July 15, 2024 • 65 mins
What happens after you sell your startup for $130M?
Join us as we sit down with Pau Sabriá, the mastermind behind Olapic and Remotely, to unravel the secrets of sustainable business growth and personal freedom.
Discover how Pau transitioned from raising over $22 million in venture capital and selling Olapic for $130M to a more balanced and fulfilling approach with Remotely, where sustainable revenue growth and a harmonious work-life balance take center stage.
Learn how his strategic decisions and philosophical shifts can guide you toward building something impactful without the overwhelming pressures of venture capital.
Pau's journey offers invaluable lessons. After a lucrative exit with Olapic, Pau and his co-founders approached their next venture with a focus on freedom and sustainability.
We delve into their thoughtful funding strategies and the dynamics of co-founding a business with diverse financial backgrounds. This conversation is a goldmine for anyone looking to create a fair and equitable environment while maintaining a sense of autonomy.
In this episode, we explore the labyrinth of startup funding, investor relationships, and the importance of timing in entrepreneurship. Pau shares his experiences on choosing between personal funds and external investments, and how bootstrapping can offer resilience against market fluctuations.
We also uncover the journey of Remotely, from its inception to finding product-market fit, emphasizing the role of past experiences in accelerating growth.
Tune in for a treasure trove of insights on sustainable entrepreneurship and discover how Pau's strategic decision-making can be your roadmap to success.
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Transcript
Episode Transcript
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Pau Sabria (00:00):
We wanted to optimize the level of freedom
that we would have whilebuilding these new businesses,
and that freedom, it's somethingthat is really really hard to
do once you go down the path ofventure capital.
The reality is that venturecapital is a business, and when
they fund businesses is toexpect a return, and then you
(00:21):
kind of don't explicitly signanything that forces you to sell
.
But there there is somethingthat you know, that the other
one knows that you're entering,and that is a kind of a
gentleman's agreement, if youwill.
Um, that there has to be somesort of expectation for growth,
(00:44):
for liquidity, and the capitalstack is stacked, I guess,
against you if you don'tnecessarily do those things.
Ariel Camus (01:07):
Welcome everyone.
This is Ariel Camus, and thisis the Only Thing that Matters
the podcast where I interviewsuccessful founders to
deconstruct their path toproduct market fit and extract
the principles and frameworksbehind their success.
The principles and frameworksbehind their success.
Today, I am super excited towelcome Pau Sabriá, a seasoned
(01:28):
entrepreneur and co-founder ofRemotely, a marketplace for
software developers in LatinAmerica, serving US-based
startups.
Pau has an impressive trackrecord, having previously raised
over $22 million for his firstcompany, Olapic, which was later
acquired for more than $22million for his first company,
Olapic, which was later acquiredfor more than $130 million.
With his current venture,remotely, Pau has shifted focus
(01:53):
from high capital influx tofocusing on sustainable revenue
growth and personal freedom,steering away from the
traditional venture capital path.
Join us as we uncover theinsights and strategies that
have guided Pau through theever-evolving landscape of
startup entrepreneurship.
Let's get started with PauSabria.
(02:13):
Hi Pau, it's so good to haveyou here.
How are you doing?
Pau Sabria (02:20):
Hi, I'm good, Thank you.
Thank you for having me.
Ariel Camus (02:23):
Well, thank you so much for making the time for
this.
I know you have someconstruction going on around you
, so hopefully you know noceiling or anything will fall on
you.
Thank you.
Pau Sabria (02:35):
Yeah, apologies for the sound.
Ariel Camus (02:37):
No, it's okay, it happens and luckily we have like
some level of noise reductiontechnology nowadays that I hope
will help us.
Pau Sabria (02:45):
Great.
Ariel Camus (02:46):
All right, we have a lot to cover.
You are what people will call aserial entrepreneur, and
whatever that means, it reallydoesn't matter.
But in the context of today'sconversation, I'm super curious
to discuss the differencesbetween the two businesses that
you have started.
I think it's worth highlightingthat you raised a significant
(03:09):
amount of capital for the firstcompany.
I think it was more than $25million with Olapic.
Is that correct?
Pau Sabria (03:16):
About a little bit over 20.
All right, about 22, somethinglike that.
Ariel Camus (03:21):
Okay, and you exited the company on an
acquisition of more than $130million.
Super worth highlighting andcongrats on that.
Thank you.
We'd love to hear what's behindthat story, but we'll see if we
get to that.
What caught my attention is thefact that when I hear about,
remotely, your new company, Idon't remember a single time
(03:44):
hearing anything about youraising capital or like a dollar
raise being something worth youknow highlighting right.
It seems like you're focusingon the actual business KPIs,
like your revenue, your growth,the number of companies you're
impacting, and I don't know.
I thought that was a superinteresting place where we could
(04:05):
start.
We can get to what thecompanies do later, but I would
love to hear first what's beenyour philosophical approach
between one company and theother when it comes to starting
the companies in general, andparticularly on the fundraising
and capital side of things.
Pau Sabria (04:24):
I'd like to start kind of by pointing out that one
of the main drivers of thetypes of businesses that I've
been building or working on havealways been the drive for
learning.
I enjoy the journey of learninga lot and a lot of what Olapik
(04:45):
was, which was effectively a B2Bsoftware as a service high ACV
marketing technology company,which is a mouthful.
I wasn't, like passionate abouthelping large consumer brands
make more money or sell moreitems, but I was more passionate
about the idea of what it takesto build a business and how to
(05:08):
kind of the quintessentialstruggle of bootstrapping and
creating something from nothing.
And with Remotely, which is alabor marketplace, that is
different, right Like I thinkthat a lot of people decide to
do more of the same and we, withmy co-founders, we didn't want
(05:29):
to go into just doing anotherB2B software as a service
business.
We like the idea of starting amarketplace which has different
challenges and learning fromthat experience as well.
But we were, as you werepointing out, we were lucky
enough to have a very goodfinancial exit with Olatik and,
(05:50):
you know, while we did take sometime off to kind of think what
to do next, we went back at itquite quickly and in the kind of
.
We did take more time thinkingthrough kind of the principles
of what we wanted to build goingforward, and we did extensive
(06:11):
research on the kind of what wewanted to do, like how we wanted
our kids to look up to us, how,like, do we want to work more,
how, how do we want to be ableto work, and and also what are,
what is the type of life?
Do we want to work, to be ableto work, and and also what are,
what is the type of life that wewant to live once we have made
the money that we had made, andand kind of try to find a
(06:34):
goldilocks type of equilibriumbetween intellectual challenge,
work, ethic, but at the sametime enjoy and give experiences
to our kids and so on and soforth.
And so we narrowed down intosomething pretty basic which was
we wanted to optimize by.
(06:54):
We wanted to optimize the kindof the level of freedom that we
would have by having whilebuilding these new businesses.
And that freedom.
It's something that is reallyreally hard to do once you go
down the path of venture capital.
The reality is that venturecapital is a business and when
they fund businesses is toexpect a return, and then you
(07:17):
kind of don't explicitly signanything that forces you to sell
, but there is something thatyou know, that the other one
knows that you're entering, andthat is a kind of a gentleman's
agreement, if you will thatthere has to be some sort of
(07:38):
expectation for growth, forliquidity, and the capital stack
is stacked.
I guess, guess against you ifyou don't necessarily do those
things.
And so our vision was let's tryto get to something that
doesn't rely on venture capital,because that will give us a
(08:00):
higher degree of freedom than ifwe do, and that dictated in a
big way the type of businessthat we would go into, because
we had to be able to monetizequickly, and also the type of
industry market that we would gointo, because there are
industries that you're not goingto be able to enter without
(08:25):
significant capital investiture,like I don't know.
A good example of that is AIright these days.
And so all of those decisionsplayed into this goal of trying
to maximize freedom.
Ariel Camus (08:39):
That is super interesting and I can relate to
a lot of that and I think a lotof like second time
entrepreneurs can probablyrelate to that and I'm curious
to see if we can imagine aparallel universe where you
started the first company butfor whatever reason you had to
shut it down.
You didn't get the exit and youwent into, like, starting a
(09:01):
second business.
Let's say that happened.
Maybe you would have been kindof frustrated by that and not
starting a second business.
Let's say that happened.
Maybe you would have been kindof frustrated by that and not
starting a second business.
Let's say you did, but youdidn't have the financial uh,
let's say, backup to to start asecond business and optimize for
this much more balancedapproach to life.
(09:21):
Do you think you would havedone things?
Definitely, how would have?
I know it's hard to imagine aparallel universe, but life Do
you think you would have donethings differently?
I know it's hard to imagine aparallel universe, but how do
you think having that financialbackup made you do things
differently and how would thatcompare if you hadn't had that?
Pau Sabria (09:35):
I don't think that the financial backup played a
big role.
The reality and this led to aslight cheat is that we did
actually raise a little bit offunding for remotely for the
second business, and I'llexplain why.
(09:56):
We went raised, obviously beingextremely transparent about
everything that we were going todo and what we wanted to do and
how we wanted to run thebusiness.
There was the idea that our Ihave four well, there's four of
(10:18):
us, there's four co-founders,and two of them haven't had that
type of exit that we had right,and going into this new
business, we didn't want ouravailability of capital to kind
of play a role in those founderdynamics, so we had to design it
with a minimum kind of commondenominator in terms of wealth.
(10:42):
And so we had a plan toself-fund and fully bootstrap
the company, going in determinedby the amount of capital that
the person the founder with theless amount of money could
afford.
And then what happened is thatCOVID happened.
Ariel Camus (11:01):
Yeah, because you launched like right before COVID
, right.
Pau Sabria (11:04):
I think it was February 2020.
Exactly.
And so then COVID happened, andwhat happened was that we went
into it with an expectation anda timeline of when we thought we
were going to be able to raise,to generate revenue, and very
quickly the levels ofuncertainty in the startup world
(11:29):
went through the roof andhiring freezes became universal
and no one knew what was goingto happen or what, even like
what, the current quarter wasgoing to look like.
And so we decided that we weregoing to raise a little bit of
money, because we couldn't holdour breath for that long with
(11:53):
that minimum amount of ormaximum, rather a maximum amount
of capital that we had setaside for the business.
So we did reach out to a fewinvestors say that we wanted to
raise a little bit of money forthis non-BC bankable business.
So we did reach out to a fewinvestors to say that we wanted
to raise a little bit of moneyfor this non-BC bankable
business, and people gave us themoney and so we decided to push
(12:15):
through and the reality is westill have most of the money
that we raised in the bankbecause the company became very
low, burningburning kind of typeof business and we're looking
kind of forward, to not havingto raise a lot of money going
forward Like that's the goal,see if we can.
(12:36):
It's almost like a designconstraint that forces you to
manage the business differently.
Ariel Camus (12:42):
It is super interesting and, I guess,
emotionally intelligent what youdid with the other co-founders
trying to create this fairplaying field where everyone was
coming into the business withthe same, I guess, possibilities
and opportunities to play thelong-term game.
(13:02):
And I'm curious, how did thatprocess go?
It's a very unique or maybesomething that doesn't get
talked about very often.
I feel like many first-timeentrepreneurs might think well,
if I can end up with a largerpercentage of my company, if I
can put more capital, thenthat's better for me, I have
more ownership and all of that.
But in your case it seems likeyou did that differently.
(13:25):
What, what were the incentives,what were the the, the goals to
do it that way?
Pau Sabria (13:30):
I think.
I think that, um, it'ssomething that worked out well
for us with with olympic.
We always were equal in allcapacities, equal salary, equal
share with the three of us andeven though it's hard, at the
end of the day you know that itis going to be unfair to someone
(13:55):
doing that.
It's always going to have somesort of an impact.
Different founders depending ontheir role, they'll face
different types of challengesand they'll have to sacrifice in
different ways.
We had my at Olopec.
My co-founder, luis, was ourCTO and he had to travel often
(14:17):
to Argentina where we have ourdevelopment team, and that was
an important investment from apersonal sacrifice, family,
work-life balance kind ofperspective.
