Ep. #1201 - Finding a Product Market Fit
In today’s Startup Hustle episode, Matt DeCoursey and Phil Alves, Founder & CEO of DevSquad, discuss finding a product market fit. Tune in as the founders delve into the essence of product-market fit and its pivotal role in your success journey. Matt and Phil also dissect the telltale signs of a well-aligned product and the decision to pivot or persevere.
Covered In This Episode
Product market fit exists when enough people want to buy a product to support business growth over time. DevSquad helps entrepreneurs bring their SaaS concepts to reality.
Listen to Matt and Phil’s discussion about the reality, myths, and key indicators of a product market fit. They toss around insights about making a product super sticky and providing value to businesses vs. individuals. Phil discusses software rules, the Mom test, and 5-75. The 5-75 rule is software that a five-year-old and a 75-year-old can figure out how to use. Matt and Phil also discuss when to pivot or persevere and why businesses pivot.
Do you want to find a product market fit for your business? Tune in to this Startup Hustle episode now.
- Phil’s backstory (1:23)
- Defining product-market fit (3:09)
- The illusion of product-market fit (4:41)
- Make your product super sticky (13:23)
- The key indicators of having a good product market fit (16:08)
- It’s easier to provide value to a business than to individuals (23:23)
- The Mom Test and 5-75 rule (26:04)
- Pivot or persevere? (30:08)
- Why do businesses pivot (36:35)
- Pivoting for greater opportunity (41:44)
For me, the only thing that really defines product market fit actually is the user getting real value from your product. And are they willing to pay for their value?– Phil Alves
Don’t overlook the fact that keeping the clients, users, or subscribers that you have, is a lot easier than going to find new ones. So if you’re able to deliver something that gives peace of mind, or reduces friction, or stress, or anything, I think that those are signs of a good product market fit because you’re solving a problem that the user has, and they don’t want to go back to the prior problem.– Matt DeCoursey
I think a lot of startup founders come into the whole thing thinking that they will take business away from the competition. And the thing is, you have to be significantly cheaper or better to unseat people from products that they’re already using because of the cost of switching over often. And the effort and the energy, and the focus that goes with it often outweigh the benefits of it.– Matt DeCoursey
I see pivots happen all the time, and we should not be afraid to do those because one of the hardest things we know in business is to build an amazing team. If you have a team that works well together, maybe we can just get the same team and move to a product that is going to be more successful. And I see a lot of companies being very successful following that route.– Phil Alves
Are you planning to launch a new tech product? Full Scale can help build your software development team quickly and affordably. You can define your technical needs in just a few clicks. And their platform will automatically match you up with a highly qualified team who will only work for you. What are you waiting for? Get started on recruitment today!
Lastly, don’t forget to check out our Startup Hustle partners. These organizations support the startup community and offer varied services for different businesses.
Following is an auto-generated text transcript of this episode. Apologies for any errors!
Matt DeCoursey 0:00
And we’re back, back for another episode of Startup Hustle. Matt DeCoursey here to have another conversation I’m hoping helps your business grow. If you listen to the show regularly, you know and have heard us talk about the fact that a poor product market fit is the number one reason that startups fail. Other than running out of money, we don’t really count that one because there are things that lead to that. We’re going to talk all about that and more on today’s episode of Startup Hustle, which is brought to you by FullScale.io. Hiring software developers is difficult, and Full Scale can help you build a software team quickly and affordably. And here’s the platform to help you manage that team. Go to FullScale.io to learn more. Speaking of software developers and companies that employ a lot of them. Today’s guest does. And with us today is Phil Alves. He is the founder and CEO of DevSquad and DevStats. You can go to DevSquad.com. There is a link in the show notes for that. Straight out of Salt Lake City, Utah, Phil, welcome to Startup Hustle.
Phil Alves 1:00
Hey, thanks for having me. I’m excited for
Matt DeCoursey 1:03
Yeah. I’m ready to talk all about this. So you know, we’ve got there’s a lot going on. You’ve worked with a lot of different clients yourself and a lot of different things. You’ve got your own SaaS products, so we have lots to talk about, but why don’t we get that started with a little more about your backstory?
Phil Alves 1:23
Sure, yeah. I started my career when I was 16 years old. I started learning how to code. I learned from books, and I did it just for fun. So like, that was what I did in the evenings, and after school is still going to high school. From there, kind of by lucky, by luck, I got my first product out, and the product was successful enough that I was able to sell that product and move to the United States in 2011. So since then, I have been building products for other people with my consulting firm and just recently launched my own product. And on the personal side, as a good Brazilian, I love Jiu-Jitsu. I love soccer. And just a few years ago, I also got into flying. So, I fly airplanes is one of my hobbies.
