Latest / Success Story with Scott Clary / Lessons - How to Scale by Hiring People Smarter Than You | Charlie Feng - Serial Entrepreneur

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Lessons - How to Scale by Hiring People Smarter Than You | Charlie Feng - Serial Entrepreneur · Success Story with Scott Clary

• 0:00
  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.
• 0:22
  Let's talk about some strategies for going from zero to one. So, first of all, when you say you're working from zero to one, provide some context. Are you talking about going in as a consultant to or as like a mentor or an advisor to a founder?
• 0:48
  Because zero to one 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?
• 1:00
  So, I do some advising, angel investing and mentoring when it comes to helping companies. And the area is 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.
• 1:24
  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 you're 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. It's just a different set of problems from one to 10.
• 1:44
  So, for clear code, for example, or any business in the early days, there's two types of things that I spent a lot of time doing. One is finding product market fit for a new market or a new product.
• 1:58
  And that zero one 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 business ops team. And how do we do it? Well, there's no right or wrong answer per say, but you can't just kick it off, get a going and eventually hire a team and hire yourself out of the job.
• 2:22
  So, when you work with companies, they could be pre product market fit. So, what are some of the experiments that you run or what is the, what's the definition of product market fit? How do you know when you found product market fit? That's probably 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 an experiment so that you can actually get there?
• 2:43
  And I know that there's a million different industries. It's like, we don't have, we only have a podcast worth of time to do this, but a high level stuff that could be applicable to anybody.
• 2:53
  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 looting to Scott, it's like, there's a lot of different definitions out there.
• 3:08
  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 fit. It's not something that you find product market fit and you could just, you know, you're done the job, the job's done.
• 3:27
  I see it very much as a kind of a, like, you know, dance is the right kind of analogy for it, but the sense that the market is constantly moving and your product needs to fit with the market needs. So there's been a lot of cases where companies would have part market fit or peer to time, but then they lose it right over the years as the market changes and what the needs of their customer changes.
• 3:52
  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.
• 4:02
  And for the most part, I believe that a, there's those common sayings of, you know, there's part market fit, you gotta feel it, we have it.
• 4:11
  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.
• 4:29
  And I feel that usually a pretty decent definition depending on what kind of business you're in.
• 4:34
  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.
• 4:46
  You might not have full product market fit, but you're onto something for consumer that number might be more like a hundred or a thousand depending on what kind of consumers you're targeting.
• 4:55
  And that's how I look at it.
• 4:58
  And say you even, and you say you even close a thousand consumers or even, you know, 20, 10,000 consumers.
• 5:09
  Do you feel like you, is there a certain channel like, for example, like say I spend a million dollars on that is obviously ridiculous example.
• 5:18
  I spend a million dollars on ads or like a hundred thousand dollars on ads say spend a hundred thousand dollars on ads and I close 20,000 dollars or 30,000 dollars in revenue.
• 5:29
  That's obviously not a great row as so do you feel like that would be when do you think that I would have achieved some sort of product market fit, even though I feel like I'm just buying and my cat is super high.
• 5:43
  And I do have customers, I do have people that are buying my product, but I haven't quite figured out how to make my business profitable yet.
• 5:49
  So when's the point where you keep that machine going, is it a year, two years or, or do you hope to achieve some sort of profitability sooner than that?
• 6:02
  I guess, I guess what I'm trying to say is like you can buy customers for any product in the world, but it doesn't always mean you have product market fit.
• 6:10
  That's right. I think of economics or unique economics of the business to be quite important to plot a market fit.
• 6:19
  So let's use that analogy, right? Like spend a million dollars or crazy amount of money to get 30,000 dollars worth of revenue.
• 6:26
  No, anyone will look at that and say, you probably haven't felt something here, just paying people, you're paying people a dollar to earn, you know, three cents on the dollar and that's probably not going to be sustainable.
• 6:37
  The only case where that might be sustainable is that if you have some kind of crazy long retention, where that customer's coming back repeatedly for a long period of time, then you'll need to prove out that they'll, if you're only making 30,000, that's a number of years before you ever make back your building dollars.
• 6:53
  That's right. So one of the lessons I did learn, kind of building both clear code in my previous business is at an early stage, LTV, treat the repeatability of business of customers, more like almost like a middle of gravy is the right word, but yeah, like treat that as a bonus.
• 7:12
  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?
• 7:25
  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.
• 7:40
  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 be payment unless you have a hypothesis around there, there are exceptions to this rule.
• 8:03
  So for example, if you're in a marketplace business where like a lot of businesses like Uber or the kind of the heavy marketplace business, it was famous for doing this for a while where they were acquiring customers at a loss because they said that what the hypothesis was that once they hit a critical mass, then every kind of the flip switched.
• 8:24
  One of the also the funny enough, the lessons we learned from the Uber and kind of the realm of the delivery businesses is that a lot of them, a lot of the one bankrupt and two, you know, for Uber, it took many, many years and not even sure today there's their profitable on a unique economic basis, but it's, you need to raise a lot of money to run a business like that.
• 8:45
  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.
• 8:53
  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.
• 8:58
  So what's the difference between product market fit, founder market fit, and who cares about founder market fit as an investor advisor angel or is it someone, is it, is it the team, like what does that founder market fit?
• 9:08
  Yeah, I think both. So as an investor, I look a lot more for founder market out days. So 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.
• 9:27
  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.
• 9:42
  It's kind of like that, now geos, you know, to a hammer, everything's a nail, right, and depending on my skill set as a founder, the way I would solve a problem is very different from you or someone else, solving a problem.
• 9:56
  And that's something that kind of very much made me realize about businesses is that kind of like show me the team, I'll show you the product that they'll go to almost, and it's essentially a reflection of who the team was.
• 10:09
  And the, 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.
• 10:22
  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.
• 10:43
  I don't really use TikTok that much, so it's just not something my not even out of skill set, just that of like interest, it's not there for me.
• 10:51
  And I think this is different for every founder or every team, and I think this is why it's also just as important for me as an investor, but it's also important for myself when I'm operating or from a team perspective, because then it's kind of like the question of what are your strengths essentially and what are you really doubling down on.
• 11:12
  And I think it's very important to understand that you don't need company.
• 11:19
  And when 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.
• 11:32
  So how does somebody do that? How does somebody find people? What is your strategy for when you're starting a company? 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?
• 11:47
  Yeah, I think about the redundancy programs past the zero one stage, I think the zero one stage, I pretty 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 founder, so it's going to be the founding team that's going to be critical from getting them from pretty much nothing.
• 12:05
  And I just need to do something that's actually working, product market fit makes money.
• 12:10
  And then in terms of kind of redundancy, I think the I think there's two ways to hire one is hiring people who kind of compliment you.
• 12:22
  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 is what I mean by that is I think when it comes to hiring, it's important that to hire people who compliment your skill set, but are actually the same as you were similar to you from a kind of world view perspective.
• 12:44
  And this is where kind of like the question of diversity kind of comes kicks in a little bit of 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 we're always be arguing on the fundamental.
• 13:04
  What I look for in the founding team as well is as well as well as co founders that I look for myself for my next business is very much.
• 13:12
  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 data on a fundamental level basis.
• 13:22
  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, we're all side have a bunch of Charlie clones and that's not very helpful. So that's what I think a lot about when it comes to hiring.
• 13:37
  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 it, if the circumstances are different and they are the perfect people to set you replace right.
• 14:07
  You