He took 3 years to make his 1st sale—then grew 1000x to $10M ARR 3 years later. | Alex Hoff, Founder of Auvik

Alex got the co-founder of a public company to join him and raised $6M out of the gate—but it took him 3 years to make his first sale. 

But after he shifted from selling to SMBs to selling to MSPs (Managed Service Providers i.e., outsourced IT), things took off:

April 2015 - $1K MRR
August 2015 - $10K MRR
June 2016 - $100K MRR
Nov 2018 - $1M MRR ($12M ARR)

And growth never stopped—soon, he'll cross $100M ARR.

Alex and his co-founder did many things differently. They came up with an idea by starting with markets, not customer problems. They raised a lot of money upfront and built a sophisticated product instead of an MVP. And they deliberated cultural values before making their first hire.

Clearly—it worked.

Why you should listen

• Learn why you should define culture before making your first hire.
• How to find market trends and customer problems top-down instead of bottoms-up.
• Why keeping your product unchanged but targeting a different market can have a massive impact and lead to product-market fit. 
• Why you should be willing to be bold and not hedge.
• Why you should only focus on one thing at a time.
• How to use constraints to do more things faster.

Keywords

Auvik, software company, networking, SMBs, mid-market, decoupling, control plane, hardware, software solution, automate, configuration, user research, product design, team, company values, SaaS, IT management, product-market fit, pivot, managed service provider, MSP, boldness, discipline, advice

Timestamps
(00:00:00) Intro
(00:01:47) The Origin of Auvik
(00:07:20) Finding a co-founder
(00:12:35)  It's People Who Build Companies
(00:14:10)  Finding the Concept for Auvik
(00:20:07)  Buikding the Product
(00:30:30)  First Customer Experiences
(00:34:40)  Feedback Loops
(00:39:08)  Getting to a Million
(00:41:33)  Finding Product Market Fit
(00:42:54) One Piece of Advice

Chapters

• 1:47 The Origin of Auvik
• 7:20 Finding a co-founder
• 12:35 It's People Who Build Companies
• 14:10 Finding the Concept for Auvik
• 20:07 Building the product
• 30:30 First Customer Experiences
• 34:40 Feedback Loops
• 39:08 Getting to a Million
• 41:33 Finding Product Market Fit
• 42:54 One Piece of Advice

Transcript

Alex Hoff  (0:00)

1K MRR was April, 2015. 10K was August, 2015. 100K was June 30th, 2016. And then a million MRR was November, what looks like 2018. We took the predictable revenue model and we took it to heart. Talk about like engineers trying to engineer something. Mark as an engineer is like, we're going to engineer sales. How many leads do we need? How many BDRs do we need? How much demand, gen dollars? Everything was a formula. So you pour money in at the top.

Work happens, leads come out, deals are made, meetings are booked, trials are done, wins are happening. Products aren't everything, right? It's people who build companies. Those people are, you're gonna have to work with them for a really long time. You need to bring in the right people. They have to have the right values. 

Pablo Srugo (0:45) 

That was a huge, I mean, that's a huge get. Like you got the founder of a public company to join you as co -founder.  Did you realize at the time just how big of a get that was

Alex Hoff  (0:55)

 Yeah, yeah, no, I wasn't as worried that I would completely fail anymore.

Pablo Srugo (1:00)

Welcome to the product market fit show brought to you by Mistral, a seed stage firm based in Canada. I'm Pablo. I'm a founder turned VC. My goal is to help early stage founders like you find product market fit.

Well, Alex, welcome to the show.

Alex Hoff  (1:18) 

Thank you very much, Pablo. Thanks for having me.

Pablo Srugo (1:20) 

Tell me a bit about the story of Auvik, like the origin story. How did things get started in the first place? And in your case, I'll mention,you wrote a book about this. So I'm sure you have a lot of stories that are maybe a bit more fresher in memory than a lot of founders that have to think back a decade ago.

Alex Hoff  (1:38)

As we age, we start to forget all the juicy details and the hardships that happened, much like raising kids. You never remember the tough stuff. Starting Auvik didn't just happen overnight. Speaking of children, there was an inflection moment that caused the beginning of Auvik. And so I have to go back a little bit. I went to University of Waterloo, studied computer science, wasn't particularly a great student, but I really enjoyed work. And I joined a company called Sandvine in Waterloo. That's really, really great people, stayed there for give or take nine years.

Pablo Srugo (2:11)

How big was the company?

Alex Hoff (2:12) 

When I joined, it was pre -revenue 30 or so people. They had just come off the sale of a company called Pigstream to Cisco, which ended up, I think it was 320 million US. So pretty good deal back in the day. Cisco ended up shutting it down for some accounting glitch in 2000, back in the 2000s. I don't remember all the details of that before my time But Sandvine got started and it was kind of interesting. I like networking. these guys and I met them in person. I just thought, hey, these are much more interesting people than what you traditionally meet in the, in the deep tech world. And so was like, I want to work with these guys. So I joined as a co -op student and I jokingly said I never left. So I continued to work part time during, during my co -op terms. I eventually started full time, wrote code for a couple of years and it was great. Love the team, but didn't want to do that for the rest of my career. So fast forward a little bit, ended up in product management, built two very successful products, very proud of the accomplishments, obviously working very closely with the team and our customers to do that. And then one day it was just like, now what? The products are successful. What's the next thing? Well, the company wasn't really in the spot to do a next thing. And I started to get antsy. You can't see this in podcasts, but I was just twiddling my thumbs and it was like visibly itchy. I thought, okay, well the traditional path, I was almost 30, was, hey, let's just get a different job. Let's just try something new. I've been here pretty much my entire career-. 

Pablo Srugo (3:34) 

How long were you at Sandvine then all in?

