He raised $1.5M, hit $400K ARR in 9 months— but had to Exit Early. Here’s the top 3 lessons he learned | Rob Palumbo, Co-Founder of Outpoint

Rob founded Outpoint in 2020 to help marketers optimize their ad spend. He was a growth marketer and his founder a data scientist. He had team-market fit, a solid thesis, and paying customers. But when the recession hit and ad spend dropped, growth ground to a halt. Nothing he did could revitalize growth. Ultimately, he decreased expenses and exited. He was able to return some cash to investors, find a home for his team and keep the product going. 

You tend to hear about what happens to the best 1% of startups. Here’s what tends to happen to the other 99%.

Keywords

Outpoint, product market fit, startup journey, acquisition, growth marketing, venture capital, business strategy, lessons learned, entrepreneurship, market dynamics

Why you should listen

• Why a great team and thesis won’t always lead to success
• How things out of your control can completely change your trajectory
• Why you should build something that works in both up and down markets
• How to find an acquisition when things aren’t going well.

Timestamps:
(00:00:00) Intro
(00:01:13) The origin of Outpoint
(00:14:49) Outpoint's Runway in 2022
(00:19:21) Trying to sell your company
(00:26:07) Lessons Learned
(00:28:53) Almost Finding Product Market Fit
(00:30:23) Planning a Startup vs starting one organically
(00:34:30) Closing Thoughts

Chapters

• 1:13 The origin of Outpoint
• 14:49 Outpoint's Runway in 2022
• 19:21 Trying to sell your company
• 26:07 Lessons Learned
• 28:53 Almost Finding Product Market Fit
• 30:23 Planning a Startup vs starting one organically
• 34:30 Closing Thoughts

Transcript

Pablo Srugo (00:00)

Rob, welcome to the show, man. 

Rob Palumbo (0:01)

Thank you for having me, Pablo. 

Pablo Srugo (0:03)

Dude, so I'm looking forward to this one. I mean, we know each other a lot more than I know, you know, my typical guests, like I usually meet them, you know, for the first time on this call, maybe a pre-call before in our case, we made a small investment in Outpoint, your company. Ultimately the company didn't work out, but you know, you raise a million and half dollars, you, you were actually on the path to a million, like 400 K was kind of the peak run rate, a quarter million dollars and like, you know, looking backwards type revenue. So there was something real there. And I remember you had a really strong team and a really strong thesis that at least to me made a lot of sense. Curious to like now that it's been, you know, a few months, like maybe even a year or so looking back with hindsight 20/20 and try to understand what it was that didn't work out.

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.

Maybe we can start at the beginning, like really quickly, you know, your background and maybe more just the origin story of Outpoint, like what Outpoint is just to some context.

Rob Palumbo (1:13)

So, I'm Rob. I am a startup growth marketer and person who really loves the zero to one journey of launching companies. Kind of three stages to my career. The first stage was serving as a startup generalist and growth operator inside of C to series B companies here in the Canadian ecosystem. So I led marketing at Borrowell. That was where I taught IT , learning how to grow a consumer company that was heavily driven by paid growth and then product-led growth. Ultimately got that company to about 400,000 monthly users by the time I left and that company continues to do well today. Similar story, joined early stage at a company called PolicyMe and helped set up their marketing systems. And then I was head of a company called Properly. Phase one of my career. Followed by that was phase two when I decided it's time to be a founder.

so I made a decision in late 2020, kind of the peak of COVID times to say, I'm going to go out and start something. Phase two was Outpoint. I'll that story. but was a rise and then exit story. And then just very quickly, phase three, what I'm doing today, I'm a chief operating officer at a venture studio called simple ventures. Our mission is to build great Canadian companies. So we identify concepts that have product market fit in other parts of the world. And then we systematically figure out if there's a market here in Canada and then launch a Canadian variant localized version of whatever that concept is. We've got three companies that we produce thus far, a lot more in the hopper. Most well-known one is a company called AlmaCare that delivers postnatal care to mom and baby after birth. And that company is doing very well. But let's talk about Outpoint. Where should I start? 

Pablo Srugo (3:12)

Well, I mean, the question is really the origin story. like you're in growth marketing already and Outpoint is related to that world. Like what's the kind of core idea that leads to Outpoint being born? 

