Post-YC, he split with his co-founder—then grew profitably to $2M ARR with just 5 people. | Jon Yoo, Founder of Suger

Jon Yoo’s startup wasn’t working. He pivoted mid-YC, spent five brutal weeks without signing a single customer, and then—right after raising his seed round—his co-founder left.

Most startups die right there. 

Instead, Jon figured out how to land massive customers like FiveTran and Snowflake. He grew from $500K to $2M ARR in 6 months. 

Why you should listen:

•Navigating a founder breakup – What happens when co-founders split and how to handle it.
•The real YC experience – What worked, what didn’t, and how they pivoted mid-program.
•Landing major customers – How they got big logos like Snowflake.
•Fundraising insights – What really matters to investors at the seed and Series A stages.
•Why startups need forcing functions – The tactics that drove fast product development.
•How to know if you have product-market fit – The signals John saw at Sugar.
•Burn rate discipline – Why they raised millions but barely spent it.

Keywords
entrepreneurship, startups, investment banking, Salesforce, Y Combinator, founder dynamics, product market fit, scaling, cloud marketplaces, business strategy, fundraising, startup, YC demo day, customer acquisition, product-market fit, founder dynamics, early stage startup, team building, scaling, challenges

Timestamps
(00:00:00) Intro
(00:07:55) The Origin of Suger
(00:13:30) Going All In
(00:19:08) The first 10 customers
(00:24:20) The Hardest Pain Point
(00:30:29) Becoming Profitable
(00:37:05) Celebrate The Small Wins
(00:39:56) Finding Product Market Fit
(00:42:27) A Piece of Advice

Chapters

• 7:55 The Origin of Suger
• 13:30 Going All In
• 19:08 The first 10 customers
• 24:20 The Hardest Pain Point
• 30:29 Becoming Profitable
• 37:05 Celebrate The Small Wins
• 39:56 Finding Product Market Fit
• 42:27 A Piece of Advice

Transcript

John Yoo (00:00):
Maybe that's why it's actually beneficial to start a company when you're young before you have all these responsibilities. A, in the early days, like you code or you sell. There's nothing else. And maybe that's why we can sell capital efficient. But it's really about like, how do you build the best product and how do you get the best customers using it and make them successful? And nothing else really matters. Fast forward to September of last year, we were at close to $2 million in ARR. and we had earned like 1.2.

Pablo Srugo (00:26):
You're profitable.

John Yoo (00:29):
In some months, yeah. You can't let things fester. I think that is kind of the worst thing, which is if you have some of these thoughts and it's keeping you up late at night, you're seeing some signs of splinters. It's way better to address it earlier than later. Because as I mentioned, it's 10 times harder to do it as you're scaling, right? So things are working, it's hard to kind of figure out why.

Previous Guests (00:48):
That's product market fit. Product market fit. Product market fit. I called it the product market fit question. Product market fit. Product market fit. Product market fit. Product market fit. I mean, the name of the show is product market fit.

Pablo Srugo (01:00):
Do you think the Product Market Fit Show has product market fit? Because if you do, then there's something you just have to do. You have to take out your phone. You have to leave the show five stars. It lets us reach more founders and it lets us get better guests. Thank you.

Pablo Srugo (01:13):
Well, John, dude, welcome to the show.

John Yoo (01:15):
Thanks for having me, Pablo. Great to be on.

Pablo Srugo (01:17):
Dude, so you've been on a bit of a tear. I mean, you raised the $15 million Series A. You're just telling me you went from 5 to 40 people in a year, which is all sorts of things, depending on the way you look at it, but definitely like a wild, wild time. And you went through a founder breakup through that. Like you've been through quite a bit already with Suger, but maybe like, let's start earlier on because this isn't the first kind of startup that you've started. Tell me a bit about kind of the first few ones and then we'll jump to this one. But I think there'll be some helpful context.

John Yoo (01:49):
I've known since I was 16 that I've wanted to start, you know, businesses. And in high school, that was when I was really big on chemical engineering, like kind of the R&D side of the business. And so I made the mistake of what everyone tells me not to do, which is start with a solution and work backwards to the problem.

Pablo Srugo (02:07):
This is when you're 16 that you're having these thoughts?

John Yoo (02:10):
Yeah, yeah.

Pablo Srugo (02:11):
I think I'm still trading Pokemon cards at 16, man. I also wanted to be a founder early on, but literally, I'm thinking at 16, our idea was like, yo, let's open up a clothing store. Do you know what I mean? These were kind of our simple brains. Do you ever actually start talking to customers, do you build something or how far do you take that first venture?

John Yoo (02:31):
No, it surely was from a R&D perspective. So it's not like we had kind of the Silicon Valley SaaS sense. You find design partners, maybe even do Figma prototypes, for example, and get it in front of them to figure out if that's what you need. We truly started with the technology first, assuming that people really wanted this. And of course, there's no outside pressure, especially at that age, to make money for your family or all these things. And so maybe that's why it's actually beneficial to start a company when you're young before you have all these responsibilities. Learned so much. I spent so much time in labs through this venture, but also before. I think it was fun at that time, but looking back, I didn't truly enjoy it. Writing papers on it, filing the patent, that's just crappy work to do. I'll tell you, it taught me that I did not want to be in a lab, and I cared a lot more about the business side of things than I did about the, you know the science side and I just wanted to really work with customers and then, that part motivated me a lot more than like spending all my time in a lab you know with test tubes and things like that. 

