20: To pivot or not to pivot? Formulating successful opportunities for your startup - with Piotr Smolen

Speaker A: Hey, it's Biera Patfield here, your host and head of new business at Duploox. Duplox is a technology agency working with startups to build digital products. For 10 years now, we've partnered with more than 100 startups, including a few unicorns backed by Greylock Vision Fund and Y Combinator. In this podcast we bring together industry Experts, seasoned entrepreneurs, VCs and whoever else we feel can bring valued founders from day one to exit. Guest is Piotr Smolin, a graduate of the Warsaw School of Economics and Stanford Graduate School of Business and the co founder and CEO of the Polish British startup in the fintech sector, Symmetrical AI. He's also the former CEO and co founder of Turbine analytics, which was sold to a strategic investor in a transaction financed by a global private equity fund. Piotr, really glad to have you with, uh, me. Thanks for joining us today.

Speaker B: Great to be here. Thank you.

Speaker A: Awesome. So to get us started, I know you have a lot of experience with building startups and you have financed them in different ways. I believe your previous business was bootstrapped, right?

Speaker B: Yes, it was a uh, fully self bootstrapped business.

Speaker A: Okay, so can you tell me a little bit more about different ways of financing and how that experience was for you? Especially now that you can compare, you know, bootstrapping a business to having access to VC funds.

Speaker B: Okay, so it's a very interesting topic and I'm thinking on it a lot nowadays when running VC backed business. So as you mentioned, my first business, it was fully bootstrapped. So basically we started as a uh, hedge fund kind of technology and pivoted into software by accident and by accident managed to win first 10 clients just to survive. But I was like thinking a lot about what's the difference? And then I would say that there's one massive difference between bootstrapping your business and being able to raise money with the VCs. So it is all about being deliberate in what you are doing and it's really important, especially for the entrepreneur. So if you bootstrap, you don't have much choice. You need to survive. So you start, you earn money from your first customers, they pay your bills, uh, they pay the salaries of the employees. So basically if your business is a bootstrap business, your goal is to launch your business somehow and then survive. So as a result it has pros and cons. So the process that you don't really waste your time on doing things that are not absolutely necessary. So that's the first thing because every month, every month you can die. So you just did only the things that will help you survive. Second thing is that you laser focus on serving the needs and the problems of the customers because you cannot just build an empire for the day. 0 you just as you need to survive, you need to help your clients in basic stuff. So this is the plus. Basically you're highly efficient, but it has also lots of cons. It means that most probably you will, you know, you will do the things that are necessary for you to survive rather than the things that you will, you will enjoy. So in my first business we finally managed to create a category winning product in a uh, risk management software for the financial institutions. And we helped risk managers to better manage risk and okay, I really like when we help those people. But didn't really feel, you know, really excited about the business I am running because it was not, I'm not solving a big problem. I was not saving the world. It was more like, okay, I just saved some time and paying the bills. Uh, yes, I'm paying the bills. So basically we finished up with a business which was uh, quite successful in the region. But there was absolutely no chance for us to build a global business because the market was already taken everywhere outside of Eastern Europe. And it was not a massive market and it was not a very, very big M problem. So basically I had a choice running my previous business to do the things I didn't necessarily enjoy doing, uh, but building moderately successful business or to look for the other way. But of course you know, being bootstrapped, it also has a lot of pros like I didn't mention. So you know, it gives you freedom. So you're the boss, your clients are maybe differently. You always have a boss. No matter what you do in your business. You might think as an entrepreneur that you don't have a boss, you always have a boss. So that your biggest clients might, might be your bosses, your, your investors. If you're not bootstraps, uh, bootstrap are your bosses. But also like your employees, you depend on your employees. So you, you, you need to serve multiple stakeholders in your business. But I believe that's running bootstrap business gives, gives you a little bit more freedom on um, dealing with investors because you don't have uh, them. But on the other hand you're more dependent on the clients.

Speaker A: Ah.

