Collin Stewart
Appearances
I am Charles Schwartz Show
Predictable Revenue, Endless Income
I mean, I'll, the only time I'll say, Hey, I'm not your guy. I can't help you out is that people are so close minded about the conversation that they're not willing to open up and have a genuine conversation because people are hiring us to, for consulting and coaching work. And it's just, it's a, I don't want to waste people's money.
I am Charles Schwartz Show
Predictable Revenue, Endless Income
So if we're just going to argue about, you know, you have product market fit, you don't have product market fit the whole time. Like it's not, I'm not interested in taking your money just like just for the headache. Right. If somebody is open to it, like we just took on one client where I've been telling him for two months, then I'm like, hey, your product market fit is not strong.
I am Charles Schwartz Show
Predictable Revenue, Endless Income
He wanted to hire me to outsource. And I was like, dude, I could take six months of your money, but it's not going to produce anything for you. I'm like, you're welcome to do that. But as the founder of this company, I'm telling you it's a bad idea. I was like, so what do you want to do? And I was very open and very candid about what I thought of Moochie, even the timing.
I am Charles Schwartz Show
Predictable Revenue, Endless Income
That's a good question. I'd probably say that point where you are trying to find a product opportunity and then getting it to your first couple of customers. I've done that a number of times. I've helped a number of companies do that. I spent 12 years building, running an agency, helping, well, six years doing an agency, six years doing it for myself.
I am Charles Schwartz Show
Predictable Revenue, Endless Income
And then when it came down to it, we dug into... What are your numbers? You know, what is the... How many referrals are you getting out of your customers, right? How many... When was the last time you talked to your customers? How many... How many customers that started using it are still using it, are upgrading, are adding licenses?
I am Charles Schwartz Show
Predictable Revenue, Endless Income
And I've got a bunch of questions where I can ask and kind of triangulate and help them see that like, hey, this is maybe not exactly the one and only thing that they need to do. Because chances are the company started with a strong insight. I'm not one of those that can just look at a Google Trend page and be like, okay, I'm going to start a company in here.
I am Charles Schwartz Show
Predictable Revenue, Endless Income
I have to care about the customer, about the industry, about the change that I want to make. Otherwise, I'm just not very good at it. And so I find that I empathize with folks that get so caught up in their idea that they're like, no, this is the only way. But when we...
I am Charles Schwartz Show
Predictable Revenue, Endless Income
And when you're going, like what I was doing at Voltage and I was like, hey, this is my insight, which was CRM wasn't a sales productivity tool. And so what I wanted to do about that was build another CRM. what I do with the founders I work with is help them back up to like, what is that core insight, right?
I am Charles Schwartz Show
Predictable Revenue, Endless Income
Your application of that insight may not be 100% perfect, but the insight is probably very good. So let's talk about the insight and let's talk about all the different things you could do with that insight. And what I can get people to back up and kind of open up
I am Charles Schwartz Show
Predictable Revenue, Endless Income
right then they start to start to realize that i trust them that i understand that there's a real insight there because telling them hey you know product market fit is a conversation killer because they're like there's all these like there's these beliefs wrapped up in like my i'm only an entrepreneur because i've got this product market fit and i have all these like my ego and my self-worth and all these things are built on top of like whether or not i have product market fit or not
I am Charles Schwartz Show
Predictable Revenue, Endless Income
And so the introducing product market fit as a spectrum, and the idea of like, hey, let's strengthen it, you've got something, it's got to be better. And then we use the process of customer development to go and find how do we make this better, and then eventually turn those conversations into customers, because that's one of the biggest mistakes.
I am Charles Schwartz Show
Predictable Revenue, Endless Income
The second biggest mistake that folks make is not selling to the people they do their customer development interviews with.
I am Charles Schwartz Show
Predictable Revenue, Endless Income
Slowly. The way it's worked for me in the past is because I learned customer development as a salesperson. And when I was learning it, I couldn't help but notice that this is basically the first half of a really good sales call. A great sales call, you're just talking about pain.
I am Charles Schwartz Show
Predictable Revenue, Endless Income
You're talking about the shape and size of the organization, their goals, their dreams, ambitions, et cetera, talking about what hurts. The difference between customer development and sales, I mean, the difference is basically with sales, you've got something that can solve the problem. With customer development, you don't quite have that yet.