Matt DeCoursey 2:10
Aren’t you supposed to be into rodeo too, as in that, like, I believe like being from Kansas, like I get exposed to ball riding. Which, by the way is a lot of fun to watch. It really is. Yes, I go watch the professional bull riding when it comes to a local arena. That’s how many people are interested. But half those people are from Brazil.
Phil Alves 2:30
Yeah, there are a lot of those there. But they’re in a different state. Those are up north, up south. Sure, I will go to watch but I never
Matt DeCoursey 2:40
Huge Yeah. And yeah, not to be too far off track. Brazil actually has the world’s largest rodeo, which hundreds of thousands of people go to. I’m not like a rodeo guy. I just thought that was fun. So people asked me, we used to have a suite at the local venue. And they say, well, what do you know about professional bull riding? And I said that someone from Brazil is probably going to win today. So
Phil Alves 3:03
Yeah, always want to go to the rodeo. I forgot the name now. But yeah, it’s a huge thing.
Matt DeCoursey 3:07
It’s called, but like 300,000 people show up to watch this thing. It’s wild. It’s one of the one of the largest populated events in the world. So anyway, enough of that. Well, one more, here I am trying to flex my knowledge about Brazil, which interestingly uses Portuguese as a language. So yeah, yes. Yeah. I’m out of Brazilian facts. But, but anyway, so you know, a few things. So you know, obviously, as the founder of Full Scale, and you’ve been a DevSquad, we’ve worked with quite a few different people or founders, you’ve built products, we’ve built products. And, you know, when it comes to that product market fit, there’s a lot of things to consider. And I’ll just throw this out there. So we can begin the conversation with a simple definition of product market fit, which is when a company’s product satisfies a strong market demand. It’s not about just having a great product, it’s about having a product that meets the specific needs of the market. And the market can often change. It can bring an increased sense of importance and attention to what you sell and it can also drag it away. So, when you think about like finding a product market fit with what you’re doing, creating, starting, launching or involved with like what are some of the things that come to mind?
Phil Alves 4:41
And just to add on top of the marketing change, I think there’s a way to mask product market fit when you think you have it, but you don’t, because some people might feel like hey, I have revenue, like especially with like b2b enterprise SaaS. You do early sell was three years contract and then to get all this customers in like a product market fit because we can sell the product. But maybe you just have messaging fit, or you have the right channel. And for me, the only thing that really defined product market fit is actually is the user getting real value from your product? And are they willing to play pay for their value? That’s how how I define product market fit. And so, again, many times I saw companies after the first year, they saw a big churn because they’re just able to sell a lot on a yearly contract and didn’t look how the users were actually using their product.
Matt DeCoursey 5:38
Yeah, I think when I think about product market fit, I think about how value how valuable is the problem that you’re solving, like that, how valuable is that solution. And there are a lot of things that can get engagement and can get, you know, interaction and users and then fail to generate revenue because maybe the solution, it doesn’t really exist, or it’s not that valuable, or it’s to the point that like, you just have to sell them, you know, $1,000,005, you know, subscriptions or something like that. So, you know, product market fit, as you mentioned, can also feel like a bit of an illusion to some people because sometimes you do get revenue, you do get adoption, and that can actually lead to that kind of phantom feeling of oh, wow, this is big. This is really valuable, when in fact, you just have like three or four early adopters. But you might struggle to find adopters five through infinity.
Phil Alves 6:39
Yeah, and like nowadays, we’re talking about SaaS products to people are buying so many SaaS products, and they get so excited, but they don’t use every single service product that they buy. And so that’s why I one of the metrics that I like to track is how many Strix in a week or in a day, if it’s a daily product, or a weekly product, how many times people are coming back to your product, you know, like what’s the Strix of like how these people come like for 10 weeks, 12 weeks, 13 weeks, they’re like every there every week because you might just get excited about something. And I’m like, they’re like, I have ADHD, I’ll go like 100 direction, I got excited about everything. And I’m like, oh, shit, I cannot do everything. And then you go back and do what, only what you can. And I think people are getting more conscious of that right now in the economy that we are and people are starting to saving, and there’s even products to help you figure out which products are not using. So you can cancel them or reduce your subscription level. So that’s another thing to keep in mind. Like, it’s, you might have early engagement. But how do you keep those people engage? How do you make sure that you’re adding value long time, you know.