Speaker B: And it is not necessarily good because they could also influence your strategy because you don't have any other option apart from serving them. So decision to leverage VC money to grow gives you different opportunities. So first of all you can be deliberate. So you can say, okay, I want to solve exactly this problem. And I believe that this problem is uh, the most important one. Even though it might require a little bit longer Runway, a little bit more time just to build something and to scale it and so on. So that's the object, this is the first thing. Second thing is you don't rely on the clients or over rely on the clients early on the journey. That means that sometimes, you know, if you start you have uh, a few design clients, usually have design clients. So they just help you build the product. And sometimes you need to make really ugly choices building your product because you need to do something for those design clients in order for, to help them which is not scalable for the whole thermographic, the whole population of the companies or clients you can serve. So if you're a VC backed, you can somehow do not really do this. So you can just build a product for broader audience rather than the design clients only because you have this choice. Uh, if you're VC backed, if you found the right model, you can scale it extremely fast. Much faster than bootstrap. Because if you have the right model, you have no limits of money. You can get to grab the market share. So in some markets you cannot bootstrap you because they are so competitive that you will not survive because somebody who is not bootstrapped would take the market share from you and you couldn't find it. So I think bootstrapping businesses is better for niche markets rather than the big markets. Um, and then if you're backed by VC money, you can afford the best talent from the day zero. It's quite important because if you bootstrap, you know the best talent will never join you at the day zero because they just look for scalability, they look for ass up, they look for better salaries, they look for projects that could be potentially global. Of course you can afford the best talent when you're successful as a bootstrap business. But early on the journey it is highly improbable that you will be able to get them on board. So yeah, so I think that both paths are different. Of course there are cons of using VC money which is that you have investors and they just push you to grow and they are rather short term than long term. And they also frequently behave like uh, they frequently try just to push you to do that. Everybody is doing. So if you're in the middle of the graft cycle in the economy, they just push you higher, higher, higher, grow, grow, grow. Uh, even if you don't necessarily have to grow at that time. But if there's a recession right now, they just push you, cut the costs, fire people, lay off everyone. But then it is not necessarily the best way to go for your business in, in that time. So, you know, it's different paths. I mean, that's. I enjoy both paths. I mean that I enjoyed the previous one, I enjoyed the current one. But it is a, uh, tough choice which option to choose for sure.

Speaker A: I think that's such a great take on it, especially since a lot of, uh, people think that VC or angel funds are just free money. But in reality, like you said. Exactly. Just two sides to every coin and there are always strings attached because obviously the investors want to see a return and they also have a say in what you do. So. Absolutely, uh, I think that's a great take on it. So assuming that you do want to talk to some VCs and you want to try and raise the funding for your project, um, what would be your advice to start approaching VCs or angels, especially when you don't really have a network built up yet and you don't really know any investors?

