From Zero to a Million: SaaS Founders Share Their Growth Journeys [357]

This is a machine-generated transcript

[00:00:00] Omer: Welcome to another episode of The SaaS Podcast. I'm your host, Omer Khan, and this is a show where I interview proven founders and industry experts who share their stories, strategies, and insights to help you build, launch, and grow your SaaS business. Welcome back to the SaaS Podcast for all you regular listeners and viewers, and a special welcome to you if you're joining us here for the first time.

So today we're gonna do something a little different. Over the past 10 years, I've had the opportunity to interview over 350 founders and entrepreneurs delving into their stories, experiences, and knowledge. And these conversations have been a treasure trove of information and insights, covering a wide range of topics relevant to the SaaS world.

So I thought it'd be both enjoyable and interesting to look back over the last six months of interviews and handpick some of the most valuable moments for you. In this episode, I'm gonna share five highlight clips that contain insights and lessons, which I believe are gonna be super helpful for early-stage SaaS founders.

Now, let me tell you, it wasn't easy to select just five clips. Every interview I've done has provided unique perspectives and pulls of wisdom, but these five highlights truly encapsulate some of the most valuable lessons. That can help shape your SaaS journey. So a quick sneak peek at the five clips.

First, we have Jeremy King, who achieved remarkable feet by taking his start from zero to a million in ARR in less than eight months. And the secret is success was understanding his customers inside out, even before having a product. You'll discover how his approach could be a game changer for your startup.

Next, we're gonna hear from Melissa Kwan, an entrepreneur who defied the conventional startup wisdom instead of rushing to. Launch, she embraced a patient and meticulous approach focusing on quality. Her story is proof that sometimes taking your time and building something truly exceptional can lead to remarkable success.

You'll hear from Christian Owens, the founder and CEO of Paddle, almost a hundred million ARR SaaS company about his exciting perspective on business. He's not afraid to start new projects and believes in making money right from day one. You'll gain some valuable insights on taking that crucial first step towards finding a solution and get inside Christian's head about how he approaches building new businesses.

Then we'll delve into Trevor Kaufman's rollercoaster journey with Piano. He faced numerous challenges, market rejection, and even had to sell his own house to keep the business alive. But his story is a testament to the power of belief, resilience, and finding success against all odds. Hopefully, you'll also be inspired by his unwavering determination.

Lastly, we'll explore Raul Vohra's journey with Superhuman. He dedicated the year to truly understand his potential customer, developing a powerful system called the Product Market Fit Engine. By focusing on early adopters who were genuinely fallen in love with the product. Raul has achieved some phenomenal growth and success with Superhuman, so I hope you enjoy the episode.

This first clip is a conversation with Jeremy King, the founder, and CEO of Attest, a research platform that enables companies to engage directly with over 125 million consumers worldwide and do market research faster. In 2015, after spending nine years as a McKinsey consultant, Jeremy decided to build a SaaS product that would make it easier for B2C companies to do market research.

He realized that often these companies were guessing what consumers wanted instead of using market research data, and he was convinced that he could solve the problem. His wife gave him six months to get the business going, so he knew he had to work fast, to validate the idea, build a product, and get paying customers.

The clock was ticking. But what Jeremy did next was surprising. In this clip, Jeremy shares his unconventional journey of taking his SaaS startup from zero to a million in ARR in less than eight months, and then eventually to eight figures in ARR. His secret, well, let's just say he went into stores at a train station and started asking questions, and then spent weeks interviewing consumers, gathering pressures, and insights.

Now you may be wondering why he would do that, and that's what makes this segment so crucial for early stage SaaS founders. It's all about knowing your customers, validating your hypothesis, and uncovering the real-world value of your product before you even have a product.

Okay, great. So you've got the idea. What kind of did, did you kind of take the McKinsey approach to kind of scope out the opportunity here and, and really do the research before you started kind of jumping into building the product, how did you get started?

[00:04:52] Jeremy King: Very much. So in the, I did do the McKinsey thing, all the desktop research about the TAM, the opportunity competitors, strengths, weaknesses, dynamics.

I was looking for not only a large tam, but also some significant tailwinds around business model or funding sources, customer needs, the development of technology and also different scalable methods that we could put in place to cause this thing to work bigger and faster and more scalably than doing a sort of terrible, quick and dirty version.

