Tzakhi (00:00.788)
Again.
Guillermo Flor (00:01.775)
Hey, Sahi.
Tzakhi (00:03.336)
Thanks for coming. We're at the Meet .Capital startup podcast. We have a very distinguished guest, Guillermo Flo from GoHub Ventures in Valencia.
Guillermo Flor (00:12.961)
you
Tzakhi (00:17.302)
And I'll just say a bit about you and then maybe you can add, but super interesting person. You started as a lawyer, you worked for PWC, then you were an M &A lawyer, then you founded your own startup. And through many adventures, you're now part of a VC that invests in early stage startups in Europe, mainly in Spain, I imagine. You'll tell us about that. And...
I know you're practicing to be an ultra marathoner and you do deep water diving, a lot of stuff. So do you want to say a little bit to introduce yourself a bit to meet Capital Crowd?
Guillermo Flor (00:45.263)
you
Guillermo Flor (00:56.143)
Yeah, I don't know if it's distinguished, but yeah, thank you so much for having me, Zahi. It's great talking to you. And yeah, basically I've had a quite kind of like multidiscipline background. I started my career, as you said, working as a lawyer, doing a lot of M &A. But after a while, I was really intrigued about the way that...
Tzakhi (01:06.248)
you
Tzakhi (01:22.486)
you
Guillermo Flor (01:22.575)
you know, funds to business and how entrepreneurs build companies. And so I decided that it was a good time to start my own startup. I didn't know anything about tech, venture capital startups whatsoever. And so it was a great adventure. I did raise a little bit of venture capital back then, but I failed to find product market fit. And after a while I decided to close.
Tzakhi (01:38.582)
you
Guillermo Flor (01:50.223)
At that point, I didn't have a business background, so I decided to do an MBA. During the MBA, I just studied as much finance as possible and ended up being fascinated with the venture capital world. I was super lucky to find a position at GoHub Ventures right in Valencia, Spain, which is actually where I'm originally from. So it's super lucky. Yeah, right now, basically I'm...
Tzakhi (02:06.6)
you
Guillermo Flor (02:20.047)
I'm investing in seeded and series A SaaS B2B companies all around Europe out of GovHab Ventures obviously and I'm really passionate about it and it's been so much fun.
Tzakhi (02:30.76)
you
Yeah, and you forgot to mention that I forgot to mention you have a very successful and interesting newsletter that you started called Product Market Fit, which I highly recommend. And I think that could be a great starting point for us to talk about, which is if you can give us a frame.
it fit, how to achieve it, what it is, what it isn't, and then we'll maybe tie it into how to raise capital on your journey.
Guillermo Flor (03:08.607)
For sure, I think it's a great starting point. I think there's a lot of noise when you are a founder. I feel a lot of founders are pressured to raise money immediately once they start a company and many times they stop focusing on the most important thing in their company which is their customers and they start
Tzakhi (03:14.362)
Thank you.
Guillermo Flor (03:39.855)
artificially, you know, they start to change their company value proposition artificially to try to be more attractive to investors or to have a more scalable business model but then falling away, you know, from their customers and product market fit. So, you know, product market fit is a concept that is
really not mathematics, you know, it's, this is not like, you know, one plus one is two. Um, it's, it's really the fewest, right? But I think it's, it's, it's also pretty simple to understand or to feel when you have product market feed. And so basically I would define it as a company that
has built a product that a big enough pool of people that share the same characteristics and that have the same problem want. So it's very simple. Product market fit is when you build a product that people want. And so there are many metrics that you can use to analyze when you have
product market fit. But it basically comes down to two things, acquisition and retention. So in software products, you can, and this is a problem that many startups have, you can actually pump your sales up. If you raise a lot of money, you can sell any product because you can actually
Create great funnels and make companies feel like they want your product and you can make them buy it But then if you don't have product market fit you will not have retention you can you know invest a lot of money in sales and Make people buy your product but then after a while those people will stop using it because it does not value, you know, so For me like product market fit is when you're able to
Guillermo Flor (06:05.039)
to build that product that people need and when they see your product, they realize really quickly what the value of it is. And then that once you start selling it, you feel there's a market pull, there's that need that when you target this individual customer profile, you feel that...