I am Charles Schwartz Show
Predictable Revenue, Endless Income
And so I'm just trying to bring slowly the sales process back into that. And the way I do it is gradually and coach people on is to do it gradually. Because if you come after that first call and you say, hey, cool, I've got this thing I'm building. I want you to give me $9.99 a month. You know, what do you say? You're going to alienate people.
I am Charles Schwartz Show
Predictable Revenue, Endless Income
They're going to feel like, oh, this is a bait and switch. You're not actually here to learn. You're here to try and sell me something. So I basically parcel it out into four steps where you start with exploratory customer development. That's where you're coming in with zero opinions about the market and you're just trying to learn and explore and find a gap.
I am Charles Schwartz Show
Predictable Revenue, Endless Income
Then once you've found a gap and it seems to be shared by, you've got kind of a persona that you commonly, if you talk to that, it's going to be their top, you know, two or three panes. Then that's when I start to move to focus interviews. And when I do move to focus interviews, I go from super wide interviews.
I am Charles Schwartz Show
Predictable Revenue, Endless Income
We basically used the agency to bootstrap a couple of SaaS companies into existence and made some huge mistakes and learned a lot along the way. But I'd say finding that first market opportunity and then figuring out how to transition that into your first customers.
I am Charles Schwartz Show
Predictable Revenue, Endless Income
customer development, they're super wide and kind of audience to like a very narrow audience. So if I was doing something for, you know, product managers, you know, I might start with like the entire product and engineering organization.
I am Charles Schwartz Show
Predictable Revenue, Endless Income
And then as I narrowed it down, like, okay, you know what, I'm going to focus on product managers that are just doing a that own a product that has a PLG sales motion. Like that's a very, very specific. So I go to focused and the goal of focused customer development interviews is to basically confirm that if I talk to 10 of these folks, 80% of them are going to share this pain.
I am Charles Schwartz Show
Predictable Revenue, Endless Income
And then once I've kind of hit that barrier or once I've hit that milestone, the next step is basically a paper prototype to say, okay, this is, because that's the kind of market side of things. That's the finding a gap. Then the next piece of product market fit is finding if you can solve that gap. So the next step is a paper product, paper feedback.
I am Charles Schwartz Show
Predictable Revenue, Endless Income
And so I say paper because I'm a horrible drawer. And I find you can spend hours in tools like Balsamiq and Figma, et cetera. But if you just sketch it out on paper, you can give people a rough idea that said like, if I built this, would this solve that problem specifically?
I am Charles Schwartz Show
Predictable Revenue, Endless Income
And then if enough people say yes, then I'll go to my co-founder CTO and say, hey, I think we should build something like this. And then I'll come back to those folks and say, hey, remember that paper prototype? Look, it's like janky code now. Is this... Is this going to solve like the problems we talked about? Yeah. And they're like close enough. And then cool. I'm like, great.
I am Charles Schwartz Show
Predictable Revenue, Endless Income
At this point, what I've been doing is everybody I've talked to, I started an exploratory, I've invited them to the next stage of focused, right? At the end of every call, I always book the next one. And so I've gone from, hey, is there a problem here to, yep, there's a problem here. Hey, let's talk about specifically, what are the different ways you experience this problem?
I am Charles Schwartz Show
Predictable Revenue, Endless Income
How does that impact you? How does it impact your job? How does it impact your boss, your company's financials? Then, hey, if I built this thing, would it solve that problem? Yes, great. Hey, look, I built this thing. Does it solve that problem? Yes, great, cool.
I am Charles Schwartz Show
Predictable Revenue, Endless Income
At this point, I want to, let's have a, can we book a conversation to talk about what this would look like if we implemented it in your organization? And that's the lead in into now you're in a sales call. And so there's no selling in the first four interviews, but it's all building towards this last interview. You invite them into a formal sales process.
I am Charles Schwartz Show
Predictable Revenue, Endless Income
I mean, you don't have to use my exact language, but that's the process that I followed. And every company I've started, every founder I've worked with gets their first 10 to 20 customers out of their customer development process.
