo Srugo (00:05:15):
You have to keep moving in iterative steps every time, and that speed, that cycle speed. The number of reps, that you get is the big difference and the big mode, and the founders that can get a hundred reps in a year are going to do way better, than the founders that are getting ten. Even for big companies, I saw this post by the new head of product at X or Twitter. Where he's actually taken Twitter and it's now a top five app in the app store. Which is all about recent downloads, which is very hard to do for an old app. It's easier to do with a new app, because obviously he gets a lot of new downloads and somebody asked him, how he did it. What were the one or two things that mainly drove growth? And he said it wasn't one or two things. It was three hundred different things and not leaving any stone unturned.

What does that mean? That means that, this is a founder that, this is not a founder. What that means is this is a company that is at scale. That is still doing things in an iterative way. Because there's probably hundreds and hundreds of ideas that they could act on. They don't pick three and go all in. They picked three hundred and did every single one of those and each one had a little bit of an effect. And the sum of all that is a massive effect. And that is just more close to the truth. You want it to be one or two things that all of a sudden changes the game and sometimes it does happen. But even when it does happen, how do you find those one or two things?

Do you just conceive of them in a boardroom and then you put them out. And they happen to be massive? Probably not, you probably took a hundred shots and either all those a hundred shots or fifty of those shots made a tangible difference. And the sum of them made a huge difference or maybe it was more power law, and one or two of those made a huge difference. But in either case, you had to try fifty or a hundred things and you have to build a culture that idolizes speed. Put speed at the top of the pedestal. Because if you are the fastest, if you get the most reps, the most cycles, your odds of winning go through the roof.

Pablo Srugo (00:07:11):
Nobody knows what's going to work, but the best founders are able to try out so many things. So fast that they're almost guaranteed to find it and by the way. This is something I find founders are so easily able to lose over time, and I think it's especially true for first time founders. Because first time founders obviously are learning as they go. A lot of first time founders have this, in their DNA in the early days. They know how to build out an MVP, they know how to just move fast and break things sort of thing. When they're just trying to get those first few customers, but as they start hiring a team. They just don't know and they have no appreciation for when to kind of listen to the experts and do things the way that they're done. And when to continue with that kind of founder first, move fast and break things type of mentality. And it tends to lead to a situation, where everything just slows down.

You have more resources, you have more engineers, you have more people on the product team and yet, if you just look at it on end. And you look at your last year, I remember this even happened to me when I was a Gymtrack. All of a sudden you just take a step back and you kind of, I mean, on the one hand. You look at Jira, you look at your roadmap and you're like, wow, we're doing so many things.

Then you take a step back and you're like, okay. Where were we six months ago? How much have we really moved the needle, in terms of our ability to deliver value to our customers? And you realize you're kind of on a treadmill. You used to be able to have an idea, put it out, test it, get feedback and iterate. And now you're kind of sucked into part of it is maintenance and bugs, and all these sort of things that you have to do. But then in terms of the new stuff. All of a sudden it's going to take three months and then we're going to do launch. And it's going to be another three months, and maybe six to nine months from now we're going to know if this thing worked.

And that is just the way things have settled. And you've kind of accepted it, and you have to find a way. This is actually, I would argue, the natural state of things. Everything pulls you in that direction. For whatever reason, teams and leaders will pull you into a state where things just. Yes, they're more organized, but they're also. They take too long. They just take too long and you have to constantly fight that in the same way you constantly have to fight bureaucracy.

Pablo Srugo (00:09:22):
These are just things that organically happen to organizations over time and you, as a founder. Have to rebel against that and you have to make sure that everybody values speed. And that that never changes, and that you're always asking, what is the smallest version of this new idea. That we could put out as soon as humanly possible. So that we could know if it's worth going for the next best thing and the next best thing, and the next best thing. And that can't ever stop. You can't stop doing things that way just, because you have ten engineers and everybody wants to have things organized. And everybody wants to have roadmaps, and plans and all these sort of things.

You're just not that big. When you have $5 or $10 million ARR, you aren't actually. You feel big, but you're not that big at all and nothing is secure, and companies. And I've seen it firsthand. Companies plateau, you can plateau at a million ARR. At $5 million, at $10 million, at $100 million, you are never safe. You are never safe, so the second that you think, okay, now we can work on a foundation. Now we can kind of put the pieces in place. Now we can just be more organized, more structured.

This is the classic Jeff Bezos thing. You've just left day one and if you're in day two. After day two comes death, right? So you have to stay in that founder mode mentality, for as long as humanly possible and you have to put speed at the top of the pile always.

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.