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NOTE Annual contracts hide the truth for 11 months | Rob Snyder
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I come from McKinsey and Harvard Business School, places where if you if there is a method to be taught, it would be taught there.
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I thought I knew what I was doing and quickly learned that I had no idea what I was doing.
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A bunch of my other founder friends were also hitting their heads against the wall while doing everything we were taught to do.
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Customers were, like, buying extremely fast.
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We took all of those things as like, "Oh, this is an indication that we have product market fit." We were signing annual contracts.
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Guess when we would find out if people...
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If we had product market fit or not?
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Uh, 11 months, yeah .
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I find a lot of people thinking about time to value, but they can get value and still churn.
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So I wanna look for something that's way more specific, which is time to not going to churn.
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When somebody showed up and bought strangely fast and was, like, quite satisfied, what did they say in the early part of the sales conversation about why they were talking to you today?
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If you focus on that, if you just zoom into that in your first sales conversation with them, listen to what they say, why this was relevant, and that will generally give you a series of insights.
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For example, right, it'll tell you how to pitch your product.
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It'll tell you who to sell to.
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They're gonna be people who look just like that.
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You're gonna wanna clone that kind of person.
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That question holds the keys to everything you want in terms of fast growth
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Hi, everybody.
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I'm Jamin, and welcome to my podcast.
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Our guest today is Rob Snyder, author of The Power of Pull and a fellow at Harvard Innovation Labs.
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Rob's a founder, go-to-market advisor, and VC operating partner.
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He worked at McKinsey and is a graduate of Harvard Business School.
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His work is about how early companies find their real first customers, the difference between pushing a product and finding a genuine pull.
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He also writes the Physics of Startups, read by thousands of founders, and his whole body of work is around one thing: how early companies find real customer demand instead of forcing it.
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Rob, welcome to the show.
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Thank you for having me.
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Hey, so take me back before all the accolades and, uh, before you wrote the book, fellowship, et cetera.
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What got you originally obsessed with how companies actually find their first customers?
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Well, so yeah, th- it, it was a strange path here, which was basically I thought I knew what I was doing and quickly learned that I had no idea what I was doing,
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especially at r- as it related to getting my startup's first customers, and the fact that I kind of felt like I was hitting my head against a wall, and then a bunch of my other founder friends were also hitting their heads against the wall- Mm-hmm
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while doing everything we were taught to do.
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Like, I come from McKinsey and Harvard Business School- Mm ... places where I think if you if there is a method to be taught, it would be taught there.
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Um-
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Yep.
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Yeah, so we followed, followed all the kinda like standard playbooks, all the things you're supposed to do, and just kinda got punched in the teeth for a few years.
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For me, then something weird happened, which was, okay, two years of basically nothing working while I was following kind of a- everything that I was supposed to be doing- Yeah ... customer research, interviews, all that kind of stuff.
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Then our startup randomly took off, and we went zero to four million in revenue in two years.
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And it didn't make sense to me why it worked .
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And so, uh, I've just been kind of trying to figure it out since then.
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Kinda like segues really into my next question, and I do apologize, this bit's maybe a little bit self-serving on my part, but, um, I bootstrapped my very first company back in 2000, and it did achieve real scale.
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I also, by the way, teach entrepreneurship here at Fresno State.
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I use Lean Startup, Crossing the Chasm, Innovator's Dilemma, kind of the canon for early-stage businesses.
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And then I exited the business around 2016.
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In 2018, I decide, "Hey, I'm gonna do this again.
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I've got all the experience.
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I've got all the knowledge.
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It's gonna be fantastic." It was the worst moment- ... of my life.
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Catastrophically bad.
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It was like I didn't know anything.
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Literally, I didn't know anything.
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And so despite the fact that, you know, the curriculum that I teach or the knowledge that I'm drawing on and all that kind of stuff, I just completely got it wrong.
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Your whole argument really is that most early founders are living in this thing called the pain cave, which I thought was hilarious 'cause, like, it's dark.
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It's uncomfortable.
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I don't know where I'm going.
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It's probably damp.
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There's likely a bear in there too with me, by the way.
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And, and we're, we're pushing our product on the marketplace, but in fact, what we should be doing is we should be finding pull, and that a lot of CEOs like myself, we're basically LARPing.
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So my question is, what is everybody getting wrong?
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Oh, that's a, that's a,
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that's a big question.
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Um, what are we all getting wrong?
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Well, I'd say there's...
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This, this operates at a couple of different levels.
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The most fundamental thing that we're getting wrong is we don't know what we're actually looking for when we're going out into the market trying to figure out if our idea is any good, figure out if somebody wants to buy our product.
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We don't know what we're looking for.
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Like, we think what we're looking for is somebody who wants our product, and, or, or maybe we, we think we're,
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we're looking for somebody who has pain points or problems that we could solve And it's all of these things that sound like they're right, but they're not right, that when we find them, we find people who say, "Oh my gosh, this would solve a big problem for us.
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Oh my gosh, this would save us $10 million a year.
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Oh wow, this product is so awesome," right?
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"This is impressive." We take all of
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those things as signal, uh, as first of all, that that's what we're looking for, and second, that as signal that they will therefore buy it.
