Pablo Srugo’s Post

Milestone alert: The Product Market Fit Show hit 10,000 followers this week. Thank you for the support!

Tesla's EV market share (finally) fell below 50%— incumbents took 15 years to match 1 founder. Founders have more power than they've ever had: In the slower-moving world of a few decades ago, companies got their power from owning supply. Once Standard Oil controlled oil or US Steel controlled steel, it was nearly impossible to displace them. Carnegie couldn't suddenly start an oil company, Rockefeller couldn't move into steel. Those founders were often defined by a single word (Steel, Oil, Finance, Rails, etc.). The world changed slowly, so even poor managers had time to adapt. Today, change is the only thing you can take for granted. Business models that are optimized for today are unlikely to work tomorrow. And business models can't react to drastic change on their own. Only excellent operators can. That's why today's great founders can move across industries. Jeff Bezos isn't just a retailer, he's also created the world's largest marketplace and cloud computing company. Elon Musk isn't just building electric cars, he's also changed finance (PayPal) and the space industry. Steve Jobs went from making PCs to making movies. The list goes on and on—and will only get longer. The world changes so much so often, no business model is safe. EVs came so fast, even incumbents with all the money, the branding, and the marketing took way too long to react. Gen AI came and changed software "overnight". The rate of change has accelerated drastically. Everyone needs to adapt. And no one is best suited to work with constant change than founders. That's why great founders have more business power than they've ever had. /// Listen to the full episode on The Product Market Fit Show #startups #venturecapital #founders

I met a YC founder who raised $3.5M, but kept the team to 3 people. He took 2 years to launch— then grew 10x to $2M ARR in a year: Benji built an end-to-end recruiting platform with just 3 people. Last month, he raised a $30M Series C. Since 2022, he grew from 70 to 130 employees. He hit $200K ARR the year he launched— then 10x’d to $2M ARR the year after. I asked Benji why it his end-to-end solution worked when so many “one stop shops for X” fail: 1. There were big unsolved pain points. 2. Existing vendors were small companies.  3. It was possible to build a bundle of best-in-class products. “If you can give people 1 product that works better than 4 products without losing functionality…people will be happy to use that.” It sounds too easy— and it is. Benji was a Director of Engineering, where he spent 90% of his time hiring— he experienced the problem first-hand. He thought about his idea for 18 months before going all-in. He had 100 conversations with potential customers before he started building. He graduated YC, raised $3.5M, but didn’t hire anyone. He kept his runway long. It wasn’t just turning 4 products into 1. Benji understood the pain point, the customers, and the space. He succeeded for the same reason most startups do: He put in the the work— the unsexy, everyday work. The work behind the scenes. The work that doesn’t make headlines. The work you never see. /// Listen to the full episode with Benji on The Product Market Fit Show #startups #venturecapital #founders

Pickleball tripled in 4 years to 14M players— without competing with tennis. Like Canva to Photoshop, it created a new market instead: Pickleball didn’t have to take players away from tennis. By creating a 10x simpler sport, it brought millions of new players to tennis courts. Canva didn’t have to take designers away from Photoshop. By creating a 10x simpler product, it created new designers out of marketers & business people. Slack didn’t have to take users away from email. By creating a 10x simpler product, it opened up new ways to communicate. When startups dramatically lower friction, new users tend to emerge. Especially when 10x easier is combined with virality or network effects. Maybe AGI replaces all human work. But well before then, founders will use AI to dramatically lower friction. They’ll create new markets where we least expect— especially since incumbents are getting harder to beat. And creating a new market means you not only don’t have to beat them— you don’t even have to compete. /// Listen to the full episode on The Product Market Fit Show #startups #venturecapital #founders

I met a founder who said no to $250K at McKinsey— & regretted it. “I had no idea what I was doing.” 14 years later, he’s built a $150M ARR unicorn: Blake is different— he spent 4 years fighting Al-Qaeda in Iraq. He was responsible for the lives of 32 soldiers. Back home, after a Harvard MBA he tried consulting, but couldn’t do it. He wanted something bigger. He started a startup—but knew little about business and nothing about tech. “I was technically homeless at the time. I was sleeping on my buddy’s couch. I had declined $250K/ year at McKinsey... I had no idea what I was doing.” 2 years and multiple pivots later, he launched ID.me, an ID verification platform. It helped veterans access veteran-specific discounts from brands like Under Armour— & helped brands increase loyalty, conversion, and cart size. It grew to 2M users in 1 year. Today, 130M Americans have an account. ID.me does $150M in revenue, at 80% gross margins, growing 30% per year. Blake raised $400M and his company is worth more than $1B. But it took 14 years & it could have gone a different way. I asked him if he’d ever thought about going back and taking that McKinsey job. “Absolutely.” “But I couldn’t— combat just changed me.” It’s not just the money or the impact. It’s the desire to create. To build something from scratch. Most founders I know haven’t gone to war— but they feel the same drive. There’s nothing quite like turning an idea into reality. There’s nothing quite like going from zero to one. ///  Listen to the full episode on The Product Market Fit Show. #startups #venturecapital #founders 

Excited to host a fireside chat with Martin Basiri, one of Canada’s most successful founders. He’s one of the most passionate, resilient and energetic founders I know. Come check it out this November at SAAS NORTH Conference.