Alex Hoff (3:36)

 Nine years. Nine years. Wow. Awesome company. mean, 

Pablo Srugo (3:40) 

yeah, like tell me a bit about, cause Sandvine is a pretty big deal, at least within in Canada, like how, how much did it grow from 30 employees to what?

Alex Hoff (3:46) 

I don't remember at the end. was like 500. We had offices all over the world. spent a bunch of time in Israel, went out to India. during my SC days, I was all over the world. Like I was afforded opportunities that most aren't able to have.

And so that's, that was where the loyalty was built. I loved working with that team. I loved the opportunities they gave me. They obviously saw something and I worked really hard. And what was the ultimate, like, just run, I don't know. 

Pablo Srugo (4:12) 

What's the, what was the ultimate outcome for Sanvine? 

Alex Hoff (4:15) 

So Sanvine went public early on the aim. I remember being a very young guy at the time. I was like, cool. I work for a public company now. And eventually they brought it to the TSX, you know, ups and downs on being a public company. You you miss one quarter and they, they all yell at  you and it's not fun. And I think that's kind of drove some of the decision making around product investment. It's hard to make a substantial J curve and affect your rule of 40 when you're public. It's just a different beast. I wasn't part of those discussions. So I don't want to comment too much, but it felt from my seat that taking a big swing and going from zero to one again on a new product just wasn't in the cards. And in fact, we had pitched one and They respectfully said, hey, love this. We're just not in position to make that type of an investment. I was like, hey, no problem. No problem whatsoever. And so as I said, I started looking and at the time we were trying for a baby, my wife was pregnant and we got our job offer to move down to the Valley. She's a lawyer and she's like, well, I can't really work down there, especially with a baby. So if we do this, then I got to get recertified. She's a patent attorney. So she has to go take some more courses. And it was a big, big deal, but she's like, well, we'll do We'll do it. But don't think you can ever start a business. I was like, what do mean? She's like, well, like I'll be taking a couple of your hiatus in my career, which is fine. But then like, you know, for you to then go off and start something from zero, it just doesn't like the timing. We're going to run out of time. I was like, yeah, what if we just do it now? And I probably had a drink or two. We're like, screw it. Let's just do it. And she's like, well, you got six months. You got to have an income in six months. We have a baby on the way. It's literally a ticking time bomb. And so I made the jump! I parted ways with Sandvine, very amicable. 

Pablo Srugo (5:59) 

With no idea? Or did you know that point? Like you had a bunch of ideas. 

Alex Hoff (6:02) 

No idea, Well, sorry, that's not to say I had an idea. I had areas of interest, obviously. I I had relationships with a number of different, these customers we were working with in carrier space. So it's like, well, I had some ideas kind of like tinking around in my head, but nothing real yet. So I made the jump and it was like, okay, now what? And I reached out to Mark Morren He was the founder of PicStream and of Sandvine. Got to know the guy over many years. Awesome guy, mentor, helped coach me along the way. And I said, Hey, well I've made the leap and I'd love to hit you up for some advice because I pretty much don't know what I'm doing at this point. He's like, yeah, sure. Whatever. Let's just go grab a drink. 

Pablo Srugo (6:43) 

By the way, I have to ask, what was your thinking for just taking that leap versus staying there? Like, did you just, was the sense of urgency so high that you're like, unless I do this, I'm just not going to put enough time into it 

Alex Hoff (6:55) 

think it would be regret. if I didn't take the chance. think like you can always get a job. So that was the calculus. My wife is very rational. She's like, so if you do this and it fails, what's the opportunity cost? They hadn't worked for six months. Whoop -de -doo. Obviously you have great relationships. You can leverage that. For me, I mean, it was risky, but it wasn't the end of the world. 

Pablo Srugo (7:13) 

The worst case scenario really wasn't that bad. When you think it out in rational terms, that's often the case. The worst case scenario just isn't really that bad. And so that's freeing. 

Alex Hoff (7:22) 

And it was nice to have a little bit pressure. uh have a deadline because you meet some of these companies and incubators like, we've been at it for 10 years, and we’re not even Profitable. I'm like, boy. boy. So I didn't really want to go down that path. Anyway, so I'd reached out to Mark. He was starting to get little antsy. He is a serial entrepreneur. Retirement wasn't really scratching the itch if I were to put words in his mouth, but we started talking. I said, hey, I've got these couple ideas I'd like to explore. And he goes, okay. Let’s do it together and it was pretty much a handshake. Why not partner with somebody who has done this before? I've got the energy, I've got the drive. I really want to make this go and having someone who can help steer me in the right direction, leverage their relationships, especially in raising capital and run the business, something I've never done before. We'll figure like -

Pablo Srugo (8:11) 

That was a huge, I mean, that's a huge get. Like you got the founder of a public company to join you as co -founder. Did you realize at the time just how big of a get that was 

Alex Hoff (8:20) 

Yeah, no, I wasn't as worried that I would completely fail anymore. probability of failing went from like 100 % to 99 at that point. 

Pablo Srugo (8:30) 

And what about him? What drew him because he, given what he'd done at that point, I mean, there's a lot of people that would line up to partner with him. There's a lot of things that he could work on. Why do you think he chose to partner with you and so quickly?

Alex Hoff (8:44) 

It wasn't, mean, it sounds quicker than it really was. We had been talking for a while. We're probably, you know, we're chatting. We had a shared hobby and we were probably chatting every couple of weeks and just kind of shooting the shit, so to speak. We had talked a lot at Sandvine, consider him and still do a mentor. So definitely there was a relationship there. Why me? Why not somebody else? He had explored other product opportunities, but not all of them always work out. And so he'd work with some other people. And from my understanding, those projects just didn't go anywhere. so timing, timing was right. There was a window of availability on

both sides and 

Pablo Srugo (9:22) 

so what happens from there? You guys decide to partner up, but still like unclear.

