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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
The art of pivoting with Rajiv Ayyangar (Tandem + Product Hunt)
What happens when you can't find product-market fit with your startup idea?
It's time to pivot, and Rajiv Ayyangar, CEO of Product Hunt and co-founder of Tandem, is a master at that.
In this episode, Rajiv shares his journey from the highs of rapid growth to the tough calls of pivoting and transitioning Tandem to a self-sustainable business.
Gain actionable insights as Rajiv recounts how tracking metrics and learning rates helped him and his team decide when to pivot, especially during the pandemic when the stakes were incredibly high.
Learn about the importance of co-founder alignment and structured methodologies for idea validation as we discuss the successes and setbacks of Rajiv and his team.
This episode is packed with real-world examples that showcase the complexities of startup life and the power of resilience.
We also explore the nuances of product positioning, remote work solutions, and the intense journey of fundraising.
Listen to Rajiv's experiences under the guidance of Y Combinator and understand the critical role of refining product positioning for success.
From handling the surge in demand during the pandemic to making strategic pivots, this episode provides a comprehensive look at navigating the most complex moments behind finding product-market fit.
In the early days we would do sort of a weekly retro and sometimes we would track a metric relative to where we were Like how many user interviews did we do, how many people said they were interested, how many people actually tried it, how many people are using it? Usually these are like single digit numbers because it's so early. But one thing that we always tracked was learning rate Low, medium, high. And then why and that was kind of interesting because sometimes we'd have different numbers, we'd have different, uh, learning rates the three of us, depending on what we were doing one kind of consistent pattern was sometimes we get to the end of the week, learning rate low, low, low. Why, what can we do to change this next week? And when there were a couple weeks in a row, we were just like learning rate is still Usually that correlated with we should pivot.
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 to extract the principles and the frameworks behind their success. My guest today is , CEO of Product Hunt and co-founder and former CEO of Tandem, a virtual office tool for remote teams. Tandem saw explosive growth during the pandemic thanks to its innovative approach to supporting collaboration among remote teams. Rajiv's journey with Tandem started in 2018, and over four years, they raised $7.5 million from top investors like Andreessen, Horowitz and Y Combinator.
Ariel Camus:In this episode, we dive into Rajiv's experience with building Tandem, the highs and lows of startup life, and his incredible insights on pivoting, fundraising and finding product market fit. We'll also discuss his current role as CEO of Product Hunt, where he's helping other entrepreneurs launch and grow their products. Get ready for a masterclass on the art of pivoting with all of you, Rajiv Iyengar. Hey, Rajiv, thank you so much for dedicating us some time today. Really appreciate having you here. You have an amazing story as an entrepreneur. I can't wait to hear, so please introduce yourself and maybe the company you built over the last few years when we met.
Rajiv Ayyangar:Oh, it's good to see you after all these years. My name is Rajiv. I previously founded Tandem, which was a virtual office for remote teams. It's like a desktop app where you can see who's around and talk in one click. Yeah, we ran the company from around 20,. We started in around 2017, pivoted several times.
Rajiv Ayyangar:Crypto, personal finance eventually built this virtual office tool and when you and I were in Y Combinator together in summer 2019, we launched it for the first time within YC and then on Product Hunt, where it really took off. That led to this several year journey where we had just a crazy growth and traction. And then the pandemic hit and it got even crazier and we thought we had product market fit. We made the app, we built out the app, we made it kind of deliver on its promise and over the next couple of years, as people started returning to the office, we just saw the top of funnel dry up and, yeah, it was kind of a crazy thing to experience like this this spike that seemed like product market fit, and then kind of a drying up of people looking for this solution. And, um, I know we weren't alone. Like the entire video space and the entire video chat space saw similar spike and then drop. Yeah, it was, it was. It was pretty eyeopening to see.
Rajiv Ayyangar:In any case, like the short version of what happened was we, um, we, we couldn't, we couldn't find a larger market. So we we ended up first trying a pretty crazy pivot around hybrid work where we had hardware devices in offices and let remote people teleport around the office. Uh, that turned out to be just too early, too expensive to set up, so we kind of shut down the company. We gave the company to two of our engineers who were excited to like run it as a kind of a side business. So it's still going. There are a couple hundred teams that use it, but it's just not not on the venture track anymore.
Ariel Camus:It's uh, let's unpack that, that story which, uh, it took you like a minute or two to share, but there are four years of ups and downs and, yeah, I can't wait to go all in. You talked about a few of the pivots and to me as an entrepreneur, that's always one of the hardest things is to decide when you have really tried something enough to give it a fair chance, but also how not to delay the decision unnecessarily to say you know what it's time to move on, and how do you take what you learn from that experience to feed into whatever you do next in the next pivot. So can you share a little bit about the pivoting experience in those years that you were building what happened before Tandem, and Tandem on its own?
Rajiv Ayyangar:Yeah, you know, pivoting is so much more common in early stages than people think. I actually kind of agree with Dalton Caldwell where he said we really shouldn't call it pivoting, we should just call it changing your idea. And you're going to change your idea in small ways and big ways so many times in the early days. So let me describe like sort of I'll trace the arc of what we did and then maybe share some like reflections on that journey, cause it's so relevant to like what I'm doing now at Product Hunt, figuring out the next direction. It's relevant, you know, relevant. The next time I start a company so we started out with so it's, first of all, founding team. It's me.
Rajiv Ayyangar:My old co-founders were Tim Hsu, an incredible engineer, who I met at Yahoo, and then Bernard Fortet, an incredible designer and engineer, who we all met at Yahoo. And initially we had this idea of a cryptocurrency portfolio tracker um, that with really high data density, beautifully designed, like the most powerful tracker. This is in 2017 and, um, we had this like seed of an idea. We put us, we put some mocks on a facebook group and we got like tons of people saying, hey, take my money now, like I want this. So we had a little bit of an idea and a little bit of traction and mostly we just wanted to work together. So we jumped in. We built the product, like very, very quickly. We launched it on product hunt. We got a little bit of traction.