We sort of impart to build the hard thing. So I did all of the desktop work to discover roughly where to look, what to build, and what would have the greatest chance of success with the most positive forces behind it. And then paired that with some pretty weird practical stuff. So two stories here. One, before starting even incorporating the company, I went out and did some practical work.

Second, I tried to set up to fast track the first two years of the company and compress that into about four to six months. So on the first one, I have this hypothesis that most demand for research happens in the corporate head office in a really important function in the org chart where all the data happens.

But everyone in the org chart deep down, really wants research. Everyone has questions, everyone needs answers. Everyone wants to understand consumers better, and so the turtle demand is much higher. So to prove that out, I went to Waterloo Station. I used to live around the corner during morning rush hours.

An afternoon rush hour and evening rush hours. I went to two stores on the upper balcony of Waterloo Station and said, what do you wish you knew about your target customers in Waterloo Station that would be very valuable to you where you know nothing right now? And out came this flood of mystery, intrigue, and guesswork.

They said, okay, and these two stores were Keels skincare, and Links accessories, and interesting corporate gifts. Completely butchered what they're called. By the way, I don't even know what they do anymore. So I went to the two store managers and they poured out all these questions. It was very clear that they had demand.

What was also interesting is that, their questions remarkably consistent. What's unique about Waterloo Station and the customers that come through here and their needs that's different from what our two shops stand for and the supply that we've got here? What are the occasions people are buying for?

What stops them from coming upstairs? Do they even know we're here? What should we sell to them that we can offer that we don't put in the front window or prioritize or emphasize right now? What will get 'em to come upstairs? What sort of offers do they have? What occasions they're buying for? This flood of demand came out.

I was like, okay, interesting. Immediately these people who have no access to research have really valuable, important questions, and there's a lot of consistency about their use cases. So what I did was I promised these two store managers, I'm gonna physically go out for each of you and interview a hundred people each in Waterloo Station and ask them your most valuable questions.

I'm gonna tabulate that data, I'm gonna bring it back to you. And I physically did that over the course of two weeks. And I tabulated the data, took it back, and they were like, This is the most useful thing that's ever happened, and I think this will really help me and my store make better decisions about how we sell and serve these Waterloo customers.

I've always thought deep down that these customers want something different from keels or links than we set out to create, but yet head office, don't let me do that. Here is some evidence that will cause me to do ranging differently, to do promotions differently, to market downstairs and suspende some budget on that, and I'll know roughly what the ROI needs to be for the first time.

Can I share this with head office? Can we do this again for other stations? Can I do this in more places and countries and use cases and product lines? And by the way, we've got Easter coming up. What can we do about that? And so there was clearly hypothesis proven around more demand and hypothesis proven about everyone needs this, not just professionals doing research projects.

[00:08:43] Omer: Did, did you charge them for the work you were doing?

[00:08:45] Jeremy King: No, no, no, no. I like the value I was getting was testing hypotheses for a test and also very early product prototypes around what do you need to know and how do you want to receive the data. So if anything, I should have been paying them.

[00:08:58] Omer: So like how did, how did they react to you coming in?

Like, you know, it kind of sounds like, you know, a bit of a weirdo coming in, saying, asking these questions and saying, I'm gonna not just interview like 10 people for you. I'm gonna spend like two weeks and a hundred people and come back and do all of this work and you don't have to pay for it. Were they skeptical?

Were they, like, what was the reaction?

[00:09:20] Jeremy King: I think that both of them were deeply skeptical. They were like, who the hell is this guy? And are you a mystery shopper? Have you been sent here by firm legal to test our data security? And then I two, I tried to keep two motivations at heart. So one is I try to be very disarming, so I try to basically say, you know, what's the worst that can happen?

And. Tell me some of your biggest problems. You don't need to tell me all your biggest problems, but tell me the ones that you can actually learn from consumers. I don't need to know why. I just need to know what you wish you knew. That's the only thing I care about. And I will promise to come back to you on this day at this time, and I'm gonna ask you when you are on roster, on Shift here, and I'm gonna converge that time and I will be here.

