June 30, 2023

B2B SaaS Company Building: Learnings from two 9-figure exits & How to build a B2B Logo Machine: Learnings from Scaling MOAT, Jonah Goodhart, Montauk Labs

Jonah Goodhart has had two exits with a total volume of more than $1.5 billion.

He was a founding investor in Right Media (sold to Yahoo), but according to insiders, he was much more involved.

He sold the advertising management platform MOAT to Oracle in 2017 for about $850 million.

That's why we're talking about Jonah's company building for B2B SaaS startups.





What you'll learn:

-Validating ideas: What makes a really good SaaS idea?


-How do you develop a B2B logo engine that keeps growing?


-How do you find product-market fit as reliably as possible?


Jonah Goodhart

LinkedIn: https://www.linkedin.com/in/jonahgoodhart/

Montauk Labs: https://www.mtklabs.com/



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(00:00:00) How did you validate and select ideas at the beginning of your career vs. how has that changed over the years?

(00:09:01) How much does your prominence in the scene and your environment influence you in idea implementation?

(00:12:58) How would you go about being a First Time Founder when supposedly all the other founders around you have more experience and know what they are doing?

(00:16:12) What things are really important when starting my business and what is more "go with the flow"?

(00:19:33) As a serial founder, how do you define a good team?

(00:23:02) As a founder, how do you decide what type of funding to choose?

When do I bootstrap, when do I seek an angel investor, when do I seek a VC?

(00:29:08) How much is it underestimated what damage debt financing can do if the founder doesn't know exactly what they're doing?

(00:40:30) What does Product Market Fit mean to you and when did you know with your company that you were achieving it/on your way to it?

(00:43:37) What does it take to build a Logo Machine in sales?

(00:50:58) When can I best tailor products to my customers and when should I focus on scalability?

(00:54:19) Have you ever had to turn down a customer because they wanted too much customization and what do VCs prefer - scalable products or customized?

(01:04:10) How do you personally cope with the mental and stressful challenges that startups bring?


