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The Only Thing That Matters
Welcome to "The Only Things That Matters", where we deconstruct the path to product-market fit of successful founders and extract the principles and frameworks behind their success so that you can apply them too.
The Only Thing That Matters
Seeking freedom after a $130M exit with Pau Sabria (Olapic + Remotely)
What happens after you sell your startup for $130M?
Join us as we sit down with Pau Sabriá, the mastermind behind Olapic and Remotely, to unravel the secrets of sustainable business growth and personal freedom.
Discover how Pau transitioned from raising over $22 million in venture capital and selling Olapic for $130M to a more balanced and fulfilling approach with Remotely, where sustainable revenue growth and a harmonious work-life balance take center stage.
Learn how his strategic decisions and philosophical shifts can guide you toward building something impactful without the overwhelming pressures of venture capital.
Pau's journey offers invaluable lessons. After a lucrative exit with Olapic, Pau and his co-founders approached their next venture with a focus on freedom and sustainability.
We delve into their thoughtful funding strategies and the dynamics of co-founding a business with diverse financial backgrounds. This conversation is a goldmine for anyone looking to create a fair and equitable environment while maintaining a sense of autonomy.
In this episode, we explore the labyrinth of startup funding, investor relationships, and the importance of timing in entrepreneurship. Pau shares his experiences on choosing between personal funds and external investments, and how bootstrapping can offer resilience against market fluctuations.
We also uncover the journey of Remotely, from its inception to finding product-market fit, emphasizing the role of past experiences in accelerating growth.
Tune in for a treasure trove of insights on sustainable entrepreneurship and discover how Pau's strategic decision-making can be your roadmap to success.
We wanted to optimize the level of freedom that we would have while building these new businesses, and that freedom, it's something that is really really hard to do once you go down the path of venture capital. The reality is that venture capital is a business, and when they fund businesses is to expect a return, and then you kind of don't explicitly sign anything that forces you to sell. But there there is something that you know, that the other one knows that you're entering, and that is a kind of a gentleman's agreement, if you will. Um, that there has to be some sort of expectation for growth, for liquidity, and the capital stack is stacked, I guess, against you if you don't necessarily do those things.
Ariel Camus:Welcome everyone. This is Ariel Camus, and this is the Only Thing that Matters the podcast where I interview successful founders to deconstruct their path to product market fit and extract the principles and frameworks behind their success. The principles and frameworks behind their success. Today, I am super excited to welcome Pau Sabriá, a seasoned entrepreneur and co-founder of Remotely, a marketplace for software developers in Latin America, serving US-based startups. Pau has an impressive track record, having previously raised over $22 million for his first company, Olapic, which was later acquired for more than $22 million for his first company, Olapic, which was later acquired for more than $130 million. With his current venture, remotely, Pau has shifted focus from high capital influx to focusing on sustainable revenue growth and personal freedom, steering away from the traditional venture capital path. Join us as we uncover the insights and strategies that have guided Pau through the ever-evolving landscape of startup entrepreneurship. Let's get started with Pau Sabria. Hi Pau, it's so good to have you here. How are you doing?
Pau Sabria:Hi, I'm good, Thank you. Thank you for having me.
Ariel Camus:Well, thank you so much for making the time for this. I know you have some construction going on around you, so hopefully you know no ceiling or anything will fall on you. Thank you.
Pau Sabria:Yeah, apologies for the sound.
Ariel Camus:No, it's okay, it happens and luckily we have like some level of noise reduction technology nowadays that I hope will help us.
Pau Sabria:Great.
Ariel Camus:All right, we have a lot to cover. You are what people will call a serial entrepreneur, and whatever that means, it really doesn't matter. But in the context of today's conversation, I'm super curious to discuss the differences between the two businesses that you have started. I think it's worth highlighting that you raised a significant amount of capital for the first company. I think it was more than $25 million with Olapic. Is that correct?
Pau Sabria:About a little bit over 20. All right, about 22, something like that.
Ariel Camus:Okay, and you exited the company on an acquisition of more than $130 million. Super worth highlighting and congrats on that. Thank you.
Ariel Camus:We'd love to hear what's behind that story, but we'll see if we get to that. What caught my attention is the fact that when I hear about, remotely, your new company, I don't remember a single time hearing anything about you raising capital or like a dollar raise being something worth you know highlighting right. It seems like you're focusing on the actual business KPIs, like your revenue, your growth, the number of companies you're impacting, and I don't know. I thought that was a super interesting place where we could start. We can get to what the companies do later, but I would love to hear first what's been your philosophical approach between one company and the other when it comes to starting the companies in general, and particularly on the fundraising and capital side of things.
Pau Sabria:I'd like to start kind of by pointing out that one of the main drivers of the types of businesses that I've been building or working on have always been the drive for learning. I enjoy the journey of learning a lot and a lot of what Olapik was, which was effectively a B2B software as a service high ACV marketing technology company, which is a mouthful. I wasn't, like passionate about helping large consumer brands make more money or sell more items, but I was more passionate about the idea of what it takes to build a business and how to kind of the quintessential struggle of bootstrapping and creating something from nothing. And with Remotely, which is a labor marketplace, that is different, right Like I think that a lot of people decide to do more of the same and we, with my co-founders, we didn't want to go into just doing another B2B software as a service business. We like the idea of starting a marketplace which has different challenges and learning from that experience as well. But we were, as you were pointing out, we were lucky enough to have a very good financial exit with Olatik and, you know, while we did take some time off to kind of think what to do next, we went back at it quite quickly and in the kind of.
