Pablo Srugo

Yesterday, Zoom hit an all-time low. The work-from-home darling fell 90% from peak. Here's why, in B2B, great distribution beats great products:

Zoom exploded during COVID. Revenue was up 5x in 18 months.

They went from $200M in Jan 2020 to $1B in June 2021.

Zoom was the first to capture the work-from-home trend.

Zoom had the better product.

Zoom became a mainstream brand overnight.

And none of it mattered.

When video calls became common, most enterprises stuck with Microsoft.

And many consumers went to Google Meets.

Two years later, Zoom's revenue is flat.

Today people laugh at how bad Google's AI-powered search is.

But Google gets 86B visits a month and Perplexity gets 70M.

Will Perplexity add 85.9B visits faster than Google can fix its product?

Probably not.

So when looking at AI startups today, here's what's going through my mind:

Is the incumbent in your space a tech company?

Do the incumbents in your space have 30%+ market share?

Is the startup challenging the incumbent in a top-priority use case?

It's not enough to have a great product, you also need to win the race.

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Listen to the full episode on The Product Market Fit Show

#founders #startups #venturecapital

I raised $6M— then I lost it. We had a big story, a huge market, and tons of hype. My startup idea sounded great on paper, it just didn’t work in real life.

I really wanted to be a successful founder. In fact, it’s all I wanted. So my co-founder Lee Silverstone and I tried to whiteboard our way to $1B startup.

“Wouldn’t it be cool if you could automatically track everything you do in the gym?”

It was cool, so we ran with it.

We “spoke with customers”. We met 25 gym owners. But we didn’t do real research. We just pitched our product and got what we wanted: 25 letters of intent.

We worked on the story. Workout tracking was just phase one. Phase two was virtual personal training – a much bigger play.

We worked on the deck. We pitched angels, VCs, and accelerators.

To us it all made sense. We needed money to build everything.

If we build it, they will come.

And it worked. We raised millions of dollars. We hired dozens of engineers. We executed a plan that made perfect sense… on paper.

But reality is a whole different thing.

A couple years in, we’re two 25-year-old business types running an R&D shop. We’re burning $250K per month and still very far from “tracking everything you do in the gym”. We’re neither playing to our strengths nor solving customer problems.

Hardly a recipe for success.

Here’s what I’ve realized:

1/ As much as you might want to be a founder, as much as you might want your current idea to be real, don’t just go through the motions. Do the work. Before startup mode, there’s research mode.

2/ “Wouldn’t it be cool if” are probably the most dangerous words a founder can say. Especially when the founders know next to nothing about the industry. And especially when the founders are first-time founders. Most great ideas start with top-of-mind customer problems, not solutions that sound cool to you.

 3/ Most great start-up ideas are like sleep, they happen organically.

The more you try to force it, the worse it’ll be.

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Hear about all the mistakes we made at our last startup on today’s episode of The Product Market Fit Show

#venturecapital #startups #founders

Lee Silverstone Rob Woodbridge