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And there is no correlation between them saying those things and them buying something.
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Mm-hmm.
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And so we just kind of wind up going down this path looking for the wrong thing, finding it, it not leading us anywhere, and us being massively confused as to what the heck we've been doing this whole time.
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Why are we still getting it wrong?
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I mean, entrepreneurship's been around for a minute and we're still...
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I mean, your book is so funny.
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Like, I like, what took you so long, Rob?
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Why am I just now reading this?
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I think there's a couple of things at play.
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I get very frustrated at what is taught about entrepreneurship, like, and, and what is talked about in terms of entrepreneurship publicly.
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My sense is that the tools that entrepreneurs are given
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today more reflect the makers of the tools than the users or the job.
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Mm.
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And so y- things like the kind of business model canvas- Mm-hmm ... or things like discovery interviews and research, those things, these things are all kind of things that seem to make sense if you're a social scientist, right, doing social science work.
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They are not the things you would d- create if you were focused on, hey, how have entrepreneurs actually in the past figured this out?
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So my kind of contrarian take is that, uh, well before entrepreneurship was cool, I bet there was a much higher success rate- Mm ... in entrepreneurship because people were just doing the obvious things.
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Right.
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Like if you read Bill Gates's story like he sold, uh, the first copy of, of Microsoft or whatever, what, I don't even remember- Yeah
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what it was called back then, before he had built anything, before he'd written a line of
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code.
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Right.
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And like that was probably the obvious thing to do.
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If you had asked him at that point, he probably would've been something like, "Well, yeah, I need to make sure people are willing to buy the thing- Right
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before I waste time building it." And so I feel like we've kind of created a bunch of things that sound right, that des- that seem to describe how the thing works that actually don't and cause us to kind of steer straight into the iceberg.
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One of the things that- Maybe flies in the face of actually is, uh, I, I was a ri- my, I started my first startup in, uh, Palo Alto.
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You know, the whole VC community is thriving, continues to thrive in that area.
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Um, some advice that I've gotten multiple times is you wanna raise money before you sell anything.
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And the reason why is because as soon as you start selling things, then you immediately get married to metrics that are not going to help you align with the true product vision.
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Is that something you've heard or seen?
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That's interesting.
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So I do hear that, but I don't hear that from VCs.
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Interesting.
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I hear that from founders a lot
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as this kind of worry they have in their head.
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Mm-hmm.
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But I was just actually, uh, in San Francisco last week talking to a VC who was like, you know, an early stage VC, he's like, "I think they are worried too much about revenue at this stage when they really need to be focused on market pull."
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Right.
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And so what I've, what I've found is actually that, um, right, like it is...
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Uh, I'll say as a founder who raised before having revenue, there is very little that is more stressful in your life than having raised a lot of money pre-revenue- Mm-hmm ... and having to send investor updates every month saying, "Yeah, we still haven't figured anything out."
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Right.
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Like, that's not fun, but I don't think that's the VC's expectation-
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Got it ...
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um, on the other side.
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I think it's self-imposed.
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Got it.
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Yeah, and it's funny actually, I'm gonna correct that framing because now that you're saying that, my sources were founders, not VCs.
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Take me back.
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What I'm looking for here is a specific mistake that you made when you were scaling.
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Um, what I'm looking for is a specific
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story or a moment in time.
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L- I mean, uh, so this isn't n- necessarily directly related to the kinda like pull stuff, but one of the, the biggest mistakes that I made when scaling was assuming that product market fit was a function of how fast we were closing customers.
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So what, what happened was we kinda like figured something out.
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We just kind of randomly lucked into figuring something out.
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Mm-hmm.
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I was delivering manually in spreadsheets as the product while we were like frantically trying to build a product.
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Customers were like buying extremely fast.
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Mm-hmm.
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They would close, they, you know, pay us thousands of dollars after one sales call- Mm-hmm
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and, and sign up.
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And so we, we took all of those things as like, oh, this is an indication that we have product market fit and should pour more on the gas, when in reality we were not looking at post-sale metrics.
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Mm.
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And r- and, uh, specifically retention and, and Mark Roberge at
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HubSpot has a really good, uh, way of thinking about the leading indicators of customer retention.
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Mm-hmm.
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We were signing annual contracts, and so guess when we would find out if people, if we had product market fit or not?
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Takes 12 months. 11 months.
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Yeah. 11 and a half months in.
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And so I would've saved a lot of pain by, uh, having the realization that, oh, just because we've solved customer acquisition and, like, it feels like we have pull pre-sale-
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Mm-hmm
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that doesn't mean we actually have product market fit.
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So you realize that 12 months later, or 11 and a half months later, what did that actually cost you?
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Oh, gosh.
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In that case, we ...
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L- like many things, we pulled a rabbit out of a hat that it, it...
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We, we probably would've gone to zero, and I've actually had friends' startups that have had entire quarters with 0% customer retention, like post series A.
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Ouch.
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And so, and so yeah, those aren't,
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you know, talk about investor updates that aren't fun to- ... or, or board, board meetings that aren't fun.
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Um, a- and so, so I've had fr- we, uh, magically kind of were able to pull a rabbit out of our hat, uh, and launched a second product around that time that had even stronger product market fit that bought us kind of another year with everybody.