 Welcome to a new episode of the Unicorn Bakery. My name is Fabian Tausch and today we're looking at Jonah Goodhart's recipe for success. Jonah was the founding investor of Right Media, which was sold to Yahoo, and later founded Moat and sold it to Oracle. Both companies were sold for more than 1.7 billion dollars combined. And today Jonah is running a venture studio called Montauk Labs. I hope I pronounced it right. And we will talk about Jonah's approach to venture building and company building, because I think you've seen a lot. You've scaled Moat for a long time and successfully, and it's super interesting to understand how you're approaching company building now at the venture studio. So Jonah, welcome to the Unicorn Bakery. Fabian, thanks for having me. Excited to speak with you today. I think first question for a bit of context before I dive right in, but when did you become an entrepreneur? Oh boy, good question. You know, I've always had this thing about wanting to be a business person, wanting to build businesses for some reason. I would say I didn't know much about it. My oldest brother started the company when he was in college. He started a newspaper and then he eventually went on to start a magazine. And so that was really my first exposure to entrepreneurism in my family. And I thought it seemed so cool. He got to sort of create products and come up with ideas and try things. And so I got, I would say I really got started as an entrepreneur when I was in college, building my first business with my middle brother. But as a kid, I was the kid that was in the neighborhood, selling greeting cards door to door and that sort of thing. So I was always, I wanted to work, I wanted to make money, I wanted to sort of create. But I wouldn't say that I had the entrepreneurial spirit until I saw what my brother did and got excited about it. And, you know, I grew up, I sort of came up at a time when the internet was really invented, the modern day internet that we think of in the mid 1990s. And so I was in college at that time. And I was excited about the world and what I was learning. And I was just enamored with the world of digital and the internet. And so that happened at a time in my life that was, that was very formational for me. And so I got excited about trying to build a business at that time. And so yeah, my first company that I started was actually in the late 1990s with my brother. And I was still an undergraduate at school at the time. That's interesting to hear. Very, very long entrepreneurial journey then. So one question that interests me is how did you pick the first entrepreneurial endeavors, like the ideas that you want to pursue versus how are you picking and validating ideas today? Yeah, so I guess I would say, on the first company, it was it was a bit haphazard. You know, we saw that companies were, were being built on the internet, we had some friends that had built some companies, and we sort of were watching this thing evolve. And I got excited about some of the dynamics that we saw in the market and decided to, to try to, to try to build something. But it wasn't, I wouldn't say we had a whole lot of forethought on, hey, this is the market, this is what we're going to do, this is what we're going to build. I was 20 years old at the time and, and really didn't understand business. When I sort of step back from it now and think about, you know, how to build a company, I'm much more analytical about it. And, you know, I really think about the dynamics that exist in a market, I think about, you know, what is, what is the company understand that perhaps other people don't, or what do they see that other people don't? You know, when I think of, of one of our business ideas now, or even most recently, Moat, you know, I'm thinking about what's the problem we're trying to solve? And, and, you know, what's the initial vision for the, for the company? And so, you know, I think, I think a lot of businesses start with trying to identify a problem and, and trying to understand, is this a, you know, a big problem or a little problem? Is this something that is going to, is going to change 10 years from now? And what are the sort of facets of this? So in the case of Moat, as an example, you know, the problem we were trying to solve was that at the time, this is 2010, when we started Moat, brands were not spending the majority of their budgets in digital. And yet, the trend, I think, was pretty clear in terms of consumers, that people were using the internet. And that was, that was going up, not down. And if you looked out 10 years, it was pretty easy to see that we would see more usage, not less. And so we, we said, the question we thought about was, will brands have to figure out a way to make digital work? And will they ultimately shift more budget to it? And is this a, is this a real sort of challenge? And the answer, of course, we felt was, was yes, brands are going to have to figure out digital, they're going to have to ultimately spend money there, if that's where consumers are. And we thought about, you know, at that time, what was causing the problem? Why were brands not spending money in digital in the way that they, they perhaps should have been? And the conclusion we came to was that there was a creative issue, meaning that the ads themselves in digital were not great. They didn't, if you think about television, advertising, it's a storytelling medium, right? There's these emotional stories that are told, and you sort of get attached to these, to these brands in, in a combination of sort of art and science. And that really wasn't happening in digital. In digital, you know, you'd see a banner ad, a display ad somewhere, and, and you sort of move on. And so the question or problem was, all right, how are brands going to figure out how to bring highly impactful advertising to digital so that they can have advertising that works and ultimately spend money there? But one of the things that we discovered with Moat, which was a big business learning for me, was that understanding a big problem, which we felt like we identified, that brands need to figure out digital in a big market, hundreds of billions of dollars, even then being spent on, on advertising, doesn't actually tell you whether you have the right solution for that problem. That's only a piece of the puzzle. And in fact, our initial idea for a solution was a crowdsourced creative marketplace, which ended up not being the right solution, didn't work. But it led to an iterative process. And we eventually came up with, with analytics and measurement. And that ended up working for us. But, you know, for me, it's a, the company building process is one where you're trying to understand a big problem in a big market. And you're trying to understand where that market's going. And you want to ask questions like, what do I know to be the case 10 years from now? And, and what do other people believe in? And perhaps, what do you believe that may be, may be seen as contrarian today? Maybe a stupid question. But you mentioned, you're now more analytical about things. And also, people know that you built Moat, a successful company, sold it, exited it. And now you're thinking about new ideas. How often or like, how much is it also a problem that there is some, let's say, public, not pressure in the in the say, in the in the meaning of everybody's looking, but people will recognize what you will do next. So how often have you thought about ideas? And we're like, Oh, yeah, I could do that. But I'm not sure if that's the right one. And you're like throwing ideas away, because maybe it's not right. Like, are you overthinking ideas now? And and how are you approaching that? Yeah, what I would say is, it's certainly for anyone who's built multiple businesses, they know what I'm going to say, which is that there is a different type of pressure, it's always pressure when you build a company, but there's a different kind of pressure when there's expectations. And it doesn't get easier. When you go to build a second company, or a third company, or a fourth company, you run into a lot of the same, same challenges. And frankly, you know, having had any success in the background is, is great. But and maybe it helps you with pattern recognition, maybe it helps you get an initial meeting. But you're kind of only as good as your most recent product. And so people want us, you know, okay, cool. That was great. You did that in the past. Now what? And and what do you have for me today? And so you, you have to build something that that solves real problems and, and creates real value. And it doesn't matter whether you've done something in the past. From that perspective, I do think that external expectations play a big role in, in sort of founder psychology. And founder psychology is