Pablo Srugo (3:35):
What was the second startup?

John Yoo (3:38):
It was actually a company like it was passed down a little bit so I bought a small equity stake and we were able to grow it. So it's called Vox Sportswear you know we basically had the, it was a customer apparel company. So we had relationships with wholesale suppliers of apparel goods. So think like a bunch of places that might sell like Fruit of the Loom t-shirts, right? Blank wants to like a $1 or $2 per unit. And we would, we had negotiated, relationships with like local, custom embroiderers or things of that nature, you know, printers, for example. And we would apply a margin on that.

Pablo Srugo (04:16):
And you're doing this through what, like through college?

John Yoo (04:18):
Yeah, through college. So, you know, every, like, just based on the, I guess we had like dividend payments, you know, and that paid me through college and frankly gave me a lot of beer money to go enjoy college with. 

Pablo Srugo (4:32):
How much was this business, like, making, like, a year?

John Yoo (4:35):
Yeah, it was around $200K annual revenue. So, like, tiny, you know, just enough to pay the bills.

Pablo Srugo (04:44):
But at that point in your life, like, you're the cool dude on campus. Like, everybody else working at, like, McDonald's or, like, making money, like, because their parents are making them.

John Yoo (04:51):
Exactly. Yeah, I went to Dartmouth. So probably a lot of folks that did not think that I was a cool kid on campus just, like, oh, here's a kid that's hustling and trying to sell me t-shirts.

Pablo Srugo (05:00):
You're going to be cool at my university, man. I'll tell you that.

John Yoo (05:01):
Yeah, okay, okay.

Pablo Srugo(05:02):
And so then you're doing that, like, I guess, like, through college. And after that, do you, like, do you go work somewhere or do you start Suger right away? How does that all happen?

John Yoo (05:11):
You know, I think at that point, like, the first startup, it wasn't a success. I mean, we just sold the patents because we knew that there wasn't something that we wanted to do longer term. Same thing with Vox Sportswear. Like, do I really want to scale out this, like, custom apparel business when, you know, I compete with, like, the likes of custom ink? I mean, that's a great market. Like, every single organization needs some form of custom apparel. Like, as we go through a rebrand, even at Suger, we're thinking through, okay, how do we get all this merch, all this swag, so to speak? But...going through college, everyone kind of tells me, hey, go get the training first, whatever the heck that means. And you go into management consulting or investment banking. And so I chose the banking path, thinking, okay, maybe I learned a lot about finance and just the world of business. Working through it, I turned to a couple like a hedge fund, another bank and stuff like that. But you kind of realize that there's just a lot of financial engineering happening. I mean, not to disparage them, but it was like, hey, come up with a model to determine the valuation of this predictive analytics company, right? Instead of arriving at what I thought the truth was, depending on some of the assumptions, it was like, hey, you need to set the valuation at X so that we can go win the deal on its competitive bank-off. And we're kind of wondering, well, what the heck am I doing if that's how we arrive at the final you know, valuation, but you learn a lot about how these big Fortune 500 companies operate.

Pablo Srugo (06:39):
It's funny, man, like the spreadsheet thing, like I'm just, at this point, I'm so jaded on like spreadsheets and forecasts, especially at the place where like we play, which is seed stage, because you can just, I mean, you can make these models say anything, like, you know, just about pick, you know, whether it's value in a company or whether it's like forecasting the next like two or three years of your business like you can just make a spreadsheet say whatever you want. And so, yeah, the value is, you know, highly questionable.

John Yoo (07:05):
Yeah, I know. There's always a mix of quantitative and what do all the inputs and what are all the inputs and how does that drive to a final output. And then if there's conversion rates, for example, from the sales funnel, how do you arrive at a best estimate? Because you certainly don't want to be off, but then you always have to overlay it with the qualitative side of, okay, what's the field sales team say? And so it's more art than science, especially at our stage when it's not like we have millions of rows of data. I guess it just depends on what type of data set you're working with. But there's a lot of judgment calls. There's a lot of intuition. And maybe that's what investment banking was like in some regards at the higher stage. Just when you're an Excel monkey, it's about the inputs and outputs and nothing more.

Pablo Srugo (07:51):
So did you quit this job to start Suger?

John Yoo (07:54):
No. So after that, I actually wanted to get a little bit of the kind of VC-backed early-stage startup experience. Turns out no one wants to hire, you know, an investment banker with one year of experience at an early stage. And I brought that ethos to this company as well. You know, we use outsourced accountants, but it's like, hey, in the early days, like you code or you sell, there's nothing else. And maybe that's why we can sell capital efficient. But, you know, it's really about like, how do you, how do you build the best product and how do you get the best customers using it and make them successful? And nothing else really matters. No matter how well you model out your like, your burn rates, no matter how well you model out, like, customer account, like all it takes is like one bad strategic decision or one big bug that just completely throws that into the wind. And things change literally on a weekly basis here. And so I frankly don't put too much focus on that.

Pablo Srugo (08:54):
How did you enter this world?

John Yoo (08:55):
Yeah. I mean, so after banking, I actually went to Salesforce. I worked there for-. 

Pablo Srugo (09:01):
You tried to go early stage, but you went massive stage.