Pau Sabria:We did take more time thinking through kind of the principles of what we wanted to build going forward, and we did extensive research on the kind of what we wanted to do, like how we wanted our kids to look up to us, how, like, do we want to work more, how, how do we want to be able to work, and and also what are, what is the type of life? Do we want to work, to be able to work, and and also what are, what is the type of life that we want to live once we have made the money that we had made, and and kind of try to find a goldilocks type of equilibrium between intellectual challenge, work, ethic, but at the same time enjoy and give experiences to our kids and so on and so forth. And so we narrowed down into something pretty basic which was we wanted to optimize by. We wanted to optimize the kind of the level of freedom that we would have by having while building these new businesses. And that freedom. It's something that is really really hard to do once you go down the path of venture capital.
Pau Sabria:The reality is that venture capital is a business and when they fund businesses is to expect a return, and then you kind of don't explicitly sign anything that forces you to sell, but there is something that you know, that the other one knows that you're entering, and that is a kind of a gentleman's agreement, if you will that there has to be some sort of expectation for growth, for liquidity, and the capital stack is stacked.
Pau Sabria:I guess, guess against you if you don't necessarily do those things. And so our vision was let's try to get to something that doesn't rely on venture capital, because that will give us a higher degree of freedom than if we do, and that dictated in a big way the type of business that we would go into, because we had to be able to monetize quickly, and also the type of industry market that we would go into, because there are industries that you're not going to be able to enter without significant capital investiture, like I don't know. A good example of that is AI right these days. And so all of those decisions played into this goal of trying to maximize freedom.
Ariel Camus:That is super interesting and I can relate to a lot of that and I think a lot of like second time entrepreneurs can probably relate to that and I'm curious to see if we can imagine a parallel universe where you started the first company but for whatever reason you had to shut it down. You didn't get the exit and you went into, like, starting a second business. Let's say that happened. Maybe you would have been kind of frustrated by that and not starting a second business. Let's say that happened. Maybe you would have been kind of frustrated by that and not starting a second business.
Ariel Camus:Let's say you did, but you didn't have the financial uh, let's say, backup to to start a second business and optimize for this much more balanced approach to life. Do you think you would have done things? Definitely, how would have? I know it's hard to imagine a parallel universe, but life Do you think you would have done things differently? I know it's hard to imagine a parallel universe, but how do you think having that financial backup made you do things differently and how would that compare if you hadn't had that?
Pau Sabria:I don't think that the financial backup played a big role. The reality and this led to a slight cheat is that we did actually raise a little bit of funding for remotely for the second business, and I'll explain why. We went raised, obviously being extremely transparent about everything that we were going to do and what we wanted to do and how we wanted to run the business. There was the idea that our I have four well, there's four of us, there's four co-founders, and two of them haven't had that type of exit that we had right, and going into this new business, we didn't want our availability of capital to kind of play a role in those founder dynamics, so we had to design it with a minimum kind of common denominator in terms of wealth. And so we had a plan to self-fund and fully bootstrap the company, going in determined by the amount of capital that the person the founder with the less amount of money could afford. And then what happened is that COVID happened.
Ariel Camus:Yeah, because you launched like right before COVID, right.
Pau Sabria:I think it was February 2020.
Pau Sabria:Exactly.
Pau Sabria:And so then COVID happened, and what happened was that we went into it with an expectation and a timeline of when we thought we were going to be able to raise, to generate revenue, and very quickly the levels of uncertainty in the startup world went through the roof and hiring freezes became universal and no one knew what was going to happen or what, even like what, the current quarter was going to look like.
Pau Sabria:And so we decided that we were going to raise a little bit of money, because we couldn't hold our breath for that long with that minimum amount of or maximum, rather a maximum amount of capital that we had set aside for the business. So we did reach out to a few investors say that we wanted to raise a little bit of money for this non-BC bankable business. So we did reach out to a few investors to say that we wanted to raise a little bit of money for this non-BC bankable business, and people gave us the money and so we decided to push through and the reality is we still have most of the money that we raised in the bank because the company became very low, burningburning kind of type of business and we're looking kind of forward, to not having to raise a lot of money going forward Like that's the goal, see if we can. It's almost like a design constraint that forces you to manage the business differently.
Ariel Camus:It is super interesting and, I guess, emotionally intelligent what you did with the other co-founders trying to create this fair playing field where everyone was coming into the business with the same, I guess, possibilities and opportunities to play the long-term game. And I'm curious, how did that process go? It's a very unique or maybe something that doesn't get talked about very often. I feel like many first-time entrepreneurs might think well, if I can end up with a larger percentage of my company, if I can put more capital, then that's better for me, I have more ownership and all of that. But in your case it seems like you did that differently. What, what were the incentives, what were the the, the goals to do it that way?
