Episode 168: Cutting the Fat after a Crisis with Alex Wattrelos, Previous CPO of Sunday
In this episode of the Product Thinking podcast, host Melissa Perri is joined by Alex Wettrelos Chief Product Officer at Sunday. Join them as they explore the challenges of rapid scaling and then descaling during the 2022 tech-crisis. They discuss how Sunday, a fintech company innovating payment methods across the hospitality industry, went from an idea on a slide deck to 450 employees with $124 million of seed funding. They also touch on the differences between product management in Europe & the US.
You’ll hear them talk about:
07:19 - Alex shares the key challenges he faced as the Chief Product Officer in the early stages of Sunday. It is important to have a clear product vision from the beginning, but this can be a struggle amongst all the other variables, such as partners, customers and employees, who are all competing for your time and attention. The key is to focus on the value proposition we want to bring, how can we then test that and how fast can we get it to market. Deciding what you want to bring makes all the millions of decisions easier, as you have something to base them on.
16:59 - Central to Sunday’s early success was their minimum viable product (MVP). In Europe, paying the bill is often a terrible experience. When you’ve decided to pay after a lovely meal in a busy restaurant, you could spend the next 15 minutes not talking to your friend but trying to gain the attention of the waiter to then pay your bill. It can be a real mood killer. After identifying this pain point, it was clear what Sunday wanted to achieve: speeding up this process. Prioritizing user feedback over the vision was key to getting this to work and focusing on improving the MVP, bit by bit.
38:21 - Alex discusses the importance of focusing on market fit and profitability, especially in the post-tech crisis era. After a period of rapid growth, Sunday needed to descale the entire operation, reduce the number of potential product features and the number of countries to focus on. It was a major challenge, but it also made working for Sunday all the more interesting. In times like this, the company couldn’t afford not to refocus on where the product would have readily available users that could see the value and how it was going to make money and become profitable.
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Intro - 00:00:01: Creating great products isn't just about product managers and their day-to-day interactions with developers. It's about how an organization supports products as a whole. The systems, the processes, and cultures in place that help companies deliver value to their customers. With the help of some boundary-pushing guests and inspiration from your most pressing product questions, we'll dive into this system from every angle and help you think like a great product leader. This is the Product Thinking podcast. Here's your host, Melissa Perri.
Melissa - 00:00:37: Picture this, you've just raised a $24 million seed round from investors, and it's time to start growing your team that you started at zero. Fast forward a year, and you're doing well. You're almost 450 people now. Now you're getting $100 million Series A in 2021 with a goal to spend it in two years. But wait, the tech crisis hits in 2022. What do you do as a chief product officer? If this sounds like an interesting story of growth to you, you're going to love today's episode with Alex Wattrelos, who's the former chief product officer of Sunday, a restaurant payment solution. Melissa and I dive into his lessons learned going through intense growth and downsizing, which he now brings to his new job as chief product officer at Furious, the online system that integrates businesses, CRM, quotes, billing, and project management. But before we bring Melissa on, it's time for today's Dear Melissa. In this segment, you can ask me all of your burning product management questions, and I answer them every single week. If you want to submit your questions, go to dearmelissa.com and let me know what's on your mind. Also, if you leave me a voicemail, I do prioritize those. So let's go to today's caller.
Caller - 00:01:45: Hi, Melissa. I'm a big fan of yours. I'm a product manager for a government contracting company. I've been in the product space for 15 years, so I certainly have a plethora of experience in new startups, growth stage startups, as well as Fortune 200 enterprise product companies. I'm a product manager on the contract that I am assigned, however, not for the greater company, which does not have a product function. It came to my attention that we do have technologists who are creating products for our greater company. We don't have product management function or even an infrastructure to support these products. I know the value of them is also nontraditional. For example, it just might bolster a bid for a new contract or lower an implementation cost, but it might not be the only reason that a contract is won or lost. We will never be a product-led company, however, we are a services company that is supported by products. And I'm curious if you have any advice for this setup. I pitched with success for our organization to think about hiring a director or a VP of product to lead these product efforts. But when I think about measuring the success of these products or trying to understand ROI, I'm falling a bit flat. Any thoughts?
Melissa - 00:02:51: So the situation that you're in is very much like a couple of different types of companies. It sounds like you're doing a little bit of consulting and you're using technology on the back end to help create more leverage and bolster up your company. A lot of businesses are in a similar situation. You can think of them as software-enabled companies. You don't necessarily just sell the software, which is SaaS. What you're doing here is you're streamlining the way that you deliver your product, or you're trying to put more value around the services that you actually deliver. So if you think of things like banks or pharmaceutical companies, they don't necessarily just sell software. They sell other things like financial instruments. You sell services. What you're doing with your technology there is very similar to that, right? It's using it to streamline the way that you work. It could be to reduce costs. It could be to create more valuable things that you can do through services for your team. So there's actually a lot of consulting companies out there that are starting to build technology that helps their consultants function better. I know McKinsey is doing this for a fact. They have a whole platform that their consultants can use. I think they're actually selling that platform now to clients as well. But in that case, it got started first for streamlining internal operations, making their consultants a little bit more powerful, and now it's something that they can actually sell to their clients. You might want to think about your products the same way. So if you're thinking about it as, hey, what do we do to add a little bit more value here? You can also start to think about how your business creates value. So you create value by delivering services.
