YouSaid · the spoken record

Todd Jackson

lines on the record: 99
first: 2024-04-11
most recent: 2024-04-11
sittings or episodes: 1
sources: podcast

Every line below is reproduced as it was said and linked to the record it came from. Nothing here is summarised or generated. Directory · Search · Corrections

“Yeah, so you go to pmf.firstround.com. Applications are open. They're going to go till May 7th. And then the program starts on May 29th. And if you want to reach out to me specifically, you can find me on Twitter. I'm at TJAC, TJACK. You can follow me, DM me. And yeah, I'm looking forward to working with some amazing founders that I know are listening right now.”
2024-04-11 · Lenny's Podcast · A framework for finding product-market fit | Todd Jackson (First Round Capital) · IDENTIFIED FROM THE TRANSCRIPT · source
“Something in that zone or earlier. Yeah. And you sort of have an idea Of what your product is. You have a hypothesis about what it is and who it's for, but you probably haven't started writing any code yet.”
2024-04-11 · Lenny's Podcast · A framework for finding product-market fit | Todd Jackson (First Round Capital) · IDENTIFIED FROM THE TRANSCRIPT · source
“No, I just, you know, if you're listening, if you're a B2B founder kind of in those early days of starting your company, or you know anyone who fits that description and you have an appreciation for just how hard it is to find product market fit and you don't want to go it alone, then please apply to this program or share the application. Like we promised we will review every single application. And I'm just really looking forward to working with a group of 20 or so amazing founders and helping them navigate these early days of product market fit finding. It's what I love to do.”
2024-04-11 · Lenny's Podcast · A framework for finding product-market fit | Todd Jackson (First Round Capital) · IDENTIFIED FROM THE TRANSCRIPT · source
“Yeah, I think there's a couple other things. One is you have to know what to show people when you're actually showing them something. Know lattice is the kind of product I mentioned that could be sold with Figma mockups. Looker couldn't be sold that way. Looker, you actually had to do a demo with their real data. So it required a lot more work to do that. Vanto was neither like a demo or a mock-up. It was actually doing the work. And like Pilot was like that. There's a bunch of companies like that. So you sort of have to figure out what is my product and sort of like how does it solve the problem and therefore what fidelity does my kind of early product or early demo have to be at in order to land the sale? And then I think you have to know when like when you've talked to enough people, it takes time to talk to people and kind of the rule of thumb is like if you talk to enough people and you can like predict 70 to 80 percent of what the next person is going to say to you because you've just talked to so many people and you've heard the pattern so clearly that's when you've talked to enough people. But these are you know these are all like things you got to learn and that's why like doing it experientially in the way that we do the program.”
2024-04-11 · Lenny's Podcast · A framework for finding product-market fit | Todd Jackson (First Round Capital) · IDENTIFIED FROM THE TRANSCRIPT · source
“It's a two hour session, like I mentioned, it's like one thing to explain this stuff, but it's another thing to see it. And so we show tons of Zoom recordings from founders who have gone through the program. And we actually do this thing where all the founders who are going through the program, they record all their videos, their customer discovery videos. And then our team watches all of the videos and creates highlight reels. And so, and we sit around in a room and watch them together. And we say like, oh, look at these questions that Lenny asked. And did you see how the customer responded? Wow, that's like an eyes light up moment or like Todd asked these questions. He's kind of leading the witness a little bit and the customer didn't seem that interested.”
2024-04-11 · Lenny's Podcast · A framework for finding product-market fit | Todd Jackson (First Round Capital) · IDENTIFIED FROM THE TRANSCRIPT · source
“He has this question. He's from Simon Koutra. I love his thing of Lenny, what is a fair price you would pay for this thing that I just described to you? And then you say your thing, and then I go, okay, well, what would be an expensive price? And then you say, and then I say, okay, what would be a prohibitively expensive price? And you sort of ask those three questions and like, generally when people tell you the fair price, it's a little bit of like they're trying to get a deal. And the expense of price is the one. Like if the product's good, the expense of price is the one that they would actually pay. Where they're saying it feels expensive, but you put it in front of them, you say it costs this much. If it's really good, they want it, right? And the prohibitively expensive one is the one that's like too expensive and they'd have to just, I just can't do that, right? So I love these style of questions. I think they're just a lot more specific than what I see most founders doing, which is just like chatting with customers. You really want to try to like sort of put them to some questions where you know they're going to answer honestly because you're asking them questions. You're not asking them to speculate. You're asking them like fairly concrete stuff. Oh, and the thing I should say is like.”