I had at some point to dealwith a lot of the issues we had
(14:37):
with the acquiring company andmy co-founders had to deal less
with that and my co-founders hadto deal less with that.
So at times during the companyit's hard to kind of understand
who will kind of sacrifice morethan the others.
But I think it's an exercisethat is really really hard to
(15:00):
try to forecast at the beginningand try to attribute different
kind of.
So we decided to go with thejust saying for everyone.
That way everyone is likepushing forward to maximize
everything and there's no kindof you have I have kind of type
of conversation and that workedwell for us in that instance.
(15:21):
Now we try to apply the samething with the hopes that you
know you try to not probablymaximize the whole as opposed to
your own personal benefit, Iguess is the interactive we will
always wonder if we would havelike.
(15:43):
The reality is that there was aC scenario that we never
explored, which was that we dogo out to try to raise that
money that we ended up raising.
We raised 1.5 million and atthe moment that we have the term
sheet that sets the value, wethen do it ourselves and in a
(16:04):
way you have this dual kind ofcontribution to some degree.
You have kind of an LP-ish kindof relationship as an investor
with the business and then as aGP-ish as an operator in the
business, as a co-founder of thebusiness, as a GP-ish as an
operator in the business, as aco-founder of the business.
(16:24):
And there is one benefit whichis that you would have a higher
level of autonomy with that typeof relationship and we had put
the money in.
Ariel Camus (16:38):
Can you explain why that would give you a higher
level of autonomy?
Pau Sabria (16:42):
I think that because even today, there's a few
things that we are bound by theinvestment agreements that we
signed right, like there's likeinformation rights we have some
limitations to what we can do interms of raising that we cannot
(17:03):
invest in cryptocurrencies notthat we would, but if we wanted
to at some point it.
Of raising that we cannotinvest in cryptocurrencies not
that we would, but but if wewanted to at some point.
It's something that we need toask for permission.
Like there's a level ofdecision making that you would
have to go through the legalapprovals with, with the
investors, and that would haveor could have different degrees
(17:25):
of kind of headache, dependingon who those investors are and
who those investors may be inthe future, in terms of
sometimes they change who theperson that you interact with is
.
And so that level of autonomycould potentially have gone away
.
But obviously there's anegative.
That is what?
How would that relationshipchange, and how would your
(17:46):
perception of the risk of thebusiness and the subsequent
downstream decision making, howwould that change as well?
Um, and I don't know.
I don't know the answer becausewe never did it, but it's
something that we think about,um obviously in hindsight,
everything is 2020, now that weknow where remotely is and that
it's going well.
Ariel Camus (18:07):
The the obvious bias is like we should have done
it, but, but I wonder if weshould have done it do you think
it would have changed yourrelationship with the other two
co-founders if you had put themoney once you had the valuation
from the other investor?
Pau Sabria (18:25):
I don't think so.
I'm more worried about my, thelevel of execution and
aggressiveness, um, andtherefore I wonder if we would
have arrived to where we havearrived.
If we had, you know, would ithave been more fearful, um, and
therefore not got into where wehave gotten today?
Ariel Camus (18:45):
that's, that's my biggest question you think that
if it had been your money, youwould have been maybe more
fearful?
Yeah, makes sense.
I mean, it's when it's yourmoney.
Uh, it's your money, right?
Um, yeah, no, it's.
It's fascinating.
So I guess, um, if I try toextract, what I'm hearing is
that you more or less knew whatyou were paying in exchange for
(19:11):
that money, in terms of thingsthat you were giving up or that
you were giving to the investor,like this information riot or
some limitations but at leastyou knew what you were giving,
right, at least you knew whatyou were giving, right?
Yeah, on the other side, if youhad put the money yourself,
maybe it was more uncertain,right?
What would have happened?
(19:31):
Right, there was more risk ofmaybe moving more slowly because
you're afraid of losing yourmoney.
Maybe you said that you thinkit wouldn't have happened, but
maybe having four co-foundersthat don't feel like equals
would have created an incentivefor the people with the lower
percentage maybe to have lessskin in the game.
Those are things that, as yousaid, it's impossible to predict
(19:53):
, so you'll much rather take theoption where you know what you
are giving instead of taking theoption where there's much more
uncertainty.
Correct, that makes total senseand it's fascinating and I say
this because a lot of peoplemight think well, you know they
had a lot of their own money tostart their second business.
Of course they did X and Y andZ, but it's super interesting to
(20:15):
see how you know things are notalways that obvious and how
there are incentives and youknow perverse incentives in both
directions and there's justlike no right or wrong.
But what matters is that you'rethoughtful about why you make
those decisions.
And talking about thoughtfuldecisions, why do you think
these investors that invested inRemotely, knowing that this was
(20:38):
not a venture-backable business, knowing that you were not
chasing a big acquisition, a bigexit, the next big round, why
did they decide to invest inremotely?
Pau Sabria (20:49):
I think part of it was that, as you know, investors
usually have to understand whatis the area and the thesis that
you're investing in, but that alot of what you say at that
point.
And at that point, bear in mind, we had nothing, we had no
(21:09):
product, we had done someresearch and little else.
The basis of it was that,especially as a seasoned
investor, you know that theentrepreneur will get a lot of
it wrong and there's a lot ofthings that they will change
their mind on.
And so we had two types ofinvestors.
(21:30):
We had investors that hadinvested with us at Olotech, and
so for them, I think it was alittle bit different.
I think for them, when theyinvest, oftentimes they invest
in an additive basis.
So for them, even almost ifthey write off that investment,
it's fine because they alreadygot the win from the first
(21:51):
investment.
So they pull you together, andoftentimes I've seen investors
that invest in founders thathave had an exit exclusively
based on a principle of I'llinvest again, because if they
were lucky, maybe they're luckyagain, and so I would put those
into a different pool.
(22:11):
But for the investors that werenew, I think that to some
degree there was the sense thatwe had tasted something blood in
terms of we had been in aVC-backed business and there was
the idea that it was kind ofcute that we were going to do
this bootstrap thing.
(22:32):
But the moment that we saw thatwe had something in our hands
that could potentially get verybig, that we would actually go
for it, right, that we wouldfind you know, we would find
compelled to raise money andswing for the fences in a way
that would be much moreaggressive.
(22:55):
And, to be clear, the fact thatwe are bootstrapping the
business doesn't mean that we'renot swinging for the fences,
just that we're using differenttimelines.
So we still want to makeremotely as big as we can.
It's just that we don't need tomake it within five years, and
the idea is we will make it verybig but over a longer period of
(23:18):
time, and that's fine by us andthat's fine by us.
And so they thought that maybewe found this type of behavior.
We would kind of feel the urgeto kind of grow faster and
(23:40):
faster and faster.
There is something to that thatI think is true, meaning like
now that we're building, thereis a rational part of ours that
compels us to make it better andmore efficient and grow faster,
and so on and so forth.
So there's some truth to that.
At the same time, the world haschanged a lot between when we
did that raise and now and therewas a period in between in
(24:04):
which people were raising crazyrounds of funding, um, and we
stayed away from that and whenthe world turned and everyone
was doing layoffs and everyonewas kind of going through the
necessary kind of readjustment.
We didn't have to, because wehad self-imposed this kind of we
(24:25):
will not do this, and so we hada slightly easier time.
I sometimes think about was ita missed opportunity or not to
raise the money, and so on andso forth.
It's hard to know, it dependson how it plays out, but I think
that I certainly enjoyed a more, more stable path, albeit being
(24:46):
a little bit more linear andless exponential, next to all of
that if there was a massiveopportunity to grow much faster
and it was that like thatobvious that you know that if
you raise more capital, youcould, you know, take an
advantage of it.
Ariel Camus (25:02):
Will you do it?
Or that will compromise some ofthe basic pillars of the type
of business you have tried toestablish for you and your
families.
Pau Sabria (25:12):
So I think, in the way that I do think that a lot
of your business relies ontiming right, and in our case,
our timing was a little bit offwith when the opportunity struck
.
As you said, we started thebusiness in February 2020, but
we had nothing, and so when themove towards remote work started
(25:38):
, the challenge we had in termsof, or the business opportunity
that we had in front of us was alittle bit too early.
Just as a reminder, remotely isa labor marketplace for
software developers in LatinAmerica, for US-based software
companies, and so the entireshift towards remote work helped
(26:00):
us tremendously.
But at the peak of the lastsoftware bubble, if you want to
call it something, which waswinter 20, we were still a very,
very tiny company, and eventhough we did feel the big pull
from the market in terms ofdemand, we were too small to
(26:20):
take advantage of it, and so weknow of companies that were
significantly more advanced thatat that point, they were just
riding a wave like no wavethey've ever ridden before, and
so I think that that issomething that, in our case, we
were a little bit off and wecouldn't kind of take fully
(26:43):
advantage, regardless of theamount of capital that we could
have raised right and then veryquickly thereafter you had the
opposite, like a significantlynuclear winter by which
everything cooled and again, nomatter how much money you have,
it's not going to help youtremendously kind of improve
your metrics as a business.
(27:04):
And so we stay very, very, veryfocused on trying to well one
survive the nuclear winter, todistinguish and quickly assess
what it feels and what it lookslike when you are at the peak of
a wave, because oftentimes youdon't really know.
You think that's the new normal.
(27:25):
Oh, it's normal to signcontracts without having to talk
to someone, right?
You think that sales is easyversus what is surprisingly
tough, and you can measure allof this in different ways, like
ratios of sales and marketingspend relative to how much
contract value you add, and soon and so forth.
(27:46):
Like you see the two sides ofthe coin, when times are really
good and when times are reallybad, so that at least you get a
better sense of where you are inthe cycle going forward.
And then our focus became okay,let's survive.
Our focus became okay, let'ssurvive, let's understand what
operating this business inreally, really dark times looks
(28:09):
like, and let's sharpen our muchscale as we can so that when
things go back up and to theright, we're going to be in a
(28:32):
much better position to takeadvantage of this.
Will we raise money then?
I hope not.
I hope that by then we'll haveenough cash flow generation to
be able to fund that growthourselves and kind of reinvest
our earnings back into thebusiness.
But it's not out of thequestion that at that point it
(28:54):
could potentially make sense toraise more money.
Ariel Camus (28:57):
So what I'm hearing is that you feel, or you
believe, that if you can dothings with your own money, it's
much better than doing it withsomeone else's money because of
the strings attached, but thatat the end of the day, if you
happen to find yourself in themoment where you identify a wave
that you can ride and benefitfrom and you feel like you need
(29:23):
more that you haven't generatedyet, you might take that money,
even though that might alsocompromise some of the type of
business that you have tried tocreate to have a better balance
compared to when you havesomeone else's expectation
pushing on you.
Correct, right, perfect.
So let's now go back on time alittle bit and let's start with
(29:46):
ola peg.
We'll get to remotely after.
I would love to hear how didyou come up with the idea?
How did the opportunity show up?
How did you decide to say, well, let's uh, take advantage of it
?
Pau Sabria (29:56):
my co-founders and I were attending business school
in new york in 2000, between2008 and 2010.
And so, as a reminder, theiPhone had just came out, in
summer 27.
And the iPhone went throughsome subsequent kind of
(30:17):
improvements over the time ofthose first two years in which,
at the beginning, you could takepictures, but you couldn't take
videos.
People don't remember this.
But there was no camera in thefront, the app store was very
nascent, there weren't many apps, instagram didn't exist, et
cetera, et cetera.
(30:38):
And so we but we saw early onthe rise of photo sharing, if
you will Like, the fact thateveryone had a camera in their
phone, in their pocket.
But we saw early on the rise ofphoto sharing, if you will Like
, the fact that everyone had acamera in their phone, in their
pocket, was going to change thegame in some capacity.
Bandwidth was going up and intothe right and the web was
(31:02):
becoming much more visual thanwhat it had been.