How can the software that you build deliver better services, differentiated services, services in a faster time? All those types of things could provide value for the customer. And even though they are not necessarily just paying for the software, they pay for that package. It's a value add, right? Software allows you to do things that you weren't able to do before. So there's still ROI invested in that, right? There's still value that's going to come from that. It might not just be one-to-one, but you can start to compare it to what would we do if we didn't have this, right? What would we be able to sell it for? How much would it cost to deliver these services? What can we do now with our product? And that's how I would back that out into financials. So in this situation, it doesn't matter if you're just selling software. You can still add a lot of value to your services and to your industry and your business if you build software that produces more value for both you internally and for your customers. So think about it that way. You might want to start by looking at it from a cost reduction perspective. That's totally fine. Or you might look at it and say, hey, this is something that we can put onto a bid that really provides value to our customers as well. Doesn't really matter. But think of it as a whole package there and what you want to build to get that done and how it affects the value that you deliver, how it affects the revenue for your business and the cost for your business. And just because software is a piece of the package doesn't mean it's less valuable. If you think about a credit card at a bank, you would never get a credit card that you cannot manage through an app or an online system. But I don't necessarily buy that online system from the credit card company, right? From the bank.
So think about it that way. It's a package.
And because all of these things are packaged together, it's a more valuable package than if we just did one alone. That's how I would back it out and start to think about it. In this case, product management is still important. You do need somebody to look at the holistic piece of all the products that you're looking at, somebody like a VP of product, and say, what value do we want to provide with our software? Is it a cost play? Is it a revenue play? Is it a value add play? How do we package it? How do we think through these things? That's where product management becomes really important. So I hope that helps answer your question. And again, for those of you, if you have a question for me, go to dearmelissa.com and let me know what it is. I will answer it on an upcoming episode. Now it's time to welcome Alex to the show.
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Melissa - 00:07:13: Welcome, Alex. It's great to have you on the show.
Alex - 00:07:16: Thank you so much and I'm super happy to be here.
Melissa - 00:07:19: So I'm really excited to talk about your story as the chief product officer of Sunday. And it's a great growth story. I'm wondering, can you orient our listeners towards Sunday and tell us about what it looked like when you joined and where it got to?
Alex - 00:07:32: Just for the context, Sunday is a fintech company. And what we built was essentially the initial product was a QR code you would put on a table that people could scan so they could pay the bill without having to wait for the waiter. And that was supposed to, or is supposed to, because the company is still there, right? Of course, move into the broader field of B2C to B2B payments. So when I joined, I joined at the very, very, very beginning of Sunday when Sunday was just an idea. And, you know, worked with Victor Lugger and Christine de Wendel, so the two co-founders of Sunday, on the slide deck, essentially on the pitch deck. Raised 24 million seed round to launch a product and build a team. And we scaled very, very fast, raised another 100 million in Series A roughly six months later. And we scaled within two years to 450 people, including 25 PMs and 130 engineers. So very, very hardcore and fast growth during that time. By then, we're in 2022. Of course, tech crisis happened. We had, unfortunately, massively downscale, but the vision and the idea hasn't changed. And so, you know, Sunday is still alive and kicking, doing its best to change payments in the hospitality world.
Melissa - 00:08:33: That is so much growth over such a short period of time, going from zero to 450. When I was at a company, we went from zero to 150 in 18 months. And I thought that was a lot. I can't even imagine 450 people. Tell us about the challenges being a chief product officer growing like that. What were some of the things that you had to deal with and consider in that time?
Alex - 00:08:52: You know, the biggest challenge you have when you grow is noise. There's just so much noise happening from everywhere, from within your teams, because they are constantly disrupted. They need to constantly change their scope and split the scope again. And, you know, bringing new people, onboard new people to the teams you have on the side, right? So, you know, the ops or the sales and whatnot, because they have the same problems as you. Plus, you need to interact with them. And, you know, before you had 1 p.m. talking to one sales guy. And the next day you have 1 p.m. team talking to one sales team, right? And that's very different and you have very different dynamics. So, and obviously the noise from the investors, the noise from, you know, everyone expecting so much. And also, you know, during that time, we also launched in 10 countries. So within two years. So that's also, you know, a ton of noise because you have a ton of partners. You have a ton of different customers. And, you know, you need to make sense and understand what are the undercurrents behind that noise and what are the opportunities you can leverage and which one should you just let go for the moment because you don't have time. So I'd say that's the number one problem.
The number two problem or challenge actually is hiring people. When you need to hire that fast, you essentially double your size every three months. And it's quite painful. And so essentially my calendar would be at the very minimum 15 to 20 hours of hiring per week. Just hiring people. Because not only do you need to hire, but you need to hire very, very good people. If you want them to have any level of autonomy and productivity in such a level of growth, because you cannot handhold people's hands when you're going through such a growth phase. So essentially I would say these are the two biggest challenges. It's the amount of noise and making sense of, you know, what are the true insights that are hidden behind that noise. And the second one is, you know, hiring the right team for the job because it's a big job to be done.