certainly a big part of something that you have to, to work at as you, as you build a company. I know a number of folks who have built multiple companies. And I would think they would, they would all say that it doesn't necessarily get easier. Because it's, you have to still build a great product in whatever market you're building in. Maybe there's pattern recognition, maybe you hopefully do things a little bit more quickly, because you go, yeah, I've seen this before, I'm not going to make that same mistake again. But yeah, there's a lot of pressure. And, and, as you say, it's, it's sometimes more visible. So, you know, if you have built something in the past, then you might have investors calling you saying, hey, we're ready to write a check. Tell us when, you know, when you're ready. And so it's great, but it's also, you know, a high bar that, that you want to succeed. Nobody wants to, to, you know, have their, the thing that they're now working on not be not be successful. So for me, you know, I take that very seriously. And I, I definitely think through what is a, what is the space that I want to play in, where I think I can make a difference. I think that's another part of it is being self aware. And, you know, asking the question, can I a positively impact this, this space, right? There's, there's plenty of industries where I can't, you know, really add any value where I know nothing about the industry. And I know nothing about the supply chains and the dynamics. And, you know, I can, I can talk to you about building a company and, and managing people and that sort of thing. But in terms of a particular industry, that is not in my world. I can't necessarily add a lot to it. So I think about, you know, is this sort of in my core competency, is this kind of in my zone of, of sort of appropriateness for the type of business that I should be working on based on my experience and my background. And so that's definitely part of it, too. I think to flip it upside down, because most of the listeners will be first time founders, it's definitely not the majority of people being serial founders. How much would you embrace that you're a first time founder, and that you have some kind of naivete while you're thinking, Oh, everybody knows what they're doing. And I don't. How would you How would you play that game? Yeah, I mean, I remember it well, first of all, and I think there's, there's actually a tremendous amount of upside in for first time founders in that you don't have the flip side of pattern recognition, right? You don't have these things in your head going up, don't do that. Because remember, when you did that last time, this other thing happened, or it didn't work out with that person, that sort of thing. And so there's, there's a certain bliss in, in having not made some of those mistakes in your journey, and just being able to try things as a first time founder. I think that there's also limited downside, because, you know, when you go to start a company, obviously, there's a lot of risk. But it's, it's not, you know, it's, I don't think there's the same people know that startups often don't work. And particularly if it's a first time founder, they, they sort of go, Okay, you know, we'll try it, we'll see if it, you know, see how it does, see where see where it goes. I think people treat that a little bit differently when you've, when you've built other businesses in the past. So I think as a first time founder, you, you want to sort of be willing to learn from others, but also embrace the benefit of not, you know, having to walk where other people have walked before and being able to try new things. And, you know, oftentimes, that's where real innovation happens, where someone had had never been in, in that world before, and, you know, gets passionate about something and goes to build a great, a great business. And, and so, yeah, I think, I think, there's certainly going to be the psychology that's the same, which, you know, imposter syndrome, or whatever you want to call it, where you feel like, I don't know what I'm doing, that never changes, whether you're a first time founder, or, you know, you've built multiple companies, you're always going to have some level of self doubt, you're always going to question things at some level. And, you know, certainly, if you've literally never built a company before never formed a company, you've never hired employees, then there's going to be pieces of that that just feel very foreign. But I think that's where, you know, good advisors and folks that have done some of those things before can at least help with some of the basics, so that you feel like, okay, I'm doing this the right way, the proper, if you will, way to at least do some of those things. But then I think you also want to take advantage of, if you will, the naivety that you might have. Because, you know, I certainly tried things with my first company, that I think people would have said, you know, that's not the right way to do it. And we learned and built successful, you know, products, by trying things that other people weren't willing to do. And so I think there's a lot of positivity that can come from that, that sort of first time founder naivety, naive, naive sort of perspective, if you will. I think what I would love to add here as a new part of the of the question is, due to all the content, and I'm definitely part of part of the equation, producing a lot of content, people try to over engineer everything from day one, from time to time. What are your thoughts on people trying to over engineer team, product from day one, vision from day one, what are the things that I'm actually focusing on? And where should I just also, let's put it with go to go with the flow? Yeah, so I think in the in the early days, I think your team is is absolutely critical. I'm one of those people that believes an idea is not worth much, right? When I talk to entrepreneurs, and they say, you know, I have this idea, don't don't tell anyone, I sort of, for me, it's, it's, you know, it's kind of a signal of where that entrepreneur is in their journey, and that in that they haven't yet come to the realization that it's 99% execution. And so I think, when you go to execute, and you think about what are the key parts of building a company, I really think it comes down to, first and foremost, the team, right, the people that that do it, the builders, the, if you're talking about software, the engineers, etc, are are really the critical components of, of your success. And so you have to, you have to get the right team on board with the right mentality and the and the right mindset for building a company, particularly an early stage company. And, you know, on that front, I think there's, there's, honestly, where a lot of mistakes are made, and companies are sort of set up for success or not is is in getting the right team. And so I think that, you know, perhaps more than anything is the key, if you have a great team, you can sort of figure things out. If you if you don't, then it's going to be hard, no matter what it is. I think beyond that, there's a there's a path that I think, makes sense to follow for B2B companies, which is, in the world of B2B, we get the benefit of being able to talk to people who are would be customers, or perhaps will be customers, and literally ask them whether they would buy a product in this space, if it solves a particular problem, they they are looking to solve particular challenges in their world. And you can go to them and say, Hey, if if we were to have this, theoretically, would this be interesting for you? And based on their feedback, it gives you really important direction, because in the end of the day, you're going to go back to those same people and say, Okay, I've built it. You know, now what now what do you think? And so I think that sort of early iterative feedback from potential customers, at least in B2B, I think it's different if you're talking about a consumer business, but in B2B, I think that's critical. But it always starts with the team. It's you know, the first question investors will ask when you say, Hey, I'm going to go build this company. Got it. Who's your team? Who's who are you doing it with? Because that's, that's really the key. So how do you define a great team? I we always hear investors talking about it, but I would love to hear from your founder perspective. Yeah, so here's what I would say. I think that a lot of people have this sort of idea that being involved with a startup would be fun and cool and interesting, and, you know, the potential to be highly impactful. But there's a reality to startups, which is that they are less secure than large companies. A lot of startups fail, they're higher risk. They're usually lower cash compensation. And frankly, they're just messy. As a