Rob Palumbo (3:23) 

Yes. So my co-founder, Sean and I met in a venture builder program called Entrepreneur First. Entrepreneur First has a, I think, really strong thesis, which is if you pair great commercial founders, who are CEOs with great technical founders who are CTOs and allow them to create a business that activates both of their experiences at the edges. They can have really strong outcomes. So they invest at Pre-Idea and the team formation phase. So my co-founder, Sean and I met in entrepreneur first. I had the background in growth marketing. Sean had a background in machine learning, engineering and data science. He worked at Amazon on their econometric modeling team in Seattle. And he also worked in cybersecurity AI. So had really strong kind of deep tech chops. And we started jamming in EF and we realized that there could be a really good opportunity at the intersection of our edges, which is his machine learning and data science expertise and my growth marketing expertise. We realized that there was an opportunity to make a technique that had been around for a very long time called media mix modeling more accessible to upstart hybrid of the two brands. So what is medium mixed modeling? Essentially, it's a process, a technique that companies use to model the effect of changes in marketing investments on their revenue and costs. And it's a technique that is different from your traditional attribution because rather than tying things like clicks and views to a sale, you're actually running sets of regression analyses and lift models to understand, okay, if brand X invests in a billboard ad, what type of revenue lift did we see in the subsequent weeks? And traditionally, MMM was really complex and costly. You had big corporations like Nielsen, Offgrang, you know, really expensive consulting projects to a company like a P&G. And it was really only accessible to large corporations. So Sean and I got together and we realized that we could combine his skill set in ML, my skill set in growth marketing to make a MMM tool that would be fundamentally faster on word lower cost and accessible to high growth CDC brands. 

Pablo Srugo (5:43)

And so maybe just to like just to simplify … the way I think about it is take say Robin Hood or whatever you've got obviously a marketing budget. You're doing stuff where you can see the clicks like you're doing Google ads. Maybe you're doing stuff on Instagram or whatever and you can see pretty clearly the attribution. But there's this whole concept around Lyft and the idea is like you don't know what lets somebody to for example type in something on Google and then get it get a Google ad for all you know they saw billboard TV ads some other offline marketing piece that then let them to do an action and then click a button and you think to yourself like that ad that they click that's the thing that's converting but it turns out that there was spend behind that that drove them to do that thing in the first place so then the question is if you're Robin Hood or way smaller like maybe you're doing 10 or 50 million in revenue how do you measure that like it's a bit of a black box and that's the whole adage of like, you know, I know my marketing works, I just don't know what half does, right? Like it's kind of like, because you do all this stuff and so you're trying to build this platform that any direct consumer brand can use to get a sense of where they should invest more that's beyond what your normal attribution stuff is going to tell them. And so maybe it turns out through Outpoint that they could see actually spending on billboards is giving you more lift spending on radio is giving you more lift. You just haven't measured it the right way. That's kind of the value prop, right? 

Rob Palumbo (7:07)

Absolutely. So it's a, it's a system that would ingest essentially their business data. So their revenue data over time, and then we would ingest their ad spend data over time. And then we would essentially build a model that would analyze what is your like baseline revenue, assuming you just have your steady state kind of marketing on. And then as you layer on a billboard or a television ad spend, what kind of lift do you see above that baseline that we could reasonably correlate some causal effect of, you know, when Robinhood bought that billboard, there was some increase in revenue above the baseline that once we run the model, the model can say, we think it was the presence of that out of home spend that actually drove that increase in lift. And you can run these over time. Essentially to make it as simple as possible. It tells you if you're going spend a dollar on a given channel How much revenue will come out from spending that dollar? 

Pablo Srugo (8:08)

Where's the best place to spend your next dollar. And the thing that I find so compelling is like if you think about the largest brands like Coca-Cola as an example consumer brands like you know They've got this on lock or as on lock as they can have it now They're doing doing like consulting stuff like running very expensive reports, but they're in so many markets that they they start to you know get a sense of the ROI I would at least think or hope of like, if we sponsor this team, this soccer team, in this town, like here's the sort of lift we can see because we've done it in so many places. But, and so you would think to yourself, like at least this is what I thought, and especially given your background on growth marketing, your co-founder's background on the data side, like, well, if we can just repackage this for your smaller direct consumer brand, not tiny, but like just smaller, the 50 million, 100 million top line, let's say. that can't do the stuff Coca-Cola can do, well, it's gonna be a bit of a no-brainer. Like they need to figure out how to spend, like it's core to their operations. 