I am Charles Schwartz Show
Predictable Revenue, Endless Income
Yeah. I mean, it's usually about what their future plans look like and see if we actually fit into those plans. You know, if, if somebody's at just made it to a million bucks and they are like profitable by a dollar, or if they're two customers a month,
I am Charles Schwartz Show
Predictable Revenue, Endless Income
they're bootstrapped and they're just paying themselves like there's not a lot there's a ton that we could do to help but there's not a lot that would make sense you know if you're at 10k mrr you don't want to invest five of that in consultants to help you get to 20 unless you got a big bank account right and so the fundraising strategy like the finance strategy of like
I am Charles Schwartz Show
Predictable Revenue, Endless Income
Do you want to be this time next year? Do you want to be here plus 10%, here times 10, here times five? And that kind of helps calibrate because the speed at which you grow or the speed at which you need to grow is going to be vastly determined by your financing strategy. And your revenue strategy should follow your finance strategy. And I think that's what got a lot of people tripped up.
I am Charles Schwartz Show
Predictable Revenue, Endless Income
Well, initially, like I came from sales. And when I walked into the accelerator incubator co-working space where I started, it's called Launch Academy. I think it was the only person that came from sales. Like everybody else was product and engineering. And I was the obnoxious guy who was always on the phone talking to people. And I remember engineers being like, why is this guy? Can I swear?
I am Charles Schwartz Show
Predictable Revenue, Endless Income
In 21, 22, you know, pre-22 money venture, I wouldn't say it was free, but it was readily accessible. Yeah. Yeah. Everybody had a sales development team. And I think in 22, 21, 22, sales development had a really bad rap because, oh, it's not profitable. Yeah.
I am Charles Schwartz Show
Predictable Revenue, Endless Income
But with the reality of it, of the situation was there was all these companies that were using it to hit top line growth numbers, but not profitability numbers. So they were investing. Like if you look at the key bank does a survey Pacific crest started the survey in 2015 or 2016. When they started the average SAS company.
I am Charles Schwartz Show
Predictable Revenue, Endless Income
So let me ask you in 2016, how much do you think a SAS company was paying to acquire $1 of annual recurring revenue?
I am Charles Schwartz Show
Predictable Revenue, Endless Income
Wouldn't even have the... They're 92 cents.
I am Charles Schwartz Show
Predictable Revenue, Endless Income
So you're paying, investing in sales and marketing only 92 cents to acquire a dollar. By the end of 2021, it was like a buck 70. I can send you the links. It was a buck 65, buck 70, something like that. So... And this is just your sales and marketing costs. This isn't accounting for engineers and servers and all the other overhead costs that go into it.
I am Charles Schwartz Show
Predictable Revenue, Endless Income
So when you think about that, if you're a SaaS company and you're selling contracts that are one year only, you're still in the hole. You have to hit 18 months just to break even on your sales and marketing costs, let alone to be profitable. And so if you're not hitting three to five year customer lifetime... there's no chance in hell you have being profitable.
I am Charles Schwartz Show
Predictable Revenue, Endless Income
And I know that's not the point of a software company, especially in the early days, it's rapid growth, but all of these companies were investing so heavily. And this is just the average, right? Like that's the crazy thing is like there were companies spending a lot less and there was a company spending a lot more.
I am Charles Schwartz Show
Predictable Revenue, Endless Income
So, you know, you know, as part of that data set, there was companies spending $5 to acquire a dollar of ARR. And like, those are the companies that lost sales development teams.
I am Charles Schwartz Show
Predictable Revenue, Endless Income
rightfully so when you look 100 you look at uh i think zendesk or not not zendesk um uh parker conrad's new company um not zenefits was his old company his new company is ripple okay rippling um I watched their CRO at Savster last year, and they're one of the fastest growing companies, software company, like large software companies.
I am Charles Schwartz Show
Predictable Revenue, Endless Income
They have hundreds of SDRs and they're getting, I think they're forecasting like 60% of their revenue this year to come from sales development. So everybody who's saying sales development isn't working, um, obviously it just wasn't profitable for them at that price or the way that they were doing it. And I think the biggest piece for that for them is the strength of their product market fit.
I am Charles Schwartz Show
Predictable Revenue, Endless Income
The crazy thing is like, I know a bunch of people that work at rippling, um, That start that we're either at Zenefits or, you know, early days, I interviewed a few hundred people, a few hundred sales leaders on my podcast. And so I've had a chance to meet some of these folks and I know they've got really smart folks in there.
