A Product Market Fit Show | Startups, Founders, & Entrepreneurship
Every founder has 1 goal: find product-market fit. We interview the world's most successful tech founders on the 0 to 1 part of their journeys. We go deep with entrepreneurs & VCs to provide detailed examples you can steal.
We want to understand product-market fit better than anyone on the planet.
A Product Market Fit Show | Startups, Founders, & Entrepreneurship
He quit his cozy Google job & founded not 1 but 2 unicorns— then grew from $1M to $12M ARR in 2 years. | Ashutosh Garg, Founder of Eightfold AI
Ashutosh is one of those rare founders who founded not just one, but two unicorns. He worked at Google for 4 years, left and started Bloomreach, which was last valued at $2.2B.
Halfway through that journey, he left to do it all over again. He started Eightfold AI which is the one we're talking about today. In 2021, he raised $220M from Softbank at a $2.1B valuation.
When he left Bloomreach, he didn't even have a clear idea of what he was going to build. He just knew he wanted to have more impact and go from 0 to 1 again.
It took him about 2 years to figure it out— then he grew from $1M ARR to $3M ARR in a year & to $12M ARR the year after that.
Why you should listen
- Why founders need to validate ideas with an open mind to not have tunnel vision.
- Why even unicorn founders don't get it right and often need to pivot to success.
- How to address problems that are not just today problems, but likely to be problems for a long time.
Keywords
unicorn founder, Bloomreach, Eightfold, product-market fit, pivot, HR space, digital marketers, talent, hiring, market need, scaling
Timestamps:
(00:00:00) Intro
(00:01:41) His first unicorn - Bloomreach
(00:05:22) Starting Eightfold AI
(00:08:50) Not Marrying Yourself to One Idea
(00:11:55) Finding real customer problems
(00:14:46) Solving Today's Problems vs Future Problems
(00:16:47) Hiring From Already Rejected Candidates
(00:22:50) Fundraising
(00:24:40) Building a V1
(00:27:00) Pivoting and then Reverting Back
(00:30:43) First Customers
(00:32:59) Finding Product Market Fit
(00:35:04) One Piece of Advice
Pablo Srugo (00:00.206)
Today I spoke with Ashutosh who's one of those rare founders because he didn't just do it once. He made it happen twice in a big way. He worked at Google for four years, left Google and started a company called Bloomreach. Bloomreach has gone on to raise $450 million. Halfway through that journey which started in 2009 and by 2016 Ashutosh decided to leave to do it all over again. He started a company called Eightfold which is the one we're talking about today. That company has gone on to also raise $400 million. The funny part was that when he left Bloomreach, he didn't even have a clear idea of what he was going to build. He thought he was going to do something in the health space and he ended up totally pivoting and doing something in the HR space. It took him about two years to really figure it out, but once he did, he found true product market fit and he scaled from a million in ARR to 3 million in ARR the year after to 12 million in ARR the year after that. 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, Ashutosh, welcome to the show.
Ashutosh Garg (1:13)
Thank you. Super excited to be here, Pablo.
PABLO SRUGO (1:14)
You know, it's actually really rare to start a company that ends up raising a hundred million dollars in venture capital or more. It's even more rare to do it two times. So maybe we can kind of start there. Before Eightfold, you had a company called Bloomreach. And as I understand you, you left that company, that company's gone on to raise like over $400 million. You left that company to start Eightfold. So I'm curious, what's the story there?
ASHUTOSH GARG (1:41)
So I started Bloomreach with my co -founder Raj back in 2009, was there for roughly seven and a half years. And in 2016, left that to start eightfold. Key idea was that now I have a good succession plan in place. The company is doing well and that gives me an opportunity to try out new things. And that is what led to start of eightfold.
PABLO SRUGO (1:58)
What was Bloomreach?
ASHUTOSH GARG (2:00)
Bloomreach started out as a company in the organic search, natural search space for digital marketers. How do you improve the traffic to your website? So coming out of Google, working in the search quality team, I kind of knew the challenges that these marketers were facing. They were constantly struggling to try to figure out what they can do to make their website show up in Google search results. There were a lot of black hat SEO out there. There were a lot of misconceptions, misinformation. So I was like, can you build a technology solution over here that can help these marketers do the right thing in a scalable fashion? And that is what led to the start of Bloomreach. So it was a solution for digital marketers.