You still didn't have streamingservices in the same way that
you had Netflix, right, but itwas something that Netflix still
relied heavily on on, like DVDrentals, for instance.
And so we went into, we thoughtabout the idea, we came up with
the idea of a group photo albumand initially it was going to be
(31:24):
for consumers, and when wegraduated from Columbia and
decided to go full-time withthis shortly thereafter, we
decided to shift to a B2Bproduct.
We were relatively successfulat monetizing the concept of a
(31:51):
group for album.
It did require, like, really,really high volumes, and I
remember doing the math of howmany premium accounts we had to
have to be able to pay onesalary and it just seemed like
we would never get there.
Um, and that was very scary.
Ariel Camus (32:04):
What were the use cases for the, the b2c approach?
Pau Sabria (32:09):
so initially the idea came from a group trip.
So the idea of like going on agroup trip with friends and
being able to pull togetherphotos of the group trip, um.
But then it became prettyevident that it would be hard to
like who.
Who do you charge in a grouptrip?
Right, Like who foots the bill?
(32:29):
And that was going to be alwayslike a friction If you don't
know who you sell to, it's goingto be hard to sell.
And so the initial idea wethought was like what are group
events in which there's a clearbuyer that wants to pay for them
?
And so we went into the weddingspace and clear buyer that
wants to pay for them?
And so we went into the weddingspace and we thought that
couples would pay for it, andand we were very successful at
(32:50):
monetizing that.
Um, but the volume and thescale of the market was such
that it just the revenue was notvery meaningful um and so how
much?
Ariel Camus (33:04):
how much were you charging per wedding, per couple
?
Pau Sabria (33:06):
we were it was expensive.
We were charging about 80 bucksper wedding.
Um, so, for a, for a premiumphoto shoot like bear in mind, I
think, uh, back then flickrflickr was a premium service and
it was $25 for a year, and sowe had unique features like a
(33:30):
moderation queue so that thecouple could moderate what
pictures went into their webalbum and things like that,
because they cared about thosetypes of things.
But we were able to monetizesignificantly.
Well, uh, it just was a slowbusiness and and and acquiring
weddings is very expensivebecause it's a very inflationary
(33:52):
market, um, in the sense thatyou compete in advertising with
the ring makers and the venue,uh, rentals and so on, and they
make significantly more moneythan you, so they're willing to
outbid you.
And so at some point we decidedwhat?
What if we find?
We found there was an event inwhich you participated in
(34:13):
pitching to a media company, oneof the largest newspapers in
the US, in New York, and we wentand pitched the idea of
essentially collecting all thesephotos of events happening in
the newspaper, and we thoughtthat that would give us like a
cheap customer acquisitionstrategy, so to speak, for the
(34:35):
wedding business.
And we won that competition andwe signed a contract with that
newspaper to power their groupphoto albums a contract with
that newspaper to power theirgroup photo albums and we made
more money with that contractthan all of the weddings that we
had done up until that pointand we thought, wow, this is so
much easier.
(34:55):
So we followed the money andover the following six months or
so, we sunset the weddingproduct and went full B2B.
At some point we thought wecould do both Probably one of
those first-time entrepreneurtype of mistakes and you very
(35:15):
quickly realize that it's really, really hard to go both B2B and
B2C and in fact, no one does itbecause it's too confusing, too
hard two different companies,two different DNAs, almost.
And so we decided to go B2B,honestly, because it was easier
path to monetization and capitalefficiency.
(35:36):
This was end of 2010, which wasat that time at the bottom of
the recession of GDP in terms ofthe US coming out of the 2008
crisis, and so there wasn't muchVC out there.
It was really really dark ages.
(35:57):
Not many entrepreneurs buildingbusinesses.
Ariel Camus (36:02):
If people feel that today is hard to raise money,
back then it wasn't possible andso the way the, the amount of
capital you could raise backthen compared to what we have
seen the past few years, waswell, I guess the last few years
were ridiculously high, right,but you had to make things
happen with way less capitalback in 20 and now that it feels
that things have cooledtremendously and people are kind
(36:23):
of complaining, if you look atstats from the Venture Capital
National Association, you seethat the volume being invested
today is still comparable tolike 2000, which was
significantly higher than 2010.
Pau Sabria (36:38):
And so things were gloom.
Back then.
We decided to go with high ACVtype of products and it worked
well for us.
Ariel Camus (36:50):
Can you explain ACV and what the value was compared
to the consumer product?
Pau Sabria (36:56):
Yeah, so ACV usually I call it the annual contract
value of a customer.
The newspaper was paying us$13,000 per year and was
allowing us to license that kindof experience to someone else
as well.
And so, without knowing it, wehad built a software as a
service business, and I say thattruthfully.
(37:20):
We didn't know what SaaS was ormeant.
Truthfully, we didn't know whatSaaS was or meant, and the idea
was that if we see if we couldsell it to more media companies
compared obviously to the $90per account, people just get
married once at least for awhile.
(37:42):
Get married once at least for awhile.
Um, and so the, the idea thatyou could make 17k every year
for the foreseeable future waswas was a very appealing one,
and the good thing about againthe acb is that the math to pay
that first salary becomes somuch easier, right, like it's,
at least for me was like well, Ithink once I have the first
(38:05):
customer, I think I can convincea couple more, and soon after
you can get to that like 50 000per year, and when you're from
50 000, you start to see thelight at the end of the tunnel
where you can pay the firstsalary of the first employee,
and so I've always thought thatpricing is a little bit like
(38:26):
gravity, in the sense that youknow there's planets with
different degrees of gravity andhow high you jump is determined
by that gravity.
And so if you have high ACV,your gravity is low, meaning
that with a relatively lowmanual effort you can get pretty
(38:49):
high in terms of revenue.
That obviously kind of hidesmaybe a lack of product market
fit.
Like you may not have productmarket fit and feel that you
have product market fit becauseyou've been able to sell
something While with a low ACVsay something more in the
vicinity of like $10 a month,something like that the only way
(39:13):
that you break free from thatgravity is with like really
strong product market fit, andit's something that I don't know
.
Maybe my risk aversion havealways pushed me to high ACV
types of products because youcan work through the kinks of
(39:36):
your product and find, withouthaving to kind of really, really
like try to do it on a verypurest like it's almost like
swimming without oxygen tanksright, like it's so much harder.
I have a lot of respect formore entrepreneurs like you that
(39:57):
go more of the consumerishroute with low ACVs.
Ariel Camus (40:00):
Well.
But it's also something youlearn, right that charging more,
while counterintuitive, it'susually always better.
Right, you create a perceptionof value that is higher.
So people tend to give morevalue to the product just
(40:21):
because it costs more.
Right, it also makes it somekind of like virtual circle,
because someone paying more ismore likely to take advantage of
whatever they paid for, it'smore likely to rationalize the
investment they made.
But just the fact that theywill be putting more effort into
using it makes it more likelythat they will be happy with the
product, which means they willhave or you will have better
(40:42):
testimonials, which means youwill be able to attract more
people.
But also, because you make moremoney, you have higher margins.
That means you can reinvestmore of what you make into
making the product better andyou know if you can get there.
Like, I don't think it reallymatters whether it's consumer or
B2B.
Of course B2B, the averagerevenue per user or ACB will be
higher normally.
(41:03):
But thinking in terms of highpricing, I think no matter if
you're doing consumer or B2B.
It's super important becauseotherwise you're competing in
price and that means that youall end up looking the same and
converging to the average, andthat is not a fun place to be in
.
So, consumer or not, I thinkthinking about high prices is
super important.
Pau Sabria (41:31):
And I think that relative related to price.
I think there's another conceptthat we also learned almost
intuitively with Olapic, whichis how you tie price to value
creation.
The problem we had we did thatfirst pivot from wedding B2C to
media company B2B with high CV,but the truth was, like looking
ourselves in the mirror, thevalue that we were creating, the
(41:56):
value proposition that we werecreating for customers, was a
little bit weak.
It was a lot of like consumerengagement and back then
Facebook was like pushingcompanies to build like
audiences and getting likesright.
Like everyone was chasing thenumber of likes you had on the
fan page and there wasn't like aconversion to dollars or to
(42:22):
value creation, like why are wedoing all of this thing?
It was kind of like a game andwe felt that that value creation
was relatively disconnectedfrom our business and, as a
result, everything suffered.
Right, like, our ability topredict to sell was harder, our
(42:44):
sales cycles were longer,everything was a little bit
tough.
But then we ran into onecustomer that, instead of being
a media company, was ane-commerce store and they told
us that they wanted to showcasethe photos of their consumers
using the product on theirproduct detail page and the
(43:06):
premise was that they felt thatthat content would increase
conversion rate customers againif we did an early adopter
program to try this widget thatwe had for media companies to
try it in e-commerce sites tosee if conversion rates actually
(43:27):
increased.
Funny story is that myco-founders also got an email
this long from me saying thatthis was a mistake, that
conversion would decrease,obviously, and that we were
going to make these companieslose money instead of make money
.
But we put ourselves in thehands of the A-B testing gods
(43:48):
and the conversion rateincreased 9%.
What?
Ariel Camus (43:53):
was your thesis of why it was going to be lower.
Pau Sabria (43:57):
I just thought that people were a lot of
decision-making in terms of whypeople buy something is
aspirational and that seeingthings by their true looks would
not like the quality, would notthe UGC?
Basically, my thought processwas that UGC wasn't inviting
(44:19):
people to buy and was sowingthem with doubt as opposed to
giving them confidence topurchase.
That was my initial hypothesis.
Ariel Camus (44:30):
Fair enough.
And why was it a hard decisionto do this A-B test?
You said that you were going tolose money of the company.
Why was that?
Pau Sabria (44:37):
the case.
No, well, the losing money partwas well, we do the ab test.
If, if the people being servedthe user generated content
purchase less, that's like a alost opportunity of revenue.
Right, like that was my.
But it was going to be time,right, but no, it wasn't.
It wasn't too hard.
(44:57):
We went at it because thecustomers wanted to do it and
there's no way to know ifsomething is going to go so far
that the theory will take youright At some point.
You need to try it, and we triedit and the conversion went up,
and the good thing about that,honestly, was the fact that we
(45:19):
had a conversion rate increase.
That meant that we had abusiness model.
We knew how much money we weregoing to make incrementally for
the company, and that amount ofmoney scaled linearly with how
big the company was, and so wecould charge more to someone big
compared to someone small, andso we could charge more to
(45:42):
someone big compared to someonesmall and our pricing could be
tied to that value creation.
And the rule of thumb we usedwas one-tenth If you charge
one-tenth of what you create interms of revenue, people will
pay you, because it's a goodkind of listen if you're going
to make nine and I'll make onepeople say, yeah, let's do that,
(46:10):
especially in the case ofe-commerce, where they can
actually measure that returningdollars almost immediately.
right, Correct, and that was theother piece.
It's like the closer you are tothat revenue generation in the
kind of the value chain, if youare very, very up top in the
kind of brand awareness type ofpart of the marketing or the
(46:30):
sales cycle, you're going to bevery, very far away from that
conversion.
We were like smack at theconversion point on the product
detail page, right, like whenpeople click buy, and so we
could.
We could measure that valuecreation very clearly and that
changed our businesssignificantly.
That was what we consider.
(46:50):
That was second pivot of all ofit, where the value creation
formula was so much clearer thatthat yielded like almost an
immediate doubling or triplingof our ACV.
So the average general contractvalue of our customers went up
significantly.
(47:11):
And then our sales cycle wentfrom being about four months
three to four months to beingone month, right, so we were
selling faster at higher ticketprices and and that's when we
saw it then, very quickly wedecided, okay, this is the way
to go.
Um, and so we kept the mediabusiness for a little bit
(47:34):
because it was still somewhatmeaningful revenue.
We were doing about eight8,000from it, while the e-commerce
business was about $10,000 amonth.
But we knew that this is whatwould grow and we ended up
sunsetting the media business afew years later when it was
(47:55):
doing about $30,000 a month.