Melissa - 00:10:37: Two very challenging things right there. Let's dive into the first one a little bit with the noise. That's something really common that I hear and I've seen working with growth stage companies, right? There's a million decisions you have to make. There's so many new people coming in. How did you concentrate? What did you choose to focus on? And then reflecting back on this period of time, is there anything that you would have done differently?
Alex - 00:10:59: I would do everything differently. But, you know, what did we do right? And then, you know, let's see what we could have improved. But I think the first thing we did right was to really have an MVP kind of mindset and not trying to understand what is going to be our product exactly in what kind of features in the next five years, but really what is the value prop we want to bring and how can we test that and validate that as fast as we can on the market. And once you really understand what you want to bring, well, it's much easier to make choices because bottom line is with 450 people and 130 engineers, you can build a lot of things that are interesting to a lot of people. And so for that, and maybe that brings me to the first thing I should have done better. The best thing is to have a strong vision. If you have a strong, clear vision, product vision and product strategy, then it's very easy to figure out what is it you're building next. And that's something I'm not totally sure why I felt that it, but we had a vision, we had a clear vision in terms of company vision.
But then when it came to, to the product vision and especially strategy, I really struggled to come up with, you know, the simple thing of where we are today, where we're going, what is the path to get there and you know, in what sequence, in what order. And somehow I never could wrap my head around it. And I think one of the mistakes I've done is linked to that noise and speed and the reason that is required of you in that time, which is, I think, I guess whenever I tried to do something around strategy, I would just block an afternoon and I would try to come up with strategy, which obviously doesn't work. You need a lot more time to do a strategy. So I built a lot of strategies, but none of them were complete enough or good enough to actually really help us. So I think that's something really, I wish I could go back in time and actually like change it and make it a, make it a lot more powerful and a lot more useful. So I'd say that's one strong thing I would change if I were to go back in time.
Melissa - 00:12:47: You bring up a good point here too, that I see a lot of companies create this company vision, but when it comes to a product vision, sometimes they lack it. And then there's this whole conversation about what is the right level of product vision, right? Some of them, I see them be like extremely wishy-washy. We want to help solve this problem, but we don't say how, right? Or we want to be the best bank, right? Or we want to have the best mobile app. That's not refined well. When you go back and reflect and look at this product vision, what do you think is the right level of product vision? How would you describe a good product vision here? And maybe even how you thought through it and came up with it. And how does that compare back to the company vision? How did you make sure that it was not so high level, but it was enough to get your teams going and provide direction?
Alex - 00:13:36: So the main thing is, because I was lucky enough after Sunday to do a couple of mentoring of different C-level and, you know, help them on that topic. And what really worked, somehow I managed to do strategies for many companies, just not mine. That's a shame. But, you know, it's never too late to learn. And so what really worked well is, again, you know, like, so what is our company vision? And then what I would define as a vision is, what is the company vision? How do you change the world? How is the world different because of, you know, your mission and what you're doing in there? And then your product vision is, what is the product that enables that world to be different? What is it essentially you're bringing? And here you want something that is precise enough so that you're sure that if you have that product, the world is indeed different. The world is indeed, you know, the world you've described in your vision. So you need some precise statements that can somehow easily be verified. If you have a product and you have your product vision, and you can easily say, we're there or we're not there yet. And these are the reasons. So that's fine enough. But what you definitely don't want is you definitely don't want to start to say it's a web app or it's a mobile app. These are things you don't want. You want to say what the product does, what are its users, how they interact with it, and then what do they get out of it? That's what you want to describe. But you don't want to say the what, because the what, you have no clue. And that's the, you know, you need to acknowledge the fact that you don't know what the what will be.
Melissa - 00:14:57: So how do we balance this? Because I feel like this is a big topic for a lot of people, right? Like, how do we balance this? And I agree with like, don't say it's a web app or a mobile app. But what I found is saying things like we're a platform, right? Or we're an open platform might be helpful. I'm trying to figure out where would you draw the line there between being too prescriptive about the solution versus giving enough direction so that people can tangibly understand what you're building towards. It's tricky for me even. And like, I go back and forth on this. So I'd love to hear your perspective. Because what I've seen is that if you're not calling out how you think about the product manifesting, it becomes the company vision almost, right? Like if you only talk about value, if you only talk about like customer segments and problems we solve, it's almost too similar. So like, where would you refine that company vision into something more tangible?
Alex - 00:15:45: The tricky part is it depends on the size of the company. When you're Uber or when you're Apple, you can go a lot wider and broader and fluffier because your means are so much more than if you're a startup or a scale-up. In the end, what I believe is the product vision needs to describe the service you're offering. It's really about that. What is the service you're offering? Whether you're offering it as a platform or as another way, in the end, it's not really that relevant. But what are people able to do or able to get? And who are these people? But who are these people and what are they able to get through you, I think, is the right level of product vision, you need to describe what is the benefit of your product, but not really what that product is. This is up for discovery.