2024-04-11 · Lenny's Podcast · A framework for finding product-market fit | Todd Jackson (First Round Capital) · IDENTIFIED FROM THE TRANSCRIPT · source
“To pay. I don't want to try to quantify that. And so that's where I go, what's your budget for solving this? What are you paying for this other tool? Let me show you mine. Would you pay, you think that you'd pay less for that? You pay more for that, right? Can you replace this other thing with the thing I have? And then I love this question. I think you've had Modavan Ramanajam on the show, right?”
2024-04-11 · Lenny's Podcast · A framework for finding product-market fit | Todd Jackson (First Round Capital) · IDENTIFIED FROM THE TRANSCRIPT · source
“That's the next question I was going to say. It's like, where would a budget for this come from? And the best answer is that there's an existing budget, right? Like either like we already spend money in some way for like a competing tool or something that can be displaced by you or we're spending, you know, we put five engineers together to like help build this thing, right? There's some source of budget that I can get. And then the question is, well, how does your team make decisions on third-party tools to bring on? And you're never going to get like the cleanest answer here. I mean, like in larger companies, you might get semi-clean answers, but it's something like, okay, like this manager can approve it directly up to a certain dollar amount. If not, it goes to this sort of like next level up of manager. And, you know, if it's like, if we're going to spend more than 50K on it, we actually have to compare three different alternatives. But whatever, there's like some known process, right? That's what I'm looking for rather than just like a bunch of ambiguity. So that's kind of like ability to pay. And then I'm going into will.”
2024-04-11 · Lenny's Podcast · A framework for finding product-market fit | Todd Jackson (First Round Capital) · IDENTIFIED FROM THE TRANSCRIPT · source
“Know where Jason was like, Oh, you're looking for a CLM already? If a customer, like, you know, another way I think about it is like if a customer has a problem and I really think they have a problem and they know they have the problem and they're looking for a solution for the problem or they've even tried to build their own solution to it and failed. That's like the best customer, right? Because they know how hard it is. They want this thing badly. They've demonstrated that and they've actually failed at building it because they underestimated how hard it was. So like are you currently looking for building a solution here”
2024-04-11 · Lenny's Podcast · A framework for finding product-market fit | Todd Jackson (First Round Capital) · IDENTIFIED FROM THE TRANSCRIPT · source
“And, like, you're the boss. This is probably pretty streamlined. There's no procurement function at Lenny's newsletter. But so let's say I'm sort of like going after a bigger company. The questions I'd ask on confirming the ability to pay are like, you know, are you currently looking for a product like this? Or are you building something internally? Like this is kind of the ironclad thing.”
2024-04-11 · Lenny's Podcast · A framework for finding product-market fit | Todd Jackson (First Round Capital) · IDENTIFIED FROM THE TRANSCRIPT · source
“If you had reacted like, yeah, that sounds kind of interesting. That's a no, right? That is a no. That is a polite way of saying the word interesting is a polite way of saying no, right? And so I'm either looking for Wow statements or I'm looking for demonstrated behavior that shows interest. I then would probably, if I want to keep going with this, and this is all in the identifying extreme value, I'd ask you like, well, what stands out as valuable here to you, right? And I want to hear you answer quickly. You mentioned it's either going to like, it's going to make my product so much better. It's going to drive success for my business, or it's going to save me a bunch of money or something, save me a bunch of risk, right? But something where you like would very quickly be able to identify why that's valuable to you. So that's kind of like part one is like extreme value. Then I got sort of like figure out ability to pay and willingness to pay. And this is for you, this is like kind of easy because you're not like a 5,000 person company.”
2024-04-11 · Lenny's Podcast · A framework for finding product-market fit | Todd Jackson (First Round Capital) · IDENTIFIED FROM THE TRANSCRIPT · source
“In my experience, that's a good thing and an exciting thing. Like if I'm sort of pitching a product idea to somebody and they are like, wow, does that really work? I mean, if that thing works, I'd sign up for the waitlist today. That to me is like, okay, now I got to figure out how to build that thing. But like I know if I am able to build it and deliver on that promise, they are going to want it, right? Or you would maybe say signs like you would demonstrate behavior that shows that you're interested in like you'd be like, oh, Todd, can we meet again next week to talk about this? Or like, hey, Todd, I actually would love to show this to the people I work with. Can you send me the deck? Those are like the signs that I am looking for.”