PABLO SRUGO (2:40)
And so I understand that by the time you left, had kind of succession planning and things were a little bit more stable. What drove that decision? Like what was happening at the time? Because -and you're not the first founder to do this, but at the same time, I'm always like, when you start a startup, your goal is for that start to work, to get really big, to be successful. And so I'm always shocked, like when that happens and then the founder's like, let's do it again. You know? So what kind of was happening? What mindset were you into at the time? And why did you, why did you end up doing it?
ASHUTOSH GARG (3:09)
Mainly it was driven by I wanted to have a different kind of impact on our society and building a business, helping digital marketers, driving more traffic, improving the ROI on digital span is important, extremely good, but still you are few hops away from impacting people directly in a positive fashion. And I started thinking about what can I do in the second part of my career, my life, that will be a lot more impactful for the society. And start after exploring education and health care, what I realized is that employment is a single most important thing in our society. If I can help people get a better job at employment, I will have a much bigger, more fundamental impact. And that was the reason why I left bloomreach to start Eightfold.
PABLO SRUGO (3:51)
And you were having these thoughts like while you were still running and being the CTO of BloomReach?
ASHUTOSH GARG (3:57)
Correct.
PABLO SRUGO (3:57)
What stage did you get to in the development of Eightfold before you took that leap?
ASHUTOSH GARG (4:03)
I think it's always a challenge that when you're working as the CTO co -founder, you really don't have any bandwidth to do much. So it was just a vision that I want to do something over here. You wanted to have a clear separation that, okay, I'm 100 % devoted to BloomReach and now I'm going to leave and start something. But it started all after I left BloomReach.
PABLO SRUGO (4:23)
I just have to ask, how did the discussion go with your co -founder? And you're like, hey, I want to do it again. I want to go from zero to one again.
ASHUTOSH GARG (4:31)
I think it was a heads up over a two year period. So it wasn't like one day you wake up and you go and tell that person you're like, okay, at some point I want to do something else. Let me think about that. Let's work together towards building a sufficient plan, solidifying the company, having certain metrics in place that will say that I'm ready to leave and the company is ready to keep on executing without me. So as a simple example, right, we raised our funding just before I left and made sure that the new investors knew that I'm going to leave as part or a few months after that funding round. So all these things have to be in place. The right funding has to be there, technology has to be there, customers have to be in a good place, a team has to be there. And it's a partnership. So you're working with the co -founder to ensure that all those things are in place so that as it manually things will be get handled properly.
PABLO SRUGO (5:19)
what was your first step like after that happened, after you left with Eightfold?
ASHUTOSH GARG (5:23)
So actually when I left Bloomreach, I left to start something in the healthcare space, not in the employment space. So the good thing is that as a second time founder, you already know number of investors. So was constantly talking to them, engaging with them around what they are seeing in the market. I had some of my ideas in the healthcare space. So I was spending time with healthcare professionals.
PABLO SRUGO (5:44)
What was the main idea that you were chasing in health?
ASHUTOSH GARG (5:47)
So it evolved a lot, but eventually it was around enabling second opinion for people with severe conditions, illness. And instead of having a second opinion through a network of doctors that you have hired or partnered enabling it through a network of hospitals that we already trust. So for example, My General in Boston to Cleveland Clinic to Mayo Clinic to Apollo in India and so on and so forth. So I spent time with all these hospitals, Stanford Hospital, met a number of folks. The second thing is today the buyer of healthcare benefits is largely HR departments of large organizations as they are self -insured. So I was also spending time with the HR benefits leader at Adobe, Google and variety of other large companies. And as you can see, I was spending time with these HR leaders. And what keep coming back to me was that healthcare is important, but our bigger problem is talent. So can you help us with talent? And that will help our organizations much more.
PABLO SRUGO (6:43)
This is really interesting to me because it's really easy when you have an idea already in mind, even a space, like pretty general idea that you had to miss those other cues, because you might go into these discussions to HR leaders and right away, you you're talking about healthcare and the discussion gets boxed in and nobody even has the space really to tell you, yeah, this is important, but actually talent is more important. And how did you set things up so that you were actually able to listen beyond even the space that you thought you wanted to tackle?
ASHUTOSH GARG (7:14)
Excellent question. And I think it's not that people will not share that with you. You have to just look for the cues. You have to have an open mind. I mean, this podcast is all about product market, right? So you need to have a conviction in your idea, in your vision but at the same time, you need to be vulnerable and be open to expose, right? So I say that almost like 80 % is conviction and 20 % you are going over there with an open mind to listen what they can tell you that could be of interest, right? Anytime someone says no, as a founder, as an entrepreneur on one hand, hurts a lot, it's not about your idea is good or not and how do you convince them. Key thing is that what are they telling you and what is the truth behind that? And is there any signal that you should pay attention to.