Melissa - 00:16:31: And when you're putting together, because Sunday was early stages, you're obviously out there testing. How are you balancing crafting that product vision versus getting feedback from customers in real time? Because like, as you said at the beginning, you're going zero to 25. So we're starting with not a lot of stuff. We're building it now with the seed round of money. What was your way of kind of going out, learning from your customers, figuring out how that vision manifests? And what'd you do to keep it updated and keep the teams in the loop?
Alex - 00:16:59: So at Sunday, what we know we want to do and, you know, what we knew already at the time is we wanted to make payments as seamless as online, like physical payments, retail payments as seamless as online. And we knew we would start in the restaurant industry because we knew there was a big pay point, especially in Europe. In the US, it's a bit better. Payment experience is a bit better. But what you have to understand is in Europe, the payment experience is often terrible in a restaurant. Like you, you're waiting at a table. You have a wonderful dinner. And then at some point, you decide to pay. And then you spend the next 15 minutes not talking to the person in front of you, but trying to grab the waiter's attention, get the bill and then somehow pay. And that takes so long. And that really kills the mood of the evening. And so, like, this is a great way of getting into fintech, getting in this interface between B2C and B2B payment, physical ones, and getting people to pay with us. So we knew where we wanted to start and we knew where we wanted to end. And we didn't really have the path towards it. Like we knew, like after restaurants, it could be hotels or they could be. You know, cabs or whatever, you know, there's many ways we didn't know really the path. But we knew we had a great starting point because we identified the pain point. And, you know, during the MVP, what we saw is we had 60% of the users paying with our app rather than paying, you know, through the standard payment terminal. So we actually validated that this is something that can work. This is something that is actually appealing to people. So to go back to your question is how do we balance vision and trying getting feedback from users? I would not say I did a fantastic job.
But it again, you know, to go back to what we said, but I think bottom line, what worked well is we really, really, really focused on where we were today. We knew we could start there. We had validated through the MVP that it was a good starting point. And then we just focused on making that thing better because bottom line is we knew if you want to enter the fintech world, you can't enter it doing everything at once. Some companies have done it, but in very different contexts. If you take Alipay or WeChat Pay, so, you know, the Chinese QR code payments companies or even Venmo or everything. What these companies have done to spread is mostly targeting the unbanked. So, you know, they target people who don't have access to the financial system in the same way that European people do. European payment system is fairly democratic in a way as in it's accessible to almost everyone. Almost everyone can have a bank account and a credit card except for very, very few people. And so you can't have that one size fits all play, right? You need to start somewhere. And we found a great place to start where we could actually and, you know, getting back to your question, get a lot of feedback for users. Reason for that is Victor Lugger, who is the CEO of our company, is also the CEO of and founder of the Big Mama Group, which is essentially a restaurant group, one of the big restaurant groups in Europe. And so from the start, we had this fantastic chance of actually being able to every single time we would have something, develop something, have an idea of being able to test there. And we still have that chance, actually. So bottom line is we knew of the place where we wanted to start. The MVP confirmed it was good enough. We knew of our vision and then we didn't focus so much on the vision. We focused really much on just making that thing work that we knew could work, making it work in as many restaurants in as many countries as fast as possible. And so, you know, user feedback was more important than vision, I would say, at the beginning of the startup.
Melissa - 00:20:09: Two things I really wanted to dive in there because I thought they were interesting about. Like one, that idea of the partnership that you were just mentioning. Like we have a place that we can go test and we could still go test there whenever. How critical was that? And how should companies that are starting out think about building, especially B2B companies, think about building those relationships? And how did you build that relationship before you had a product even to like be able to go in and start testing it?
Alex - 00:20:31: Again, we were super lucky just because our CEO was also the founder of that other company. So bottom line, we didn't have to build many relationships. Of course, we had to build a good human relationship to the people there. And, you know, like not all the time rely on the CEO. But bottom line is it was pretty easy to get there and test. So we were very lucky in a way. But indeed, it was so incredibly valuable. As soon as we started, you know, having a product worked on the pay at table thing, we started wanting to expand. So, you know, the question is, do you want to expand in adding ordering to your app? Or do you want to expand in adding loyalty or review or whatever else, right? And all these things, instead of building, you know, something that would work for everyone, we could always build something that just worked just for them with their branding, with their colors, with their everything. You know, nothing that is customizable because, you know, we just had to essentially add an HTML page, right, to our web app. And that was it. And we could test and we could see if people would actually use the review module or if people would use the loyalty program or if people would use or not use the ordering or even build a fake door test. Right. So, you know, and that was also very easy to manage because, you know, we were in direct contact with these people. So I'd say that should be focus number one.
And the reason for that is I think when you think 30 years back, companies were not good at testing things. They would never test things. Today, everyone's super aware of the need for good discovery. And now we all see the opposite as in startups being super young, pre-product market fit. And wireframing everything, prototyping everything and giving it to people in the streets trying to see what's their reaction. But then it doesn't always work. Sometimes the best test is just on your live product. For example, especially if you're doing a payment product, someone interacting on the wireframe where it's not their money is not a proper user test. Like a proper user test is someone paying, giving a tip on your app, you know, and whether they give 22% or 25% matters. Matters a lot. And it will be a different reaction. Whether it's their money or some wireframe, Figma wireframe that you're sending them. So I think bottom line is that is why it's so important to have customers you can test with and have good relationship is when you're, when you start up, when you scale up and your pre-product market fit are young enough. You cannot wireframe everything. You cannot prototype everything. You need someone where you can test live and test on your product directly.