Rajiv Ayyangar:Then we, very quickly, the crypto markets were crashing and we just saw that our retention tracked with the price of bitcoin. We like reached the ceiling. We couldn't figure out how to monetize. We started exploring paths to monetize and we didn't like any of them. Like we didn't feel like we were the right team to build, build out tax advisory services and we didn't want to sell ICO ads. Those seem pretty sketchy In 2018. That was probably the hardest pivot. It was our first one because we had like thousands of people using the app and like hundreds of millions of dollars tracked on it. So it really felt like there was something there. There was love, people loved it, but we just couldn't figure out how to grow it. We couldn't figure out how to monetize it.
Ariel Camus:And Did you try to charge? Like you mentioned that the people in the Facebook groups were like saying, take my money, Did they actually deliver on their promise?
Rajiv Ayyangar:You know I'm trying to remember. I think we didn't charge because we weren't growing. We'd raised like a very small, like pre-seed round and we thought, like we did the math on like how much we thought we could charge, and we did some exploratory conversations and like it just didn't like we could probably get some people to pay, but it just didn't like we, we could probably get some people to pay, but it just didn't seem worth it. In hindsight I think it would have been interesting to charge, because what happened was what I would not recommend for a pivot, which was just we kept the product around and just didn't develop it until it like eventually broke and then we tried to transition people off to some competitors who we thought were good. It was really sad. I think we should have either tried to charge and get it to self-sustainability or just shut it down.
Ariel Camus:What do you think made you not? I know it's been a while, but what do you think was the disconnect between this initial like? Let me explain why I'm asking this. I think sharing a mock-up on a Facebook group and getting people to say, take my money seems easy, but it's actually not that easy. But at the same time, it's not enough to validate that actually that's a viable business. But in your case, what was the disconnect between what they were saying and what they were actually doing after that? Was it that you decided not to charge for some reason, or was it that they were actually not willing to pay for what you had built?
Rajiv Ayyangar:I don't. I think they were probably willing to pay, but there just weren't enough people. We had like 4,000 users. There was a lot of, there was a lot tracked on it, but like I don't think the users would have been willing to pay enough for it to be worthwhile. I think, like maybe we could have questioned this, but I think at the time we were thinking like, look, we could get, we could get maybe enough money to, like you know, reduce our burn a bit if we're not growing. Like there's nothing big here, there's nothing like venture scale here. Also, like we, we, when the markets went up and down and we saw the usage go up and down, we really started questioning our value.
Rajiv Ayyangar:And also we thought the path. Because we had people tracking a lot of funds. We thought the path to monetizing would be to build more complex tools. My co-founder had built portfolio tools at Palantir for hedge funds like Bridgewater, so we had the experience to build much more complex tools. But when we did user interviews and we asked about calculating a, a Sharpe ratio or like diversification, nobody cared. Zero people cared. Nobody wanted to manage risk and it makes sense Like the core impulse of like crypto investing, especially then, is gambling. People wanted more upside. They didn't want to limit downside.
Ariel Camus:They were worried about FOMO right. It's so accessible to everyone and it was so hot that everyone, including my uncle and my mom, were FOMO right. It's so accessible to everyone and it was so hot that everyone including my uncle and my mom, were investing in crypto right. So, like probably the typical person that ended up using the product probably wasn't my mom, but it was someone who was not a sophisticated investor that really needed the complex tools that a complex, sophisticated investor will be willing to pay for right.
Rajiv Ayyangar:Yeah, they don't need the tools for pro traders. So I think that was a little bit of the product insight that made us feel we were at a dead end. But if I step back, pivoting is so personal, so much about you and the team, and I think when you pivot, or how long you persist on an idea, is the sum of the traction and your personal conviction. You can have very little traction, but if you have high personal conviction you can persist, and I think in this case we didn't have really strong conviction that what we were doing was good for the world, enabling crypto trading. I don't think necessarily. Retail, um, you know, retail trading is necessarily good for people, right, it's. It's often pretty irresponsible financially. So we were very mixed on that. We thought it was good if we could help people do it more responsibly, but people did not want that very clearly I think that's we didn't have a ton of personal conviction it's such a terrific insight.
Ariel Camus:Uh, what you mentioned of it's the market, but also your conviction, and it's a hard balance because you, on one hand, like for some entrepreneurs, often have this biased view of the market where you only see the successes of companies and it seems like it's overnight, and you feel like, well, if it doesn't happen overnight, it's really not a good idea and more often than not, it just takes a lot of hustling to get to success.
Ariel Camus:Right. But at the same time, if you just fall on the side of, well, it is supposed to take a lot of hard work. How do you decide when to, like, you know, say it's enough, and I think the the recipe that you just gave it's an important one, right. You have these two pillars that both can provide support to an idea, and it's your conviction, your passion, passion as a team, as an entrepreneur, and the market, and you could probably do well, even if you don't have a huge passion. I mean, it's a handicap, but you could do well if the market is exploding, you might be able to do okay in an okay market if you're extremely passionate about it, because you're willing to, like, endure the probably, you know the. What's the name the valley of sorrow of, like you know, not seeing any growth like for years, uh.
Ariel Camus:But if you have none of that, probably that's a very easy call uh to say, like you know, let's move on yeah, yeah, there were a couple.
Rajiv Ayyangar:There are a couple other things I think we learned because we the the first pivot was hard because we had so many users using it, but then we built a personal.
Rajiv Ayyangar:We had talked to them and we had talked to a lot of people and asked what their problems were, and they we really felt like going beyond crypto finances to their personal finances was a big need, and so we ended up like going from the portfolio tracking to more of like giving you clarity and like helping you get to a better state on your personal finances as a problem, and we spent, like I think, about a two month cycle working on a few different types of apps and like exploring monetization.
Rajiv Ayyangar:At the end, we pivoted away because we couldn't get anybody to use our app. Like, personal finances are so stressful, it's just a lot easier not to open the app than to use it and we had spent a lot of time grinding on like we were taking a lot of inspiration from Headspace, like just reducing the stress, like simplifying things, giving you a clear progression, and we I think it came to a head when my co-founder could fail to convince his sister to put money into an investment account like a basic investment account because of like decision paralysis and we were like okay, we, this is a really hard problem and we have not managed to make any progress on this and we also don't know how to monetize it, so that that was like an not managed to make any progress on this and we also don't know how to monetize it, so that that was an like an easier pivot to make by the way, I'm laughing here because it's one of my pet peeves, like seeing how much lack of financial education there is in the world.