Especially in the early days, if you just focus on convincing the other person, I mean, you have not achieved anything. I mean, some people will just say that, okay, fine, who cares, right? Actually, your idea is good, but that's not helping you. What you have to do is keep probing, why are you not liking it? What are the challenges you are seeing over here? What else is top of the mind thing for you? So go in, be inquisitive, be curious, be open -minded, but at the same time, have a clear idea that this is what I'm doing right now, this is what I'm thinking about, right? And at any point in time, you're getting a variety of signals. And that's a tough balance between constantly thrashing, constantly switching ideas, to being too dogmatic about your own idea and not paying attention to what market is telling you.
PABLO SRUGO (8:33)
Do you remember, I know this was eight years ago, but do you remember any of the conversations, especially the ones that, you know, where you walked out of the room and started to rethink not so much the approach, but the idea, right? And all of a sudden started to think about, huh, maybe it's not about health. Maybe there's an even bigger problem to solve here.
ASHUTOSH GARG (8:52)
I think in this ideation phase, especially when I'm in that ideation phase, right? What I'm doing is I'm constantly thinking about new ideas and not marrying myself to one idea. Now at any point in time, one idea is at the top of the list, the others are not. So that's what I say, you are constantly paying attention, but then there are five other ideas. You're constantly calling people about four other ideas as well, or five other ideas, not just your primary idea. So for example, when I was talking to my investors, these people that I have known from the past. Like Ashu, we like healthcare and we like you, but you know healthcare is a tough space and with all kinds of challenges we really want to get into healthcare. Now, what was interesting is that almost all of them said that if you really want to pursue healthcare, we will invest in you. But one of the things they said, for example, was we will invest in the startup because of you, but not because of healthcare. I'm like, okay, here is a signal. So let me just keep paying attention to these signals. Give me a little bit time tell you, guide you over next two, three months. And I'm not to be a two -year window. I mean journey either because then you just are thrashing constantly going back and forth you're not making any progress right. You're not trying to condense everything in a week's period either. So give it three four months time keep listening to the market keep listening to what people are telling you. I think one thing over here at least that what works well for me is not if you have one idea then more often than not instead of being excited about the idea you have fear of not being able to pursue anything and that forces you to keep doing what you are doing. If you three four ideas on day one then you're not really married - more open, more flexible, you always have like, okay, I can figure out something else, right? And then see very quickly, try to have one idea above another to die down.
PABLO SRUGO (10:27)
I like that a lot, especially because lately I've been thinking about this, know, founders are almost always on a spectrum. I don't know if you'll agree or not, but at least this is how I think about it, which is excitement on one side and fear on the other. And there's always things to be fearful of and things to be excited of. You'll oscillate, like there will be moments where you'll be much closer to fear than excitement and you go back and forth. But I think as a founder, finding ways to most of the time be much closer to the excitement side than the fear side and operate out of excitement less than fear is a great way to just keep moving forward because this stuff's hard, right? And this stuff's full of unknowns. And so there's always two ways to look at it. And I think like that's what ingredient in the early days. And it's true. Like when you have one idea, I remember the last thing I wanted to go was going back to the drawing board, back to square one, back to having no clue what we were even going to build. So when you're operating with not one idea, but let's say a priority of ideas, three, four, five, whatever it is, and that doesn't need to be a hundred, it kind of frees you. So that actually, that makes a lot of sense to me.
ASHUTOSH GARG (11:25)
Yeah. No, I think I call it, you have to have a healthy balance of optimism and pessimism. And in fact, I was recently advising someone, one of the founders about their idea. And my ask them was, can you put a slide together around why your idea is going to fail? But also then how are you going to address and solve for those challenges? So it's not about hiding away from the negatives, but you have to tackle them head on, address them and move forward.
PABLO SRUGO (11:50)
And so back to those conversations, you're hearing high level, like, I mean, the really high level thing is talent is a bigger problem. What about talent was a problem? What were people telling you?
