(YC S21) $10M ARR, Storylane Founder, Nalin Senthamil: PMF Unlock - Are Prospects Interrupting You?

- At the end of first year, we were close to a million. - How much ARR do you have right now? - We are at 10 million in revenues. - That's Nalan, YC founder of Storylane. And I wanted to know how did you hit product market fit and what was the biggest indicator that you were really close? - I think there are two things, well, in a very simple way is you should look at it. Before you finish your sentence, they are ready to finish your sentence. They're gonna say, look for that. I mean, like that basically means like they're already one step ahead of you while you're talking, right? That's one. And then they'll-- - In this episode, we go in depth on how the hit product market fit, what to look for, also how they got into Y Combinator and what that looked like. I'm noticing an interesting pattern where the founders who spend the least amount of time on their YC applications seem to be the ones that get in at a higher rate. Maybe that's because they're focusing on hitting product market fit and talking to customers. If you're in that product market fit, early seed funding stage, this is gonna be a great episode for you. Shout out to our sponsor, Auth0 for startups. They take the steps out of authentication so you can get back to building a great company. I'm Adam O'Donnell, this is the founder initiative, boom. - Nolan, thank you for coming to the founder initiative. I'm so excited to hear your story, building story lane as well as your other experiences. I mean, you've had how many companies that you've started before story lane? - Before story lane two. - Yeah. - That's awesome. And I know I'm excited to be able to dive into that, but if you just had to first summarize from all your experience like having, being a co-founder of a company that was sold to Snap, like you've had a lot of experience building startups. What was the single biggest learning that you had from that idea phase to first dollar, maybe within story lane or any of the other ones? - I would say within story lane. So it's the best moment when you get the dollar. A lot of times people say like, "Hey, there is like partners, design partners. "I would love to try your product." The real aha moment comes when they actually swipe your credit card and then pay you. I'll tell you the reason is like the first company, I couldn't do that, right? And you really crave for that at some point to get the PMF validation. With story lane, the moment was like, I think for us, like after we started out and then there was a big public company who signed up with us. That's when it hit, okay, this is real, you know? A public company signing up using us. This was 2022 beginning, Nutanix, they signed us with us. That's when it felt like, okay, this is real. We can build on top of this more. - And so just leading up to that, what was one of the things that like, how did you know that it was an actual thing? 'Cause a lot of people say that, okay, I'm interested in buying this, but then they actually don't. What were the kind of things that you were hearing from them that made you knew it was real? - So we have seen this issue. So when I started story lane, let me go back and say like, why we started it, right? So I think before story lane, I had a company called Kinderland, it's an edtech market. We built it. One of my competitors there actually had a demo of their product when their websites were sharing it. They built it homegrown completely, built with a dev team and engineering team. So they always, we always like, hey, they're doing pretty well because of this thing. Now, after we sold it, we're always thinking about like, what's next? So I had a couple of ideas we were dabbling around it. And then we knew this market exists because it hit us really hard. I mean, you need to look back and do like what basically you went through and then to start the next one. So story lane was started in that way. Then we started talking to people to validate ourselves. Everybody we spoke to, they felt like, oh, that'll be great if I could share something with them. If I could share a demo of my product to somebody. So the validation was there, but we really wanted someone to pay the money, put it up and go through it. It took us six months after we built the product to figure that out until then. But the only time we started is like when they were ready to go put it up and they started seeing value through it and they started paying the money. That's when it started. - So you were getting the head nods and then you went and built it? - Yes, we built it in parallel. I would say we built it like first as the Figma prototypes and then that's the validation. And then once you started getting the head nods, yes, and I will pay for it. Then we started building the prototypes as well. Like by the way, this is all happening while we were at YC and we went to the YC and while we were doing it. - Got it. So you got into YC before you had the prototype and then you're building, how many customer discovery