I am Charles Schwartz Show
Predictable Revenue, Endless Income
But what I've seen some of what they're doing and what they're doing is what was standard like five years ago. But they're getting, or sorry, what they're doing is like, yeah, what was standard five years ago, and they're getting like 10 years ago response rates. So like their response rates are five to 10x better than most SaaS company benchmarks right now.
I am Charles Schwartz Show
Predictable Revenue, Endless Income
Yeah, absolutely. Okay. What the fuck? Why is this guy always talking to somebody? Like, doesn't he actually do any work? And that was kind of the perception. And I came to it because I had come from sales and I was trying to figure out how to do customer development. But I had spent 10 years, 12 years in sales as the geeky sales guy.
I am Charles Schwartz Show
Predictable Revenue, Endless Income
strength product market fit, they have, like, they have products that fit really well into the market, they're really well established, established brand. And they have something that people need, they're disrupting a fairly large industry.
I am Charles Schwartz Show
Predictable Revenue, Endless Income
Yeah, I mean, to kind of go back to what I was saying before, I wish they knew they could go back to their customers, the people that they interviewed in the customer development process and sell to them. And take it step by step. Don't obviously jump into it. But I think... Imagine you invented the fire extinguisher.
I am Charles Schwartz Show
Predictable Revenue, Endless Income
And let's allow me a silly analogy that you interviewed 100 people that were currently on fire. And let's imagine, even sillier, that they're still on fire three months later when you built the fire extinguisher. Isn't it kind of a jerk move not to go back to them and be like, hey, remember all the pain you told me and all the burns and all the fire and the flames? I built this thing.
I am Charles Schwartz Show
Predictable Revenue, Endless Income
Do you want to put yourself out? Even if the fire extinguisher isn't that good, they're going to say yes. Right.
I am Charles Schwartz Show
Predictable Revenue, Endless Income
And then just making sure that you're not over-investing until you have really strong product market fit, until you have really confirmed. Because the most frustrating customers I've had have been really good software companies that had great products where the founder wanted to open up a new market, but they didn't tell us it was a new market, right?
I am Charles Schwartz Show
Predictable Revenue, Endless Income
I had a conversation with a customer last year, and I think we worked with them for like nine months. We booked like 60 some odd meetings for their team. that like showed up and entered pipeline. So their salesperson had 60, 63 at bats. It was pretty good. And none of them closed. And so they let us go. And I was like, okay, well let's talk about this. And like, why?
I am Charles Schwartz Show
Predictable Revenue, Endless Income
And so when you're the geeky sales guy and you're the youngest on the team, you naturally get pulled into every CRM project. And I got into sales because I was in marketing, and I found a way to write a copy and paste a macro from Stack Overflow and basically automate my job.
I am Charles Schwartz Show
Predictable Revenue, Endless Income
And I was really, cause I, for me, it was less about the money and more about the, like, I want to figure out what went wrong.
I am Charles Schwartz Show
Predictable Revenue, Endless Income
And what the sales rep eventually blurted out at the end was, oh, well we actually target our, all of our business is in this industry. Okay. And we've been targeting this slightly adjacent industry that unless you know deep about, unless you're like fairly educated about finance and how it works, it is different enough for it to be its own industry. And all of our case studies are irrelevant.
I am Charles Schwartz Show
Predictable Revenue, Endless Income
And so he had a tough time closing them. And I was like, okay, one, that kind of sucks. Because we could have been focused on the original industry in the first place.
I am Charles Schwartz Show
Predictable Revenue, Endless Income
And the benchmarks that you're going to expect going after an industry you're established in and have strong product market fit versus a new industry, and you have to figure out your market message fit, all of these things, and how to sell to these folks is going to be totally different. And then on top of that, like just the timing of outbound, like nine months, they had a two month sales cycle.
I am Charles Schwartz Show
Predictable Revenue, Endless Income
So you expect nothing for the first three months of outbound. You're going to start getting some meetings in the next three months. So you're six months in and like, you've got some meetings, some, when I say meetings, I mean like opportunities that have entered pipeline, you'll get meetings earlier than this, but the quality improves pretty dramatically as you go along.
I am Charles Schwartz Show
Predictable Revenue, Endless Income
but most people aren't ready to buy. And so if you're going to talk to 10 people every month, like one out of 10 are going to be in a buying state because you're reaching them and, you know, you're reaching them cold. They're not coming to you saying, oh, I've got this pain. And so most people discard those nine folks that they talk to.