Uber beat taxis, Amazon beat Walmart, & Microsoft beat IBM. But AI is different—it’s harder for startups to beat incumbents than it’s ever been: 1/ AI is not a new distribution channel. To compete with Uber, taxis had to build an app and start with 0 downloads. To compete with Amazon, Walmart had to build a website and start with 0 visits. To compete with Microsoft, IBM would’ve had to build the OS themselves and start with 0 installs. AI is different. Incumbents just add AI to their websites, apps, or operating systems. They don’t start from 0— they immediately deliver value to millions (or billions) of users. 2/ AI is a sustaining technology, not a disruptive one. Uber was a worse version of taxis (more expensive, longer wait times). Ecommerce was a worse version of shopping (worse selection, expensive shipping). PCs were a worse version of mainframes (less memory, less compute). In all cases, the markets were tiny to start. So incumbents either misread the opportunity or took too long to respond. AI is different. Google, Microsoft, Amazon etc all understand the innovator’s dilemma. Not only that— they’re not even facing it! AI isn't a worse version of anything. It just makes existing products better. This time, incumbents get the opportunity. They don’t take long to respond. So we're paying close attention to these 3 things: A/ Which incumbents are you taking on? Many incumbents aren’t tech forward, can’t hire great tech talent, or are too busy factoring to worry about AI. B/ Is the market highly concentrated or fragmented? It’s easier to enter a market with several highly competitive incumbents. Startups can more find partnership opportunities and get the distribution they lack. C/ Are you challenging an incumbent’s main use case? You’re never taking on Google, you’re taking on a PM at Google. PMs working on search get a lot more resources than PMs working on some peripheral product— that’s your opportunity. It’s harder to take on incumbents than it’s ever been. But make no mistake—massive AI companies are yet to be born. Because as anyone who’s built a company knows: Harder and impossible are not the same. /// Listen to the full episode on The Product Market Fit Show #founders #startups #venturecapital

I met a 1st-time founder who pitched 120 VCs—he closed $2.7M in 5 weeks with demand for $5M+. Here's his step-by-step guide to close a round: 1/ Create the narrative. The money flows to the best storytellers— especially for early-stage rounds. Andrew Rea (CEO Taxwire) started with a memo. He first wrote out his story—& then built a deck. 2/ Create a long lead list. Fundraising is a numbers game. Andrew built a list of over 200 investors. He figured out who he wanted to speak with at each firm. He locked down specific intros for each person. 3/ Stack your meetings. He scheduled 5-10 meetings every single day. Packing meetings means more reps— and more momentum. 4/ Go all in. I see lots of founders who try to raise casually. I get it— there’s so much to do operationally, it’s hard to go all-in on raising. The problem is in most cases, causally fundraising means you spend more time, not less. Investors sit on the fence & rounds drag on. Andrew devoted 90% of his time to fundraising. He was all-in. And it went quick. He built his deck in September. He pitched VCs in October. He was done by Thanksgiving in November. "We were at $1.1M the Tuesday before Thanksgiving. Then Friday, we hit $1.8M. Then by end of Wednesday, we were at $5M on what was supposed to be a $1.5M round." To be clear, this is the 20% optimization of closing a round. 80% is the business itself, the team, and the hard facts. But Andrew was a first-time tech founder. His startup had no revenue. He didn't raise in a hot year. He followed a process. He made it a priority. And it worked. #startups #venturecapital #founders /// If you want to raise a round the right way, check out the full episode with Andrew. We go deep and tactical on every single step on The Product Market Fit Show

Yesterday, Zoom hit an all-time low. The work-from-home darling fell 90% from peak. Here's why, in B2B, great distribution beats great products: Zoom exploded during COVID. Revenue was up 5x in 18 months. They went from $200M in Jan 2020 to $1B in June 2021. Zoom was the first to capture the work-from-home trend. Zoom had the better product. Zoom became a mainstream brand overnight. And none of it mattered. When video calls became common, most enterprises stuck with Microsoft. And many consumers went to Google Meets. Two years later, Zoom's revenue is flat. Today people laugh at how bad Google's AI-powered search is. But Google gets 86B visits a month and Perplexity gets 70M. Will Perplexity add 85.9B visits faster than Google can fix its product? Probably not. So when looking at AI startups today, here's what's going through my mind: Is the incumbent in your space a tech company? Do the incumbents in your space have 30%+ market share? Is the startup challenging the incumbent in a top-priority use case? It's not enough to have a great product, you also need to win the race. /// Listen to the full episode on The Product Market Fit Show #founders #startups #venturecapital

I met a founder who grew to $22M ARR in 4 years. But when the economy turned, ARR fell 50%. His biggest regret? Choosing growth over profits: In 2019, Chris Walker burned the boats. He quit his job & started a company. He started small— he charged $100/hour to help startups with go-to-market. He posted on LinkedIn every day. 18 months later, he had 50K followers & $1M in revenue. So he kept investing in growth. 18 months later, he had 100K followers & $10M in revenue. So he kept investing in growth. 4 years after starting the business, he hit $22M in revenue. And then, everything changed. Interest rates went up, stocks went down, and customers stopped spending. There was nothing Chris could do. In a good market, a high-growth business with $22M in revenue is easily worth over $100M. In a bad market, a declining-revenue business with $10M in revenue is maybe worth $10M…assuming you can find a buyer. 
His advice? “Know what type of business you're building.” “I made the mistake of thinking that we were building a company that would get massive revenue. I should have been building a much more profitable, sustainable business from the get-go.” Whether you focus on growth or profits depends on your business. But I still see many businesses that are neither lean nor high-growth. In an ideal case, you have both growth and profits. In any case, you need at least one of the two. 
 /// Listen to the full episode with Chris on The Product Market Fit Show. #startups #venturecapital #founders