interviews are you doing per week like at this period? - So the sequence of events is like, we got into YC in summer 2021. We don't have a product. We went into YC, we got into YC. Then we said like, okay, let's be serious about building this demo platform. Then during that time, we built it. And as part of the YC, YC is amazing. So what you do is you start talking to people while you're building this, right? Naturally, that's what it forces you to do. And we started talking to people. So when you ask me about like validations, we're talking to a lot of other YC companies. And then one mistake we did was talking to only YC companies also. I mean, even though you've done a lot of companies, it can get, you can get sucked into it and lost to it. Basically talking to more YC companies. Slowly we started talking to other people and other vendors as well. We spoke to hundreds of people, right? So hundreds of customers, hundreds of not customers, hundreds of prospects who will be buying this. We did that during the YC time. And then after YC, there are a couple of YC companies purchased our product as well. That's when we started seeing the value and you started trading. But for the demo day, we had a version built by them. And we didn't have any customers then. We had like two to three, maybe that's about it. - That's so interesting. What's your single biggest learning in those couple hundred interviews that you did that you would apply like right now if you were starting over? - The interviews, if you're in YC, definitely don't talk only to YC companies. That's the biggest learning. And I think we spent a month talking to YC companies only. And I think that was like, oh man, I sure started talking to companies outside of this. The second problem was we came from a tech market before. So we started talking to all the other tech network of companies, which was also a mistake. So you need to go network beyond your networks, right? So start going, digging in beyond your networks. It took two to three months before we realized we are in a bubble talking to the wrong set of people. That's one I would say, yeah. - That's, and what are you asking them in these interviews? - We, basically we asked them about like the art product right now is used by product marketing team and sales engineering teams today, pretty much, right? Who build these demos for the product, right? So when we spoke to them, we didn't know who to talk to properly. So we were looking at marketing teams. The idea of talking is to figuring out your ICP there. Figuring out who is actually resonating with it. That's one thing we started doing quickly. And then finding out, oh, it's a product marketer. It's a sales engineer. These are the people that's interesting. We started understanding like, how do you build these things today? And like, what are the challenges you're having? And then like, if I give you something like this and saves you so much of effort, like, would you buy it? And then we show it, what does it look like? Oh yeah, I want to see, you have to look at the facial expressions of them. Like, ah, yeah, that'll be great. Oh yeah, awesome, you know, things like that. Then you slowly give it. But you don't stop with us. We have learned it. Like you have to pay by dollars. Swipe the credit card. And only, you know, it's really a solving something. - That's the only real way. But is it, are you asking them around the problem statement? Like, are you getting the meeting by the problem statement or the solution? - We are getting the meeting, it actually varies. We're getting the meeting because like sometimes it depends on the network. So we are getting the meeting basically like, I'm building something in the space. New, sometimes people just get on a call. This was like very initially. And the other thing is like, once we started refining after the first 10 conversations, we know what we are solving for clearly. And then we start selling the problem statements. What if I do these things and make your demos, like build a lot of demos for your product that your sales teams can start using instantly? That's how our tagline also came. People started resonating. What if I can build demos for you in 30 minutes and give it to you? Then like, yeah, sure, let's talk, right? So we kind of took that and put it on a website now. Build killer demos in 10 minutes also. And it is in 10 minutes, we would be do. But it kind of refined our homepage pitch also in some ways during those conversations. - It makes sense 'cause that's what they're phrasing back to you, like the real value. And it's like, so the advice to someone in this phase right now is 'cause like, you're probably moving, you're probably lightly pivoting along the way as these conversations are coming. I mean, I'm just trying to think of a final word of advice for someone here right now in terms of like, who's not there yet? They haven't gotten that excitement yet, but they think that they're trying to make a decision around this thing or that thing. - I would say a lot of times when you want to get a meeting, try to pitch