Ariel Camus:and in fact, before I started this podcast, I was considering starting a youtube channel on personal finance. And I decided I'm going to start something on the entrepreneurial side because I have way more experience there. So more to you know to bring to the world. But it's one of those problems that seems so obvious, yet at the same time it's you know, people, they make such irrational decisions with the way they, you know, they save, the way they invest. And I had that same experience where I tried to, like I'll say, teach to some people that I consider, you know, very smart, very, you know, thoughtful, and the reactions were also so, so, so irrational. And that's when I realized, wow, that's going to be a much harder problem to solve than just, you know, posting nice videos on YouTube. So totally understand that part.
Rajiv Ayyangar:It's hard. Yeah, totally. And that one, I think we felt it was a, we felt really strongly it was a, it was a problem, but it was hard to find an, a, an entry point that we had conviction on and we had no traction. I guess, like one other thing that's coming to mind in the early days, would track. We would do sort of a weekly retro and we would track. Basically sometimes we would track a metric relative to where we were, like how many user interviews did we do, or how many people said they were. You know there's a whole bunch of different levels, like how many user interviews did we do, how many people said they were interested, how many people actually tried it, how many people are using it. Usually these are like single digit numbers because it's so early. But one thing that we always tracked was learning rate low, medium, high, and then why and that was kind of interesting because sometimes we'd have different numbers, we'd have different uh learning rates, the three of us, depending on what we were doing and, um, one kind of consistent pattern was, you know, sometimes we get to the end of the week, learning rate low, low, low. Why? What can we do to change this next week and when there were a couple of weeks in a row, we were just like learning rate is still low. Usually that correlated with we should pivot. We're not making progress here anymore, like regardless of the traction. So that was maybe another kind of loose way to think about when you should pivot. It's very subjective.
Rajiv Ayyangar:But another thing that comes to mind I'm just kind of remembering what made us better was, I think, a big art to pivoting the early days is how do you pivot together, like how do you come up with ideas together and pursue them together? One framework we came up with was just flagging conversations with either growth, where you like build up the idea into its strongest form, or convergence, where you're like more critical and you look at well, will this actually make sense? Like, what are we actually? How are we actually going to test this? What's the quickest way to test this? How do we disprove this, this, how do we disprove this? When we flag conversations like that, it let us all try and have the same conversation together rather than so.
Rajiv Ayyangar:The problem with pivoting in the early days is that, or the problem with coming up with ideas in the early days is like especially if you have a few co-founders. When I come up with an idea, it's early, I haven't thought it through, I'm kind of amped on it. There are holes in every idea. If you share it with a co-founder and they just see the holes, they shoot it down. It's really easy to shoot down ideas, right?
Rajiv Ayyangar:So then what happens is like nobody one, from an energy standpoint, nobody's ever excited about anything. Because, like you get a little bit excited, then cold water, like a wet blanket, gets put on it and so it kind of feels like no ideas reach escape velocity. And then, also, like from a relational standpoint, it's just like really tough, even if you're really good friends, to have your friend tearing down your ideas and to then tear down your friend's ideas like every day. So when we, when we started trying to have the same type of conversation together, the amplitude of ideas and our, our conviction increased, right, like we'd all be really pumped about an idea and then we'd like all tear it down, be like, yeah, no, that's a terrible idea. Next, and and I think that one, it was much more, it let us explore further.
Ariel Camus:And then, two, I think it just increased the chance that some idea would reach escape velocity and then we all start start building it sounds like what you did there was to like take kind of like the the emotional aspect of ideas being something personal, and kind of extracting them from you know your ego or you know your persona as an entrepreneur, and say we're going to come up with a methodology together to judge and explore ideas and we have an agreement on what that exploration looks like so that when we decide that it's not a good idea, it's not going to be that I'm going against you. It's that together we went through the process that we agreed to follow and we proved that it wasn't a good idea. And it makes a lot of sense if you need to go through that process of finding ideas makes a lot of sense is if you need to go through that process of finding ideas.
Rajiv Ayyangar:Yeah, if you're pivoting and learning more each time about yourselves, about founder market fit and about the market, it can feel like you're getting warmer and warmer. But if you're not, if you're like I think the worst, the worst cases I've seen when I've maybe like talked or like loosely advised friends startups are where they pivot because one person had conviction to pivot but the other person is still looking back at that door like what if we've gone through that door and then that those, those doors that you could have gone through create.
Rajiv Ayyangar:They nag at you, they weigh on you over time and at some point you can get to this place where, like, you're not excited about the current direction and all of the doors that you didn't walk through are kind of pulling at you, and that's what you want to avoid. And sometimes it can be helpful, like if somebody is like, really there's an idea that's really pulling at them. Maybe the best thing that their co-founder can do is ask Hey's, let's test this as quickly and as high conviction as possible. Do you remember uh, I think it was peter reinhardt, the segment founder how he he hated he's talked at our yc batch and he hated the idea of segment. And so he told his, like cto, let's test this, let's launch it on hacker news, and then we can walk away from it forever, and sometimes the the very test that would cause you to walk away, is the right test to make you go forward.
Ariel Camus:And it's so hard to know what the market truly wants. I mean, we have so many biases and I have the feeling you have this element in who you are as well, which is kind, you know, kind of the vision-led entrepreneur. You have ideas of how you want the world to look and sometimes those biases that come from the visions are very powerful, but also they can blind you from what the market really wants and I think until you put it out there you don't know. But the sooner you put it out there, the better to really find out. Is it something that the market will want? That I am passionate about? Both things are important, I think.
Rajiv Ayyangar:Yeah, yeah, and that passion, yeah. It just reminds me of the conviction part and I guess one of the next pivots we had was, I think, a very low conviction pivot. We saw a market inefficiency for crypto traders and we launched an exchange for hedge funds like a b2b exchange and we immediately got a lot of interest, got about 20 hedge funds signed up, but it was the kind of thing where we thought there's either a market efficiency or not. We launched it. It wasn't close to. It was like about 100x below the scale for any sort of liquidity and we just immediately walked away.
Ariel Camus:You build the actual product. Yeah, like an mvp of the product.
Rajiv Ayyangar:We built the mvp, but it was. It was fast, it was kind of a cool product. It was like a low information uh network matching auction. It was based on hinge in the early days, the dating app, where it would match you with friends of friends. We'd match hedge funds with kind of like friends of friends or counterparties of counterparties to increase liquidity. Fairly straightforward product to build.