John Yoo (09:03):
Exactly. Because I was like if I'm not going to go to an early-stage startup, let me go see what a best-in-class tech startup that really has figured out the art of B2B sales. And honestly, I thought I was going to be at Salesforce for like two years and maybe move to an early-stage startup. But I mean, I got to work with some of the most incredible leaders. And the other part about Salesforce was I just learned about what B2B sales was. I learned about what the best salespeople think about what they do on a day-to-day basis. And all these people like revenue operations, deal desk, et cetera, support kind of sales motion. It really was my co-founder, Chengjun, that had the idea, that had the technical domain expertise. Because he worked on AI at Google, worked at Meta before that on their newsfeed, I think. Sorry, ads. And then he actually worked at Confluent as the tech lead on their cloud marketplace team. And it turns out they had a team of like 10 engineers working on this problem because it's such a difficult thing of unifying APIs, workflows, and all the setting up different data pipelines by different marketplaces they were engaging. He thought, okay, if Confluent needs this help,

Pablo Srugo (10:14):
And this is to be clear, this is the team at GRR Confluent that puts that app on other marketplaces?

John Yoo (10:21):
Exactly. So just let me take a step back. Like what Suger does, right, is we help companies sell on cloud marketplaces and we automate workflows related to you know, the entire lifecycle of a transaction. So everything from offers to contract management, then, of course, billing and metering. And when you get into like selling across these marketplaces, you know, each marketplace has unique APIs, unique policies on how they handle like meter usage or, you know, how you want to engage with their cloud sales teams, et cetera. It is just an incredibly complicated thing to build, even though it's very niche, right? When I tell anyone in this space, not in our space per se, but a lot of folks, even in Silicon Valley, they always say it's a very niche market. Like, wow, I had no idea that enterprise software companies really needed that.

Pablo Srugo (11:12):
Yeah, because how many of these marketplaces at scale are there? There's Salesforce, there's AWS. How many of these really matter?

John Yoo (11:20):
Yeah, so anytime that a company gets big enough, they think about, how do we create a thriving ecosystem around this that locks in retention, that locks in partnerships with these other folks, because that is incredibly sticky. Think about if you're turning off Salesforce. You're not just turning off Salesforce, but you're turning off every other tool that you're using in your tech stack that is embedded within Salesforce. That could be pipeline intelligence, it could be CPQ tools, etc. And today, I mean, there's so many different type of marketplaces. You have what you call cloud marketplaces. So that's AWS, Azure, Google Cloud, Alibaba. You have data marketplaces. So that's like Snowflake and Databricks. And HubSpot has a marketplace. Salesforce has a marketplace. And so I'd say the ones that we are really focused on today is the cloud marketplace. They are, you know, I mean, their GMV is, like, expected to cross $100 billion over the next five years. And, I mean, you think about some of the early adopters, like Confluent, the reason why we got so excited. You know, 40% to 50% of their revenue actually goes to these side marketplaces. And a lot of people just don't know that. You know, one of our customers, Snowflake, for example, they were the first to cross a billion dollars in just AWS marketplace revenue alone. And so you look at some of those numbers and you're like, wow, this actually is not niche at all. Like we're just in the early adopter phase and it's slowly getting into like early mainstream or whatever, you know, that cross of the chasm is.

Pablo Srugo (12:50):
And how do you meet your co-founder?

John Yoo (12:51):
We had a third co-founder, you know, and I used to work with them at the next startup that I worked at after Salesforce. I was kind of leading this operation event and this SMB segment at one point, and he was working on new products. He left two months before I did. And he said he's working on this idea with Chengjun, the CTO. And I was convinced to come over and start working on this idea with them. And then about three months later, after working with them, we got into YC and there it goes.

Pablo Srugo (13:24):
Is that when you, like, did you go all in before YC or was YC the trigger point when you kind of quit and just jumped in all in on Suger?

John Yoo (13:30):
All in. Yeah. I mean, it was one of the toughest decisions because I had something great going at work stream. You know, I loved the team. And I've always thought, okay, if not now, like I have known I've wanted to do this and COVID's kind of a lost year to some extent. I need to go scratch this itch because I've wanted to do this since I was 16. And, you know, it'll be way harder to do with kids, you know, with other life responsibilities. You know, Chengjun has two kids and honestly, I have no idea how he does it. He's a superman.

Pablo Srugo (14:02):
And how'd you do? You guys went a third, a third, a third and you were CEO, even though it wasn't originally your idea or like, how'd you guys set it up?

John Yoo (14:08):
Yeah, so it was really around, Chengjun would focus on engineering. This other founder would focus on product and customer success. And then I would focus on kind of anything business-related. So that's, you know, go to market, whatever else there was. And that's, yeah, that's how we started. I mean, Chengjun and I have been working on some other variations of the idea, more around metering for about six months prior. But it was mainly a pivot, like a new idea that we started working on. And even in the first couple months, or probably in the first month or two of YC, and of course, three months before that, we were exploring a bunch of ideas, whether it's sales commissions, whether it's some sort of SDR play. But ultimately we thought marketplace is where we have the most like-founder market fit and we see that it is a space that we can truly disrupt. And also, you know, you work across the entire lifecycle of a transaction. And so this was a great wedge market for us to start with and then expand from there on.

Pablo Srugo (15:14):
What was like your original pitch to YC? Like, why do you think YC, what do you think YC saw?