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Got it.
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And so we, um, were able to kick the can down the road again, but, um, ma- you know, uh, many others have, uh, don't just get randomly lucky like that.
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If you could go back in time then, what would you have done differently?
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Hmm.
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Uh, one, uh, one thing that I've found i- like ear- with early customers, so first 5, 10, 15 customers, is spending a lot of time with them post-sale and just asking the brutally hard questions- Mm-hmm
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about, uh, are you going to churn?
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Yeah.
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Uh, and, and not taking it personally when they say yes, and like assuming that when they buy, by default they are going to churn unless something
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happens.
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And my job is, is not to, to judge the fact that they're going to churn, not to avoid the, the fear that they might churn, but embrace the reality that they will churn, and I need to find the person who's decided they're not going to churn and figure out what changed in their mind, and how do I start to systematize that?
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And that, that kind of thing.
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So if it, it wound up being that, um, i- in our case, if we could onboard somebody, we, we sold employee retention software.
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If w- we eventually found out that if we onboarded somebody and they got their first notification that an employee was likely to quit within a couple of weeks, like I think it was like two weeks of them buying the product- Mm-hmm
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they would, they would go from like definitely going to churn to like w- it would be weird if we churned, and also I'm gonna text all of my fellow restaurant owner friends and tell them they need this.
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It's a game changer.
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Right.
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And so it would have been to figure that out way faster by asking the
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hard questions.
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Do you think leveraging something like time to first win would be a tool that you could have used?
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Uh, yeah, if I'd heard of that.
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Um, uh- Yeah ... and so um-
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Fair enough.
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Yeah.
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I, I, I think, uh, for me it was, um...
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Uh, what, what's been helpful for me is the em- embracing...
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Uh, uh, 'cause, 'cause I find a lot of people thinking about time to value, but they can get value and still churn.
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So I wanna look for something that's way more specific-
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Yeah ...
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which is time to not going to churn.
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I,
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I love that answer.
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I mean, one of the things that you did is a product market fit score.
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I found that...
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Well, actually don't know where I found it, but I have it up on my screen right now.
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It's in your Physics of Startups, substance.
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Yeah.
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Um, I thought this was brilliant, by the way.
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You know, and all the things that you're creating, they're simple but not simplistic.
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Thank you.
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When did, when did you come up with this, this
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framework?
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Gosh.
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Like, what was the, what was the impetus more specifically?
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Yeah.
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So a- as I mentioned before, I've been, uh, confused, I would say- Mm
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since, since the startup...
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Since the things that I thought would work didn't work- Mm ... and the things randomly worked that I didn't expect to work.
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And so I've just been confused ever since then.
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Mm.
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And so I feel like the, my life over the last kind of five, 10 years has been just trying to piece together how do things work- Mm-hmm
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why do things work when they work?
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And so I think I wrote that blog post on the product market fit score, like, a year or two ago, and it's just been this kind of like constant process of trying to assemble what I view as, like, a foundational theory- Mm-hmm ... of like, why do people buy things?
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Why do startups take off, and what are the mechanics of it?
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And so all of these, like, everything I write, I, I write every week and it's just trying to
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advance the theory here and, and to like actually understand the different pieces of it.
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And so I think the reason that I had to come up with the product market fit score, and the reason more recently I've been coming up with, like, what is the standard, what does good look like-
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Mm-hmm
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is because it's just unclear what good looks like- Mm-hmm ... for a startup.
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When I was a founder, it was like, "Hey, yeah, we have a couple of customers and we're growing, but is this g- like, is should, should I be expecting to do more?
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Should I be...
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Like, what, what does good actually look like?" And I just never knew.
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And this definitely helps align with that, which kind of leads me to a, another question around funding.
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If you're a VC, how does the work that you've done impact the rubric of should I invest in this company or not?
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Yeah, super.
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So the interesting thing is, uh, uh, that I've had a lot of VCs reach out about the book and about the kind of pull framework generally.
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I I don't think I'm very nice to VCs in the book, um, or, or generally.
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But it's been interesting that I've had quite a few reach out specifically, uh...
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One of the, one of the conversations was, like, quite interesting, where the, the investor said, "Yeah, we've basically-- we've been trying to figure out a way to evaluate our in- uh, investment opportunities-
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Mm-hmm
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the potential companies that we're investing in, solely based on demonstrated market pull."
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Mm.
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"
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Because we've found that when we invest on literally anything else, on their vision, on the market size, on their plans, on all this kind of stuff, on the technology, it basically never works." Hmm.
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"Or it's super weird if it works.
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It's just- Mm-hmm ... super random.
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It winds up being a lucky pivot." That's what I'm hearing a lot from investors, is how do we actually identify, especially for an early stage startup- Mm-hmm ... do
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they, have they actually found pull- Mm-hmm ... versus are they just pushing?
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Is there, is whatever traction they have just kind of them- Brute force
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pushing, them twisting arms, and kind of, kind of a mirage?
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Yeah.
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Yeah, for sure.
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I mean, I experienced that, right, as I mentioned, in 2018 because I had built a, uh, good brand inside of the market research world.
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So people are just gonna listen to me be- by default.