Speaker B: Okay, so there are a couple of things you need to consider even before you start. So first of all, I think that you need to be prepared. What does it mean? First of all, before even talking to any investors, you need to figure out where are you at at the moment? What is your stage? Is it a presiding you have a product or not? MVP or not? What Miles, what you can prove that you've already done? So I wouldn't really go after investors if, if you have just the business plan and idea. Okay, if sometimes, if you're a serial entrepreneur, you just exited your business and you have a great network already, so you will get money for your new venture without just for the, you know, power PowerPoint slide. I got money. I got precede rant for PowerPoint because I was just after my first exit. But if you're not lucky enough to be already successful, I believe that you need to do a lot of work before you will earn the right to raise your first round. So first of all, uh, I would ask myself, did I talk to at least 102 hundreds of prospects to really understand, to really, really understand the problem and the competitive landscape? And does the problem I want to solve really exist or not? Second, I believe that you should build the MVP of your product before you approach the investors. And I don't say you have to build if you have an idea for a quite complex product you won't have money to build it, but you can at least build a landing page. You can at least create a waiting list is not that expensive. The landing page, it can consist of of the value prop you offer. You can just reach out to the customers and you don't have to use marketing budgets. You can just do this manually on LinkedIn, uh, you can use Product Hunt or any other places just to get attention of the prospects. And you should have at least a few hundreds of excited customers on the waiting list before you go to the investors because it will increase your credibility. Then I believe that you should already have an idea. You should already have a team on board but you don't have necessarily to hire them. So you can have people who you will start working with you part time with a promise that when you got funding they are full time with you. So you can battle test them before you start working with them. But then on your deck you can show that you have not just your co founder, you have more people uh who are working on the idea. So getting prepared it means that there's lots of work you need to do for yours. Even if you don't fundraise, you need to do before to decide to spend next part of your life on something, you need to know that you have the resources that exists and then you need to know that the problem exists in general then when approaching investors. So first of all uh, you should do the research meaning that so build the look, look around, look at the VCs available in the market. Engine investors try to put them in tires. So like first tire, second tire, first tire, the first tire are the investors you would love to work with that's already invested in a very successful businesses similar to you what you're building. Uh and then create a deck and start testing with third uh tire VCs and angels and look at what's the feedback. If the feedback is good you can just start reaching out to the second tire. If the feedback is good you can start reaching out to the first tire. Then how to do this if you don't have a network because it's really the investors, the top investors, they get uh, tens or hundreds of decks every day. So there's a lot of noise. It's quite really difficult to see what's the signal uh among the noise. So it's really important how you're introduced to the investors. I would not really cold email or cold call the potential investors. So the best way to go is first of all just to hang out around some kind of startup conferences to get first, uh, relationships and first contacts. But most probably you already have some relationships from your previous work. If you used to work in the startup or enterprise client, you might have some contacts already. You might know some people who could invest as an angel in your business, but usually what works. So as for the angels, I'm pretty sure that everyone has multiple angels in their network. It could be a manager working for the enterprise in the domain you just want to attack. It could be your ex boss, it could be your, you know, lots of potential investors. And so first of all I would just reach out to their closest angels and try to get money from them. If you won't get money from them, you won't get money from anybody else. So that's the first, first uh, thing, uh, second thing, reach out to the, to the angels and try to build like initial traction in your fundraising based on angels. And then you don't have to force them to send money to your account. You can just have a deal like, okay guys, I'm working on this idea. I uh, will have a VC funding for that idea, uh, but would like you to commit. But it could be conditional commitment. So you can say you can, as an angel you can commit into investing in my business if I got the run from the vc. Uh, and again you can get commitments and conditional commitments from the business angels. And then when you go to the VCs, you're in a position that you already have some money committed. So you say okay, I want to raise 1 or 2 million or 5 million, whatever. And 30% of the run is already committed by angels. By the way, those angels are experts in the industry I am in. So they just know inside out the industry and decided to commit. So this is a strong signal for the investors. Um, then how it is best to be introduced to the investors. So you need to find somebody, um, who would introduce you. It could be the angel or the angels you are working on. Um, it could be other founder. So I think, I believe that what is really efficient is so what works for the investors is that they really like the introductions done by the founders from the portfolio companies. So they already trust those guys, they invested in them. And if there's a founder of a great startup they have in a portfolio saying they investor, okay, I just met a great guy, I know the great guy with great project. Just look at it. 99% of the investors would trust this introduction. The investors also trust also the introductions of the angels they work usually with. So basically often the angels are the first checks in. And then if the angel used to do more investments, they usually know some VCs that invested in their projects. They already invested. So it's also a good introduction because you have already the track record of working with somebody and then you get another interesting project from that person. So, yeah, so, uh, it's a tricky thing. You need to do a lot of work before fundraising. You need to do a lot of research, you need to be introduced the right way, and then you will figure it out.

Speaker A: That is such fantastic advice, especially for somebody that doesn't have a network built up yet and really needs to start somewhere. And I really like the idea of just starting with your lowest tier of VCs and then just building up and getting experience through that, because you will get some feedback already. So, um, I think that's fantastic. Um, you did mention that you got lucky with symmetrical AI. So I, um, maybe you can tell me a little bit more about how it was born and how your journey started there and what your current challenges are.