John Yoo (15:17):
I mean, I think you got to ask them, honestly, but they really invest in the team at the end of the day. So the funny thing is when we actually applied for YC, it wasn't even around marketplaces. It was around usage metering. And so, lo and behold, like we show up to the interview and it's a 10-minute, like high-pressure interview. And the first thing they say, and, you know, they have like the pack, the application packet ahead of us. And the first thing we say in the interview is just, hey, we're actually pitching a different idea than, than what we had applied with. I hope that's okay. And, you know, they don't really care in a day. It's about, you know, do, do we believe that there's the right founding team? Do we believe that, you know, they're going to make it work regardless of what idea they're working on, you know, and be able to kind of find that product market fit so…

Pablo Srugo (16:02):
But you pitched them at that point, you had pivoted already to this marketplace idea.

John Yoo (16:05):
Exactly.

Pablo Srugo (16:06):
And what was the YC experience like? I mean, so many people obviously want to get into YC. Give me a sense of what it's really like to kind of go through that, how helpful it is. What are the sort of things that happen?

John Yoo (16:17):
Totally. So we joined for two purposes. One was, of course, the brand recognition that goes really far away. Actually, at least three reasons. The second was, hey, we're first-time founders. There's probably a ton of things that we don't know. And so having this trusted advisor who can help us navigate all those potholes, let's do that. And then the third part was, it could be a tremendous distribution channel. You hear all the time about these YC founders buying and selling from one another. Now, out of the three, the first two are correct. Great brand recognition. We got great advice from our group partners. Distribution, not at all. Yeah. You know, we did not sell to other companies in our cohort, which a lot of YC founders do, you know, because our ICP tended to be more later stage. And, you know, if you reach out to a YC founder of like a series C startup, I mean, every batch, I'm sure they're getting spammed by YC founders trying to sell them stuff. And, you know, you're not getting as much responses.

Pablo Srugo (17:17):
Well, it makes sense. Like I, you know, I had Gusto on the podcast and he sold to YC, but it was like, oh, you're just starting a startup. Like here's like easy to use payroll software. That makes sense. In your case, it's like, hey, do you want to sell on marketplaces? It's kind of not really a seed-stage problem. Usually, like you said, it's more like a late-stage trying to diversify your revenue problem.

John Yoo (17:33):
Exactly. Like if you're like a cap table management or accounting or some of these other things that you really need at that early stage, I'm sure some great fits. But still, you know, we were happy with the benefits that we got. I mean, with regards to your question around like, what is it like there? I'll say it is a pressure cooker. And they have a great way of distilling actions or kind of things to do down to the fundamentals. Think about it almost like an engineering sprint where they maximize accountability. They would say, we'd have group office hours where they say, what did you do last week? What are you going to do this week? And next week, we would be held accountable to what we said. And Gustaf, you know, our partner mentions the best founders are the ones where, you know, every week there's a new topic or problem they're working on. If it's the same problem week in, week out, like the founders are not moving fast enough. And so we really took that to heart. Boy, like there was moments for five weeks, you know, in February, I think, where we didn't sign a single customer after we got our first three ends. You know, you go into this group office hour being like, fucking eh, like, then I was going to get two customers last week. We didn't get that. We said we're going to release these products. We got busy with like all these other things. Man, those five weeks, I could not sleep, would wake up in panic attacks of, holy shit, like, did I make the right decision in leaving Workstream? But, you know, we stuck it through and kind of kicked and screamed our way to getting our first 10 customers.

Pablo Srugo (18:58):
And this is, by the way, what year? 2023?

John Yoo (18:59):
2023.

Pablo Srugo (18:59):
And when you come out of like YC demo day, do you raise a big round? Like where are you at that point?

John Yoo (19:08):
Yeah, we got out of, you know, we went to demo day with 30K in real ARR, but we had $100K in contracted ARR. And so what that means is we, you know, you kind of got to do whatever you can to get the first 10 customers that can go into that. But what we did was we said, hey, it's a free trial until a specific milestone. And for us, it was until they did their first transaction on Marketplace. And we had very high confidence that they would, you know, do a deal because it's very buyer-driven. And so we went out to fundraise. It was about a three-week process, you know, starting from like the week before demo day all the way through like two weeks after. So we raised from Kraft Ventures, who was our lead investor, Intel Capital, who co-led the round and has been just a both of who has been incredible, tremendous partners for us, along with Pioneer Funds.

Pablo Srugo (20:03):
How big was the round?

John Yoo (20:03):
$2.4 million.

Pablo Srugo (20:05):
And what do you do? So now you have like 10 customers, you've got like two and a half million bucks. And I have to assume like raising, I mean, this is what I gather, especially talking to a lot of, and I went through founder startups, so I felt a bit of it. This is back when Founder Service still had a decent brand before all this stuff happened. But it's pretty easy to raise, right? Like coming out of YC.

John Yoo (20:23):
It is. It certainly gives you a, I don't know, that brand recognition aura, I guess you could call it. But at the end of the day, They're not, you know, we have 10 customers, right? They're not really banking on early traction. They're once again banking on the team and the space. I mean, with Kraft, there was like a week process. You know, we met once and then, you know, they did their diligence for about four or five days and then had a real deep dive where, you know, the partner, Jeff, really dug into the business. I mean, it felt like a YC interview and that it was just… pretty hardcore line of questioning, which I think we did a good job on. And then literally the next day, we got term sheets from them and we're able to close the rounds.

Pablo Srugo (21:05):
And what do you do with that money? Do you start hiring a bunch of people right away?

