Scaling to $100M: SaaS Growth, Product-Market Fit, & Startup Strategy

[00:00:00]most startups are going to fail very very few of them succeed the chances that you're going to succeed aren't very high what you want to do depending on how much money you have is you want to give yourself as many chances to find product Market fit as possible when you find product ret fit you will feel it you won't know why it happened but you'll feel the market pull the only way you can find that out is to my name is Jim Rose I'm the CEO of circleci circleci is a continuous integration and continuous delivery platform think of it we're the manufacturing system for software so when developers make a change to an application you want to be able to build test and validate that that change is good before you put it into the hands of your Downstream consumers we're at a pretty decent scale so we're more than 100 million in Revenue we're about 300 plus folks distributed globally we work with organizations of all sizes including folks like hugging face and weights and biases including the US government well it's been an interesting Market over the last 10 years I mean I think the first thing is you always want to recognize that the market is cyclical there's going to be ups there's going to be Downs as an entrepreneur and as a startup your job is to not get too high at the same token not getting too low you want to make sure that you're charting a path and staying stable and making sure that you're doing the best thing you can but if you're building a good business and you're building something that's valuable and then that your customers enjoy you're going to be fine there are very very very few overnight successes but usually if you look at most great companies they've been at it and working hard and growing over the course of 5 7 10 15 years what I have found is that you need two things to be successful as an entrepreneur one is you need to be inherently very curious you have to always be kind of trying to figure out what makes things tick what's Curious what's interesting right now what kind of problems are you running into and then I think the other part of it is you have to be able to step back and see problems not just at a small microscopic level you have to be able to step back a little bit and look for patterns cuz I think great opportunities and great businesses often times while they start with a very unique Point solution or Point Insight It's usually the companies that you to see succeed over a long period of time have that ability to zoom out a little bit and say oh that one point is actually related to these 15 other things what if we could solve seven of them what do you have to avoid as an entrepreneurs you have to avoid getting too swayed by the flavor of the day or the the trend of the moment Trends are Trends one of the things I see happening so much right now is the halflife of Trends right now is getting shorter and shorter and shorter and our attention span is getting shorter and shorter and shorter you have to figure out how to be aware of it but then ultimately be in a place you can ride out and understand the value that you're adding for a customer and not get not get distracted if you're focused on an area where there's a lot of users or a lot of money spent it just gives you a lot of ability and affordance to be wrong if you're going after a market and there's only $10 million spent there and only $10 million of potential you're going to have to figure out a way to get all 10 of it whereas if you're going after a market that's a100 billion there's lots of different ways to get to $10 million in Revenue and so focusing on very large opportunities in large pools gives you a lot of flexibility to try new things and a lot of different ways to Choose Your Own Adventure to get to size and to get to something that's meaningful often times the thing that you build that's going to be meaningful is going to be seen as a toy by everyone else that's the way that you can kind of establish a way to generate something that's meaningful to 10 users or 100 users once you can find that thing that that attaches that that becomes meaningful to your customer that's the the the spark so you want to Target markets that are big but you want to Target opportunities that you can get to quickly so that you can better understand am I on the right track my solving a real problem the customers enjoy the thing that we're that we're building and delivering to them so that you can continue to kind of invest and reinvest and grow I'm Rob Zuber CTO of circle a co-founder relationship is a very long relationship and it's very difficult to exit I met Jim through our third co-founder at copius and so Jim and I went for coffee and he sort of gave me a bunch of insights into the business as someone who had never even worked on it that were really interesting and compelling to me like very insightful and I thought this is someone who really understands product really understands like the kinds of things that you face in a startup and so I think it would be really interesting to work together I will say many early stage investors spend all of their time trying to understand the Dynamics of the team and the relationships between the people because that is the biggest challenge if I was considering starting a company with someone I would be extremely honest about who I am what motivates me how I work what frustrates me and would want to hear the same from that potential co-founder to know that we're going to work together because otherwise we're going to invest years of our lives in something that's going to collapse your best Partnerships are going to be people that you enjoy as people you really want to not just find people who have the skills that you believe that you need that you find that might be complimentary to what you do but you need to find people that are socially compatible with you as a team can work well together even when things aren't working well they may all be incredibly skilled you know it might be like a basketball