But the core business of Olapicended up doing north of $2
million a month.
But the business the corebusiness of Olopec ended up
doing north of $2 million amonth.
Ariel Camus (48:03):
That is fascinating .
So you went from B2C having alow average revenue per user not
a huge recurrence, becauseyou're returning customers after
their weddings basically tosomething where there was more
willingness to pay.
Probably on the B2B side,companies in general have more
money than individuals, so theycan pay more, but the value was
(48:23):
still not measured in the dollarreturn.
And then you found theopportunity where you were
closer to the transaction.
The value added was directlyassociated to the actual revenue
and that means it's a mucheasier decision for the person,
which means they're willing topay more and they're willing to
make the decision faster.
Pau Sabria (48:42):
Correct and also important for the scalability of
the business.
It's easy to teach how to sellthis type of product because it
becomes very obvious and a veryskilled salesperson.
You had someone that could.
(49:02):
You know you could train.
You had to train no matter what, but anyone could do it.
Ariel Camus (49:12):
That is a great insight.
This moment, when you finallymake this connection with the
e-commerce system, you cancharge much more and sell much
faster.
To me that definitely lookslike product market fit.
But when you were maybe a fewmonths before that, did you
think maybe with the weddingproduct we have product market
(49:34):
fit and what did that look like?
And then when you went with themedia companies, did you feel
also like we had maybe productmarket fit.
Wasn't even a thing back thenthat you call it like that, but
were there like three differentmoments where you thought like,
oh, we found something reallyreally worth pursuing?
Or it was always kind of likethis is not good enough, this is
not good enough.
And you only found this beinggood enough when you got to the
(49:56):
e-commerce part.
Pau Sabria (49:58):
I been good enough when you got to the e-commerce
parts.
I mean it's all relative right.
So I remember it was a greatfeeling with the consumer
product, like waking up withthat email that says you've been
paid $90 or $80, right.
Like having several of thoseemails.
And that's not something youget on a B2B site as much,
especially on the ACB.
(50:18):
Like the number of transactionsyou get per month is in the
dozens if you're lucky, and sothat dopamine hit hits
differently when it's thisconsumer and it truly feels like
you're not doing anything forit, whereas the other one you're
rowing and it's almost likemore a consultative type of sale
, so there's a lot of effortthat goes into it.
It's almost like more aconsultative type of sale, so
(50:40):
there's a lot of effort thatgoes into it.
So that did feel special and Iunderstand how it can be
addictive.
But with the sheer absoluteamount of money that you could
sign with a customer, the B2B iscertainly appealing because of
(51:01):
that.
And then there was the firstprinciple, kind of thinking
around value creation that forme clicked it and that ensured
that you would have a long-termsuccess as a business, as
opposed to like a short-termdystopian, like distortion of.
Oh, I think I have havesomething like deep inside
(51:22):
ourselves.
We knew that the media businesswas somewhat weak, um, for a
wide variety of reasons, but oneof them being this kind of not
being tied to value creation, um, but did you talk about it by
then, saying, well, this isworking, but it is a weak type
of business?
Ariel Camus (51:40):
or there were moments when you felt like this
is working and it's amazing no,we, we, we talked about it.
Pau Sabria (51:47):
There were several indications, right, not only
this, like there was the factthat media businesses were kind
of dying.
Uh, so you'd never want to bein a market that that is then in
a decline.
Obviously, as an entrepreneur,you always have to kind of be
looking at the bright side ofthings and being optimistic
about things and like, push forit.
And there's some almost likeignorance is bliss type of
(52:10):
message somewhere there thatpushes you to kind of keep going
.
And the reality is that all oflike, some people sometimes have
asked me, like would you buildthe business differently now,
knowing all of these things?
Like would you go into thee-commerce business first and
like, like grow it from then?
(52:32):
And and the truth is that thee-commerce business needed other
things for it to work.
It needed e-commerce to be athing.
It needed instagram to exist,hashtags to exist.
It needed a lot of things tomature to the point that that
became a reality.
And if we had started that backwhen we started the wedding
(52:54):
business, none of those thingsexisted and it wouldn't have not
worked and we would have movedon thinking like this would
never work right and so, in away, stumbling your way through
life to get to the point wherethat timing is right is, to some
degree, important.
So I wouldn't necessarilychange my steps because we would
(53:17):
have missed, from a timingperspective, the opportunity to
strike gold when, when we didthat said, the reality is in
parallel of everything that wewere doing.
Right?
Instagram was created, likeliterally when we did the pivot
from consumer app to b2b withthe media companies.
(53:37):
Instagram launched and I signedup on the first day of
Instagram.
I'm user 3000 something onInstagram and we saw the advent
of hashtags and the APIs andFacebook bought Instagram.
I think that 13 months afterthey launched and they bought
(54:02):
them for a billion dollars,right.
So 13 months after the launch,we hadn't even signed our first
e-commerce site, right?
So success in terms of relativemeasure is always like humbling
because we could have done,know we could have invented
instagram.
Maybe instead we could stay doneon, on, on the, on, on that
(54:25):
kind of part of the of thespectrum, and not even in the
same industry, right like wewere in a shared space in
manhattan and in that sharedspace, which was this is all
like pre-we work days it wasvery, very cheap, very kind of
crappy space, but kind of filledwith early entrepreneurs that
(54:46):
went on to do different things,and one of the interesting
stories I like to tell is thatin that office space that had
essentially no windows we shared, that was the first New York
office of Uber, and so TravisKalanick would come to the
office there and we met him and,you know, everyone in the
office would hang together withsome sometimes and I remember
(55:10):
him telling me about Uber and mesaying something stupid along
the lines of like well, this app, why would you need an app to
call a cab if you just go downthe street and grab a cab, while
if we had taken all our moneyand gave it to him, probably our
exit would have beensignificantly higher than that
(55:30):
of the Olympic right.
So there's a lot of differentdegrees of product market fit
that happen in your life andthat you know.
There is not like there'sproduct market fit, there's no
(55:50):
product market fit.
There's different degrees ofvirality that you could hit in
different businesses.
Ariel Camus (55:57):
Absolutely, and timing, as you said, it's so
important, but also, yeah, therelative nature of success.
If we could travel back in time, we could probably be
trillionaires.
Right, but that hasn't beeninvented yet, so let's see what
happens to businesses andinflation when that happens.
But anyway, what was the yearwhen you found the e-commerce
(56:18):
opportunity?
Pau Sabria (56:19):
That was summer 2012 .
2012.
Ariel Camus (56:24):
Okay, you ended up exiting the company four years
later 2016?
Correct, correct.
And then you started remotelyin 2020, right, with COVID.
I'm going to skip a veryimportant part.
I'm sure you have been askedabout the acquisition a lot, but
I want to focus today, and inthis podcast in general, in
product market fit and the earlydays.
So let's now go to the earlydays of remotely in your current
(56:48):
company and let's do the sameexercise again, but with a POW
and a team that knows much moreabout themselves.
You know businesses.
You're in such a differentplace.
How did you find theopportunity?
How did you decide that it wasworth it?
How did you go on trying tovalidate?
Pau Sabria (57:06):
it.
Yeah, so our idea for Remotelywas born out of another idea,
which was that we wanted tobuild businesses.
We wanted to build businessesand so, as many entrepreneurs
that have been bitten by theback of entrepreneurship, we
(57:27):
thought that now that we had hadone exit, that we would do a
venture studio and that we hadall sorts of ideas, of cool
ideas we wanted to build.
We had found each other asentrepreneurs, founders like we.
We enjoyed working together.
We had already worked togetherfor many, many, many years and
(57:50):
we wanted to keep doing that andthat was honestly, something
that had.
That was more fun and moreentertaining and more
challenging and more rewardingthan, say, becoming a VC
investor, an angel investor,which many entrepreneurs go down
that path At least for us,that's what excited us.
And so we went into a journeyto analyze how you build venture
(58:13):
studios and talking to peoplethat had built venture studios
and again still with the veryclear idea that we wanted to
maximize freedom.
And the challenge with VentureStudios and I'm going to kind of
the too long, don't read kindof version of it is that they
(58:33):
are de facto VC funds, like youhave to raise money to support
the structure that builds thebusinesses, and then, in order
for the whole model to makesense, you need to build a lot
of businesses.
You have to raise money.
On the idea, basic pitch wouldbe I need $10 million to build
(58:56):
five businesses and I'll put twomillions to each and that's it,
and you'll have a big chunk ofeach one of the businesses.
And the problem with that wasthat we didn't know if we would
have the stamina of buildingfive businesses, like we had
built one, and it was super hard.
(59:16):
And so the thought of building,or at least saying that we were
going to build five was superhard.
And so the thought of building,or at least saying that we were
going to build five, was verydaunting.
And so we thought but if youdon't make that kind of
commitment, how do you justifyraising that amount of money?
And so everything falls apartif you want to have freedom of
(59:42):
decision of how you want to dothings.
And so we said well, instead ofthat, let's go build first a
business that is cash flowingand that has high likelihood of
being profitable.
And in analyzing one of theventure studios that we had
looked into, they had a businessthat was a marketplace of
(01:00:05):
talent in their portfolio and wethought, oh, wow, we should do
this, this makes a lot of sense.
And we did some mysteryshopping and found out how much
they were making per developerand we we were like this is
great.
And very quickly all the piecesfell together because we
thought, well, if this is abusiness that not only gives us
(01:00:27):
the cash but also gives us thetalent technical talent to then
go on and build all thosesoftware businesses we've been
talking about, that would beamazing.
And so that's how the ideaformed and then it was polished
right.
I think it went through thespark of an intuition to then a
polishing of an intuition of theidea, which I think is to some
(01:00:50):
degree important.
There's a lot of nuances toideas that everything has to
feel right and, for instance,one of those things was that the
type of business that we werepitching we had used ourselves
when building Olopek, and so wehad direct relationship into how
(01:01:11):
to operate it, like we hadbuilt remote teams of engineers
in Latin America.
So we had a certain degree ofauthority to talk about the
topic because we had experiencedit.
We had also experienced it overmany years, meaning that we
knew what the transitions that acompany goes through as they
(01:01:32):
grow and scale and what thechallenges would be and how
would that affect your remoteengineering team In the same way
?
Because we had done it and howwe had treated our own team, we
felt that we had authority togive a good value proposition to
the software developers.
All of those kind of littleingredients and polishing
(01:01:53):
thoughts kind of felt that wehad not a unique advantage but a
unique edge and adifferentiating form factor that
will allow us to launch thebusiness and somewhat bootstrap
the supply and demand in a waythat we could see what would be
next after the next door.
(01:02:14):
Right, and yeah, we went intothe business and relatively
quickly started monetizing.
I think that the maindifference between the Remotely
product and Olapic's product wasthat it was so much easier to
(01:02:36):
sell.
Everyone understood what wewere doing.
We were just doing something,understood what we were doing,
like we were just doingsomething that other people were
doing, whereas with Olapic wewere selling something new that
no one had done before.
So there was a significantamount of advocacy and and
convincing and and kind ofthought leadership and
innovation thought that you hadto go through first.
(01:02:58):
So this one was significantlyfaster to kind of quote product
market fit.
So our business didn't changemuch from inception to today.
Ariel Camus (01:03:13):
And I guess in this case you also took an idea that
had already found productmarket fit at this other venture
builder and what was thedeciding factor?
Was the founder market fitright, the fact that you had
authority, that you hadexperience, that you had an
insight that gave you anadvantage there, and I think
that's super important, and youmentioned that before that with
(01:03:34):
Allapik.
I'm paraphrasing here youmentioned it was not something
you were extremely, it was not atopic you were passionate about
, but it sounds like withRemotely there is not just the
type of business that will kindof fund the type of life that
you want to have, but also thetype of business that will have
(01:03:55):
the type of impact in the worldthat you want to see, but also
by doing something that you areknowledgeable about.
