The Exchanges

Q And what was the YC experience like? I mean, so many people obviously want to get into, into YC, like, give me a sense of what it's really like to kind of go through that, how helpful it is. What are the sort of things that happen?

A Totally. So we joined for two purposes. One was, of course, the brand recognition that goes really far away. Actually, at least three businesses. The second was, hey, we're a first time founder. There's probably a ton of things that we don't know. And so having this like trusted advisor who Can help us like navigate all those, you know, plot holes. Uh, let's do that. And then the third part was, uh, you know, it was a, it, it could be a tremendous distribution channel. Like you hear all the time about these YSE founders, like buying and selling from one another. Now, out of the three, the first two were correct. Great brand recognition. We got great advice from our group partners. Uh, distribution, uh, not at all, you know. Like we did not sell to other companies in our cohort, which a lot of YC founders do, uh, you know, because their ICP tended to be more later stage. And, you know, if you reach out to a YC founder of like a series C startup, I mean, every batch, I'm sure they're getting spammed by YC founders trying to sell them stuff. And, you know, you're not getting as much responses.

AI assessment note: “Great brand recognition. We got great advice from our group partners. Uh, distribution, uh, not at all”

Q two and a half million bucks, and I have to assume, like, raising, I mean, this is what I, what I gather, especially talking to a lot of, and I went through founder startups, so I felt a bit of it, this is back when, when founder startups still had a decent brand before all this stuff happened, but it's pretty easy to raise, right? Like, coming out of YC?

A It, it is, like, it certainly gives you, uh, kind of that brand recognition, or I guess you could call it, um, but at the end of the day, they're not, You know, we have 10 customers, right? They're not really banking on early traction. They're, they're once again banking on the team and the space. I mean, with craft, there was like a, a weak process. You know, we, we met, uh, once and then, you know, they did their diligence for about four or five days and then had a real deep dive where, you know, the partner, Jeff, uh, really dug into the business. I mean, it, it felt like a YC interview and that it was just, uh, Pretty hardcore line of questioning. I would say, I think we did a good job on them. Then literally the next day we got, we got term sheets from them and we're able to close around.

AI assessment note: “It, it is, like, it certainly gives you, uh, kind of that brand recognition”

Q Walk me through the, the, the workload and, and kind of the setup, right? Especially when you're five people going on 10, like how are, is everybody in office? Like how, how much time are you putting into this?

A Man, we were, uh, we were at a WeWork initially and we, you know, we're very opinionated people. And so we'd have like screening matches on the shared desk area of WeWork. And so we thought, okay, we gotta go get an office. That office was, I mean, it could barely fit five people, stunk to high hell, uh, you know, and, uh, the way that it would go is like, I would go is, is me, um, kind of handling everything on go to market and, uh, you know, onboarding and a bit of support, um, and Chang Yun, the CTO and three engineers. And the way to go is this, I'd be, I'd be out on the road, like conferences, hopping on zoom calls, trying to, Kick a scream that a lot of partnerships could be partner with AWS. For example, we get customers on board them. Um, if there's like a technical part of it, you know, changing when to get involved and then, you know, support was like, uh, all hands on, on deck, you know? Um, and it was very iterative in the sense, like you would have a demo with, uh, a company that is probably, you know, kind of the next year of upgrades in terms of size, you know, first demo, I understand the requirements. Uh, and then I'll just run to the engineering team or, you know, Turn my chair to the engineer team and say, Hey, we got one week to the next demo. We got to have XYZ. It does not need to be functional, but it needs to be demoable. And we would just repeat and rep…

AI assessment note: “we got to go get an office. That office was, I mean, it could barely fit five people”

Q Perfect. Well, John, let's stop it there. I'll ask the last two questions we always end on. Uh, the first one is when did you feel like you'd found true product market fit?

A That's a really good question. Everyone says you'll, you'll know it when you feel it or yeah. For me, it was probably around October of 20, 23 was when I first like got the feeling. So it took us, you know, four months to get to 10 customers. And then starting in June, July, we started kind of averaging, you know, seven to 10 customers, uh, a month. And so by the time we reached like 50, I was like, holy crap, this actually is working. Um, we just gotta keep doing what we're doing and it'll work out. And so that's the first part. The second kind of wave of, of, uh, product marketing was when we would go to events and like people would talk about us. At the end of the day, it's about like market validation and, um, have people that you haven't reached out to or talked to know you guys' names. I think that is like sign of some like big market validation. I always kind of approach it from, there's these big conferences like AWS reInvent that happens every November. Every reInvent was very different. Like the reInvent that I went to in two, 2022 was don't know a single person. I'm walking around doing that stupid.