I am Charles Schwartz Show
Predictable Revenue, Endless Income
And they're like, oh, they don't have a project in the next 90 days. They're not worth my time. And that's what this company was doing. And I was like, guys, you just met, you know, 60 folks. You pulled six good opportunities out there, but there's 55, 56 that are going to close soon.
I am Charles Schwartz Show
Predictable Revenue, Endless Income
the next year you just have to keep working them and the sales the sales guy didn't didn't listen to me um and that's probably the second the the next most frustrating conversation is with i have with old customers that worked for us or worked with us two years ago shut us down after a year because it wasn't profitable and then the following year closed a bunch of deals from outbound and now they're frustrated that they didn't keep going um
I am Charles Schwartz Show
Predictable Revenue, Endless Income
And then I was sitting there, and I was playing solitaire, and I almost got fired because I was playing solitaire because it was the only thing on my computer that would run, and I couldn't do anything else. And so after almost getting fired, the sales guy across the hall was like, hey, I got some cold calling. Here's a list. Come join me.
I am Charles Schwartz Show
Predictable Revenue, Endless Income
Yeah, that's the, it seems like a scam artist thing to say, you know, hey, there's been no results so far, but trust me, it's going to come. And it's just, it's one of the reasons why I think outbound agencies and the industry as a whole gets a bad rap is it takes time because you're reaching people in all different buying directions.
I am Charles Schwartz Show
Predictable Revenue, Endless Income
And so he sat me down and kind of gave me the spiel, and I started cold calling. And so that was my entry point into sales.
I am Charles Schwartz Show
Predictable Revenue, Endless Income
Yeah. I mean, I think when I sit down with founders, almost the first place I go is the pipeline, especially if they've got customers and they've been trying to sell and they've been prospecting. And I can usually chop up like a pipeline. Like the last time I did it, I think the guy had 30, 50, 30, 40, something like that, opportunities in his pipeline.
I am Charles Schwartz Show
Predictable Revenue, Endless Income
And we did a pipeline review, took a couple hours, and we chopped it down to like three good ones. So they went from like, oh yeah, we got to close like, you know, to this, like to this month and to next month and through the month after. And I was like, not with a pipeline like this. And then everyone's like, okay, so I need outbound.
I am Charles Schwartz Show
Predictable Revenue, Endless Income
I'm like, but outbound is going to be the helper six months from now, right? You have to turn the crank yourself. There's nobody, there's no getting out of this. There's no spend some money and buy. Like maybe there are other demand gen channels, like ads can turn on pretty quickly, but it still takes time to build those things, right?
I am Charles Schwartz Show
Predictable Revenue, Endless Income
And I think what founders don't realize is there's this big giant handle called customer development, talking to customers and going back to people you've talked to before and kind of inviting them to the next stage that they just got to grab the handle and turn. Um, but I find most founders I work with, they're pretty sloppy about their pipeline management.
I am Charles Schwartz Show
Predictable Revenue, Endless Income
You know, you look at, you look at somebody's pipeline, you're like, oh, so what does that deal? Well, why is this one here? What does that stage mean? They're like, oh, okay, cool. I'll go three down and be like, okay, so does this person meet that? Oh, no, they're actually back. There's no shared definitions. There's no qualification framework. There's no ability to test.
I am Charles Schwartz Show
Predictable Revenue, Endless Income
And it's really interesting working with when I'm doing this with engineers because there's a thing called a unit test when you're writing code where basically if you're doing – some people do test-driven development where you write the unit test first and then you write the code that will complete that test.
I am Charles Schwartz Show
Predictable Revenue, Endless Income
having a good sales pipeline review and having good definitions are kind of the unit tests where you have this regular recurring thing that will say basically confirm that you are passing the tests on all of the things in your pipeline and that's something that not a lot of people do especially founders that
I am Charles Schwartz Show
Predictable Revenue, Endless Income
are solo or are taking on the revenue side of things solo, they don't have anybody who can call bullshit on that op really belongs here or doesn't belong there. And when you're forecasting revenue to hit in Q1 off of, you know, hope and miracles and magical unicorn dust, like it's not going to go very well.