Pau Sabria:I think. I think that, um, it's something that worked out well for us with with olympic. We always were equal in all capacities, equal salary, equal share with the three of us and even though it's hard, at the end of the day you know that it is going to be unfair to someone doing that. It's always going to have some sort of an impact. Different founders depending on their role, they'll face different types of challenges and they'll have to sacrifice in different ways. We had my at Olopec. My co-founder, luis, was our CTO and he had to travel often to Argentina where we have our development team, and that was an important investment from a personal sacrifice, family, work-life balance kind of perspective. I had at some point to deal with a lot of the issues we had with the acquiring company and my co-founders had to deal less with that and my co-founders had to deal less with that. So at times during the company it's hard to kind of understand who will kind of sacrifice more than the others.
Pau Sabria:But I think it's an exercise that is really really hard to try to forecast at the beginning and try to attribute different kind of. So we decided to go with the just saying for everyone. That way everyone is like pushing forward to maximize everything and there's no kind of you have I have kind of type of conversation and that worked well for us in that instance. Now we try to apply the same thing with the hopes that you know you try to not probably maximize the whole as opposed to your own personal benefit, I guess is the interactive we will always wonder if we would have like.
Pau Sabria:The reality is that there was a C scenario that we never explored, which was that we do go out to try to raise that money that we ended up raising. We raised 1.5 million and at the moment that we have the term sheet that sets the value, we then do it ourselves and in a way you have this dual kind of contribution to some degree. You have kind of an LP-ish kind of relationship as an investor with the business and then as a GP-ish as an operator in the business, as a co-founder of the business, as a GP-ish as an operator in the business, as a co-founder of the business. And there is one benefit which is that you would have a higher level of autonomy with that type of relationship and we had put the money in.
Ariel Camus:Can you explain why that would give you a higher level of autonomy?
Pau Sabria:I think that because even today, there's a few things that we are bound by the investment agreements that we signed right, like there's like information rights we have some limitations to what we can do in terms of raising that we cannot invest in cryptocurrencies not that we would, but if we wanted to at some point it. Of raising that we cannot invest in cryptocurrencies not that we would, but but if we wanted to at some point. It's something that we need to ask for permission. Like there's a level of decision making that you would have to go through the legal approvals with, with the investors, and that would have or could have different degrees of kind of headache, depending on who those investors are and who those investors may be in the future, in terms of sometimes they change who the person that you interact with is.
Pau Sabria:And so that level of autonomy could potentially have gone away. But obviously there's a negative. That is what? How would that relationship change, and how would your perception of the risk of the business and the subsequent downstream decision making, how would that change as well? Um, and I don't know. I don't know the answer because we never did it, but it's something that we think about, um obviously in hindsight, everything is 2020, now that we know where remotely is and that it's going well.
Ariel Camus:The the obvious bias is like we should have done it, but, but I wonder if we should have done it do you think it would have changed your relationship with the other two co-founders if you had put the money once you had the valuation from the other investor?
Pau Sabria:I don't think so. I'm more worried about my, the level of execution and aggressiveness, um, and therefore I wonder if we would have arrived to where we have arrived. If we had, you know, would it have been more fearful, um, and therefore not got into where we have gotten today?
Ariel Camus:that's, that's my biggest question you think that if it had been your money, you would have been maybe more fearful? Yeah, makes sense. I mean, it's when it's your money. Uh, it's your money, right? Um, yeah, no, it's. It's fascinating.
Ariel Camus:So I guess, um, if I try to extract, what I'm hearing is that you more or less knew what you were paying in exchange for that money, in terms of things that you were giving up or that you were giving to the investor, like this information riot or some limitations but at least you knew what you were giving, right, at least you knew what you were giving, right? Yeah, on the other side, if you had put the money yourself, maybe it was more uncertain, right? What would have happened? Right, there was more risk of maybe moving more slowly because you're afraid of losing your money. Maybe you said that you think it wouldn't have happened, but maybe having four co-founders that don't feel like equals would have created an incentive for the people with the lower percentage maybe to have less skin in the game. Those are things that, as you said, it's impossible to predict, so you'll much rather take the option where you know what you are giving instead of taking the option where there's much more uncertainty.
Ariel Camus:Correct, that makes total sense and it's fascinating and I say this because a lot of people might think well, you know they had a lot of their own money to start their second business. Of course they did X and Y and Z, but it's super interesting to see how you know things are not always that obvious and how there are incentives and you know perverse incentives in both directions and there's just like no right or wrong. But what matters is that you're thoughtful about why you make those decisions. And talking about thoughtful decisions, why do you think these investors that invested in Remotely, knowing that this was not a venture-backable business, knowing that you were not chasing a big acquisition, a big exit, the next big round, why did they decide to invest in remotely?
Pau Sabria:I think part of it was that, as you know, investors usually have to understand what is the area and the thesis that you're investing in, but that a lot of what you say at that point. And at that point, bear in mind, we had nothing, we had no product, we had done some research and little else. The basis of it was that, especially as a seasoned investor, you know that the entrepreneur will get a lot of it wrong and there's a lot of things that they will change their mind on. And so we had two types of investors. We had investors that had invested with us at Olotech, and so for them, I think it was a little bit different. I think for them, when they invest, oftentimes they invest in an additive basis. So for them, even almost if they write off that investment, it's fine because they already got the win from the first investment. So they pull you together, and oftentimes I've seen investors that invest in founders that have had an exit exclusively based on a principle of I'll invest again, because if they were lucky, maybe they're lucky again, and so I would put those into a different pool. But for the investors that were new, I think that to some degree there was the sense that we had tasted something blood in terms of we had been in a VC-backed business and there was the idea that it was kind of cute that we were going to do this bootstrap thing.