ASHUTOSH GARG (11:59)
So great question. And at that time, the biggest problem was I'm not just not able to hire the right talent quickly. Hiring was a big challenge. But now what is interesting is that what market is going to tell you is today's problem. Market is not going to tell you where the problem will be in the long term. And that is for us to decide and figure it out right. So as a founder, you are making a bet on the market, you're making a bet on the vision and if the vision were to turn out right, you're successful, if not, you're not. So everyone was telling me that our challenge is we are not able to find people. And as part of that, we are struggling, we are going to LinkedIn, we are going to different data sources, we are reaching out to the people, not enough people are responding. So hiring is a big challenge for us. The insight that we had on day one as I was talking to these people was... To hire an individual you are reaching out to or engaging 100 plus other people. So if you're a company of 10 ,000 employees, you have already engaged with a million people and that million is equivalent to roughly the working population of Bay Area. So you have reached out to and talked to most people in Bay Area. So is it that you constantly need to keep reaching out to new people or you need to build a way to engage with a talent that you have already interacted with in the past? And what can I do to help you solve that problem? As you start thinking about it. That is today's problem. The way we do the work is changing and it has been changing for a while. Like back in the days when I was leaving my first job from IBM, it was like, how can you leave IBM? In fact, how can you leave a job once you have a job, you stay there for the rest of your life. That's right. But today, if someone has been in the company for more than two, three years, we start asking why. Is everything okay? You cannot find anything else outside. But there's a pattern over there. And the pattern is people are going to leave and it's okay for them to. their skills may change. The company's own requirements will change. And if you're not executing around those skills, you're not developing those skills, you will constantly face this challenge, this attrition. The employment contract, the way we think about it, is also evolving a lot. I mean, people are doing lot more freelancing. People are doing a lot more part -time gigs. Even many people have multiple jobs at any point in time now. So that is what shaped the thinking of 8 -fold was, yes, there's a great problem to be solved today, but there are bigger problems that are going to come. over time and can we focus on building a company that will start from sort of grace, but also shaping the market for the future.
PABLO SRUGO (14:19)
And how do you like balance that? Cause it's a, a, it's a fair point. I mean, it's true that the customers want solutions to problems they have today. It's not their job to think about what problems they might have in five years and then communicate that to you. So you can kind of go ahead and solve it. But as you start crafting the vision of the company, do you, are you kind of constantly having conversations with HR leaders about
your ideas of where things are going to go, or do you just kind of leave that on the side and focus on solving their today problem, which is this, you know, how do I hire faster?
ASHUTOSH GARG (14:50)
I think you will have those conversations, but people are expecting you to be the visionary over here. And like here's a very simple example. During COVID time, take late 2020, there were many companies that were coming from all over the place, right? And growing extremely fast. And what was the driving force behind these companies was people have to work from home. COVID is out there, you can't go meeting people in person, you can't go to the office. So let's build a solution to solve that problem. Makes sense. There's money to be made over there. But one day the COVID is going to reduce. One day the life is going to get back to normal. And on that day, will your solution still be, is going to be relevant or not? And if not, can you still build a company solving today's problem with a path towards solving the problem as the world is changing, going to evolve? And thinking about it, are you solving?
today's problem because there's some market dynamics that is happening today that may not be relevant tomorrow. And I think that is what I mean by like where the world is today, where the world is going to be 10 years from now, five years from now. And why that is important is for if you have a reasonable idea, let's just assume for a second, right? For any reasonable idea, you can build a business that will be five, 10, 15, $20 million in revenue. Most markets are large enough for that, but one day you want to go public, you want to have a large company, and at that time you will need a revenue of a billion dollars. and to be able to have a revenue of a billion dollar the market has to be at least 5 -10 billion dollar and is the market going to pay 10 billion dollar market 10 years from now and if not then how can you succeed so people get to today someone is ready to write a 10k check for me so it must be a good market and let me start something over here these three people said yes or to your original point right in the early days you have to be very paranoid yes you need to look for positive signals but you have to pay attention to the negative signals as well and it's not about negativity it's about solving the problem. So all those negative signals are saying that what are the things you need to watch out for?
PABLO SRUGO (16:41)
So as you kind of develop this vision, I mean, you decide to go after this problem around talent, you develop this vision, what do you decide to build? Like, what do you think is kind of your first solution at that point?