Rob Palumbo (9:04) 

Totally, and it's not just a Coca-Cola that would benefit from that type of insight, but your upstart new CPG that is trying to sell direct to consumer and is trying to launch new retail locations, they need that level of insight as well to make good decisions. So really what it is is how do you productize a process that was previously done manually by an expensive workforce and turn it into software. And it's interesting because you actually see that trend play out, I think a lot more commonly now than was the case in 2021, where you have a lot of companies now using AI to replace what was previously done manually. In our case, we were building a system that productized the data science process, but we still had humans in the loop. The kind of thesis was you just make it faster, lower cost, achieve kind of the same level of accuracy that those big heavyweight projects would deal. 

Pablo Srugo (10:01)

So here's the first question. Like when you went out and started speaking to customers, what was the reaction like on a 1 to 10? Like, I really don't care. Or this is like a must have or, somewhere in between.

Rob Palumbo (10:12)

 So I think the moment to time where we launch the business is important here. So we were coming up during the kind of peak of growth at all costs era in 2021. So at that time, brands were spending hand over fist trying to launch new channels. Really, the mandate was grow, grow, grow. So when we went to market during that period, the PMF actually seemed to be very clear. Brands wanted to adopt solutions that would help them grow faster, better understand where can I deploy that next dollar. So, you know, how did we go to market? we're able to get, I'd say, like pretty fast traction in 2021. We raised our first round, coming at the peak of that market, a million and a half. DCs from Canada in the US and UK, great angels, who understood the space very well from firms like Shopify and Affirm, and build a strong team. And that period of 2021 was good times, really, getting traction with brands like Princess Polly, big Australian brands. Partait, a non-alcoholic beer brand here in Canada and the US. Subtraction was strong in 2021. But then we faced a shift in 2022 when the market shifted. And essentially that period boom time kind of came under pressure. You had what is being called this like D to C winter where interest rates rose, the high multiples and high growth expectations from the previous period came under significant pressure. I mean, like as an anecdote, this was not a client of ours, but as a well-known company, Allbirds, they IPO'd, I think they had a 4 billion valuation when they went to market. And today, I believe that's down 98 % and they're trading at something like 70 million today. So what happens when those conditions change? Well, folks shift to prioritize profitability over growth. We saw folks essentially say, we don't really need a platform to tell us where to invest more. If anything, we need a platform to tell us where to invest less. But that value proposition is fundamentally different than the one that is “we're enabling your growth”. And I'd say at that time, we kind of had a bit of-

Pablo Srugo (12:33)

 But couldn't you argue that it's the same, it's two halves the same coin? Like in other words, if you can tell them where their spend is most efficient, then you could also tell them, you know, well, if you're going to decrease your spend, then decrease this channel and that channel. Isn't that…, you know, the worst thing you can do when, I mean, or like how do they think about it? Like, what in that played out that way? 

Rob Palumbo (12:55)

I think yes, in theory, like, that's what we can intellectually tell ourselves that a dollar saved is as good as a dollar earned. i think in reality, the conditions that our clients were facing were different. We had kind of just cuts across the board across all channels. We had headcount cuts. No. I think we literally had a number of clients that we were serving that actually went under while we were serving them. So that doesn't help your Outpoint SaaS ARR retention very well. And I think in theory, if you're selling a prediction to someone, it works really well when you're giving them a report card that says, hey, if you spend more, you're going to get this great return here. It is a tougher sell when their revenues are declining, they're scaling back, and they're getting a report card that doesn't show a lot of positivity. And that's kind of like a tough sell. If you're not painting a rosy picture as a product that is like in the business of giving a prediction, it's difficult news to deliver to your customer. And while that value proposition in theory is still strong, it I think fundamentally affects the like unit of value you're creating for them. Folks want to grow. 

Pablo Srugo (14:11)

It makes sense. And I've seen, I mean, I saw this in many other kind of situations with companies like things that deliver hard or why that you would think, well, don't don't you you don't want to cut the things that deliver hard or why. But when you're in cut mode, you're in cut mode, like you cut your staff, you cut the number of tools you spend on you, freeze all new projects is just kind of like a thing that comes down from the top. And it's like we need to cut our burns so fast that we can't really look at it on a case by case basis. We just have to across the board, reduce spend. And that's typically like into that motion. It's really hard to sell when when this is happening like in 2022 how much runway do you have?