friend of mine, Scott Belsky, who's a renowned entrepreneur and designer in his own right, he said he wrote a book called The Messy Middle. And he talks about navigating what is quite simply a very messy process. And a lot of folks don't have the stomach for that. Level of uncertainty. It's not easy. And it's not for everyone. And so I think part of the the formula for finding the right team is finding people that have the right mentality that when faced with both adversity and success, they see those things as as motivations, that they have a mindset to push forward and, and always figure it out that that sort of get that the the goal of the company is the the thing that you're all driving towards. And you sort of pull out all stops to to make that work. And so I think, you know, having, it's easy to say someone with a positive mentality, but but having a positive mentality with grit is is hard to teach. And I think it's it's one of those things that you kind of know it when you see it. And candidly, in the companies that I've been involved in, over the years, the last 25 years or so that I've been building companies, we've had folks come through that that, you know, either we or they realize it's not a fit. And that's okay. And there's different stages, right? In a truly early stage company, it's a different type of person typically, that's successful than in a in a later stage company. And so I think, to find the right people is, is about trying to align on on those sorts of, of attributes. Are they, you know, do they have a mindset that is willing to take risk? Do they? Are they willing to sort of work all night and day to try to achieve a goal? Are they are they willing to, to work on weekends, not because the job says you have to work on weekends, but simply because that's might be what's required in a situation where you're trying to achieve a specific goal. And so I think there's, there's just a different mentality for folks and that that kind of do well in that, in that setting. And certainly, it's about setting expectations and, and trying to ensure you have alignment. But I think the good news is, when you hopefully eventually do get to success, it is one of the most unbelievable feelings to know that your team made it happen, that your team, you know, found a way to push through. And, and, you know, of course, that they also participate in that, in that upside and that success of the company. But to know that the sort of blood, sweat and tears of it is what makes it fun. It's what makes it, it impactful, what makes it sort of worth doing, in my view, if, you know, if you get to, if you get to success, and you didn't have the kind of feeling of, wow, that was hard, it doesn't feel quite as good. And I think most, most entrepreneurs that I know that have been successful, it's been hard. I very rarely meet someone who says, super easy, we just, you know, spun this up, it worked out of the gates. And, and, you know, it did really well, that that's pretty rare. Usually, it's now we had a lot of, we had a lot of trials and tribulations. And, and, but we had an amazing team who was willing to push through it. And we eventually got there. And that and that's what makes it feel so good at the end. One question that I as a founder have to ask myself early on, and it became a bit normal to take on investors, and try to do that right away. But let's, let's say you're founding a new venture, you don't have the financial possibilities that you have right now. How do you evaluate if you're bootstrapping, if you're taking on angel investors, if you're taking on VCs? How do you decide for the different paths? Yeah, I mean, I think it comes down to a couple of things. But one is, I take it very, very seriously, when I take money from other people, my mentality is, it's like I've taken money from, you know, my family or my grandparents, when when they were alive. It's, it's something that to me, it's, it's, it's sort of a sacred thing. I don't believe that you just sort of take money. And if it works, it works. If it doesn't, doesn't, I think some people have that mentality, I do not. I think it's extremely serious. And so I think if you're going to get to the place where you're going to, you're going to ask people for their hard earned money to give to you that they you may lose for them. It has to be at a moment where you're all in, where your mentality is like, I will do whatever it takes to make this work. If that means, you know, nights, weekends, nonstop, jumping on a plane in the middle of the night to go visit a client the next day, then there's no question you just do it. I believe that once you take money from other people, you have an obligation to to them that is that is sacred. And I think that, you know, unfortunately, I don't think everyone takes that has that, that feeling or has that mentality. But I personally believe it's it's important. And I think that helps sort of lead the way. So, you know, to answer your question, when you think, all right, do I take angel money? All right, well, am I at a place where I feel like I'm doing this full time? Do I have another job as an example. So I'm not a fan of people taking on investors when they have another job, because they're going to be distracted. And I think it's hard to, to be successful when you're you're doing something else. And so that would be one thing I would ask is, are you all in? Are you putting 100% of your time? Are you literally devoting your entire life to a large degree to make this successful? And if the answer is yes, then you might be at a place where it makes sense to try to raise money. You know, getting friends and family is usually the first step where people are going to bet on you and have a very forgiving mentality. But you know, nonetheless, I take that stage very seriously as well. I think when you get into raising money from venture capitalists whose job it is to invest in startups, then you're at a different, you're at a different place. At that point, I think you need to have a very clear vision of what you're building. I think that, you know, you ideally have a product market fit that you've gotten to off of your initial seed capital from friends and family. You know, it's not to say that you can't raise money before that. But you are playing with statistics around risk, basically, that the risk goes up. So if you raise money from a venture capitalist, and you don't have a product, you don't have a product market fit, then, you know, you might be successful. But then it's a question of how much money does it take for you to get to that point? And how long does it take? And whether you run out of money or not? And venture capitalists are very focused on doing what they're supposed to do, which is deliver returns for their investors. And so they're careful to invest in companies, again, put more money into a company unless they see significant progress and traction. And so once you take VC money, you're down a path where you better show significant traction, you better show growth, you better show that you're getting to the place that you mutually agree the business needs to go. Otherwise, you're going to be in a bad spot. Because then if you don't have product market fit, and you raise venture capital money, and you're not at a place where you can raise more money from them, then you're not in a great spot. Because now you have to either go get money from other people who are going to wonder why your existing investors aren't re-upping. And that's a hard line to walk. Or you're going to, you know, have to raise debt or do something else, which can be a company killer. And so I think it's, what I would say is delay raising money until as far as you can, until you get to a place where you just have to do it because you need the capital to hire someone or you need it for your initial product build. But you want to be ready when you go down that path. But as you say, it's not a choice for everyone. It's a balance that, you know, when we started our first company, we put on credit card debt, was we didn't raise money because we couldn't raise money. We didn't know anything about venture capitalists. We didn't know who to talk to, what to do. We didn't have a network. And so we raised, quote unquote, raised credit card debt on our own and maxed out our credit cards. And luckily we were able to get some traction on that path. But I recognize that not everyone can do that. But I think once you go down the path of taking other people's money, you're kind of on the, you're on the train at that point. And so it's hard to get off. And so you better make sure you know what you're doing. I think it's one of the decisions that feels like everybody, like I know so many founders who are like, yeah, I just have to get money and that I'm getting started