A Product Market Fit Show | Startup Podcast for Founders
00:21:44 · Steve Tuck, Pablo Srugo
Well, what if you could take 60 racks, these diesel engine racks you've been running for two years and consolidate them into 30 high efficiency Oxide racks and free up a whole bunch of real estate, both in power and in physical space to go deploy new capacity. So I hate to tell you it varies by customer, but it does. [00:22:04] S1: You get a sense of kind of the main thing. So just the eclipse round, when did that happen? [00:22:08] S0: We closed December 31st, 2019. [00:22:11] S1: Okay. Because what I was getting to is, I mean, when you're doing something like this, you kind of need funding. I mean, you need real funding. You can't just kind of like hack your way to something, right? So that's a huge milestone. And then I want to get a sense of if you were to think about those first, call it five years, six years until you hit what you refer to as a primary for the moment, how would you split them? Like, how would you bucket them? What were some of the main milestones, let's say, that happened in that time span? Yeah. [00:22:36] S0: I do want to mention, you know, because everyone thinks, and investors early on were like, oh, it's going to be such capital intensive business. You're going to need to raise so much money to get this thing built. And we were able to actually get the company not only off the ground and the commercial liftoff, but to profitability for $100 million. And that might sound like a lot to some. [00:22:59] S1: Today he doesn't. Today he's like, what, $100 million?
00:23:01 · Steve Tuck
[00:23:01] S0: I would say it was far, far, far less than we thought it might take. And very germane to this conversation, I think where a very high percentage of companies capsize is that they push into go-to-market expenses before they have product market fit. It is the most common failure mode of startups. And VCs don't help because they want to gas it. They want you to like push as hard and fast as possible to see like where the winners are going to be and where the winners are not going to be. And it's tough to navigate because, you know, you're trying to do a service to your investors. But I loved, I think it was maybe Peter Levine that had said, you know, when you're hiring for sales, you do not want to hire the next salesperson until you can see the whites of the customer's eyes. Like they are on you. They're all over you. You want to hire a little too late rather than too early. And there's this notion, of course, of like, well, I've got to hire the salespeople to be able to go generate the sales. And really going out and testing assumptions and having as many prospective customer conversations as possible and asking them to suspend disbelief to say, yeah, but what if, then how would you use the product? And then what would be that next stage to expand and use it more broadly across the company? And like, just steep yourself in that before you are, I've got to go, got to go hire that VP sales. My investors really want me to do it. And then, of course, that person's like, well, I got to build the team. And like, where's the VP of marketing? Like, you don't have a VP of marketing. Like, let's get that person in here. And that person has to bring in the team. And before you know it, you've got $2 million a year of expenses. And you don't even have a repeatable sales process. You may not have even built the thing that customers want. And that is a trapping that is endemic to, like, startups writ large. And is why I very much appreciate that you run the show and do such a good job of helping folks understand, you know, what are these points and these milestones and how to gauge what success looks like. Back to your question, I think for us, there was a pretty easy and obvious first milestone, which was getting the core team hired. And getting folks that were going to be able to build across the hardware and software domain.
00:25:22 · Steve Tuck, Pablo Srugo
And, you know, one of the advantages to building in the open, which is, you know, so many companies want to do this build in stealth. Like, build, build, build. Like, don't show anyone your underbelly. And then, you know, like… [00:25:36] S1: Huge launch event. Yeah, exactly. [00:25:38] S0: Yeah, yeah, big launch event. And the problem with that is that now everyone has to come up to speed on what this thing is. Why do I want it? How does it work? And what was the thought process? And who's behind it? And can I trust it? I mean, I trust is probably the most important element that you are trying to establish as you are getting a company off the ground and you are getting closer to market. And so we took the opposite approach. We were like, we're going to share everything about this journey along the way, which, by the way, was a multi-year journey. So, you know, on the one hand, you could argue like, oof, you're going to keep talking about stuff while you're building for three years. Surely folks are going to get tired and are going to move on.
00:25:38 · Steve Tuck, Pablo Srugo
[00:25:38] S0: Yeah, yeah, big launch event. And the problem with that is that now everyone has to come up to speed on what this thing is. Why do I want it? How does it work? And what was the thought process? And who's behind it? And can I trust it? I mean, I trust is probably the most important element that you are trying to establish as you are getting a company off the ground and you are getting closer to market. And so we took the opposite approach. We were like, we're going to share everything about this journey along the way, which, by the way, was a multi-year journey. So, you know, on the one hand, you could argue like, oof, you're going to keep talking about stuff while you're building for three years. Surely folks are going to get tired and are going to move on. Ad[00:26:19] S1: I'm going to ask you for a small favor, a tiny little favor. In fact, it's not even now that I think about it, it's not even really a favor for me. I'm actually trying to help you do a favor for you. If you do, just hit the follow button. You won't miss out on the next episode. You'll see everything that we release. If you don't want to listen to an episode, you just skip it. But at least you don't miss out. This is one of the kind of tactical deep dives that we're going to do. So let's do it now, actually, because it fits in the storyline. When you say build in public, like what specifically did you do? Like a PR, you know, once a quarter? Was it, you know, newsletter to customer? Like what are some of the things that you put in motion as part of this kind of build in public idea?
00:26:19 · Pablo Srugo, Steve Tuck
Ad[00:26:19] S1: I'm going to ask you for a small favor, a tiny little favor. In fact, it's not even now that I think about it, it's not even really a favor for me. I'm actually trying to help you do a favor for you. If you do, just hit the follow button. You won't miss out on the next episode. You'll see everything that we release. If you don't want to listen to an episode, you just skip it. But at least you don't miss out. This is one of the kind of tactical deep dives that we're going to do. So let's do it now, actually, because it fits in the storyline. When you say build in public, like what specifically did you do? Like a PR, you know, once a quarter? Was it, you know, newsletter to customer? Like what are some of the things that you put in motion as part of this kind of build in public idea? [00:27:00] S0: So the first thing was kind of cataloging and documenting everything we did before thinking about how we would share it. And, you know, very, very early on, like going actually back to when we were fundraising, we knew we weren't going to see our families for the better part of three or four weeks. So we went out, which seems a little reckless maybe at the time, but we spent this like a huge amount of money, like 500 bucks on like podcasting equipment. And it was in Jess's garage, actual garage, and set this stuff up. And we would go down to Sand Hill and do meetings all day and then drive back. And at 7 p.m., we would sit there and record the day's events for our families. This is just so we could share with our...
00:27:00 · Steve Tuck, Pablo Srugo
[00:27:00] S0: So the first thing was kind of cataloging and documenting everything we did before thinking about how we would share it. And, you know, very, very early on, like going actually back to when we were fundraising, we knew we weren't going to see our families for the better part of three or four weeks. So we went out, which seems a little reckless maybe at the time, but we spent this like a huge amount of money, like 500 bucks on like podcasting equipment. And it was in Jess's garage, actual garage, and set this stuff up. And we would go down to Sand Hill and do meetings all day and then drive back. And at 7 p.m., we would sit there and record the day's events for our families. This is just so we could share with our... [00:27:42] S1: It's hilarious. I've interviewed like over 300 founders. I've never heard of anything close to that. Pretty unique.