2024-04-11 · Lenny's Podcast · A framework for finding product-market fit | Todd Jackson (First Round Capital) · IDENTIFIED FROM THE TRANSCRIPT · source
“And so, okay, so that's like an example of a wow statement, right? And you probably had in the back of your mind, how are you going to do that? Like, is that actually going to work? That's true.”
2024-04-11 · Lenny's Podcast · A framework for finding product-market fit | Todd Jackson (First Round Capital) · IDENTIFIED FROM THE TRANSCRIPT · source
“Know how to do them. Okay. So, what if I was able to, it's probably a service in this case, not a product. What if I was able to give you a service that said Lenny, you're going to be able to scale this podcast? We are going to help you find the 500 best guests in the world that are really excellent. We're going to guarantee they show up. You're going to have endless content on your podcast in your newsletter. What do you think about that? What do you think about that idea?”
2024-04-11 · Lenny's Podcast · A framework for finding product-market fit | Todd Jackson (First Round Capital) · IDENTIFIED FROM THE TRANSCRIPT · source
“Okay, awesome. And so, what's hard about those three things? Like, you said you want to scale the newsletter, you want to increase quality, you want to make the community awesome. What's hard about those things? What's standing in your way of doing those?”
2024-04-11 · Lenny's Podcast · A framework for finding product-market fit | Todd Jackson (First Round Capital) · IDENTIFIED FROM THE TRANSCRIPT · source
“What, like when you think about we're sitting here in April, when over the next three months, let's say, what are your top three goals for Lenny's newsletter and Lenny's podcast?”
2024-04-11 · Lenny's Podcast · A framework for finding product-market fit | Todd Jackson (First Round Capital) · IDENTIFIED FROM THE TRANSCRIPT · source
“So you've got to identify extreme value. This is like independent of what I'm building, Lenny. Like I want to hear about your problems and your challenges and what is most important to you. And so I need to do it in kind of this like non-leading way. And I need to avoid the trap that we call happy years. With founder, you know, because I found a lot of founders like, I want to build this thing, I want you to like my thing. And so I look for the things that you say that sort of support what I'm doing. That's the trap, right? And so I could just try it on you, Lenny. Like, yeah, I might say. Okay, Lenny. So you are, you're doing Lenny's newsletter and you're building Lenny's podcast.”
2024-04-11 · Lenny's Podcast · A framework for finding product-market fit | Todd Jackson (First Round Capital) · IDENTIFIED FROM THE TRANSCRIPT · source
“Yeah, and I was talking a little bit about, we think of it as dollar driven customer discovery. And I think a lot of founders are familiar with customer discovery. I think many like, or they at least talk to customers, which is good. I don't think most of them do it in like the highest signal way. Because again, like customers are people. They're nice. They're going to be polite, right? They're also not good at predicting things that they will use or buy or want, right? They're very good at talking about their problems, but they're not necessarily good at predicting their own behavior. So we think about it in terms of dollar-driven discovery, which is how do you test the dollar potential of a hypothesis? And this is like a whole two-hour session.”
2024-04-11 · Lenny's Podcast · A framework for finding product-market fit | Todd Jackson (First Round Capital) · IDENTIFIED FROM THE TRANSCRIPT · source
“The persona. That's another thing I was amazed about spending time with Zach from Platt and Lloyd from Looker and Jack from Lattice. They had all of these people like they were text messaging with all of their customers, right? And they're meeting them like on the weekends and stuff. They really, really knew their customer well. They were friends with their customers. And so you've got to get so deep into the mind of the persona and like, you know, what are their challenges? What are their goals? How do you help them sort of succeed at their job? That's the stuff that really gets you, you know, kind of earns you the right to get the rest of the piece right. And so the problem obviously comes next. And I think about this, and I can actually get into Lenny a little bit if you want to get into some of the customer discovery stuff because that's the second session.”