because of all the media coverage and all that happened throughout the hype cycle in 2020, 2021. And everybody just knew a lot of people or read a lot of news about people getting funded from VCs, from angels, etc. And I think a lot of founders who just came into the ecosystem more and more during that time have to understand that that's not the normal case. And you have to think about it as good as possible. And it has to be an educated decision to actually take on investors. That's also why I love that you talked about it in that detail, because the longer I do the podcast, the less or the longer I would wait to take money if I would start a venture now, but it's, it's completely contrarian to what the people would think of me doing the podcast. Because I talked to all these venture based and venture finance companies, but all what all that I see is that if you do that, if you take on money too early, and you're not 1000% sure what you're doing and what you want to do, then things can get pretty messed up. And if you're done, like it's a huge roller coaster for the company, for your personal, mental health, etc. And people underestimate it a lot. And we don't see those stories, right? You don't hear about the ones that go badly, that the VCs don't talk about it. The press doesn't tend to talk about it unless it's some big, you know, name that we knew about, and then it shuts down. If you're just some company that nobody knew about, you raised a bunch of money, and it doesn't work. It's not covered. It's not press worthy. And so but that that path is psychologically one of the hardest things, because once you get on that path of raising money, you put a valuation on the company. And so you've now said it's quote, unquote, worth x, even though it's not really, and people aren't, you know, you're not selling the company for that price. And it's not a tradable asset and all sorts of reasons. But psychologically, it's hard to get people out of that out of that mentality, which is why, for example, people optimize up always their valuation, which is a mistake for for a couple of reasons we can talk about. But once you go down that, that path, and you're on the the sort of VC money path, which is the right decision for companies often, at the right point, I'm not saying don't raise VC, I've done it, and it was the key, or one of the keys to our success. But you got to do it at the right time in the company's in the company's progress. And, and I think it's, it's, you have to do it, recognizing a bit about what's happening in the market. So you mentioned, you know, when people raise money in 2021, at seemingly crazy prices, a lot of those folks now who didn't raise enough money to last them five years, are realizing that, ooh, we need to go out and raise more money. And now, when valuations have gone down by half or two thirds, and some of those situations, they're in a bad spot, because now they're going, how do I go? We've made progress as a company, let's say, but how do you go raise money at sort of a multiple of what you would have had to be at, you know, typically VC rounds, you want to double or triple the price, round by round, because you're getting dilution each time you raise money. And so to do that, if the valuations broadly were too high to begin with, is is super, super tough. And so you could you could find yourself in a situation where you've actually done well as a company, where you've grown. But because you raise money at too high of a valuation, that was your only sort of fault, you've kind of screwed yourself and, and you may not be able to raise money, or you may have to do a down round or, or sort of take more dilution or have other parts of a deal that that could end up hurting your employees or your early investors or yourself, etc. And so there's all sorts of challenges, if you do that. So one of the things that I tell entrepreneurs, is you really got to raise, if you're going to raise venture capital, you got to be very thoughtful about what price you're doing it at. Because unless it's the last round, unless it's literally the last dollar that you're ever going to take, and you're positive, no matter what, I'll never have to come back for more money, unless it's that, which is pretty rare, you're probably going to raise money again. And then the question becomes, what is the timeline? How long do I have from the time that you raise that money until you're going to have to raise again? That's your that's your sort of clock. And within that timeline, let's call it two years. In that two year time period, what does the company have to do? Does the company have to go from, you know, a million to 10 million in software recurring revenue? That's hard. And so how confident are you that you're going to do that in the next two years? And are you setting yourself up for success or failure? And so I think that those are the calculations that entrepreneurs tend not to take. A lot of entrepreneurs just think higher valuation, the better, it's less dilution, but it's sort of a short term mentality. And I think you want to, you want to see the whole board, you want to play this out a couple more turns to make a smart decision. One thing that I listened to from one of your older podcast interviews, even before 2020. So it was quite quite five years ago, I think you talked about the difference between valuation and like paper value and enterprise value and how focusing on brand and enterprise value helped you becoming a more successful company. Can we focus on the differentiation here quickly? Because I think for a lot of founders, that's nothing they have ever thought about because it's not talked about anymore. Yeah, so your your sort of actual value is different from what someone may be willing to pay for it in a moment. And when I say that someone may be willing to pay for it, if we're talking about the context of a venture round, they're not typically buying the majority of the company, they're not, you're not selling them all of your stock, you're buying a piece of it. That's not tradable, that's not fluid, that's at one moment in time, and typically comes with protections for them called preferred, which means that they get their money back first if if the company sells. And so you know, what I try to think about is what is the actual value of the of the company. And when I say actual value, I would encourage you to go through an exercise where you look at down markets and what are companies of your type worth in terms of how do they how do they trade in public markets. And so as an example, today, a software as a service company might trade at five times revenue, it might trade at 10 times revenue, or something within that within that range. And that's sort of roughly the range of where SaaS companies have historically kind of landed for a time period in 2021. And and perhaps before companies were trading at 20 times revenue, or even in the private markets, 30 or 40 times revenue. If I'm an entrepreneur, and I have a company that I'm raising money for, those are the moments where I go, okay, I might be able to sell a piece of my company at 40 times the revenue, but long term, it's probably worth five to 10 times, right long term, that's that's sort of the where things where things sort of settle back down to. And, and if that's the case, and I'm going to sell something at a price that's way above that, what are the ramifications of, of doing a deal at that price? And so what is the high bar that I now have to hit for my next round, etc. And so I think you want to, you want to sort of keep in the back of your mind, what is this sort of worth on on, you know, if I had to sell it in a in a, in a not so great market, or was trading publicly in a in a not so great market, what is it? What does it trade at? And I think that gives you a better perspective of sort of what's the, what's the real value, it might be downside, it might be conservative, it might be, you know, that's the lowest that that hopefully you'll, you'll be at. But if you don't do that, and you just sort of allow yourself to go, well, someone was willing to invest in us at 40 times revenue. So I guess we're worth 40 times revenue. Well, you're not, you're, you're, you're not worth that, unless someone has bought your entire company for that, or unless you're publicly trading at that. And even then, you're not, you might be worth that for a moment for a time period, but it probably doesn't sustain itself, and very rarely has, if you look at the largest software companies in the world, the most successful ones, the ones that make a tremendous amount of net income and EBITDA, they settle out even in crazy markets at sort of, quote, unquote, reasonable multiples. And that all comes from investors evaluating other options and what risk versus return that