like what you're gonna put on your website in a simple ways. You're gonna put on your homepage something, right? Which is going to attract people coming in. Try to refine that more and more and pitch that on your messages. Because there are two things you're doing. One is, is it resonating for people coming to your website? And the other is in your messages also it's resonating. So as I said, like that basically the messages led us to put what we have to put on a website also in some ways because that resonated with people. - That's, and you've got to get that down to like sub 50 characters, something quick. - Something quick, something easy, right? I mean, like you get a lot of people, everybody gets a lot of emails, LinkedIn messages, like nobody, it needs to hit quickly, right? What the value and everything. And I think talking about websites also because people coming in, you make these people come to your website after messaging. Now you need to make sure that messaging there is also crisp. - That's so good. Well, I know we're kind of already talking about product market fit, but if you had to just say from all your experience building and hitting product market fit, because how much ARR do you have right now with storyline? - We are at 10 million in revenues. - That's amazing. After four years and you've, and you've had relatively not a lot of investment, which sounds like on purpose. - Yes, it's not fully on purpose, I would say. So we went to YC, YC is an investor, and then we have a bunch of angels checks and founders be invested also. Overall, we raised close to a million, that's about it. And that's nothing in today's world, what do you see? - So one million, and we are at 10 million revenues. So right after YC, we did want to raise capital. My philosophy is like, you have to raise once and get so that you have options to pivot a couple of times with the capital. So when we tried to raise, there was a competition of our competitors of ours who raised large rounds like series B, 60, 70 million. So it was a challenge to raise at that point. We have already built companies, we know what's the plan B for us if you don't raise, like, hey, just buckle down and build. And finally, you build what people want, that's what it, right? And money is great to give you options to pivot. That in some ways, like with the less capital, you become very clear in your GTM, you become ultra clear about like who do you talk to, time becomes super important, the capital becomes important. Actually, it makes you better in some ways. I mean, it worked for us. - It's a healthy constraint. - It's a good constraint to have sometimes, yeah. - That's beautiful. In terms of getting to product market fit, what's the single biggest thing that you, inside that you had that helps you accelerate it? 'Cause you hit it in probably a couple of years. - Yeah, I mean, like at the end of first year, we were close to a million, I would say around 900K, 800K, 900K, we were there. End of first year. So we didn't feel it at that time. Look, I think in today's market, product market fit is always evolving. Like even today, I would say at this scale also, like there are different things you need to focus on. But around close to one million, when we got like a few public companies buying Storylane and wanting these things, that's when we started realizing about like, okay, it's not just like startups and market that are public companies out there who really wanted. I think you start getting that sense. And then we didn't hire a salesperson until we hit one, 1.2 million revenues. There was an inbound salesperson said, "Hey, you guys are selling yourself on this. "Can I help you guys?" And then Dutchman realized, "Maybe yeah, we should get a sales guy." And then we started talking to him. And then we realized, okay, it's repeatable. Another person can repeat it. Like he just picked it up in a month and started repeating it. Then we realized like, hey, that's a repeatable motion being there. And so you start getting that feeling of a good PMF there. - It's a repeatability and the indicator, the thing that got you there. I know we've kind of uncovered it, this customer discoveries, or any other insight around like the thing that, the biggest thing that got to the product market fit. Or is it literally just a bunch of little things like we've described? - I think it's, you don't stop talking to customers. You don't stop talking to prospects. So until one million, me and my co-founder were talking to them, right, doing. So that's the best thing. Don't bring in a salesperson early. It's a good thing, right? Because after like we're getting like lots of customers, hundreds of customers is when a salesperson came in after I hit one million. So which means like we spoke to huge number of ICP profiles. So in terms of our product marketers or sales engineers. So we kind of understood exactly what the product needs to show, what needs to be built, and is it resonating? So you're not overbuilding or underbuilding, you're building the right things quickly, right? So that is