Pau Sabria:But the moment that we saw that we had something in our hands that could potentially get very big, that we would actually go for it, right, that we would find you know, we would find compelled to raise money and swing for the fences in a way that would be much more aggressive. And, to be clear, the fact that we are bootstrapping the business doesn't mean that we're not swinging for the fences, just that we're using different timelines. So we still want to make remotely as big as we can. It's just that we don't need to make it within five years, and the idea is we will make it very big but over a longer period of time, and that's fine by us and that's fine by us. And so they thought that maybe we found this type of behavior. We would kind of feel the urge to kind of grow faster and faster and faster. There is something to that that I think is true, meaning like now that we're building, there is a rational part of ours that compels us to make it better and more efficient and grow faster, and so on and so forth. So there's some truth to that.
Pau Sabria:At the same time, the world has changed a lot between when we did that raise and now and there was a period in between in which people were raising crazy rounds of funding, um, and we stayed away from that and when the world turned and everyone was doing layoffs and everyone was kind of going through the necessary kind of readjustment. We didn't have to, because we had self-imposed this kind of we will not do this, and so we had a slightly easier time. I sometimes think about was it a missed opportunity or not to raise the money, and so on and so forth. It's hard to know, it depends on how it plays out, but I think that I certainly enjoyed a more, more stable path, albeit being a little bit more linear and less exponential, next to all of that if there was a massive opportunity to grow much faster and it was that like that obvious that you know that if you raise more capital, you could, you know, take an advantage of it.
Ariel Camus:Will you do it? Or that will compromise some of the basic pillars of the type of business you have tried to establish for you and your families.
Pau Sabria:So I think, in the way that I do think that a lot of your business relies on timing right, and in our case, our timing was a little bit off with when the opportunity struck. As you said, we started the business in February 2020, but we had nothing, and so when the move towards remote work started, the challenge we had in terms of, or the business opportunity that we had in front of us was a little bit too early. Just as a reminder, remotely is a labor marketplace for software developers in Latin America, for US-based software companies, and so the entire shift towards remote work helped us tremendously. But at the peak of the last software bubble, if you want to call it something, which was winter 20, we were still a very, very tiny company, and even though we did feel the big pull from the market in terms of demand, we were too small to take advantage of it, and so we know of companies that were significantly more advanced that at that point, they were just riding a wave like no wave they've ever ridden before, and so I think that that is something that, in our case, we were a little bit off and we couldn't kind of take fully advantage, regardless of the amount of capital that we could have raised right and then very quickly thereafter you had the opposite, like a significantly nuclear winter by which everything cooled and again, no matter how much money you have, it's not going to help you tremendously kind of improve your metrics as a business. And so we stay very, very, very focused on trying to well one survive the nuclear winter, to distinguish and quickly assess what it feels and what it looks like when you are at the peak of a wave, because oftentimes you don't really know.
Pau Sabria:You think that's the new normal. Oh, it's normal to sign contracts without having to talk to someone, right? You think that sales is easy versus what is surprisingly tough, and you can measure all of this in different ways, like ratios of sales and marketing spend relative to how much contract value you add, and so on and so forth. Like you see the two sides of the coin, when times are really good and when times are really bad, so that at least you get a better sense of where you are in the cycle going forward.
Pau Sabria:And then our focus became okay, let's survive. Our focus became okay, let's survive, let's understand what operating this business in really, really dark times looks like, and let's sharpen our much scale as we can so that when things go back up and to the right, we're going to be in a much better position to take advantage of this. Will we raise money then? I hope not. I hope that by then we'll have enough cash flow generation to be able to fund that growth ourselves and kind of reinvest our earnings back into the business. But it's not out of the question that at that point it could potentially make sense to raise more money.
Ariel Camus:So what I'm hearing is that you feel, or you believe, that if you can do things with your own money, it's much better than doing it with someone else's money because of the strings attached, but that at the end of the day, if you happen to find yourself in the moment where you identify a wave that you can ride and benefit from and you feel like you need more that you haven't generated yet, you might take that money, even though that might also compromise some of the type of business that you have tried to create to have a better balance compared to when you have someone else's expectation pushing on you. Correct, right, perfect. So let's now go back on time a little bit and let's start with ola peg. We'll get to remotely after. I would love to hear how did you come up with the idea? How did the opportunity show up? How did you decide to say, well, let's uh, take advantage of it?
Pau Sabria:my co-founders and I were attending business school in new york in 2000, between 2008 and 2010. And so, as a reminder, the iPhone had just came out, in summer 27. And the iPhone went through some subsequent kind of improvements over the time of those first two years in which, at the beginning, you could take pictures, but you couldn't take videos. People don't remember this. But there was no camera in the front, the app store was very nascent, there weren't many apps, instagram didn't exist, et cetera, et cetera.
Pau Sabria:And so we but we saw early on the rise of photo sharing, if you will Like, the fact that everyone had a camera in their phone, in their pocket. But we saw early on the rise of photo sharing, if you will Like, the fact that everyone had a camera in their phone, in their pocket, was going to change the game in some capacity. Bandwidth was going up and into the right and the web was becoming much more visual than what it had been. You still didn't have streaming services in the same way that you had Netflix, right, but it was something that Netflix still relied heavily on on, like DVD rentals, for instance.
