A Product Market Fit Show | Startup Podcast for Founders
00:46:17 · Pablo Srugo, Ali Khokhar
[00:46:17] S1: what do need? That's the big big Pivot. This is like a small within Pivot. [00:46:20] S0: Yeah. This is like the core thesis of hey, we can build AI systems that capture really good expertise, that can go and deliver service service heavy workflows in the form of software in a with a high degree of quality. That thesis foundationally stayed. Initially, we were serving both solopreneurs, SMB, and enterprise, right, so we're like serving a very different set of customers, and then we were layering on a second layer of complexity which was really being leadership exec coaching, we were doing consultants, marketers, we were doing a little bit of health stuff, it's so just like all over the place. And so we then said, okay, couple things happened. One was I saw the path actually to 10,000,000 of ARR in that old world. I stopped seeing the path to a billion run rate. And so it was like, I felt like we were climbing the hill, and the top of that hill wasn't the end state we wanted to land in. And we were like still a baby of a company, so like we could have kept going. It was work it's not like it just stopped working. [00:47:15] S1: You were doing how much in revenue more or less?
00:47:17 · Ali Khokhar
[00:47:17] S0: We were doing just under $3.02, 300 k of revenue. K. But like solopreneur, like, know, ACVs are five ten k. Right? And so we were just like servicing that archetype of customer generally speaking. And we're like at a few 100 k, we had raised our seed round. And we're like, okay, cool. You know, let's go get to two, three, and raise an a, and then we'll try to get to 10 and so on and so forth. But again, going back to like, if my cofounder and I lose the conviction that this is a $10.50, $100,000,000,000 outcome, we need to instantly change direction. Even if there's still a lot of room to go. Right? Even if like we're at the beginning of a hill, it's still a hill. As soon as you see that end state being 10 to 15,000,000 of revenue, not 500,000,000 or a billion of run rate, then now it's opportunity cost. Now we're wasting everybody's time. We're wasting our time. We're selling a story to the world. We're sharing a story to the world that we no longer believe in. Right? And so that obviously was like a very big moment. The other thing we started realizing also was we had just built a more enterprise grade platform that a lot of our earlier customers were only taking advantage of 10 to 20% of the actual machinery we had built. It almost felt like at some point we started selling a tank to somebody who wanted a bicycle. And we're like, why don't we just point our machine to people who wanna buy a tank? Like essentially exactly what we have actually built. And so that's sort of where we were sitting was we looked at our customer base, we're like, this tiny sliver actually is the future of the company, and we can build a large business here that is like interesting, that we care a lot about, that we personally have a lot of deep conviction in, that a lot of our team members have a lot of deep conviction in, that we have personally seen the pain points consistently around, but the core thesis is also consistent. It's not like we're full one aiding. The core thesis of service is heavy, supply constraint, high quality is important, high risk of failure, like let's go build AI systems or agents, none of that.
00:49:08 · Pablo Srugo, Ali Khokhar
[00:49:08] S1: Was there a customer or conversation in healthcare that you saw that was that was like telling you that that was the one and not the others? [00:49:14] S0: Yes. A lot of health coaches started coming to us, and then that customer that, you know, bought us during that Christmas break [00:49:20] S1: That 10 k enterprise. Yeah. [00:49:22] S0: That that went to that was a 240 k deal, essentially, the first that we do. It's like basically we doubled the company's revenue overnight with one one new customer. And we're like, oh, great. Yes. They see the long term, they see the we have such a good fit here. Let's go and focus only on that, and then we did the hard decision of actually churning everybody else. Fully refunded them, found them a new home, you know, made them whole, but we stopped working [00:49:46] S1: with What percent of your revenue was that at the time? [00:49:48] S0: Well, a 100% of our old revenue returned. Everybody. We started from scratch on the revenue side of things and rebuilt from the ground up, but we crossed our previous high within two months. And then like five x that, and then 10 x that. And so like we start the bet that we had made, the hard decision worked out very quickly. And again, that's when I started feeling the pull from the market was when we narrowed the focus and went to enterprise.
00:49:48 · Ali Khokhar, Pablo Srugo
[00:49:48] S0: Well, a 100% of our old revenue returned. Everybody. We started from scratch on the revenue side of things and rebuilt from the ground up, but we crossed our previous high within two months. And then like five x that, and then 10 x that. And so like we start the bet that we had made, the hard decision worked out very quickly. And again, that's when I started feeling the pull from the market was when we narrowed the focus and went to enterprise. [00:50:11] S1: Was that hard to sell? Like you and the founder to you and your cofounder aligned it, was it hard to sell to investors? Was what was the hardest part of of having to churn out? Like, know, today, you're like, well, it's 200 k in revenue, whatever. But at the time, like, was a 100% of your revenue or 80%. It's you know, it it didn't come easily.
00:50:11 · Pablo Srugo, Ali Khokhar
[00:50:11] S1: Was that hard to sell? Like you and the founder to you and your cofounder aligned it, was it hard to sell to investors? Was what was the hardest part of of having to churn out? Like, know, today, you're like, well, it's 200 k in revenue, whatever. But at the time, like, was a 100% of your revenue or 80%. It's you know, it it didn't come easily. [00:50:28] S0: You know, I'm really, really fortunate that it was not hard with my cofounder. We were very aligned very quickly. We were just like in sync instantly. We did not even have to debate too much or argue too much about this decision. We were like very quickly like, yeah, this makes a lot of sense. And we were very open with our team as well. We were very open and very transparent with our team around here's what we are thinking right now. Here's what's working, here's what's not. We actually did like a forty five day sprint to make a decision on a pivot. Like we did it very openly, and we again, fortunately had to have a really strong founding team who all believed in us as as leaders, and understood the nuances and the pros and cons on how we're thinking about things. And investors, again, we were lucky because they were just like, we bet on YouTube. That's the whole reason why we bet on this company is we bet on YouTube. So if we if you truly believe this and you we understand the logic and how we're thinking through this, we're in. So it's not actually quite hard to do this, which is a very, fortunate part, I think, for me.
00:50:28 · Ali Khokhar, Pablo Srugo
[00:50:28] S0: You know, I'm really, really fortunate that it was not hard with my cofounder. We were very aligned very quickly. We were just like in sync instantly. We did not even have to debate too much or argue too much about this decision. We were like very quickly like, yeah, this makes a lot of sense. And we were very open with our team as well. We were very open and very transparent with our team around here's what we are thinking right now. Here's what's working, here's what's not. We actually did like a forty five day sprint to make a decision on a pivot. Like we did it very openly, and we again, fortunately had to have a really strong founding team who all believed in us as as leaders, and understood the nuances and the pros and cons on how we're thinking about things. And investors, again, we were lucky because they were just like, we bet on YouTube. That's the whole reason why we bet on this company is we bet on YouTube. So if we if you truly believe this and you we understand the logic and how we're thinking through this, we're in. So it's not actually quite hard to do this, which is a very, fortunate part, I think, for me. [00:51:22] S1: We'll end it there. I'll just ask one last question we always end on. What would be like your number one piece of advice for a founder that's kind of in the, you know, pre seed seed stage, finding product market fit?