important. A lot of times you step out of it. That helped us constant refinement for us. - It just being right in the weeds and just one thing at a time. And then you know how to steer the product. And yeah, I think it's a game of persistence at the end of the day. Cause you can't plan it, but like you had a theory. You kept talking to the right people and then you got out of the bubbles. - Yep, yes. - And then you moved to the right ICP. - That's right. - And then the pivoting, like how much pivoting do you think you did? Would you say that you did from the very beginning? - I would say we were not talking to product marketers. We were talking to like demand gens and other people. - Got it. - So after some time we pivoted. And that was not too long. Like I think we, having built like a couple of companies before we know quickly like when we are not doing something right. You know that in the conversations. That's why I say founders should have the conversations. And you need to pick the signals, whether it's resonating with them when you're talking. - And those are facial signals. - Those are facial signals. Like sometimes the voice, like you have all the transcripts and all is good. But like you are in the call. If you're plugged into the call, you're seeing what they're seeing. Like, you know, you get that expressions. I mean, that's really a big cue. I think we shouldn't miss those things. - Yeah, and I really, like what if being a good founder is distilled down to the simplicity of like just understanding the human across the table. And what are the differences? Cause like I, as a founder, I did hundreds of customer discovery interviews and like just ran my head against the wall in a couple of different opportunities. And I, like they said the good, like people want to affirm what you're doing. - Yeah. - So they're naturally like, yeah, it's good. But you're, so what's the difference? - I think there are two things within the very simple ways you should look at it. Before you finish your sentence, they are ready to finish your sentences. They're gonna say, look for that. I mean, like that basically means like they're already one step ahead of you while you're talking, right? That's one. And then there'll be like a moment for them. Oh, shit, that's exactly what I'm looking. There is an expression that's screaming expression you should hear sometimes, right? That is another important indicator. So sometimes you look for a transcript. Okay, all that is good. Now, I mean, yeah, today we look at transcripts at that scale, but the point is like initially, like these transcripts looking through it, you would know it when you see it. And that's expression that comes out. And that's basically what I think you should look for. I think the most important I like is like when they finish your sentence, they start telling you what to build. They start pitching for you right away there. That's the, basically. - That's it versus the, send me something and I'll review it. - Oh, no, no, no, that doesn't work. That's a nice way to say like, it's not something that works for us. - Yeah, I've never had that work. But I love, so it's almost like, are you being interrupted by your prospects? - Interruption is the best thing, right? And the prospect can just listen. - 'Cause they're excited. - Yeah, excited. - And they understand the chain of thought that you're in. - That's right. - You're not the one like forcing them to understand this. - Yep. - They're pulling into it. - Yeah, exactly. So a lot of times we get on a call sometimes even now, right? When you never call, oh, they'll be like telling, oh, can you do all of these things as well? Like they're filling it out for us. Oh yeah, you're just ahead of me, yep, absolutely. - That, this is amazing. I mean, just like as a small example with this event series that I recently lost called buyer pitched tear downs where we get like a panel of buyers and then we have founders come and apply it to be the event who are selling to those buyers. Like the, I've been trying, I've done so many different event types when I was at other companies in the past. And this one has that. Like every time I talk to people about it, they start telling me the same, they're like, well, you need to have this, you need to do this, you need to do, and then they're signing up like crazy. All sponsors are saying yes before they even saw the price package I've literally had them. So all these amazing things are happening. But I, so I know the difference. I know it's different, but the biggest correlation is what you're saying. I really think it's the interrupting. It's like, they're like, no, 'cause they feel like they're part of something. And you're just like stewarding it and they want to participate. - They want to participate. They feel like it's mine. They need to feel that, right? That's a great signal when you start seeing that, yep. - I'm only saying it 'cause like it's more confirmation 'cause I'm like, I've been feeling this, but I'm like, this is different. This is not every experience and I love hearing that. Well, thank