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But then what was interesting is they wouldn't buy.
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Mm-hmm.
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So I got a lot of smiles and nods and pats on the head, but I didn't get a lot of customers.
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That's super common.
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It's super com- And it's like, you know, if I looked at you at that point as an investment, like, as, as somebody to invest in, what I'm thinking in my mind is wow, successful, been successful,
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bootstrapped something successfully before, second time entrepreneur, mult- or multi-time entrepreneur, has all this amazing background, has all these amazing connections it's getting t- is talking to people.
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And, and like, if I, if I'm not asking the question, okay, but is there actually pull
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underneath this?
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Right.
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Right.
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Like, and what do we think the pull actually is?
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'Cause that's one of the hard parts too is like, you know, everyone kinda knows what pull looks like when you've found it and- Right ... you're like scaling super fast.
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It's like I'm pretty sure Anthropic has pull.
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Yeah.
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Like, I don't, I don't have to have a PhD to, to know that.
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But it's hard to say, okay, but what is it, and what's underneath, and what comes before the kind of Anthropic level scaling?
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Yeah.
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That, that...
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And that, and that's where getting back to your analogy of the pain cave, it's just a really sucky place to be, and there is that still ambi- uh, ambiguity layer that e- that exists when you...
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You know, like Steve Jobs said in his famous Stanford speech, uh, "When you look back, you'll see how the dots connect, but when you're going through it, you won't." And, and that's really, you know, when you're going through it, you just have no idea how all this connects.
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And again, this is where your framework of pull, I think is, well, I know is so helpful because it does, you do in the book create a very clear prescription for how to be able to execute against that.
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All right.
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So for my listeners that are entrepreneurs, first time or many times over, I like thinking about what is something very tactical that they can do.
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So pretend it's Monday morning, I'm looking for a specific tactic, a test, it could be a tool, whatever it is, that they can use to help them find market pull.
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Hmm.
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Yeah.
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So I, my number one tactic is to use the pull framework, which is in the book, we can talk about it, to craft a hypothesis of who you believe will rip a product out of your hands That's the core th- like, it's put that down on paper.
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Mm-hmm.
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And then you're gonna go test it by talking to five potential customers who should fit that hypothesis and see what they do.
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But the first thing you have to do is put a line in the sand and say, "I think this person will rip it out of our hands, would be weird not to buy our product."
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There would have to be cost, right, to those early conversations?
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Yeah, totally.
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Totally.
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You, you wanna have...
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You, you basically wanna say, "Hey, here's what I think this person is trying to do- Mm-hmm
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and why they're stuck." Yeah.
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And, and then, "This is what I'm gonna offer them, and this is the price I'm gonna put on it.
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And this price makes sense because their existing..." You're like, "Here's what the value of the getting this project on their to-do list done is.
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It's a, you know, it's gonna make them an extra million dollars a year.
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Okay?
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So it could, we could sell this up to $900,000 a year.
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They might not buy that, but, like, that's the- Right ... value of this.
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Their other option for doing this is hiring somebody who, um, you know, that would cost $100,000 a year all in, and so we're gonna...
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Okay, so we're gonna put it 2,000 a month on this and see- Mm-hmm
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and see there." But yeah, you, you wanna kinda have all of that bundled together.
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Got it.
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All right.
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This is my last question.
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What is one question that the people listening can ask their own teams this coming week that will
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help them identify or move towards a pull framework?
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When somebody showed up and bought strangely fast and was, like, quite satisfied, what did they say in the early part of the sales conversation- Mm-hmm
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if we had one?
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Or, uh, I, I'm, I'm imagining- Yeah ... you have a sales conversation here, but what did they say in the early part of the sales conversation- Mm-hmm ... about why they were talking to you today?
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If you focus on that, if you just zoom into that in your first sales conversation with them, you are...
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And, like, listen to it.
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I hope you recorded it.
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Listen to what they say, why this was relevant, and that will generally give you a series of insights, for example, right?
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It'll tell you how to pitch your product.
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Mm-hmm.
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It'll tell you who to sell to.
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They're gonna be people who look just like that.
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You're gonna wanna clone that kind of person.
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And so that question will...
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basically holds the keys to everything you want in terms of fast growth.
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I'm even gonna do that Monday morning.
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All right, everybody, our guest today has been Rob Snyder, author of The Power of Pull and a fellow at Harvard Innovation Labs.
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Rob, thanks for joining us on the podcast today.
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Thank you.
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Everybody else, I have never done this before, but I am absolutely gonna plug this book.
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It should be required reading for anybody even thinking about starting a business, and if you're operating a business that's under $10 million, I just can't underscore enough the value of...
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that you'll find inside of it.
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You will find a link in the show notes to, to the book.
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It's not a...
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I'm not getting any transactional benefit from that if you use that link or otherwise.
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Just go on Amazon and search for, uh, Rob Snyder, The Power of Pull.
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You will not regret it.
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Lastly, if you've enjoyed this episode, please take a second, give it a five-star review on Apple Podcast or Spotify.
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And as always, the actual comment makes a bigger impact on it surfacing to people like you, uh, so I'd
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greatly appreciate that.
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That's it for me.
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I hope you have a great rest of your day.