2024-04-11 · Lenny's Podcast · A framework for finding product-market fit | Todd Jackson (First Round Capital) · IDENTIFIED FROM THE TRANSCRIPT · source
“So the four Ps again are persona problem promise and product. And the persona is interesting because in some ways it's synonymous with the market. A lot of people are like, a lot of people think of the market in like this macroeconomic way where it's like, oh, it's this category of ERP software, whatever, right? I think it's much more tangible for a founder to think of the market as like a collection of people, right? Jack Altman was thinking about his market as all of the HR leaders out there. And he was thinking about how many of them are there and what are the problems they have and how much money are they willing to spend on solving those problems? It's a collection of people who have money to pay for a product or pay for a service. And so that's really the first piece. Like find the persona and really try to get into the mind of”
2024-04-11 · Lenny's Podcast · A framework for finding product-market fit | Todd Jackson (First Round Capital) · IDENTIFIED FROM THE TRANSCRIPT · source
“Okay, so level one, nascent product market fit. You're just trying to get three to five customers and you're focused on satisfaction first and foremost. Level two is developing. This is where you're going from five to 25 customers, and you're really starting to focus on demand. Level three is strong product market fit. You're going from 25 customers up to 100 or more. And you've got to start thinking about efficiency at that scale. And then level four is extreme. You're more than 100 customers. Your company's awesome. You got to keep doing all three of those things well, and you have to start looking for ways to expand your total addressable market.”
2024-04-11 · Lenny's Podcast · A framework for finding product-market fit | Todd Jackson (First Round Capital) · IDENTIFIED FROM THE TRANSCRIPT · source
“Well, that's a personal decision for founders. I do think if you've been going at it for four to five years and you haven't started to find anything that you're really feeling pull from the market on, I don't know. You've done it for four to five years. It's like, what are the chances that you're going to magically find something? I think there are probably a handful of startups that do it, that figure it out and get back on like an amazing growth curve. But that's the exception rather than the rule. If a founder wants to return the money to investors, if a founder wants to look for a soft landing, there's no shame in that. Product market fit is very, very hard. That's why we're doing this. It's why we're trying to increase the odds. And we're also trying to like, you know, sort of make it clear what it looks like and what it doesn't look like. And everybody knows when they do a startup, the odds are that you will not get there, right? And so there's no shame in that. And I would completely be.”
2024-04-11 · Lenny's Podcast · A framework for finding product-market fit | Todd Jackson (First Round Capital) · IDENTIFIED FROM THE TRANSCRIPT · source
“Going from 5 to 25 quickly. Yeah, if I see a company. Go from five customers to 25 in a year. That is almost always as strong that there's like a sign that there's some pretty strong product market fit there.”
2024-04-11 · Lenny's Podcast · A framework for finding product-market fit | Todd Jackson (First Round Capital) · IDENTIFIED FROM THE TRANSCRIPT · source
“That hopefully the whole thing, the boulder is kind of rolling down the hill and it's carrying you forward and you don't just feel like you're pushing this rock hill for five years. I don't think that's like a that's not a fun place to be.”
2024-04-11 · Lenny's Podcast · A framework for finding product-market fit | Todd Jackson (First Round Capital) · IDENTIFIED FROM THE TRANSCRIPT · source
“Let's say somewhere 12 to 18 months in level one, just really figuring that out and figuring out my four P's. And then hopefully I move very quickly. It takes me a while to get to my first five customers, first five satisfied customers, but they love it. And then I go quickly from through L2, maybe that takes about a year. This is kind of like the looker, the looker path, right? The happy path. And then L3 is kind of long just because we're going all the way from, you know, five million in revenue up to 25. And that might take, you know, a year or two, probably two years, even in a good case. And then getting from 25 to 100 million is hard, obviously. Very hard. And then that probably takes a couple of years. And then you're figuring out all of these things. Like you're growing your team and your company's got a lot more moving parts and functions. And there's like a demand generation side of the house and sales and there's engineering and the whole thing just gets more complicated with a lot more people. But I think that if you set the foundation really nicely kind of at level one and level.”
2024-04-11 · Lenny's Podcast · A framework for finding product-market fit | Todd Jackson (First Round Capital) · IDENTIFIED FROM THE TRANSCRIPT · source
“Yeah, so again, this whole thing probably takes four to six years. And so let's just pick five years as the number to get to level four. I think. Way this works ideally is you probably take 12 to 18 months to do level one because that is the most important level honestly in my mind because that's where you're really choosing the right persona and the right problem to focus on. And I think it's like just that choice is one of the most important choices that founders make. And the interesting thing, you know, my partner Josh Koppelman talks about this all the time is that founders spend 99% of their time building because that's what they've done, right? And they spend like 1% of their time picking and picking the market, picking the problem, picking the customer. And in reality, it's that pick that like determines the constraints and the boundaries of where you're going to be working for the next hopefully like 10 years of your life. So there's a real imbalance there. And I actually think that like that pick is the most important thing. So I would actually like to spend.”