I think the second thing that worked in my favor is I think they both fundamentally de believed that I wasn't gonna do it. And they were like, yeah, yeah, I'll believe it when I see it. So when I did come back, I think they were more shocked when I came back with real data and was happy to talk through it for an hour and a half each.

Then I was, then they were shocked when I asked in the first place. So using both of those things to our advantage, I, I always like to think about interest alignment. Where are the, where are the fears and where can, how can we preclude them or remove them? And where are the interests around points of value and how can I align with them?

And both of those had a fear of losing data or doing something wrong. Both of them had no belief I would come back. So I tried to demonstrate to them I would come back. And then when I did come back, I really followed through and made it valuable to them. And actually went and did the work, and that helped melt away all of these concerns.

And that's some of the tactics that we still use in our go-to-market today.

[00:10:46] Omer: All right, in this next clip, we step into the entrepreneurial journey of Melissa Kwan, co-founder and CEO of eWebinar, a SaaS platform that lets you deliver automated webinars for sales demos, onboarding and training. Prior to eWebinar, Melissa co-founded Pacio a check-in solution for open houses used by realtors, which she sold for a mid seven figure sum in 2019.

Just two months later, she set her sights on eWebinar, beginning as a solo non-technical founder. Melissa faced challenges in getting the product off the ground, and her initial efforts with the development shop resulted in significant cost time. And even a lost friendship. The interesting thing about Melissa's story is that her approach to building eWebinar goes against conventional startup wisdom.

She didn't subscribe to the launch fast and be embarrassed by your product adage. Instead, she adopted a strategy marked by meticulous patients spending over two years developing her product until it met her high quality standards. While some people might consider her approach counterintuitive in the fast-paced startup world of SaaS, Melissa's strategy has proven itself.

eWebinar grown to $750K in ARR so far and has got around 700 customers all while being entirely bootstrapped. In this upcoming clip, Melissa unpacks her unique approach. She emphasizes the importance of understanding the problem at its core, using this understanding as a guide in product development.

She talks about her unwavering focus on quality and the urgency being driven, not by competition, but by careful financial projections. It's a fascinating glimpse into the world of a startup founder, unafraid to defy conventional wisdom. So David comes on board, you have a CTO back on on the team. What did you, what did you do next?

How did long did it take to actually fix everything and get to a point where you were able to ship the product?

[00:12:35] Melissa Kwan: Probably another year and a half. So there was a bit of overlap between David and the workshop and the dev shop, just trying to bridge things together. But we built the product for like, I think two years before anybody saw the first version of it.

And I just went all in. Right. You know, people are like, oh, you should talk to your customer, show 'em things all the way. I didn't do any of that because I knew this problem so well that I didn't wanna be distracted. And I think one of the, I don't need to validate the problem. The problem already exists, right?

There are other companies with similar products that have good businesses. One of the best ways to validate your idea is the fact that someone else is doing the same thing and you just know that you can do better. So it took, yeah, a, a good two years before we, we put it out there. And because we are bootstrapped, it was particularly important to me that we start charging from day one.

And that for me is, is not as hard as for other people because I, I have a background in sales, right? So I know how to create value and get people to put in their credit card, but it still has to be a good product. And because I've sold business software for so long, I knew exactly what it would take for someone to give you their credit card.

So we probably spend an extra six months just going the extra mile, like making sure the last 2% was perfect before I put it out there. And the team was actually quite frustrated cuz they're like, why don't you just put it out there? I'm like, I can't, like, it is so hard to get your first audience to come on board that.

If you show them something that's less impressive than they, what they expect, it's gonna be extremely hard to get them back. So I didn't wanna put anything out there until I knew that somebody would pay for it.

[00:14:23] Omer: Okay. So let, let's unpack that a little bit because on, on the face of it, this is a conversation I've had countless times with founders and sometimes, not always, it turns out.

There was just this, it was about perfection. It was this reluctance to just get this thing out there and they look back at it and they say, yeah, you know what? I could have probably done it in a third of the time. If I could go back. I think with your situation, there are a couple of things that I think are worth understanding.

When you said you really understood this problem well, how many webinars had you personally done before you started working on eWebinar?

[00:15:11] Melissa Kwan: Wow. I can't, I can't even count the number. But Pacio, I ran that company for five years. Three of those years we had a product and webinars was the only way in which I was able to deliver a demo.