Speaker B: Okay, so I will start with how it was born. Um, so I was just after my first exit. So after my first exit, I had a year off, so I did a lot of traveling. And it's Stanford and it's actually nothing. And after a few months of doing nothing, I just thought, okay, I need to do something. And it was quite difficult to decide on what to do because I didn't have any urgent problem I wanted to solve and didn't even see. And most of the ideas I just saw, I just thought, okay, they're very risky or they're not that big, and so on. So decided, okay, so let's find somebody I can start working with first. So let's decide on who before I decide on what. And I couldn't, um, do the second business with my previous co founder, which launched family business just after exit. So he was like, right in his family business, there was no place for somebody outside of family. And so we decided to build the next business with one of my best friends, uh, from high school. He had also quite interesting path, spent lots of years in Boston consulting. Like, very, very interesting profile, Daniel. Um, so basically we just started to do our own research and just to crunch data and, uh, look for the idea, what we should do. And still it was quite difficult to decide which direction to go. So after, like, months of just discussing loads of ideas, what we can do, we just said, okay, let's do nfa. Let's just choose the first idea, that random idea. We believe it's uh, good enough and let's do it, let's test it. And then we just did quite an unusual thing because we just wanted initially we just wanted to create a kind of a marketplace for underwriting of financial services. So we just wanted to make it really easy for people to get the cheapest possible credits or insurance in uh, a few clicks in the Internet. So initially what we did is we created a blog post about how it could be done better so the underwriting of financial services can be done better 10x better in the future. What would be the future? The architecture of the better model of financial services. And we just created a blog post and just sended it to some friends uh, what they think about this idea. And, and it was in Google Docs, it was not the medium, it was just the Google Docs. And then what we figured out is that there was like uh, 100, 200 people reading it at the same time most of the time. And then we just started to get inbound interest from the VCs who just read the blog post and just send us an inquiry if we want to build a business around the idea for the blog post. So we got plenty of, plenty of Vs knocking on our doors or uh, emails uh, willing to have a chat. So we created quickly a deck, uh, we quickly hired a few people, we invested in this project our own money initially. So the first 250k euros it was our own money because we just wanted to have an MVP of the product before we get the rant. So we just started to build this kind of a programmatic marketplace for financial services. We got mvp, we started to talk to the customers, we got the first three letter of intents of big prospect customers being to use it and we somehow managed to get the precise run uh quite quickly. And the first check in uh, was the fund from the Silicon uh Valley uh, I met when at Stanford. So it was kind of, I believe that they invested only, uh, it was plug and play. But they invested only because they just got to know me personally and they trusted me and they just put first check in uh we got market one, we got French capital, uh and we raised the precede and then we just figured out that the original idea, uh, it was not the right time for it, I mean that it could never work. So so basically what we wanted to do is to force banks to programmatically create uh, offers for credit or for insurance uh, based on the kind of bidding in the online. So it was quite a crazy idea. And on the demand side we had plenty of partners willing to help their customers to buy cheaper credit or insurance. But on the supply side, nobody really wanted to be a provider. They didn't have infrastructure to do this and didn't really want to participate in the competitive bidding because it would decrease their margins. So we quickly realized that it doesn't make sense, at least at the time, to build kind of programmatic marketplace for financial services. But it was after pre seeds but one of the. So basically we just tested loads of distribution channels for the marketplaces we created. And one of our ideas was okay, what if we can team up with M players because employers are trusted partners, a trusted site for both employees, uh, and financial institutions. So maybe the employers could be the distribution channel how we can get to the people and help them. So maybe we can just create a kind of financial marketplace on top of the employers and the data from payroll, which is very important data source for the banks. So we decided, okay, let's pivot into financial wellbeing platform. So we just started to sell something we called salary on demand first. So basically we just wanted employees to be able to be paid any second of work instead of waiting until the payday. Uh, and it was the first feature we designed and then we planned to build this marketplace. So basically if you are with the employer who teamed up with symmetrical, you will get cheaper access to credit insurance as a benefit and free access to your salary in real time. And we started to do this um, financial wellbeing business. So it was a mobile app which integrated with payroll system of the employer and the employer was distributing this mobile app to the employees and it was moderately successful. So basically we managed to close such accounts as Santander Bank, Orlen, John Deere, the global brands, global clients. But the problem with that business was that it was not sustainable. So we could sell, we could close great clients, get great brands on board, but we didn't make money on this. And the reason we didn't make money was that it was really difficult to sell to those great brands and it was very expensive to sell. And then the service we were offering was very cheap because it was a benefit. So the employer didn't really want people to overpay for anything. They wanted to pay as little as only possible for the financial services. So basically we managed to be in a business which looked quite successful on the first side but didn't make money. And we didn't see any way for this business to be really making money in the future. So we started to look for other opportunity, uh, what we can do based on what we learned. And our strong thesis was that in order to deliver our service, we had to integrate with over 10 payroll systems across Europe. We had to understand how payroll, so the process of paying people works. And we just thought, okay, it is so broken. Payroll process is so broken, it is inefficient, it is expensive, it is slow. You wait a week until you're uh, paid. After you started processing, it is still done in Excel. Even if you have a system, 99% of work is done in Excel. So we just thought, okay, maybe you could just build something better for payroll. We found that there's one group of companies like those so called geek economy players. So you have thousands of employees, highly flexible workers with high turnover. So new employees coming in, coming out every day. So the payroll for them worked even worse than payroll in general. So we built an MVP of a payroll product for gig platforms. We launched that and we managed to, in a few days, in a few weeks, we knew that this is it. So we managed to close great accounts like unicorns, Decacorns in a few months as clients for the service that didn't really exist at the time. We had just an MVP of payroll. Uh, we started to deliver even more value than existing alternative with simple mvp. We just thought, okay, this is the right way to go. And then we grew like 20 times in revenues. We grew our team from 30 to 80 now. And we just followed that opportunity. Yeah. So quite a long journey. Of course things changed, so it's another story. So we lost the market fit, uh, in the meantime. But as I said, it's quite a long story.