2024-04-11 · Lenny's Podcast · A framework for finding product-market fit | Todd Jackson (First Round Capital) · IDENTIFIED FROM THE TRANSCRIPT · source
“The majority of companies, so greater than 50%, probably closer to 60 or 70%, are going to get stuck at L1 or L2. And so that leaves roughly, let's say, 30% make it to L3 or L4 just in our experience looking broadly. And that's our entire goal, right? It's like, if that can be, because again, like once you get to L3, you've got a real shot. You've got a real shot at building an awesome company. And so if we get that number, help founders get that number above 30%. Like imagine if that was 50-50, right? And half the companies that, you know, we were working with at seed were able to get to level three strong product market fit. I think that would be epic. And I think our founders, you know, would they be incredible benefits to the ecosystem from that.”
2024-04-11 · Lenny's Podcast · A framework for finding product-market fit | Todd Jackson (First Round Capital) · IDENTIFIED FROM THE TRANSCRIPT · source
“On new products too, but it's not easy. You have to get into this mindset of product market fit is never easy. And if we want to continue to grow, we got to find it again and again and kind of maintain that mindset.”
2024-04-11 · Lenny's Podcast · A framework for finding product-market fit | Todd Jackson (First Round Capital) · IDENTIFIED FROM THE TRANSCRIPT · source
“Now they do badge readers. Stripe has sort of classic Stripe, but they've got Stripe radar, Stripe Atlas. Square has the square stand. Cash app, square checking, square loans. All the companies that are tens of billions of dollars of value have figured out a way to do this. And it's kind of like the never-ending journey that you said before, Lenny. Like, you know, congrats, you got to level four, but there's just like this endless thirst for continued growth. And the interesting thing about that is that it requires finding product market fit over and over again. Like just because you got to level four on your main product doesn't mean product market fit is free on all these new products, right? And you've been inside Airbnb and I've been inside, you know, Dropbox and Twitter, like getting new products to be successful is hard, right? And it requires this mindset of like, yeah, we've got a little bit of advantage because people know who we are and we have a customer set that hopefully we can layer.”
2024-04-11 · Lenny's Podcast · A framework for finding product-market fit | Todd Jackson (First Round Capital) · IDENTIFIED FROM THE TRANSCRIPT · source
“Point, you've got less than 10% churn, you've got greater than 120% NRR. And so now the whole thing is like, well, how do I keep growing? I mean, like this thing's gotten pretty big. And this is generally, you know, when we get to 100 million, especially and beyond the stage that founders are thinking about how do I keep growing by expanding TAM, by expanding total addressable market. To expand TAM, I can usually take my product and bring it into new markets or I start to think about multiple products, right? As a way to expand TAM. And so this is where you see like all the truly great companies, like the legendary companies are all able to do that. Like Vanta has begun to do this, right? They have like the Vanta Trust Management platform. They've got security questionnaires. They've got vendor risk management. So they're starting to do this. You know, you think of Vercata, who I mentioned before, like they started with security cloud security cameras. Now they do alarms. Now they do smoke detection.”
2024-04-11 · Lenny's Podcast · A framework for finding product-market fit | Todd Jackson (First Round Capital) · IDENTIFIED FROM THE TRANSCRIPT · source
“Yeah. So, first of all, congrats. I mean, if you get to level four, you have a valuable company, right? Like you are probably already a unicorn and you're starting to think about can I become a deck of corn? And so you've reached like the very highest levels of satisfaction demand and efficiency. And so the benchmarks at level four are like, okay, now your team is probably bigger than 100 people. You're like series C, Series D or beyond. You've got more than 100 customers and you're starting to figure out how do I get to 200, 300, eventually 1,000 customers. You're beyond 25 million in ARR. So like 25 million and up, I think in ARR, it qualifies as level four. And your other metrics are looking really good too, right? Like your sales conversion, first call to close one is probably better than 15%. Your magic number is greater than one. Your CAC payback is less than 12 months. All these things are like super awesome. And finally now you've got your gross margin above 80%, your burn multiples ideally less than one at this.”