So it has all the differentcomponents to make it worth
pursuing.
Yeah, Fascinating.
All right, Pao, we're going toleave it here.
I'm looking forward to seeingwhat happens in the story of
Remotely, but whatever that is,I know it's going to be exciting
(01:04:17):
, fun, challenging, as always,but I'm really grateful you have
shared everything so far.
I look forward to maybe doinganother episode in a couple of
years to see where Remote is.
Pau Sabria (01:04:29):
Happy to Mariel, it was great to see you.
Ariel Camus (01:04:35):
Thank you so much for tuning in.
Your support means the world tome.
Thank you so much for tuning in.
Your support means the world tome.
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We wanted to optimize the level of freedom
that we would have whilebuilding these new businesses,
and that freedom, it's somethingthat is really really hard to
do once you go down the path ofventure capital.
The reality is that venturecapital is a business, and when
they fund businesses is toexpect a return, and then you
(00:21):
kind of don't explicitly signanything that forces you to sell
.
But there there is somethingthat you know, that the other
one knows that you're entering,and that is a kind of a
gentleman's agreement, if youwill.
Um, that there has to be somesort of expectation for growth,
(00:44):
for liquidity, and the capitalstack is stacked, I guess,
against you if you don'tnecessarily do those things.
Ariel Camus (01:07):
Welcome everyone.
This is Ariel Camus, and thisis the Only Thing that Matters
the podcast where I interviewsuccessful founders to
deconstruct their path toproduct market fit and extract
the principles and frameworksbehind their success.
The principles and frameworksbehind their success.
Today, I am super excited towelcome Pau Sabriá, a seasoned
(01:28):
entrepreneur and co-founder ofRemotely, a marketplace for
software developers in LatinAmerica, serving US-based
startups.
Pau has an impressive trackrecord, having previously raised
over $22 million for his firstcompany, Olapic, which was later
acquired for more than $22million for his first company,
Olapic, which was later acquiredfor more than $130 million.
With his current venture,remotely, Pau has shifted focus
(01:53):
from high capital influx tofocusing on sustainable revenue
growth and personal freedom,steering away from the
traditional venture capital path.
Join us as we uncover theinsights and strategies that
have guided Pau through theever-evolving landscape of
startup entrepreneurship.
Let's get started with PauSabria.
(02:13):
Hi Pau, it's so good to haveyou here.
How are you doing?
Pau Sabria (02:20):
Hi, I'm good, Thank you.
Thank you for having me.
Ariel Camus (02:23):
Well, thank you so much for making the time for
this.
I know you have someconstruction going on around you
, so hopefully you know noceiling or anything will fall on
you.
Thank you.
Pau Sabria (02:35):
Yeah, apologies for the sound.
Ariel Camus (02:37):
No, it's okay, it happens and luckily we have like
some level of noise reductiontechnology nowadays that I hope
will help us.
Pau Sabria (02:45):
Great.
Ariel Camus (02:46):
All right, we have a lot to cover.
You are what people will call aserial entrepreneur, and
whatever that means, it reallydoesn't matter.
But in the context of today'sconversation, I'm super curious
to discuss the differencesbetween the two businesses that
you have started.
I think it's worth highlightingthat you raised a significant
(03:09):
amount of capital for the firstcompany.
I think it was more than $25million with Olapic.
Is that correct?
Pau Sabria (03:16):
About a little bit over 20.
All right, about 22, somethinglike that.
Ariel Camus (03:21):
Okay, and you exited the company on an
acquisition of more than $130million.
Super worth highlighting andcongrats on that.
Thank you.
We'd love to hear what's behindthat story, but we'll see if we
get to that.
What caught my attention is thefact that when I hear about,
remotely, your new company, Idon't remember a single time
(03:44):
hearing anything about youraising capital or like a dollar
raise being something worth youknow highlighting right.
It seems like you're focusingon the actual business KPIs,
like your revenue, your growth,the number of companies you're
impacting, and I don't know.
I thought that was a superinteresting place where we could
(04:05):
start.
We can get to what thecompanies do later, but I would
love to hear first what's beenyour philosophical approach
between one company and theother when it comes to starting
the companies in general, andparticularly on the fundraising
and capital side of things.
Pau Sabria (04:24):
I'd like to start kind of by pointing out that one
of the main drivers of thetypes of businesses that I've
been building or working on havealways been the drive for
learning.
I enjoy the journey of learninga lot and a lot of what Olapik
(04:45):
was, which was effectively a B2Bsoftware as a service high ACV
marketing technology company,which is a mouthful.
I wasn't, like passionate abouthelping large consumer brands
make more money or sell moreitems, but I was more passionate
about the idea of what it takesto build a business and how to
(05:08):
kind of the quintessentialstruggle of bootstrapping and
creating something from nothing.
And with Remotely, which is alabor marketplace, that is
different, right Like I thinkthat a lot of people decide to
do more of the same and we, withmy co-founders, we didn't want
(05:29):
to go into just doing anotherB2B software as a service
business.
We like the idea of starting amarketplace which has different
challenges and learning fromthat experience as well.
But we were, as you werepointing out, we were lucky
enough to have a very goodfinancial exit with Olatik and,
(05:50):
you know, while we did take sometime off to kind of think what
to do next, we went back at itquite quickly and in the kind of
.
We did take more time thinkingthrough kind of the principles
of what we wanted to build goingforward, and we did extensive
(06:11):
research on the kind of what wewanted to do, like how we wanted
our kids to look up to us, how,like, do we want to work more,
how, how do we want to be ableto work, and and also what are,
what is the type of life?
Do we want to work, to be ableto work, and and also what are,
what is the type of life that wewant to live once we have made
the money that we had made, andand kind of try to find a
(06:34):
goldilocks type of equilibriumbetween intellectual challenge,
work, ethic, but at the sametime enjoy and give experiences
to our kids and so on and soforth.
And so we narrowed down intosomething pretty basic which was
we wanted to optimize by.
(06:54):
We wanted to optimize the kindof the level of freedom that we
would have by having whilebuilding these new businesses.
And that freedom.
It's something that is reallyreally hard to do once you go
down the path of venture capital.
The reality is that venturecapital is a business and when
they fund businesses is toexpect a return, and then you
(07:17):
kind of don't explicitly signanything that forces you to sell
, but there is something thatyou know, that the other one
knows that you're entering, andthat is a kind of a gentleman's
agreement, if you will thatthere has to be some sort of
(07:38):
expectation for growth, forliquidity, and the capital stack
is stacked.
I guess, guess against you ifyou don't necessarily do those
things.
And so our vision was let's tryto get to something that
doesn't rely on venture capital,because that will give us a
(08:00):
higher degree of freedom than ifwe do, and that dictated in a
big way the type of businessthat we would go into, because
we had to be able to monetizequickly, and also the type of
industry market that we would gointo, because there are
industries that you're not goingto be able to enter without
(08:25):
significant capital investiture,like I don't know.
A good example of that is AIright these days.
And so all of those decisionsplayed into this goal of trying
to maximize freedom.
Ariel Camus (08:39):
That is super interesting and I can relate to
a lot of that and I think a lotof like second time
entrepreneurs can probablyrelate to that and I'm curious
to see if we can imagine aparallel universe where you
started the first company butfor whatever reason you had to
shut it down.
You didn't get the exit and youwent into, like, starting a
(09:01):
second business.
Let's say that happened.
Maybe you would have been kindof frustrated by that and not
starting a second business.
Let's say that happened.
Maybe you would have been kindof frustrated by that and not
starting a second business.
Let's say you did, but youdidn't have the financial uh,
let's say, backup to to start asecond business and optimize for
this much more balancedapproach to life.
(09:21):
Do you think you would havedone things?
Definitely, how would have?
I know it's hard to imagine aparallel universe, but life Do
you think you would have donethings differently?
I know it's hard to imagine aparallel universe, but how do
you think having that financialbackup made you do things
differently and how would thatcompare if you hadn't had that?
Pau Sabria (09:35):
I don't think that the financial backup played a
big role.
The reality and this led to aslight cheat is that we did
actually raise a little bit offunding for remotely for the
second business, and I'llexplain why.
(09:56):
We went raised, obviously beingextremely transparent about
everything that we were going todo and what we wanted to do and
how we wanted to run thebusiness.
There was the idea that our Ihave four well, there's four of
(10:18):
us, there's four co-founders,and two of them haven't had that
type of exit that we had right,and going into this new
business, we didn't want ouravailability of capital to kind
of play a role in those founderdynamics, so we had to design it
with a minimum kind of commondenominator in terms of wealth.
(10:42):
And so we had a plan toself-fund and fully bootstrap
the company, going in determinedby the amount of capital that
the person the founder with theless amount of money could
afford.
And then what happened is thatCOVID happened.
Ariel Camus (11:01):
Yeah, because you launched like right before COVID
, right.
Pau Sabria (11:04):
I think it was February 2020.
Exactly.
And so then COVID happened, andwhat happened was that we went
into it with an expectation anda timeline of when we thought we
were going to be able to raise,to generate revenue, and very
quickly the levels ofuncertainty in the startup world
(11:29):
went through the roof andhiring freezes became universal
and no one knew what was goingto happen or what, even like
what, the current quarter wasgoing to look like.
And so we decided that we weregoing to raise a little bit of
money, because we couldn't holdour breath for that long with
(11:53):
that minimum amount of ormaximum, rather a maximum amount
of capital that we had setaside for the business.
So we did reach out to a fewinvestors say that we wanted to
raise a little bit of money forthis non-BC bankable business.
So we did reach out to a fewinvestors to say that we wanted
to raise a little bit of moneyfor this non-BC bankable
business, and people gave us themoney and so we decided to push
(12:15):
through and the reality is westill have most of the money
that we raised in the bankbecause the company became very
low, burningburning kind of typeof business and we're looking
kind of forward, to not havingto raise a lot of money going
forward Like that's the goal,see if we can.
(12:36):
It's almost like a designconstraint that forces you to
manage the business differently.
Ariel Camus (12:42):
It is super interesting and, I guess,
emotionally intelligent what youdid with the other co-founders
trying to create this fairplaying field where everyone was
coming into the business withthe same, I guess, possibilities
and opportunities to play thelong-term game.
(13:02):
And I'm curious, how did thatprocess go?
It's a very unique or maybesomething that doesn't get
talked about very often.
I feel like many first-timeentrepreneurs might think well,
if I can end up with a largerpercentage of my company, if I
can put more capital, thenthat's better for me, I have
more ownership and all of that.
But in your case it seems likeyou did that differently.
(13:25):
What, what were the incentives,what were the the, the goals to
do it that way?
Pau Sabria (13:30):
I think.
I think that, um, it'ssomething that worked out well
for us with with olympic.
We always were equal in allcapacities, equal salary, equal
share with the three of us andeven though it's hard, at the
end of the day you know that itis going to be unfair to someone
(13:55):
doing that.
It's always going to have somesort of an impact.
Different founders depending ontheir role, they'll face
different types of challengesand they'll have to sacrifice in
different ways.
We had my at Olopec.
My co-founder, luis, was ourCTO and he had to travel often
(14:17):
to Argentina where we have ourdevelopment team, and that was
an important investment from apersonal sacrifice, family,
work-life balance kind ofperspective.
I had at some point to dealwith a lot of the issues we had
(14:37):
with the acquiring company andmy co-founders had to deal less
with that and my co-founders hadto deal less with that.
So at times during the companyit's hard to kind of understand
who will kind of sacrifice morethan the others.
But I think it's an exercisethat is really really hard to
(15:00):
try to forecast at the beginningand try to attribute different
kind of.
So we decided to go with thejust saying for everyone.
That way everyone is likepushing forward to maximize
everything and there's no kindof you have I have kind of type
of conversation and that workedwell for us in that instance.
(15:21):
Now we try to apply the samething with the hopes that you
know you try to not probablymaximize the whole as opposed to
your own personal benefit, Iguess is the interactive we will
always wonder if we would havelike.