Cuz you're not sitting beside someone. Right? When I say a webinar, I'm also counting like one-on-one meetings. And I would do them every day, like I did them every day for for three years. Whether it was a demo or whether it was a kickoff or some onboarding or new feature training. Like I was always using the webinar platform that sucked the least, and it was like, go to webinar and join me. Then Zoom right?

[00:15:55] Omer: Over a thousand?

[00:15:56] Melissa Kwan: Probably over a thousand.

[00:15:58] Omer: So I think that that's important. That's an important piece of information because people can go and look at a problem in a market. And think they understand it, but maybe they've only spent a few weeks or months researching and there are so many nuances that, you know, if I went into the webinar space, I'd kind of say, well, I kind of know what, how webinars work and, and how to build a software and all of this stuff.

But there's so much nuance when you actually go through and do a thousand plus webinars as a user. That you have such a deeper understanding of the problem and you've already gone out and researched and looked at other products, and you were turned off by a lot of them because they didn't have that great first impression.

Right. From what I understand. So it kind of makes sense that you've gone through this, you have this really deep understanding, this deep pain, and you want to get this right. But then on the other hand, you told me earlier that, hey, you know, I would hate the idea if someone beat me to this and got there first.

And so with that lens, it feels like where was the sense of urgency? To get this thing out sooner because a lot can happen in two years.

[00:17:19] Melissa Kwan: Yeah. And I'm glad that not much did happen in two years. Right? Like the first thing that you do, you incorporate a company and then what do you, you go to like the, what is that?

Google alerts, like if there's like a keyboard thing where you can get like weekly newsletters or like a summary. And then the second thing you do is you basically just keep an eye on what's coming out on, on the web. And every time I get this email, I'd be like nervous. I mean like what else is out there?

And I'm constantly just looking for like webinar, webinar automation, vid, interactive video. Like I'm constantly searching. I mean, the thing is the market is so big that there's, there's enough for everybody. Right. You don't have to be the best in order to get customers. You could be okay and so have like find your tribe, right?

So part of me was worried that someone would do a better job than me, but part of me was like the pie is so big that like I don't have to really worry about, I don't really let those things get to me. But you obviously wanna see like what the market is doing, what your competitors are doing. But I mean, when you're bootstrapped and when, when I say bootstrapped, like David and I both put in capital.

And of course we, we don't pair ourselves. I ha I still haven't paid myself. It's been four years and we had some friends and family investment in the beginning to just, to get the, get the company off the ground. But there is like an end cash date where you're not gonna have any more money. That's the urgency.

Right. And I'm like, OCD about like financial projections. One of the most valuable things that, like somebody taught me in my previous startup was how to do financial projections. So I always have projections two to three years out, and I knew exactly how much revenue we need to make at which month to break even, how much things have to cost, like who can we actually hire, how much can we invest?

So all those numbers were always in front of me. So it wasn't so much like an urgency as it was like. Just a practical decision that you can't sit on something forever.

[00:19:24] Omer: The next clip is from an interview I did with Christian Owens, the founder and CEO of Paddle, a payments infrastructure provider for SaaS companies.

Christian started building websites when he was just 12 years old. He walked into a local high street store and asked if they wanted him to build. A website for them. His first customer was an Indian restaurant at 14 years old. Inspired by Groupon, Christian persuaded a number of software vendors to participate in selling a discounted software bundle to their email lists, and generated over a million dollars in sales.

Today Christian is running a company that employs nearly 400 people, is close to a hundred million dollars in ARR and has raised $300 million in VC funding. Paddle also recently acquired profit well in a deal worth $200 million. But what makes this discussion truly special is Christian's unique approach to business.

He views business problems as any other issue and has always been on the move to solve them. This mindset combined with his natural pragmatism has played a key role in his success. You know, to me, Christian stands out because he's not afraid to start new projects, and he believes in making money from day one.

He doesn't obsess over making a huge hit straightaway. Instead, he's all about taking the first small step towards finding a solution. Now for early stage SaaS founders out there, this is a golden piece of advice. If you're stuck in a rut, unable to start because the problem seems too large, or you're waiting for the perfect product idea, stop, listen and learn from Christian's approach. It's not just about the end game, it's about the journey and the incremental steps that you take towards your goal. There's something about the way you think and approach problems that it, that, that kind of lets you move and start running with these ideas quickly.