they can, that they can get in public markets eventually. Certainly, they're not always efficient, but they eventually kind of move towards rough efficiency for, for companies. And so I think that's, that's the good news is you can kind of see what it, what the real thing is. What is a big software company that makes a lot of money and is hugely successful trade at? And if you're trading at, you know, in a private market deal at a way higher multiple than that company, doesn't mean you shouldn't do it, but it means you should be really thoughtful about those decisions and what are the, the, the implications of those. To get to the point, to think about exit valuations and what is my company really worth on the first hand, you have to make revenue on the second hand, best case, you are beyond product market fit. So I think we should quickly cover the topic of how do you define product market fit? And when do you, did you feel it at moat that you are having the first signs or like the fully fledged product market fit? It's a product market fit is for me a really simple idea. It's repeated sales with customers who are happy, who find success with your product or service. Some people believe there's a magic number for that, a certain customer count, a revenue threshold, a recurring revenue threshold. I'm not sure if it's that cut and dry, but I think the more customers you have and the more revenue you do, something's working. And so you're on the right path at that point. And I would argue that if you have a bunch of customers and they're not churning, they're, they're spending at least more time with you. And maybe even some of them are buying more products from you. Then you're probably at a place where you have some level of product market fit. Now having product market fit is not a guarantee of future success. It just means that right now you have something that's working and that multiple customers are willing to pay you money for it. And they're not leaving after they try it. They're sticking around. But to, to build a company, you have to evolve, you have to innovate. You have to get lots of companies that want to have your product and you have to not turn them. I believe in, in building a new logo machine, if you're a software company, as an example, and not turning those customers. I think those are the two components, new logos and no churn after you get product market fit. But, but to answer your question on Moat, we launched a creative search engine in 2011 and a lot of people used it. Thousands, tens of thousands of people in the industry used it, but it was free. So it didn't generate revenue. And so I think it was successful, but I would not say that it was product market fix. We weren't generating repeated revenue from, from customers, but it gave us a signal we were moving in the right path. When we launched analytics in 2012, we got Forbes as our first customer. Again, it was validation, but not product market fit. I would say in late 2012, in early 2013, when we had sold our product multiple times to multiple companies, they were, you know, spending a hundred thousand dollars, $200,000, $500,000, et cetera, real money on our product and they weren't canceling. They were happy and were very engaged with us at that moment. I think we felt like, okay, there's, there's probably product market fit here and we may have something. Now we're spicing it up, I think, because we're talking about product market fit and what happens after. And you said you have to build a logo machine when you're in B2B sales or in a B2B space. So what does it actually take to build a logo machine? What, what parts of the company do I have to build up and evolve and improve to being able to build a logo machine that also not churns all my clients? Yeah. So, and let me step back for a second on why I said that. I love this question because I think it gets at the essence of what founders in B2B software companies sometimes miss. I often get the question, should we be focused on new clients or expanding existing customers? And of course, you know, the answer is yes, you should do both of those things. But if I had to choose one, I would say new customers. And, and the reason is because in order to scale, you're ultimately going to need to sign up lots of customers, right? You're not going to have any one customer that is funding your entire business at scale. And so in order to, to build a sustainable scaled company, you have to have a lot of customers. Now, the second piece of it is, is churn. So if you get customers and they go, oh, this wasn't what I thought, or it's not working and they churn, they cancel, then you have a problem. And so to build a, a successful company in B2B, you need both the ability to get new customers and lots of them, and you need those customers to stick around. Now, how do you do it? Comes down to a bunch of things. So one, it's your, your lead pipeline, right? So how are you getting leads? Are they quality leads? How many do you get? Are you getting two leads a month? Are you getting 200 leads a month, right? What is the, what is the path for you to get leads at Moat? We had this creative search engine that ended up being a lead generator for us because people would, would talk to us because they liked it and used it and it was free and didn't require registration. And so first thing is how are you getting leads? Second thing is, is what is your sales process? Is it, is it sort of clean, if you will? Is it, is it clear? These are the steps that you go through. You eventually get to a place where you can label those steps. You know, at Moat, we used to say we're in the, the vision pitch stage, which is early. We're just trying to get someone excited about the vision of the company or what we're trying to solve. You might be in the data review phase, which is you've done work for them and now you're looking at the data together and evaluating it. But you want to have a, a clean and clear sales process. You want contracting to be easy or as easy as possible and know what you can give on, what you can't give on. And perhaps most importantly, you want to enable customer and low churn. You know, I, I talk to people in, in the B2B world who close clients and then they churn them. And we, we call this a leaky bucket. If you have a leaky bucket, you're not going to have a good business. Nobody wants a software company where people sign up and then churn. And so to have a sales machine, you need to both get leads in, have a clear process to get sales done, have visibility into that process, be able to predict with a high likelihood of success, whether or not a client or a potential customer is going to close. And then you want to know whether they're engaged, whether they're happy, whether you're interacting with them and you want to track all of that. And that's going to help you understand whether you're going to keep these customers and ultimately maybe expand them. But in my mind, expansion of customers is sort of the second phase. You want to build the machine that gets folks through the door, make sure that it works, make sure that they're happy. And then you can, you can move on to scale. It's interesting because when we, for example, look at the businesses that then go public, we see, of course, the hopefully the fully fledged company that has figured out both like attracting new clients, but also the expansion and in inside of the clients with the net revenue retention, that is one of the key benchmarks to understand, okay, how much besides the growth, how much possibility is there to, to extend the clients. And so I can imagine that a lot of founders are focusing on this very, very early to on a micro level, figure out, okay, how can I sell more? Do I cross sell? Do I build on top? Do I, what do I do? And what would you say is the right balance? Because if I just focus on selling to more and more clients and onboarding them and forget about, okay, I could cross sell here, I need to build a new product layer that I can set up as a new tier that people can can unlock as well. At what point do I then start thinking about this expansion part? Yeah, so I think there's there's two ways to think about expansion, right? There's more of what they're already buying from you and selling them something that they're not buying from you, right. And so on the ladder, which I think is is part of what you're referencing, you're talking about building new products. On the former, we're talking about them just getting full usage out of it. And so, you know, let's say that that for somebody signed up, and they said, we're going to put this on 10% of our of our ad buys or 10% of our inventory. For me to expand them, it's a simply means getting them to use us and more of their inventory, right? That kind of expansion, I think is is