Rajiv Ayyangar:The hard part was the incentive alignment, pricing the set, like selling it to people, convincing people. That was a, that was just a strange one. And then at some point we just had to launch it and then we got clear signal. But that that's actually when we started working on remote work, because I think it took I want to say it took us four days to build the product and then it took me like two months to get 20 contracts signed. So I was just kind of like doing, you know, say, doing enterprise sales, and then tim and bernat were kind of like twiddling their thumbs and at this point Bernat had had a kid, so we were working remotely more and so we were feeling more disconnected. So they started kind of hacking and prototyping on that problem and then when we launched the market it was clear.
Rajiv Ayyangar:There was no liquidity. None of us had conviction that we should persist here, so started working on the. The remote work thing really resonated with us. And going back to the thing about conviction, I think we built five completely different prototypes in the first, like few months. Like we built a walkie talkie app. We built a voice messages. Voice messages it was sort of like an answering machine where if I talked to you, it could, it would record at the same time as talking. We built and then we built this like. There's probably a few more that I've forgotten.
Rajiv Ayyangar:We at some point we built a document editor with voice and video attached nice with the idea that if we are your workspace and then you'll be available to be called. And each time we were testing some theory we had a few people try it. Going back to the thing about conviction, we had so little traction for these early prototypes, when I think about it, people were interested but basically nobody used them and they were kind of unusable and we weren't even using them. But we were kind of trying to use it and I think from the very first one, the problem we felt. We felt the problem every day because we're working remotely.
Ariel Camus:What was the problem exactly?
Rajiv Ayyangar:we we used to be working in the same room, whiteboarding every day, and now we were working remotely and we weren't talking as much, ideas weren't flowing as much. Um, we were losing context. We felt you know what it felt like. It felt like we were in an airplane before and then the airplane hit water and now we're just like felt it felt and also just like, from a personal standpoint, like these were. We started the company mostly to work together, and it and it just felt like we weren't working together, felt like we were kind of off in our own corners and it sounds like you were coming from.
Ariel Camus:Uh, an operational velocity of like building validating, trying chatting was super high, exceptionally high, super high.
Rajiv Ayyangar:So remote.
Rajiv Ayyangar:Yeah, it's tough to to experience that, so I can see why you experienced that intense pain yeah, yeah, yeah it was, it was, uh, that was something that we just, we just felt so viscerally. So you know, hindsight, I think that was a big reason why, even though the first few prototypes, you know, really didn't get much traction, we kept on iterating on it and each time we iterated we solved a little piece of it and we, we mapped space a little better. It's like we initially we thought it was just about friction. If we remove the friction, people will talk more. Not true at all, not true at all. Like people won't pick up or it can feel invasive, right?
Rajiv Ayyangar:So then we started exploring, like how do we get people to be online? And the workspace idea. We thought, hey, if we could build your code editor and your document editor, your spreadsheets figma, and then have voice and video attached, you'll have to be available. We can't build all of that. What's the minimum thing we can build? Maybe we can build a document editor. And so we built a doc editor that was very tuned to real-time collaboration, because that's what we felt was missing, and then had voice and video attached and we thought, because you're working in the docs, you'll be available to be called. Kind of true, but also, we couldn't get anybody to switch to our kind of brittle document editor that sometimes lost your documents and like notion was pretty good at this point, so it was like a really hard sell.
Rajiv Ayyangar:What was true was when we added the ability to see what document people are in, and that started us thinking about this idea of presence as not being just green dot, orange dot, but like what are you doing. And so we removed the documents and instead showed what app you're in. Are you in VS Code coding? Are you in Notion? Are you in Google Docs in? Are you in vs code coding? Are you in notion? Are you in google docs? Are you in figma?
Rajiv Ayyangar:And that started to. That started to work a bit. And that's when we that's or we had like a two-week old prototype when we applied to yc and and then we went through one more. We basically cut the product in half in uh after our book face launch, because we had this chrome extension that showed cursors on websites and we thought it was a lot easier product to build than the voice and video calls. So we were kind of hoping that that maybe that's the product, um, and then we launched in book face. It didn't go that. It didn't go that well, like some people installed the app, but, um, I distinctly remember like it was hard to get feedback but I started calling people and texting people on their phone and eventually got.
Ariel Camus:And, by the way, this is people on Facebook, which is a social network, the internal social network for Y Combinator founders. So you were talking to Y Combinator founders that to a certain extent, you have some kind of like shared trust, that or like a shared identity that makes you more likely to want to help each other. Right, and they were not really willing to help.
Rajiv Ayyangar:Well, they were just busy and they had kind of used the product Like these are. That's another thing that, like, I think people forget. In the early days there's a lot of indifference. You know, if you're, I think that talking to customers is not easy and it's it's not supposed to, it's not. I've never, you know, found it to be easy like maybe post-product market fit. It's really easy because you can just get a fire hose of customers and then the challenge is talking to the right customers.
Rajiv Ayyangar:But in the early days, like we had a dozen teams that had actually downloaded and tried and were using tandem and still it was hard to get them on the phone because they're all founders, they're all like super busy, they're building, so like they would occasionally send us like bug reports. But then when I started talking to them, I got really clear signal that they really cared about the see who's around and talking one click use case like the, the voice calls and video calls, and they really cared about the see who's around and talk in one click use case like the voice calls and video calls, and they really didn't care about the shared cursors on browser. Yeah, and that was kind of the last super big iteration before the pivot a couple of years later.
Ariel Camus:This was while you were in Y Combinator and it was before the end of the batch, before demo day.
Rajiv Ayyangar:This was early in Y Combinator. Oh, so then there's this. There was this really key moment. I remember I think it was a week or two in and Gustav uh, who is the like create the growth team at Airbnb, was our group partner basically pushed us to launch much faster than we were planning. We, our plan was hey, we, we didn't have self-serve at the time. So we thought, hey, we need to like build out self-serve, we also need to make the calls more reliable, we need to build a few more features and then we'll launch to our bash inside, uh, in a couple weeks and then in like midway through the batch or like a little bit further through the batch, maybe we'll launch to all of yc and then product hunt, like closer to demo day. And gustav is like uh, launch your batch today or tomorrow and then you should launch to book face like a couple days later, and then, like next on thursday, you should launch on product hunt. And we, and then we just like had all these excuses.