ASHUTOSH GARG (16:54)
I think the approach that I have taken for both startups was, and frankly, coming out of Google in 2008, and then coming out of Google Meetings out of 2016, both I was confident personally and...investors and everyone around me was confident that technology can be solved. We can build a product and technology. The key thing is, is there a true business problem over here or not? And do we have a way to tackle that problem or not? So what we did was we went and talked to numerous CHRs. So caught up with 50 CHRs of many different companies. And our simple question was, today, there are a lot of candidates that you have engaged with in the past. Like every time you apply to a company, you get a message saying that, thank you, Pablo, for applying. We consider your application, we don't have an opening for you right now, but someday when we have an opening for you, we will reach out to you, right? But no one does. We call it the CHROs. The very first question was that if you were to take all the data that you have collected over the years, clean it up, organize it, and identify among those people, from those that set, who are the people who are relevant for openings in your company today, and build a framework to reach out to those people automatically and help get them engaged. Would you be interested in this? And unanimously, answer was yes. That sounds very interesting, very exciting. Now, of course, some people were, I don't know what these candidates are doing now. I don't know how many candidates do I have in my data set. I don't know if they will respond. And those are the things you need to sort around. But that was the initial idea, which was a rediscovery of talent.
PABLO SRUGO (18:25)
By the way, I'm just curious on this because I remember reading a book. I think it was How Google Works. It was some book about the workings of Google. And I remember part of it - And this might be a book that is before, it might be after, sorry, I don't remember exactly when I read it. So it might be after 2016, but they spoke about how one of their big discoveries around hiring was exactly this. was like, it turns out the probability that somebody that applies gets hired is I'm just going to make a number 1%. But the probability that somebody that we've interviewed, but we rejected gets hired is like 2 % or 3%. So like, it's actually a much better pool than the overall pool. And that was something that I don't know if that, if you had seen that at Google or if this was maybe even actually after eight folder or completely coincidence and unrelated.
ASHUTOSH GARG (19:14)
So I'm a person who tries to generalize a lot and look for signals everywhere and learn from the experiences. So when I was at Google, I probably interviewed like a thousand people. So I was constantly interviewing hiring talent. So it was kind of used to that. And then even at Bloomreach, right. And actually, even if I were to set that aside, Pablo, right? Here's a very simple thing. Even at Google, you may think it's a very hard company and everyone is dying to join there. Google, there are enough people who get an offer from Google and say, no, there many times you get good talent who apply to you, but you don't just don't have an opening for them. yeah, the rec just got filled. So I'm saying it's not even the people who got to get rejected. There are enough people who have rejected you for sitting in a database. And two years from now, they might be ready to join you back. And sometimes you reject people for that specific role at that moment doesn't mean that they are not good people. there are very numerous factors why someone may not have joined on that day, because you said no, they said no, the wrong fit, wrong timing, not compensation ban, any number of reasons.
PABLO SRUGO (20:17)
And by the way, in these conversations that you you got this unanimous like, yes, this would be interesting to me. What else did you ask? Did you talk about like pricing? Did you did you get another sense? Because it's, you know, and I asked this because at a really high level, it's easier for customers to say yes to high level things, right? Like, hey, is this a problem? Yeah, I guess it's a problem. Like, would you use this if you had it? Yeah, I would use it. And then do they actually use it? Do they actually pay for it? Like all these other things. So I'm curious how deep you went to validating the business case during those conversations.
ASHUTOSH GARG (20:46)
I mean, we tried a little bit. To be honest, we didn't do necessarily a great job. That was my first foray as a go -to -market person also. And sometimes ignorance is not bad. There many things you don't know and you have to learn and figure it out, right? I think what we do quite a few times, we are not pegging the conversation to the ROI. See, I mean, even in this, right, I can go and ask that CHRO, how much are you going to pay? And at some level, CHRO is, I mean, if I'm in the issues, I'm like, okay, you tell me what is the price of your product. It's a demand and supply, right? Who can do for me in the cheapest, best fashion, right? Faster, cheaper, faster, better, right? Instead of that, question is, how much am I willing to pay for a good candidate? Today, most companies end up paying 20 % of the comp to hire the right person. Anytime in fact you're hiring contractor, you still end up paying 20 % over here. So for someone with a compensation of 200k- companies end up paying 20 to $40 ,000. So if I'm able to surface identify 10 good candidates out of which you end up hiring three, 50 to 100k is not an unreasonable amount to go and demand that customer. key thing is that see at any point in time you're talking to these 50 people some will be savvy, some won't be savvy, some will give you a low ball number, some will give you a high ball number, right? You don't have a product, you don't even have a company, they don't lose anything by saying, yeah, Ashu will pay you a lot, right? Or they may not get the problem completely or solution completely and they may say that no, I'm not going to pay you more than 5k, 10k. So yes, there is a signal over here, but you really need to have the pulse on the market like what is the fundamental problem you're trying to solve and what is the value of solving that problem? And if you do it right, then you can come up with a pricing strategy that will work over time.