Pau Sabria:And so we went into, we thought about the idea, we came up with the idea of a group photo album and initially it was going to be for consumers, and when we graduated from Columbia and decided to go full-time with this shortly thereafter, we decided to shift to a B2B product. We were relatively successful at monetizing the concept of a group for album. It did require, like, really, really high volumes, and I remember doing the math of how many premium accounts we had to have to be able to pay one salary and it just seemed like we would never get there. Um, and that was very scary.
Ariel Camus:What were the use cases for the, the b2c approach?
Pau Sabria:so initially the idea came from a group trip. So the idea of like going on a group trip with friends and being able to pull together photos of the group trip, um. But then it became pretty evident that it would be hard to like who. Who do you charge in a group trip? Right, Like who foots the bill? And that was going to be always like a friction If you don't know who you sell to, it's going to be hard to sell. And so the initial idea we thought was like what are group events in which there's a clear buyer that wants to pay for them? And so we went into the wedding space and clear buyer that wants to pay for them? And so we went into the wedding space and we thought that couples would pay for it, and and we were very successful at monetizing that. Um, but the volume and the scale of the market was such that it just the revenue was not very meaningful um and so how much?
Ariel Camus:how much were you charging per wedding, per couple?
Pau Sabria:we were it was expensive. We were charging about 80 bucks per wedding. Um, so, for a, for a premium photo shoot like bear in mind, I think, uh, back then flickr flickr was a premium service and it was $25 for a year, and so we had unique features like a moderation queue so that the couple could moderate what pictures went into their web album and things like that, because they cared about those types of things. But we were able to monetize significantly. Well, uh, it just was a slow business and and and acquiring weddings is very expensive because it's a very inflationary market, um, in the sense that you compete in advertising with the ring makers and the venue, uh, rentals and so on, and they make significantly more money than you, so they're willing to outbid you.
Pau Sabria:And so at some point we decided what? What if we find? We found there was an event in which you participated in pitching to a media company, one of the largest newspapers in the US, in New York, and we went and pitched the idea of essentially collecting all these photos of events happening in the newspaper, and we thought that that would give us like a cheap customer acquisition strategy, so to speak, for the wedding business. And we won that competition and we signed a contract with that newspaper to power their group photo albums a contract with that newspaper to power their group photo albums and we made more money with that contract than all of the weddings that we had done up until that point and we thought, wow, this is so much easier. So we followed the money and over the following six months or so, we sunset the wedding product and went full B2B.
Pau Sabria:At some point we thought we could do both Probably one of those first-time entrepreneur type of mistakes and you very quickly realize that it's really, really hard to go both B2B and B2C and in fact, no one does it because it's too confusing, too hard two different companies, two different DNAs, almost. And so we decided to go B2B, honestly, because it was easier path to monetization and capital efficiency. This was end of 2010, which was at that time at the bottom of the recession of GDP in terms of the US coming out of the 2008 crisis, and so there wasn't much VC out there. It was really really dark ages. Not many entrepreneurs building businesses.
Ariel Camus:If people feel that today is hard to raise money, back then it wasn't possible and so the way the, the amount of capital you could raise back then compared to what we have seen the past few years, was well, I guess the last few years were ridiculously high, right, but you had to make things happen with way less capital back in 20 and now that it feels that things have cooled tremendously and people are kind of complaining, if you look at stats from the Venture Capital National Association, you see that the volume being invested today is still comparable to like 2000, which was significantly higher than 2010.
Pau Sabria:And so things were gloom. Back then. We decided to go with high ACV type of products and it worked well for us.
Ariel Camus:Can you explain ACV and what the value was compared to the consumer product?
Pau Sabria:Yeah, so ACV usually I call it the annual contract value of a customer. The newspaper was paying us $13,000 per year and was allowing us to license that kind of experience to someone else as well. And so, without knowing it, we had built a software as a service business, and I say that truthfully. We didn't know what SaaS was or meant. Truthfully, we didn't know what SaaS was or meant, and the idea was that if we see if we could sell it to more media companies compared obviously to the $90 per account, people just get married once at least for a while. Get married once at least for a while.
Pau Sabria:Um, and so the, the idea that you could make 17k every year for the foreseeable future was was was a very appealing one, and the good thing about again the acb is that the math to pay that first salary becomes so much easier, right, like it's, at least for me was like well, I think once I have the first customer, I think I can convince a couple more, and soon after you can get to that like 50 000 per year, and when you're from 50 000, you start to see the light at the end of the tunnel where you can pay the first salary of the first employee, and so I've always thought that pricing is a little bit like gravity, in the sense that you know there's planets with different degrees of gravity and how high you jump is determined by that gravity.
Pau Sabria:And so if you have high ACV, your gravity is low, meaning that with a relatively low manual effort you can get pretty high in terms of revenue. That obviously kind of hides maybe a lack of product market fit. Like you may not have product market fit and feel that you have product market fit because you've been able to sell something While with a low ACV say something more in the vicinity of like $10 a month, something like that the only way that you break free from that gravity is with like really strong product market fit, and it's something that I don't know. Maybe my risk aversion have always pushed me to high ACV types of products because you can work through the kinks of your product and find, without having to kind of really, really like try to do it on a very purest like it's almost like swimming without oxygen tanks right, like it's so much harder. I have a lot of respect for more entrepreneurs like you that go more of the consumerish route with low ACVs.