John Yoo (21:08):
Not at all. Yeah, I mean, we were at 4 people at that point in May. And then by the end of that year, we were at 5 people. So we were incredibly cash-conscious. Maybe it's just kind of our backgrounds of not wanting to go out of business or just being incredibly frugal, maybe for lack of a better word. And YC they had advice like, hey, make sure this goes a long way until you feel like you have true product-market fits, which we certainly did not have at that point.

Pablo Srugo (21:36):
Is this, by the way, like a question on that, because I've heard it a few times and I think it's the way you got to do it. Like, but when you raise this round, is that what you say to Kraft? Is that what you say to Intel? I'm going to take this money and I'm probably not going to hire anyone right away. Or do you tell them like, yeah, like we're ready to go? Like you're the five hires I want to make, right? Like what's the story?

John Yoo (21:53):
Not at all. It was like, hey, do you think that we can do something really disruptive and something where we think the puck is going in the future of B2B sales? It's going to take us some time to figure that out, but we have some early traction, you know, and you look at the, you know, the GMV through these marketplaces, you know, and at that point it was around, like, we certainly tried hiring. Like we made, it was certainly wasn't for a lack of an effort. It was just incredibly hard to hire talented folks at the very beginning, because we, a lot of it was a mistake on our end. Like we didn't know truly what we were looking for. We truly had a spot talent and you know, they, they really, you know the saying is like, I was slow fired fast. Right. And then, yeah, we hired slow and we ended up having fire fast because...

Pablo Srugo (22:44):
Real slow.

John Yoo (22:46):
Yeah, exactly.

Pablo Srugo (22:46):
But listen, I don't know, man. I think it's kind of that early on, like you're still fit. You got 10 customers. You got very, like you said, $30K ARR. Like you're very much in the figuring it out phase. And now you're going from five to 40. You see very clearly the pain of hiring. It's like you have to do it. You need the bigger team. But, you know, there's a productivity hit. There's the time of recruitment. There's the alignment, the integration. And when you're just trying to figure things out, it's actually easier with 4 or 5 people than with like 20 or 30.

John Yoo (23:15):
You know, I wouldn't say miss it, because those are some stressful days, but the early days, like effectively, you know, so the first 10 customers is like, okay, how do I just pick and stream my way to getting them, you know, and some funny stories like. A lot of people think they can take advantage of you at that point. So we had potential prospects who would say, hey, I'll give you access to my IT team if you give me 2% to 3% of equity. And I've always believed paying for design partners is kind of bullshit. Getting people to pay is truly the best indicator for market validation. And I was also at that point saying no to a lot of folks because not everyone's a good customer. And when you have that few people who can actually support customers and build the products, I really worked hard to curate the list of our first 20-ish customers because that was going to determine oftentimes the future of our product development cycle for the next three months. And, you know, for example, like we knew metering through these marketplaces is the hardest pain point. And so I wanted to solve for that first. And also that's where we had the best kind of founder like CTO market fits. And so we really went after kind of consumption-based billing companies in the early days. And now we work with people across the board, like Airtable and Notion and Clarity, and they don't do consumption-based billing, right? And so trying to kind of increase the scope or I guess the ICP in a big way. And… I'll tell you, like the early days felt like kind of door-to-door selling kitchen knives a little bit. And I was so bad at it in the early days. Like I'd go conference booth to conference booth in a suit and tie, which turned out no one wears that. Yeah, surely.

Pablo Srugo (25:03):
No way, man. I love it. Tell me, I mean, do you remember any of those, particularly specific kinds of conversations or moments from those early days?

John Yoo (25:12):
Yeah, I mean, like that, like, when I went to suit a tie and go to conferences being like, hi, I'm John, co-founder of Suger. And the booth guy would just look at me saying, like, what the hell do you want? I'm trying to sell my own products. You know, and you're just sitting there, like, looking like an idiot. What I focused on, like, you know, I, like, went to a competitor's happy hour, snuck in there by pretending to be stupid. Not pretending to be someone else, but we were also kind of exploring the metering idea. So it wasn't unethical by any regard, but between doing whatever we can to get our voice heard and meet people, right? I always talk about it as stacking up credibility. As you get one customer, you can go a level higher. So a lot of our early customers were like series A, series B startups, you know, and then I would kind of user success stories with the series B customer, take it to series C and so on and so forth. And I was just so focused on how do we get the most recognizable and what, you know, I guess, for lack of a better word, the hottest startups to work with us because there's an aura around, oh, shoot, like a snowflake's working with Suger. They must be doing some really good things, right?

Pablo Srugo (26:21):
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Pablo Srugo (26:28):
What was an inflection point where you landed some big logo that got you to that next level up?

John Yoo (26:35):
Super early on, we signed this customer called Crossbeam. They are the partnership tool. In the early days, we'd sell to head of partnerships, head of alliances. That's shifted a little bit to the CRO persona. You know, signing that customer that every one of our buyers knows gave us a massive, you know, kind of gravity, so to speak, of, oh, crap, Crossbeam's using them. Maybe I should take a look at them, right? And then I remember we signed, like, you know, kind of a two Series C startups, Red Panda, that's really big in the, you know, kind of DB, I guess you'd call it infrastructure space. And they do a lot of metered billing. And then we signed Teleport. That's a Series C startup in the cybersecurity space. So that kind of gave us the ammo to really go deep into those sectors and mention, hey, we make them successful doing XYZ. The big win for us, I got to say, was winning Fivetran. That happened at the end of 2023. And that kind of gave us the power of, hey, if we can support a customer that's doing tens of millions of dollars through Marketplace that, you know, I think they were, you know, they last reported like $300 million in ARR, and that's public news. That gave us so much like kind of brand, I guess, to be able to kind of get a lot of other customers in that, you know, late-stage startup slash, you know, mid-market, like early end of enterprise. And so a lot of these marquee customers, yeah.