Melissa - 00:22:48: I think that's a really nice point. People get very confused about MVPs. And I've been talking about MVPs for 10 years, and I've heard every definition about it. And I've always encouraged people to try to do something in a low-code or no-code way. But to me, people are misunderstanding the purpose of an MVP if they're not starting from where you're talking about. Like, where does the value actually happen? What's the thing the user needs to do to prove this is actually valuable? And in the case for you, it's like actually paying. And when your money's not on the line, you can't get the right feedback. So how do you think about mitigating risk so that you're not going out there building this entire crazy payment app? Or how did you mitigate risk? And not knowing if people would pay on it. What steps do you take to de-risk that situation and make sure that you don't go blow a bunch of money?
Alex - 00:23:36: The very first MVP of Sunday was built with two developers in three weeks. That's a very low risk. And that is where we confirmed it was absolutely terrible and full of bugs and missing a ton of things. But that's where we confirmed that in a restaurant where we control, you know, we control the speech of the waiters and we control everything. But yet in a restaurant, we could reach day one, 60% of the payouts in that restaurant with the most terrible product you could think of. And so once we had that, we're like, these numbers are that good. 60% like Apple Pay is not even there in Europe. Like Apple Pay is maybe at 30% out of the iPhone users, right? Not out of the whole market. So getting to these numbers on the most terrible product ever told us there's something and there's something we can do. And so I would say from there on, risk was not so much more a big topic. It was more, we don't have time. We don't have enough time. And so we need to speed up. We need to speed up. We need to speed up. Obviously. This was also emphasized by the fact that, you know, we had very strong VC backing with a lot of money behind. And the relationship to risk was very different in 2020, 2021 than it is today, right? Like today, when you think about risk, you think about, hey, like, just don't crash the company. Don't lose the money. At the time, people were much more willing to see 10x, 100x, 1000x multiples. I mean, not multiples, but actually like, you know, how your valuation should evolve. And then it's okay if 10, 9 out of 10 that actually crash. So I'd say that's that. It's like the very first MVP cost almost nothing and confirmed that both B2C and B2B players were able to use it in a very strong, purposeful fashion. The other things we saw as well is like, not only the usage, but also the value behind it.
What we saw is we saw that we would rotate the tables, you know, essentially a quarter an hour faster. For a restaurant, that means everything because a restaurant has around 10% margin, 10% EBITDA on their tables. But every additional table you sell is 80% margin. The reason for that is you've already paid your rent. You've already paid your waiters. You've already paid almost everything. And so every single additional dish, every single additional table that you can serve is a ton of margin that you're bringing into your restaurant. And so when you speed up table rotation, for example, by a quarter an hour is quite a lot. Then you actually make a lot, a lot more profit than you would without the product. So that these are, you know, we saw a ton of numbers. We also saw that we were doubling tips. We've the most terrible kind of product, not doubling tips in the US, right? Obviously, like we didn't go to 3% tips, but in Europe, you know, in Europe, it's like 2% to 3% tips. And we would say that we would do a double as that with the product. And so, you know, all these things told us there's a ton of value here and we can really move forward aggressively. And the only thing we don't have is time. So that is then, you know, every time we would try something like this review loyalty program and everything, time was the key factor in our mind. It's like, how can we try the fastest something so that we know whether we dropped it or we don't drop it.
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Melissa - 00:27:05: One of the things that I like about these stories too, and I feel like there's a lot of corporations out there, let's say, that really want to work like a startup. And what I tell them is that time factor, right? And the fact that you will run out of money one day is the thing that makes startups scrappier. But the one key thing I think that's really hard sometimes for product managers starting out in that organization or in a larger organization is THINKING about what I call like thin slicing. I know like Alistair Cockburn calls it like carpaccio when it comes to development stuff. But it's like, how do we think about what's the minimum that we can get out there and have test and get the right experience without going away for like six months and building this huge fully fledged feature and get it out? And that comes from like a technical perspective, but also a product perspective, right? Like starting from the product experience and figuring out what's the minimum and then going back and figuring out what you can do on the technical side to actually make it happen. And your story, I think, is a great story that demonstrates that like MVP thin slicing scenario here where it's not just we were taxing that people will pay, right? It didn't matter that I had every feature in the world here. We're just testing that people would pay. As you went on from that MVP and started to think about how do things get out there faster, how did you like encourage yourself and the team to start thinking about what you could de-scope, right? Like what didn't have to go into that version, what you could actually get out to customers faster?