Rajiv Ayyangar:We were like so freaked out and we're like but if we don't do this, they're not going to retain blah, blah, blah. It's not, this isn't working now. And he's like that's, that's right, that's all true, but you need to figure out whether people want this more than you need to figure out whether you can keep them super, super amazing feedback.
Ariel Camus:Right, it's like go one step at a time and I can relate to that. You think, well, what is the point of like burning or wasting a bullet, of launching on, you know, product hunt which I might not be able to do again so soon and if I'm not going to retain those users, well then you're going to learn very fast that maybe no one wants your product and that's time that you're saving a lot of time.
Ariel Camus:So like it's such a good piece of advice, but it's very counterintuitive when you are in the moment of building stuff totally, totally because you yeah, you are spending a bullet.
Rajiv Ayyangar:There are there are more bullets than you think, because you can launch a hacker news, but you are, you're spending a bullet, but really the the highest, highest probability of the thing. The thing you should be afraid of is that nobody wants it. I still think that that was the right insight. My really summarized or condensed version of what happened was we launched on Bookface. People didn't really want it as we were describing it. We found through a bunch of testing this is why you should go to demo days and like test your positioning and talk to friends found the virtual office tagline really, really helped explain what this was. We launched on Product Hunt, which, with a much crisper positioning, and that was just night and day. It just went viral. It spilled over into Twitter, linkedin, everywhere.
Ariel Camus:So you launched on the internal YC network with a different kind of descriptor of what the product was and that didn't catch. But then you changed it through exploring it with people discussing different ways of explaining it, and when you found the one the virtual office for your team you used that on on Product Hunt and that really worked really well.
Rajiv Ayyangar:We also simplified the product because we cut out the collaboration in browser piece. We were trying to make every site like Figma in the browser, and I think that's a very cool vision, but it was not a thing that people necessarily wanted. If they're on Figma, they already have cursors, and for other sites it's just not that helpful. Wanted. If they're on figma, they already have cursors, and for other sites it's just not that helpful. And having to install a desktop app and a chrome extension um, I think when we cut out the chrome extension, we quadrupled our activation rate, because it's it's like quadratic risk.
Rajiv Ayyangar:Right, it's not. You don't lose half of people, you lose three quarters of people when you add an extra app. So we we cut that out of the product and we simplified our description. I think initially it was something like remote collaboration platform or collaboration, real-time collaboration for remote and distributed teams, which is too vague. You know, in hindsight, right, it's just a little broad, it's a little vague. Never tested that well, and virtual office we initially didn't want to do because we thought people would think it's vr.
Rajiv Ayyangar:But it turned out that once people learned it wasn't vr, they quickly found their way to the idea, which was like an app that helps you connect with your teammates, and it turned into a category. It's like kind of crazy. We were the first ones to to have that virtual office positioning. A whole bunch of different approaches to it came out. Like Gather Town has gotten like crazy big. You know, we've got their new entrance. Now Rome is a virtual office. It's turned into this category that, like, I still think has potential but nobody has like crushed it yet. But yeah, that positioning really resonated. We found out that a ton of teams wanted it. Our retention was terrible at first for all of the reasons that we knew. But we had such an insane spike that we kind of just spent the next year and a half making the product great and making it deliver on that.
Ariel Camus:And we did. What was the spike? What level of spike did you see when you launched a product while you were in Y Combinator?
Rajiv Ayyangar:in Y Combinator I think we had. There were very, very small teams, but we had like, uh, you know, hundreds of teams signing up and using the product.
Ariel Camus:Um, but then you went on to uh raise a lot of capital, uh, even before them, when they from andreessen horowitz and you were kind of one of the hottest startups of the batch. What was it? What do you think was it that made it, um feel like, okay, this is the one company that we need to invest in?
Rajiv Ayyangar:I think there's a little bit of well. So for context, the previous round we raised like. We only raised half of it. We raised like 600K. It was for the crypto portfolio thing. We had a lot of traction but it was in crypto. I think it took us three months and we got 30 or 40 rejections right. It was like a absolute grind.
Rajiv Ayyangar:And then this round for yc was about 10 days, start to finish and I think I think there were a few factors. I think it was, I think we just fit a lot of general theses at the time which we weren't aware of, like we were in the right space. Zoom had just ipo'd, bottoms up sass like slack, slack had just had a huge exit. So this kind of like the opportunity and sort of bottoms up sass seemed enormous. We were founders who had, like, worked on consumer products at yahoo and were working on enterprise, you know. So that that, I think, was a thesis that a lot of VCs had. But I think, most of all, I think it was just attraction and I actually think about there was a moment before, I think before Demo Day, there was a moment where we'd had a good initial spike but it hadn't really exploded. I think it was four weeks out from Demo Day and we asked Dalton like hey, we've got some inbounds from investors. Should we start building the relationship now? And he's like you could spend more time with investors.
Rajiv Ayyangar:That would increase the quality of the fundraise a little, or you can iterate and take more shots on goal and see if you can get a hockey stick, and that's going to increase your outcome a lot more. Regardless of what happens with the raise, you will have moved the company forward, which is the real game we're all playing.
Ariel Camus:And so he was basically like YOLO. What was the metric you were trying to optimize at that point?
Rajiv Ayyangar:We were just trying to get growth.
Ariel Camus:But as measured by.
Rajiv Ayyangar:Like active users. Active users okay.
Ariel Camus:Like call hours. That's the key, that was the key.
Rajiv Ayyangar:Okay hours spent on calls gotcha. Okay, because that's the key interactions like you talk with your teammates what was, and so what was that number?
Ariel Camus:what did that number look like by the time you started fundraising?
Rajiv Ayyangar:I don't, I don't know. I think it was not very high in terms of absolute value, but it was very steep gotcha.
Ariel Camus:It was growing really fast and initially, when we slide in, like you know for demo day. Let's say it looked very steep and you know it's. It's an emotional reaction to a hockey stick kind of curve probably there were four weeks where we grew 50 each week.
Rajiv Ayyangar:Yeah, and I I think I mentioned this in some email to paul graham and he's like that means some huge number per year and that seems insane. I think he's like making fun of me for saying we've grown 50 a week for the last four weeks as if it's going to continue.