Rob Palumbo (14:49)

so we had sapped up assuming that 2022 would play at similarly to twenty twenty one in our traction would continue at the same pace which is pretty blistering like into Q4 and even into Q1 of twenty twenty two so I think we increased our burn rate under the assumption that we would then be able to raise again in mid twenty twenty two that we were doing the thing. we were venture scaling. We were growing very quickly quarter over quarter and we had traction. I think expectations versus reality hit. In mid-2022, we kind of started to face retention issues. I think to one of your earlier questions, you know, our initial customer base at this time is still largely coming through founder led sales, warm connections. And while that brings in that critical early revenue, Actually, I don't know if we've truly validated product market fit with those folks. They were false positives.you know, folks that were supportive in the good time became clear that they could not continue on the trajectory they were on as time shifted. And so we faced the situation where our burn was high and revenue was plateauing when we thought it was growing.

Pablo Srugo (16:02)

 And what was that? Was that like six months of revenue… more?

Rob Palumbo (16:05)

In terms of, sorry- how much of burn we had? 

Pablo Srugo (16:08)

Sorry, six months of runway, of runway. 

Rob Palumbo (16:09)

Of runway? We still had probably over a year. So we probably brought our spend up to about 100k a month. So there was never a point in time where we thought we were at risk of, for instance, not being able to make payroll, which was a fortunate position for us to be in because I know not everyone was in that position. So we still had about 12 months by mid 2022. But I think it became clear that we didn't quite have product market fit and the decisions that would need to be made to get there were not super clear. And by that, I mean there was kind of an array of options. We weren't able to raise a subsequent round in mid 2022. I think folks were rightly alarmed by the slowing growth, the retention issues we faced and thus, we then kind of faced a few different options. We said, well, we still have capital. We could keep operating as is, keep executing according to the plan that we created in 2021 and just grow through this pain and try to raise as conditions improved. That, I think, felt like as a founder, a challenge because it would rely on factors that were somewhat out of our control. was kind of the hope and pray strategy. Then there was decision point two, which was, well, we could actually just preserve this capital, do a hard layoff, and extend our runway and pivot. I think what made that difficult was our business was, at that point, still a productized service. So in order to continue delivering revenue, we did need to keep our humans on staff. So while we were a SaaS company, we had great data scientists. and ML engineers in the background that were servicing each company, building the models, cleaning data, integrating with their systems. So that decision would essentially mean that we would have to bring revenue down because we couldn't service the existing customer base. So that one seemed tough too. And then we looked at path 3, was, we know we have something here, the product works, and it may be that we just chose the wrong customer segment and perhaps the product could be better suited to a more mature company, to an enterprise client. And thus, we actually decided to begin a process to find an acquirer, someone that could repurpose the tech and the product for different use cases. 

Pablo Srugo (18:57)

How do you do that? That I find is so, it's the classic VC thing to say, if it's not working, just get acquired. And I was the founder, that makes it seem so much more straightforward than it is.. you know like it it's not I mean it's not like going out to fundraise where you can just kind of Find VCs and pitch a hundred and then you either somebody does or doesn't take it. How do you go about trying to get an enterprise to buy what is fundamentally like a team with a really early stage product? 

Rob Palumbo (19:23)

and we were very early stage just to double-click on that. You know we had semi-automated processes. They were bottlenecks that limited our ability to like quickly just turn on the taps and grow. And I think that was okay because that mattered more to the VCs than it did to the potential acquirers. Essentially, what is required is a bit of a mental shift in how you think about your business and then present your business. So we ran a process that was similar to fundraising in that, you you identify your target partners, you begin conversing with them and

Pablo Srugo (20:00)

How do you even do that though? Like even that, like the top of the funnel seems to me like maybe one of the hardest parts, like how do you identify what's gonna buy you and then even just like get in front with this kind of weird conversation of like, hey, you wanna buy my company? I mean, that's not, it's such a not a position of strength, you know? 

Rob Palumbo (20:16)

It's not easy. And, you know, there were a lot of, I'd say moments during that period where I had doubts where mental health was challenged and you wonder, should I just wind this thing down now? Is it even worth, you know, spending the extra time to find a home for this product that you know, we believe in and we believe has some validation, but not quite enough for what the market needed at that moment in time. So what do you do?