2024-04-11 · Lenny's Podcast · A framework for finding product-market fit | Todd Jackson (First Round Capital) · IDENTIFIED FROM THE TRANSCRIPT · source
“No, I agree. It's like your spinning plates and the higher levels you get, there's more plates. You know, you have to keep spinning. And so at level three and getting to level four, we've got to maintain satisfaction and demand. We cannot let them regress in a market that's getting harder, right? And we have to really start focusing on efficiency. And the companies that can maintain satisfaction and demand and continue to grow and become really efficient now we're at level four.”
2024-04-11 · Lenny's Podcast · A framework for finding product-market fit | Todd Jackson (First Round Capital) · IDENTIFIED FROM THE TRANSCRIPT · source
“That's going to push our burn multiple above three again. And that's a little bit of a pickle to be in, right? When you sort of have to trade off growth and spend like that”
2024-04-11 · Lenny's Podcast · A framework for finding product-market fit | Todd Jackson (First Round Capital) · IDENTIFIED FROM THE TRANSCRIPT · source
“Yeah, so level three problems. And again, it's hard to get to level three. So, like, you know. You've got a leaky bucket, like your NRR is below 90%, or your regretted churn is greater than 10%. Maybe growth is just slowing down. Like you grew 3x each of the prior two years, but you're kind of struggling to do a 2x this year. And that in part, that can become, you know, level three, you know, we're five years into the company or so. There's probably a lot of competition. Like if you've gotten here, you've got something that's working, right? And people are starting to notice and there's going to be competitors. And they could be the big competitors. They could be the new startups, but you're going to have to figure out how to navigate probably a tougher market than you entered five years ago. And so, you know, maybe you found your first scalable channel, but it's getting saturated. You got to find a new channel. These are kind of like the level three props. Or like you're growing, but like I said, with efficiency, like you're spending too much money to grow. So you feel like, okay, yeah, we can grow at 3x year over year, 2x year over year, but it's like.”
2024-04-11 · Lenny's Podcast · A framework for finding product-market fit | Todd Jackson (First Round Capital) · IDENTIFIED FROM THE TRANSCRIPT · source
“I think if you told many, many precede founders that they'd be able to get to 100 million and not know whether they had product market fit, they'd probably take that.”
2024-04-11 · Lenny's Podcast · A framework for finding product-market fit | Todd Jackson (First Round Capital) · IDENTIFIED FROM THE TRANSCRIPT · source
“Keep ripping on the satisfaction and the demand, and we tune this thing to get very efficient. So, like, you know, we're talking about our gross margin needs to be above 60%, hopefully above 70%. Our burn multiple is now below three, right? Like ideally, we're in close to one, right? Burn multiple like in the one to three zone is where we want to be at level three. Regretted churn's less than 10%, and RR is greater than 110%. These are like good kind of benchmarks for this level.”
2024-04-11 · Lenny's Podcast · A framework for finding product-market fit | Todd Jackson (First Round Capital) · IDENTIFIED FROM THE TRANSCRIPT · source
“You've really cracked a demand channel. Like you've cracked marketing and sales, you've got at least one channel that is very scalable. And probably 10% or more of your inbound is coming from just like referrals and word of mouth. And you're like, you're getting known like we talked about. ACV ranges are very high, very wide, I should say. I would say like if you're in this like, you know, on your way to 100 customers, where you want to get to with level three is like 100 customers. And so if you're sort of approaching 100 customers and maybe you have like 75k kind of average ACB, that would be strong, right? You're sort of in this wide zone of 5 million all the way up to 25 million ARR that is very like level three. And you're actually starting now to think about some of these efficiency metrics. Remember, we've been sort of like punting efficiency. We were saying it shouldn't be worse than a certain number, but it's like not a focus. Now it's like got to come into focus. Because the way that we get to level four is we.”
2024-04-11 · Lenny's Podcast · A framework for finding product-market fit | Todd Jackson (First Round Capital) · IDENTIFIED FROM THE TRANSCRIPT · source
“Was going to do for them, and that in itself was a very formative and tricky part of the journey. So the benchmarks when you are at level three are now you're probably like 30 to 100 people inside your company. You're probably at like series B-ish kind of territory in terms of venture, like maybe late series A, maybe early series C, but like probably around series B.”