Matt DeCoursey 7:48
I think you have a good point with the measuring that and that and the metric of like daily user, and you know, and login or usage or whatever is as a big is a big metric that venture capital and business analysts look at because you’re right, like if it’s something you go back to every day, and I’ll give you an example as the founder, so GigaBook.com. SaaS product that, that Full Scale owns. And you know, that’s been a long time since this happened. But it was years ago, we it was still pretty early. And we had kind of a bad software push, and and broke a couple things one day, and my god did the phone rang that day. Now talking about finding a silver lining, we fixed the problem in a couple of hours, and it was gone. And we all kind of sat back because that’s stressful stuff when that occurs. And by the way that happens to every software business at least once at some point. But I sat back and I looked at the team and I said you know what, while today was not fun. I will say it was important. And they’re kind of looking at me, what are you going to say next? I’m like, it shows how important what we built is to our users because with a couple hours of hiccups, they’re lightened up phone, that they can’t live without it. And that’s and that’s an important thing. And it also increased, it increased our feeling of of responsibility for making sure that we didn’t mess anything up again. But like I said, when you realize that you’ve built this critical component of how people run a business or you or do something, I think that’s when you know, you’re onto something.
Phil Alves 9:37
Yeah, I think it’s very important for us to know when you’re building a product, what kind of product are you building. Is a mission critical software, or it is a software that people can live without? That doesn’t affect their day if it goes down? And when I was building my own SaaS, I actually purposely want to build something that if we went down wouldn’t be the end of the world. I didn’t want to build an email service. I didn’t want to build up payment gateway, something that people cannot leave without, for real. But it was pretty amazing when we had issues and our stuff, even though it’s a developer analytics platform, so we just show you stats of how your team is doing. It doesn’t affect if you can work or not. But people were still were calling us, it’s still, I mean, we don’t have the phone, I should say they were still emailing. And they’re still like, why this is now we wanted to use the product. And that it’s like, you like you say, you’re not happy that you have a problem, in our case was the problem with the workers. So like, there’s a lot of workers and then this worker server went down, and now people cannot do their job. But it was also feels good, it feels good to know that people care you get down when people are, are messaging you about it, you know?
Matt DeCoursey 10:42
Yeah, and I think that, you know, those are the kinds of tools you talk about the good product market fit. And I think this is where people get a little that what they’re looking at. And considering as important with what they built, is sometimes misaligned. And it took me years to learn this as as a software founder, before I finally realized that things like peace of mind are more valuable than anything else you can put in there. And when I say that, like I just really use GigaBook as an example. So like when a business that takes bookings, or collects payments for appointments and stuff like that, is able to automate that process. They remove a whole lot of anxiety when it missed opportunities, redundant work that they need to do. So you talk about like, how now, yes, that there’s a bunch of quote, features that are below that payment collection and scheduling reminders or whatever. But really, in the end, you’re delivering peace of mind, meaning that user can, you know, go provide the services that they provide for other people or do whatever it is that they do in a way that, you know, like you said, it’s it? Well, it is kind of mission critical in that regard. So, you know, I think that’s and so why is all that important? Well, this is kind of a foundational requirement for sustainable growth in some regards. And it’s, you know, these that results in a reduced cost of customer acquisition because I’ll give you an example like something. And we’ll just still use GigaBook here. So people learn about that product, when other people are using it, it’s where reminders come from, it’s where they see the widget, they see stuff like that, and they say, Oh, wow, this was really, really cool. This is really easy. Maybe I could use that in my business. And these are the kinds of things that that that gain traction, and keep your stuff moving forward. And, you know, I think the main thing as well, though, that’s important is don’t overlook the fact that that keeping the clients, users, or subscribers that you have, is a lot easier than going to find new ones. So if you’re able to deliver something that gives peace of mind, or, or I don’t know, just reduces friction, or stress or anything, I think that those are signs of a good product market fit, because you’re solving a problem that the user has, and they don’t want to go back to the prior problem. That’s a good thing. So
Phil Alves 13:23
For sure. And I think we should approach this specifically, it’s very interesting, because once you get in, like, people have to book the appointments, and that become a behavior and they cannot run their business at that point, without your booking system. Because it’s sticky. Yeah, it’s super sticky. So like, there’s, I feel like building products, there are trade offs. And then you have to understand what trade offs you’re doing, and how that trade off will affect your product market fit. And we went different ways about building a product, like you build something super stick, that if it’s not there, I cannot run my business, if I need people to schedule to come, like to see me, like, wherever, like, let’s say, my barber, and I’m using your product to schedule people in and now like, I’m going to be answered the phone when I’m like I supposed to be cutting hair, it’s a big deal. So like, once they adopt your product that you don’t miss that they’re gonna keep using because it’s there. Now, there are a lot of products like for example, my product where I made the decision of like, I wanted to be on top of everything that they’re actually using, I wanted to be an analytics product analytics product, like my product like Mixpanel that like how people are using Insight, you don’t need an analytics product is if I’m going to take a step back and I’m going to look big picture. How is my team performing? How is my business performing? And hopefully I’m gonna have actionable insights. And so I feel like there’s a trade off and you have to understand that one’s gonna maybe be harder than the other to get to product market fit, because you have to change the behavior of people like long term with you, your product, I made it decision that now I’m not going to book manually anymore. That’s if you lose your client, they’re gonna go to another product. Because the alternative, it’s, it’s pretty bad for them. And also the pain point, it’s very big.