Alex - 00:28:23: The thing is, every time you want to think of an MVP thing, you know, you first do your documents and you write down whatever you want. And then you say, okay, the MVP is that. And then you can literally go back there 24 hours later and say, what can I remove? And you can already remove like three quarter of the work. And if you do that again, again, we're going to remove 75% of the work. And I think bottom line is what I told my PMs is don't come up with an MVP plan without having spent three days removing stuff from it. Like really three days, you take an hour and you remove everything you're going to remove. And you don't do that alone. You do that with your engineering manager or, you know, a dev you know is interested in the topic or the, you know, a sales guy that actually knows quite a bit about that market, that product or anything. Like don't do it on your own. Do it with other people. But I think the most crucial thing is just come back to it enough times so that your mind is able to reset and you're able to again re-challenge do I really need to do that? And in the end, you end up with extremely minimal MVP where you realize, I'll give an example of my current company. My current company has this problem. We have somewhere where we can edit some PDF documents and most companies want to edit the template of it, the PDF template, so that it looks like their brand.
And this is extremely time-consuming for support because we need to help them a ton. And so what we did, what I told them is now we're just going to put it costs 200 euros if you want to hear the support to help you on that topic. But no, we need to build a payment engine and everything like that, no, we don't build a payment engine. We just say we're going to take them 200 euros. We're never going to take them 200 euros. But people that don't believe it's worth 200 euros for them will never click on that button or never ask us to help with the template because they don't want to pay. And the people for whom it is worth 200 euros or more, guess what? We're happy to help them. And that's an MVP. And bottom line is, you know, in the future, if I still have too much demand, then maybe I'm going to bill for it. Or maybe I'm going to, you know, set up some organization, someone in my organization that just does that. Or whatever, we'll see. But right now, I don't bill the people. I just tell them it's cost that much money. And for the people whose, you know, value is less than that, well, they don't ask me anymore. And I have less work and I've solved my problem.
Melissa - 00:30:33: I like that story a lot. I think that's a really good mentality for thinking about it. The other thing I was thinking about earlier that you said is that you guys chose as one of your strategies to expand geographically as fast as possible, which is a hard strategy. What made you decide to like off the bat do that first? Like it was like, we're going to expand geographically. Like this is the motion we want to choose.
Alex - 00:30:51: So initially what we did is we raised the seed round. We went US, France, Spain, and the UK. France, Spain, and UK because we had physical presence there with the restaurants company that I've mentioned and the US because, well, the US is just such a fantastically attractive market. And I, you know, if you take an example, big restaurants in France has around $1 million to $2 million turnover. A big one in the US has 10 to $15 million turnover. So then it's easier to compensate your CAC when closing a US restaurant than when closing a French one. So we went US, Spain, France, and UK. And so the reason was we were strong in three countries. And the last one is the US, which is, and absolutely dominating countries in terms of market and market size, and also, you know, a very, you know, tech-savvy market, which is important when you go to the restaurant industry, because the restaurant industry is ages behind in terms of digitalizations. And then, you know, we had fantastic growth numbers, like really, really, really strong numbers. And that led US to raise $100 million Series A. And when we did that, then the deal at the time when you would raise money was you need to spend that in, you know, two years or whatever year and half. It was just like peace, burn it, make more growth and then, we are going to raise more money and you know we're just going to keep going like this until you know, we rule the world and once we rule the world yield back money, don't worry. And so you know, then we're like, okay what do we do with that money? Do we do more products? Or do we do more countries? And countries we need more products. But more countries felt easier because still payments habits are fairly similar.
They are quite a bit different between the US and Europe. But within Europe, there are still a fairly standard. And we have a product that it actually easily scale. And opening country was actually not that hard and we managed it fairly well. I'd say the thing we underestimated there was, although the habits of payments are similar, the market are different. Exactly what I mentioned about the difference between a big restaurant in France and a big restaurant in the US, a restaurant in Portugal is extremely small. So in Portugal, we could, for example, very easily sell to tons of restaurants, but every single restaurant is very small. So just the cost of acquiring that restaurant and setting it up and connecting to the POS and whatnot was very, very hard to offset. And we need to do fantastic penetration adoption numbers within this restaurant to actually offset the cost of acquisition. So the reason was it was easier than you felt the right move, especially in a move where we are going after that simplifying payments for everyone in the Western world. And so the more markets you have, the less space you let to your competition, of course, right? And the more you can start building a global corporation, which is very important payments. Because payments is mostly all about volume. The more volume, the less you pay. And so the more profit you can make or the lower the pricing you can offer, which helps you to have more growth, which was more to play at the time.
Melissa - 00:33:41: Let's talk a little bit about that growth play. You mentioned that you raised $100 million and the VCs were like, go spend it, do it in two years. Then we have the tech crisis. We've got all these things going on. How did that affect the way that you thought about strategy as a CPO and what you did prior to the tech crisis and what happened afterwards?