2024-04-11 · Lenny's Podcast · A framework for finding product-market fit | Todd Jackson (First Round Capital) · IDENTIFIED FROM THE TRANSCRIPT · source
“Uphill. And if you stop pushing, it's going to roll back on you and crush you. And that's how it felt until we had a few million in ARR. That's when the boulder went down the other side and we had to chase it and chase it to keep up. And this is, you mentioned earlier, like founders were like, I'm not sure I ever felt product market. This is like when you start to feel it, right? And Jack Altman, you know, again, from Lattice said, just the biggest shift was in the ease of getting leads. Like I remember thinking, I don't even know where these leads are coming from. Just more and more of them are showing up each month. That is like a great feeling. That is a great feeling. Philip calls on from Vercata. He's in, you know, some of the videos on our website too. His quote, I'll read it, was, after our first year of sales in 2018, those next two years were crazy. We were barely keeping up with production. We had to scale all the systems. Like a lot of things had to happen in the span of 12 to 18 months in order to deliver on everything that customers were hoping the solution.”
2024-04-11 · Lenny's Podcast · A framework for finding product-market fit | Todd Jackson (First Round Capital) · IDENTIFIED FROM THE TRANSCRIPT · source
“Yeah, so level three is strong product market fit. This is where I think it starts to get fun. This is where all the product market fit adages come in. The fish are jumping into the boat, you know, the rock is rolling down the hill and I'm trying to chase it instead of pushing it up the hill. And keep in mind for most enterprise founders, we're now three, four, five years into the company, right? So it's not like easy to get here. And to get to L3 here, you are looking for repeatability, right? The marginal customer has become much easier. And so you mentioned Lenny, this quote from David Sue from Rachel, which I love too. And I'll read it again. He said, you know, we talked to someone who said that finding product market fit was so visceral you immediately felt it like a geyser. And we honestly never felt that in the first couple years. At Retool, every customer we got, whether that was number four, number 14, felt like the last customer we were ever going to find. It felt like rolling the stone.”
2024-04-11 · Lenny's Podcast · A framework for finding product-market fit | Todd Jackson (First Round Capital) · IDENTIFIED FROM THE TRANSCRIPT · source
“Yeah. And probably just look for something that is a lot more of a burning pain. It's usually that the problem is not significant enough, important enough to people, or the promise is not valuable enough. It's usually kind of one of those middle to assuming you have a reasonable persona.”
2024-04-11 · Lenny's Podcast · A framework for finding product-market fit | Todd Jackson (First Round Capital) · IDENTIFIED FROM THE TRANSCRIPT · source
“It's both. So, like, sales becomes easier. But I think if you are starting to get to level three, which is where we're getting to next, you've probably got 10%, 20% of your inbound coming or completely organically. Organic inbound.”
2024-04-11 · Lenny's Podcast · A framework for finding product-market fit | Todd Jackson (First Round Capital) · IDENTIFIED FROM THE TRANSCRIPT · source
“Well, some sales cycles are slow. Like if you're selling to companies that are big or selling to government, that type of thing. You know, I don't know. Rough rule of thumb is like, you know, there's different ACVs also. Like if you're the kind of product that is 20K, 30K annual contracts, that was Looker, right? But they were able to do the sales cycle very repeatedly because they closed so often, right? There are some contracts that are 100K, 200K, you know, six-figure contracts. Those can take a long time. Those can take three to six months. You can't basically be in the worst of both worlds where you've got a slow sales cycle and a low ACV. Like that is the quadrant of death, basically.”
2024-04-11 · Lenny's Podcast · A framework for finding product-market fit | Todd Jackson (First Round Capital) · IDENTIFIED FROM THE TRANSCRIPT · source
“Think sometimes it's nice when it's the ironclad thing. It's nice is when it's the looker thing of like you don't have to change anything, right? You just starts working and basically the whole thing works the whole time. That's not common. It's nice when it's the ironclad thing when you just sort of change one of them or maybe two of them. Starting over with all four of these is hard at level two, right? But oftentimes it's what's required. I was mentioning earlier, like level two is the second most common level to get stuck. big chunk of companies are going to get stuck at level one and the second biggest is at level two So sometimes it's hard. I think the trap is not doing enough to realize that you're actually like not progressing to product market fit in the way that you need to and just starting to burn money and not make progress. And you've seen many startups kind of struggle with this. I think it's the hardest part of it.”