Alex Hoff (9:25) 

yeah, totally unclear. Basically it a handshake. It's like, so I was like, so like, do what do we do? Do we like work from home? He's like, no, no, no, that's stupid. let me, let me call up a buddy. Let's get some shared space. let me, let me see if we can rent a desk or two better to have there that we can be talking person. I was like, okay, that sounds like a good idea. And so there was a number of ideas. As I said, that we, had come with Mark's a very methodical guy, very take frameworks, apply them. structured thinking, don't follow your emotions, like be really rational, like really smart guy. Definitely the ability to see waves and capitalize on those waves. A couple of things that we also recognize was from the Sandvine thing is having a customer that spends a hundred million dollars with you, I may be rounding up a little bit in the story, but it kind of sucks. It's great. It's great for the business, but it's actually really distracting in the sense that they control your roadmap. very high stress, super long sales cycles. You basically have to accommodate their every need. It's not great at all times. The other thing that we were very conscious about was be born in the cloud this time. Why? Selfish reasons. We had equipment all over the world with Sandvine and maybe had to push a software patch, maintain different versions. Like, there's so many advantages of being SaaS, but from a purely engineering point of view, we're just. We got to do it this way from the beginning. Like, let's just agree on this right now. It was 2011. So, you know, SAS was, was happening, but it wasn't like everything was SAS. It was pretty early. So we kind of wrote down a couple of key principles. obviously spent a lot of time talking about, what type of company do we want to build? Not just the product, but like, how do we align on stuff like culture? How far do we want to take this? Do we want to go public? Like, like we spent a lot of time just like making sure that the founders were eye to. Cause that's where a lot of disconnects come later on. If you're just not truly honest, I remember Mark's like, you're going to spend more time with me than your wife. And I was like, that's not true. That's a red flag, but then it's like, wait a second. No, you're right. Like I'm gonna spend eight hours a day with you or more. And we have to be honest with each other. We have to work together. We have to have the same goals. And so we had a lot of honest conversations about what is it that we wanted to build? How did we want to build. What roles did we want to have? What experiences did we want to have? And started going from there. 

Pablo Srugo (11:47) 

What's fascinating to me is you start, like, if you think about the ways to start a business, right? Like there's the classic, like technology looking for a problem, right? You start with some products, some tech, and you're trying to figure out where it applies, which, you know, sometimes works, but can be very painful. There's like the generally accepted way that you should do it, which is like, you find a real problem, unique insight, whatever, and then you build accordingly. And then there's the way you guys seem to have done which is almost these like meta concepts. It's not about the problem or the thing you're solving. It's like all these, like you don't want massive customers. You want to build in the cloud. You want to have these cultural principles. And I guess you're forming like some, I mean, part of it is getting to know the other person and aligning and part of it, guess, seems like you're forming some constraints to understand the sort of things that you would even consider going after. I'm just curious, like, how does that play out?

Alex Hoff (12:35) 

Products aren't everything, right? It's people who build companies. Those people are, you're going to have to work with them for a really long time. need to bring in the right people. They have to have the right values. One of the things I loved about Sandvine and why I stayed there so long was this concept of the Sandvine way. And I'm too old to remember the 10 tenants of the Sandvine way. They were relentless at enforcing that. It was really, really powerful as a young and impressionable new grad. That whole cultural concept was so strong and so powerful. I'd worked at a big mega corporation and it was just whole nameless job. And it's just like, you know, when I worked at Sandvine, it was like, wow, this is great. And it's like, how do we, how do we take that experience and make it better? And so we formed the Auvik way and I'll get back to that a little bit later, but what is it that we wanted to do? I mentioned that Mark was really good at finding waves. So we looked at what are some of the emerging trends. So SaaS obviously was one of them. Machine to machine communication was quite popular at the time. Definitely innovative ideas around that. And so we looked at these waves, we went through a bunch of them. And eventually just started killing them because they just, they weren't big enough. They were too small. They were not our area of expertise, not a type of customer we understand. And I remember one day we were in a, in a meeting room. We're like, I don't think this is working. Like, no, we're not really getting anywhere with this concept that we are exploring. It was a networking concept, but we really getting anywhere. It was going to be too capital intensive and it just, it didn't make sense. So we didn't do it. And it was in and around March. Just as my wife was due and I remember being quite sad because we're like, we're going to roll. He's basically like, I think we're done. I'm going to wrap it up from here. was like,

Pablo Srugo (14:11) 

yeah, that's right. Six months is up. Then get your company off the ground. 

Alex Hoff (14:15) 

And then it just like, had given it the good old college try and it just didn't go. And Mark had some personal stuff that he had to attend to and a couple of weeks go by. And I remember calling him or texting him. don't remember where was at the time. And he's like, I don't necessarily want to give up. I was like, yeah, good. Because here's, here's what I found. There's this open flow thing. There's a software defined network. He's like, yeah, I know about that. We, looked at that previously. It's quite interesting. I was like, yeah, no, I think there's really something here because it's very analogous to what we did at Sandvine. And he's like, go on. And so we started talking about the concepts and what we could do. And he's, but you know, but your daughter was just born. was like, yeah, I definitely have a constraint here. like, he leaned over. He's like, what do you need? I was like, what do you mean? It's like, well, like not what you want. Like, what do you need to keep going on this adventure? I was like, well, I got to pick groceries

pay my mortgage. He's like, I'll cover that. And I look back at one of those defining moments in my career. It wasn't a ton of money. And I think about like, you know, having been moderately successful with Auvik, I would do the same thing for someone I believed in. But for me, that was just like this big, whoa moment. And I'm truly, truly, truly grateful for that. It's a huge, huge unlock. 

Pablo Srugo (15:23) 

Yeah. It's a huge unlock, I mean, it might be small dollars.

Alex Hoff (15:26) 

It changes the stress level. Allows you to focus. It's not like we're going to do it forever again, but we're like, let's put some parameters around this and let's see if we can make a go of this. And around that time, we said, well, we need to network. We need to bring in more people. Like as a founding team. 

