A Product Market Fit Show | Startup Podcast for Founders
00:37:39 · Cosmin Nicolaescu
[00:37:39] S0: Yeah. So we obviously demo stuff. That already is stands out because at least in accounting, apparently, there's still product out there that, like, you don't get to even demo it properly, which is is is kinda crazy to me. But we run demos. Typically run several of those with different people depending on the the firm. Then we said, to get the right signal on a pilot, you need to find the the right balance between too little and too much. So we've seen firms that are very hands off, very little usage, and so you go through the pilot very quickly, but at the end of the pilot, they don't have high conviction. Because they're like, well, yeah, I mean, it was good, but we only did like a few returns, for example, so maybe we should do more. And now you've reset the clock on that. And so now it's like, great, now I'm running a second pilot, so you've wasted all that time. The other extreme is we're gonna run hundreds of returns with like dozens of people on our firm involved, also very dilutive because it's very hard to keep engagement higher across a large number of people when you go through a lot of returns. Like, if you run, like, a handful of returns or a certain complexity or a certain shape, you're not gonna learn much more from running, like, dozens of those. Like, you'll get the signal pretty quickly if if they're good or not, but having a lot of data makes it very hard to go in-depth. So we go, when we run a pilot, through returns of different complexity with different folks on different roles, and then we literally go return by return and give you a side by side comparison between your return that you finalized in our draft. If they're the same, great. They're the same. Not much to to spend time on. If they're not the same, here's why they're not the same and what led to that. And maybe it's on us. Maybe we didn't have document or context, whatever it is. But it's very in-depth and that helps bring credibility because now you have enough volume and enough variety in in kind of the data that was tested, and you've gone really deep on all of them to to get a good sense of will this product work, not work, for what does it work, what does it do, not do, and much more confident to move forward for for that. And I think the third one is, again, no smoke and mirrors.
00:39:40 · Cosmin Nicolaescu, Pablo Srugo
I've heard of pilots where you get something and they have AI, but then they have humans that go and correct things that AI got wrong, and then they give you the final thing. And it's like, well, that's not really the AI part. You should be upfront about that if you're doing that. I've seen others that will go through the same return multiple times and process it, because again, many of these systems are not deterministic and so you'll get different results, and then they take the best out of all these combinations and give you a final thing. I was like, no, that's like, that's not how real world world looks like. Like, you should be upfront about it and just run it like your customers would because when they'll run it, they'll just see these failures and be disappointed. [00:40:21] S1: And what about the flip side, which is on the customer side, like keeping them close, motivated, you know, on time and and getting like because the flip the flip side of the failure mode is you actually do everything you're supposed to do on your end, but maybe you don't get enough, you know, attention from them, in your case, returns from them, or maybe you do, and then now you're waiting a month for a decision. Like, how do you how do you kind of keep that momentum going throughout?
00:40:42 · Cosmin Nicolaescu
[00:40:42] S0: I think it has to do with finding the right champions at the right levels. So the thing that you normally hear with enterprise sales is find the CEO, they give you buy in, and then you can make decisions. That doesn't really work well because the managing partner or the CEO at an accounting firm is not going to be close enough to the details to to be involved in that. A lot of times, they end up being involved towards the end because they see the promise of accrual across all these business sides, and so it escalates to to their level. But all they can do is say, I want to deploy technology across my firm, go forth and and figure out how to do it. And so then it's typically like, how do I involve the right level of seniority to have the unblocking escalation path as needed? For us, if I think about our past year, it's generally been the person running tax, like the tax partner at that firm, because they get to make the decisions for their service line. Then there is, if they have a technology team, how do you get them involved? And the thing that they care about is, is it secure? Is it easier to integrate with? Is it just gonna be a pain for me or not? And so we try to be very clear about what we do, and the fact that we've built developer products, I think helps a lot in how we've approached things. Then finally, it's having people two or three levels down in the organization that are actually doing the work, they're excited about this. So the manager, senior manager kind of level, where they're senior enough to kind of know the organization and and experience and have credibility, but not that senior that they're not doing real work. And once you have that combination, then they can get folks around them to to be excited. And again, keep that number relatively small because you don't need to have a 100 people be excited about it, you just need a handful of people and that projects more broadly. And that is in the pilot stage. I would say post pilot in the rollout stage, because I think that is the even harder piece, is having the right folks to drive change, like project managers and working very closely with them. So you hear about four deployed engineers in enterprise very commonly now.