2024-04-11 · Lenny's Podcast · A framework for finding product-market fit | Todd Jackson (First Round Capital) · IDENTIFIED FROM THE TRANSCRIPT · source
“And what they need to be doing is a 200 pivot. And I think Jackton says, but I think part of my interpretation of this is like it's psychologically hard as a founder. You've gotten to this many customers. You're starting to plateau, but you're like, oh, I don't want to throw this whole thing away. But you sort of have to be willing to let go and really focus on nailing the four P's at this point.”
2024-04-11 · Lenny's Podcast · A framework for finding product-market fit | Todd Jackson (First Round Capital) · IDENTIFIED FROM THE TRANSCRIPT · source
“That means no, right? When you're hearing that from customers, like you want customers who are like, oh, of course, like, yeah, this is kind of expensive, but I'm going to make this work because I need this, right? And so if you're seeing any of those signs, those are the signs that you maybe are stuck or plateauing at this level. And I really think it's important to think about the four Ps and think about how am I going to sort of pivot my way out of this. And Jack Altman, who I mentioned earlier from Lattice, He's got like a great quote on this. It's up in a video on the website, which is like, you know, what did he say? He said, oh, the most founders do like a 10% pivot.”
2024-04-11 · Lenny's Podcast · A framework for finding product-market fit | Todd Jackson (First Round Capital) · IDENTIFIED FROM THE TRANSCRIPT · source
“Things it's like every level just gets like more things you have to do, or you know, you could be finding that the sales cycle is taking too long, you're losing deals late in the funnel, you're losing to competitors, you're just not feeling kind of the urgency from customers, or you're struggling to hit the price point that you want. And the way that customers will say this to you, because customers are nice, right? They'll say, oh, we don't have the budget. Or like, oh, it's, you know, it's just not the right time for us. Like, we'd love to talk again next year.”
2024-04-11 · Lenny's Podcast · A framework for finding product-market fit | Todd Jackson (First Round Capital) · IDENTIFIED FROM THE TRANSCRIPT · source
“Yeah, so the whole idea of level two is this thing that the marginal customer is getting easier, right? And so you've got to be focusing on demand and the repeatability of demand while you maintain satisfaction. So the yellow flags are like things that are the opposite of that, right? Like your current customers are like pretty happy, but you're just having trouble opening the floodgates. Like as you're getting to the top end of level two, you should start to hear some startups kind of know who you are. Oh, you need a soft two? your startup like oh vanta right like oh you know you need ai powered contract management software oh ironclad right you sort of start to get known for a thing and so if you're having trouble opening those floodgates and and you you're sitting there for i don't know 12 months 18 months that's kind of a problem or you have things like your regretted churn is greater than 20 i see that as a you know that's a satisfaction warning sign and you again you have to maintain the satisfaction as you work on these other”
2024-04-11 · Lenny's Podcast · A framework for finding product-market fit | Todd Jackson (First Round Capital) · IDENTIFIED FROM THE TRANSCRIPT · source
“I think it's hard to create a category. It certainly works in some cases. But if you actually have a really interesting span on an existing category, there's already buyers spending money on that thing. They're already looking for something to buy, right? Which is, you know, so if you can do it, I do actually think that way is easier.”
2024-04-11 · Lenny's Podcast · A framework for finding product-market fit | Todd Jackson (First Round Capital) · IDENTIFIED FROM THE TRANSCRIPT · source
“It's got this AI stuff. Like, it's just a better product, right? Or the demo looks like it's going to be a better product. And so Jason reflects on this, and he's like, yeah, the thing for us is we had been trying to create this new category of AI legal assistant. And it was just like a slog, right? And instead, when we changed our positioning to play in an existing category of CLM, but a much better CLM, but customers are already looking for a CLM. They're already looking to spend money on a CLM and just expand the definition of what that category is. things just start to click. And that's how they got sort of through that zone of like 10, 20, 30 customers. And even if you look at the Ironcloud website today, it says AI-powered contract management software, right? Like that really is the key idea still.”
2024-04-11 · Lenny's Podcast · A framework for finding product-market fit | Todd Jackson (First Round Capital) · IDENTIFIED FROM THE TRANSCRIPT · source