Tzakhi (06:20.072)
you
Guillermo Flor (06:34.031)
they are interested in, they want to try it, and when they try it and they use it, they gain enough value for them to keep it and keep paying for it. And so, for me, it's really that simple, but I feel like, as founders, you have so many different inputs and you are...
showcasing for investors and pretending that your company is going to be growing and you are also trying to pretend to your customers that you are a serious company and that you're not going to die. And so many times I feel like founders stop focusing about just the most basic thing, which is like solve this problem that this amount of people have. And...
And it's just that simple. And so, yep.
Tzakhi (07:29.558)
Well, I think, sorry. No, I think, and you wrote about it, product market fit could be trivial if you're not trying to do something which is innovative or new. Because if you're just taking, there are lots of products that aren't needed in the market and you can just make another version of them. But if you're trying to innovate, then you have a challenge of how to make a new product that the market has a real demand for. And...
then the attenuation between what's already in demand and whatever you can offer that's novel is really the space that you're moving in and trying to get closer to that market pull, which indicates our product market fit.
Guillermo Flor (08:16.815)
Yeah, I mean, I think that is a big challenge for startups because many times you want to build something that hasn't existed so far. And I feel there's some startups that have to kind of create new markets or create, you know, yeah, exactly new markets and...
Tzakhi (08:27.67)
you
Guillermo Flor (08:45.743)
they need to kind of educate their customers first in order for them to start using their product. For example, I mean, when the internet appeared, most people wouldn't dare to buy anything online with their credit cards because they would feel, oh, they're going to steal from me. No. Um.
Tzakhi (09:03.048)
you
you
Guillermo Flor (09:14.325)
like e -commerce, kind of like Amazon, had to educate a lot of people into how to use this new product. Although the demand was already existing, right? I mean, people were buying stuff and people wanted to get stuff as fast as possible, that's something that hasn't changed. And so Amazon was...
Tzakhi (09:19.638)
you
Tzakhi (09:40.134)
Yeah.
Guillermo Flor (09:43.791)
really giving some, you know, giving access to faster purchases right to your house on the internet, which is something new, but for a necessity that was already existing. And I feel that it's so important to really understand that necessity and that problem because so many...
Tzakhi (10:05.91)
you
Guillermo Flor (10:12.815)
so many startups just build stuff because the founders feel like hey this is cool people are going to like this and then nobody does you know and so
Tzakhi (10:15.496)
you
Guillermo Flor (10:29.241)
I like the way that I like I'm currently like for example when I had my startup We did not have that market pool what I was trying to build it was fairly complex in terms of technology, but What I understand now is that it was not a must -have for my clients It was a cool feature to have you know something that it's
Tzakhi (10:40.438)
you
Guillermo Flor (10:58.863)
nice but it's not really making their life so much better enough for them to pay for it use it every day etc and so for example right now like i'm writing this newsletter product market fit i started writing it already like one year ago more or less and for a whole year i was writing about so many topics and publishing about so many topics and
I was trying to have a sense of what are the most common problems for startup founders, right? And so I was publishing about multiple topics and I found out that product market fit is one of them. How did I found that? Because I felt the market pull. Like I can say that I found in some sense product market fit because...
there was more demand immediately when I was like solving problems regarding that and I could see like more people read the articles, et cetera, right? And so for a startup product, it's kind of like the same. You need to feel like, think that you want to like help a specific, you know, customer profile, which can be anything that there's enough amount in the world.
Tzakhi (12:27.734)
you
Guillermo Flor (12:28.943)
for it to be a big market and then start delivering value with your product until you see that that ICP is really happy to use your product. And then once you see that that ICP is really happy to use your product and that it's using it recurrently, then you can think about, okay,
Tzakhi (12:46.376)
you
Tzakhi (12:52.424)
you
Guillermo Flor (12:56.079)
I have product market theta or I have something that shows enough market pull for me to now go fundraise. And then that's the point where you can build, you know, a kind of more complete product and then scale it and distribute it, you know.
Tzakhi (13:10.536)
you
Tzakhi (13:17.942)
What's the method of doing that kind of process of iteration that you recommend? Is it talking to a lot of clients? Is it just testing things and see what gets bought or what gets a pull?
Guillermo Flor (13:27.747)
Yeah, I mean, everybody says that you have to talk to your clients and there's many startup kind of like courses that tell you, you need to, like before you start a product or you launch a project, you need to interview like a hundred people and okay, yeah, it's fine to research a lot, but you're...
you need to build their product yourself because customers are not going to tell you the truth all the time. And so the only validation metrics that are valuable or that are real are the product ones and the conversion rates of your, I would say your payment.