I am Charles Schwartz Show
Predictable Revenue, Endless Income
Yeah, our company started because of a book. So my co-founder, Aaron, wrote Predictable Revenue based on his time at Salesforce. And that book has brought us so many customers and kind of helped start, was the inspiration for me getting into doing carb.io. And it's over 12, 15 years old by now. And so since we've, I don't know, for the last five years, I've been talking about writing a book.
I am Charles Schwartz Show
Predictable Revenue, Endless Income
But I didn't want to write Predictable Revenue 2. And so I started an email newsletter community where I talked to founders and just been sharing the ideas. A lot of the stuff we've been talking about today in our conversation today. And I've been sharing it out kind of weekly as a method for helping kind of battle test some of the content that's going in the next book.
I am Charles Schwartz Show
Predictable Revenue, Endless Income
And as we sit today, I'm looking at my... Final draft, I'm handing in the third round of substantive edits, which is book geek speak for like I'm almost done writing and then people are going to start checking spelling and grammar. For the book that's going to come out in October, it's called The Terrifying Art of Finding Customers.
I am Charles Schwartz Show
Predictable Revenue, Endless Income
And it's going to be a founder's handbook for going from product market fit to getting those first customers and then basically leveling yourself up out of that sales role.
I am Charles Schwartz Show
Predictable Revenue, Endless Income
Yeah, there's the Predictable Revenue podcast. We're probably 370 episodes deep at this point. And we interview founders and sales leaders talking about revenue. The early stuff really focused on sales development, sales leadership tactics. And lately, we've been more focusing on founders and their early revenue journeys and mistakes made and what they learned along the way.
I am Charles Schwartz Show
Predictable Revenue, Endless Income
So I'll shoot you a link, but the Founders Edition newsletter is where you can go and if you give it your email, you can see all of my posts dating back from, I think I started almost a year ago, maybe December of the previous year. So you can go see all the back posts and you can kind of see the book evolve through there. So that's the best place to check it out.
I am Charles Schwartz Show
Predictable Revenue, Endless Income
Well, I think because I had spent so long in sales and I'd been involved in so many CRM projects. Not I think, I know. I considered myself an expert. I'm an expert in CRM. I've set up a bunch. I've been using Salesforce since 2005, like early, early, early Salesforce. So I had a very... large opinion of myself.
I am Charles Schwartz Show
Predictable Revenue, Endless Income
Best way to get in touch is email. Colin with two L's at predictablerevenue.com. I post on LinkedIn, but I really don't enjoy LinkedIn as a platform. I'm not a huge social media guy, so I do check my DMs, my inbox on there somewhat frequently, but I'd say email is the best way.
I am Charles Schwartz Show
Predictable Revenue, Endless Income
Yeah. I mean, if you listen to this and you had a question or if you disagreed with something I said, or if you were asking, or you want more information on a resource, or you want to have a candid, honest conversation with me, just drop me an email.
I am Charles Schwartz Show
Predictable Revenue, Endless Income
Thanks for having me on, Charles. It's been good talking to you.
I am Charles Schwartz Show
Predictable Revenue, Endless Income
And so when it came, when I read, you know, all the books on customer development and get out of the building and interviewing people, I think I took the term customer validation a little bit too literally. I had sketched out my idea and I went and did, I put the effort in and I interviewed 50 people and went, look at my idea. Isn't it great? Not quite in those words, but that was the effect.
I am Charles Schwartz Show
Predictable Revenue, Endless Income
And I've seen this in a lot of other entrepreneurs where I wasn't open-minded enough to hear people actually saying, we don't want another CRM. Your idea is interesting. You have a valid insight, but we don't want that insight packaged as a CRM. We want it. as part of Salesforce or working along Salesforce.
I am Charles Schwartz Show
Predictable Revenue, Endless Income
And I couldn't, I couldn't, it was like a belief that I had, you know, like some people have these beliefs that they just are not willing to change. Yes. And this was one of them. It was like, no, no, no. I'm going to, I believe that I'm smarter than everybody. I'm this deep jobs, a CRM, and I am going to, you know, break this thing wide open.
I am Charles Schwartz Show
Predictable Revenue, Endless Income
I'm going to take on Salesforce and obviously it didn't work. Um, I eventually, I had a mentor sit me down and I'm Canadian. And he said about the meanest thing you could say as another Canadian, which is, I can't wait till you're working on something where you have a chance of being successful.