Pablo Srugo (20:46)

Yeah, because what's even like, what are you thinking in terms of best case here? Like you think you can make money from here? Or is it like how much money can you give the investors back? Or like, what's the upside to you as a founder?

Rob Palumbo (20:55)

Yeah, at that point, the best case scenario would be of course that you can return more than you've raised and deliver outcomes that can reward your investors and yourself and your team. So to answer your earlier question about like, how did we identify the top of funnel? It was a mix of both, evolving conversations with existing clients that we already had who actually could be in a position to buy us. those included like agencies and technology partners. So that was the more organic way to start those conversations. We had tech partners that we integrated with, for instance, that we said, hey, you know what? We're in a position where we're actually looking to sell. Do you want to take a look at the tech and team? We had agencies that were working with us. We said, would this actually be useful to you as an internal tool? So that was like bucket one, the folks that we were already working with. And then bucket two was just running an outbound process, identifying companies that could use our media mix modeling tech within their internal systems. So you know, in bucket two, we actually had some interesting big names, big tech companies who took a look. A few big brands actually took a look, you know, as they were running like multi-million dollar data science teams. And perhaps they could tuck in a product that is essentially their in-house marketing science team in tech. And then it just becomes kind of a multi-month process, similar to fundraising. What I would say is different about the process though, is the conversation becomes less about what could be and, you know, pitching the vision in 10 years. And it becomes more about the kind of ground truth of what can the product do today? Who is on the team? How skilled are they? And we had some very skilled folks on the team. And then how does it fit with their strategy? And I actually enjoyed those conversations to like a sense they felt more operational in grand truth than the kind of like VC conversations. And it really becomes a, you know, a point where it needs to make sense for the acquirer from their, ground truth, what are you going to do for me next year? Point of view. And it's less so about what are you going to do in 10 years? 

Pablo Srugo (23:15)

And ultimately, did that become like a kind of, you know, for equity exit or more just even like keeping, you know, reemploying some people at a new company? Like how did that ultimately turn out? 

Rob Palumbo (23:28)

So ultimately we were acquired by a company that private equity backs and was essentially a hold co for a number of different agencies and sass tools. The transaction was one that allowed us to get some cash back to our initial investors,but was not one that actually rewarded the common shareholders. I'll put it that way. So we sold the company, got some cash back to our investors. And then I'd say most importantly, the team in technology was then preserved as Outpoint under this new acquirer. You know, the product continues to be in use today. My co-founder and the tech team, you know, are still there building good stuff. it wasn't the kind of, you know, unicorn outcome you see in the headlines, but it was a little bit more than a soft landing. 

Pablo Srugo (24:29)

I think so. I was just going to say like, you know, obviously not not a win for anyone, but at the same time, given what you had, you know, from that, if you look at it from that perspective, it is a win because I think accomplishing any sort of exit, especially in the environment of like late ‘22, but in any environment, honestly, is hard and I find it's often trivialized in our world. I've heard it so many ways, I've heard it when you back really top level engineers from Google and stuff and sometimes people say, well, worst case, somebody will just acquire them and people get money back and it's complete BS. And then the other one is in this situation where they built a product, things are kind of okay, go get bought, go get acquired where you should do. You know, most of the time, it doesn't work out. You just end up with a zero and a wind down. Like that's, that's the common, end state. like to actually find someone who wanted to take on the costs of your team and leverage the product. you know, I consider it a win in those circumstances. 

Rob Palumbo (25:37)

 concur. And I'm incredibly grateful that there was a outcome and the kind of lessons learned, I think are really important to take for the next. 

Pablo Srugo (25:51)

That's I was going to ask. Yeah. Like what, what are your top-, I mean, there's macro shifting. That's like, it is what it is. Right. But outside of that, like, what would you say are some of the biggest things you think about? Like, are there decisions that you're like, if we had done this instead of that, maybe things would have turned out differently. 