Tzakhi (13:58.76)
you
Tzakhi (14:19.318)
you
Guillermo Flor (14:28.239)
Like what I mean is if you talk to, if I ask you now, Saki, hey, I'm building this tool for a podcast and I really need to know what's your day to day and your problems and whatever. And then I try to tell you yes. And I'm thinking about this and that. Okay. You can give me your opinion. Most likely you'll tell me your idea, something that you want, you know,
Tzakhi (14:29.)
you
Tzakhi (14:34.774)
you
Guillermo Flor (14:56.975)
But in the end, I am not sure if you would pay for that or if that is somehow valuable. I think a way better approach for it is like, I know that there's a hundred people, you know, following this podcast, whatever, or there is like this gathering of podcasters, I don't know, or this Slack channel. And...
I just, obviously like I've been analyzing the programs before, but I just share, hey, I built this. Let me know if this is valuable for you. And then I can see if out of a hundred podcasters that I send to, none entered to the product. It's like, this is not definitely not valuable for them. And then maybe you shouldn't move on. But...
Tzakhi (15:52.342)
Yeah, I think there's a double challenge because once one challenge is getting an honest and real response from people that you're interviewing and asking. And there's a great book about this, the mom test. And the premise there is that don't ask your mom because your mom will always tell you it's a great idea. So try how to get around that kind of problem where people are not giving you an honest response. But the second part is also that your clients might.
Guillermo Flor (16:13.935)
Right.
Tzakhi (16:21.942)
not be as imaginative as you are. You're trying to think of something new. Their look don't respond to you with what they know because they don't.
mood or position or haven't given it the thought of what can be beyond what they know. So those are limits and you're right, best ways to kind of try to see what gets a real response, like what do people pay for, subscribe to, which is not as great, but at least it's some indication of actual action taking. Okay, I wanna ask you this. Now, this is obviously a process, it doesn't take a day.
and startup founders are challenged with on one hand, they're building something, they're iterating on it. It's hard to get enough revenues or revenues at all while you're in that process and building and you need to raise capital. How to navigate kind of raising capital along the journey to product market fit?
Guillermo Flor (17:30.191)
That is a great question. I feel like raising big pre -seed rounds is only a really high pedigree startup founder can do. Most startup founders don't raise million dollars pre -seed rounds.
but I feel like the best way to raise money before product market fit is to share with your investors the passion for solving a problem and what I mean by this is if you go to an investor and you tell them I don't have product market fit I want money because I want to find
Tzakhi (18:12.424)
you
Tzakhi (18:24.52)
you
Guillermo Flor (18:30.031)
something to build the investor is going to tell you. You know, like build something first and then come talk to me, you know? But if you have great expertise about one specific topic or industry and you see there's a huge problem that you feel you are really passionate about solving,
Tzakhi (18:48.712)
you
Guillermo Flor (19:02.607)
there are going to be investors that
Tzakhi (19:06.76)
you
Guillermo Flor (19:07.191)
coincide with you in the passion of solving that problem because maybe they've been in that industry themselves or maybe they've suffered the problem themselves and so I think Obviously like most presidency rounds are pre -product market fit I feel having that expertise and that clear mission helps a lot to raise
capital but also there are a lot of metrics that you can use into your favor that are for example market growth like if you like if for example right now what is really trending are the apple vision pro no it's a maybe like you have
Tzakhi (20:02.294)
Yeah.
Guillermo Flor (20:05.933)
info like you can say something like there's a new market being built right now in the Apple vision pro or the whole AR or space or spatial computing ecosystem. There's a big opportunity to capitalize on this problem in this new market. And so that is attractive for investors because they see that there's a
Tzakhi (20:21.718)
you
you
Guillermo Flor (20:34.799)
great opportunity in something that is growing way faster than any other market currently. So that and your internal demand metrics that can be anything basically like if you are like the same topic, if you are writing about hacks on the Apple vision pro and your newsletter, for example, is growing.
Tzakhi (20:55.464)
you
Guillermo Flor (21:04.495)
at 10 ,000 people a month, then that is also kind of like indicators that there is demand for a new product within this field, you know, if you're writing about it very specific. So there are metrics that at pre -seed you can show to investors that there is demand for the product that you want.
Tzakhi (21:19.56)
you
Tzakhi (21:30.55)
Do you generally recommend founders to spend time being kind of content leaders in their niche?