Matt DeCoursey 15:13
Well, when you talk, you talk about like sticky products. And now here’s, here’s some just real talk. There are also things that businesses just don’t want to swap out. You know, like you mentioned, like, what’s like a booking software, I mean, it’s kind of a pain in the ass to switch it out. It’s the same thing with your payment gateways, your banks, certain things like that. So, you know, like, on some levels, you can get, you know, if you do a good enough job, you can definitely stay in that conversation, or in that, in that, you know, client spot and situation.
Phil Alves 15:50
That being said, it would be super hard to get into, right, let’s say, if you could position to Twilio, who wants to replace to it isn’t great, no, but who wants to go to the whole thing of replacing there, and they have such a big market share. So again, you have to think about your pros and cons and how you’re going to go about it, you know.
Matt DeCoursey 16:07
And we’ve talked about that before, on the show, we did a 52 part series about how to start a tech company. And one of them one of the the, one of the things we talked about in one of the episodes was, you know, gaining customers, gaining users. And I think a lot of startup founders come in to the whole thing, thinking that they’re going to take business away from the competition. And the thing is, is you have to be significantly cheaper or better, to unseat people from products that they’re already using, because the cost of switching over often. And the effort and the energy and the focus that goes with it are often outweigh the benefit of it. So yeah, so let’s, I want to talk about a few things that are key indicators of having a good product market fit. But before I do that, I want to remind everyone that finding expert software developers doesn’t have to be difficult, especially if you go to FullScale.io, where you can build a software team quickly and affordably can use small scales platform to define your technical needs and see what available developers testers and leaders are ready to join your team. Go to FullScale.io to learn more. While you’re down there. You can also down there in the show notes, clicking that link, click the link for DevSquad. They’ve got some people out there too. So you know, there’s a lot going on. You know, I think that you talked about about product market fit. But it’s also hard to achieve that without having the right team of people building it. So get out there and look for that. Now, when you talk about indications that you might have. I’ll tell you what, let’s do true. Let’s do True or False here, Phil. Okay. All right. The following is an indicator of a good product market fit a high customer retention rate? Yep, for sure. I’m going with it. Rapid organic growth on referral rates. Oh, referral rates? For sure. True. All right. Yeah. Low customer churn. Yep. True. positive net promoter scores. Yep. If you don’t know what a net promoter score is, I’m gonna let you Google at NPS. But that’s it’s it’s a gauge of it’s it’s an indicator and a measuring stick as far as how happy people are. Okay, is this an indicator of product market fit and inconsistent or decreasing usage of your product or service?
Phil Alves 18:43
No, but I feel like you have to investigate it further. Because it could be that there are other things that are affecting, and people are canceling a product because of their financial situation or because they moved to another company. So I feel like is a yellow flag. I’m not sure if there’s a red flag yet. You know, like with McAfee change over time.
Matt DeCoursey 19:08
Yeah, you have a good point. And let’s go back to March of 2020. Right, pandemic time. And, you know, for us at Full Scale, we lost a ton of business, because there was a reaction from the market uncertainty about financing business, new investment rounds, stuff like that. That will f a time that drove high customer churn rates. And you know, and that was a, that wasn’t something that wasn’t related to our business in general that was related to marketplace conditions. I think we’re experiencing some of them in 2023 right now with a slowdown in venture capital and while some parts of the economy have boomed, Over the last year or two, a lot of them are really kind of aren’t. And, you know, you mentioned like, that’s why I say you have a good point, we ran into that with Gigaba, we’re like, we’ll get a cancellation. And it’ll just say, my business didn’t go, Well, you know, like, we’re not in business anymore. And that’s not necessarily because of what you’ve built in some situations. So.