NOTE Annual contracts hide the truth for 11 months | Rob Snyder
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I come from McKinsey and Harvard Business School, places where if you if there is a method to be taught, it would be taught there.
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I thought I knew what I was doing and quickly learned that I had no idea what I was doing.
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A bunch of my other founder friends were also hitting their heads against the wall while doing everything we were taught to do.
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Customers were, like, buying extremely fast.
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We took all of those things as like, "Oh, this is an indication that we have product market fit." We were signing annual contracts.
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Guess when we would find out if people...
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If we had product market fit or not?
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Uh, 11 months, yeah .
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I find a lot of people thinking about time to value, but they can get value and still churn.
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So I wanna look for something that's way more specific, which is time to not going to churn.
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When somebody showed up and bought strangely fast and was, like, quite satisfied, what did they say in the early part of the sales conversation about why they were talking to you today?
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If you focus on that, if you just zoom into that in your first sales conversation with them, listen to what they say, why this was relevant, and that will generally give you a series of insights.
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For example, right, it'll tell you how to pitch your product.
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It'll tell you who to sell to.
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They're gonna be people who look just like that.
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You're gonna wanna clone that kind of person.
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That question holds the keys to everything you want in terms of fast growth
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Hi, everybody.
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I'm Jamin, and welcome to my podcast.
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Our guest today is Rob Snyder, author of The Power of Pull and a fellow at Harvard Innovation Labs.
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Rob's a founder, go-to-market advisor, and VC operating partner.
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He worked at McKinsey and is a graduate of Harvard Business School.
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His work is about how early companies find their real first customers, the difference between pushing a product and finding a genuine pull.
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He also writes the Physics of Startups, read by thousands of founders, and his whole body of work is around one thing: how early companies find real customer demand instead of forcing it.
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Rob, welcome to the show.
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Thank you for having me.
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Hey, so take me back before all the accolades and, uh, before you wrote the book, fellowship, et cetera.
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What got you originally obsessed with how companies actually find their first customers?
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Well, so yeah, th- it, it was a strange path here, which was basically I thought I knew what I was doing and quickly learned that I had no idea what I was doing,
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especially at r- as it related to getting my startup's first customers, and the fact that I kind of felt like I was hitting my head against a wall, and then a bunch of my other founder friends were also hitting their heads against the wall- Mm-hmm
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while doing everything we were taught to do.
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Like, I come from McKinsey and Harvard Business School- Mm ... places where I think if you if there is a method to be taught, it would be taught there.
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Um-
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Yep.
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Yeah, so we followed, followed all the kinda like standard playbooks, all the things you're supposed to do, and just kinda got punched in the teeth for a few years.
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For me, then something weird happened, which was, okay, two years of basically nothing working while I was following kind of a- everything that I was supposed to be doing- Yeah ... customer research, interviews, all that kind of stuff.
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Then our startup randomly took off, and we went zero to four million in revenue in two years.
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And it didn't make sense to me why it worked .
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And so, uh, I've just been kind of trying to figure it out since then.
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Kinda like segues really into my next question, and I do apologize, this bit's maybe a little bit self-serving on my part, but, um, I bootstrapped my very first company back in 2000, and it did achieve real scale.
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I also, by the way, teach entrepreneurship here at Fresno State.
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I use Lean Startup, Crossing the Chasm, Innovator's Dilemma, kind of the canon for early-stage businesses.
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And then I exited the business around 2016.
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In 2018, I decide, "Hey, I'm gonna do this again.
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I've got all the experience.
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I've got all the knowledge.
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It's gonna be fantastic." It was the worst moment- ... of my life.
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Catastrophically bad.
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It was like I didn't know anything.
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Literally, I didn't know anything.
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And so despite the fact that, you know, the curriculum that I teach or the knowledge that I'm drawing on and all that kind of stuff, I just completely got it wrong.
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Your whole argument really is that most early founders are living in this thing called the pain cave, which I thought was hilarious 'cause, like, it's dark.
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It's uncomfortable.
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I don't know where I'm going.
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It's probably damp.
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There's likely a bear in there too with me, by the way.
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And, and we're, we're pushing our product on the marketplace, but in fact, what we should be doing is we should be finding pull, and that a lot of CEOs like myself, we're basically LARPing.
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So my question is, what is everybody getting wrong?
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Oh, that's a, that's a,
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that's a big question.
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Um, what are we all getting wrong?
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Well, I'd say there's...
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This, this operates at a couple of different levels.
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The most fundamental thing that we're getting wrong is we don't know what we're actually looking for when we're going out into the market trying to figure out if our idea is any good, figure out if somebody wants to buy our product.
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We don't know what we're looking for.
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Like, we think what we're looking for is somebody who wants our product, and, or, or maybe we, we think we're,
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we're looking for somebody who has pain points or problems that we could solve And it's all of these things that sound like they're right, but they're not right, that when we find them, we find people who say, "Oh my gosh, this would solve a big problem for us.
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Oh my gosh, this would save us $10 million a year.
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Oh wow, this product is so awesome," right?
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"This is impressive." We take all of
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those things as signal, uh, as first of all, that that's what we're looking for, and second, that as signal that they will therefore buy it.
