← Success Story with Scott D. Clary
Success Story with Scott D. Clary
Lessons - How to Scale by Hiring People Smarter Than You | Charlie Feng - Serial Entrepreneur
00:15:42
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- [00:00]
A
In this lessons episode, explore how early stage founders navigate the zero to one journey and build real momentum before scaling. Discover why product market fit shifts with evolving customer needs. Understand how focused experiments reveal whether demand is genuine or manufactured. And uncover how founder market fit and early hiring choices shape a team built for lasting growth. Foreign let's talk about some strategies for going from 0 to 1. So first of all, when you say you're, you're, you're working from zero to one, provide some context. Are you talking about going in as a, as a consultant to or as like a mentor or an advisor to a founder? Because zero to one is, is very early on. So is that pre revenue, is that pre product market fit? When do you get involved and what does an entrepreneur look like when you start working with them?
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B
Oh, so yeah, so I do some advising, angel investing and kind of mentoring when it comes to helping companies and the areas that, when it comes to, from an advising perspective, it's that usually they are before product market fit, they're kind of the early stages. Sometimes they have a little bit of revenue, but maybe one or two customers and trying to figure out how do I get my first 10 customers. And I think zero to one looks different for every business. It looks different even depending on what the problem you're trying to solve. It's really that early stage of trying to figure out what is the right solution for a given problem before you start to scale it. And then you run into scaling problems, which is a different set of problems from 1 to 10. So for clerical, for example, or any, any business in the early days, there's two types of things that, you know, I spent a lot of time doing. One is finding product market fit for a new market or a new product. And that 0,1 involves a lot of experimentation. And then there's the other type of zero to one of building a team. So saying, you know, we don't have a marketing team or we don't have a growth team, we don't have a biz ops team and how do we do it? Well, there's no right or wrong answer per se, but you kind of just kick it off, get it going and eventually hire a team and hire yourself out of a job.
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A
So when you, when you work with companies, they could be pre product market fit. So what are some of the, the experiments that you run or what is the, how do you, what's the definition of product market fit? How do you know when you found product market fit? That's probably a, a better way of saying it and then how do you, once you know when you found product market fit, how do you work backwards and experiment so that you're, you can actually get there? And I know that there's a million different industries. It's like we only have, we only have a podcast worth of time to do this, but a high level stuff that could be applicable to anybody.
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B
That's right. That's right. I think there's a few lessons I've learned and mistakes, a lot of mistakes I've made over the years. I think the elusive product market fit, like maybe what you're alluding to, Scott, it's like there's a lot of different definitions out there and it's, I think a couple of things I've learned over the years. One thing I'll clarify a little bit or my belief around product market fit is that it's not a static, it's not a static thing. It's not something that you find product market fit and you could just, you know, you're done, the job's done. I see it very much as a kind of a, like I don't know if dance is the right kind of analogy for it, but the sense that the market is constantly moving and your product needs to fit what the market needs. So there's been a lot of cases where companies would have product market fit for a period of time, but then they lose it right over the years as the market changes and what the needs of their customer changes. So I think that's one thing to remember for product market fit is that it's not something you kind of done and forget, but rather it's something that you need to keep kind of working with the customers on. And for the most part I believe that A, there's those common sayings of, you know, there's part market fit, you got to feel it when you have it. Usually people mean that because the for you to acquire a customer or for the economics to kind of run the business or get a new customer is so efficient or so low because you built something that people want that it just feels like all the customers are coming in. And I feel that usually a pretty decent definition depending on what kind of business you're in. So if you're in a kind of a more SMB or B2B business, once you kind of get your first 10 customers that are non that are not your friends and family, you kind of know that you're onto something. You might not have full product market fit, but you're onto something for consumer that number might be more like 100 or 1,000, depending on what kind of consumers you're targeting. And that's how I look at it.
- [04:58]
A
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- [09:07]
B
That's right. I think of economics or unit economics of a business to be quite important to product market fit. So let's use that analogy, right? Like spending a million dollars or a crazy amount of money to get $30,000 worth of revenue. Anyone will look at that and say you probably haven't found something. You're just paying people, you're paying people a dollar to earn 3 cents on the dollar. And that's probably not going to be sustainable. The only case where that might be sustainable is that if you have some kind of crazy long retention where that customer is coming back repeatedly for a long period of time, but then you'll need to prove out that if you're only making 30,000. That's a number of years before you ever make back your million dollars. Right. So one of the lessons I did learn kind of building both Clearco and my previous business is at an early stage ltv treat the repeatability of business, of customers more like almost like, I don't know if gravy is the right word, but yeah, like treat that as a bonus. Don't rely too much on the revenue or the repeat revenue past a year, two years is really stretching it. Mostly because you don't. The business would be so different two years from now. Right. And for you to rely on the revenue on year three or even year two of a customer will. There's definitely exceptions to the rule, but it's going to make you as an entrepreneur running the business much harder. So a lot of times I focus on kind of that year one profitability. And it doesn't mean that you have to run a profitable business as a whole. It just means that the math for every customer that you're buying should be profitable or should not be, you know, shouldn't pay one. Unless you have a hypothesis around. There are again exceptions to this rule. So for example, if you're in a marketplace business where a lot of businesses like Uber or the kind of the heavy marketplace business was famous for doing this for a while where they were acquiring customers at a loss because they said that or the hypothesis was that once they hit a critical mass then the flip switched. One of the. Also the. Funny enough, the lessons we learned from the, the Uber and kind of the, the realm of the delivery businesses is that a lot of them, a, a lot of them went bankrupt. And two, even for Uber it took many, many years. I'm not even sure if today there's, they're profitable on a unit economic basis, but it's, you need to raise a lot of money to, to run a business like that.