So what is it? Is it just you, just, is it just the curiosity when you have something there and you're like, okay, I just want to go out there and see what it is. Or do, do you just feel like you have a, you know, very high sense of confidence about yourself and your ability to go and do these things? So what is it, because there's, there's something about you with all of these examples that we've talked about, that you come up with an idea and you just sort of, you sort of just start to run with it.

And a lot of other people might never do anything. Or they might be like, wow, that Paddle idea. Yeah, would love to solve that but it feels so massive and it's such a pain and I wouldn't even know where to start. So just, yeah, give, give. What goes, when you think about these, these business opportunities, what, what do you think is the difference with you that makes you start running with the idea?

[00:22:05] Christian Owens: I think that I kind of see these sort of business problems as just any other problem. And it's sort of like, if you think about the, if you think about the I'm sort of, I'm getting old enough that I can say the word career now, which is interesting. But like, if you think about the kind of the journey of my career, it's been experiment with something, have an issue with it, try and solve the issue.

So it was build websites for people. Someone asks for an invoice, dunno how to make an invoice, create a thing to help me make invoices. Like want to sell invoicing software instead of building a website for people. Oh, what's the thing that I don't have? I don't have customers who has customers, other software companies.

Can we partner with them to get their customers? Like building that business, it's commerce is really difficult. Commerce is really difficult. What's the solution? I don't know. But there is a solution. I'm, I'm dealing with it today. Other people must have this problem. I'm gonna go and try and solve, go and try and build the product I wish I had when I was building that company.

So does that, does that very much sort of like each subsequent thing is linked to the previous thing in terms of just general experiences, kind of, which I think has served me well. I think the second thing is I'm just deeply at the end of the day like. I'm the, people laugh at me like for, I'm just the biggest pragmatist I am.

Like what is the most pragmatic solution to the problem that is immediately in front of us that we can go and implement? And like I get excited about dreaming about kind of the vision of the thing that we could create as well. But I don't, I think the, the thing that a lot of people do is they get so fixated on how the world will look if everything that they are telling themselves that they need to believe in order to do this, they get so fixated on the end outcome that they forget to start.

And I think that I get so excited about the end outcome that I can't wait to stop. I'm like, oh, if we did, and I think it's probably because every subsequent thing has led to the next thing for me. That I kind of realized that sort of these things are incremental and they ultimately compound sort of like the business I run today is sort of, kind of orders of magnitude greater than the business that I ran to begin with, which was building websites for people.

So it's, I think it's sort of just being unafraid to kind of just chip away at a problem. Like the first version of Paddle wasn't particularly pretty. And to be quite honest, like there was a part of my brain, which was like, not even just every software company, every company in the world will use this one day, but that wasn't, I, I didn't expect that to happen day one.

I was just excited that if I could, those 20 people that I emailed, if 10 of them decided they were gonna give it a shot. So it was sort of, there was a deep kind of like pragmatism in each of these things. And I also think kind of, even though we're, this business is venture backed and we raised $300 million from day one, there was a sense of this thing has to be a real business.

Like from day one, Paddle made money, like when we signed the, the first customer who started using it and they started transacting through it, it made money from day one. The bundle business made money from day one. The invoicing software company made money. So it was, I think kind of the other flip side to the, the, the, the thing I was saying earlier is I think that sometimes people get so fixated with the end goal that they forget that the first thing that they create, the first iteration of it also has to be a business.

And you see like all of these companies who go for kind of distribution and kind of huge scale, and they'll figure out how they monetize it later. And maybe in the current market that we're in, that's changed a little bit, but I think my approach was always the opposite. It was always, it can't just be like the minimum viable kind of version of the idea, but it has to be the minimum viable version of the idea that we can monetize because it's only with creating something that is monetizable, that generates revenue, that we can take that revenue and reinvest it into creating something greater, and that itself will compound. So I think that's just sort of the framework, if you can call it that. That, that is always sort of been the thing that I have used to sort of decide what the next thing to do was.

[00:26:27] Omer: All right. Next up, we are diving into a chat I had with Trevor Kaufman. Trevor is the CEO of Piano, a platform that provides paywalls, personalization and analytics for hundreds of media companies and brands. His journey is an incredible rollercoaster, right, full of highs and lows that anyone thinking of starting a company should hear about.