Phil Alves 20:24
And when we start this conversation we talk about, like, also building a $5 product versus a more expensive product. And, and I feel like, especially if you’re trying to build products for prosumers people, they’re like trying to start a business or a smaller business, there’s that point to like, maybe they will suffer because of market conditions, or, like, we think about like this Zen caster using to record your podcast right now, the reality of it is most people don’t go over 20 episodes. So so it’s a hard market to be. So that’s things to think about, too. When you think about product market fit and, and are you choosing the right market to play, like, I feel like you have product market fit is is about are you is an underserved enough market, or is a market that you can charge enough money that you don’t need all this, there’s many customers, or out there’s much money to raise, or no, you wanted to raise money, you want to be big, it’s about the strategy, you know,
Matt DeCoursey 21:23
Well, and then some products in general, just just because you don’t experience a long-term user relationship doesn’t mean that you have a poor product market fit. And I’ll give you a good example. There’s a company here in Kansas City that builds the technology that all of the paint companies, paint, like house paint, like indoor outdoor, like all these companies use it in their app. So you can try to get an idea of what the paint would look like in your room. This is an example of like, okay, it’s, here’s the thing, eventually you paint that room, and maybe another room, you’re gonna run out, unless you’re a professional painter, you might run out of rooms to paint, and then that, that that kind of product might have, they have a great product market fit for people that are currently looking to choose a color of paint to paint the room. But I would imagine the engagement rates, and the daily usage of that falls off a cliff because you ran out of rooms, or houses or something to paint, you know, like you kind of get it done. And then there it is, and then left, you know, those are different kinds of products, those are kind of one off stuff. So I’ll give you one, I used to sell pianos, when I was young. And a piano, like a traditional piano has a lifespan of 80 to 100 years, you usually make a sale to someone and that’s it. You know, there’s not a lot of people now there are some people that maybe start with something simple and then come back and get a better one. But, you know, that was one of those things that I mean, we have the right product, we have the right market, there was a fit for that the ones that needs met, it’s done. That doesn’t but that because I’m bringing this up because we’re talking a lot about like SaaS and recurring stuff. But over in general, when it comes to all markets, some things are a good product market fit, they just don’t have a recurring nature to them.
Phil Alves 23:22
Yeah. So last European example, you’re selling pianos for people that sell pianos, because they always have to sell more pianos, and then that becomes more scalable. That’s why I love to stick with the b2b space, especially for bootstrap because if you lose the same painter examples, staying in the b2b space allows you to give so much more value to you, because business can put $1 amount to what they’re saving. So if they’re using my software, and they they have 100 developers, and they learn developers are better off now. And they see more productivity. And so they’re like, Okay, we produce 30% more our developers cost x, we save this much money. And so that’s also going back to the value thing. It’s so much easier to provide value to a business than to individuals.
Matt DeCoursey 24:14
Well and those are some of the reasons that when it comes to finding investment in the in the private equity and venture capital markets that there’s well there are funds more funds than not, that literally will only invest in b2b enterprise software. Why? Because it’s a bigger ticket to like you mentioned businesses need things that grind the gears. Another thing is, it’s a lot easier to get a business on Sundays to get a business or someone that works at a business to spend the business’s money than it is to get an individual, that same person that might be in charge of a $300 or a month decision for your SaaS product might go home later that night and cancel an $8 a month subscription on the personal note because they they don’t use it or it’s their own money. Meaning like, it’s a lot easier for people out of atmost businesses to spend the business’s money than it is to spend a consumers money. So, and also the tickets are just a lot more expensive.
Phil Alves 24:14
Yeah, it’s definitely very different. Like, for example, my personal finances, I don’t manage them, because I’m so used to manage death squads, and then my business finances, then my wife gets mad at me like, oh, that’s $10,000. And she’s like, Oh, this is not your company. $10,000 is a lot of money for that individual level, you can just go like, Oh, $10,000 here, $20,000 there. But those are easy decisions that you make in an hour in the business, depending on the size of your business. And those are not easy decisions that you make, like in our personal life, we pay 20 bucks for Netflix and expect everything to be 20 bucks.
Matt DeCoursey 26:04
Yeah, but and with that, though, even at 20 bucks, Netflix, that’s a hell of a lot of subscriptions to pay their bills. Yep, like a lot. A lot of $20 bills to stack up. Now. Let’s talk about a couple of ways to like, identify or look out for product market fit. I mean, conducting surveys and talking to your users is is number one. Ask people what they like and what they don’t like about what you’ve built. And then lesson.
Phil Alves 26:36
Yeah, I agree.
Matt DeCoursey 26:38
They won’t tell you stuff that you want that you like hearing, but they will tell you stuff you need to hear.
Phil Alves 26:44
Yeah, there’s a lot of way to get fancy about it, like a lot of the mix panel product where you can like track northstar tracking engagement, and look out the events and where people are doing. But it’s, it’s funny how like, at the end of the day, just a simple conversation does so much, and you don’t have like, spent all this time implementing things. So you just know if you have product market fit or not. So I feel like sometimes we over QA and we overcomplicate it when, especially in the early days, you can do things that don’t scale. You can jump on a call with your customer and ask them questions. And there’s a book that I love about knowing how to do those interviews and ask those questions. It’s called the Mom Tests because you have to ask the right questions to get the answers that you need. You know, so that’s a book they recommend for everybody.
Matt DeCoursey 27:33
The mom, like, m-o-m? Yes. So let’s stand for something or is or is it really like a mother?