PABLO SRUGO (22:26)
That makes sense. mean, it is ultimately about ROI. And in some cases, like in this case, it was actually the best when the ROI is clear in your face, right? So when there's already a cost associated to hiring and you can do it faster, better for the same price or for 50 % less or whatever it is, like that gives you a pretty clear yardstick of what the market is willing to absorb. Okay. So after these conversations and you get this kind of unanimous, yes, you're feeling there's something here, I assume. Do you now get to building or what is your next step at that point?
ASHUTOSH GARG (22:58)
At Eightfold, what we did, and actually at some level, we did the same thing at Bloomridge, is that now there's a space I want to be in. There's a problem I want to solve. I went and raised some money, got an initial team in place of four or five people.
PABLO SRUGO (23:11)
How much did you raise?
ASHUTOSH GARG (23:12)
Around $5 million.
PABLO SRUGO (23:13)
How much of that would you say was about the thesis? I mean, you kind of alluded to this earlier, and how much was it just about you and the credibility you already had, the relationships you already built with investors?
ASHUTOSH GARG (23:22)
I think both things have to come together. Ultimately, as an investor, you need to feel that is this the person who can solve this problem or not? And is this a problem that worth solving? And even when they say that it is about an individual, right? They are betting on this individual will figure out something over here. So if they need to pivot, they need to change directions, they will adopt according to the market what they're hearing. And one thing that I would say in hindsight, we did a smart, both in case of globe reach and in case of eight fold was, Have investors part of those conversations. The thing that you didn't, again, because of the past credibility that I had, it was easier for me. But when I went to Lightspeed, right? And I was talking to Peter. So what Peter did was Peter assigned a junior person from the firm saying, why don't you help Ashu set a few CHRO calls and see what comes out? So as I was building my thesis, Lightspeed was building their own thesis as well over here. So Lightspeed was part of those calls. So whatever I heard from those prospective buyers, light speed also had exactly the same thing. And so it was kind of a weird due diligence going on in the real time, right? As the process is unfolding. And at some point, their conviction is probably even higher than my conviction.
PABLO SRUGO (24:37)
Okay, so then you raised that round, you hire a team, and how did you think about, like, did you think through an MVP, kind of lean startup approach, or did you build in a different, kind of with a different mindset altogether?
ASHUTOSH GARG (24:49)
Always lean- Sometimes over years, people will complain, why didn't you build all these things? Why didn't you build a more robust product? Why didn't you build a more robust solution? Well, I didn't know what to build at that time. I was trying to figure out what to build, right? I want to conserve cash. I want to go as fast to the market as possible, right? We started coding probably on first September 2016. And by November and early December, we had a paying customer.
PABLO SRUGO (25:14)
So three or four months to a V1 and a paying customer. What was that V1? How did- What did you constrain it to in order to be able to ship something so quickly?
ASHUTOSH GARG (25:22)
It was largely a matching solution where the idea was that for your open requisitions and a database of candidates, for each person we can analyze what they have done in the past, what is because they have based on that we can understand their learning ability for the new set of things and use that to figure out who is the right person for which role in the organization.
PABLO SRUGO (25:42)
Really what you're doing, you're ingesting the database of candidates that they've already kind of gone through, talked to, have resumes, et cetera, and figuring out who might be good for the role. and you're surfacing up, I guess, a a list of names per role. And it ends there. Like at that point, they take it on, they do their normal interview process and they design, they designed whether they want to hire somebody or not. And how did you structure that pilot? Like at that point, did you start thinking about pricing? Did you do a pilot for free?
ASHUTOSH GARG (26:08)
In this case, all these were paid pilots. So actually not even the paid pilots, were like regular customers.
PABLO SRUGO (26:13)
And what were the results? Like how well, how well did that V1 work
ASHUTOSH GARG (26:16)
I think that is where I would say I tripped over. The product worked well. The customers were happy. We signed five or six customers between first December and 31st January. And I was talking to one of my investors and the person was like, too much success early on may not be the right, may actually be the wrong signal because these people probably know you and they are signed because of you. Customers also, right? Or not having a success as well could be a wrong signal. So while we signed five, six, very, very quickly, pretty much like out of the 10 conversations, five signed. I was like, this is working.