(15:43):
The reality is that there was aC scenario that we never
explored, which was that we dogo out to try to raise that
money that we ended up raising.
We raised 1.5 million and atthe moment that we have the term
sheet that sets the value, wethen do it ourselves and in a
(16:04):
way you have this dual kind ofcontribution to some degree.
You have kind of an LP-ish kindof relationship as an investor
with the business and then as aGP-ish as an operator in the
business, as a co-founder of thebusiness, as a GP-ish as an
operator in the business, as aco-founder of the business.
(16:24):
And there is one benefit whichis that you would have a higher
level of autonomy with that typeof relationship and we had put
the money in.
Ariel Camus (16:38):
Can you explain why that would give you a higher
level of autonomy?
Pau Sabria (16:42):
I think that because even today, there's a few
things that we are bound by theinvestment agreements that we
signed right, like there's likeinformation rights we have some
limitations to what we can do interms of raising that we cannot
(17:03):
invest in cryptocurrencies notthat we would, but if we wanted
to at some point it.
Of raising that we cannotinvest in cryptocurrencies not
that we would, but but if wewanted to at some point.
It's something that we need toask for permission.
Like there's a level ofdecision making that you would
have to go through the legalapprovals with, with the
investors, and that would haveor could have different degrees
(17:25):
of kind of headache, dependingon who those investors are and
who those investors may be inthe future, in terms of
sometimes they change who theperson that you interact with is
.
And so that level of autonomycould potentially have gone away
.
But obviously there's anegative.
That is what?
How would that relationshipchange, and how would your
(17:46):
perception of the risk of thebusiness and the subsequent
downstream decision making, howwould that change as well?
Um, and I don't know.
I don't know the answer becausewe never did it, but it's
something that we think about,um obviously in hindsight,
everything is 2020, now that weknow where remotely is and that
it's going well.
Ariel Camus (18:07):
The the obvious bias is like we should have done
it, but, but I wonder if weshould have done it do you think
it would have changed yourrelationship with the other two
co-founders if you had put themoney once you had the valuation
from the other investor?
Pau Sabria (18:25):
I don't think so.
I'm more worried about my, thelevel of execution and
aggressiveness, um, andtherefore I wonder if we would
have arrived to where we havearrived.
If we had, you know, would ithave been more fearful, um, and
therefore not got into where wehave gotten today?
Ariel Camus (18:45):
that's, that's my biggest question you think that
if it had been your money, youwould have been maybe more
fearful?
Yeah, makes sense.
I mean, it's when it's yourmoney.
Uh, it's your money, right?
Um, yeah, no, it's.
It's fascinating.
So I guess, um, if I try toextract, what I'm hearing is
that you more or less knew whatyou were paying in exchange for
(19:11):
that money, in terms of thingsthat you were giving up or that
you were giving to the investor,like this information riot or
some limitations but at leastyou knew what you were giving,
right, at least you knew whatyou were giving, right?
Yeah, on the other side, if youhad put the money yourself,
maybe it was more uncertain,right?
What would have happened?
(19:31):
Right, there was more risk ofmaybe moving more slowly because
you're afraid of losing yourmoney.
Maybe you said that you thinkit wouldn't have happened, but
maybe having four co-foundersthat don't feel like equals
would have created an incentivefor the people with the lower
percentage maybe to have lessskin in the game.
Those are things that, as yousaid, it's impossible to predict
(19:53):
, so you'll much rather take theoption where you know what you
are giving instead of taking theoption where there's much more
uncertainty.
Correct, that makes total senseand it's fascinating and I say
this because a lot of peoplemight think well, you know they
had a lot of their own money tostart their second business.
Of course they did X and Y andZ, but it's super interesting to
(20:15):
see how you know things are notalways that obvious and how
there are incentives and youknow perverse incentives in both
directions and there's justlike no right or wrong.
But what matters is that you'rethoughtful about why you make
those decisions.
And talking about thoughtfuldecisions, why do you think
these investors that invested inRemotely, knowing that this was
(20:38):
not a venture-backable business, knowing that you were not
chasing a big acquisition, a bigexit, the next big round, why
did they decide to invest inremotely?
Pau Sabria (20:49):
I think part of it was that, as you know, investors
usually have to understand whatis the area and the thesis that
you're investing in, but that alot of what you say at that
point.
And at that point, bear in mind, we had nothing, we had no
(21:09):
product, we had done someresearch and little else.
The basis of it was that,especially as a seasoned
investor, you know that theentrepreneur will get a lot of
it wrong and there's a lot ofthings that they will change
their mind on.
And so we had two types ofinvestors.
(21:30):
We had investors that hadinvested with us at Olotech, and
so for them, I think it was alittle bit different.
I think for them, when theyinvest, oftentimes they invest
in an additive basis.
So for them, even almost ifthey write off that investment,
it's fine because they alreadygot the win from the first
(21:51):
investment.
So they pull you together, andoftentimes I've seen investors
that invest in founders thathave had an exit exclusively
based on a principle of I'llinvest again, because if they
were lucky, maybe they're luckyagain, and so I would put those
into a different pool.
(22:11):
But for the investors that werenew, I think that to some
degree there was the sense thatwe had tasted something blood in
terms of we had been in aVC-backed business and there was
the idea that it was kind ofcute that we were going to do
this bootstrap thing.
(22:32):
But the moment that we saw thatwe had something in our hands
that could potentially get verybig, that we would actually go
for it, right, that we wouldfind you know, we would find
compelled to raise money andswing for the fences in a way
that would be much moreaggressive.
(22:55):
And, to be clear, the fact thatwe are bootstrapping the
business doesn't mean that we'renot swinging for the fences,
just that we're using differenttimelines.
So we still want to makeremotely as big as we can.
It's just that we don't need tomake it within five years, and
the idea is we will make it verybig but over a longer period of
(23:18):
time, and that's fine by us andthat's fine by us.
And so they thought that maybewe found this type of behavior.
We would kind of feel the urgeto kind of grow faster and
(23:40):
faster and faster.
There is something to that thatI think is true, meaning like
now that we're building, thereis a rational part of ours that
compels us to make it better andmore efficient and grow faster,
and so on and so forth.
So there's some truth to that.
At the same time, the world haschanged a lot between when we
did that raise and now and therewas a period in between in
(24:04):
which people were raising crazyrounds of funding, um, and we
stayed away from that and whenthe world turned and everyone
was doing layoffs and everyonewas kind of going through the
necessary kind of readjustment.
We didn't have to, because wehad self-imposed this kind of we
(24:25):
will not do this, and so we hada slightly easier time.
I sometimes think about was ita missed opportunity or not to
raise the money, and so on andso forth.
It's hard to know, it dependson how it plays out, but I think
that I certainly enjoyed a more, more stable path, albeit being
(24:46):
a little bit more linear andless exponential, next to all of
that if there was a massiveopportunity to grow much faster
and it was that like thatobvious that you know that if
you raise more capital, youcould, you know, take an
advantage of it.
Ariel Camus (25:02):
Will you do it?
Or that will compromise some ofthe basic pillars of the type
of business you have tried toestablish for you and your
families.
Pau Sabria (25:12):
So I think, in the way that I do think that a lot
of your business relies ontiming right, and in our case,
our timing was a little bit offwith when the opportunity struck
.
As you said, we started thebusiness in February 2020, but
we had nothing, and so when themove towards remote work started
(25:38):
, the challenge we had in termsof, or the business opportunity
that we had in front of us was alittle bit too early.
Just as a reminder, remotely isa labor marketplace for
software developers in LatinAmerica, for US-based software
companies, and so the entireshift towards remote work helped
(26:00):
us tremendously.
But at the peak of the lastsoftware bubble, if you want to
call it something, which waswinter 20, we were still a very,
very tiny company, and eventhough we did feel the big pull
from the market in terms ofdemand, we were too small to
(26:20):
take advantage of it, and so weknow of companies that were
significantly more advanced thatat that point, they were just
riding a wave like no wavethey've ever ridden before, and
so I think that that issomething that, in our case, we
were a little bit off and wecouldn't kind of take fully
(26:43):
advantage, regardless of theamount of capital that we could
have raised right and then veryquickly thereafter you had the
opposite, like a significantlynuclear winter by which
everything cooled and again, nomatter how much money you have,
it's not going to help youtremendously kind of improve
your metrics as a business.
(27:04):
And so we stay very, very, veryfocused on trying to well one
survive the nuclear winter, todistinguish and quickly assess
what it feels and what it lookslike when you are at the peak of
a wave, because oftentimes youdon't really know.
You think that's the new normal.
(27:25):
Oh, it's normal to signcontracts without having to talk
to someone, right?
You think that sales is easyversus what is surprisingly
tough, and you can measure allof this in different ways, like
ratios of sales and marketingspend relative to how much
contract value you add, and soon and so forth.
(27:46):
Like you see the two sides ofthe coin, when times are really
good and when times are reallybad, so that at least you get a
better sense of where you are inthe cycle going forward.
And then our focus became okay,let's survive.
Our focus became okay, let'ssurvive, let's understand what
operating this business inreally, really dark times looks
(28:09):
like, and let's sharpen our muchscale as we can so that when
things go back up and to theright, we're going to be in a
(28:32):
much better position to takeadvantage of this.
Will we raise money then?
I hope not.
I hope that by then we'll haveenough cash flow generation to
be able to fund that growthourselves and kind of reinvest
our earnings back into thebusiness.
But it's not out of thequestion that at that point it
(28:54):
could potentially make sense toraise more money.
Ariel Camus (28:57):
So what I'm hearing is that you feel, or you
believe, that if you can dothings with your own money, it's
much better than doing it withsomeone else's money because of
the strings attached, but thatat the end of the day, if you
happen to find yourself in themoment where you identify a wave
that you can ride and benefitfrom and you feel like you need
(29:23):
more that you haven't generatedyet, you might take that money,
even though that might alsocompromise some of the type of
business that you have tried tocreate to have a better balance
compared to when you havesomeone else's expectation
pushing on you.
Correct, right, perfect.
So let's now go back on time alittle bit and let's start with
(29:46):
ola peg.
We'll get to remotely after.
I would love to hear how didyou come up with the idea?
How did the opportunity show up?
How did you decide to say, well, let's uh, take advantage of it
?
Pau Sabria (29:56):
my co-founders and I were attending business school
in new york in 2000, between2008 and 2010.
And so, as a reminder, theiPhone had just came out, in
summer 27.
And the iPhone went throughsome subsequent kind of
(30:17):
improvements over the time ofthose first two years in which,
at the beginning, you could takepictures, but you couldn't take
videos.
People don't remember this.
But there was no camera in thefront, the app store was very
nascent, there weren't many apps, instagram didn't exist, et
cetera, et cetera.
(30:38):
And so we but we saw early onthe rise of photo sharing, if
you will Like, the fact thateveryone had a camera in their
phone, in their pocket.
But we saw early on the rise ofphoto sharing, if you will Like
, the fact that everyone had acamera in their phone, in their
pocket, was going to change thegame in some capacity.
Bandwidth was going up and intothe right and the web was
(31:02):
becoming much more visual thanwhat it had been.
You still didn't have streamingservices in the same way that
you had Netflix, right, but itwas something that Netflix still
relied heavily on on, like DVDrentals, for instance.
And so we went into, we thoughtabout the idea, we came up with
the idea of a group photo albumand initially it was going to be
(31:24):
for consumers, and when wegraduated from Columbia and
decided to go full-time withthis shortly thereafter, we
decided to shift to a B2Bproduct.
We were relatively successfulat monetizing the concept of a
(31:51):
group for album.
It did require, like, really,really high volumes, and I
remember doing the math of howmany premium accounts we had to
have to be able to pay onesalary and it just seemed like
we would never get there.
Um, and that was very scary.
Ariel Camus (32:04):
What were the use cases for the, the b2c approach?
Pau Sabria (32:09):
so initially the idea came from a group trip.