Speaker A: Mhm. So it's a very cool story because you essentially had two massive pivots, um, within the story for your company. And it sounds like maybe there's another one, um, on the horizon for you.

Speaker B: Yes.

Speaker A: Um, that's really interesting. How do you make that decision? Because obviously, um, when you're at the point where you can see that it's not going, ideally it could be going better, then you're probably starting to think about a pivot. But it's also a risk because what if the business isn't going terribly, it's just not growing as well as you would want it to. And um, I guess my question is how do you make that decision and how do you weigh the risks, uh, the pros and cons of actually pivoting and making a huge change to your business?

Speaker B: Yeah. So, uh, it's a great question. I believe that it is a major problem of most of the founders on early stage. And the problem is that the reality is usually not binary. It is not, um, you know, black or white. Usually you're in the gray zone. So the business is going okay or good, but not great, and it's quite difficult. And then the natural tendency, the psychological tendency, is that usually if something does not go the way we thought, we try to do even more of what we are doing. So the entrepreneurs are really resilient. They just want their idea to be a great. They want to prove that their idea is the great idea. So usually the trend is that, okay, it doesn't work, let's put even more work, let's do more thing that we are doing, uh, because we will be right, or let's optimize some stuff, maybe we can just improve something and it would work. And the challenge is that sometimes it works, sometimes it doesn't. And there's no proven way to say because it is always a decision. Shall I look for local maximum? Is there small change I can do in the way I run my current business to make it much better? As often, frequently it is just this one small thing. So maybe the pricing is wrong, maybe some part of the customer experience needs to be improved. And this is a trigger for you to capture product market fit. Sometimes it is also a question of timing. Sometimes you have the right idea, but the market is not ready. Um, but sometimes you need to think outside of what you're working on to look elsewhere because you need to look for global maximum rather than local maximum. And then the truth is that it is, uh, more art than engineering. And I have no real advice, really good advice. Because every month every entrepreneur needs to do this exercise. So shall I look for local maximum or shall I just survive because the market will be there in the future? Or should I look outside of what I am building, look for something else? And then I would say that what you should do it depends on the Runway you have. Uh, and you need to be really, really deliberate. And then there's also an intuition. So basically you just look at your Runway, you look at the milestones you need to achieve to raise the next round if you're venture backed. And then you need to tell honestly to yourself, do I believe how much time I have to experiment within the local maximum? So optimizing the things I do, does ah, it work or not? And you should monitor every month, does it work or not? And our experience with, um, our previous pivot was we spent so much time, we spent a year trying to optimize lots of stuff. Optimize pricing, optimize the way we sell, optimize the way we operate, the way we onboard clients. Lots of stuff. We optimized lots of stuff. What's still there was not a, uh, massive change. And usually when you have a product market fit, you just feel it, you just see is just booming. So if it's not booming, you don't have product market fit. Um, so we just thought, okay, maybe after a year of experimenting, we just thought, okay, we need to look elsewhere. I mean, that it's, uh, we could experiment for another two years. Maybe it would work or not, but we would prefer to look. We just don't believe that we can just build a really exciting business doing what we were doing. So we decided to do this outside of the box. And then the cool thing is that if something ticks, it ticks right away. So it was like, even after we prepared an MVP and a very simple landing page, we just already felt, okay, there's something in it, there's a problem, and the customers, uh, were knocking on our door. Uh, so just thought, okay, this is the better approach. And I think that it was a good decision.