AI assessment note: “For me, it was probably around October of 20, 23”

Q And can you go a bit deeper on like, take that, that marquee customer, like what was the exact pain point that you saw for them that got them over the line?

A Yeah, it was really around workflows. So, you know, the way that our space is broken up is if you're early stage, you think about how do I get listed on marketplace? How do I get started and do my first couple of transactions? When you get to the five trend snowflake range, it's about how do I automate workflows? Because it's such a kind of siloed like channel. Um, you know, Salesforce, for example, doesn't have a way to send offers to marketplace. Uh, they're, they're, Building solution lights, you know, Stripe or, or, uh, NetSuite doesn't have a way to recognize revenue through these marketplaces. And so they have to set up these like kind of, uh, product teams that the way that Costland did with all those engineers, or they have to get all these like offshore deal desk ops people that manage inflows and outflows of lease and money and whatnot. And so for us, it was around how do we automate all the work that they're doing manually? So that it can be managed out of a central team with like minimal, you know, you know, uh, kind of work. And that, that really resonated well with some of these larger scale customers. The other big focus we did, you know, and that came from Chang Jun's, you know, understanding of the space was we really focused on building a unified API, like unified APIs for everything. And it was a very API first platform. Uh, and in the early days we actually …

AI assessment note: “Salesforce, for example, doesn't have a way to send offers to marketplace”

Q trading Pokemon cards at 16, man. I also wanted to be founder early on, but like, literally I'm thinking at 16, our idea was like, yo, let's open up like a clothing store. Do you know what I mean? Like these were kind of our simple brains. Do you ever actually, you start talking to customers, like do you build something or how far do you take that first venture?

A No, it surely was from a R&D perspective. So it's not like we had You know, kind of this, you know, the Silicon Valley SaaS sense, you know, you find design partners, maybe even do Figma prototypes, for example, and get it in front of them to figure out if that's what you need. We truly started with the technology first, you know, assuming that people really wanted this. And of course, there's no, you know, there's no like outside pressure, especially at that age to like make money for your family or all these things. And so maybe that's why it's actually beneficial to start a company when you're young, before you have all these responsibilities. Learned so much. I mean, I spent so much time in labs, uh, through this venture, but also before. I think it was fun at that time, but looking back, I, I didn't truly enjoy it. Like writing, you know, papers on it, you know, filing the pen, like that, that's just crappy work to do. It, I will tell you, it, it taught me that I did not want to be in a lab, and I cared a lot more about the business side of things than I did about the, you know, the science side, and, and I just wanted to Really work with customers. And then, and that part motivated me a lot more than like spending all my time in a lap, you know, with, with test tubes and things like that.

AI assessment note: “No, it surely was from a R&D perspective. So it's not like we had”

Q trading Pokemon cards at 16, man. I also wanted to be founder early on, but like, literally I'm thinking at 16, our idea was like, yo, let's open up like a clothing store. Do you know what I mean? Like these were kind of our simple brains. Do you ever actually, you start talking to customers, like do you build something or how far do you take that first venture?

A No, it surely was from a R&D perspective. So it's not like we had You know, kind of this, you know, the Silicon Valley SaaS sense, you know, you find design partners, maybe even do Figma prototypes, for example, and get it in front of them to figure out if that's what you need. We truly started with the technology first, you know, assuming that people really wanted this. And of course, there's no, you know, there's no like outside pressure, especially at that age to like make money for your family or all these things. And so maybe that's why it's actually beneficial to start a company when you're young, before you have all these responsibilities. Learned so much. I mean, I spent so much time in labs, uh, through this venture, but also before. I think it was fun at that time, but looking back, I, I didn't truly enjoy it. Like writing, you know, papers on it, you know, filing the pen, like that, that's just crappy work to do. It, I will tell you, it, it taught me that I did not want to be in a lab, and I cared a lot more about the business side of things than I did about the, you know, the science side, and, and I just wanted to Really work with customers. And then, and that part motivated me a lot more than like spending all my time in a lap, you know, with, with test tubes and things like that.

AI assessment note: “No, it surely was from a R&D perspective.”

Q what advice do you have around? Because I think a lot of people go through, a lot of founders go through like founder breakups or key employees leaving early on. And I don't think anybody wants to talk about it. Um, so the question really is like, yeah, partially what happened just to set context, but then what's your biggest lesson or learning? How did you deal with it all?