Pablo Srugo (15:41) 

What was maybe just before that, like, what was the idea at that point? You software defined networking. I mean, tell us a bit more just about.

Alex Hoff (15:46) 

 So software defined networking as a, as a concept was decoupling the control plane, the software from the hardware, much like a CPU, a GPU. Don't couple them together, decouple them. And in the networking world, all your switches, they don't talk to each They have to be manually configured. It's a real pain in the butt. We had so much experience with this at Sanvon. I remember sitting in, you know, telecom labs where it's like seven degrees screaming fans and configuring these networking, configuring networking equipment. And so was like, I know the pain of this. I consider myself a my smart guy, but like, this is like a black magic to get network configuration right. We'd all felt the pains of it. We felt there was an opportunity to simplify networking, to decouple the control plane from the software plane and There was something there.

Pablo Srugo (16:32) 

 Like telcos would be the customers or who? 

Alex Hoff (16:34) 

Telcos, enterprise. But then we were like, we don't want to sell to those. And then it became a very intellectual exercise. And I was like, I guess we did a lot of talking in the early days. We didn't write a single line of code until we were committed. 

Pablo Srugo (16:44) 

And this was, by the way, this was like intellectual, like you guys in a room thinking or also talking to others.

Alex Hoff (16:50) 

Well talking. Customer potential Talking, talking to others, trying to get meetings, doing a lot of reading. Went to a couple of conferences. But there was a lot of like brainstorming. Honestly, there's a lot of like through. or a wall and see what sticks and challenging each other.

Pablo Srugo (17:04) 

And you didn't want to sell the telcos or enterprises because of what you'd said earlier. Like you just didn't want to these huge deal size, long sales cycles, field salespeople, quite expensive. You know, one of the other things I neglected to say is one of other principles. So like we'd love to do because of the SaaS thing, subscription, small deal size, very high velocity sales. We'd like to try that this time. It's complete opposite from the whole enterprise sales motion. As we were thinking about software defined networking, like, well, this is only going to appeal to brand new network because you have to put new equipment in. Who can afford that? Data centers and enterprise and telecom. Well, we don't want that. What about everybody else? What about the SMB? What about the mid market? That's where we want to play. Well, they can't afford this. Aha. What if we just built the software plane, the software solution that talks to his existing equipment? And as we tested this idea with people, they're like, you're crazy. You can't do that. We're like, like, it's not that hard. Like we have so much experience doing this. It's not that hard  It's just an abstraction layer. They're like, no, no, no, it can't be done. I'm like, no, it totally can be done. And that's when we thought we had something. 

Pablo Srugo (18:02) 

And that was to enable maybe just for the non -tech audience, like ultimately that enables an SMB to do what? Because of that decoupling? 

Alex Hoff (18:12) 

Fair enough. I'm sort of putting the cart before the horse. Managing a network. You know, I have a cartoon and maybe I'll share it. I built this cartoon for our pitch deck. went on like Fiverr or one of those equivalent websites back in the day. And I said, hey, how do you configure? Remember back in the day, had VoIP phones in our office. To get that VoIP phone to work, A, to work, B, to work well, to have the good quality experience. didn't get a drop calls or garbled calls during someone downloading. You had to do a bunch of network configuration and that stuff is extremely. So what we wanted to deliver was describe what you want and let a system build that configuration for you. you know, do more, not actually say call it Gen AI. I have for networking. That's a terrible analogy because that's too hyped up now. Call a little compiler. a little compiler, you tell it what you want to do and it builds you the config and it does it in a multi -vendor way. So the outcome we were trying to drive for SMB at the time that the idea we had was like, well, let's just simplify networking. You don't need to have a PhD CCIE, which is a Cisco certified infrastructure engineer. There's only thousands of them in the world. you don't. this, 

Pablo Srugo (19:13) 

this voiceover IP, this void phone that you mentioned, is that just an example or was that the core thing back then?

Alex Hoff (19:17) 

 It's just example. no, just making networking work when you were probably still in high school was a real pain in the ass. And so, and so we really wanted to solve that problem. I can go into lots of examples, but it's just, it's complicated. It's even complicated. Like it's still complicated now, you know, almost a decade later or over a decade later, but it's better. And so we had this idea along the way we had, you know, reached out into our, into our networks, into Waterloo and beyond. And we ended up bringing on another co -founder Dave Yaw. He was the CTO of Blackberry. Blackberry went through its peak. And then it's trough and Dave became available and Dave might be one of the smartest software engineers I've ever met. And he joined and we had this idea to build a system that can take a descriptive, basically a description of what the network wants to look like and then build the configuration for it. 

Pablo Srugo (20:11) 

So that description that's still in code, I would think.

Alex Hoff (20:14) 

 Yeah. live business logic to go, but it's still code, it's just far less complicated and you don't need to know. how Cisco does it or HP does it or Aruba does it or any of other vendors. It's just like, don't worry about the details, abstract it all the way. And so we'd talk to some professors, we had talked to people in industry and they're like, yes, this seems doable. It seems really hard, but it seems doable. We're like, okay, I think we're on to it. So we came up with this story of see, tell, do. If you want to drive automation, you have to be able to see what the network looks like. And in order to see the network, you got to deploy something, inventory it, discover it, all the things are understand the configuration in order to tell the system what you want it to do and then drive automation. So we went out and I say we went out, Mark leverages networks with Celtic House, Roe and BDC. And we obviously were talking and they were keeping apprised of our progress over the span of time. I don't remember how long it was, but a year probably at this point. And they were like, when you guys have something, let's seriously talk. Now we have something. While it was frustrating at times to say the least, we raised money. substantial amount of money. 

Pablo Srugo (21:21) 

Especially back then, even more so like these days, there's more and more of these pre product, know, seed rounds, whatever still, still hard to get, but doable.