Speaker A: Yeah, it sounds like it, but it sounds like it was a really hard decision, especially with what you've mentioned. You know, there's some cost fallacy. So basically you want to keep going, even though we can see that it's not really working the best. You've already invested so much time, money, and just effort into something that you just want to keep going with it. But I think it's just excellent advice. Um, what you said is that just keep revisiting it, keep checking if you've got this product market fit. And if it's not going, ideally, maybe it's time to just pivot and change things a little bit. Um, you do mention the magic product market fit, which is just obviously, uh, what every business really, really needs. How do you get there? How do you make sure that everything is right, that it clicks?

Speaker B: Okay, so there are a couple of things, because the product market fit it has is much deeper topic, uh, in general, because it is. So first of all, it is a value proposition, uh, market fit. So basically, the first part of the product market fit is that, is there any need? And the thing you're building fits into this net so we can validate this, so there's a market for this, so you can validate this without building a product, because it's all about the, uh, business value promise and then getting customers excited about the business value you want to deliver. So that is the first part. And then you can assess this quite quickly because it's, you know, if something solves the real problems of the customers, it would resonate from uh, them you will get if you just do cold mailing, you will have, if you ab test five ideas with cold mails, if there's one standard idea, you will see it right away. The conversions from those cold emails will be much, much, much higher. So this is the first thing, but this is not the end. Because if you have already validated the business need, you need to validate if you can build something that solves the problem. Ah, sometimes you can just have a great idea to build something and it is impossible, not feasible to be built. So the second part of the equation is all about user value. So can I build a product that delivers on the promise and how much time it would take then? Usually it is not that you can build the product in a month. So usually you need to find. So first of all your job to get to the product market fit is you need to find design clients. So the clients that are for whom the problem is really big, for whom you can build quite a simple solution and already solve at least part of the problem and uh, the clients who are willing to risk and spend more time with you will build the final solution. So second part of the getting to product market fit is uh, can I get the design clients and solve their problem in a much simpler way than the target product? Because if your target product is huge and you will spend two years of building won't click because nobody will give you money for two years of building a product, uh, before validating if it could really solve the problems. So second step in getting to product market fit is to validate if there's an easy way to get in. Uh, but then there's a third step of getting to product market fit, which is that how big is the market? Uh, do the design clients. Are the design clients a part of a broader market or is it just a niche that have totally different problems than the broader market? So basically you could just build a product just for 10 companies that would, those 10 components would love it and pay a lot for it, but then there would be no other client for this kind of a product. And I believe that we felt as a semantic, we felt into that trap a little bit. Um, I can elaborate on it more. So basically the difficult part is that you need to make sure if there's a broader market, uh, on top of outside of these design clients space, which you can serve with the product you built for the design clients. So that's the third step. Then the fourth step is monetization and pricing. So basically we just, we, at the first time, maybe in the second iterations, this, uh, financial wellbeing iteration, we failed because everything ticked up until the pricing. So the big question is that the next thing you need to validate is, okay, can I make money on this? What are the unique economics? Can I just sell profitably to the clients? Can I build a healthy business around the idea? So is the price of the service I am selling high enough just to create a sustainable business? And then usually it's a problem because to serve the design clients, usually you give them discounts. So I would never do something for free. Because if somebody, if something is for free, you don't validate anything. So the client needs to pay for your service. But usually you give the discounts just, uh, to incentivize the design clients. And then you need to figure out if you can just sell with your full price at scale. And so that's the next part. And then it would also validate this thesis of being able to grow with money, with the VC money, because if you just cannot put more money into the sales and marketing process to get more revenues, the business doesn't make sense. So that's, uh, the next part. And then there's a. And I think that if you can prove that the clients are paying and you can grow with the clients outside of the design market, you can say, okay, I have a pmf. Um, but then there's the last part of the equation, which is not frequently part of pmf, but by the definition. But is the business model, is my business defensible in time? That's quite interesting because usually you manage to build a new product and successfully attack a new market because there's some niche which is not really easy to be seen by the existing incubants. But on every market you have incubants, the players who have big customers, lots of resources, and they just look on the market for opportunities. So the big question is, what is special about your business that nobody would really attack the same niche and kill you right away with more resources. And then, so it is great to find a business in which you can just build this, uh, competitive advantage. What does it mean? So sometimes nobody would attack your market because it would cannibalize their own market. So if you're Uber, no taxi company attacked Uber, uh, because it would just attack their core business. So if you're in this situation, so you have A core business model innovation. You're there so you can be attacked by the new entrants backed by the VC money, but the incubators will not kill you. You can have uh, network effects or data network effects. So the bigger you are, the more resilient you are. You can have a great brand or great product. Principles that nobody would really copy that fast. But you need to have something special, ah, in order not only to build a successful business, but also to just build the kind of business that all of the VCS want to invest in.