Alex - 00:33:59: Before, I had essentially two jobs. One job is the organizational part of the CPO, which is just make a scale. Give us a product that we can onboard as fast as possible in as many countries as possible, that is easy to understand by any new salesperson we've hired and easy to install by any new ops person and everything. And build enough, you know, a team that is big enough and autonomous enough so that they can, you know, like you can have 25 PMs working at the same time and we are, you know, stepping on each other's toes. So, you know, that was one big part of the job as well. And the other part was, okay, what next? What next? What next? What next? So, unfortunately, you lose a bit of focus because, you know, you're trying so many things because the only thing in the end you're lacking is time. You're not lacking in money and you're not lacking in resources. You're lacking time. Like that's the number one thing you're lacking. So, you know, that's my job is coordinating, like what are the topics we're trying? What are new topics we're trying? How do we get good enough on the topics we've already validated? And then how do we scale our organization as a whole? After the tech crisis, so we unfortunately had to massively downscale because as most startups in such a growth phase, we were never set up to actually like be profitable anytime soon. And so we had to downscale. And once we did that, the job, of course, the downscaling part was really tough and really hard. But after that, I would say the product job at least became even more interesting. The reason for it is it's cool to do a product that scales. I think it's even funnier to do a product that is that good that people want to pay a lot of money for it that you can be profitable. So the job became very different.
It's how do I make a product that people really want? And this is tough because when you're totally, when you're inventing something new, there's no margin, there's no market. Like people, you go to someone, you're like, you need that. It's like, no, I don't need that. And once you've convinced them you need that, then you'll tell them, no, it costs that much. And just like, no way it costs that much. It should cost so much or nothing or whatever. You should give it to me for free. And so you're always fighting uphill battles everywhere. And so your product needs to be absolutely excellent and providing a ton of value. And you know, one of the things we struggled at the beginning, one of the things we identified is when we started thinking about profitability was we were seeing all the data points that we were providing a ton of value to everyone in the restaurant ecosystem, to the consumer, because they're saving time and having nicer experience, to the waiter because they're making a lot more tips, and to the restaurant owner because they're rotating their table faster and, you know, especially making more profits on their restaurant. And, you know, we had hard data validating these hypothesis. And, you know, that was fantastic. But it's one thing to see that you have value and that you provide value to people and to convince people that they're getting value, especially like, you know, when you think of the waiters, waiters are often people that are doing that for two, three years before doing another job. They might not be as committed as, you know, we might think, for example, a SaaS employee, you know, a PM, a new PM in a company, like they might not be as committed to that job. You know, they might not be as analytical. So when you tell them you make more tips, I'll give you a simple story.
Like I went to a restaurant, a customer of ours, and talked to a few waiters. And at some point I talked to one waiter and she told me, yeah, I don't make more tips with Sunday. That's like, that's just not true. And she's like, I was like, well, why do you say that? And she's like, well, last week I got, keep in mind these are French numbers, right? Not US numbers, but I got 20 euros of tips with Sunday and I got 80 euros of tips with cash and terminal payments. And I was like, yeah, okay. But when I look at the data, you had 95% of your tables paying with cash or payment ultimately. So if you had made everything, every table paid with Sunday, you would probably not have got 100 euros of tips, but 400 euros of tips. And then she was like, oh wow, okay. But the thing is she looked just at the nominal value, right? Because she was not an ethical person. That's not her job. That's not what we ask of her, right? So she was just saying she gets less tip with Sunday. But the thing is she had almost no table paying with Sunday. So of course she gets less tip with Sunday. And so, you know, it's not enough to generate more tips, but you have to tell them how much they're going to get, how much more they're going to get. And to do that, it feels easy, but it's not easy. It's not easy because, first you have to tell it in a simple enough message. And second, you need to reach to these people. And they are not your employees. The waiters are not, you know, Sunday's employees. They are the employees of the restaurant. And again, we mentioned they have high turnover and everything. So you have a ton of problems to solve before you can convince every single waiter that has Sunday in their restaurant to actually push for a solution and actually like actively pitch it to customers. It's not enough to produce value. You have to show it as well.
Melissa - 00:38:21: That's a really good lesson, I think, for people out there listening. To me, if you can't show what you get from a product, it's really hard for the people who support the product to actually demonstrate values to people who have the budget and for people to keep using it, right, if they don't understand those things. So I always think that's like a great piece to actually concentrate on in product management. You were talking a little bit, too, about how your objective went from growth at all costs, right, to profitability. How did that affect your strategy? And what should people who are, you know, CPOs who are leading teams now in this like post-zero interest rate world start to think about when it comes to profitability versus growth or how they should be considering their strategies that way?
Alex - 00:39:02: I would say the number one thing we did is reduce the amount of things we were going to try and reduce the amount of countries we were going to be in and trying to actually like really focus on the countries that were digital savvy. So we would see essentially digital savvy would bring higher option in restaurants. Once you're in there, people use you. Then big enough restaurants so that, you know, once you sell to them, you make enough money and you have enough volume to make money. Lower or smaller sales cycle. So, you know, not only you can acquire them at a cheaper cost, but you can acquire them fast and you can build momentum there. So I'd say that was the number one thing is, you know, refocus on the countries where, you know, we know we have market fit. Market fit as in not only market fit as in are people willing to use it, but market fit as in we are able to make money in a relatively close timeframe. That would be the first thing. Then the second thing is, again, to reduce the amount of products we try and be a lot more conservative. And then moving away from an MVP focused on how much time we spend on things and going to an MVP of how much money may we make out of this. Like if we build this out of our user base, who's going to take it or are we going to increase our user base? Yes, no. Right. And then within our user base, who's going to take it? And then, you know, who's potentially going to buy that? And then how do we validate that? And so, yeah, for example, when Sunday built the review product, it was absolutely wonderful. I mean, I had, uh, so essentially like at the end of the payment experience you could just essentially rate the restaurant and the review will be posted on Google Maps. And this thing essentially multiplies by five the number of cool ratings you get as a restaurant.