Pablo Srugo (28:10):
And can you go a bit deeper on, like, take that marquee customer, like, what was the exact pain point that you saw for them that got them over the line?

John Yoo (28:19):
Yeah, it was really around workflows. So, you know, the way that our space is broken up is if you're early stage, you think about how do I get listed on marketplace? How do I get started and do my first couple of transactions? When you get to the five-trend snowflake range, it's about how do I automate workflows. Because it's such a kind of siloed channel. Salesforce, for example, doesn't have a way to send offers to your marketplace. Their billing solution like Stripe or NetSuite doesn't have a way to recognize revenue through these marketplaces. And so they have to set up these like kind of product teams that the way that Coslant did with all those engineers, or they have to get all these like offshore deal desk ops people that manage the inflows and outflows of leads and money and whatnot. And so for us, it was around how do we automate all the work that they're doing manually so that it can be managed out of a central team with like minimal, you know, kind of work. And that really resonated well with some of these larger-scale customers. The other big focus we did, and that came from Chengjun's understanding of the space, was we really focused on building a unified API, like unified APIs for everything. And it was a very API-first platform. And in the early days, we actually thought, oh, all these companies will build on top of our APIs. But it turns out that is not the case at all. They like the unified APIs because it does allow them to customize all these things. But when you're selling to business users like salespeople or partnership people, they don't have engineering or IT resources, right? So they wanted us to do it for them, which is why we really built the workflow builder that allows to trigger a series of actions upon any events that come in through the marketplace, like an offer being accepted or just like an entitlement getting canceled.

Pablo Srugo (30:10):
So it's fundamentally, it's a way to kind of perfectly track the end-to-end sale all the way from, let's say, selling on AWS Marketplace till you see it where you need to see it and you can kind of do whatever you, like basically whatever you would do direct, you get to do through these marketplaces as a result of your product.

John Yoo (30:28):
Exactly.

Pablo Srugo (30:29):
And so by the end of that year, you have 5 people. What's like ARR at?

John Yoo (30:32):
We were at $500k ARR. So, yeah, for, you know, for a little bit of a kind of an understanding, I forget the burn rate at that point. But, you know, fast forward to like September of last year, we were at… close to $2 million in ARR and we had earned like $1.2.

Pablo Srugo (30:52):
You're profitable.

John Yoo (30:53):
I think we were, yeah, we were in some months. Yeah, for sure. It's funny because we just had a ton of dark circles under our eyes like in those early days. I don't know how our engineering team was able to build all that we did.

Pablo Srugo (31:05):
Yeah. Walking through the workload and kind of the setup, right? Especially when you're five people going on 10, like how is everybody in office? How much time are you putting into this?

John Yoo (31:17):
Man, we were, we were at a WeWork initially and we, you know, we're very opinionated people. And so we'd have like screening matches on the shared desk area of WeWork. And so we thought, okay, we got to go get an office. That office was, I mean, it could barely fit five people, stunk to high hell, you know. The way that it would go is me kind of handling everything on go-to-market and onboarding and a bit of support and Chengjun, the CTO, and three engineers. And the way it would go is I'd be out on the road, like conferences, hopping on Zoom calls, trying to kick and scream. I've done a lot of partnerships because we partner with AWS, for example. We get customers, I'd onboard them. If there's like a technical part of it, you know, Chengjun would get involved. And then, you know, support was like all hands-on, on deck, you know? And it was very iterative in the sense like you would have a demo with, a company that is probably, you know, kind of the next tier up breaks in terms of size, you know, first demo, I understand the requirements, and then I'll just run to the engineering team or, you know, turn my chair to the engineer team and say, hey, we got one week till the next demo. We got to have XYZ. It does not need to be functional, but it needs to be demo-able. And we would just repeat and repeat after every call.

Pablo Srugo (32:39):
How important are those forcing functions early on?

John Yoo (32:42):
So, so important. It is. There's nothing like something that lights a fire under your butt. Nothing will light a fire under your ass than saying, hey, if we go build these features, we can go land this marquee customer. And that's not just lighting a fire on my ass. That is truly like our engineering team is amazing in that they're customer-centric. Like they care about sales. They care about what our customers need.

Pablo Srugo (33:05):
Well, that's the thing. Why do people work at early-stage startups? I think because any A-level engineer could work at Google, could work at name your favourite company, make way more money, work a lot less hard, but it's the impact. And so that's the forcing function. It's not deceptive. At the end of the day, it's actually so tied to that's why you're here. It's like, hey, if you do this, this will happen. If you're at a big company and you do this, Nothing's going to happen. You don't show up for two weeks. Frankly, nothing's going to happen in most big companies and most projects. But in this place where there's five of us, yeah, if you do this, we will land this customer. And if you don't, we won't. That is impact. And it's so tied to impact for that customer and being customer-centric.