logical to focus on early on, ensuring that they're happy, ensuring that it works and ensuring that they hopefully roll you out on on more of the same product. When you're talking about building new products, I think you want to be careful that you don't forget about it that you don't sort of say, you know, we're not going to do it because that's where competition could come in and, and, and do something that powers a capability that you don't have. So you don't want to not do it. But at the same time, if you get too distracted by sort of building that, then you forget to to get scale with the existing clients that you that you have. And so I guess my view is you want to you want to focus on the product, the initial product that you're selling, get that to work and get that to work at scale and get lots of people to use it. And then I think you want to have the good problem of a lot of people using our products, they all seem to like it. There's so much stuff that we can do. Now, the question is, what do we prioritize for for additional product builds? And I think that's, I think that's the place you want to, you want to do that. Because I think otherwise, you know, everyone has limited resources. And you want to you want to not get distracted and focus on expansion and having to light up 2345 different products when you've not gotten to scale on your first one. I think there's a second question that is interesting for a lot of mid market, upmarket enterprise software companies. And it's the balance between customization for a customer and also productizing and scalability of the product. And I know there is no black and white answer. But what is your take? When? When do I have to customize more for a customer? And at the same time, how do I say, Okay, I can't do this right now, I have to find a scalable and productizable solution. So somebody said to me once, the definition of enterprise software sales is that you're willing to customize. And I thought that that was interesting. I don't know if it's exactly right. But you know that the when I got into the analytics business, I went to sell a customer and they had a free analytics solution that they could use. And I said to them, why don't you just use this free analytics solution? Why would you pay for one when you could get it for free? And they said, Well, there's two things. One, you get what you pay for when it's free, so you get no support, no service, etc. But number two, there's no customization. And being able to customize it to fit our specific needs is critical. So being willing to customize, I think, in the early days, is is pretty important for for enterprise software. Now, the balance you want to strike is the level of customization, right? You don't want to be their in house developer, and customize things so much so that it doesn't scale to other to other clients, what you want to do is you want to think about all right, what features and capabilities that they're asking for, would also make sense for other people. And so may also make sense for us to build and you want to, I think, bias towards what are going to be the repeatable use cases. But I think you, I think you have to customize or be willing to customize early on, I think there's very few products that you can sort of put out there people just use and requires nothing and you call it a day. But it's again, I wouldn't think of it as customizing for one customer, I would think of it as a customer that gives you or multiple customers that give you feedback, and you end up building customizations that then work across multiple customers. So this is to be clear, I'm not saying customizing, you know, one client integration, but you are taking client feedback. And they're saying, you know, at moat, we had a client early on AOL. And they said to us, the head of analytics there at the time, brilliant guy said, you know, we want the ability to export your data into a pre built PowerPoint presentation. And we thought, interesting, hadn't heard that for a cool idea. And he said, that doesn't, I don't have that capability anywhere else. And it would be really helpful to hit a button, and all of your metrics and stats drop into a pre built AOL PowerPoint, we ended up building it, it ended up being really popular. But we build it obviously, for every client to be able to do that. And so that would be an example where we hadn't envisioned doing that. Initially, they gave us the idea. But then we customized our software that we rolled out across the board. Have you had situations where you were in negotiations with a larger client, and they were asking a bit too much for customization, and you were on the edge of saying, Okay, we just can't take the client because that's not what we actually want to do. Um, I don't know where I've had it. If we say we can't take the client, I think there's a question of what is the product that you're selling early on. And some of that is a collaboration or an iteration. And so, you know, I think you want to, you want to think about, is this going to be repeatable? I think that's the question that I would ask is, are other clients going to want something similar? And am I building something that's repeatable? Or am I literally building something that is just for this company? And I think if you're literally building something that's just for this company, it's not ideal, that's more sort of a consulting kind of relationship. And so I think, you know, in terms of turning away customers, I guess the way I would think about it is, if it's a large company, and you're in enterprise software, it's pretty hard to, for most of us to turn away customers. But I think I would, I would try to think about, all right, what can I build? How can I solve the problem they're trying to solve? In a way that's repeatable, and I might decide, you know, that's this part of it is not a space I'm going to play in. And so I'm not going to solve this part of the problem, but I'll work on this other part of the problem. And that's okay. So you can, you know, have a conversation with them that we're not going to go down this path, we're going to go down this other path. But I don't know that you if you have a big company, who, you know, says, well, we'll spend money with you to solve this problem. Most entrepreneurs I know, would get excited about that and probably wouldn't walk away. Just asking because a lot of VCs and investors early on want to see a super, super, super scalable version when you have like two, three, four clients, and you're just getting started. And it's just super important for entrepreneurs to hear about, okay, entrepreneurs decide rather than what VCs want at that moment. Well, one thing I would add on that on the VC comment is that you want to choose your VCs wisely, you want to choose your venture capital partners wisely. This is an area where it's not just about the money. And it's, it's not necessarily about the strategy and advice, although certain venture capitalists can be, can be really great at both of those things. We got lucky, we had a fund called Mayfield in Silicon Valley, and a fund called Insight out of New York, that were our main institutional investors. We also had SoftBank as an investor, it was great. But, you know, you want to, you want to ideally choose your investors, and not sort of optimized to just whoever gives you the highest valuation or the most amount of money. And the reason is, on your point about the questions that they asked you and the expectations that they have, is you want to know, have they been in the space before? What are the things that they've seen? What are their expectations going to be? And if, you know, Mayfield as an example is someone who is a software investor through and through, same thing with Insight. It's like the main, the main thing that, that both of them do, they do some other stuff too, but they're both predominantly software investors. And so B2B software investors also. And if you go to them and you talk about product market fit and new logo machines, and all of these types of things, they're very comfortable in those worlds. They've seen hundreds, if not thousands of companies. And they have a lot of insights and data about what has, what has worked and what hasn't. And that ends up being extraordinarily helpful. And so I think if you hit it, if you are talking to a venture capitalist, and you feel like the expectations are not realistic, because wait, we only have four customers. Why are you asking us about, you know, this, this question? It might just be, you know, a VC that's, that's not had experience in this world. And that's okay. But it's just a question, if that's, you know, it's a question that you want to think about hopefully before you, you take money from them is, you know, what is their insight going to be? It's