Ariel Camus:Well. But it's also something you learn, right that charging more, while counterintuitive, it's usually always better. Right, you create a perception of value that is higher. So people tend to give more value to the product just because it costs more. Right, it also makes it some kind of like virtual circle, because someone paying more is more likely to take advantage of whatever they paid for, it's more likely to rationalize the investment they made. But just the fact that they will be putting more effort into using it makes it more likely that they will be happy with the product, which means they will have or you will have better testimonials, which means you will be able to attract more people. But also, because you make more money, you have higher margins. That means you can reinvest more of what you make into making the product better and you know if you can get there.
Ariel Camus:Like, I don't think it really matters whether it's consumer or B2B. Of course B2B, the average revenue per user or ACB will be higher normally. But thinking in terms of high pricing, I think no matter if you're doing consumer or B2B. It's super important because otherwise you're competing in price and that means that you all end up looking the same and converging to the average, and that is not a fun place to be in. So, consumer or not, I think thinking about high prices is super important.
Pau Sabria:And I think that relative related to price. I think there's another concept that we also learned almost intuitively with Olapic, which is how you tie price to value creation. The problem we had we did that first pivot from wedding B2C to media company B2B with high CV, but the truth was, like looking ourselves in the mirror, the value that we were creating, the value proposition that we were creating for customers, was a little bit weak. It was a lot of like consumer engagement and back then Facebook was like pushing companies to build like audiences and getting likes right. Like everyone was chasing the number of likes you had on the fan page and there wasn't like a conversion to dollars or to value creation, like why are we doing all of this thing? It was kind of like a game and we felt that that value creation was relatively disconnected from our business and, as a result, everything suffered. Right, like, our ability to predict to sell was harder, our sales cycles were longer, everything was a little bit tough.
Pau Sabria:But then we ran into one customer that, instead of being a media company, was an e-commerce store and they told us that they wanted to showcase the photos of their consumers using the product on their product detail page and the premise was that they felt that that content would increase conversion rate customers again if we did an early adopter program to try this widget that we had for media companies to try it in e-commerce sites to see if conversion rates actually increased. Funny story is that my co-founders also got an email this long from me saying that this was a mistake, that conversion would decrease, obviously, and that we were going to make these companies lose money instead of make money. But we put ourselves in the hands of the A-B testing gods and the conversion rate increased 9%. What?
Ariel Camus:was your thesis of why it was going to be lower.
Pau Sabria:I just thought that people were a lot of decision-making in terms of why people buy something is aspirational and that seeing things by their true looks would not like the quality, would not the UGC? Basically, my thought process was that UGC wasn't inviting people to buy and was sowing them with doubt as opposed to giving them confidence to purchase. That was my initial hypothesis.
Ariel Camus:Fair enough. And why was it a hard decision to do this A-B test? You said that you were going to lose money of the company. Why was that?
Pau Sabria:the case. No, well, the losing money part was well, we do the ab test. If, if the people being served the user generated content purchase less, that's like a a lost opportunity of revenue. Right, like that was my. But it was going to be time, right, but no, it wasn't. It wasn't too hard.
Pau Sabria:We went at it because the customers wanted to do it and there's no way to know if something is going to go so far that the theory will take you right At some point.
Pau Sabria:You need to try it, and we tried it and the conversion went up, and the good thing about that, honestly, was the fact that we had a conversion rate increase. That meant that we had a business model. We knew how much money we were going to make incrementally for the company, and that amount of money scaled linearly with how big the company was, and so we could charge more to someone big compared to someone small, and so we could charge more to someone big compared to someone small and our pricing could be tied to that value creation. And the rule of thumb we used was one-tenth If you charge one-tenth of what you create in terms of revenue, people will pay you, because it's a good kind of listen if you're going to make nine and I'll make one people say, yeah, let's do that, especially in the case of e-commerce, where they can actually measure that returning dollars almost immediately.
Pau Sabria:right, Correct, and that was the other piece. It's like the closer you are to that revenue generation in the kind of the value chain, if you are very, very up top in the kind of brand awareness type of part of the marketing or the sales cycle, you're going to be very, very far away from that conversion. We were like smack at the conversion point on the product detail page, right, like when people click buy, and so we could. We could measure that value creation very clearly and that changed our business significantly. That was what we consider. That was second pivot of all of it, where the value creation formula was so much clearer that that yielded like almost an immediate doubling or tripling of our ACV. So the average general contract value of our customers went up significantly. And then our sales cycle went from being about four months three to four months to being one month, right, so we were selling faster at higher ticket prices and and that's when we saw it then, very quickly we decided, okay, this is the way to go.
Pau Sabria:Um, and so we kept the media business for a little bit because it was still somewhat meaningful revenue. We were doing about eight8,000 from it, while the e-commerce business was about $10,000 a month. But we knew that this is what would grow and we ended up sunsetting the media business a few years later when it was doing about $30,000 a month. But the core business of Olapic ended up doing north of $2 million a month. But the business the core business of Olopec ended up doing north of $2 million a month.