Phil Alves 27:41
So the whole premises of the book, it’s like, how could you ask questions to your mother about what you’re doing and still get value instead, because your mother loves you so much. But if you do it in the correct way, if you’re right, ask the correct questions, you might not lead people to try to protect your feelings. And that’s the whole premises of the book. It’s an amazing book on user testing and, and understanding if users are finding value from your product.
Matt DeCoursey 28:10
I have a I have a simple software rule that I call 5-75, which means a five-year-old and a 75-year-old should both be able to figure out how to use it or get started with with that level of ease. Which isn’t always possible with everything, but you talk about the, everything about you could have a great solution. But if it’s at the end of a really terrible onboarding or setup process, you’re not going to no one’s ever going to find out about it because it’s not going to get set up properly. So can a five year old or a seven and if you’re 75, and listening to this podcast, I don’t mean that in a bad way. I just invented that when my dad was 75 because he was constantly calling me asking me how to do things, set stuff up, all that, and I realized I’m like, man, this is really a lot of the stuff. I was like this is really hard to do. Why is this so confusing? Yeah, when a guy that owns a tech company can’t help you set up your software product or something or not can’t or if it’s just a challenge, then that might be a different test. So
Phil Alves 29:23
And it’s I haven’t seen so many business building that premises. For example, Salesforce is such a complex model. It’s so hard to setup.
Matt DeCoursey 29:34
I don’t even use it for that reason.
Phil Alves 29:35
Yeah. So you probably saw the seven year old development conference. We built CRM for constructions CRM for financial advisor CRM for car dealers CRM for x, just because the CRM simplifying and making stupid simple because that’s composed No. Yes, Salesforce can serve everyone but to serve one they have so many level of complexities of customizations. And then like even HubSpot was built on to make something simpler than than frickin Salesforce.
Matt DeCoursey 30:07
Well, that’s why we use HubSpot and Salesforce. That was the thing you know if Salesforce is okay, so obviously Salesforce is like a multibillion dollar company, GigaBook is not. So one of my biggest regrets with building GigaBook was okay, so what? So why do we do we have a good product market fit at GigaBook for companies that need high level our companies or users that need high levels of customization. So the whole thing is customizable, which is a lot more work a lot more maintenance, a lot more consideration a lot more integration than just if I would have gone back. So they say there’s riches in the niches like rather than being like the eighth biggest booking software or whatever. We could have been number one and like something niche now but without though the product market fit shouldn’t be so so precise that you have no market. So the question is, what is that? So you mentioned like you rattle off all these different levels of all these different types of CRMs. And stuff like that, which is kind of funny, because my co-founder at Full Scale and and here at the Startup Hustle podcast was also the founder of VinSolutions, which is a huge car dealer CRM. So yeah, so have some familiarity with that. But you look at the specificity of it. And so when we don’t when we get users that don’t adopt it yet, so we had to adapt the way we did everything at GigaBook, to create what we created what we called SmartStart, which is intelligent onboarding. Because there’s so much customization in there, you ever go to set something up, and you’re on a page, and you’re like, I don’t need any of this. So you got you get, but you sit there and you look through all of it. And like it just it’s it’s sensory overload. So you know, and we wanted to do things to make stuff easier. Like for example, if you Okay, so when you get a US, a United States based mailing address, the zip code is the last field you always fill out. Software, people should make that first. Because if you know, someone’s zip code, you know, their timezone, you know, their currency, you know, their location, and you can fill out a lot of stuff along the way. And like some of that is, is if you do have a complex product, then you need to become a specialist in getting people into it. And that will make it a better fit for them. Because when they’re inside, it’s already set up to do what they want to do. That’s where people flop out of Salesforce. Like I did the same thing. I was like, Okay, this, everyone’s I’ve heard so much about it. And I used to live in Indianapolis, where Salesforce has like a 900 story building with their name on it, but it but it overloaded me, I’m like, wait a minute, I need to, I’m gonna potentially have to hire someone to work on this full time just as an administrator. And I was like, there’s gotta be simple stuff in there. Because like you get it, you sell software development services, I needed to know, your name, your location, your website, what you’re looking for, and when do you want to start? Like, I don’t need to go 900 levels deep into things and build another set of software. So yeah. Okay, so we’re running out of time. And I think we’d be remiss to not, I think it’d be like, we need to talk a little bit about what happens if you realize you don’t have a good product market fit, but your business is already out there. And this is the pivot or persevere section of this conversation. You know, one of my favorite moves is the pivot. You know, I think that you before we hit record you mentioned like, spinning, spinning sir, spinning software products out of a service business or something else. You know, I use the example of giga book being highly customizable. If I want to take a pivot there, I could just decide to make it the world’s number one software for people that wanted to schedule clowns at a kid’s birthday party, you know, or something. But that might be a pivot if we saw an opportunity, and I actually consider. Do you remember, like five years ago are probably actually more like eight to 10 years ago, when everyone got into escape rooms? Like it was this craze. They were everywhere and all these people were reaching out and they were asking you they wanted a booking solution for it. Nobody had one. We talked about it. We were still a little early in the company history that to take a fall on pivot. I probably could have done that and beat the two other people that actually made a solution for it. And then the in the industry leader in that right away, you can now here’s the thing, you can charge a premium for that. You’ve already set up and it’s niche down. So people will call me and they’ll say, hey, you mentioned earlier a hair like a hairstylist, people will call me and they’ll be like, hey, my cousin is a hairstylist. I think she’d really like GigaBook. And I will literally say, no, there are four or five products that serve that exact market that will be better for your needs. And I recommend you try one of those. And why would I drive people away from my own platform? Because it’s just it’s it’s a it’s a it’s good advice. You know, now with that we also Okay, so we have an exorcist, like, a guy that performs exorcisms that has an account at GigaBook and you can book your exorcism online. There is not a platform that serves that type of service provider specifically. So you know, you get Yeah, so there’s, there’s a lot of needs in there. But if you need to pivot, and you realize it, some of that’s as simple as it can be niching down, it can be picking one segment that you got a really strong response for and deciding that that is going to be your specialty. What kind of pivots have you have you seen embraced or worked on? You don’t have to be overly specific of their clients. But I’m curious, like, where and when you’ve seen pivots? And did they work?