I am Charles Schwartz Show
Predictable Revenue, Endless Income
And so is Roger. He's another entrepreneur. He was founder of the co-working space and I had another couple of projects on the go. And he's somebody who I'd gone to before. Who I respected and he respected me. And he's like, he was frustrated because I wasn't getting it. And I think that was the moment that kind of cracked me open and said, ah, I got to stop and reconsider a whole bunch of things.
I am Charles Schwartz Show
Predictable Revenue, Endless Income
And the first piece was opening my mind to actually listening to customers. I was kind of doing customer development right, but I... Compared to how I run it now, it was totally wrong. And I was coming into it with ill intent, not ill intentions, but just totally closed minded about the process. I was coming into it knowing, feeling like I knew everything I already needed to do, needed to know.
I am Charles Schwartz Show
Predictable Revenue, Endless Income
And I was just there to check the box of like, hey, I've talked to 50 people.
I am Charles Schwartz Show
Predictable Revenue, Endless Income
So we typically serve entrepreneurs, founders that are trying to build their first go-to-market channel. They've got initial product market fit, and they're trying to figure out how do we get out of founder-led selling and then kind of scale up the team. And maybe they've got, in the earliest cases, they've got a couple of customers.
I am Charles Schwartz Show
Predictable Revenue, Endless Income
In the later cases, they've been selling and they've got up to a million in ARR. And typically what they come to us for is outsourcing. They say, hey, I've got this thing. I want to get this sales thing off my plate. I want to get this lead gen thing off my plate. So I want you to outsource for me.
I am Charles Schwartz Show
Predictable Revenue, Endless Income
And I think why we get so many people sending us referrals is they know I'll tell people I think it's a bad idea if I think it's a bad idea. And when we work with more established companies, there's a really narrow niche where outsourcing is a really great fit. Specifically, if you don't want to build a huge team, there's no political capital to hire new folks.
I am Charles Schwartz Show
Predictable Revenue, Endless Income
Hiring is really costly, not just from a monetary perspective, but
I am Charles Schwartz Show
Predictable Revenue, Endless Income
bureaucracy and budgets and all that everybody's got capex opex and all the different budget things for companies that are not looking for extreme growth or aren't going to be going to be are going to be roughly the same size next year plus a little bit outsourcing a great fit for an entrepreneur for a founder who's building their first team outsourcing is a terrible fit most most of the time because
I am Charles Schwartz Show
Predictable Revenue, Endless Income
One, nobody can build anything better than the founder. I don't care if you and I sit down, if I sit down in your company and try and build a team and you try and build a team, even if I built that team 100 times before, you know your company, you know your customer, you know your market 10 times better than I will.
I am Charles Schwartz Show
Predictable Revenue, Endless Income
I'll eventually get there and I'll have the advantage of knowing the tactics and things. But if we had this side by side, you're going to do a better job. Now, you alongside me working together, we'd probably do an even better job than either of us on our own. And I think that's kind of the conversation we tend to have with entrepreneurs is trying to talk them out of premature scale.
I am Charles Schwartz Show
Predictable Revenue, Endless Income
Having two customers and 10K in monthly recurring revenue and then trying to invest $100,000 or $500,000 or $1 million in building out a sales development team. I'm like, let's back it off a bit because it takes a long time to... realize and achieve the value from that.
I am Charles Schwartz Show
Predictable Revenue, Endless Income
And so I, one of the things I end up talking most frequently with founders is, pardon me, quantifying product market fit, and then trying to find a way to time your go to market investments so that it kind of it aligns with your fundraising strategy of, you know, if you got 18, if you got, you know, I've had this conversation a bunch in the last 60 days, it's January 9, as we're recording this.
I am Charles Schwartz Show
Predictable Revenue, Endless Income
And in the last 60 days, people have been coming in planning for 2025. Right. So many people have come to me and said, I think I had five people in one week said, I want a sales development team. I'm like, okay, cool. Let's talk about it. Like, what are you trying to achieve? I need to raise in next summer. And I was like, okay, and what do you want to achieve with that?
I am Charles Schwartz Show
Predictable Revenue, Endless Income
Like, well, I want to have... an SDR team and I want to have pipeline coming from it and X and Y and Z. And I'm like, okay, well, let's look at the actual math. And like, if we started today, say January 9th, in six months, you're not going to have any close one deals, right? You're going to have spent a bunch of money. You're not going to have got a lot of value. Now, some people will.