Rob Palumbo (26:06)

Absolutely. I mean, let's talk about macro for a second, because I think that is something that is controllable when you think about your business strategy. And it's controllable in the sense that. I think there's ways you can design a business model that will be durable to a market shift. And I think you want to ensure that you have a business that works equally well in a lower period. And then if there is a high period, that's like bonus and upside. So market timing is critical, but I think there are ways for founders to design their business from kind of day zero to work in a low period. And I actually think that's what a lot of companies are doing today with, you know, lower head count coming out of the gate, raising smaller rounds, focusing on a path to cash much more quickly. So I think that's a decision that companies can make and are making. in retrospect, I think that would have been- there’s things we could have done to design the business model to, you know, encourage that value proposition we talked about earlier, where cutting spend is actually a huge win rather than focusing on growth. that's one, I'd say the second was about our capital raising strategy. we did a good thing, I think, by raising in 2021. That was fortunate for us. As valuations came down, I don't think we were quick enough to pivot our fundraising strategy to the new reality. We were still expecting high multiples. I think that actually slowed down our fundraising process a bit. I don't know if that would have changed the overall outcome, but in retrospect, I think there's like a balancing optimism with the reality on the ground learning there. Number three is around your customer mix. So we made a bet on D2C e-commerce and D2C brands very early. And as a result, we were very concentrated in a group of customers that faced the same types of market shifting and volatility that we did. And, you know, there could have been a decision made to diversify our mix earlier or to read the tea leaves faster. But I think when you're caught up in the plan that you have as a founder, especially after you've raised a little bit of funding, you can kind of continue in that founder reality distortion mode where you keep executing the plan that made sense when you raised it. But you could have pivoted earlier and tried to adapt to that new reality earlier. 

Pablo Srugo (38:40)

Let me ask you something else. Do you think you ever got to a place where you had true product market fit in the sense that your customers really loved your product and really couldn't live without it?

Rob Palumbo (29:53)

I think there was certainly a segment of companies that there was true product market fit with. And those were brands that were able to continue to grow through the downturn. The ones who continued to use the product were the ones that were performing well and actually at their core had good marketing performance. I think there are clients that still use the product today that were on for 2021, 2022. So there's PMAP in the small segment, but I don't think we had true PMAP in the broader sense of repeatable motion, you know, cold adopters continuing to come in who really value it. I think, you know, if you look at your, some of your measures of PMAP around things like retention and your ability to grow like your NRR, We didn't have those. So PMF with a small segment, but I don't think enough of a base to say that we had conquered enough of a market. 

Pablo Srugo (29:56)

Then what do you think about even going back to time zero where the decision is made to come up with a business by taking your skillset and somebody else's skillsets and then finding kind of where those merge and what… and what opportunities you can approach. Do you have any thoughts about coming up with businesses in that way versus, you know, the more kind of serendipity path to starting a startup? 

Rob Palumbo (30:23) 

I think it is a way, but not the only way to build a business. When I look at new business opportunities now, I start with market first and I start with customer need first rather than starting with what can our team do and then backing into it. So the sequence changes a bit. So you start with market and opportunity first, and then you bring in the team to fill that market. So the sequence is inverted. And I think you're going to be more successful if you start with that marketing problem first, rather than the, can we create?

Pablo Srugo (31:00)

 Because it's funny, like you work so at Simple Ventures, right? Like the person behind it, I just think of Mike, right? At Wealthsimple. And I'm, you know, his story of building Wealthsimple which is now one of Canada's biggest companies, is kind of pure serendipity, right? Like he starts, you know, working on this like spreadsheet, Excel spreadsheet to help people make trades. He kind of productizes that. And then it starts to become, you know, what WellSimple became, which is like the Robin Hood of Canada or whatever, over time, like kind of step by step. And it's funny, like there's just so many businesses that got really big that, you know, Wattpad being another one that's popular, right? In Canada on the consumer side, just this little app for people to read books on the go back when people were reading on mobile phones. And then it becomes this marketplace, you know, for readers and writers with original content. I just wonder if, having gone through it from the more, and now even you're going through it, like at Simple Ventures, you guys build ventures in this more top-down way where it's like, okay, we're going to build a business. You know, let's analyze this, analyze that. And then you build it kind of the studio model. I just wonder if you have any opinions, strong opinion one way or the other around that way of building a business versus the, you know, more organic, I don't know if that's the right word, way of, way of coming.