Speaker A: Mhm, absolutely. That is just such fantastic advice I think. And it's just the crux of the matter is like what you said, you have to be unique, but you also have to be able to um, be resilient to any outside influences, any disruptive change. 100%. Um, so skipping forward a little bit, you have your market fit, you're doing well. What's next? When do you decide that perhaps it's time to think about an exit? And um, do you already think about, do you consider exit opportunities when you first set out with a startup or do you just wait until you feel like it's the right moment, um, for you to potentially start thinking about an exit?

Speaker B: So when you start, usually you don't think about exits at all. I mean that of course some investors would like to see exit slide on the deck. But I believe that it is foolish uh, because before you have a, uh, product market fit, you don't really know what market you will be in and what is the opportunity. So up until you get strong product market fit with strong traction, I would not spend a second on thinking about the exit. A second there's a waste of time. Uh, and then, you know, I have, you know, uh, so my previous business, I exited and maybe I will like tell you how it happened. So it was not intentional, it was not deliberate from there. But actually when we were like growing this, my first business, it was called Turbine, uh, we had to interact with multiple partners on the market. So basically on the value chain it was not just us. So we need to integrate with some data providers, we had to integrate with other systems. We naturally got to know the landscape, the space, the players, the main players in the market, and of course all of them, especially the established players with strong market position in the region. They look at the new startups, they look at everyone who integrates with them or delivers some value to their clients. And then usually initially what they tried to do is to partner with us or to copy us. Some of them Tried to copy us and build their own software for risk management and they failed because they didn't have a software DNA. Some of them wanted to partner with us and we partnered with some of them just to do co sales and upsell and, and so on. And then I just started to participate in industry events just to figure out who is who and just to build presence of my company in the market. So quite naturally I got to know most of the prospective buyers. So I got to know existing players that could vertically integrate with us. So basically for whom we are a part, we could be a part of their value chain. So let's say they just do data processing and then they can just move the data to our system to do analytics. But for them the M and A could make a sense because they can just integrate uh, vertically and add another service to their offering. I met similar players, both on our market, but also on the markets in Western Europe, because for them it could be just an idea just to build a market position with one transaction so they can expand horizontally through acquiring gas. And of course I had some chats with the investors, like private equity investors who just look for opportunities in general. So basically, I mean the first initial conversations about exit, it was uh, triggered by the potential buyers three years before the real exit. So we were just approached by the players in the industry who got to know us. Ah, okay guys, you're a startup, maybe you, you think about selling yourself. Would you like to talk about this? And so on. And then I said no, but I just kept relationship. And I believe that to have a successful exit it is all about longer relationship. So people think that exits are like transactional. You say, okay, I want to sell my business, I hire M and A advisor or Erland Young or Deloitte and they will get us a list of the uh, prospective buyers and then we'll have a process and exit is done. That's not true. Sometimes it happens of course, but at that time the price is suboptimal. And the way you should think about this is, okay, you need to understand your industry. So for whom it makes the most sense to buy you because of the horizontal expansion, vertical integration, for whom you can create much more value. And you need to know those players, they need to understand the, understand the way you operate, the value you can deliver. You need to build personal relationship with the CEO or CEOs of those companies. And of course I don't say that you don't do the transactional way of selling your business, but the moment you want to exit you'll have much more prospective buyers and many of them will trust you. So they will pay higher price because they would really know what's the value for them. So you have much more competitive situation and the better dynamics of the exit process rather than not building those long term relationships with potential buyers.

Speaker A: Awesome. Uh, I think the key takeaway here is that literally every aspect of business is about contacts and networking, uh, from the very, very beginning, just up until the very end. So fair enough.

Speaker B: I deeply believe in this. I mean that, you know, for me, like as an entrepreneur, for me business is all about people, relationships, the relationships with the employees, the investors, partners. And it is not like, uh, networking. I believe that is, uh, quite an ugly word, overused, but it's not networking. It's all about building meaningful relationships and building trust with employees, with investors, with clients, with partners and potential buyers. And I believe that many people do really underestimate that. So they just think about the relationships very transactionally and they just, you know, they do fundraising without building relationships, selling without building relationships, hiring people without building relationships. And I believe that it is wrong because business is part of life and actually this is quite an important part of life. We spend lots of time, uh, in our work. So basically I believe that building meaningful long term relationships is the best way to be successful in the long term.