I am Charles Schwartz Show
Predictable Revenue, Endless Income
And, but when I'm talking to somebody about timing and when they're trying to, and when I'm trying to help them plan, I'd like to assume the absolute worst. And then if something better happens, great. And so in four of the five cases, the entrepreneurs needed to hit a raise and they had a cash crunch coming if they didn't hit a couple of sales in the next six months.
I am Charles Schwartz Show
Predictable Revenue, Endless Income
And investing an additional, upping their burn $20,000, $30,000 a month to hire a bunch of salespeople that weren't going to produce value for 12 to 18 months. And not that they're not producing value at all, but they're not going to produce value at the at the right time, right? It just wasn't aligned with the timing of what the founders are looking for.
I am Charles Schwartz Show
Predictable Revenue, Endless Income
And so that's a lot of the conversations I have is trying to help them figure out, okay, well, if we can't do that, and I don't want to get stuck here forever, what is it I do? And so how do I go from I've got my first few to how do I build that into 10 2030 without investing in a huge sales development team?
I am Charles Schwartz Show
Predictable Revenue, Endless Income
Product market fit, the way I see it is kind of the strength of, I'd say the size of the opportunity that you found, right? If you and I were going to start a printer company, a copier company, There's probably not a huge market for it. I mean, there is a massive market for it, but it's saturated. There's Xerox and Canon and probably some other ones, right? But there isn't a giant market need.
I am Charles Schwartz Show
Predictable Revenue, Endless Income
But if we started something that was... If you found something where there is a huge amount of unmet needs, where there's all these customers that...
I am Charles Schwartz Show
Predictable Revenue, Endless Income
are really frustrated with the way that the current solution works and it's costing them money it's costing them time it's causing them pain right to me that is the beginning of product market fit that is the market side right it's the huge amount of unmet needs the products out of product market fit is how well your product meets those needs and i think together they kind of create this multiplier effect on your revenue efforts so say you and i were going to go and start that copier business
I am Charles Schwartz Show
Predictable Revenue, Endless Income
We're going to do some cold outbound, do some cold calling, some knocking on doors. It's going to be, let's call it one out of 10 effective. It'll work, but it won't be as effective as if we were doing something else. Now, let's say we start this other business and say, I don't know, we found a big market opportunity. There's lots of pain. That pain is costing them money.
I am Charles Schwartz Show
Predictable Revenue, Endless Income
We're going to do the same. We're going to put the same amount of effort into cold calling, cold emailing, and knocking on doors. Chances are we're going to get 8 out of 10 or 10 out of 10 out of the result. And that's not because you and I are magically better. It's because there's a greater market need. So to me, product market fit is not something that's binary.
I am Charles Schwartz Show
Predictable Revenue, Endless Income
It's something that kind of exists on a bit of a spectrum from weak, which is like selling copiers into a world where copiers and everything exists already to selling something new and helping people with new pains and challenges that are unsolved. And when you do that, people tend to not just be more receptive, but they tend to tell their friends.
I am Charles Schwartz Show
Predictable Revenue, Endless Income
And the transition from like when I was selling Voltage CRM, like I'm a decent salesperson. I'm a better salesperson now than I was back 12 years ago, 13 years ago. But even back then I was decent. I had one customer with Voltage. That was my first company, the CRM company. When we pivoted to car, we were just doing the like Wizard of Oz style beta where I'm like, nothing's going to work.
I am Charles Schwartz Show
Predictable Revenue, Endless Income
Everything's going to be manual. It's me behind a curtain running spreadsheets and mail merges. I interviewed 50 people for Voltage, and I ended up with one customer. I interviewed five people with Carb. I interviewed more people than just five, but the first five people I interviewed with Carb turned into seven paying customers.
I am Charles Schwartz Show
Predictable Revenue, Endless Income
I was confident I could only handle five and two of them bullied me into taking one of their friends because they need it. They're like, no, no, no, no. James needs this so bad. I talked to Mac and he was just telling me about this. You've got to help him. And like, to me, that's the definition of market pull is I was telling people I couldn't do more. And they're like, no, no, no, no.
I am Charles Schwartz Show
Predictable Revenue, Endless Income
Hey, thanks for having me on, Charles.