Back in 2012, he found this. Tiny team of two who are working on a way to make small payments easier for people who create digital content. Seeing potential, Trevor invested in their idea and eventually stepped in as CEO a year and a half later, though it was clear that their business plan would only work if they could.

Get tons of customers so they switch gears and try to sell their product to big media companies. But this was a very tough move to make. The big companies they approached either didn't want to sell subscriptions or had already come up with their own solution. To make things worse, Trevor was using his own money to keep the business alive, even having to sell his house at one point.

Fast forward to today, it's clear that Trevor's belief paid off Piano is now raking in a cool $80 million a year in ARR serves about 800 customers around the world. They've got over 600 people on the team and have raised the whopping $222 million. Trevor's story is a lesson on how. Tough it is. Being an entrepreneur, he faced a market that didn't want what he was selling, but he held on believing in the problem that he was solving with his team and the ability of his team to build a great solution.

His story is also proof that even when you're offering a solution to a problem that customers didn't know they even had. With the right mix of belief, tenacity, and resilience, you can turn the odds in your favor and find success. You're running this business, you are excited about the product and the opportunity. You realize that the business model that you had wasn't working or wasn't gonna be an interesting business.

So you switch to a SaaS model and there's the pains that come with making that transition. And then you realize that this is a real, you know, you're pushing a rock uphill trying to persuade these media companies to start charging for content because they're still going down the the ad revenue path and how were you funding this business during that time?

[00:28:46] Trevor Kaufman: I was paying payroll out of my own pocket, so I I had sold schematic to WPP and so I, I, I had some money and wound up selling my house to fund the business, and, you know, it was, it was a tough time. It, you know, in, in, in retrospect it was smart, but, you know, we, there was no proof.

It was difficult. Yeah. I believe that it's easy to, you're very lucky if you find something that customers believe that they want. But yet no one else has stepped in to fill that need. Right. So the, the only alternative is something they don't yet know they want. Right. And that's where we were, we really believed that companies were gonna have to charge for content.

That there was gonna be a, a subscription business that we would be accustomed to paywalls, in effect, everywhere that there was a replumbing of the media, of the digital publishing business that needed to take place. We feel like we're still in that process, but, years ago no, nobody agreed with us. You were a little too early.

[00:29:51] Omer: Is that what kept driving you that, that belief because you're, you're going in and you're, you, you know what I see is, you know, the, it's a startup trying to find traction, trying to get to product market fit. Generally the sound, the signs aren't that exciting. When you're saying you, you're having a hundred meetings and, and, and struggling to, to close, you know, one sale, was it that belief that kept you going and.

Had you continuing to pour your own money into the business or, or was there something else?

[00:30:23] Trevor Kaufman: You know, I'm really not sure Omer exactly why I kept going in the face of some pretty op, some pretty clear market evidence that people didn't want what we had sell at that time. I, I think I, I'm maybe being too strident.

I mean, in Europe, clearly there was a more robust digital subscription content business than in the States. And as we started to talk to com companies in other countries, we got an inkling that what we did might be more valuable. I, I guess I just, I had real faith in my colleagues. I mean, I really thought that we could build a better product and thought that even if there were a lot of.

Bumps in the road or or twists in the road, I guess as we change to different directions that that team could build great stuff. And that it was just a matter of us finding out enough in the markets, having people know about us enough and continuing to develop product that we'd eventually hit it. And, and I think it was really that faith in the team that made me think we needed to keep going no matter what.

I should just also say Omer, you know, I had an experience in the agency business. You'll remember the.com crash right in, in what, I guess 2002. Yeah. And, and really at that point, it's hard to imagine now, but the internet seemed ridiculous to people. Right. It was after pets.com and like a great way to get fired at a company was to spend money on building a website.

Right. And I had a web development agency at that point. And, you know, we had the tax authorities come in and try and figure out how much they could liquidate all our monitors for in the middle of a workday one time in Los Angeles. And it was dire, right? But, but yet we made it out of that. Right.

Eventually things turned around and I guess I just had faith that a similar, a similar thing would happen with Piano.