00:42:47 · Cosmin Nicolaescu, Pablo Srugo
And I very strongly believe in that, but from the kind of theoretical perspective of having folks on your team very deeply involved in driving the change, not necessarily that I send a person and I ship them and they're gonna make all the changes. Because if I send you an engineer, an accountant, whatever in your firm, no one knows them, they're not going to understand the dynamics of different teams and people at offices, they're not gonna be successful telling people what to do. But basically having someone in that role that works very closely and deeply embedded with the firm on the change management is critical for actually rolling that out and being smooth tax season over tax season. [00:43:26] S1: The other piece that I wanna talk to you about is something that you mentioned to me earlier was, obviously, you have an engineering mindset. Your brain thinks that way, and you've taken that and applied it kind of throughout the whole company that you're building, not just around how you kind of ship software. And I my understanding is you're only 20 people today even though you've raised, you know, 75,000,000. [00:43:43] S0: Twenty first person that started last week. [00:43:45] S1: There you go. So tell me more about that. In other words, how are you bringing the engineering mindset to the rest of the organization? Why are you 20 people and not 50 given what you've raised and given how big the opportunity is? And let's kind of dive into your thinking around talent, recruiting, and and operations.
00:43:58 · Cosmin Nicolaescu
[00:43:58] S0: Going back to your earlier question about how we made choices and what we end up doing, a big factor for us was cultural. What is the culture that we can we want to create and then we can create? And a few things that that we had on our list. One, we wanted to build something where you don't need to have a massive team. And this is both pre AI in general. Like, I we both enjoy working with smaller groups of people. And when you have smaller groups of people, everybody knows everyone. It's just a very different feeling. If I think about early days at both Stripe and Brex, it felt very different. And the reason why a lot of the early folks at these rocket ships end up leaving is because the company grows and they kinda lose touch, becomes much more bureaucratic, and they don't know everyone and just lose that connection. But also, especially true in a world in which we believe individual productivity increases so much more, that the coordination cost that you had already even before, like, that's the the answer. Right? Like, as a large organization, as a whole, you can do a lot more than a small team, but individually, you do less. Each individual is less productive because you have more layers, more coordination necessary, and so you're generally slower. But the sum of it ends up being faster is the theory. That cost of coordination is higher and higher and higher as individual productivity increases so much more. Like, they used to be the 10x engineer before. Now I think those 10x engineers are 100x engineers. And so I'd rather have fewer 100x engineers than those 100x engineers not being able to become 100x engineers because of the coordination costs required. And so we are very mindful about every single person that we add in the company and how in the long run we believe we can build accrual to be a much smaller company than you would typically think. And I've gotten this comment that you just made from several folks. It's like, you guys should be ten fifty, a 100 people buy down. I'm like, absolutely not. Like, it's very strongly disagree, and I think we would be in a significantly worse place from a lot of of different reasons. And that trickles into how you run the company. So we don't have management at this company.
00:45:57 · Cosmin Nicolaescu
I think it's technically everybody reports to me, but we don't do one on ones, we don't have scheduled meetings, we trust individuals to be very mature. Is it fully remote? We are remote, so we have folks in SF, New York, Seattle, LA, and then a few other random cities where we hire. But basically as long as you're in The US and you're willing to travel, we spend a lot of time in person despite the fact that we're remote, great. That works. We hire generally experienced people, like most folks that we've hired, we've worked with at Stripe, they've kind of had roles, jobs, have seen scale, And the reason for that is not because I I have anything against more junior people, it's because I think it is they require more support around them to kind of grow. If I think about during COVID, it was miserable for new grads. It's awful to be a new grad and to work in a remote company, I think. You just don't learn as much. And so we try to optimize for the kind of culture that that we wanna have. Number three is there are very loose roles, like you're either building the product, growing the product, or enabling people to do one of those two things. That's kind of it. We have very loose lines between like people who are selling the product are building stuff nowadays. Like everybody uses Cloud Code, We've built a lot of internal infrastructure with agents that can autonomously build things and analyze things and tie things together across the company, and everybody in the company uses these tools on a daily basis quite highly. I think the other week, I was looking at some at Tokonosu, which I'm not a fan of Telkonet MaxLinx by any means, but it was not an engineer. And it's not because they built a bunch of stuff. It's just like so much analysis and and kind of tying things together, and the the independence that people have as a result is insanely high right now. And by doing this, it enables us to have a lot of flexibility. We move people around every few months. Like, if you're an engineer, you're not like I'm an engineer on the client portal. Maybe you work on a client portal for one or two sprints or like a few weeks, maybe a couple months, and then you're gonna move on something else, either because you want to or because we're gonna tell you to do it such that people get out of their comfort zone and learn the code base across the board.