So the idea of like going on agroup trip with friends and
being able to pull togetherphotos of the group trip, um.
But then it became prettyevident that it would be hard to
like who.
Who do you charge in a grouptrip?
Right, Like who foots the bill?
(32:29):
And that was going to be alwayslike a friction If you don't
know who you sell to, it's goingto be hard to sell.
And so the initial idea wethought was like what are group
events in which there's a clearbuyer that wants to pay for them
?
And so we went into the weddingspace and clear buyer that
wants to pay for them?
And so we went into the weddingspace and we thought that
couples would pay for it, andand we were very successful at
(32:50):
monetizing that.
Um, but the volume and thescale of the market was such
that it just the revenue was notvery meaningful um and so how
much?
Ariel Camus (33:04):
how much were you charging per wedding, per couple
?
Pau Sabria (33:06):
we were it was expensive.
We were charging about 80 bucksper wedding.
Um, so, for a, for a premiumphoto shoot like bear in mind, I
think, uh, back then flickrflickr was a premium service and
it was $25 for a year, and sowe had unique features like a
(33:30):
moderation queue so that thecouple could moderate what
pictures went into their webalbum and things like that,
because they cared about thosetypes of things.
But we were able to monetizesignificantly.
Well, uh, it just was a slowbusiness and and and acquiring
weddings is very expensivebecause it's a very inflationary
(33:52):
market, um, in the sense thatyou compete in advertising with
the ring makers and the venue,uh, rentals and so on, and they
make significantly more moneythan you, so they're willing to
outbid you.
And so at some point we decidedwhat?
What if we find?
We found there was an event inwhich you participated in
(34:13):
pitching to a media company, oneof the largest newspapers in
the US, in New York, and we wentand pitched the idea of
essentially collecting all thesephotos of events happening in
the newspaper, and we thoughtthat that would give us like a
cheap customer acquisitionstrategy, so to speak, for the
(34:35):
wedding business.
And we won that competition andwe signed a contract with that
newspaper to power their groupphoto albums a contract with
that newspaper to power theirgroup photo albums and we made
more money with that contractthan all of the weddings that we
had done up until that pointand we thought, wow, this is so
much easier.
(34:55):
So we followed the money andover the following six months or
so, we sunset the weddingproduct and went full B2B.
At some point we thought wecould do both Probably one of
those first-time entrepreneurtype of mistakes and you very
(35:15):
quickly realize that it's really, really hard to go both B2B and
B2C and in fact, no one does itbecause it's too confusing, too
hard two different companies,two different DNAs, almost.
And so we decided to go B2B,honestly, because it was easier
path to monetization and capitalefficiency.
(35:36):
This was end of 2010, which wasat that time at the bottom of
the recession of GDP in terms ofthe US coming out of the 2008
crisis, and so there wasn't muchVC out there.
It was really really dark ages.
(35:57):
Not many entrepreneurs buildingbusinesses.
Ariel Camus (36:02):
If people feel that today is hard to raise money,
back then it wasn't possible andso the way the, the amount of
capital you could raise backthen compared to what we have
seen the past few years, waswell, I guess the last few years
were ridiculously high, right,but you had to make things
happen with way less capitalback in 20 and now that it feels
that things have cooledtremendously and people are kind
(36:23):
of complaining, if you look atstats from the Venture Capital
National Association, you seethat the volume being invested
today is still comparable tolike 2000, which was
significantly higher than 2010.
Pau Sabria (36:38):
And so things were gloom.
Back then.
We decided to go with high ACVtype of products and it worked
well for us.
Ariel Camus (36:50):
Can you explain ACV and what the value was compared
to the consumer product?
Pau Sabria (36:56):
Yeah, so ACV usually I call it the annual contract
value of a customer.
The newspaper was paying us$13,000 per year and was
allowing us to license that kindof experience to someone else
as well.
And so, without knowing it, wehad built a software as a
service business, and I say thattruthfully.
(37:20):
We didn't know what SaaS was ormeant.
Truthfully, we didn't know whatSaaS was or meant, and the idea
was that if we see if we couldsell it to more media companies
compared obviously to the $90per account, people just get
married once at least for awhile.
(37:42):
Get married once at least for awhile.
Um, and so the, the idea thatyou could make 17k every year
for the foreseeable future waswas was a very appealing one,
and the good thing about againthe acb is that the math to pay
that first salary becomes somuch easier, right, like it's,
at least for me was like well, Ithink once I have the first
(38:05):
customer, I think I can convincea couple more, and soon after
you can get to that like 50 000per year, and when you're from
50 000, you start to see thelight at the end of the tunnel
where you can pay the firstsalary of the first employee,
and so I've always thought thatpricing is a little bit like
(38:26):
gravity, in the sense that youknow there's planets with
different degrees of gravity andhow high you jump is determined
by that gravity.
And so if you have high ACV,your gravity is low, meaning
that with a relatively lowmanual effort you can get pretty
(38:49):
high in terms of revenue.
That obviously kind of hidesmaybe a lack of product market
fit.
Like you may not have productmarket fit and feel that you
have product market fit becauseyou've been able to sell
something While with a low ACVsay something more in the
vicinity of like $10 a month,something like that the only way
(39:13):
that you break free from thatgravity is with like really
strong product market fit, andit's something that I don't know
.
Maybe my risk aversion havealways pushed me to high ACV
types of products because youcan work through the kinks of
(39:36):
your product and find, withouthaving to kind of really, really
like try to do it on a verypurest like it's almost like
swimming without oxygen tanksright, like it's so much harder.
I have a lot of respect formore entrepreneurs like you that
(39:57):
go more of the consumerishroute with low ACVs.
Ariel Camus (40:00):
Well.
But it's also something youlearn, right that charging more,
while counterintuitive, it'susually always better.
Right, you create a perceptionof value that is higher.
So people tend to give morevalue to the product just
(40:21):
because it costs more.
Right, it also makes it somekind of like virtual circle,
because someone paying more ismore likely to take advantage of
whatever they paid for, it'smore likely to rationalize the
investment they made.
But just the fact that theywill be putting more effort into
using it makes it more likelythat they will be happy with the
product, which means they willhave or you will have better
(40:42):
testimonials, which means youwill be able to attract more
people.
But also, because you make moremoney, you have higher margins.
That means you can reinvestmore of what you make into
making the product better andyou know if you can get there.
Like, I don't think it reallymatters whether it's consumer or
B2B.
Of course B2B, the averagerevenue per user or ACB will be
higher normally.
(41:03):
But thinking in terms of highpricing, I think no matter if
you're doing consumer or B2B.
It's super important becauseotherwise you're competing in
price and that means that youall end up looking the same and
converging to the average, andthat is not a fun place to be in
.
So, consumer or not, I thinkthinking about high prices is
super important.
Pau Sabria (41:31):
And I think that relative related to price.
I think there's another conceptthat we also learned almost
intuitively with Olapic, whichis how you tie price to value
creation.
The problem we had we did thatfirst pivot from wedding B2C to
media company B2B with high CV,but the truth was, like looking
ourselves in the mirror, thevalue that we were creating, the
(41:56):
value proposition that we werecreating for customers, was a
little bit weak.
It was a lot of like consumerengagement and back then
Facebook was like pushingcompanies to build like
audiences and getting likesright.
Like everyone was chasing thenumber of likes you had on the
fan page and there wasn't like aconversion to dollars or to
(42:22):
value creation, like why are wedoing all of this thing?
It was kind of like a game andwe felt that that value creation
was relatively disconnectedfrom our business and, as a
result, everything suffered.
Right, like, our ability topredict to sell was harder, our
(42:44):
sales cycles were longer,everything was a little bit
tough.
But then we ran into onecustomer that, instead of being
a media company, was ane-commerce store and they told
us that they wanted to showcasethe photos of their consumers
using the product on theirproduct detail page and the
(43:06):
premise was that they felt thatthat content would increase
conversion rate customers againif we did an early adopter
program to try this widget thatwe had for media companies to
try it in e-commerce sites tosee if conversion rates actually
(43:27):
increased.
Funny story is that myco-founders also got an email
this long from me saying thatthis was a mistake, that
conversion would decrease,obviously, and that we were
going to make these companieslose money instead of make money
.
But we put ourselves in thehands of the A-B testing gods
(43:48):
and the conversion rateincreased 9%.
What?
Ariel Camus (43:53):
was your thesis of why it was going to be lower.
Pau Sabria (43:57):
I just thought that people were a lot of
decision-making in terms of whypeople buy something is
aspirational and that seeingthings by their true looks would
not like the quality, would notthe UGC?
Basically, my thought processwas that UGC wasn't inviting
(44:19):
people to buy and was sowingthem with doubt as opposed to
giving them confidence topurchase.
That was my initial hypothesis.
Ariel Camus (44:30):
Fair enough.
And why was it a hard decisionto do this A-B test?
You said that you were going tolose money of the company.
Why was that?
Pau Sabria (44:37):
the case.
No, well, the losing money partwas well, we do the ab test.
If, if the people being servedthe user generated content
purchase less, that's like a alost opportunity of revenue.
Right, like that was my.
But it was going to be time,right, but no, it wasn't.
It wasn't too hard.
(44:57):
We went at it because thecustomers wanted to do it and
there's no way to know ifsomething is going to go so far
that the theory will take youright At some point.
You need to try it, and we triedit and the conversion went up,
and the good thing about that,honestly, was the fact that we
(45:19):
had a conversion rate increase.
That meant that we had abusiness model.
We knew how much money we weregoing to make incrementally for
the company, and that amount ofmoney scaled linearly with how
big the company was, and so wecould charge more to someone big
compared to someone small, andso we could charge more to
(45:42):
someone big compared to someonesmall and our pricing could be
tied to that value creation.
And the rule of thumb we usedwas one-tenth If you charge
one-tenth of what you create interms of revenue, people will
pay you, because it's a goodkind of listen if you're going
to make nine and I'll make onepeople say, yeah, let's do that,
(46:10):
especially in the case ofe-commerce, where they can
actually measure that returningdollars almost immediately.
right, Correct, and that was theother piece.
It's like the closer you are tothat revenue generation in the
kind of the value chain, if youare very, very up top in the
kind of brand awareness type ofpart of the marketing or the
(46:30):
sales cycle, you're going to bevery, very far away from that
conversion.
We were like smack at theconversion point on the product
detail page, right, like whenpeople click buy, and so we
could.
We could measure that valuecreation very clearly and that
changed our businesssignificantly.
That was what we consider.
(46:50):
That was second pivot of all ofit, where the value creation
formula was so much clearer thatthat yielded like almost an
immediate doubling or triplingof our ACV.
So the average general contractvalue of our customers went up
significantly.
(47:11):
And then our sales cycle wentfrom being about four months
three to four months to beingone month, right, so we were
selling faster at higher ticketprices and and that's when we
saw it then, very quickly wedecided, okay, this is the way
to go.
Um, and so we kept the mediabusiness for a little bit
(47:34):
because it was still somewhatmeaningful revenue.
We were doing about eight8,000from it, while the e-commerce
business was about $10,000 amonth.
But we knew that this is whatwould grow and we ended up
sunsetting the media business afew years later when it was
(47:55):
doing about $30,000 a month.
But the core business of Olapicended up doing north of $2
million a month.
But the business the corebusiness of Olopec ended up
doing north of $2 million amonth.
Ariel Camus (48:03):
That is fascinating .
So you went from B2C having alow average revenue per user not
a huge recurrence, becauseyou're returning customers after
their weddings basically tosomething where there was more
willingness to pay.
Probably on the B2B side,companies in general have more
money than individuals, so theycan pay more, but the value was
(48:23):
still not measured in the dollarreturn.
And then you found theopportunity where you were
closer to the transaction.
The value added was directlyassociated to the actual revenue
and that means it's a mucheasier decision for the person,
which means they're willing topay more and they're willing to
make the decision faster.
Pau Sabria (48:42):
Correct and also important for the scalability of
the business.