Phil Alves 36:34
Yeah, I feel like there’s two main kinds of pivots. And you just talk a lot about one kind of is the ICP kind, who is my ideal client profile. And I saw that many times, for example, we had this one product that we built was for helping people build financial plans, so they will be more organized and know where they were. And originally they thought their ICP would be the individual, that person that it’s a, they call them forgot the name, not Harry, Harry Erina is not yet rich. So those are, therefore therefore, that was their target market. And, and the product was great, but those people weren’t buying. And so they just swapped, changed the ICP for companies and like, what if we, like go compete with Dave Rezende Program they a lot of companies buy to teach their employees how to manage money. But our thing is not video. It’s like we connect your finances, we show you, give actionable insights. And that change of ISP made the whole difference. There was another one that I was someone that came to my podcast that I thought was a great example. They were trying to build a SaaS product. And they built this amazing feature on like, their whole billing and, and aborting and trying to reduce churn. And the actual product that they build wasn’t great, nobody bought. But they’re like, they took that one piece out. And they made a SaaS product, to help companies that didn’t want to spend the time with the things that every SaaS product need with like, connecting to Stripe and manage the subscription. And that became their product. I mean, one of the products I use every day is Slack. That was what happened, right? So they were trying to build a video game. And then they need to communicate internally. And someone hacked together a chat for them to communicate internally. And later on, when they run out of money. They they realized the only really valuable thing they had was the valuable their internal software. And they they released that for everybody. And now we have Slack. So I feel like those are the two main kinds of pivots that I see happen all the time, and should not be afraid to do those. Because, like, one of the hardest things is we know that because that’s the business that we are in is to build an amazing team. And so if you have a team that works well together, if we have engineers that do well, if we have a product manager, they understand and they can get the ball moving, maybe we can just get the same team and move to a product that they’re going to be more successful. And I see a lot of companies being very successfulfollowing that route.
Matt DeCoursey 39:11
You talked about the pivot sort of Shopify was originally an online store for snowboard equipment called SnowDevil. When the founders were dissatisfied with the existing ecommerce tools available, they built their own. So, you know, honestly GigaBook still was kind of a pivot for us. So GigaBook, was it moving forward when we started Full Scale with Full Scale got real big for us, you know, and 5000 saw company and it it garnered more attention from us, rightfully so at the time. And when I say like a pivot, it wasn’t really a pivot. So the components that exist in GigaBook: scheduling, notifications, reminders, text message communication, stuff like that, we were able to essentially merge that with the FullScale.io platform because with hundreds of employees and you get it, you’ve got like 80 to 100 employees yourself like, so for us, it’s a little our service offerings a little different because we’re more like staff augmentation. And we want to create a seamless process that let someone’s oh, here’s a talented person I might want on my team, I can click this button. I see when they’re gonna get sched that when they’re available, it does timezone conversions because your your folks are in Brazil, I’m assuming ours are in the Philippines, these are your nearshore offshore, the time zones are different. It’s all wonky, stuff like that. And then you talked about the organizational efficiency that that it provided because we also could customize it the way we needed it. It removes like, oh, man, you look at all the notifications, reminders, all those different things. So sometimes, you can get an overlap with different things that you do. And then like you mentioned, sometimes you’ll build something and realize that 10% of it’s really valuable, the other 90%, you may have actually kind of wasted your time building, you usually get to that point by not testing for a good product market fit along the way. By the way, we did that I remember one thing when we were first building GigaBook, I thought was just going to be like, this feature, it was involving tracking, like sales tracking, basically, like I had, what was the result that we came out with, and we spent all this time building it. And then we launched it, and no one used it, except for us. But that’s also like I learned a lesson from now, which is maybe go out and talk to our users and ask them what they want more so than anything else. And, and I did that afterward, which actually resulted in us building some things.
