How to Design a Great Product by Thinking Differently: Live from SaaStr 2021
Henrique Dubugras and Jaleh Rezaei go way back. Not only are they both CEOs and cofounders of successful tech companies—Brex and Mutiny, respectively—but together, they shared an office at startup incubator Y Combinator when their companies were just starting off. Both companies were among each other’s first clients, even while still designing and iterating upon their initial products.
In a live conversation at tech summit SaaStr 2021, Henrique and Jaleh discussed the product and market-based decisions they’ve made while building their companies, and the successful decisions that came about by going against the conventional wisdom.
Watch the full discussion, or read some highlights below.
Understand the market, and yourself, while validating your product
Henrique: Brex came out of a pivot. We got into Y Combinator with a virtual reality idea. As we had previously done a fintech startup in Brazil, we didn’t want to do fintech anymore—we had just gotten to Silicon Valley and wanted to do something bleeding-edge like Bill Gates, Steve Jobs, people like that. We wanted to do VR, but three weeks into YC, we realized we didn’t know what we were doing. We knew fintech, not VR.
One piece of advice I heard was to not only think about product-market fit but founder-market fit. Why are you, as a founder, uniquely positioned to do this startup?
We were young, from Brazil, knew fintech—we thought maybe that’s our edge.
Jaleh: My cofounder and I met working at Gusto; I led marketing, he led one of the engineering teams. Through lots of manual work, growth engineering, and data science, we figured out how to convert our top-of-funnel traffic into actual revenue, upselling, and referring customers.
The catalyst for starting Mutiny was that what we had made was something everyone would need but might not have the engineering capabilities to build that from scratch. We wanted to build a no-code platform that any company could use to convert and personalize for their different audiences.
We had a big vision, but the conventional wisdom at the time was: startups are inherently chaotic, and you should expect wild iteration and messes on the walls; otherwise, you’re not doing your job. While some of that is true, we wanted to create structure and stability within which we could iterate.
Henrique: When we started validating our idea, it wasn’t intuitive how to think about it. We found a small set of customers who said they’d love and need our product, so we started credit cards for startups. For us, it was clear that we’d expand beyond startups, but every time we went to investors, they said they didn’t know about the TAM (Total Addressable Market) for this.
One of the early constraints of product-market fit is you can’t build things that are too complex because [early on] you don’t have too many resources; you need to go after things that are somewhat simple. But when you grow and have more resources, the opportunities can go further than you thought.
Jaleh: One of the best things we did early on was ask ourselves: “for our vision to be true, what are the hypotheses that need to come true?” We ended up creating five hypotheses, each with a metric.
That framework paid dividends for us in the early days because even though we made lots of changes and moved fast between which areas of the business we were investing in, the team was able to move in a holistic way and understand why we were making the changes we were. This also helped in recruiting, when people wanted to know about the pieces that made up the bigger vision.
Do things differently to iterate and grow
Henrique: Brex has an interesting property: every company needs a version of what we’re doing. If you’re starting a business, you need a corporate credit card.
But how can we be better than the ones that already exist? How do we build a better value proposition that’s obviously better than those already out there?
We asked founders: if we built a card that gave you a higher limit, had no personal guarantee, had amazing rewards, and it was super easy to use, would you use it? Not everyone said yes, but a good amount did. But then… can we actually do that?
We knew that if we got to the promised land of offering these four things to customers, they would sign up. We worked backward from there—what is the value prop that most people would say yes to, and how do we make that economically viable and good?
Jaleh: Early on, we made a decision on who our ideal customer profile would be—once we qualified someone who purchased Mutiny, every failure was our fault.
We started selling to customers three weeks after building our product. Some things weren’t yet built into the product, but we took it as our responsibility to help customers be successful; we were really hands-on.
One instance: people would come into Mutiny with 20 different segments to personalize and increase conversion for—but would get stuck not knowing which they would do first, or second, or third, so we started pulling the data for them manually. We didn’t worry that this method wouldn’t scale; we were just solving their problem manually first, then figured we’d worry later about whether we could automate it.