Alex Hoff (21:29) 

 It's a big chunk of change too. And it's what the, what the company needed because what we believe the MVP was going to be, it was a quite substantial build. 

Pablo Srugo (21:36) 

I know you mentioned talking a lot about roles. How did you, how did you set it up with those two?

Alex Hoff (21:40) 

 So Mark was the CEO. I was going to work on product management and kind of be customer facing and Dave was deep, deep deck, smart guy. So that's where he was going But all of us had a very engineering focused mindset. I mean, I had done pre -sales at Sandvine. I had a very customer facing there. So I was like, I'll figure it out for now, at least, as you figure out the product definition. I'll do that until... But yeah, it was a very unconventional way of raising money. People ask how we did it. Well, the easiest way to raise money from a venture firm is to go make them hundreds of million dollars before. 

Pablo Srugo (22:11) 

Correct.

Alex Hoff (22:12) 

 Sandvine and PicsTree 

Pablo Srugo (22:14) 

You get at least one of my two free passes after that. That's right. So... Blank check term sheets.

Alex Hoff (22:19) 

So, I mean, it wasn't like it was super easy and I will not make it out to be. Mark had probably some hair tearing out moments as we worked through all the details, but we did it. We started building the team. As I said, we had a very big concept of MVP and one of the things we knew with this concept that if we're going to take it to SMB, we're going take it at mid -market, well, we're not designing something that's very complicated. The other wave that we were capitalizing on was this concept of the consumerization of IT. Apple was releasing the iPhone and that whole idea is like, IT should be simple. Like actually simple, not command line interfaces, not typing in code to configure things. It should just work. So we've spent a lot of time upfront doing user research, talking to prospects, trying to understand what the product should look like. We brought in a design firm and one of the first questions is like, Hey, so do you have any Users that we can talk to, if you're suggesting product, like what product? We don't have a product. And so we spent a lot, can't, a lot of academic time trying to design what the future should look like. And I have some of those screenshots still. Like we executed on that. Even to this day, we still are true to that vision and it hasn't changed materially. We got that right. Could it be better now? Yeah. Well, we've got years now of experience under our belts to optimize that and how people interact with it, all that good stuff. But we went. really aggressive, like we're going to make simplicity over everything else. And one of the decisions, both good and bad was we're going to err on, on like static designs versus, Hey, here's a Swiss army knife. If you don't like it, just configure it and figure it out later. Because that's like a product manager's excuse to not understanding the customer use case. So we're like, no, no, for now, we are going to design all the dashboards. We're going to do that. We're going to get it right. And when we're wrong, we will do that for everybody. 

Pablo Srugo (24:10) 

That's what's gotten, I mean, that's what's more and more common, say these days, right? With products. 

Alex Hoff (24:14) 

Very much so these days, but like this is now 2013 or so. Yeah. people didn't do it this way, right? People didn't have the capital. Usually it's like, it gets up in the market and learn, learn, learn. Editor of, editor of, editor of. And it was like, yeah, but that's not going to work for us. And I wasn't wrong on that one. I don't think any of us were wrong there because our customers were very demanding. We're in a mature space in the world of network management or IT management software. It's not super sexy stuff. We're really good at it. We're really passionate about what we're doing. So we built this product. We launched it. We brought on a Jackie Murphy and awesome team of people to run demand, Jen and marketing and probably 10 ,000 trials later, we had like one conversion and the feedback was very consistent.It was “cute”. That's nice. I can't afford this. And some of the stories were just brutal. Like there was a whole bunch of like, you don't have this feature. I need this feature in order to displace this product. We're like, okay, fine. You know, If it makes sense and it's a common pattern, we'll go, we'll, we'll chase features to win our first couple of deals. And there was some themes, obviously, we needed diesel, we needed this capability and that capability. So we did them all and we still weren't converting. We're throwing money at demand,, we were getting more trials. was a drop off rate. Like,

Pablo Srugo (25:23) 

 let me just ask that. I mean, that question stopped mine for me is like, how do get to thousands of trials with only one or two kind of converting? Like, wouldn't you have stopped at trials or something like that?

Alex Hoff (25:36) 

 Nope. How do I put.. IT people can be, they like to try new things. So you put an ad out there on Google, Google AdWords, and they click it. know, crazy people sign up and you know, there's a funnel there to actually downloading it and trying it out and getting through the onboarding. So we spent a lot of time trying to refine that onboarding experience, but ultimately what we were learning was we weren't ready for the SMB market. And there was one story that just like, it was gut wrenching. We had an IT manager at a small law firm, probably 20 partners. I don't remember the details. Talking with this guy, he's like, I love this. You know what's great about this is that like when there's a network issue, I can be at home and I can log into Ovex cloud platform and I can manage my network. That saves me a trip to the office. How much is it? We're like $200 a month. He's like, that's it? Okay, I'm to go to the partners and ask for this. This is brutal. Partners were like, no, we're not, we're not spending $200 a month. That's what we have you for. And that was a big, oh no moment. because what we realized is SMB had no business doing their own IT. They were cheap. They were hiring people. were undervaluing the concepts of IT, the risk associated with IT, and just doing a bad job. So we were pretty down, but like literally at the same moment, these MSPs, we're like, what's an MSP? We joked in retrospect now, we couldn't even spell MSP. And so an MSP is a managed service provider. So it is an outsourced IT organization that provides services to one or more companies. And we're like, wait a second. 

Pablo Srugo (27:09 ) 

So how nascent was that? Cause today MSPs has become huge. How nascent was this market of MSPs?