A Yeah. So, so this happened in June of 2023. And, you know, timing wise was also right after we raised our seed round. And so that's, that's another complexity of just things to deal with. You know, the reason why, like ultimately we just had a difference in vision of what we wanted to build. Um, and there's a little bit of friction around that throughout the product development process. Um, and I gotta say it is, uh, emotionally draining, um, because, you know, I knew that their co-founder personally, he was the one who said, Hey, let's work on this idea together. You know, you're looking at the barrel of the gun of like, Hey, is, is this, is, is this what's best for the company? Because ultimately you got to set egos aside, personal feelings aside and do what's best. You know, we just raised the seed round. So honestly telling the investors was kind of the first hard part. You know, they were like, what the heck? Like that was a month ago. Were these feelings, like, do you guys know these feelings? Like when you raised the round and they're asking all these probing questions, but ultimately, you know, Like they are supportive, right? And part of it is like, I got, I got a really good feedback from someone that was like, um, when you, whenever you talk to the board or your investors, you're not asking for approval, you're asking for alignment. And so we were able to explain ver…

AI assessment note: “when you talk to the board or your investors, you're not asking for approval”

Q And this is to be clear, this is the team at GRR Confluent that puts that app on other marketplaces?

A Exactly. So just let me take a step back. Like what Sugar does, right, is, uh, we help companies sell on cloud marketplaces and we automate workflows related to You know, the entire life cycle of a transaction. So everything from offers to contract management, then of course, billing and nearing. Um, and when you get into like selling across these marketplaces, you know, each marketplace has unique APIs, unique policies on how they handle like meter usage or, or, you know, how you want to engage with their cloud sales teams, et cetera. It is just an incredibly complicated thing to build, even though it's very niche. You know, when I tell like anyone in this space, you know, not in our space per se, but kind of a lot of folks, even in Silicon Valley, they, they always say it's a very niche market. Like, wow, I had no idea that, that, you know, enterprise software companies really needed that. Yeah.

AI assessment note: “Exactly. So just let me take a step back.”

Q And how do you meet your co-founder?

A We had a third co-founder. You know, and I used to work with them at, you know, the next startup that I worked at after, after Salesforce, that was kind of, um, you know, leading this operation event and, um, you know, this SMB segment at one point, and he was working on new products. You know, he left two months before I did. I, you know, and he said, he's working on this idea with changing the CTO. And I was convinced to come over and start working on this idea with them. And then about three months later, uh, after working with them, you know, we started, uh, we got into YC and You know, there it goes.

AI assessment note: “I used to work with them at, you know, the next startup”

Q What was like your original pitch To YC. Like, why do you think YC, what do you think YC saw?

A I mean, I think they, you, you gotta ask them honestly, but, uh, they, they really invest in the team at the end of the day. So the funny thing is when we, when we actually applied for YC, it wasn't even around marketplaces. It was around usage and so lo and behold, like we show up to the interview and it's a 10 minute, like high pressure interview. And the first thing they say, and you know, they have like, The pack, the application packet ahead of us. Uh, and the first thing we see in the interview is just, hey, we're actually pitching a different idea than, than what we had applied with. I hope that's okay. And, you know, they don't really care. At the end of the day, it's about, you know, do, do we believe that there's the right founding team? Do we believe that, um, you know, they're going to make it work regardless of what idea they're working on, you know, and be able to kind of find that product where it fits, so.

AI assessment note: “they really invest in the team at the end of the day”

Q way you got to do it. Like, but when you raise this round, is that what you say to craft? Is that what you say to Intel? I'm going to take this money and I'm probably not going to hire anyone right away. Or do you tell them like, yeah, like we're ready to go. Like here are the five hires I want to make, right? Like what's the story?

A Not at all. Um, it was like, Hey, do you think that we can do something really disruptive and something where we think the puck is going in the future of B to B sales? It's going to take us some time to figure that out, but we have some early traction, you know, and you look at the, you know, the GMV through these marketplaces, you know, and at that point it was around, like, we certainly tried hiring. Like we, we made, it was certainly wasn't for a back lack of a lack of an effort. Um, It was just incredibly hard to hire talented folks at the very beginning because we, a lot of it wasn't a stake on our end. Like we didn't know truly what we're looking for. We truly had a spot talent. And, you know, they, they really, you know, the, the, the saying is like, I was slow, fired fast.

AI assessment note: “it was like, Hey, do you think that we can do something really disruptive”