A Product Market Fit Show | Startup Podcast for Founders
00:17:47 · Andrew Butt, Pablo Srugo
[00:17:47] S0: You're right. I think we could see there was demand. I think we didn't know in the early days how much demand there was and so, for example, how many industries actually had these rebates and was it only distributors or would it also be other types of companies in the supply chain and was it just the UK or would it be other countries? We knew there was demand but we didn't really know how big the market was in those early days. Then I think also trying to come up with a standardized approach wasn't that straightforward because with bespoke you just build whatever anyone wants and you do what the customer tells you to do whereas with the products, you are really saying, "This is how the product works; this is best practice; and no, it can't do that but, don't worry, because this is how you should do it." Then, of course, you get pushback and customers say, "No, we are unique and that will work for us." That was still quite challenging to standardize on an approach that we could put into our product. [00:18:38] S1: It seems to me that might be one of the hardest parts. I'm curious if you remember any stories around building V1 and just making the choices between, here's five or 10 different custom iterations that we've done for these different customers. This is what we need; this is what we need and then the debates around why or whatever.
00:18:56 · Andrew Butt
[00:18:56] S0: One of them, which was really interesting, was customers wanted to be able to get their trading partners – so that means if you're a distributor, it would be your suppliers and if you're a manufacturer, it would be your distributors and your retailers – to log in to a portal and then access certain information on the rebates and maybe approve and sign off an agreement and various things. They all wanted a custom portal that was branded for their company and where they could control the users and set the permissions and that's what everyone wanted. It was actually my cofounder so I can't take the credit for this one, David, he said, "No, what we'll do is we'll have a standard portal which will just be enable.com and every trading partner has to register on Enable." "Our customers won't have a unique portal that they control. It would just be the standard platform that everyone – and then we will effectively own the trading partners because they'll register with us and then we'll make it many to many so that each trading partner can then see other trading partners." That was something where I thought that will never work because customers just will refuse to do that. When you went back to the bespoke customers, they didn't want that but what we found was with new customers, we just explained that was how it worked, that just is how it performed and they were like, "Sure, that sounds fine." That was just one story and that's been good because we've now got literally tens and tens of thousands of trading partners of our customers all registered directly with Enable and it's a many-to-many marketplace. That was a really, really good design decision that we made in the product.
00:20:29 · Pablo Srugo, Andrew Butt
[00:20:29] S1: That's a great story and just what moves to mind is, did you do any classic customer discovery as you were designing V1 or did you just stay – you had some exposure because of what you built and then you just put your heads down and built it? [00:20:44] S0: It definitely was iterative and those early customers on the product – we did have a product but it was very narrow. Again, one of our skills back then, and hopefully – I think we do still have it but it was a particular standout aspect back then, was actually user interface design. Again, my cofounder, David, that was his real skill. Our software looked really good and in those early days we didn't have that much surface area but what we did have was very – had a lot of boardroom appeal and it was easier to sell. What that meant, to answer your question, is we would get the first few customers to sign up and then we were building the products with them because we had this small surface area and we had to actually build it out as we were implementing it. [00:21:30] S1: What was that MVP and how did you decide what the smallest – you mentioned surface area. What was the smallest thing you could build that someone might pay for? [00:21:38] S0: It was really a repository of agreements and nice tools to be able to create the agreements in a structured way and search them and view them and so on. [00:21:50] S1: Like contracts, literally the contracts?
00:21:50 · Pablo Srugo, Andrew Butt
[00:21:50] S1: Like contracts, literally the contracts? [00:21:52] S0: Yes, exactly, so the rebate contracts where we'd say, "This is between Pablo and Andrew and there's three different line items and first one is that I pay you 5% of all purchases" and so on, so building that contract and having that in a nice repository that you could search and report on. [00:22:09] S1: Before that, that would be, what, like a Microsoft Word document? [00:22:13] S0: Yeah, exactly. That's a good point because very early you could create or the system would dynamically generate a PDF version of the contract from the data you'd put in whereas before customers would have an Excel spreadsheet that they had to manually maintain and then a Word document, to your point, of what the actual contract was and then the two would often be different. Then I think, also, the calculation engine was really important so calculating those rebates by pulling in the transactions and reconciling them with the agreements. That probably was it. That's what we built first. Then people said, "We need to do forecasting and we need to do cash collection and we need to do approval workflow." These were all things we didn't have and we had to – we won the customer and then basically build that out while we were implementing it. [00:22:56] S1: What would you say was the main ROI of especially that early version of the product? Why did people buy it? Was it time saving or –
00:22:56 · Pablo Srugo, Andrew Butt
[00:22:56] S1: What would you say was the main ROI of especially that early version of the product? Why did people buy it? Was it time saving or – [00:23:06] S0: It was actually better than that. It was financial return on day one because most people weren't calculating these rebates at all or correctly. If you are the distributor, let's say, you typically would just rely on the supplier paying you this money. [00:23:22] S1: You rely on your boss to give you the right commission. That's the – okay. [00:23:27] S0: Exactly. You don't get a statement, necessarily. You just get the check and maybe it looks about right. What we found was we could run an audit where we would take, let's say, your top 10 manufacturers, take your last 12 months of your transaction data, put all of that into Enable and Enable would say, "You should have received $10 million." Then the customer would say, "Oh, we only got $8 million" and so we could find that missing money very, very quickly. [00:23:53] S1: Those are the numbers, a few million dollars left on the table, sort of thing. Is that common? [00:23:57] S0: Certainly. We've seen that many, many times. Yeah. Some of our early customers and ongoing as well, we certainly have found multimillions in a single customer. It's not always that much. It might be a few hundred thousand but it does run into the millions as well. [00:24:12] S1: You're literally finding money on the table. Is that how you went into that audit you just mentioned? Was that early on part of your sales process like, hey, let us run an audit and we'll show our value to you?
00:24:12 · Pablo Srugo, Andrew Butt
[00:24:12] S1: You're literally finding money on the table. Is that how you went into that audit you just mentioned? Was that early on part of your sales process like, hey, let us run an audit and we'll show our value to you? [00:24:22] S0: I think I'd probably be overstating it because we just didn't know much in those days and we weren't – we didn't really have a sales process. I think in the early days there was just – because there was just nothing available, there was no rebate management software in the market, we were winning customers who were desperately looking -- and they knew they needed it and they knew they were missing money already and we didn't have to sell that to them because they knew it already. Then they just found us and then they said, "Wow, this is exactly what we were looking for." [00:24:49] S1: This sounds like a classic hair on fire problem where people act -- there's nothing, I would say, more compelling in B2B than when you can go to a customer and say, "We will make you more money." especially if that money's right there and you just help them literally find it , it's pretty compelling. Walk me through those first 10, 20 customers. You mentioned them coming to you. Was that really what it was, mainly inbound? They were just finding you. If so, how did you make yourself discoverable? I'm curious how I landed them.