A Product Market Fit Show | Startup Podcast for Founders
00:15:22 · Ron Spreeuwenberg, Pablo Srugo
[00:15:22] S1: So I would say when we're at this third – after finishing this – call it this third stage of interview, the fourth stage is when we started to transition to designing the product. So this third phase, we were collecting all this way more detailed information. Then next step is taking that information and turning it into some solution. So being an ex-consultant, naturally, I went to PowerPoint, started creating some slides. And they were basically just screenshots of what the product would look like. This was also a very tangible audience, which was another thing that was helpful to learn by visiting the physical environment. They want to see something. It was very hard to conceptualize things to them and concepts. They wanted to see it, and feel it, and understand it. So that was also helpful information. And so creating these PowerPoint slides, I just created, again, screenshots of what the product might look like, seven to eight screenshots. And then that was then going into the next phase of this customer discovery where I would then bring this in. And I would bring it in, and I would present it on an iPad. So it looked like a product, which I think was important as well, to present it in that way. [00:16:50] S0: Was it just you, by the way, at this point? [00:16:52] S1: Me and my co-founder, Alana. She was and is our CTO. So she was all on the engineering side, and we were working collaboratively on the product design at this point. [00:17:03] S0: Got it.
00:17:03 · Pablo Srugo, Ron Spreeuwenberg
[00:17:03] S0: Got it. [00:17:04] S1: At this point, I'm actually showing them something. So this is a huge shift from the previous round of conversations where now I'm going in and I'm saying, okay, these have been great conversations with you. We've taken all the information you've provided and information from some of our other conversations. We've actually put something together. And I just want to show it to you and get your thoughts. And again, it's very non-intrusive. Again, it's putting them in the position of they're the expert, and I want to get their feedback and get their thoughts. And we just walk them through and just get their reactions. And again, you're getting lots of great product feedback, learning more about certain workflows. We learned, for example, that there's also parents are sometimes sending them information, which is helpful for them to know. What happened with my child in the morning before I dropped them off? Did the infant have their bottle or not yet? That's helpful for them to know. And so this was also a critical stage in terms of A, getting feedback on what that view on the products actually going to be, and look like, and do. And you also just learn a whole bunch of what I'll call super-detailed things that you just, you wouldn't know unless you're getting to this level of detail. [00:18:35] S0: By the way in any of these steps did you talk about pricing like even asking like "Hey how much would you pay for something like this?"
00:18:35 · Pablo Srugo, Ron Spreeuwenberg
[00:18:35] S0: By the way in any of these steps did you talk about pricing like even asking like "Hey how much would you pay for something like this?" [00:18:42] S1: Yeah, I did at that point as well, start to bring in pricing a little bit just to get a sense of where people's heads was at. And again, giving just specific anecdotes, and this is where you have to take all the information you get and be able to decipher what you're going to do with what. We had someone say, look, this looks really great, but your competitor charges a price, which is a one-time price. And then you never have to pay again. And this is 2013. And it's like, okay, we know that the market's not going that way. Cool, but maybe you'll figure that out eventually. And you'd have folks be like, this is awesome, but just if you change the font here, we would probably buy it. You're getting those early signals of who’s ready for this and who's not. [00:19:43] S0: And the other thing I wanted to ask is, and this is in rough terms, but how long did each step take? So calling the 10 customers, and doing the 50 interviews, then this piece of the wire frames. How much are you – are you spending a month in each step, couple months, weeks? [00:19:57] S1: I would say it was probably about a three-to-four-month process. And then we built MPV v1 of the product in two to three months with a month of overlap of building while continuing to get information. So in total it was six months from when we were looking up in the yellow pages to having v1 MVP.
00:19:57 · Ron Spreeuwenberg, Pablo Srugo
[00:19:57] S1: I would say it was probably about a three-to-four-month process. And then we built MPV v1 of the product in two to three months with a month of overlap of building while continuing to get information. So in total it was six months from when we were looking up in the yellow pages to having v1 MVP. [00:20:29] S0: Perfect, okay, so let’s call it six months of research. Did you try and fund-raise during this time or shortly thereafter, or was it all bootstrapped? [00:20:37] S1: All bootstrapped. [00:20:39] S0: Any thoughts on that? Did that help or hinder? [00:20:41] S1: I think it helped because we took our time to get the right amount of information. This wasn't a sector or a business that was going to be overnight boom to bust. And it kept our culture pretty lean and not wasteful. [00:20:59] S0: And did you ever think through or worry much about TAM?
00:20:59 · Pablo Srugo, Ron Spreeuwenberg
[00:20:59] S0: And did you ever think through or worry much about TAM? [00:21:04] S1: No mostly because, I don’t know, this is maybe more of a personal view, but I just have the view of way too much emphasis is placed on that, especially in the early days. You don't know what your TAM's going to be. You don't even know what your business is going to be in ten years. Even HiMama as an example, we started out with the parent communication, but then we did all the administrative capabilities within the center, like staff management, and ratios of staff to children. We did payments, which is a whole new revenue stream, tuition payments. We acquired a company that does curriculum. So we have – we're now on a whole curriculum. Each of these things doubles or triples your TAM. And so I'm a pretty big proponent of just getting started, and getting a business going, and understanding the space. If you understand the customers really well, which is another part of bootstrapping, I think you end up really understanding your customers well. There will be more market opportunities as you grow.
00:22:14 · Pablo Srugo
[00:22:14] S0: Ron, you might be surprised on just how true that is when I talk to – just through this show. So many post-Series B stage founders who now have $10 million plus AR businesses who in the early days – I mean maybe in your case, maybe you thought through, okay, there's X number of daycares generally. If they pay this much could be a big business. And that's the extent to it. But the whole focus really is just on can we actually deliver real value to a daycare or 10 daycares? Is it going to be differentiated enough to everything else that they might be doing, or buying, or status quo, or whatever it is, and then just putting one foot in front of the other. And honestly I think especially if you take that bootstrap approach, these things are linked. From the founder's perspective, does it really matter? If worst case scenario you succeed, and it's a five or $10 million business, and then you don't know where to go, you got something pretty solid, as long as your ownership was good. And you can get lost. And I remember doing this at Gymtrack. You can get lost in the story and just in the clouds of trying to create this billion dollar plus opportunity so that you can win over VCs like myself who think maybe a bit too much about TAM. So yeah, I think that's valid. I really do think it's valid.