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And there is no correlation between them saying those things and them buying something.
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Mm-hmm.
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And so we just kind of wind up going down this path looking for the wrong thing, finding it, it not leading us anywhere, and us being massively confused as to what the heck we've been doing this whole time.
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Why are we still getting it wrong?
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I mean, entrepreneurship's been around for a minute and we're still...
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I mean, your book is so funny.
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Like, I like, what took you so long, Rob?
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Why am I just now reading this?
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I think there's a couple of things at play.
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I get very frustrated at what is taught about entrepreneurship, like, and, and what is talked about in terms of entrepreneurship publicly.
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My sense is that the tools that entrepreneurs are given
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today more reflect the makers of the tools than the users or the job.
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Mm.
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And so y- things like the kind of business model canvas- Mm-hmm ... or things like discovery interviews and research, those things, these things are all kind of things that seem to make sense if you're a social scientist, right, doing social science work.
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They are not the things you would d- create if you were focused on, hey, how have entrepreneurs actually in the past figured this out?
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So my kind of contrarian take is that, uh, well before entrepreneurship was cool, I bet there was a much higher success rate- Mm ... in entrepreneurship because people were just doing the obvious things.
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Right.
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Like if you read Bill Gates's story like he sold, uh, the first copy of, of Microsoft or whatever, what, I don't even remember- Yeah
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what it was called back then, before he had built anything, before he'd written a line of
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code.
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Right.
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And like that was probably the obvious thing to do.
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If you had asked him at that point, he probably would've been something like, "Well, yeah, I need to make sure people are willing to buy the thing- Right
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before I waste time building it." And so I feel like we've kind of created a bunch of things that sound right, that des- that seem to describe how the thing works that actually don't and cause us to kind of steer straight into the iceberg.
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One of the things that- Maybe flies in the face of actually is, uh, I, I was a ri- my, I started my first startup in, uh, Palo Alto.
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You know, the whole VC community is thriving, continues to thrive in that area.
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Um, some advice that I've gotten multiple times is you wanna raise money before you sell anything.
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And the reason why is because as soon as you start selling things, then you immediately get married to metrics that are not going to help you align with the true product vision.
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Is that something you've heard or seen?
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That's interesting.
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So I do hear that, but I don't hear that from VCs.
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Interesting.
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I hear that from founders a lot
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as this kind of worry they have in their head.
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Mm-hmm.
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But I was just actually, uh, in San Francisco last week talking to a VC who was like, you know, an early stage VC, he's like, "I think they are worried too much about revenue at this stage when they really need to be focused on market pull."
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Right.
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And so what I've, what I've found is actually that, um, right, like it is...
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Uh, I'll say as a founder who raised before having revenue, there is very little that is more stressful in your life than having raised a lot of money pre-revenue- Mm-hmm ... and having to send investor updates every month saying, "Yeah, we still haven't figured anything out."
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Right.
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Like, that's not fun, but I don't think that's the VC's expectation-
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Got it ...
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um, on the other side.
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I think it's self-imposed.
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Got it.
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Yeah, and it's funny actually, I'm gonna correct that framing because now that you're saying that, my sources were founders, not VCs.
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Take me back.
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What I'm looking for here is a specific mistake that you made when you were scaling.
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Um, what I'm looking for is a specific
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story or a moment in time.
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L- I mean, uh, so this isn't n- necessarily directly related to the kinda like pull stuff, but one of the, the biggest mistakes that I made when scaling was assuming that product market fit was a function of how fast we were closing customers.
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So what, what happened was we kinda like figured something out.
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We just kind of randomly lucked into figuring something out.
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Mm-hmm.
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I was delivering manually in spreadsheets as the product while we were like frantically trying to build a product.
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Customers were like buying extremely fast.
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Mm-hmm.
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They would close, they, you know, pay us thousands of dollars after one sales call- Mm-hmm
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and, and sign up.
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And so we, we took all of those things as like, oh, this is an indication that we have product market fit and should pour more on the gas, when in reality we were not looking at post-sale metrics.
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Mm.
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And r- and, uh, specifically retention and, and Mark Roberge at
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HubSpot has a really good, uh, way of thinking about the leading indicators of customer retention.
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Mm-hmm.
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We were signing annual contracts, and so guess when we would find out if people, if we had product market fit or not?
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Takes 12 months. 11 months.
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Yeah. 11 and a half months in.
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And so I would've saved a lot of pain by, uh, having the realization that, oh, just because we've solved customer acquisition and, like, it feels like we have pull pre-sale-
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Mm-hmm
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that doesn't mean we actually have product market fit.
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So you realize that 12 months later, or 11 and a half months later, what did that actually cost you?
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Oh, gosh.
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In that case, we ...
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L- like many things, we pulled a rabbit out of a hat that it, it...
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We, we probably would've gone to zero, and I've actually had friends' startups that have had entire quarters with 0% customer retention, like post series A.
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Ouch.
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And so, and so yeah, those aren't,
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you know, talk about investor updates that aren't fun to- ... or, or board, board meetings that aren't fun.
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Um, a- and so, so I've had fr- we, uh, magically kind of were able to pull a rabbit out of our hat, uh, and launched a second product around that time that had even stronger product market fit that bought us kind of another year with everybody.