PABLO SRUGO (26:51)
And they're not trivial. I 25k a year, like we're talking about 150k of new revenue in a month. Like it's looking amazing.
ASHUTOSH GARG (26:58)
We didn't send anyone in February and March. I was like, okay, this is not working. We need to pivot over here.
PABLO SRUGO (27:05)
What had happened? Was it really just your relationships? People just believed in you and they're like, okay, yeah, sure. Let's do it.
ASHUTOSH GARG (27:09)
No, was I being this anxious founder. who was trying to move fast, but things just take time. So I kind of pivoted it to a new business model, a little bit slightly different product, slightly different setup. And in fact, I met Matri said, we are going to stop selling the product that we sold in the first two months. And we started selling a slightly different variant of that product.
PABLO SRUGO (27:31)
What were the key differences?
ASHUTOSH GARG (27:33)
The second product that we built was helping you manage the candidates that are coming from recruiting agencies. So the idea was that as an enterprise, you're signing up with multiple recruiting agencies and it's hard to manage all these agencies. They're sending the candidates, sometimes the other duplicate candidates, sometimes they send you low quality candidates, right, who are not matching their positions. So what we will do is we will be the layer. Agencies can submit the candidates to us. We can submit to the enterprises. Similarly, agencies, they have all these candidates they are talking to. They have a hard time finding the right enterprises to work with. So we're like, okay, if we can have the contact with enterprise, on the other side, we can have the contact with agencies, we become the marketplace of candidates.
PABLO SRUGO (28:11)
That's pretty different. I mean, you're obviously still in employment and you're still helping people hire, but it's quite different to work with agencies and kind of be this middle layer versus just the in -house existing database and kind of rematching, right?
ASHUTOSH GARG (28:24)
Exactly. So it was very different. We shut down the first, no, shut down, but because we had customers, the good thing was, but we stopped selling the first product. It was a hard guidance to the sales team. You cannot sell that. You're only going to sell this new thing. And in the second one, the pricing was on a on the usage base. You can sign up the contract, you don't have to pay us anything only when you start hiring but hire you pay us some money as a commission that you a percentage of the commission that you pay to the agency. Till October-November we was just selling the second product and we went and signed 100 plus customers for that as well. So in that sense that was working well but no enterprises excited to work with agencies because they don't like to write a 40k check. So it was a kind of a weird I mean dynamics where enterprises have to work with agencies but they don't like to work with agencies. some of that math.
PABLO SRUGO (29:12)
You, I mean, you signed a hundred customers, but it was all usage based.
ASHUTOSH GARG (29:16)
Money was not large. I think it was probably quarter million, half a million, something like that.
PABLO SRUGO (29:19)
Okay. Not bad. But yeah, something for sure.
ASHUTOSH GARG (29:22)
But as that was happening, what I kept hearing a little bit is there was still an excitement about our original product in the market. So by November, I realized that no, actually that was a mistake to stop selling the first one. We need to keep selling that as well.
PABLO SRUGO (29:35)
Maybe go deeper on that. when you're saying you're hearing excitement,
How was that happening? Customers were just asking you like, hey, what happened to your first product? Like, I want to see that again? Or how direct was it?
ASHUTOSH GARG (29:47)
Yeah, I don't want to work with agencies, but can you just help me with my own handling? I see. I don't want to pay per hire fees. I want to pay some sales subscription fees. I already have too many candidates coming in. I'm a hard startup, so I really don't need help with new candidates. I really need help on fair treatment and screening these people, right? And I'm like, yeah, I do have a product for that, which I'm not selling right now. But I did sell that product to a few companies who are still using it, By December of 2017, we went back to the old product and by think January of 2018, we shut down the second product.
PABLO SRUGO (30:20)
Incredible.
ASHUTOSH GARG (30:21)
I mean, you have to be just open to hearing what's going on. I think the part is be open to proving, proven wrong. Not everything will go as you wanted it to, but it's not about you. Don't take it personally, just really, it's about the product, technology at that moment, right? The market need. And if you align yourself with the market need, most of the things will work out
PABLO SRUGO (30:39)
And how did they work out? as you then relaunch the product in 2018, how did things go from there?
ASHUTOSH GARG (30:45)
We haven't looked back. have just gone well.
PABLO SRUGO (30:48)
Do you recall how many customers you signed in that first year or just how fast things took off?