team you have somebody who's great at shooting three-pointers great at at driving to the hoop and somebody who's really good at getting rebounds but if the the pieces don't fit well together you're not necessarily going to have a great team and what you're really trying to do is you're trying to build a great team and not necessarily get too fixated on the the independent skills of all the individual players that I think gets lost far too often is that most founder blowups and I think that's a real struggle for you know super early stage startups cuz you can barely find anyone that's willing to like take a pay cut take all the risk do all these things and join you and you're super excited to have anybody that says they're willing but the reality is those early hires are the most important ones that you will have and they will work with you to Define and structure that culture so it's really important that those early folks are bought in and that's what helps you amplify and build the culture that you've defined you should focus on getting out and talking to as many customers as you can and inevitably the thing that you got to go fix or the thing that you have to really fixate on is what is the problem that we're actually solving for the customer and the only way you can figure that out is by going and talking to them customers are great at telling you what their solution would be they're not always so good about articulating what their problem is and be less concerned about the solution that they're telling you because their solution is is inherently going to be directed at the at their specific instance of the problem often times when you're getting negative feedback those are actually the most valuable conversations too often as an entrepreneur it can be very raw when you're talking to a customer sometimes customers will definitely not like what you've built and what you delivered when you're an entrepreneur the thing that you're building and putting into the hands of the customer is a representation of your time and effort often times when when you get negative feedback your natural reaction can be to basically lean back and recoil and sort of protect yourself you need to be leaning in and just digging in into the why of trying to like why are we a little bit off the mark why are we not actually able to solve it when you start you're solving the problem for the customer and whatever that problem is and as you get bigger as an organization as you acrew expertise there's some point in there where you become the expert in the problem and you have to go from consuming information from the customer to being in a dialogue with the customer where the customer is going to keep telling you what their problem is but what you need to start to do and what you need to be investing in in that relationship is your expertise in that particular problem in the world of circleci we've seen the customer problem probably from 18 different ways and facets more so than the customer has the customer tells us their problem we share with them what we've learned over time and then we can come up with some kind of joint solution it's a tight balance you have to figure out how much you listen versus how much you contribute that balance changes over time when I joined in 2014 the pricing model was established around that time as people were getting more and more comfortable with things like elastic compute and Cloud offerings they were getting more oriented towards capacity or usage models meaning use this VM you know in ec2 for X number of hours and I pay exactly for those hours and those those models were even shifting to like by the minute pricing so pricing was becoming much more Dynamic based on usage and our customers were asking us why am I paying for this fixed bandwidth on the weekend we shifted our entire pricing model to be usage based and that took a long time to transition I mean introducing new pricing is hard getting people to shift is hard and then getting the last people right from a tech platform perspective you don't get to turn off all those parts of your platform until you've gotten the last customer off of them right it's like the first customers is exciting but then you're doing two different things so we went through a big transition but that is ultimately paid off so my takeaway and advice from our changes in pricing strategy is that ultimately when customers feel like they what they're paying you is directly aligned with the value they're getting they're much more likely to pay so in the usage based model for us it's when I'm building software I am paying you to help me build software and when I'm not I'm not paying you that much better aligns with their perception of the value that they get from versus a capacity model where even when I'm not using it I'm paying for it and so that transition really allowed us to have a better relationship with our customers around value and them paying for the value that they get from us startups don't die startups run out of money what you want to do depending on how much money you have is you want to give yourself as many chances to find product Market fit as possible that means you have to keep your development cycle as short as humanly possible and you have to keep the feedback Cycles as immediate as possible so even big well-funded startups that that that may maybe don't succeed or they fail often times the length of the development cycle is way too long they're they're spending months if not quarters and in some cases years perfecting a technology that they have no idea if anybody's actually going to use so what you want to do is you want to be able to build something that's meaningful enough that when you put it into the customer's hands the customer can actually react in a way that's going to tell you whether you're on the right track especially with your early users your earliest users are going to expect that first version of the thing that you put into their hands it's going to be rough it's going to be Jagged there's going to be things that don't