John Yoo (33:44):
Absolutely. Actually, when they hear the feedback from our customers about how we improve their lives, it is tremendously motivating of you make that impact. Like one of our founding engineers, I mean, he worked at a couple of startups on natural language processing, for example, but he worked at Microsoft for a couple of years. And it's like, you know, any product or engineers oftentimes work on a tiny little feature, right? Within the cog of the machine. And here you get to like own a whole product line. And we've always indexed on kind of functionality and stability in the early days than designable widgets. We just wanted to make sure that people could do their jobs. I mean, even until I mean, still now, but halfway through last year, one of the customers we signed, Clary, they said, wow, this is super powerful. The UI looks like it was built in someone's garage. We didn't invest in product design early days. And they still ended up signing with us. And when things like that happen, from an engineering perspective, it must be incredibly proud. They must be very proud.


Pablo Srugo (34:45):
And was there balance in those early days or was it seven days a week?


John Yoo (34:48):
There's no balance, even now. I've given up on that idea, honestly. There's always... I could work, well, I could work for like two weeks straight, no meetings, and there still would be two weeks around the clock with no meetings, and I'd still have… just so much things in the backlog to improve different processes.


Pablo Srugo (35:07):
In a sense, that's the pull. You know, it's funny when you know in early stage things are not going right if you are in control. Like you really in the early stages should feel like you are kind of drowning. And that's when things are, you know, paradoxically going right, because you should have so many things that must be done as a react, as a kind of, as a fallout of fulfilling a real need. When you don't, and everything's kind of controlled, there's probably just not enough happening. There's not enough pull. And, you know, remember, like a startup is default dead. And so if you just do that long enough, you won't have a company for much longer. 

John Yoo (35:49): 
Absolutely. I'd rather go to bed for 4 hours just thinking about all the things that we need to do to support our customers than, as I mentioned, February during YC when I was just staring up at the ceiling like, how do I get customers? And it's always a shit show. I remember super early on in our time, we had a minor security incident. But in retrospect, like, it was so minor that our customers didn't even care. You know, when we reported it, like, went through the whole process of, like, you know, to make sure that we were in line with our policies. But at the moment, it just felt like the world was crumbling around us. I mean, I thought, like, hey, we're going to lose all our customers. I'm going to get sued. I thought, like, man, I'm just going to be jailed time. I was actually at a conference, like, talked to some, signed some more, like, key customers, and, you know, this thing came up, and… I'm like pacing outside just, oh my gosh, we are done, right? But I'd rather have that type of stress and, you know, I've kind of viewed it as, hey, this is an incredible challenge than anything else because I'd rather have this experience and learn how to roll through it than stare at the ceiling because we're in pivot hell and we have no idea what we need to do next.

Pablo Srugo (37:05):
Well, when you're having those existential crises, it means you have at least a chance at success. That challenge is what's between you and success. But when you're in that pivot hell, not solving problems, it's not like you solve this thing and then success. It's just not that clear. And so it's just much further away. Walk me through just a little bit, just the numbers. So half a million, end of 23, when did you hit a million?

John Yoo (37:31):
I think in April. I mean, around April.

Pablo Srugo (37:35):
Okay. So April 24. And then by September, you said 2.

John Yoo  (37:38):
Yeah. It's funny. You got to celebrate the small wins. And I remember telling our seed investors, we hit a million, just very quickly. Casually in our next, you know, sync up and you're like, what did you do to celebrate? Like, I don't know. I'm like, nothing.

Pablo Srugo (37:54):
Dude, work.

John Yoo (37:56):
And looking back, I wish we did do something more special, you know, get t-shirts printed or, or I don't know, go out to go, on a trip or something. Cause you know, you gotta celebrate these things, but when you're just like in it, you can't really think about anything else. So trying to be a lot more mindful of that this year.

Pablo Srugo (38:14):
I think that's smart. So does that mean you celebrated the 15 million A?

John Yoo (38:17):
No, not, We will. We will. We'll go do something. 

Pablo Srugo (38:22): 
Because that closed when? Was that December?

John Yoo (38:25):
That was, yeah, like kind of end of November, December timeframe. You know, I think by the time this podcast comes out, you know, it'll have been announced. We just moved into a nice larger office and, you know, we'll do some party, but we're so busy kind of serving our customers that it's hard to find those times. But, you know, like anything else, nothing's going to happen until you say it's important and you have to make deliberate time to make it happen. So, you know, we'll go do something.

Pablo Srugo (38:55):
And just employee-wise, you were 5 at the end of 23. By the end of 24, before your A, where were you at?

John Yoo (38:58):
We had 17 people. I was looking at our headcount. We've doubled our headcount every quarter for the past few quarters, and we'll double it again by the end of this Q1. So, a lot of people talk about, well, AI is making it possible for one-person startups to build a billion-dollar company. Maybe one day, but for us, there's a lot of hands-on keyboard. It's a competitive market. We really want to scale, and so we need to make sure that we are supplementing them with all the AI tools. And they are. We're leveraging AI big time, not just natively within our product, but for us to improve our productivity. But if you want to go fast, there's nothing like having a single-threaded owner who can really focus on their specific kind of job to be done.

Pablo Srugo(39:46):
Perfect. Well, John, let's stop it there. I'll ask the last two questions we always end on. The first one is, when did you feel like you found true product market fit?