you, help. Let's talk about getting into YC. I mean, every founder in the world that I've talked to, like they're like, well, I didn't apply, but I'm like, would you want to get in if you could? And they're like, yeah, like everyone wants to help us with like what that looks like when you got in. And even if you wanted to start with the biggest reason you think that they actually invested in you. - We applied to YC in 2021 summer. We weren't planning to go to YC and we submitted the application last day only. Just a day before, my co-founder said like, "Hey, why don't we just try it out and apply to YC?" We said like, "Okay, when is the deadline?" "Oh, tomorrow, okay, what do we do?" Let's record, fill the application. It wasn't that hard. It was very simple. We had to record a shoot a video and then send it our application. We were not clear at that time exactly what we'll do. We had a couple of ideas we were dabbling before that. And one of them was related to what remote.com deal is doing today. And then luckily we go in the direction of building the demos. So we went with demos and everything and then we got in. Then we started building, okay, that's real. So we need to build this product. We need to build the team. We brought together quickly. But why we got in? We don't know. That's because probably we've been like founders a little bit, but yeah. So that's probably one of the reasons. And then the interview is pretty straightforward in terms of what we-- - So you were basically just saying like this is, were they asking questions about your background primarily? - Yeah, they were. I think the only thing that they had was like, hey, you guys are building into GTM space. Like you built like technologies, you built like being in Amazon, you built like AR glasses, net tech, like where is GTM coming to you, right? So my only thing is like, doesn't matter, you can learn any space in six months and go and sell into that, right? - That's what you said. - That's what I've been saying, yeah. I'm not a marketer, but we sell into product marketing. Because as a founder you're building, you're wearing already lots of hats. It doesn't mean like you need to be that. You're already in those roles and a lot of times when you're building it, right? So I think YC gets it, yeah. - They do and the outsiders, like I just think of Jesse at Deckagon, like as a customer support killer, he was never in that. And you see it, they've raised 234 million. I was fortunate to have them on the podcast and like they seem to be like crowned like the winner of the new agentic, just customer support movement. And just hearing that he wasn't in that, I was like, and we've known this, I think, anyone who's been in Silicon Valley for a bit has seen that, but it's almost like founders have wanted to pretend like they are from the industry. Once they got product market fake, 'cause they're like, it'd be just weird to say that I'm not one of you. But the reality is it's like almost you're better to listen when you're a third party in a way, that's what I'm hearing here, like you're unbiased. - Yeah, you're unbiased because I'm learning at that point, right? I'm not coming with like any kind of preconceived notions about how this function works. I'm new, but I'm learning. And I know a lot more about product marketing and marketing today, because I've spoken to, I don't know, hundreds and hundreds of marketers and product marketers over the, I mean, I would say maybe close to like 1000 now, right? It could be over four years. We spoke to so many people, like either through customers, prospects, over the last four years, together me and Co-Founders. So then you learn a lot of knowledge, right? That's knowledge that you learn. Then now it helps you build the product. So why he understands that? I mean, even if he didn't, but that's the only thing that they were hesitant about. Like, will you guys be able to learn this, do this? At this stage in your career, right? And when they see the hunger, they're like, yeah, sure. You can do it, right? That's basically where it comes. - It was that, that's beautiful. What is, did they have any questions around TAM? Because I think with micro SaaS, like which you're clearly not, but it just seems like there's so many different SaaS products and it's like, man, is this a platform opportunity? How do you know there's a billion dollar opportunity? Like, did you have any questions or are you personally about that? - I always believe like you get in one way inside. Like in this case, we've gotten through demos. We are at a certain stage. Now, what I do see in the GTM market, I've learned a lot about GTM now, is like in this space, you don't have big IPO players, right? Today there isn't anyone like Gong is still not an IPO. That's a big like Intel stack, right? So it's crazy like they've been there. There are many companies there. There is a lot of platform play consolidation that happens. So most important to understand in this space is like, the TAM will continue. You have to expand this by building adjacent product lines quickly