Alex Hoff (27:14) 

 the market is a talk about being at the right place at the right time. Every startup needs luck. We were at the right place at the right time. The, the MSP market was really the evolution of the IT reseller market. So IT resellers would sell you hardware, then they'd sell you services. But as hardware margins eroded, so did their ability to make money. So they sell more services, but selling more services kind of made the customer go against the reseller. Like they didn't have the same alignment. And so these concept of managed services came up as like, no, no, no, no, we're going to align on the same, same outcome. Get my IT to work and we'll pay you a fixed fee. If you could do that, basically it's 100 % gross margin. If you can't, that's a you problem. And so this whole concept of managed services was evolving in and around the same time we were coming to market. So perfect timing. Second big timing moment was there was this concept of a tool called a RMM, a Remote Monitoring and Management Platform. So these are tools that were often self -hosted tools. So they weren't quite cloud yet that you could put on a bunch of computers on your Windows desktops in various organizations so that you can essentially manage it. So perfect product for the MSP world, perfect product to help enable them to deliver their IT services.

Pablo Srugo (28:39) 

Is this so somebody remotely could like access your computer and like move your mouse?

Alex Hoff (29:44) 

 Troubleshoot it and patch it. The RMM tool was there to help enable MSPs and a lot of those vendors were the catalysts to that evolution from these resellers into this managed services model. they were there advocating for this new world, but they were focused on the Windows machines. And honestly, that's where the bulk of the work was. And so when we came to market, they're like, well, we're not switching our RMM for you guys. It's really cool that you can give us visibility into the networks. It's amazing, but you're not an RMM. And we're like, no, we're not. We're network management. like, well, we don't believe that it works. We're like, well, can you try it? No, we've never seen anything this works. SNMP, which is a technology that a lot of this equipment used to talk so complicated. I don't want to set it up. I'm like, no, no, but we've like, we've done all that. Like you don't have to lift a finger. I don't believe you. I remember getting to actually heated arguments with customers over or prospects at the time, but like, works. MSPs. 

Pablo Srugo (29:39) 

These are MSP prospects. 

Alex Hoff (29:40) 

Yeah. Because they were just so used to such a labor intensive tools, more the Swiss army knife, the toolbox approach versus an out of box experience. They called bullshit on us. I'm like, no, just try it. And It worked so well that I coined this phrase, I guarantee you'll learn something new about your network. And every time people deployed, I'd show them something or our sales reps would show them something like, Hey, did you know this? They're like, no, I didn't know this. we got our, so let's just recap the timeline. 2011, late 2011, we, found, we, we founded the company, got going 2013. raised capital. So we now have a strong thesis of what we're going to go execute on. We didn't get our first customer until early 2015. So a long. Yeah, couple of years, burning money along the way and there's some tough conversations in our... 

Pablo Srugo (30:30) 

How many did you guys get the team to? What kind of burn were you doing at that time?

Alex Hoff (30:33) 

I think we were 30 people. 

Pablo Srugo (30:35) 

Just rough math. you probably... I mean, that 6 million is like two and a half years of runway. Is that more or less accurate? 

Alex Hoff (30:41) 

Something like that. like that, right? 

Pablo Srugo (30:43) 

Yes. By the time you get your first customer, you're on the... looking at the 6 -12 months... 

Alex Hoff (30:49) 

We're on the ropes and we get our first customer and it's like 200 bucks and you start to get a couple more. It took us from April, 2015 to August, 2015 to go from one to 10 K. It was brutal because it was like 100, $200 deals a month. So, you we, we now had a lot of customers and that part of the business was growing, but like, wasn't generating enough cash to run the business. 

Pablo Srugo (31:09) 

So, the value to these customers was fundamentally like, Hey, MSP, you've got a bunch of customers. You need to make sure that everything around networking works properly. And this product lets you have the visibility that you need to do that. And it's really easy to use. 

Alex Hoff (31:24) 

Big thing is they actually had no idea what the network looked like. They had no idea. Because just imagine you're a service provider, you walk into someone's organization, you walk into the local law firm, you're like, hey, we want to manage your IT. Great. You ask them what infrastructure they have and they're like, I don't know. That's what we're hiring you. So they would use all of it to actually discover the infrastructure because we'd focus so much energy on that out of box experience. They use the tool. to do that initial discovery, that inventory, understand what was there, discover things that they didn't even know. Like, man, there were some awesome stories of people poking ceiling tiles and finding switches hidden in this ceiling tile so they could make a long run. But the customer would never even know that was there because you couldn't see it. 

Pablo Srugo (32:10) 

And the downside to not knowing is if there's a problem, diagnosing it just gets much harder,

Alex Hoff (32:15) 

 You can't manage what you can't see. And so this whole concept of see, tell, do was starting to resonate. We had repeatability. had demand gen messaging about network mapping and discovery that was starting to really, really resonate. You know, our conversion went from zero to not zero and our demand gen motion, we started building a BDR. So now we're at 10K a month. We needed more money. We felt like we had something as whole. Not, call it a pivot, but a refocus from selling to internal IT teams to managed service teams was good. It was working. It was repeatable. It just wasn't scaling. And so largely, we double down. And this is Mark's story to tell. But I remember he was in a meeting with our investors and he goes, this is where you test your metal. This is the fun part. And the investor's like, my God, no, this is not the fun part. This is not what I mean for me. You know, Mark's an entrepreneur's entrepreneur. It's a hundred million or zero. Like there's no binary. There's only a binary outcome in his mind. And that's what made working with him so amazing. Cause it was not like, let's hedge. let's just slow down. It's like, no, no, no, no, no. Don't lift. Keep your foot on the gas. We're going to figure this out. The two of us, or I would say all of us, all the management team, we had conviction at this point. We knew there was something there. We just had to increase sales. In our heads, it was like 10K, no problem. This is repeatable now. There's a huge enough market. There's enough tailwinds here. We're going to figure it out. The metrics weren't very good. So we did the classic friends and family, raise a little bit more money. stretch it out just a little bit further. And we got to a hundred K about a year later, a month. 

Pablo Srugo (33:57) 

Okay. How much more money did you get? Did you bridge there?