Which is absolutely insane for two reason. Number one is mostly ratings. You get are from haters, people who are not happy, who's going to, you know, they're going to rate you bad. And so, so your reviews are sensitively, lower that what they should actually be on Google Maps and here. We're offering it to every single person that is paying right, and the process is much, much more seamless. So you're reducing that bias of, you know, more haters are coming to rate you on Google than normal, like any customers you may have. So that's number one thing. The second thing, so you increase your average rating. The second thing is number of ratings. What most people don't know is number of ratings is not only a sign of, you know, strength or reliability in the rating, but it's the equivalent of SEO on Google Maps. The more ratings you have, the more recent ratings you have, the more traffic essentially you have on Google Maps. And so the more you're going to appear, even on a higher view. Like, if you're looking at the whole city, you're going to see only a few restaurants. These are the restaurants that either pay for it, of course, or, you know, have the most ratings. And so suddenly you bring a ton more visibility and a ton more, you know, a lot of better ratings with that product. And so I went to the US, I think three weeks after launching that product and visited one of our most successful restaurants, which had like close to 85, 90% adoption before even having the review product. And when I met with the owner, which was obviously completed before the review product, the guy just talked to me about the review product for 45 minutes. Because he was that excited. And I was like, all right, that's a sign that even from a guy that loved the product before, now he's only talking about reviews.
And so he would literally buy, he would buy that at three times the price and he would still be super happy and it's still worth the money for him. And so, you know, bottom line is this is what we focused on. We wanted to see these signs and, you know, can we sell that if we sell it? Do people buy it right now? Do people say, oh yeah, maybe, or I want to try or, you know, what can we show? Can we easily show value as well? Like reviews is a topic where it's very easy to show value. Loyalty, for example. It's a big way. It's harder to show value because loyalty builds up on the other time. Right. So, so to show value to people is much harder. So you can sell to people who know what, who they want a loyalty program right now and they want a turnkey solution. You know, you can do that because, you know, we're integrating payment system and whatnot, but you can only sell to the people who want one right now. You can't sell to the people who are not looking for one. Review, everyone knows Google reviews. Most waiters, most general managers are incentivized on the reviews they get, you know, online. And so that was a typical case of a product where we thought differently about the MVP. We were focused on, you know, how can we, you know, can we sell that? And can we really sell that? And that was a very clear, clear case.
Melissa - 00:43:07: You know what's funny about all this? I'm building a restaurant.
Alex - 00:43:10: No, are you? Wonderful.
Melissa - 00:43:12: Yeah, my sister and I. Yeah, we're opening it in our town. It's the only place I've lived where I was like, I could do this. I'm not going to run it. She's going to run it. She's a restaurant person. But my entire family is in restaurants except me.
Alex - 00:43:23: Wonderful. What kind of restaurant?
Melissa - 00:43:24: It's going to be a upscale cocktail bar, small plates. Yeah. So if you come to Bluffton, South Carolina, which is in the middle of nowhere, we'll be here. We'll look into using Sunday.
Alex - 00:43:34: Ah, wonderful. I love the restaurant industry. I mean, like, I think it's such a wonderful business. And these are some of the best times. And these are, I've had in my life. And you can have that literally every week. So I love it. But it's a tough business. It's a tough business. It's long hours. It's early wake up, tough in management, tough in everything.
Melissa - 00:43:55: Oh yeah, we know what we're getting into. It's funny because everybody's like, do you know what you're getting into? And I was like, I grew up with parents who owned restaurants. My sister has always worked in restaurants. Like I know more than I want to know, but I will be, I'm hoping and getting off the ground.
Alex - 00:44:07: They're not that naive, but sometimes being a bit naive helps as well.
Melissa - 00:44:11: Exactly. But I'm excited. And I think, yeah, being a little naive and being like, it's going to be great. You know, you just have to be super optimistic. I think we're very optimistic. And I know my sister is very good at running restaurants. So I trust you to do that. Well, this was great. Thank you so much, Alex, for coming on and telling us all about your journey. If people want to learn more about you, where can they go?
Alex - 00:44:29: LinkedIn. I'm not a very vocal person. I don't have a blog or a website or anything. LinkedIn is great.
Melissa - 00:44:35: Okay, great. And we will definitely post the links so that you can find Alex on our show notes. So if you go to productthinkingpodcast.com, we'll have all of his details there. Thank you so much for listening to the Product Thinking Podcast. We'll be back next Wednesday with another fantastic guest. And remember that if you have any product management questions for me, you can submit them to dearmelissa.com. That way I can answer them on a future episode. Thanks, and we'll see you next time.