Episode Transcript
[00:00:00] Speaker A: To be honest, I was afraid of my customers. Second has this illusion of clarity of your customers. Did you talk last week? That shows everything actually. That like false sense of progress is what I would say kills and can kill early stage companies.
[00:00:22] Speaker B: Welcome to The Entrepreneur's Logbook Podcast. I'm your host Zach Bernard. You can find me on social at zackp and in each episode I bring on experts from various industries for you to learn about their strategies and insights driving extreme business growth. Today we're joined by Vitaly Sidorenko, CN partner at Gearhart, an AI powered product development studio based in San Francisco that helps companies scale build complex enterprise grade software products. Vitaly spent 14 years in the trenches of B2B SaaS. Not just as like an advisor watching from the sidelines, but as a founder who bootstrapped his first company from zero and iterated from through 37 product versions and built it into a number one media monitoring platform in Ukraine with over 300 clients including McDonnell, Samsung, Deloitte, all the big ones maybe you're thinking about before making sexual exit. That experience is exactly what brought him to Gearhart where his team has now delivered 80 plus product including SmartSuite, which you might have heard of because they've had clients such as Capital One. They built it from scratch which hit $1.2 million AR within four weeks. They've also raised $30 million. And then Vidali is also a scout for a Silicon Valley VC fund, which means he's basically sitting on both sides of the table building products for founders while he's also evaluating them at the same time here. Vitaly, it's great to have you on the show. Hola. Welcome aboard here.
[00:01:46] Speaker A: Thank you Vak. Thanks for having me. Yeah, it would be nice to share something. Yeah, yeah.
[00:01:52] Speaker B: I'm excited for this conversation because I will tell you we've had a good amount of guests on the show, but I think probably one of the areas that we we have not touched on too heavily has been like the development side of things. SaaS software.
It's something that's present like literally everywhere. Like we're using software every single day to make our stuff more efficient and maybe we build internal tools and everything, but it's not some. We have not had a guess on that side of things. I myself have been diving into building some internal tools and I've seen the pain sometimes of building them. So it's going to be an interesting one here. But one of the things I always like to ask to anyone that comes on the show as it is A business. It is an entrepreneurship podcast and you're basically a serial entrepreneur. You've started multiple different companies. Is if you had to restart your entrepreneurship journey from zero, what's kind of the one thing that you think maybe you do differently?
[00:02:47] Speaker A: Oh, that's a tricky one.
I would done a lot of things differently right now, especially if we are talking about my first business.
But.
What comes to my mind, especially when you build products, is the power of your network.
And let me explain what I mean here, to be even more specific. What would I done differently? I would make sure that I have 1, 2, 3 people from my target audience who I know very well, who know me and who are ready to answer my questions whenever I have them about something.
So I understand that obvious things that when you build something, you need to talk with your audience, you need to do interviews, you need to check your hypothesis. But if you have this at least like one person or two, like on the shorthand, when you build something, when you have new thoughts about like changing something, it's really super helpful to have people you can always write or call and ask because.
Yeah. And it is crucial.
It is crucial for your. For the speed of your business development overall. So that is something I would definitely do because I believe when I. When you start doing something, when you start building business, at least in my case, to be honest, I was afraid of my customers and you try to avoid conversations anyway.
So that's definitely. You need to fight risk from day one.
Yeah.
[00:05:10] Speaker B: It's like getting like market feedback, being able to have people in your network or customers, client or anything like that. Yeah.
[00:05:18] Speaker A: And this first people should be a start of your community.
So what I would, if I would continue, my answer is to like to have at least like 13 people like in this like supporters group. But then the supporters group could become community around your product.
And that is something I believe is crucial for any especially B2B business.
[00:05:51] Speaker B: Interesting. Yeah. I mean, because you see a lot of these Facebook groups all about using a certain tool, like certain software and people all help each other and there's that support side of things. But I feel like it's an amazing way to get market feedback or what you should be adjusting doing. And I feel again like you were saying have a couple close friends or people that you like go to for the questions. Because when you're building, you have like this tunnel vision. You're like, this is what my users need. This is what I should be building. This is what I should be doing. And then you start asking around and people are like, yeah, I literally just want, like, this one thing. Like, people are going to be like, oh, I need to add dark mode. People are going to love it. It's going to be an amazing feature. It's like, no. No one cares. They just want the feature that makes their life easier at the end of the day here.
[00:06:33] Speaker A: Yeah, absolutely. Oh, man, I have so many stories about it.