Alex Hoff (33:59) 

 Don't remember. Probably shouldn't say cause I'll get it wrong, but it was enough, enough to just stretch it out. During those times we were, we were going to every conference we could afford. We were doing the classic thing of like, what's the cheapest flight? Can we share rooms? don't stay at the conference, stay somewhere else. But we would go into these conferences and again, we'd have the booth app, we'd have the screen with the network map. And people say, well, how long does it take to deploy? I'm like, I don't know, like five to 10 minutes. They're like, nope, don't believe you. I'm like, no, but true. It was such a leap for people to believe that this actually worked.

Pablo Srugo (34:37) 

Did you test strategies or find ways to get people to believe faster?

Alex Hoff (34:40) 

 Yes. So, and that was where the phrase, I guarantee you'll find something new, this is worth your time. people thought it was a replacement for their existing tool. So we had to really refine the messaging. We compliment your existing tool where the RMM is really good at your windows and desktops. We only focus on the network. And so being a little bit more binary to say we're friend, not foe, it's incremental dollars. You're not switching because the cost of switching would be out of this world. So we didn't even build those capabilities to go manage the windows devices. And so we spent a lot of time working on messaging and at the time, I was running sales as well as product manager, it was a really weird role, but was really great about that idea of being on the phones, closing deals. When someone brings you a problem, you're not listening to a recording later or listening. 

Pablo Srugo (35:28) 

That's right. The feedback loop is super quick.

Alex Hoff (35:31) 

 The feedback loop is instantaneous. I would say, okay, great. Then I'd go to our sales guy, his name was Rob at the time, and he'd test this messaging now. Talk about this feature instead. Talk about it this way. And then he would pound the phones and do his thing. Now it like, was a force multiplying effect. So it was like, at one point it was like four or five of us squeezed to one meeting room in one of our offices. we were an old Blackberry building, five people. was like, it was like a sweatshop, just pounding the phone, zoom meeting or not zoom meetings back in the day, but like whatever the screen sharing tool we had at the time, just closing deals and 2K a month deal was just like, my God, this is unreal. And you think about that in the SaaS world, it's it's only 24K ARR. Like that what did you do? Not that big a deal.

For us, that was a needle mover. We started to get more and more of those. 

Pablo Srugo (36:18) 

And you went pretty quick. mean, I'm thinking about like from, you know, one k to 10 K in three months. Fine. But then from 10 to a hundred in a year, it's almost like zero, you know, zero to a million in a year ish, which is kind of that top decile. 

Alex Hoff (36:30) 

Except for the first three years. Yeah. So that was, that was the thing, right? Like investor patience was wearing thin because early 2013, we have our money. We're building, we're building, we're building. doing demos, free trials, like we just want to get some users to try and get some feedback. Like that from launch to first deal was way too long. I think that's something that when you look back, like what we would, we have done things differently. Yeah. You needed to learn and that's how long it took. And in a space where we were competing against some pretty mature vendors in the IT space, at least it was, it was tough slog. It was a lot of features, at least in the MSP space, there was really nothing to compete against. And so that  gave us the freedom almost to be able to put something out there and say, Hey, this is good. It's way better than what you have. I know it doesn't have everything you got to buy in. You don't have a solution. This problem will give you the solution. Here's the roadmap. We're going to execute on it as opposed to trying to rip out someone's existing tool. That's always just, just so

Pablo Srugo (37:33) 

 by the way, I don't know whether this is a stupid question or maybe you got this question back then, but like, did you worry you'd run out of MSPs? Like what was the market size of MSPs? back then when you were starting.

Alex Hoff (37:42) 

 Yeah. Everyone uses the number 30 ,000 MSPs or they used a hundred thousand MSPs. We don't know where those numbers come from. You ask people in the industry today. I don't really know if there is an actual number. There was enough. We had done enough research that research was validated by other third parties. We had talked to other companies in the space. It was a big enough market. There was a notable transaction where SolarWinds acquired Enable, Canadian company actually. Enable was out of Ottawa. And solar ones in Texas, they acquired it. And that was a bit of a, Ooh, interesting moment. There was another big acquisition in and around the same time of us like really going after. So we're in the 2015 to 2016 range. feel, but I have to check the dates. company called GFI was acquired or went public and they split off TeamViewer, which is wildly successful. There was a lot of activity in that space now. So we, we saw momentum. We had created partnerships with a company called ConnectWise, which built the ticketing system and the, and the desktop windows, desktop management. So we were, we were able to create a relationship with them to. Co -sell. And that was, that was a big moment too, to accelerate this because now we were anointed. Hey, it's, this is a friendly product. They're not trying to go after you. They're going to try and sell with you. So we went to all their events and they were really, really helpful. 

Pablo Srugo (39:00) 

And do remember what the ramp looked like after that? Like you go from 10 to a hundred a year. Do remember what it took to get to like, you know, a million a month or whatever?

Alex Hoff (39:08) 

 Yes, because we have this tradition as part of our, as part of our Auvik way, we have this tradition. We celebrate orders of magnitude, one, 10, a hundred, a thousand of some, some event. And, for MRR, we celebrated, one K of April in 2015. we share a glass, a little toast of baby duck, which is sparkling average. It is not the best sparkling wine. No one really knows the origin story of the baby duck, but the way I remember it, he was in our fridge at our office. Don't know how it got there. And when we had our first win, we opened it up and there that became our tradition. that's great. So yeah, I have, in my office at home, I have the baby duck bottles, for the MRR milestones. And so yeah, one K MRR was April, 2015. 10 K was August, 2015. A hundred K was June. 30th, 2016, and then a million MRR was November, what looks like 2018. That was pretty fast. And I would say we took the, what's the Salesforce book? Predictable revenue. We took the predictable revenue model and we took it to heart. Talk about like engineers trying to engineer something. Mark as an engineer is like, we're going to engineer sales. How many leads do we need? How many BDRs do we need? How much demand, gen dollars? Everything was a formula. So you pour money in at the top, work happens, leads come out, dials are made, meetings are booked, trials are done, wins are happening, and then the organic growth of the MSP space. So

Pablo Srugo (40:43) 

 And I have to ask, did you hit the next order of magnitude, the 10 a month?