why oftentimes people don't want to take money from, let's say, hedge funds, and folks who are in a totally, you know, we would call it Wall Street people, because it's a totally different mentality. And they often don't understand the ins and outs of building a B2B software company. And so if you can get someone who's an expert in building B2B software companies, that's really critical. One of the things that Naveen at Mayfield said to me, when we first started talking is he said, building a SaaS company is a 10 year journey. Are you ready for it for 10 years? And I thought, wow, one, I hadn't thought of it that way. And two, it was refreshing to have someone, you know, essentially say, we're in this for the long run with you. And this is going to take a long time, it's going to, it's going to cost a lot of money, you're going to need to raise a lot of money. And it's a long process. And that only comes from people who have done it before and who've had experience and sort of see how these things tend to evolve. And so I think choose your investors wisely is the advice I would give. Absolutely. Helpful for a lot of people. I think question that I would love to add, it's more but on the general story, but what would you say were the biggest breaking points or most crucial breaking points of mode where it was like, okay, this could go wrong, or this could can go right, we just have to solve this right now. Yeah, we had a couple. You know, we had a couple major challenges throughout our journey. We had a lawsuit that got filed against us for alleged patent infringement. They were wrong, and we won. But that took a lot of time and effort and money and lawyers and stress and distraction. And so that was an example of adversity or a breaking point that we had to deal with. On a more positive note, we had a client sign up, who is one of the largest marketers in the world. And once they signed up, they said, we love this, we'd like to roll this out to 8080 international markets in the next couple weeks. And now some would say, well, that's, you know, that's a good problem to have. But I would say anyone who says, that's a good problem to have hasn't managed through these so called good problems. Because yes, it's good when someone asks you to do more at scale. But there's real risk involved. And if you're not up for the task, you could not only lose the client, but it could massively impact your overall business, what resources you're allocating for that execution, what your priorities are, what you deprioritize, etc. In that case, we had to reimagine customer support to be able to handle 24 hour customers, you know, that needed support all around the world. We had to think about languages and all sorts of things. I would say it ended up being one of our proudest moments as a company. But it definitely wasn't clear when we were in the middle of it that it was going to work. And, you know, I think you hit these breaking points, or you hit adversity in a company. And even if it's a quote, unquote, good problem to have, it doesn't always feel that way when you're in it. And you want to be really thoughtful about how you navigate through. And I think part of it is just having a positive attitude and having a team around you that has a positive attitude. And that says, you know, all right, let's figure this out. We'll get through it. We'll find a way, there's got to be a way to do this. And, and you push through. And was the first moment when you thought, okay, it feels like we as a company are now quite stable, of course, that can go things go wrong, but it feels like we're somehow we have built a fundamental safety net. I'm not sure I ever feel like a company is, is totally stable. I think that can lead to complacency. I, I'm always thinking about what can go wrong. I'm always thinking about, you know, what are we missing? What are our competitors doing? You know, I guess, after we sold the company, we had 250 or 300 employees, and, you know, it was $100 million. And, you know, it was $100 million recurring revenue business. So it was it was substantial. And I was working for the acquirer for a number of years, and eventually left. And I guess, now, 10 plus years later, the company's still around, and doing well, I, I can feel proud that that we created a lot of value for customers and, and, and that the company continues to do so. And so I guess, maybe at this point, we could say that there's some level of stability. But I think if I was working there, still, I'd probably not feel like everything is stable. So I don't know, maybe when you're on the inside of it, you, you never feel like it's stable. What's your personal tactics and strategies to keep up with the roller coaster on a personal and, and mental side? Yeah, I do a couple of things. But But first of all, I think every startup is a roller coaster. I think that it's every, you know, there's good and bad days, there's good and bad moments. I used to say when when something good happens, don't get too excited, because something bad might happen soon. And if something bad happens, don't worry too much about it, because something good is probably around the corner. And, and those things tend to kind of pair themselves for some reason in in startups. And so I think having the, the mentality that that's okay, it's supposed to happen this way, there's going to be good and bad stuff, and there's going to be moments. And nothing's going to stay forever, it's not going to be good forever, it's not going to be bad forever, you're going to have a mix of things. I think trying to take a pause, trying to literally turn off your your email, your devices, your slack, your whatever. And, and sort of have moments where you can think I used to love to travel, not because I love being on the road, I didn't love that aspect of it. I certainly didn't love being away from my family. But it gave me these forced moments of being able to pause where I couldn't be on a phone call because I was on a an overnight, you know, flight. And so I couldn't be, you know, online the whole time. And, and so those moments are when I got sort of the most creative or when I had a new idea, or when I was able to just relax a bit from whatever was was happening with the company. So I, for me, personally, it's about pausing. Stopping whatever you're doing is sort of my my solution. I also am a big believer in building micro habits. So, you know, deciding that you're going to do some level of exercise every day or deciding that you're going to read a little bit of a book every day, or learn something new. I think that expands your, your mind and it gives you an opportunity to step away from the roller coaster of the of the company, at least for for a little while, recognizing that we're always somewhat always on. But even if it's five minutes a day, or 10 minutes a day, taking a pause, taking a break, I think can be really helpful. And, and I guess the last thing I would say is talking to other people. You know, when you talk to other entrepreneurs, they will all tell you, it's stressful being in a startup. And if you talk to other founders or CEOs, they will all tell you it's super stressful being the, the CEO. And, and the reason is, in that case, the buck stops with you, right? You run out of money, it's the CEO's fault. You didn't hire the right folks, it's the CEO's fault. You didn't deliver for a customer, it's the CEO's fault. And so I think there's a level of stress that that you get, which is just sort of par for the course. And I think that's, that's understanding that and understanding that that's okay. And that's, that's the job that you signed up for, in that case, is, is part of the battle and recognizing that this is Yeah, this is what I, I'm in for, I get that this is part of it. And the flip side of it is that you can have a level of, I think, sort of proudness when, as a company, you don't run out of money, and you do attract the right team, and you do help customers succeed. And at that, you know, at that point, it's the, it's the team that did it, not the individual, not the CEO. It's the group that did that. But as the CEO, you get to feel proud of what your your company created and what you did. And so there's, you know, it ebbs and flows. That's the that's the story with with startups. I would love to ask 1000 more questions. But I think this is a perfect note to end the conversation and let a few all the listeners think about that. And maybe even relisten to think about it one more time and more often. Because I really, really loved it. I really enjoyed it. And there's so much more we could talk about. But I think this this end note was just was just perfect. If you don't have anything more that you would love to say, I just can can say thank you. Thank you so much for having me, Fabian. Pleasure.