and then expand this market so that you're able to sell into both GTM means like marketing and sales as well. Lot of companies today focus only on marketing or only on sales. What I do feel is like this is converging quite fast, more and more in the next five to eight years, 10 years, right? It's already happening. So selling into both is probably the way to go a lot more in your product. You might say like, hey, you're diluting, you're going to ICB. I think that's 10 years before, but now I think it needs to be sold together, in my opinion. - Interesting. As someone who was on the GTM team, which technically reported the marketing, but no joke while I was at the Zendesk, we went from reporting to marketing, then reporting to sales, and then reporting to marketing. So like we literally were just a perfect example of like, we're like, we're just working on GTM. But like we literally had like different lineups. So I see what you're saying. And it's almost a, it's a beautiful thing in the way that like companies are marrying sales and marketing close together. 'Cause that's the only way you can win. - Yeah, and they are. Because there are a lot of tools overlapped with them, and they want one consolidated tool. And you want to start figuring out a way to sell into both of them very early on. So it's good. So that basically what, it's not like we designed it this way. I'll tell you. I mean, I mean, like it's not like plan five years back. No, no, we figure, it's like, figure out as you build this, like your question about, how do you increase your time and everything? Hey, just we figure out, like open up the opportunities and then start going in the direction, right? You don't plan everything. You plan for the next year, you plan what it is you get in, and you see that this opportunity is big, the market will grow, and then there's more companies going to come anyways. And then there's more people in GTM is always going to be the problem for people. So you figure out a way to expand in that space. That's part of it. - That's good. I mean, my only question is just, like you said, you focus on an ICP. Can the ICP literally be multiple titles like that? - When you say ICP multiple, like product marketing and sales? - Yeah, sorry. I guess there's two different things. Obviously, that deal company, but also in terms of like within the company. - Oh, with like sales and marketing. - Exactly. - It is going to be, it's challenging. I'm not saying it's like so simple, but I don't think you should do this on day one, right? And I think you should have this in a way that you focus on one, set into it and then figure out, map out your roadmap, map out your strategy. How do you expand into other teams as well, right? So that needs to be there. And that could be a strategy of like being fully bottoms up like a PLG product that you're building up. Whatever that strategy is, you have that strategy in place, but be open like what's your not start and this is what you're going to go. And then you start changing your direction quickly. - Yeah, that's so good. I'm trying to think, is there any other deep insights that you'd want to share as a parting words? - No, I think one other big insight I would say is like when you're raising capital at this point, we raised very less. And I think a lot of people ask about us raising less today in the market. I think capital is raised the first round having an option for you so that you have enough to pivot multiple times. But that's not the end all. Even if you didn't raise enough, focus on what a customer wants, just buckle down and build what they want. And then that's good enough, right? Sometimes we get too caught up. Oh, I didn't raise, I can't do anything. I've seen a lot of founders when I talk to them. So don't worry, have a plan B and you can still do it, right? That's the main thing I would say. And unfortunately, our media and everything portrays more about funding. More capital means more. I'm not denying against it, it's good. But if you don't, not everybody can, but at the same time, but it's not like you have to give up and then figure out a plan B quickly. - It's just, do you have enough money to be able to pay the bills while you just hyper focus on building this out? And it sounds like you're saying a lot, I mean, depending on what you're building, if it's not hardware and other things, you can build with a low amount of money. So probably what has that. Prioritize that, like you probably don't have to hire everybody in the Bay Area. So figure out a way to make it work. It's the adjustments that you'll have to do, make it work until you have enough to bring in things back, yeah. - Yeah, that's so good. Well, thank you, this is amazing. - Thank you, yeah. Thanks for having me. - Boom, we'll end it right there. I'll high five you. - Thanks for listening to another episode of the Founder Initiative Podcast. I'm your host, Adam O'Donnell. This is much more than a podcast. It's a movement that's designed to help founders hit product market fit, and get funded. Reach out to me on LinkedIn. Boom.