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Got it.
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And so we, um, were able to kick the can down the road again, but, um, ma- you know, uh, many others have, uh, don't just get randomly lucky like that.
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If you could go back in time then, what would you have done differently?
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Hmm.
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Uh, one, uh, one thing that I've found i- like ear- with early customers, so first 5, 10, 15 customers, is spending a lot of time with them post-sale and just asking the brutally hard questions- Mm-hmm
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about, uh, are you going to churn?
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Yeah.
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Uh, and, and not taking it personally when they say yes, and like assuming that when they buy, by default they are going to churn unless something
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happens.
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And my job is, is not to, to judge the fact that they're going to churn, not to avoid the, the fear that they might churn, but embrace the reality that they will churn, and I need to find the person who's decided they're not going to churn and figure out what changed in their mind, and how do I start to systematize that?
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And that, that kind of thing.
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So if it, it wound up being that, um, i- in our case, if we could onboard somebody, we, we sold employee retention software.
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If w- we eventually found out that if we onboarded somebody and they got their first notification that an employee was likely to quit within a couple of weeks, like I think it was like two weeks of them buying the product- Mm-hmm
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they would, they would go from like definitely going to churn to like w- it would be weird if we churned, and also I'm gonna text all of my fellow restaurant owner friends and tell them they need this.
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It's a game changer.
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Right.
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And so it would have been to figure that out way faster by asking the
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hard questions.
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Do you think leveraging something like time to first win would be a tool that you could have used?
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Uh, yeah, if I'd heard of that.
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Um, uh- Yeah ... and so um-
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Fair enough.
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Yeah.
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I, I, I think, uh, for me it was, um...
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Uh, what, what's been helpful for me is the em- embracing...
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Uh, uh, 'cause, 'cause I find a lot of people thinking about time to value, but they can get value and still churn.
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So I wanna look for something that's way more specific-
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Yeah ...
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which is time to not going to churn.
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I,
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I love that answer.
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I mean, one of the things that you did is a product market fit score.
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I found that...
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Well, actually don't know where I found it, but I have it up on my screen right now.
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It's in your Physics of Startups, substance.
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Yeah.
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Um, I thought this was brilliant, by the way.
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You know, and all the things that you're creating, they're simple but not simplistic.
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Thank you.
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When did, when did you come up with this, this
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framework?
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Gosh.
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Like, what was the, what was the impetus more specifically?
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Yeah.
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So a- as I mentioned before, I've been, uh, confused, I would say- Mm
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since, since the startup...
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Since the things that I thought would work didn't work- Mm ... and the things randomly worked that I didn't expect to work.
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And so I've just been confused ever since then.
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Mm.
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And so I feel like the, my life over the last kind of five, 10 years has been just trying to piece together how do things work- Mm-hmm
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why do things work when they work?
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And so I think I wrote that blog post on the product market fit score, like, a year or two ago, and it's just been this kind of like constant process of trying to assemble what I view as, like, a foundational theory- Mm-hmm ... of like, why do people buy things?
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Why do startups take off, and what are the mechanics of it?
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And so all of these, like, everything I write, I, I write every week and it's just trying to
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advance the theory here and, and to like actually understand the different pieces of it.
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And so I think the reason that I had to come up with the product market fit score, and the reason more recently I've been coming up with, like, what is the standard, what does good look like-
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Mm-hmm
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is because it's just unclear what good looks like- Mm-hmm ... for a startup.
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When I was a founder, it was like, "Hey, yeah, we have a couple of customers and we're growing, but is this g- like, is should, should I be expecting to do more?
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Should I be...
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Like, what, what does good actually look like?" And I just never knew.
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And this definitely helps align with that, which kind of leads me to a, another question around funding.
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If you're a VC, how does the work that you've done impact the rubric of should I invest in this company or not?
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Yeah, super.
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So the interesting thing is, uh, uh, that I've had a lot of VCs reach out about the book and about the kind of pull framework generally.
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I I don't think I'm very nice to VCs in the book, um, or, or generally.
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But it's been interesting that I've had quite a few reach out specifically, uh...
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One of the, one of the conversations was, like, quite interesting, where the, the investor said, "Yeah, we've basically-- we've been trying to figure out a way to evaluate our in- uh, investment opportunities-
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Mm-hmm
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the potential companies that we're investing in, solely based on demonstrated market pull."
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Mm.
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"
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Because we've found that when we invest on literally anything else, on their vision, on the market size, on their plans, on all this kind of stuff, on the technology, it basically never works." Hmm.
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"Or it's super weird if it works.
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It's just- Mm-hmm ... super random.
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It winds up being a lucky pivot." That's what I'm hearing a lot from investors, is how do we actually identify, especially for an early stage startup- Mm-hmm ... do
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they, have they actually found pull- Mm-hmm ... versus are they just pushing?
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Is there, is whatever traction they have just kind of them- Brute force
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pushing, them twisting arms, and kind of, kind of a mirage?
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Yeah.
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Yeah, for sure.
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I mean, I experienced that, right, as I mentioned, in 2018 because I had built a, uh, good brand inside of the market research world.
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So people are just gonna listen to me be- by default.