Rob Palumbo (32:18)

 I think there's definitely some advantages to the venture studio model, which is you are less tied as a founder to your like one core idea, meaning you're not like stuck in this kind of path dependency mode where you need to continue to grind on the same train track path that you laid out at the beginning when you started to pitch your vision. I think you have more optionality in the venture studio model, which is a pro and con. I'd say the pro is you can think more critically and with less bias. can kind of map a set of options, break down those options into their simplest forms. And you can be more, I'd say rigorous about testing the risks in those businesses and finding out if there is actually a market for that opportunity. So at Simple Ventures, we kill a lot of startup concepts as we bring them to market and test them. I think when you are an N of one founder building an N of one company, it is much harder to kill your company. So in the Venture Studio model, you can be more systematic. You can clarify the situation. I kind of think of every business as like a big decision tree where you have different probability kind of weighted outcomes and resource costs and trade-offs and In the Venture Studio model, you could just be much more clear-headed about knocking out the different nodes on that tree. But then, again, when you are in that N of 1 company mode, no matter what happens, you continue down that tree. And it's much harder to pivot. Of course, you can reverse. But I find that there is more, I'd say, sunk costs and bias inherent when you are just doing it the more organic way.

Pablo Srugo (34:02)

Perfect man. Well, listen, appreciate you taking us through the Outpoints story. i think it was really insightful. I mean, I think people will definitely learn a lot by hearing the things that went right and the things that went wrong and what kind of changes they can make today to increase the odds of success. And ultimately like that's all it is. Right. Because like you're just talking about probabilities. i mean, this stuff is hard and nothing is, nothing is for sure in startup land. 

Rob Palumbo (34:29)

For sure. I think if I were to close on something, build your business to be durable in good times and bad, and then just be as unbiased as possible when you actually evaluate what are the risks in the business? What are the opportunities in the business? And I think, you know, in both modes of operating, you need to move fast, you need to sharpen your bets, you need to think probabilistically. But now I think we have the privilege in 2024 of like building a business that is set up to be profitable earlier, that is set up to use resources in a more efficient way, and is set up to be designed in a way that is going to have a higher probability of success. And I think it's actually a good thing that people are thinking that way now. We've kind of flushed out the era of less clear thinking. And now we have an era of more clear thinking. And I think like in your position, Pablo, you probably have some amazing opportunities out there now that like founder mode has shifted to be one that is more systematic, I think.

Pablo Srugo (35:35) I agree, I summarized it like founders are smart now. They're certainly smarter than I was when I was starting, especially first-time founders. Repeat founders always have that kind of extra level of learning behind them, right? They took the punches to the face. But I remember when I was a first-time founder, I was just like, Unicorn or bus, man, I don't care. We're going big. And I just think founders are smart now in the sense that it's not so much that they don't want to build something big. It's the way to get there, I think, is more grounded in reality. it's like, you know, if you actually look at some of the massive successes, you know, we're talking about here in Canada, Wealthsimple, but you can go down like one of the latest companies I spoke with, Huntress, you know, they're like a $2 billion company now just crossed a million, they are, you know, they started with three people, like for so long, it was so small. was no, you know, like there was just angel funding behind it. Like there wasn't a lot of, there's certainly no hype and there was no like, you know, go as fast as possible. was just like, know, until you have the thing, like once you have that product market fit, once you have that pull and you know which channels work, you have to lean into it. And oftentimes that means like raising money and ultimately Huntress went out to raise, you know, a lot of money, know, hundreds of millions in its lifetime. But in those early days, like I think founders are smarter now because they're right sizing the amount they raise, the amount they spend to where they're actually at in the journey and not like getting ahead over themselves and tipping over their skis, so to speak. 

Rob Palumbo (36:59)

Totally. And the upside is preserved. Like even though a founder may be now protecting their downside in a more efficient and effective way. 

Pablo Srugo (37:06)

You could argue it's enhanced. Exactly. Yeah.  You might have more upside. 

Rob Palumbo (37:11)

I mean, if people are thinking in bets now and like actually weighing what are the odds of X, Y, and Z actions in a more systematic way. I think that just compounds and it accumulates their knowledge, it accumulates their path to getting PMF. You talk about getting channels working. They can actually more clearly understand when they have demand side leverage and when they don't. And I think so many companies leaned into a demand side engine that was not built on fundamentals. And now those false positives have kind of gone away and we're at like this ground truth worlds and it's nice. I actually think it's a more calm, stable and fundamentally accurate way to build a business. 

Pablo Srugo (38:05)

Awesome, man. We'll stop it there. Thanks, Rob, for jumping on the show. 

Rob Palumbo (38:09) 

Appreciate it and thanks for having me. Bye.

Pablo Srugo (38:11)

 If you 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 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 this 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, 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.