Ariel Camus:Of course it's not going to continue, but it was like a very steep spike and and anyway, it does make sense that that in a market or operating under a hypothesis that VCs are exploring and passionate about, you can't control that part and in your case I was like you were not even aware of that.
Rajiv Ayyangar:But weren't aware.
Ariel Camus:Yeah, it does count. I mean timing, it's super important there's a lot of luck.
Rajiv Ayyangar:There's a lot of luck to it and that and there's a and also we didn't know is gonna be a quick fundraise when we started out, and that's the thing with fundraisers you sometimes don't know whether it's going to be easy or hard until you start. You have to be agile.
Ariel Camus:How will you compare time-wise? You said you know three months versus 10 days, but when you look at the nuances, the quality, you know how people are talking to you. How did those two processes compare, the one with the crypto tracker and the one with tandem? I've had very different experiences. Yc was like Disneyland for an entrepreneur. It was crazy. How was it for you? How did they compare? I'm asking you this in case someone is listening, so that they can maybe extract from here some signaling that they can also observe in their own fundraising processes.
Rajiv Ayyangar:Well, anybody who's the hot rounds are a really unique thing. They're incredibly stressful and incredibly difficult in their own way. At the same time, you're very fortunate to be in a position where you have to, where you can pick the right partner right. So you try and use that to like climb the maslowian hierarchy of needs of fundraising to give yourself an unfair advantage and like everybody's got their own hierarchy. But I think it's like do you have enough capital in the bank at not a terrible valuation to keep building? That's great, that's awesome. Next level is like better valuation, less dilution. Next value is like good partner, maybe a brand name that gives you some you know, some brand recognition. And then the next level, like the high, the highest level for some people is just minimal dilution, maximum money. For some people it's like hey, I want a partner that gives me a completely unfair advantage, who I want to work with for a very long time, so you can, like you, you know you try to climb up as high as you can on any fundraise.
Ariel Camus:How do you know that you can climb that?
Rajiv Ayyangar:You don't, it's. You have these early signs at every step. I think if you've been through a fundraise before, you can sort of read the signs a bit better, especially if you've been through a range of like like. I've been through terrible fundraisers and I've been to through I've been through the full spectrum. We got a lot of advice. I think what can be really helpful is advice from a really good friend who's in venture, who's either in your sector but not your stage, or your stage but not your stage, or it your stage but not your sector. So they're they're not in the game, and that you know you have a lot of trust with them, so they can be confidential and they can give you like an accurate read.
Rajiv Ayyangar:For us it was. It was the YC partners. You know they, they know the market so well. At every stage they would say like okay, there are a couple of possibilities based on what happens next. We think you'll go one of these directions and they were pretty accurate. They were pretty accurate, which is crazy. You know it's a crazy advantage and I think one of the reasons why YC is such an advantage for founders the what was I going to say? I think that the thing. Maybe there are two things that would be interesting to people about like really hot raises. One they're. They're horrible, like they're. Just you're sleep deprived, you don't know who to trust. Everybody's trying to sell you and then you build relationships with people. Then you have to say no because you can't take all of the investors, and that sucks.
Ariel Camus:So they're both great and horrible. Does it suck more that no one really offering you anything?
Rajiv Ayyangar:nope okay it doesn't it doesn't, but in the moment it can feel really bad because it's so compressed, so like you're very grateful for the position and at the same time, from an interpersonal level, it's like it's a different, it's an interesting kind of rough. And the second thing is that there are so many distractions that I think you just have to. There's so many distractions, right Like there there are some VCs that will, you know, give you tickets to ball games and like give you gifts, and there's a lot of like, a lot of conversations. You'll have Really anything you say, people will love the idea, right, and you, you start to realize very quickly it's not at all what you're saying. You just have heat, you have momentum and it got to the point. It can get to the. It can get to this point like where I walked in, cold sleep, deprived, to a full partner meeting, hadn hadn't met anybody, and two hours later we had a term sheet and it's like it's just about the signals and the momentum and they've already done diligence and so, like you start to learn like what is real and to kind of like be more measured and see, well, do people follow through on what they say?
Rajiv Ayyangar:And for us I think a lot of that seemed like a distraction because we only cared about one thing Was this firm gonna help us build the kind? So I think that was really helpful for us to stay focused. Oh, and then the other thing I'd say for any fundraising for any fundraise is like if you can spend like half a day or a day with your co-founders just thinking about the future and like possibilities and just getting in sync, that's really helpful because things can change in a matter of minutes and you wanna feel like you're you're just. You want to feel so on the same page that you're all interchangeable, especially in the days of when we raised it was. You're probably driving up and down the peninsula, going to meetings in person, and so we'd split. You know, like one founder would go to one meeting and we just all had to be. I think it was helpful that we felt so interchangeable.
Ariel Camus:That is a rare thing. I think right that you feel the trust that anyone will sell the company as well. That is rare and amazing, rare. Yeah, so you raised this round. Things kept growing. You kept seeing traction. What happened after that?
Rajiv Ayyangar:Well, it was rough because we raised the round and things were already starting to falter from the product hunt and demo day spike as they do. And the reason is, one, there isn't as much buzz and, two, our retention, as you recall, was horrible.
Rajiv Ayyangar:And we told investors this. It was on the slides. They were promising retention needs work. So we started grinding on retention and at the same time, because the adoption had kind of slowed, we were also thinking like do we need to work on positioning and like the go-to market as well? So we were trying to do three things. We're trying to make the product deliver on the promise, make it more stable, build it, build out the features, improve presence, figure out all these mechanics, make it less awkward. We were trying to hire we we hadn't hired anybody, it was one engineer, my co-founder, and we were dying like the product was, you know, very brittle. And then three we were trying to figure out like do people, how do we test? How do we figure out how to, you know, get more people in the door? And so we're like in this state and like the numbers are like growing, but very slightly.
Rajiv Ayyangar:And then the pandemic hits and it was insane. There was a day, a single day, where we doubled Right. And then there was a period of three weeks where, you know, we'd go down every couple of days and it was just. It was just like horrible. You know, I think Mike Seibel said product market fit feels like being punched in the face. That's 100% what it felt like Not in a good way. We felt like we had a 3%, maybe a 5% failure rate in calls User reported failure rate and we knew it was terrible and yet people were still using it and they were frustrated and we were struggling. And it was just Tim on engineering and like there was one day when all of Italy like got shut down for the pandemic and tried to download tandem basically and it's like Figma, the company is downloading tandem Like every big company in Silicon Valley that we'd heard of was trying to use it and running into problems. Uh, yeah, yeah, it was. It was like it was really. It was rough.