John Yoo (39:56):
That's a really good question. Everyone says you'll know it when you feel it. Yeah. For me, it was probably around October of 2023 was when I first like got the feeling. So it took us, you know, four months to get to 10 customers. And then starting in June, July, we started kind of averaging, you know, seven to 10 customers a month. And so by the time we reached like 50, I was like, holy crap, this actually is working. We just got to keep doing what we're doing and it'll work out. And so that's the first part. The second kind of wave of product market fit was when we would go to events and like people would talk about us. At the end of the day, it's about like market validation. And I have people that you haven't reached out to or talked to know you guys' names. I think that is a sign of some big market validation. I always kind of approach it from, there's even big conferences like AWS reInvent that happens every November. Every reInvent was very different. Like the reInvent that I went to in 2022 was, don't know a single person. I'm walking around doing that stupid, like, oh, I'm John. 

Pablo Srugo (41:07):
In your suit, yeah.

John Yoo (41:09): 
In my suit and no one gives a shit. The second reInvent, I'm walking down the hallway and like, you know, like I see customers, right? And I get to say, I get to stop and say, hi, like, how are things? You know, is there support? You know, how are we supporting your, you know, use cases, et cetera? And then the most recent reInvent that we went to last year was like, we know like so many people in the room, people are coming up to us, you know, you have our Suger swag on. It's like, oh, I forgot about you guys. And, you know, when you kind of get that validation from people, it is so empowering and honestly, incredibly humbling. So, so humbling that, you know, we're doing good and the market is recognizing us.

Pablo Srugo (41:51):
And then the last question, normally we ask about a piece of advice, but I'll ask something more specific because we didn't talk about kind of the founder breakup. And so I'll ask this question, like what happened, you know, at a high level and maybe more specifically, what did you learn and what advice do you have around? Because I think a lot of people go through, a lot of founders go through like founder breakups or key employees leaving early on. And I don't think anybody wants to talk about it. So the question really is like, yeah, partially what happened just to set context, but then what's your biggest lesson or learning? How did you deal with it all?

John Yoo (42:27):
Yeah. So this happened in June of 2023. And, you know, timing wise was also right after we raised our seed round. And so that's another complexity of just things to deal with. You know, the reason why, like ultimately we just had a difference in vision of what we wanted to build. And there's a little bit of friction around that throughout the product development process. and I gotta say it is, emotionally draining because I knew the third co-founder personally, he was the one who said, hey, let's work on this idea together. You're looking at the barrel of the gun of like, hey, is this what's best for the company? Because ultimately, you got to set egos aside, personal feelings aside and do what's best. You know, we just raised the seed round. So honestly, telling the investors was kind of the first hard part. You know, they were like, what the heck? Like that was a month ago. Were these feelings? Like, do you guys know these feelings? Like when you raised the round and they're asking all these probing questions, but ultimately, you know, They are supportive, right? And part of it is, I got a really good feedback from someone that was like, whenever you talk to the board or your investors, you're not asking for approval, you're asking for alignment. And so we were able to explain very specifically why we thought this was the right decision. Now, that said, there's all these legal things that we have no idea. It feels like the world is crumbling. And it is very natural to feel a level of guilt in all these things. Besides telling the investors, the hardest part is having a very honest conversation with that founder. Of, hey, is this working? And honestly, this whole release might have even been 10 times smarter if you had a bunch of employees explaining, hey, the company is not going under, or you want to present a unified voice. And I guess, thankfully, at that point, it was just still four people, and that made it a little bit easier. To its credit, I got to say, you know, the first thing that he and I aligned on is the value is small. So let's keep this amicable and know that this is not personal, it's a business decision. And, you know, the first thing that he did when he saw me afterwards is just give me a big hug and say it's okay because I was incredibly distraught. And to be completely vulnerable, I felt a tremendous amount of guilt. But once again, this is a job that we've signed up for. We have to do it. And he's a tremendous individual and I wish him all the best. And what I learned from that is just You can't let things fester. I think that is kind of the worst thing, which is if you have some of these thoughts and it's keeping you up late at night or you're seeing some signs of splinters, it's way better to address it earlier than later. Because as I mentioned, it's 10 times harder to do it as you're scaling. As things are working, it's hard to figure out why. The second piece is you just have to do it with empathy and transparency. I think it's never good when it is just, you know, hey, we're doing this and then just toss him onto the curb because of these differences in opinions. I think it is worthwhile to have that conversation and not just say, here's the result, but actually explain why and try to come to a common understanding. Because, you know, the value is small. It really is. And you kind of want to just do right by people who did put in their time and energy, even if it didn't work out.

Pablo Srugo (45:56):
Perfect. Well, John, thanks so much for being open with us and sharing your story and sharing the hard parts of it, which is the pieces that everybody wants to kind of know about and figure out how to get through and the parts that people are sometimes hesitant to kind of dive into. It's been great having you on the show, man.

John Yoo (46:14):
Thanks so much for having me. I had a great time, Pablo.

Pablo Srugo (46:16):
So guess what? I met this founder who listened to every single episode of the Product Market Fit Show. He just called me and he sold his company for over a billion dollars. That's right. If you listen to every episode of the Product Market Fit Show, that's what's going to happen. That's just, it's, you know, I can't say it's guaranteed, but it's what I've seen. It's just, it's what I've seen in the past, but you won't know for sure unless you, you know, try it out for yourself. So go back because there's over a hundred episodes of the Product Market Fit Show and you haven't listened to most of them. Check them out.