A Product Market Fit Show | Startup Podcast for Founders
00:33:24 · Pablo Srugo, Andrew Butt
[00:33:24] S1: You'd already made the move, by the way, or you were still thinking ? [00:33:26] S0: No. This was just like a month or two after contemplating that we might move. What was happening was we'd got, by then, let's say a million of ARR or something but it was growing slowly because we hadn't got any – we were not focusing on it. What was clear is we would have to have a really good growth rate at the point we closed the Series A. I then had to basically divert resources between the services company and the product company and accelerate that growth. That took about a year. There were a couple of visits backwards and forwards to the Bay Area planning things. Then it was November, 2019 that we were just about to move – we were about to make the move. We'd got our lease signed on an apartment and so on and we were meeting investors for real. I met a bunch of investors and said to them, "I'm going to be here in January full time but I'm just showing you what we're doing. If you are interested, let's meet again in January." Then we actually got here December, January time. Part of that story was, a lot of the investors weren't interested, obviously, as always, but there were a couple who were and they didn't want to wait so they said, "Look, we want to do this now." In the end we actually signed the term sheet with Menlo Ventures who led the Series A before we physically arrived in San Francisco. [00:34:49] S1: What did they see, because, again, did they understand the space or what was it from their vantage point that made them excited?
00:34:49 · Pablo Srugo, Andrew Butt
[00:34:49] S1: What did they see, because, again, did they understand the space or what was it from their vantage point that made them excited? [00:34:56] S0: I think they were very smart individuals and they didn't understand the space because there wasn't really a space here and no one else was doing this so I don't think they'd seen this before but they – something resonated with them. Part of it was the network effect that I've mentioned where you win a customer and then they want to bring all their partners with them and then they have other partners and so on. That was part of the interest. We just got their curiosity and they were impressed with the numbers because, like you say, getting to a couple of million while bootstrapping is or was unusual [00:35:27] S1: You had gone from about a million to, what, two and a half in that year? [00:35:30] S0: Yeah, that was the type of thing. They then took some time to do some diligence and to make some calls and speak to some customers and then they were like, oh, actually this does sound really interesting. They had that vision which most of the other investors didn't have back then. [00:35:46] S1: How did it feel like when you closed that round and you—did you feel like, whoa, I can breathe all of a sudden?
00:35:46 · Pablo Srugo, Andrew Butt
[00:35:46] S1: How did it feel like when you closed that round and you—did you feel like, whoa, I can breathe all of a sudden? [00:35:52] S0: Yeah. No, it was hugely, it was hugely exciting to go from a couple of weeks or a couple of months of visibility to a couple of years plus of visibility in one day. That was huge. I remember the day of the close. It was actually February the 19th, 2020. We had an all-hands meeting that day and we announced to the whole company, look, this is now closed. We've gone from a few weeks of breathing room to a few years of breathing room. Now we've got the fuel to really drive and focus on this and we're not going to be beholden to the services work where we just have to do whatever anyone wants us to do. We can actually drive our own agenda. That was huge. I remember originally thinking, if we could raise $10 million that would keep us going forever. We'd never raise anymore. The crazy thing now, as you pointed out, is we've now gone on and raised significantly more than that. I think the investment required to build a significant global company is probably higher than most people realize and certainly higher than – I think some people are more clever and they can do it with a lot less money but for me, it has been more expensive than I first anticipated. [00:37:02] S1: Yeah, I mean, you've raised nearly $300 million now, so. [00:37:05] S0: Correct.
00:37:05 · Andrew Butt, Pablo Srugo
[00:37:05] S0: Correct. [00:37:05] S1: Congrats. By the way, one more question on that. Do you remember any – especially having it being your first goal round, really fundraising, do you remember any particular meetings, rejections? We're all used to getting no's as founders but every now and then there's just something that hits a little harder. Maybe they pinpoint something that's a little bit more of a doubt in your mind and you're like, ah, I wonder if they're right. [00:37:26] S0: Yeah, definitely. I think one of the things is implementing our system fully does take a bit of time because we're connecting to the customer's ERP system usually, and we're pulling in all their transactions and then we're pulling in all their master data and most people's data quality is low. It's not like a Dropbox or a Slack where you can sign up and then on day one you are using the product and recognizing revenue. This is more where you have to implement it over a period of a few months. I think one of the big questions was, can that really scale? Can you really get, say, 1,000customers because if it takes a few months to implement each one, then how does that scale? I think that was a good pushback, which I thought – I wasn't sure we'd be able to overcome. [00:38:13] S1: We'll stop it there and I'll just end on the two questions that we always end on. The first one is, when did you feel like you had true product market fit?
00:38:13 · Pablo Srugo, Andrew Butt
[00:38:13] S1: We'll stop it there and I'll just end on the two questions that we always end on. The first one is, when did you feel like you had true product market fit? [00:38:23] S0: I think probably a couple of moments, really. The first one, I think, was once we had, say, a dozen independent customers that weren't associated with each other in any way and they weren't friends and family. They were unique companies that had encountered us or we'd encountered them and we had them all live on the product on the same code base then that was a really good feeling of, this isn't just some system we've written for a couple of companies or that we've persuaded someone to use. We've actually got 10 or 12 distinct companies all running on the same code and getting value and renewing, for example, renewing their first year that type of thing so I think that would be a big marker. Then I think the other one was, after I came out here to the Bay Area and we hired an amazing revenue leader, a guy called Jerry Brooner, who's still with us today. He started to build go-to-market and get real customer velocity where we were signing up 5, 10, 15, 25, 30 new customers per quarter then that also – because originally we were signing up a customer every now and then and at the point where we were doing, say, 25 customers a quarter, net new, then that definitely was a clear signal.
00:38:23 · Andrew Butt, Pablo Srugo
[00:38:23] S0: I think probably a couple of moments, really. The first one, I think, was once we had, say, a dozen independent customers that weren't associated with each other in any way and they weren't friends and family. They were unique companies that had encountered us or we'd encountered them and we had them all live on the product on the same code base then that was a really good feeling of, this isn't just some system we've written for a couple of companies or that we've persuaded someone to use. We've actually got 10 or 12 distinct companies all running on the same code and getting value and renewing, for example, renewing their first year that type of thing so I think that would be a big marker. Then I think the other one was, after I came out here to the Bay Area and we hired an amazing revenue leader, a guy called Jerry Brooner, who's still with us today. He started to build go-to-market and get real customer velocity where we were signing up 5, 10, 15, 25, 30 new customers per quarter then that also – because originally we were signing up a customer every now and then and at the point where we were doing, say, 25 customers a quarter, net new, then that definitely was a clear signal. [00:39:37] S1: Awesome. Then the last question is, if you could take everything you've learned through your journey at Enable and go back to your younger self when you were just starting in, in 20 15, 20 16 with one piece of advice, what might that be?