Rajiv Ayyangar:And also we felt like we had to focus. We felt like it was so unambiguous that people wanted this. We needed to focus 100% on making it deliver, and so we did that. Over the next year and a half we tried a bunch of different things, figured out a bunch of product and user interaction issues. I think we 2.5x'd retention. It just started working in the way that we wanted it to work. You could see people having fluid conversations and it was a grind. It was like a lot of different things over a year and a half and as we were doing that, like fewer and fewer people were downloading. But we just thought, like like there's still a market out there, we just need to make it even better. And this is, you know.
Ariel Camus:Were you measuring? Did you know where the traffic was coming from, why they were finding you, how they were finding you?
Rajiv Ayyangar:This is the thing we really didn't. We had a rough sense At some point when the pandemic hit. We were like, where are people coming from? We had a survey. It was mostly word of mouth and then we never really interrogated it because we didn't need to, and that I think you know. Going back to Gustav's question, you need to know whether people want it more than whether you can retain. I think you always got to be like when you're dealing with market shifts, you always got to be a little paranoid whether people still want this or whether people wanted remote connection. But did they want the format of the product specifically?
Rajiv Ayyangar:Yeah, by the time we realized like, oh, this product is performing but we're not growing because it's not clear that people want this. We started doing a lot of, we started digging into who's coming in the door, why we did like hand sales, we tried some enterprise sales, we did a bunch of funnel and growth experiments and it took us a while to get a baseline because we just hadn't interrogated the go-to market that much. Yeah, it was. It was kind of crazy. It's just like we. We realized through launching it that there's there. There wasn't, um, it didn't seem like there was a market for the product as it was positioned, like there was a small one. The teams that use it loved it, but we couldn't like access a bigger market.
Ariel Camus:How? What did you do when you realized that?
Rajiv Ayyangar:We pivoted. We realized that like a big piece of this and what we were hearing in all the user interviews was people coming back to the office, and that a big topic of conversation was the problem of hybrid work, the the second class citizen problem, where people who are remote feel different than people in the office. And also we were feeling it too, because we were we. You know, we're a team that likes to work in person but was forced to be remote, so we had an office the whole time and some of some of the time we'd work in person and we were feeling the problem. So we explored a lot of prototypes and came up with something that was kind of crazy Again hardware that lets remote people teleport around the office but also kind of worked. You would forget who was in the office and who wasn't. It made the remote people really powerful. It felt fairly natural when you're in the office.
Rajiv Ayyangar:There's so many reasons this is a bad idea. It's hardware. We were a tiny team. We weren't well capitalized, we had very little runway, we weren't clear where the budget was going to come from. Very few people had like people were kind of coming back to the office, but it was oscillating. It was in that period where people would like Google's coming back to the office next week. No, they're not, they're kind of coming back to the office. So it was a really unstable time and this was one of those times where we thought like, hey, we need to launch big uh to see if people like actually want to this. So we pulled out all the stops, we got a fair bit of play on the launch Uh, it was an idea that resonated with a lot of people, but I think we got five signups for the like we.
Rajiv Ayyangar:We had an incredible splash, a lot of traffic and five actual signups and I think that was how did you launch, or where, uh, product hunt, product launch went really well. It also got picked up by tech crunch. We demoed, for you know one of the reporters there and he like saw it. He saw it, he visited our office and like felt what it felt, like nice. We also did a little bit of collaboration. We got it working on cisco hardware and also on on uh, on other other companies hardware and they they did a little bit of co-marketing because it was like it's sort of like an evolution of Cisco telepresence and we I mean billboards are really cheap at this point.
Rajiv Ayyangar:So we did a billboard on 101 in the Bay Area. I think it said like be at the office when you can't be at the office, which was kind of fun, and like I think it was like 10 or 15K, it was like surprisingly affordable. And I think it was like 10 or 15K, it was surprisingly affordable. This is when people were still working from home. There wasn't a lot of traffic, but the combination just made this huge splash. We saw a lot of traffic, a lot of interest, a lot of buzz, but when it came to actually signing up, yeah, it was crickets. I think that's what it feels like to be way too early or just have the right problem but the wrong solution.
Ariel Camus:Yeah, so do you think the problem was like pricing or that it felt like weird to have that type of solution? What was it that people were not really buying? They liked the concept, that they were not willing to really act on that. What was it that caused that that they were not willing to really?
Rajiv Ayyangar:act on that. What was it that caused that? Yeah, I think it was like maybe the problem wasn't acute enough. This is the problem with team collaboration the problem isn't acute and also the friction was insanely high. It was expensive, the hardware was a little unreliable, it was hard to set up, there were some awkward things. There was a lot of awkwardness to it that you had to smooth out. It's like the people in the office kind of need to get used to having people pop in and pop out. For some teams, that was great. They loved it. For some teams, you know, people were a little shyer. They didn't want people popping in, which never made sense to me because they're working in an office with other people. You know it is. It's, it's a real. There's some psychological effects that we could have smoothed out with more, with more time, but I think it was like it had. If it, if it was going to work, it was going to work rough and it didn't work in a rough state.
Ariel Camus:it felt more like a, like an expensive vitamin. Right, it wasn't a pain killer for something that people were very acutely feeling and it was expensive to try it. Expensive, I guess, operationally speaking, but also financially speaking. So I can see why that was hard.
Rajiv Ayyangar:Just the wrong market, wrong format as well, like there's a company, tanari, in Japan that builds a portal between offices and they sell mostly to larger enterprises. They have an extremely well-developed wall video chat where you can actually make eye contact. The audio is good, it's extremely low latency. It's expensive it's like 50K an install but for the companies that can afford it it's like a much cheaper alternative to like Cisco telepresence. So, different market, different form factor, different go-to-market motion.
Ariel Camus:And they're getting traction.
Rajiv Ayyangar:As you said before, they were super well capitalized, which probably allowed them to iterate enough and eventually build the scale to like, which is super expensive with hardware so well they actually weren't well capitalized, but the installs are so expensive Like they were able to deliver so much value per install that they've like been able to make it quite far on like not a lot of capital, which is even more impressive.