Ariel Camus:That is fascinating. So you went from B2C having a low average revenue per user not a huge recurrence, because you're returning customers after their weddings basically to something where there was more willingness to pay. Probably on the B2B side, companies in general have more money than individuals, so they can pay more, but the value was still not measured in the dollar return. And then you found the opportunity where you were closer to the transaction. The value added was directly associated to the actual revenue and that means it's a much easier decision for the person, which means they're willing to pay more and they're willing to make the decision faster.
Pau Sabria:Correct and also important for the scalability of the business. It's easy to teach how to sell this type of product because it becomes very obvious and a very skilled salesperson. You had someone that could. You know you could train. You had to train no matter what, but anyone could do it.
Ariel Camus:That is a great insight. This moment, when you finally make this connection with the e-commerce system, you can charge much more and sell much faster. To me that definitely looks like product market fit. But when you were maybe a few months before that, did you think maybe with the wedding product we have product market fit and what did that look like? And then when you went with the media companies, did you feel also like we had maybe product market fit. Wasn't even a thing back then that you call it like that, but were there like three different moments where you thought like, oh, we found something really really worth pursuing? Or it was always kind of like this is not good enough, this is not good enough. And you only found this being good enough when you got to the e-commerce part.
Pau Sabria:I been good enough when you got to the e-commerce parts. I mean it's all relative right. So I remember it was a great feeling with the consumer product, like waking up with that email that says you've been paid $90 or $80, right. Like having several of those emails. And that's not something you get on a B2B site as much, especially on the ACB. Like the number of transactions you get per month is in the dozens if you're lucky, and so that dopamine hit hits differently when it's this consumer and it truly feels like you're not doing anything for it, whereas the other one you're rowing and it's almost like more a consultative type of sale, so there's a lot of effort that goes into it. It's almost like more a consultative type of sale, so there's a lot of effort that goes into it. So that did feel special and I understand how it can be addictive.
Pau Sabria:But with the sheer absolute amount of money that you could sign with a customer, the B2B is certainly appealing because of that. And then there was the first principle, kind of thinking around value creation that for me clicked it and that ensured that you would have a long-term success as a business, as opposed to like a short-term dystopian, like distortion of. Oh, I think I have have something like deep inside ourselves. We knew that the media business was somewhat weak, um, for a wide variety of reasons, but one of them being this kind of not being tied to value creation, um, but did you talk about it by then, saying, well, this is working, but it is a weak type of business?
Ariel Camus:or there were moments when you felt like this is working and it's amazing no, we, we, we talked about it.
Pau Sabria:There were several indications, right, not only this, like there was the fact that media businesses were kind of dying. Uh, so you'd never want to be in a market that that is then in a decline. Obviously, as an entrepreneur, you always have to kind of be looking at the bright side of things and being optimistic about things and like, push for it. And there's some almost like ignorance is bliss type of message somewhere there that pushes you to kind of keep going. And the reality is that all of like, some people sometimes have asked me, like would you build the business differently now, knowing all of these things? Like would you go into the e-commerce business first and like, like grow it from then? And and the truth is that the e-commerce business needed other things for it to work. It needed e-commerce to be a thing. It needed instagram to exist, hashtags to exist. It needed a lot of things to mature to the point that that became a reality. And if we had started that back when we started the wedding business, none of those things existed and it wouldn't have not worked and we would have moved on thinking like this would never work right and so, in a way, stumbling your way through life to get to the point where that timing is right is, to some degree, important. So I wouldn't necessarily change my steps because we would have missed, from a timing perspective, the opportunity to strike gold when, when we did that said, the reality is in parallel of everything that we were doing. Right?
Pau Sabria:Instagram was created, like literally when we did the pivot from consumer app to b2b with the media companies. Instagram launched and I signed up on the first day of Instagram. I'm user 3000 something on Instagram and we saw the advent of hashtags and the APIs and Facebook bought Instagram. I think that 13 months after they launched and they bought them for a billion dollars, right. So 13 months after the launch, we hadn't even signed our first e-commerce site, right? So success in terms of relative measure is always like humbling because we could have done, know we could have invented instagram.
Pau Sabria:Maybe instead we could stay done on, on, on the, on, on that kind of part of the of the spectrum, and not even in the same industry, right like we were in a shared space in manhattan and in that shared space, which was this is all like pre-we work days it was very, very cheap, very kind of crappy space, but kind of filled with early entrepreneurs that went on to do different things, and one of the interesting stories I like to tell is that in that office space that had essentially no windows we shared, that was the first New York office of Uber, and so Travis Kalanick would come to the office there and we met him and, you know, everyone in the office would hang together with some sometimes and I remember him telling me about Uber and me saying something stupid along the lines of like well, this app, why would you need an app to call a cab if you just go down the street and grab a cab, while if we had taken all our money and gave it to him, probably our exit would have been significantly higher than that of the Olympic right.
Pau Sabria:So there's a lot of different degrees of product market fit that happen in your life and that you know. There is not like there's product market fit, there's no product market fit. There's different degrees of virality that you could hit in different businesses.
Ariel Camus:Absolutely, and timing, as you said, it's so important, but also, yeah, the relative nature of success. If we could travel back in time, we could probably be trillionaires. Right, but that hasn't been invented yet, so let's see what happens to businesses and inflation when that happens. But anyway, what was the year when you found the e-commerce opportunity?
Pau Sabria:That was summer 2012. 2012.