Henrique: It also helped that we were serving startups, and we were a startup. But in expanding outside of startups, we didn’t know the customer as well as we did, and we had some trouble empathizing. We built some stuff wrong and iterated but got back to the advice from YC: talk to your customers.
Founders always have the early customer you have good intuition around, but expanding to different or larger customer segments gets hard, so you have to go back to talking to and listening to your customers.
Another point: you can’t talk to customers just to validate something that’s already in your head.
The ways we were successful were in talking to customers without any expectations, listening really deeply, and then figuring out what to do.
How the build the best team in the world
Henrique: We were really aggressive with recruiting. We made a lot of decisions around how to get the best talent. Many founders say “this is the way I want the company to build, this is what I believe, etc..”
There are so many smart people out there—we wanted our culture to be shaped by that. We hired our CFO and General Counsel to shape our culture. We wanted them to have a say in how we were building things, and we came out with a stronger culture than if we hadn’t done that.
We give a lot of equity, we’re generous with cash. We give titles. Many people say ‘constrain and restrict’, and I get why that may be true in the real world, but above all, we want the best people. That can make all the difference.
We still have a culture of hiring the best people in the world. We always want to change and adapt so we can continue attracting the best people in the world.
Also, historically, especially for early-stage companies, hiring people who have been through other startups helps a lot. The life of startups is so different that lots of the experiences aren’t relevant. If you can get someone who has gone through startups before, that’s a big indicator of if a person is going to work or not work. That was one of our main heuristics. If you’ve been #2 at a successful startup that grew, that’s a good profile.
Jaleh: I think the reason people sometimes say ‘don’t give out cash and titles’ is that people are worried about retention. But you’ve had great retention for early critical hires.
Henrique: I don’t really buy the argument of people joining for the wrong reasons. In the early stages, if a company has a chance of not working… if you’re good you have so many opportunities and you’re choosing to join this startup by two random Brazilian dudes…? [laughs]
If you’re early, there’s so much risk involved; I don’t see a lot of people joining for the wrong reasons.
Jaleh: The thing we did differently, for a few critical roles that were unique for Mutiny, was build the function based on our needs, rather than was is considered ‘world-class’ for that function.
For example, for our customer success roles, we needed to be analytical but also creative. I didn’t talk to anybody from customer success departments; I wrote out the things that were important and started filtering for them on LinkedIn. Our first hire was a math major who was doing personalization and was a consultant—with customer experience—but was also in writing competitions. She was a beautiful writer, had a clear left-brain right-brain combo. She now leads that department, and her first hire was a film major who moved into marketing analytics.
It set a unique cultural DNA of people who are good with customers but have a unique mix of art and science—that’s very important for us. Listen to your instincts on areas where you think you need to operate very differently than how other companies are doing it.
Treat Failure as a Learning Opportunity
Henrique: There was a point where we became obsessed with strategy. We starting building things that were strategically amazing for us, but we forgot to ask if the customers wanted them.
One of our advisors told us about the Strategy Tax.
The Strategy Tax is when you do something that’s amazing for the company, but forget to ask if the customers actually want it. We’ve done a few of those, where we get obsessed with building products we’re pretty sure customers want vs. what might be strategic to have based on their needs.
Jaleh: In the early days, we set revenue as a goal. We set those goals by looking at companies in analytics and seeing their revenue trajectory. When we went through YC we heard a talk by one of the partners from Initialize that resonated with me: when you’re starting something, you want it to work, but you’re not always going to see the reality of how it is, because you want to be ‘right’.
You should always be clear about what your most important metrics are—whatever metric or graph you don’t want to show to your board, is what you should be showing to everybody. That’s the thing you need to fix immediately.
We decided to set revenue goals early on because ultimately everything showed up in revenue. We could see low conversion, churn, lack of up-sell, which would all show up in revenue. That worked well for us, especially since our market moves quickly.
Watch the full discussion: Live from SaaStr 2021 on YouTube