Ariel Camus:It's very impressive.
Rajiv Ayyangar:That's an example of like yeah, I think there are other things in the space that would have worked, but we very clearly didn't have that what?
Ariel Camus:what was the moment you decided to, like you know, to pull the plug and you mentioned you um allowed two of the team members to keep running, you know, like a spin-off version of the company, that is like self-sustainable um, what was that? That must have been a very difficult moment to say like, okay, this is it yeah, there, I mean it's, there's another.
Rajiv Ayyangar:There's another thing that was happening where you know we had a few plans pivot. It was like raise, raise a small bridge to give us time to launch the pivot pivot. If that doesn't work, see if we can find a strategic acquisition. If that doesn't work, see if we can find a strategic acquisition. If that doesn't work, see if we can find at least a good hire, because the team was awesome and wanted to work together. And if that doesn't work, shut down. And then in the midst of that, two of our engineers said like hey, let's just chart, let's put a pay gate on and see if this can be self-sustaining. And we did that and like two thirds of the teams using it stayed and started paying.
Ariel Camus:You were not charging before.
Rajiv Ayyangar:We weren't charging. We were kind of, we were like soft charging, but the scale wasn't like. Scale just wasn't enough that it would have changed. Anything Like we weren't growing wasn't a high scale. But when we started charging it opened up another end game which was keep itself sustaining. It's not going to pay anybody's salary but it can keep going. And so they opened up that. So then, when we were shutting down, we had this other option which we, which we took of, like spin it out into a different entity and keep the company going, and so we had like this this is like plans A, b, c, d, and we actually went through all of these phases in a few months, and I think either it's a the markets were shifting quickly or I couldn't read the market well. But you know the we started out looking for acquisition interests and there was a ton looking for acquisition interests and there was a ton.
Rajiv Ayyangar:And this was around the time when the market was crashing and, one by one, companies started instituting hiring freezes and pulled out time, so it was a really yeah, it was a really interesting experience where we started out talking about strategic and product acquisitions and ended up talking about aqua hires, which is quite a shift and it requires a different approach, and in the end, we got a couple offers, but nothing that seemed good for the team. At that point we're optimizing for the team and their careers we actually just said, oh, we're going to shut down, we're going to keep the product alive, not kill the product. It's not, it's not fun, but I think, like I'm I'm proud of how we did it and like, optimize for a team, then customers, and then, yeah, yeah, you should be proud.
Ariel Camus:And I think if there is something that I get from this, well, it's two things. One, your capacity to not just to pivot but then to build stuff and ship software and validate ideas is exceptionally high. I wish I had that level of velocity. It's super impressive. And then the rest is, as you said, it's luck, right, it's timing, it's right time, right place with the right idea, and that makes the whole thing. But then you can't control that and that makes the whole thing, but then you can't control that. But the other part, maybe as a wrap-up, is that there is this consistent theme in every single pivot, which is that you first launched on Product Hunt and today you are the CEO of Product Hunt, which is pretty cool.
Ariel Camus:I've been a huge fan for many years. Well, many, many years. Now it's one of the few newsletters that I open every single day. I'm a nerd of new products. We don't have a lot of time and you know the topic is the zero-to-one stage finding product market fit. But as the CEO of Product Hunt, who knows the insides, what is some advice that you can give, both as the person that launched Product Hunt but also as the person now building the launcher for hunt. What I'd like two, three pieces of advice for anyone who wants to leverage product hunt to get their first customers like to get customers for their products yeah, the first thing is launch sooner than you think.
Rajiv Ayyangar:Uh, as we talked about before, uh, most of the conversations I have are people finding some excuse not to launch. I talk to a lot of people who have gotten a story in their head that maybe product hunt isn't like good for this sector. It almost always is. There's a lot of diversity on the leaderboard and you should launch. I think that one of the key factors for launch is that tagline and there's a reason why. Like you probably remember, in Y Combinator, in group office hours, the first question was always where are you building?
Ariel Camus:We spent a lot of time on that, for sure.
Rajiv Ayyangar:A lot of time on that. It's like we go around what are you building? You describe it in a line. Your people in the group, your fellow founders, say I didn't understand that at all. I'm going to be honest with you I have no idea what you're building and you iterate on it until you forge something that's clear and compelling. And where I think a lot of people fail is the clarity part. Here's the thing you can't go viral if I don't know what you're building because I can't tell a friend. So, clarity above all.
Rajiv Ayyangar:Test the tagline with people who don't know what you're building. I think it's good to test it with friends. Test it with friends, test it at demo nights. We started like hosting and our community started hosting demo nights all over the world. So that's a good place to test the tagline. And then let's see a couple things that are specific. Yeah, explain in the, in the first comment that you leave, like explain a bit about why you're building this and how you built it. Um, add some shout outs. So shout outs are like a new thing we added where you can call out two or three of the products that you loved, that you found indispensable in building it, and that helps. It's an audience of builders, right. So it helps like tell the story of your product and the craft behind it and also it just like spreads the love a little bit. I love that and it shows other builders what are the top tools that they should use. So those are kind of like the main things.
Rajiv Ayyangar:I'm trying to think about mistakes and our launch flow describes a lot of this but a common mistake is doing a video that doesn't show your product. Trying to do a video that's like higher production and fancier Look. I think videos either need to be sandwich quality extremely high production Sandwich is like the best at explainer videos or a very well-executed loom of you the founder talking through your product Makes sense and like the in-between stages are not very helpful. People on Product Hunt love looking at the products. That's it's in the name, so just show off the product. Other that I think well known like there's a big component that's the community support. Tell your friends like that's a big part of the launch as well. It's sort of like a good event to to tell your friends and your network about the launch and that's part of how you get the word out and uh, yeah, I think those are the main things that all makes a lot of sense and I'm going to stay with the launch.
Ariel Camus:Now I'm going to apply that to myself. I'm actually about to launch something, so I'll ping you in a few days to to tell you about it and maybe to test the tagline with you amazing. I'm looking forward to it it's been a pleasure having you here. Thank you so much for your time.
Rajiv Ayyangar:Good to see you. Great to be here.
Ariel Camus: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 and until the next episode.