Phil Alves 41:44
Another kind of pivot that comes to mind is that maybe you did something that’s good and and that’s successful, but you realize a bigger opportunity in within that business, we have a customer that just had an exit. And when you talk about Shopify, I remember of him so he was running a commerce store. And his ecommerce store was doing well through Shopify, through Amazon, but he was having such a hard time managing inventory. And so he didn’t find any solution. And first, he built an internal tool to manage his his inventory. Now he realized inventory management was much bigger than the specific niche that he was selling a product. And so he spin off another product, which was a SaaS product that he was able to use it, he’s on ecommerce, and then they end up growing a lot. And then he end up actually just recently selling their SaaS product for a great exit for him. So it wasn’t that he’s ecommerce wasn’t doing well, was that he found another opportunity and he pivot to go pursue that opportunity. So I didn’t know if it was too much of a bigger maybe spin off with my own firm, like, we talked about their status at 80 to 90 employees firm. But I figured out that what we really love to do is help development teams do more and get stuff done. And I’m doing I’m gonna be able to do much bigger scale with my my SaaS product than I can able to do for my consulting firm, which consulting is very different in the staffing permutation. But I was like, hey,
Matt DeCoursey 43:11
Consulting relies on people and people inherently aren’t very scalable. Trying where software can be. That’s why, that’s why the VC world is so in love with software because you can theoretically, if it’s done right, go from thousand users to 10,000 users in a at lightspeed. Where if you had to do that, and it’s like that at Full Scale, I know this firsthand. So if I went, you know, I got 325 employees, and if all of a sudden I needed thousand of them, I gotta go find 675 more, which doesn’t happen at that same rate of speed. So
Phil Alves 43:49
Consulting is very profitable, though. That’s It’s amazing place to start, because less than 1% of companies will be able to raise money. So I feel like a lot of people, I think software is a great second, third, fourth business. A lot of our own customers. Yeah, they made their money somewhere else. Like they made the money with a driving school for example, and other booting software for driving school because they can afford it. They don’t have to pay for try to go raise money when it’s a very hard game. You have to have the right resume, the right pedigree, the right connections, were you could just do like a first build a business that’s easy to profit to be profitable. And then you move into software like because I know also from my own dating side, my customers love to hear your point. It’s gonna take two or three years to break even in SaaS. You know, so you have to be able to, to hold that.
Matt DeCoursey 44:46
You know, I watched this show on the History Channel called Alone, where they go drop people off and like the remote wilderness. There’s 10 of them and you know, they whoever stays out there the longest wins and they’re there. are all busy bees when it comes to accumulated enough food to make it through the the dry or the winter times. And launching a software business is very simple, or very similar. It’s not simple. It’s very similar strike that from the record place. Okay, well we are out of time and I want to let everyone know I want to do a quick reminder, I’m gonna get in trouble if I don’t mention this. If you need to hire software engineers, testers, your leaders Full Scale can help. We have the people in the platform to help you build manage team experts and go to FullScale.io answer a few questions, let our platform match you up with fully vetted highly experienced teams of engineers, testers and leaders. So and once again, with me today, Phil Alves and Phil sells dev services to you can go to DevSquad.com, DevStats.com, as well, where he is the founder and CEO. Oh, you know, I, I think that, you know, we I think we covered a lot of good stuff here. I want to give you the mic. Want to give you the mic one more time and give you the opportunity to? You know, is there anything you’d like to say and sum up today’s episode?
Phil Alves 46:10
Yeah, I think that was a great conversation. Thanks for having me, I would like to invite your listeners to test DevStarts. There’s a free trial, no credit card require. And they’re going to be able to see also everything that you’re trying to do to get the adoption, which is very important to to get product market fit. So when you sign up for my product, you’re gonna get an email every day from me for the next seven days, where I’ll walk you through videos and how you use the software and how you need because at the end of the 14-days trial, I want you to already have received the value. So you sign up for the product. And maybe if you’re not the ideal customer, you’re not going to have the value. But I would invite everybody to go test DevStats.com and sign up for the free trial. We’re not going to require any credit car and also going to be able to see what we do to try to raise the engagement and how we viewed products.
Matt DeCoursey 46:58
A lot of people go check it out. Anything that makes you better, faster, cheaper is worth looking into Phil, thanks for joining me, man. I’ll catch up with you down the road.
Phil Alves 47:06
Sounds great. Thank you