work but if you find something that that directly addresses the customer need they'll grab it right even though there are like rough edges in the product when you find product ret fit you will feel it you won't know why it happened but you'll feel the market pull the only way you can find that out is to ship fast and ship early having product Market fit and keeping product Market fit are not the same thing so don't assume that now you've nailed it and it's always going to be the same usually you hear the thing that guy you hear won't get you there the paranoia and drive to like absolutely understand your customer and their need should stay the desire to iterate quickly and always be improving and always be experimenting don't lose that because you suddenly feel like oh we found it now we do something different so it's a question of building on top of your drive for brilliant product not parking that and doing something else now what else do you add on top of that you're going to get much higher leverage sort of go to market marketing strategy when you have a product that people love and then later you know depending on the scale of your customers and the type of your customers you might also do direct sales direct sales is a can be an expensive big proposition so you want to know that you're in a place that that's the kind of customer you have to go after the more you can do on self serve you know product L growth I think the better you're going to be in the early days and then a lot of it is tweaking like okay people love the product but boy is a lot of energy to get into the product right maybe the onboarding flow is complex or hard to understand or whatever how can we tighten that where are we losing people right so really paying attention to how people are flowing through because pre-product Market fit you probably don't have enough numbers going through your product right of users to really even understand but now you're seeing okay lots of people are going through and they got all get to this spot and something goes wrong right we lose a bunch of people here great what is that can we go talk to customers can we look at the data how do I improve that so really like opening up the funnel to make sure people are converting and then marketing pour fuel on the fire drive people in but pay attention because you'll you'll Drift from product Market fit and if you lose it now you're pouring money you know into something that's not working developers and the technologies that people ultimately select often times are selected because somebody else said it was cool a technology would kind of come and go maybe every 3 to 6 months now it's like 5 to 10 days and in the world of generative AI it's going even faster you know you talk to most development teams in generative AI you kind of plan your world on six we Cycles because the the technology that you started with 6 weeks ago may not even be relevant 6 weeks later and so you want to stay as close to at least in our case the developer and the user and the practitioner because they're the ones who ultimately best understand the technology that they're using and can give you the greatest feedback because they will continue to use a technology that actually solves their problem and they are very quick to throw away stuff that doesn't actually work I would say as a company or an entrepreneur if I were looking in the AI space is one I would the Slate clean and try and find things that I thought were inherently unique and just get very very creative again it feels very same right now I think the people that are really going to succeed come up with ideas that today are going to feel very radical but in 2 or 3 years are going to feel ex incredibly normal but what's normal in 3 years is going to feel very different today I would encourage people to be as creative as possible I think the second part of that is I would think very deeply about what can you do that's uniquely valuable to the customer bad is defensible over time I think what you're seeing right now is as people have tried to take similar activities that we did before generative Ai and of just trying to made them a lot of it just gets easily displaced the big foundational models the big vendors of today basically look at kind of a unique Niche application that somebody might have and they just do it better and they can do it more cheaply than some of the other providers can and then you watch entire parts of the market disappear I think that's pretty natural but if you're an entrepreneur you want to find something that you think is inherently defensible there's there's some reason that you as a company doing it and doing it over time Acres more and more value and Acres more and more differentiation that somebody can't come in and basically take it away from you and that someone who comes in and takes it away from you is probably going to be a fortune1 company that has infinitely more money and can do things at a lower cost so you have to find something that's very unique and valuable and one of the huge benefits of startups and being an entrepreneur is that you're unencumbered you don't have to worry about the way it was done before you don't have any customers and come up with something entirely new I think that's how you find success find something that's truly unique something that's truly inspirational and spend your time there because most startups are going to fail very very few of them succeed the chances that you're going to succeed aren't very high but the way succeed is by trying to do something meaningful if you're doing something that's truly inspirational and meaningful maybe as a startup with the first thousands or millions of dollars that you invest you're able to get 20% of the way there and you're able to hand the Baton off and go join a larger organization who then helps you get it to the Finish Line right but if you're just doing something that's an interesting facet or feature of somebody else's platform that's easily copyable there's there's better ways to spend your time [Music]