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But then what was interesting is they wouldn't buy.
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Mm-hmm.
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So I got a lot of smiles and nods and pats on the head, but I didn't get a lot of customers.
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That's super common.
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It's super com- And it's like, you know, if I looked at you at that point as an investment, like, as, as somebody to invest in, what I'm thinking in my mind is wow, successful, been successful,
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bootstrapped something successfully before, second time entrepreneur, mult- or multi-time entrepreneur, has all this amazing background, has all these amazing connections it's getting t- is talking to people.
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And, and like, if I, if I'm not asking the question, okay, but is there actually pull
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underneath this?
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Right.
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Right.
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Like, and what do we think the pull actually is?
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'Cause that's one of the hard parts too is like, you know, everyone kinda knows what pull looks like when you've found it and- Right ... you're like scaling super fast.
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It's like I'm pretty sure Anthropic has pull.
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Yeah.
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Like, I don't, I don't have to have a PhD to, to know that.
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But it's hard to say, okay, but what is it, and what's underneath, and what comes before the kind of Anthropic level scaling?
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Yeah.
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That, that...
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And that, and that's where getting back to your analogy of the pain cave, it's just a really sucky place to be, and there is that still ambi- uh, ambiguity layer that e- that exists when you...
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You know, like Steve Jobs said in his famous Stanford speech, uh, "When you look back, you'll see how the dots connect, but when you're going through it, you won't." And, and that's really, you know, when you're going through it, you just have no idea how all this connects.
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And again, this is where your framework of pull, I think is, well, I know is so helpful because it does, you do in the book create a very clear prescription for how to be able to execute against that.
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All right.
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So for my listeners that are entrepreneurs, first time or many times over, I like thinking about what is something very tactical that they can do.
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So pretend it's Monday morning, I'm looking for a specific tactic, a test, it could be a tool, whatever it is, that they can use to help them find market pull.
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Hmm.
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Yeah.
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So I, my number one tactic is to use the pull framework, which is in the book, we can talk about it, to craft a hypothesis of who you believe will rip a product out of your hands That's the core th- like, it's put that down on paper.
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Mm-hmm.
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And then you're gonna go test it by talking to five potential customers who should fit that hypothesis and see what they do.
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But the first thing you have to do is put a line in the sand and say, "I think this person will rip it out of our hands, would be weird not to buy our product."
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There would have to be cost, right, to those early conversations?
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Yeah, totally.
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Totally.
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You, you wanna have...
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You, you basically wanna say, "Hey, here's what I think this person is trying to do- Mm-hmm
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and why they're stuck." Yeah.
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And, and then, "This is what I'm gonna offer them, and this is the price I'm gonna put on it.
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And this price makes sense because their existing..." You're like, "Here's what the value of the getting this project on their to-do list done is.
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It's a, you know, it's gonna make them an extra million dollars a year.
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Okay?
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So it could, we could sell this up to $900,000 a year.
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They might not buy that, but, like, that's the- Right ... value of this.
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Their other option for doing this is hiring somebody who, um, you know, that would cost $100,000 a year all in, and so we're gonna...
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Okay, so we're gonna put it 2,000 a month on this and see- Mm-hmm
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and see there." But yeah, you, you wanna kinda have all of that bundled together.
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Got it.
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All right.
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This is my last question.
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What is one question that the people listening can ask their own teams this coming week that will
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help them identify or move towards a pull framework?
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When somebody showed up and bought strangely fast and was, like, quite satisfied, what did they say in the early part of the sales conversation- Mm-hmm
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if we had one?
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Or, uh, I, I'm, I'm imagining- Yeah ... you have a sales conversation here, but what did they say in the early part of the sales conversation- Mm-hmm ... about why they were talking to you today?
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If you focus on that, if you just zoom into that in your first sales conversation with them, you are...
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And, like, listen to it.
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I hope you recorded it.
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Listen to what they say, why this was relevant, and that will generally give you a series of insights, for example, right?
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It'll tell you how to pitch your product.
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Mm-hmm.
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It'll tell you who to sell to.
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They're gonna be people who look just like that.
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You're gonna wanna clone that kind of person.
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And so that question will...
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basically holds the keys to everything you want in terms of fast growth.
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I'm even gonna do that Monday morning.
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All right, everybody, our guest today has been Rob Snyder, author of The Power of Pull and a fellow at Harvard Innovation Labs.
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Rob, thanks for joining us on the podcast today.
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Thank you.
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Everybody else, I have never done this before, but I am absolutely gonna plug this book.
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It should be required reading for anybody even thinking about starting a business, and if you're operating a business that's under $10 million, I just can't underscore enough the value of...
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that you'll find inside of it.
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You will find a link in the show notes to, to the book.
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It's not a...
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I'm not getting any transactional benefit from that if you use that link or otherwise.
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Just go on Amazon and search for, uh, Rob Snyder, The Power of Pull.
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You will not regret it.
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Lastly, if you've enjoyed this episode, please take a second, give it a five-star review on Apple Podcast or Spotify.
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And as always, the actual comment makes a bigger impact on it surfacing to people like you, uh, so I'd
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greatly appreciate that.
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That's it for me.
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I hope you have a great rest of your day.