It's easy to teach how to sellthis type of product because it
becomes very obvious and a veryskilled salesperson.
You had someone that could.
(49:02):
You know you could train.
You had to train no matter what, but anyone could do it.
Ariel Camus (49:12):
That is a great insight.
This moment, when you finallymake this connection with the
e-commerce system, you cancharge much more and sell much
faster.
To me that definitely lookslike product market fit.
But when you were maybe a fewmonths before that, did you
think maybe with the weddingproduct we have product market
(49:34):
fit and what did that look like?
And then when you went with themedia companies, did you feel
also like we had maybe productmarket fit.
Wasn't even a thing back thenthat you call it like that, but
were there like three differentmoments where you thought like,
oh, we found something reallyreally worth pursuing?
Or it was always kind of likethis is not good enough, this is
not good enough.
And you only found this beinggood enough when you got to the
(49:56):
e-commerce part.
Pau Sabria (49:58):
I been good enough when you got to the e-commerce
parts.
I mean it's all relative right.
So I remember it was a greatfeeling with the consumer
product, like waking up withthat email that says you've been
paid $90 or $80, right.
Like having several of thoseemails.
And that's not something youget on a B2B site as much,
especially on the ACB.
(50:18):
Like the number of transactionsyou get per month is in the
dozens if you're lucky, and sothat dopamine hit hits
differently when it's thisconsumer and it truly feels like
you're not doing anything forit, whereas the other one you're
rowing and it's almost likemore a consultative type of sale
, so there's a lot of effortthat goes into it.
It's almost like more aconsultative type of sale, so
(50:40):
there's a lot of effort thatgoes into it.
So that did feel special and Iunderstand how it can be
addictive.
But with the sheer absoluteamount of money that you could
sign with a customer, the B2B iscertainly appealing because of
(51:01):
that.
And then there was the firstprinciple, kind of thinking
around value creation that forme clicked it and that ensured
that you would have a long-termsuccess as a business, as
opposed to like a short-termdystopian, like distortion of.
Oh, I think I have havesomething like deep inside
(51:22):
ourselves.
We knew that the media businesswas somewhat weak, um, for a
wide variety of reasons, but oneof them being this kind of not
being tied to value creation, um, but did you talk about it by
then, saying, well, this isworking, but it is a weak type
of business?
Ariel Camus (51:40):
or there were moments when you felt like this
is working and it's amazing no,we, we, we talked about it.
Pau Sabria (51:47):
There were several indications, right, not only
this, like there was the factthat media businesses were kind
of dying.
Uh, so you'd never want to bein a market that that is then in
a decline.
Obviously, as an entrepreneur,you always have to kind of be
looking at the bright side ofthings and being optimistic
about things and like, push forit.
And there's some almost likeignorance is bliss type of
(52:10):
message somewhere there thatpushes you to kind of keep going
.
And the reality is that all oflike, some people sometimes have
asked me, like would you buildthe business differently now,
knowing all of these things?
Like would you go into thee-commerce business first and
like, like grow it from then?
(52:32):
And and the truth is that thee-commerce business needed other
things for it to work.
It needed e-commerce to be athing.
It needed instagram to exist,hashtags to exist.
It needed a lot of things tomature to the point that that
became a reality.
And if we had started that backwhen we started the wedding
(52:54):
business, none of those thingsexisted and it wouldn't have not
worked and we would have movedon thinking like this would
never work right and so, in away, stumbling your way through
life to get to the point wherethat timing is right is, to some
degree, important.
So I wouldn't necessarilychange my steps because we would
(53:17):
have missed, from a timingperspective, the opportunity to
strike gold when, when we didthat said, the reality is in
parallel of everything that wewere doing.
Right?
Instagram was created, likeliterally when we did the pivot
from consumer app to b2b withthe media companies.
(53:37):
Instagram launched and I signedup on the first day of
Instagram.
I'm user 3000 something onInstagram and we saw the advent
of hashtags and the APIs andFacebook bought Instagram.
I think that 13 months afterthey launched and they bought
(54:02):
them for a billion dollars,right.
So 13 months after the launch,we hadn't even signed our first
e-commerce site, right?
So success in terms of relativemeasure is always like humbling
because we could have done,know we could have invented
instagram.
Maybe instead we could stay doneon, on, on the, on, on that
(54:25):
kind of part of the of thespectrum, and not even in the
same industry, right like wewere in a shared space in
manhattan and in that sharedspace, which was this is all
like pre-we work days it wasvery, very cheap, very kind of
crappy space, but kind of filledwith early entrepreneurs that
(54:46):
went on to do different things,and one of the interesting
stories I like to tell is thatin that office space that had
essentially no windows we shared, that was the first New York
office of Uber, and so TravisKalanick would come to the
office there and we met him and,you know, everyone in the
office would hang together withsome sometimes and I remember
(55:10):
him telling me about Uber and mesaying something stupid along
the lines of like well, this app, why would you need an app to
call a cab if you just go downthe street and grab a cab, while
if we had taken all our moneyand gave it to him, probably our
exit would have beensignificantly higher than that
(55:30):
of the Olympic right.
So there's a lot of differentdegrees of product market fit
that happen in your life andthat you know.
There is not like there'sproduct market fit, there's no
(55:50):
product market fit.
There's different degrees ofvirality that you could hit in
different businesses.
Ariel Camus (55:57):
Absolutely, and timing, as you said, it's so
important, but also, yeah, therelative nature of success.
If we could travel back in time, we could probably be
trillionaires.
Right, but that hasn't beeninvented yet, so let's see what
happens to businesses andinflation when that happens.
But anyway, what was the yearwhen you found the e-commerce
(56:18):
opportunity?
Pau Sabria (56:19):
That was summer 2012 .
2012.
Ariel Camus (56:24):
Okay, you ended up exiting the company four years
later 2016?
Correct, correct.
And then you started remotelyin 2020, right, with COVID.
I'm going to skip a veryimportant part.
I'm sure you have been askedabout the acquisition a lot, but
I want to focus today, and inthis podcast in general, in
product market fit and the earlydays.
So let's now go to the earlydays of remotely in your current
(56:48):
company and let's do the sameexercise again, but with a POW
and a team that knows much moreabout themselves.
You know businesses.
You're in such a differentplace.
How did you find theopportunity?
How did you decide that it wasworth it?
How did you go on trying tovalidate?
Pau Sabria (57:06):
it.
Yeah, so our idea for Remotelywas born out of another idea,
which was that we wanted tobuild businesses.
We wanted to build businessesand so, as many entrepreneurs
that have been bitten by theback of entrepreneurship, we
(57:27):
thought that now that we had hadone exit, that we would do a
venture studio and that we hadall sorts of ideas, of cool
ideas we wanted to build.
We had found each other asentrepreneurs, founders like we.
We enjoyed working together.
We had already worked togetherfor many, many, many years and
(57:50):
we wanted to keep doing that andthat was honestly, something
that had.
That was more fun and moreentertaining and more
challenging and more rewardingthan, say, becoming a VC
investor, an angel investor,which many entrepreneurs go down
that path At least for us,that's what excited us.
And so we went into a journeyto analyze how you build venture
(58:13):
studios and talking to peoplethat had built venture studios
and again still with the veryclear idea that we wanted to
maximize freedom.
And the challenge with VentureStudios and I'm going to kind of
the too long, don't read kindof version of it is that they
(58:33):
are de facto VC funds, like youhave to raise money to support
the structure that builds thebusinesses, and then, in order
for the whole model to makesense, you need to build a lot
of businesses.
You have to raise money.
On the idea, basic pitch wouldbe I need $10 million to build
(58:56):
five businesses and I'll put twomillions to each and that's it,
and you'll have a big chunk ofeach one of the businesses.
And the problem with that wasthat we didn't know if we would
have the stamina of buildingfive businesses, like we had
built one, and it was super hard.
(59:16):
And so the thought of building,or at least saying that we were
going to build five was superhard.
And so the thought of building,or at least saying that we were
going to build five, was verydaunting.
And so we thought but if youdon't make that kind of
commitment, how do you justifyraising that amount of money?
And so everything falls apartif you want to have freedom of
(59:42):
decision of how you want to dothings.
And so we said well, instead ofthat, let's go build first a
business that is cash flowingand that has high likelihood of
being profitable.
And in analyzing one of theventure studios that we had
looked into, they had a businessthat was a marketplace of
(01:00:05):
talent in their portfolio and wethought, oh, wow, we should do
this, this makes a lot of sense.
And we did some mysteryshopping and found out how much
they were making per developerand we we were like this is
great.
And very quickly all the piecesfell together because we
thought, well, if this is abusiness that not only gives us
(01:00:27):
the cash but also gives us thetalent technical talent to then
go on and build all thosesoftware businesses we've been
talking about, that would beamazing.
And so that's how the ideaformed and then it was polished
right.
I think it went through thespark of an intuition to then a
polishing of an intuition of theidea, which I think is to some
(01:00:50):
degree important.
There's a lot of nuances toideas that everything has to
feel right and, for instance,one of those things was that the
type of business that we werepitching we had used ourselves
when building Olopek, and so wehad direct relationship into how
(01:01:11):
to operate it, like we hadbuilt remote teams of engineers
in Latin America.
So we had a certain degree ofauthority to talk about the
topic because we had experiencedit.
We had also experienced it overmany years, meaning that we
knew what the transitions that acompany goes through as they
(01:01:32):
grow and scale and what thechallenges would be and how
would that affect your remoteengineering team In the same way
?
Because we had done it and howwe had treated our own team, we
felt that we had authority togive a good value proposition to
the software developers.
All of those kind of littleingredients and polishing
(01:01:53):
thoughts kind of felt that wehad not a unique advantage but a
unique edge and adifferentiating form factor that
will allow us to launch thebusiness and somewhat bootstrap
the supply and demand in a waythat we could see what would be
next after the next door.
(01:02:14):
Right, and yeah, we went intothe business and relatively
quickly started monetizing.
I think that the maindifference between the Remotely
product and Olapic's product wasthat it was so much easier to
(01:02:36):
sell.
Everyone understood what wewere doing.
We were just doing something,understood what we were doing,
like we were just doingsomething that other people were
doing, whereas with Olapic wewere selling something new that
no one had done before.
So there was a significantamount of advocacy and and
convincing and and kind ofthought leadership and
innovation thought that you hadto go through first.
(01:02:58):
So this one was significantlyfaster to kind of quote product
market fit.
So our business didn't changemuch from inception to today.
Ariel Camus (01:03:13):
And I guess in this case you also took an idea that
had already found productmarket fit at this other venture
builder and what was thedeciding factor?
Was the founder market fitright, the fact that you had
authority, that you hadexperience, that you had an
insight that gave you anadvantage there, and I think
that's super important, and youmentioned that before that with
(01:03:34):
Allapik.
I'm paraphrasing here youmentioned it was not something
you were extremely, it was not atopic you were passionate about
, but it sounds like withRemotely there is not just the
type of business that will kindof fund the type of life that
you want to have, but also thetype of business that will have
(01:03:55):
the type of impact in the worldthat you want to see, but also
by doing something that you areknowledgeable about.
So it has all the differentcomponents to make it worth
pursuing.
Yeah, Fascinating.
All right, Pao, we're going toleave it here.
I'm looking forward to seeingwhat happens in the story of
Remotely, but whatever that is,I know it's going to be exciting
(01:04:17):
, fun, challenging, as always,but I'm really grateful you have
shared everything so far.
I look forward to maybe doinganother episode in a couple of
years to see where Remote is.
Pau Sabria (01:04:29):
Happy to Mariel, it was great to see you.
Ariel Camus (01:04:35):
Thank you so much for tuning in.
Your support means the world tome.
Thank you so much for tuning in.
Your support means the world tome.
If you enjoyed today's episode,please consider subscribing and
leaving a review.
It's one of the best ways youcan help this podcast get off
the ground and help moreentrepreneurs like you.
Thank you.
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