Ariel Camus:Okay, you ended up exiting the company four years later 2016? Correct, correct. And then you started remotely in 2020, right, with COVID. I'm going to skip a very important part. I'm sure you have been asked about the acquisition a lot, but I want to focus today, and in this podcast in general, in product market fit and the early days. So let's now go to the early days of remotely in your current company and let's do the same exercise again, but with a POW and a team that knows much more about themselves. You know businesses. You're in such a different place. How did you find the opportunity? How did you decide that it was worth it? How did you go on trying to validate?
Pau Sabria:it. Yeah, so our idea for Remotely was born out of another idea, which was that we wanted to build businesses. We wanted to build businesses and so, as many entrepreneurs that have been bitten by the back of entrepreneurship, we thought that now that we had had one exit, that we would do a venture studio and that we had all sorts of ideas, of cool ideas we wanted to build. We had found each other as entrepreneurs, founders like we. We enjoyed working together. We had already worked together for many, many, many years and we wanted to keep doing that and that was honestly, something that had. That was more fun and more entertaining and more challenging and more rewarding than, say, becoming a VC investor, an angel investor, which many entrepreneurs go down that path At least for us, that's what excited us. And so we went into a journey to analyze how you build venture studios and talking to people that had built venture studios and again still with the very clear idea that we wanted to maximize freedom. And the challenge with Venture Studios and I'm going to kind of the too long, don't read kind of version of it is that they are de facto VC funds, like you have to raise money to support the structure that builds the businesses, and then, in order for the whole model to make sense, you need to build a lot of businesses. You have to raise money. On the idea, basic pitch would be I need $10 million to build five businesses and I'll put two millions to each and that's it, and you'll have a big chunk of each one of the businesses. And the problem with that was that we didn't know if we would have the stamina of building five businesses, like we had built one, and it was super hard. And so the thought of building, or at least saying that we were going to build five was super hard. And so the thought of building, or at least saying that we were going to build five, was very daunting. And so we thought but if you don't make that kind of commitment, how do you justify raising that amount of money? And so everything falls apart if you want to have freedom of decision of how you want to do things. And so we said well, instead of that, let's go build first a business that is cash flowing and that has high likelihood of being profitable.
Pau Sabria:And in analyzing one of the venture studios that we had looked into, they had a business that was a marketplace of talent in their portfolio and we thought, oh, wow, we should do this, this makes a lot of sense. And we did some mystery shopping and found out how much they were making per developer and we we were like this is great. And very quickly all the pieces fell together because we thought, well, if this is a business that not only gives us the cash but also gives us the talent technical talent to then go on and build all those software businesses we've been talking about, that would be amazing. And so that's how the idea formed and then it was polished right. I think it went through the spark of an intuition to then a polishing of an intuition of the idea, which I think is to some degree important.
Pau Sabria:There's a lot of nuances to ideas that everything has to feel right and, for instance, one of those things was that the type of business that we were pitching we had used ourselves when building Olopek, and so we had direct relationship into how to operate it, like we had built remote teams of engineers in Latin America. So we had a certain degree of authority to talk about the topic because we had experienced it. We had also experienced it over many years, meaning that we knew what the transitions that a company goes through as they grow and scale and what the challenges would be and how would that affect your remote engineering team In the same way? Because we had done it and how we had treated our own team, we felt that we had authority to give a good value proposition to the software developers. All of those kind of little ingredients and polishing thoughts kind of felt that we had not a unique advantage but a unique edge and a differentiating form factor that will allow us to launch the business and somewhat bootstrap the supply and demand in a way that we could see what would be next after the next door.
Pau Sabria:Right, and yeah, we went into the business and relatively quickly started monetizing. I think that the main difference between the Remotely product and Olapic's product was that it was so much easier to sell. Everyone understood what we were doing. We were just doing something, understood what we were doing, like we were just doing something that other people were doing, whereas with Olapic we were selling something new that no one had done before. So there was a significant amount of advocacy and and convincing and and kind of thought leadership and innovation thought that you had to go through first. So this one was significantly faster to kind of quote product market fit. So our business didn't change much from inception to today.
Ariel Camus:And I guess in this case you also took an idea that had already found product market fit at this other venture builder and what was the deciding factor? Was the founder market fit right, the fact that you had authority, that you had experience, that you had an insight that gave you an advantage there, and I think that's super important, and you mentioned that before that with Allapik. I'm paraphrasing here you mentioned it was not something you were extremely, it was not a topic you were passionate about, but it sounds like with Remotely there is not just the type of business that will kind of fund the type of life that you want to have, but also the type of business that will have the type of impact in the world that you want to see, but also by doing something that you are knowledgeable about. So it has all the different components to make it worth pursuing.
Ariel Camus:Yeah, Fascinating. All right, Pao, we're going to leave it here. I'm looking forward to seeing what happens in the story of Remotely, but whatever that is, I know it's going to be exciting, fun, challenging, as always, but I'm really grateful you have shared everything so far. I look forward to maybe doing another episode in a couple of years to see where Remote is.
Pau Sabria:Happy to Mariel, it was great to see you.
Ariel Camus:Thank you so much for tuning in. Your support means the world to me. Thank you so much for tuning in. Your support means the world to me. If you enjoyed today's episode, please consider subscribing and leaving a review. It's one of the best ways you can help this podcast get off the ground and help more entrepreneurs like you. Thank you.