ASHUTOSH GARG (30:55)
I think more than how many customers. So we did a few pivots in some sense, right? One was the production that we did. Second thing was initially, I mean, you started a company in the Bay Area. all your friends are in Bay Area, your network is in Bay Area, right? You start calling these people, you start selling into them, right? So you're selling to Bay Area startups. The challenge with them was they just didn't have enough people in their database. I mean, if you're 10 % company, you just don't have enough candidates, right? So all that you can solve for them is minimal. So it was like, okay, can we sell it to the large enterprises? So the second paper we had was instead of selling to the Bay Area startups, we started selling into large enterprises outside.
PABLO SRUGO (31:32)
And when was this?
ASHUTOSH GARG (31:33)
In 2018. What was very exciting was that the kind of customers we were able to attract, even in 2018, is a very small company, were some of the household names. I don't remember, but for example, we signed American Express of the World in 2018, 2019 timeframe. So very quickly, we were able to sign up some of the biggest brand names. And I think that has been unique thing about 8 -4 journey till date, is if you look at the brand names of the customers that we signed. I don't think there's any other company of our size, which will have so many Fortune 500 companies out there.
PABLO SRUGO (32:08)
And walk me through like, from what I see, I correct me if I'm wrong, but from what I see in mid 2018, you raised a pretty large kind of $18 million round. What was the basis of that? That like numbers based, like your revenue was already in the millions or was it more around just seeing some of these big logos jumping on board? Like, what do you think drove that round?
ASHUTOSH GARG (32:29)
So 2018 round was more driven by the conviction in the product technology as it was shaping up in early indicators, not the revenue. Then I think we raised another round in 2019 that was based on the revenue traction that we were getting. And I would say the first two, three rounds typically are based on the product technology market conviction. And the later rounds are more driven by the revenue numbers.
PABLO SRUGO (32:53)
Let me end it there. That was great to kind of walk through that journey. And let me just ask
the last two questions that we always end on. The first one is, know, for you personally, like when was the moment when you felt or if there is one, right? When did you feel like you had true product market fit?
ASHUTOSH GARG (33:11)
Let me answer slightly differently. I don't think I ever feel that I have a true product market. This market is constantly evolving. So it's more around do I have a conviction that I'm going in the right direction? And if I keep on evolving with the market, will have a phenomenal product and business.
And I would say that by mid 2018, late , 2018, it was clear that we are on to something really big over here. You can use a number of different indicators over here. One indicator is revenue. Second is number of customers. Third is are other people in your company able to sell your product without you? Fourth is what value those people are getting. Fifth is how many of those customers are renewing, buying more from you? Sixth is How is the rest of the market reacting to what you are doing? So I think there's a combination of all these things. More often than not in your gut, you know, whether you have the product market fit or not. Is this where you want to spend your life and more money and more resources or not? Right. And sometimes you are not paying attention to that part. So I think it was clear that with the kind of customers we were getting, the kind of traction we were getting in the market, how everyone else was talking about us, how different people in the company were able to sell the product, that we have something going on.
PABLO SRUGO (34:23)
And by the way, like when you did do that, kind of in 2018 went back on this full product, like how quickly did you ramp to like one or two or three million in ARR?
ASHUTOSH GARG (34:32)
I think in a year we went from roughly one, two, three to 12 and beyond.
PABLO SRUGO (34:38)
It's interesting. And this often happens, right? Like the beginning, I would not say it took a while, but it like, you know, had that little blip and then that false pivot and then, you know, you kind of get to that one, but then it's like three, 12. I mean, that's a pretty crazy ramp from then on. pretty exciting. And then last question is, if you could go back to, and this is, know, now you've had, because of Bloomreach and Eightfold, like, you know, decades of experience building startups, like what, and I know you talked to a lot of founders, so I'll ask it this way, like, what do you find is some of the most common advice that you give to founders who are in that early stage, who are finding in the process of finding product market fit?
ASHUTOSH GARG (35:18)
One is, are you solving a real market need or not? Are you in a big market or not? Don't capitalize on the short -term trend, but focus on the long -term things. And the last and the most important one is don't fall in love with your own product. Focus on, again, the market need and keep adopting to solve that problem.
PABLO SRUGO (35:36)
Well, Ashutosh, thank you so much for taking the time. This has been awesome.
ASHUTOSH GARG (35:38)
Excellent. Thank you, Pablo.
PABLO SRUGO (35:39)
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. Whichever app you're listening to this episode on. Take it out, go to a product market fit show and leave a review. Please. 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 the better, more detailed the better, 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.