Alex Hoff (40:48) 

 Not Not yet. Still working on that one. 

Pablo Srugo (40:53) Coming soon Coming soon. Love it. We'll stop it there. That was a fantastic, fantastic story. I was talking to things, Alan from Clipfolio that said you know, product market fit, like there's a product and there's the market. In your case, you said it wasn't really a pivot. And I would agree. The product didn't seem to change either at all or not too much. What changed was, was the market and just the market segment can have such a impact on that market demand, that market pull, because the needs all of a sudden are different, even for the same product, even in somewhere that's so adjacent, so close. That was pretty fascinating. But let me ask maybe just the last two questions. One we kind of touched on already, I'll ask it anyways, which is for you, When was the moment when you felt like you had true product market fit? 

Alex Hoff (41:33) 

Definitely, there were some times where I thought I'd like, know, somewhere between the one and 10 K, like, is this going to happen? But there was a moment in the Orlando airport security line, just as we wrapped up the first, I think it was the first Connectorize trade show. They're like, there were some guys, they were just chatting. They're like, Hey, did you see that purple vendor? They had this networking thing. Like that was by far the coolest thing I've seen at the show. And we were like, Hey, that's us. We were standing right behind it. was like, there was unsolicited feedback. One of the things I'm quite good at it is spotting a pattern with one or two data points and being able to project to the future. And I was like, yeah, that we're going for it. We were on a high. And then it's, that just started to repeat and repeat and repeat at every trade show we went to. So I remember that security line story quite well. 

Pablo Srugo (42:21) I 

mean, I just love that moment of when you have. what is always like an idea in your mind of the sort of product you're going to build, the value you're going to deliver, and then to see the reaction of either customers or prospects who are like in full agreement. it's kind of when that idea becomes reality. And I could see that moment just being very impactful and obviously kind of ingrained in your memory. And so then the last question is, if you could go back and maybe even now, like I know you work with a lot of founders, like what do you find is like the most common piece of advice you tend to give out?

Alex Hoff (42:54) 

Be bold. we talked about, you my jump to do this was what's the worst thing that can happen? Give up, get a job. Like you're a highly employable. And in fact, even failing it's actually a good thing in the sense that you have learned so much and know when to pull the plug, know when to move on. Like that shows such strength of character. So, you know, I talked to people, it's like, be bold, put enough resources on it, make it a real good, make a go of it. And so if you're going to pursue something, Pursue it, know when to kill the idea. Like we killed selling it to IT market. Don't spend your years trying to tinker like just go. Go as fast as you can as reasonably possible. I'm not saying blood scale, but be bold.

Pablo Srugo (43:36) 

 Would you tie that to focus? Because I often find one way of not being bold or one way of hedging is this kind of not unfocused. Nobody thinks they're unfocused. Everybody feels they're focused, but it's like you do a bunch of things. In case these other things don't work.

Alex Hoff (43:51) 

 no, no. Do one thing, do it well, then move on to like be single threaded. Do one thing really, really well. Then you can add a second thing. It's like, you know, as a company we've matured, we sell now three products. Like that's different. We're at a different scale of our business. In those days, it was one thing, take it or leave it.

Pablo Srugo (44:08) 

So I know you work with a lot of founders now. Like what are some of the most common pieces of advice you tend to be giving out these days? 

Alex Hoff (44:15) 

So other than being bold, I would say discipline is really, really important. At beginning of this podcast, talked about, I had a child. I then subsequently had a second and a third child. And one of the promises I made to myself was I'm going to be there. So there was like not a day that I didn't leave the office at 5 PM. This is when we still worked in an office. I was home every day, no matter what, unless I was on the road for a trade show. But even then I would take the worst flights to get in and out. I wanted to be there. I wanted to be present. And so doesn’t mean you can't work really hard? Doesn’t mean can't jump back on the computer at nine or 10 and burn it till two in the morning if you have to, but being present and creating that discipline, success isn't that important. Like your family is. So I think that was, that's a huge piece of advice and that discipline actually allows you to learn how to delegate and learn how to let go of things and prioritize. Cause there's only a finite number of hours in the day that you can focus on your job. You have other things to do in your life that are more important. 

Pablo Srugo (45:15) 

Well, there's that classic quote that comes to mind like constraints set you free. And it's almost a theme of this episode, because like we mentioned it even early when you're thinking about the solutions you want to start, you start with these constraints. And I would argue they helped you craft what you ultimately crafted. And this is an example of the same thing, which is when you say, I'm not going to work these hours and there's exceptions to everything, right? But like, I'm mainly really going to only work these hours. It forces you to think much harder about the sorts of activities you're engaging in, because you don't have all of the time in the world. Same with the six months you gave yourself to launch the business. was another huge constraint and it adds momentum. adds urgency. And like you said, it adds discipline to it all. If you've listened to this episode and the show and you like it, I have a huge favor to ask for you. Well, it's actually a really small favor, but it has huge impact. But whichever app you're listening to this episode on, take it out, go to Prada Market Fit Show and leave a review. It's going to help. It's not just going to help me to be clear. It's going to help other founders discover the show because the algorithms, whether it's Spotify, whether it's Apple, whether it's any other podcast player. One of the big things they look at is frequency of reviews. It's quantity of reviews. And the reality is if all of you listening right now left reviews, we would have thousands of reviews. So please take literally a minute, even if you're just writing like great podcast or I love this podcast, whatever it is, just write a few words. Obviously the longer, better, the more detailed, the better, but write anything, leave five stars and you will be helping me. But most importantly,  many other founders just like you discover the show. Thank you.