[00:32:26] Omer: I think that's, that's one thing that I've seen in. A lot of successful entrepreneurs is this, this ability to keep going. Just taking that one more step I mean obviously it doesn't always work out.

[00:32:40] Trevor Kaufman: But yeah. And there's some guys who do that and fail, right? Terribly. My, my friend Reggie who started Cvent, you know, he was that business, they went, almost went outta business and he was sleeping on friends couches and now it's a phenomenally successful Vista equity backed business. And you know, Vista bought it for over a billion dollars and Reggie did great and good for him because, you know, he kept that going bus business going when nobody believed in it.

[00:33:07] Omer: Okay. In our final clip, we dive into an interview with Raul Vohra, the founder and CEO of Superhuman, a blazingly fast email experience that helps you save three hours or more every week. After his prior company reported, got sold to LinkedIn, Raul started noticing Gmail was becoming bogged down and slow, so he decided to step up and tackle the issue.

But here's where things get interesting. Instead of immediately diving into product development, Raul took a whole year just to understand his potential customers, and then after two years of coding, the product still wasn't ready. The pressure to launch was growing. And becoming intense. But Raul knew that without a clear path to product, market fit, launching would probably be a disaster.

That's when he developed the product market fit engine, a system to define, measure, and improve product market fit. And that system has been key in helping Superhuman find product market fit, achieve impressive growth, and raise over 125 million so far. So let's tune in and discover how you can leverage the product market fit engine to achieve product market fit, and fuel your growth.

[00:34:21] Rahul Vohra: In the summer of 2015 slash 14, depending on how you count it. We started much like any other company by writing code and in the summer of 2016. We were still coding and in the summer of 2017 we were still coding. So as you might imagine, I felt this incredible intense pressure to launch both from the team but also from within myself. Cuz after all my last company, Rapportive had launched, scaled, and been acquired and less time.

And yet here we were two years in and we still have not launched. Deep down inside, I knew that no matter how intensely I felt pressure that a launch would go very badly. I did not believe we had products market fit. It wouldn't be the Mark Andreen story.

[00:35:06] Omer: Why did you, why did you think that you've spent so much time invested, so much time in year one, talking to customers, getting this in, you know, this information.

Spent a couple of years building the product. I know you talked about the definition being subjective, but it sounds like you were doing all the right things. So why did you feel that way?

[00:35:25] Rahul Vohra: It's one of those things, it's very similar to your question. How did you know you wanted to be an entrepreneur? I just knew it.

It was obvious to me that the thing that we had was good and had flashes of brilliance. But that it didn't yet meet the bar of an email client that people could switch to and then further meet the even higher bar of something that was special enough that people would stick with it. And although I knew all of that, I couldn't just say the things I am just saying to you now to the team.

You know, they, these are folks who had poured their hearts and souls into the products. They would say, well, Rahul, how do you really know? You know, isn't the standard advice to be embarrassed about your product? Shouldn't we just launch this and see, and that's, that's the thing that most startups do.

They just launch it and see. But the, if you are following along, the correct counter is most startups also fail. So just because most startups do it doesn't mean it's the thing that we're going to do, which is why to bring it full circle. I set out. Looking for this way to define products market fit for a metric to measure products market fit, and then ultimately for a methodology to systematically increase it, which is what I ended up coming up with part discovery, part invention, and we call it the products market fit engine.

[00:36:50] Omer: How did you come up with it? You, you, I know you did a lot of research. I know some of the ideas you got from meeting with Sean Ellis. It sounds like there was almost like this research project going on trying to figure out how to do this. Was there one or two particular places that you went to to, to get this, or was this just a process you had to go through to figure this out?

[00:37:14] Rahul Vohra: This was the kind of research or reading that I was just doing through the course of being a founder. You know, I'd read Paul Graham's essays, I'd read. Andreessen's essays Sean Ellis is all over the internet and it's easy to find stuff that they write. And it's interesting as a founder, I have a professional interest, you might call it in how all of this stuff works, but it is perhaps Sean Ellis who was the beginning of this trail. And for those that don't know him, he ran growth in the early days of Dropbox and LogMeIn and Eventbrite and many other amazing companies perhaps most famous for coining the term growth hacker. Now, what Sean found is a leading indicator of products market fit, one that is actually benchmarked and predictive.