Speaker A: I think that's an awesome take on this. Absolutely. So, um, Piotr, to close it up, I do have a question for you about what is a key piece of advice that you could give to new founders out there? Something that maybe you know now that you wish you had known when you were starting out yourself or maybe you've actually received a crucial piece of advice that you feel has really resonated with you the most.

Speaker B: I, uh, have lots of small pieces of advice, so couple of them. So first of all, I believe that the successful entrepreneurs need to be good sellers because in the first years of, when you run your business it is all about selling. So you sell the vision of your business to the prospective employees to get the best ones on board. Then you sell the vision to the investors to get money. Then you sell the vision of the product to the prospective customers before it exists, uh, so they can buy. So you need to be extremely good in sales. But then I wouldn't say that sales in a model because sales is also kind uh, of hardy word. So when you go to the university, nobody wants to be a salesman salesperson, because you just think of, about, you know, if you think about salesperson is that this Stupid guy who tell you a lot of stupid things to get the sale and then to go to the next customer. But what I believe in is that the sales is all about relationships and trusts and you. And then I believe that if you're really passionate about the business you're building, you will be a great seller because you sell your passion to the problem you want to solve. And even the most introvert engineer founder could be a great seller if he truly believes in what he's doing and he's not afraid to communicate what he or she believes in. And so I would say that my piece of advice is to be really passionate about what you're doing really. Because if you're not passionate about your business, you just start, just don't do it, go to work, go work for, uh, any other enterprise. But then you also need to be bold. I believe that I was quite bold, but not bold enough in the way because sometimes if you have just the crazy ideas just because you just tell about them, they happen. Uh, so sometimes we don't do things because we don't believe that. We don't try to hire a great hire because we believe that they want, they would never join us. We don't try to sell to the great client because we believe that we are not good enough. And I believe that we should be bold. You know, entrepreneurs should be bold and not be afraid. It is the same like with dating, you know. So basically if you're on the dance floor, if you want to, you know, pick up the best man or woman on the dance floor, you will never do this unless you just go and talk to her or him. Uh, so basically you just need to be bold and passionate and then it would work. So this is my advice. And then second advice is that don't really. So sometimes because you got money, you believe that you got the product market fit. Okay, the investors, so smart people invested money in my company. I get loads, uh, of PR and I won all of the startup competitions. So I have a great product so I can sell it because it is great. Everyone believes in my product. And it's not true, I mean that you need to really analyze, monitor if you have a product market fit or not. And if you have a product market fit, you will feel it, you will see it. You won't be able to really add new salespeople or support people quickly enough. And I wouldn't really spend a penny on aggressive graft. I wouldn't be aggressively hiring people unless I have a product market fit. So up until I have a product market fit. When I have a next business, I wouldn't have more than 10, 15 people in my company. I wouldn't spend a penny on marketing and sales because getting to product market is most important. And we did this mistake in that symmetrical. To be really honest, we hired too many people. We were aggressive in sales before getting to PMF and it is really distracting, it is slowing you down. So it's quite good. I know that if I were for the next time to build a new business I would do it differently but I would really getting to PMF is the single job to be done for the early stage funder and then don't trust anyone investors, uh, up uh, until you feel that you have it. Don't spend much money.

Speaker A: Fair enough. I think that's great advice. Be confident but also be very much aware of where you really are and be conscious of your business and your product. I think that's fantastic. Um, Piotr. Ah, it's a great closing point, I think. Thank you so, so much. Because you've given so much advice, I think it's going to be incredibly helpful for all the founders, all the uh, entrepreneurs out, uh, there. So thanks so, so much for being with me today.

Speaker B: Thank you. Thank you for having me.

Speaker A: My pleasure. Thank you.

Speaker B: Bye bye bye.

Speaker A: Thank you for listening. If you want to learn more about Symmetrical, visit Symmetrical AI. You'll find the link in the podcast description. If you enjoyed our conversation, subscribe wherever you're listening from to get updates on the newest episodes. We're always keen to hear hear from you as well. If you have any suggestions or questions, Message me on LinkedIn. Talk to you soon.