- [11:41]
A
It's, it's, it's stressful. So obviously that is not the majority of people out there trying to build companies. Okay, that's good, that's good. That's good insight though. And then okay, so we're talking about product market fit. One thing that I've seen you speak about often is founder market fit. So what's the difference between product market fit, founder market fit and who cares about founder market fit? Is it an investor advisor angel or is it someone, is it, is it the team? Like what is that? Founder market fit?
- [12:04]
B
Yeah, I think both. So as, as an investor, I look a lot more for Founder market fit nowadays. So there, there's something people talk about, about, you know, first time founders, you look a lot about, you think a lot about product. Second time founders, you think a lot about distribution, of how to get the product out to your customers. One thing I'd add to that is like almost like third time founders, you think a lot about the people like who's actually involved in the business because it's the people that's based on their skill set. They will have access to different distribution channels as well as they'll have different ways of thinking about building a product. It's kind of like that analogy of to a hammer everything is a nail, right? And depending on my skillset as a founder, the way I would solve a problem is very different from you or someone else solving a problem. And that's something that kind of very much made me realize about businesses is that kind of like show me the team and I'll show you the product that they'll build almost. And it's essentially a reflection of who the team was. And to me the founder market fit just means that do you have the right team or do you have the right founders or founding team in place to tackle this right market or this right problem set? And I think a lot of this is half skill set but also half interest based. Right? Like for example, like I'd say my skill set is perhaps not as heavy or not as good in the either the pure consumer space, like the I'm probably not going to build the next TikTok or Facebook because I don't use Instagram, I don't really use TikTok that much. So it's just not something in my, not even out of skill set, just out of like interest. It's not there for me. And I think this is different for every founder and every team. And I think this is why it's just as important for me as an investor, but it's also as important for myself when I'm operating or from a team perspective because then it's kind of like the question of what are really your strengths essentially and what are you really doubling down on. And I think it's very important to, to understand that when you're building a, building a company.
- [14:15]
A
And when you, you speak about finding that right team. So let's tie that into one of the first things you said, which was I want to make myself redundant. I want to basically hire myself out of a job. So how does somebody do that? How does somebody find people? What is your strategy for when you're starting a company and this is obviously something you probably teach over to founders, but what's your strategy when you're starting a company? How do you make yourself redundant?
- [14:43]
B
Yeah, I think about the redundancy programs past the 01 stage. I think the 01 stage. I pre. Well, this is kind of why I look for a lot for a founder market fit because I think the it's going to be the founders or it's going to be the founding team that's going to be critical from getting them from pretty much nothing. Right. Just an idea to something that's actually working product market fit makes money. And then in terms of kind of redundancy, I think there's two ways to hire. One is hiring people who kind of complement you and then there's the hiring people who are kind of like similar to you. Right. And I think it's. I think they're not two separate concepts but the same concept. And so what I mean by that is I think when it comes to hiring, it's important that to hire people who complement your skill set but are actually the same as you or similar to you from a kind of worldview perspective. And this is where kind of like the question of diversity kind of comes kicks in a little bit of you kind of want diverse skill set or diverse perspectives, but you actually don't want to like you don't want people who are having conflicting like missions, conflicting goals as you because or else you'll always be arguing on the fundamentals. And that's what I look for in the founding team as well is as well as well as co founders that I look for myself or my next business is very much they're aligned very much with me in terms of the mission. The way we kind of see the world, what we want to accomplish. If it's something kind of on a fundamental level basis, would we agree and then above that you actually do want the diversity of thought, diversity of opinions of how would you tackle this problem. Hopefully their perspective is not the same as me or else I'd have a bunch of Charlie clones. That's not very helpful. So that's what I think a lot about when it comes to hiring. And I very much try to hire people who are kind of more experienced or people that I would want to almost work for. Right. Or people I would work want to work for if the circumstances are different and they are the perfect people to essentially replace. Right.
- [16:49]
A
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