You simply ask your users, How would you feel if you could no longer use the product and you measure the percents? That answer very disappointed, as opposed to somewhat disappointed or not disappointed. Now, here's the key thing. After benchmarking hundreds of startups, Sean found that the companies that struggle to grow almost always get less than 40%, very disappointed.

And the companies that grew the most easily, well, they almost always got more than 40% disappointed. So, in other words, if more than 40% of your users would be very disappointed without your product, you have initial product market fit. Now there's a lot more that the engine does. It actually shows you how to optimize that, how to increase it.

It can even produce a roadmap that's essentially mathematically guaranteed to take you there. Which may sound absurd, I realize. But if you, if you take a look at the process, you'll see how it works.

[00:39:02] Omer: We'll, we'll provide some resources so people can go and if they're interested to understand this in depth, but in the next five or 10 minutes, I'd love to at least give people a distillation of those four steps.

I think that kind of make up the engine so people can walk away with just at least a high level understanding of what this means and how they may be able to to use it. Does that sound good?

[00:39:27] Rahul Vohra: Sure. That sounds good. So there are four steps or five steps depending on which version of this engine that you're using.

The first one is to survey. So there is a set of four questions that we email to every user. The one that I mentioned, how would you feel if you can no longer use the product, but then three other very important ones. What type of people do you think would most benefit from the product? What is the main benefit that you receive from the product and how can we improve the product for you?

You're gonna get a whole bunch of data back and then you want to segment. The thing that you're trying to understand here is who are the people who really love your product? And this is so important to do in the early days, cuz if you're an early stage startup, you're gonna have a whole widespread of people and a lot probably of early adopters who, whilst they're enthusiastic, probably aren't very representative of the kind of customer that you ought to be going after.

So you end up segmenting, you're looking for pockets of those responses where people really, really love your products. And in the course of doing this, you'll actually develop what I call the highest expectation customer. This is where that Nicole example from earlier in the episode came from, actually, it was from this exercise.

And what you're then able to do is simply by. Choosing to ignore certain segments and focus on others, increase the metric, increase the percentage of people who would be very disappointed without your product. Once you've done that, you then go step three, which is to analyze, and there are really two things that we're trying to understand here, which is, number one, why do people love our products?

Number two, what holds people back? From loving our product, and there's a whole bunch of analysis you can do here. It's rather fast. It's, it not, doesn't take that long. These days it's very easy with some of the tools available online. And I believe now there are actually startups that exist, that have taken this whole process and turned it into a product.

You can now do the products market fit engine with products, which is pretty cool to see. But that brings you onto step four, which is to implement. At this point, you understand why users love your product. This is what we call a core benefit for superhuman. That'll be things like speed, keyboard shortcuts, time saved, aesthetics, and you also actually understand what's holding people back from loving your product.

Now, there's a very important nuance here, which is, you know, most companies will just go and talk to their users and. Now users will complain loudly and then they'll start to build those things. But the problem is if you do that, you often end up with a inci, almost confused product that isn't for anybody in particular because it's sort of driven by.

The people that you happen to have as early users. Whereas if you follow this algorithm, you end up specifically building for the people who almost love your products but not quite, and for whom the main benefit resonates, such that if you build the things that are holding them back, you know that they'll go into the very disappointed camp.

In other words, you know that they'll become your perfect type of user, the kind of person who loves your product. For the reason that they ought to, and they'd be very disappointed without it. And that brings you then to the final step, which is track. You know, this framework will work, but there are no silver bullets and I recommend tracking this product market fit score and running the process regularly.

We track it every week. We roll it up to every month. We roll it up to every quarter. We look at it longitudinally over years, and it's a process that we've been running at superhuman. Since then to this very day.

[00:43:12] Omer: All right. Thanks for listening. I hope you enjoyed this special highlights episode. If you'd like this format and would like to see me do this regularly, maybe once every quarter, then let me know.

Drop me a mail or reach out to me on Twitter or LinkedIn. Also, I'd love to hear from you like, what's your feedback on this format? What did you like about it? What do you think I could improve to make this even better in the future? Love to hear from you and and figure out whether this is worth doing, and if so, how do we make this better and better?

So thanks again for listening. As always, I appreciate you and your support. Cheers and all the best.