Guillermo Flor (21:39.887)
I like what I recommend like it really depends on the type of startup if you are selling enterprise software it really doesn't matter so much because most of the people reading your content will not be your buyer personas you know sales like enterprise sales are long cycles in
it's really formal, you know, it's another game. But if you are building a startup that goes to, you know, SMBs, I think it does have a lot of impact. Like for example, I don't know if you know Behive, the newsletter platform, the founder, I think his name is Tyler Dent, does a lot of content and I feel like he shares so much about...
how the product is evolving, features that they are releasing. I don't know how to grow your newsletter. And I think that's really valuable. And a lot of people with these letters follow him. And I guess so many people moved from Substack to Beehive because of that. And I do feel it can be a great strategy because...
With good content, if it's about your niche, you can reach out and connect with a lot of your potential customers, but also create a community around your product. And those potential customers will push your product and might or can create exponential growth. And of course.
Tzakhi (23:32.822)
And they also give you data, which is what you touched upon earlier, and sometimes validation.
Guillermo Flor (23:37.907)
Yeah, also like it kind of creates like this flywheel effect. This is something that a lot of startups have used to grow kind of like Notion, you know? Notion has a huge community that love their Notion product and that build templates and they share the templates and that acquires Notion more users and customers. So...
You know, I think many startups forget that we are a startup or they're a startup because they're building an internet business. But it seems like because the internet is not new anymore, we think it's not as powerful as it was before, but you have the power to connect with everyone in the world. So you definitely should capitalize on that.
Tzakhi (24:14.71)
you
Tzakhi (24:37.59)
Okay, interesting. You invest in stage A startups, right, at Go Hub. What are your expectations at the A round in terms of product market fit? Or does it vary? Does it depend on the type of startup?
Guillermo Flor (24:53.921)
Most of the times, like, it's seriously, I'm looking at companies that are between 1 million and 10 million in ARR. So obviously they, like, I don't know, many people say that after 1 million in ARR, you've reached product market feed.
What I really look at is the number of clients that they have, the type of contracts that they have, and the time that they've been using the product. Like for example, I see some startups that have rates of 1 million ARR and they only have seven customers and three of them are pilots, but they're doing enterprise sales and they were able to get to that number, but they might not have product market fit.
Tzakhi (25:27.112)
you
Guillermo Flor (25:49.167)
they just have a good network and know how to sell really well.
Tzakhi (25:49.942)
. . .
Guillermo Flor (25:56.495)
And then on the other side, you can find startups that are one million AR and they have like, I don't know, a thousand clients or 500 clients. And they've like, the clients have been using the software for three, four years and you see there's high retention and then you see there's a clear product market fit. The need is, it's really straightforward. I feel like products, best products are really straightforward. You know, best startups are really straightforward. Like,
Stripe, okay, with Stripe you can get paid on the internet. That's it, nothing more. And build a subscription for your SaaS company. Really straightforward. It's not, you see how many landing page of startups say really abstract stuff. Like you're going to...
Tzakhi (26:36.63)
you
Guillermo Flor (26:52.095)
make more money or reduce costs and they don't market their product with what they do that's fine but that means that what they do is not so valuable, no? I mean so yeah, like coming back to the question it does change a lot from company to company but like the main thing is as I was saying earlier I will look at activation like this
how fast companies acquire new customers and then retention, how many of those customers stay using the product and paying for it.
Tzakhi (27:29.026)
Got it. Gia, thanks so much. This was really interesting. A lot of very good points. I guess people should follow you and subscribe to Product Market Fit, your newsletter. And who should reach out to you for Go Hub Ventures?
Guillermo Flor (27:46.995)
Yeah, for sure. They can connect me on LinkedIn to Guillermo Florian if they are raising seed to see, they say, please do. And yeah, also my newsletter is productmarketfit .tech. So that's awesome. And thank you so much for having me, Saji. This was great conversation.
Tzakhi (28:12.822)
Thank you. I'll just say to whoever's listening, subscribe to our podcasts and YouTube channel and of course to our newsletter on Meet .Capitol where we every week we give takeaways from our podcast meeting. So those come out on Tuesday. Guy, this was a great episode. Thank you so much. And I'll share the links to your LinkedIn and newsletter and to Go Hub Ventures, of course.
Guillermo Flor (28:35.055)
Thank you, Sakhi.
Guillermo Flor (28:42.087)
Okay, yeah, thank you, Saki. This was awesome.
Tzakhi (28:47.19)
Thank you. Bye bye.
Guillermo Flor (28:50.319)
Bye bye.