[00:06:38] Speaker B: Yeah, I imagine.
But I'd love to shift gear a little bit, moving on to more like Gearheart, because I know you've obviously started multiple companies, but Gearheart is, like, the. The main focus on, like, urine right now. You guys built, like, more than, like, 80 products, which is a lot. And I was looking at, like, you're buying, like, smarts. Like, I swear I've heard of this company before, and I think we've tried using it, like, the past. So it was an interesting one here. But I'd love to understand, like, what kind of the engagement looks like whenever you guys work with any client companies. What's kind of like the. From that first conversation, just something actually being alive in the market. And, like, what does that process look like? Where would you say that most people usually show up thinking that they're ready when they're actually, like, not actually ready? Because I feel that's a common one.
[00:07:23] Speaker A: Oh, yeah, definitely.
If summarize, I can say that our potential customers show up in two flavors.
First flavor is we have an idea.
Yeah, let's get this started.
And don't have any descriptions, anything. Just have an idea and let's go build something and another flavor.
So I wrote some documentation. Could you check this out and then we can start the development.
And I open this documentation, and there are like 80 pages of documentation.
And they're asked, usually I wrote all the documents. Please develop this. Exactly what I wrote.
And I would say that both of these flavors are a signal for us that they are not ready, honestly. So the first cohort, they just don't have clarity on what's actually needed. And the second has this illusion of clarity. Yeah.
Why same illusion of clarity? Because usually when we read this specs, they're, like, super detailed. Like, how this button should look like, what this button should do, like, everything. And it seems. And I see that the person spends months writing it, like, several months writing this, but this documentation is missing, like, all.
Everything from the business side. What problem are we solving? Who's our target audience? What is the market size?
Like, what's what. We try to check in the first version how our sales pipeline looks. Right now like before we built building Lake who our first customers who are waiting for this product. No, that's. Everything is missing. It's just the detailed documentation of like how everything should work and usually it based on thoughts of founders. Maybe like experience. Of course, of course. Experience and expertise. Maybe domain expertise. Yeah, but still they're missing to sell before building something. And in the first case when it's just an idea, they basically missing everything because again they don't even know.
Like it seems like they're ready to move forward, but they are not sure yet what exactly they want to do.
Yeah.
So that's why how the engagement engagement with us usually looks like we have this initial conversation and when, when I do my you know like first analysis by asking a few questions, usually I'm asking similar question to what usually investors ask. Because it's important for me to understand the stage of the founder, like where he or she like right now on this journey, how much time do they like ready to spend on this and so on. And then the first phase of working with us is usually discovery phase.
Now it's discovery plus prototyping. That's like not because it's a best practice or like some chat box we need to go through.
No, it's because without it we don't know what to build, we don't know what to recommend you to do right now. And we are positioning ourselves not only as a development partner but also like product, like development partner with product mindset who built products before. So we want to be like partners for to our founders and to really help them to avoid some mistakes, especially at the beginning. And for doing this, we need this discovery. We need to make several deep dive sessions with the founder. We need to do our part of some analysis to understand market a little bit like competitors, also to analyze deeper where the founder is right now. And then we are able to recommend something and together with the founder to align on okay, what MVP should look like, what should we put in the MVP and what should we avoid putting into mvp? And also now especially of course with AI during this discovery phase, we also can build the prototype easily so that founders have something clickable and we always pushing them. Go sell, go sell.
While we, while we're doing all this stuff. Because it's the most important thing.
[00:13:17] Speaker B: Yeah, because I feel like a lot of people are just going to be like, oh, I have this amazing idea like here is everything I want to be billed. But they don't even do the Mercury search first. They don't know if it's going to work if the product is going to fail. So it sounds like based on obviously your experience too, because if I recall correctly, you had one company or one startup that eventually didn't work out too well because they didn't find product market fit in one specific market. So you seen that firsthand. But you're also a VC scout too, so you kind of know, okay, this, I've seen that historically, it's probably not going to work. So you're able to ghost them, like, hey, let's make sure we take all the steps one at a time. So when we want to go to America, when we want to build this thing, there's actually people that want this. Like there's actually problem being solved versus you're just solving a problem that you think people had. And I think that's a common one that a lot of people like assume here, which probably shouldn't do here.
[00:14:13] Speaker A: Yeah, definitely.
And one thing I want to mention here, that nobody knows what is wrong and what is right when you build a product unless it's your customers.
So usually all these talks with investors, experts, mentors, coaches, they are really great and could be super helpful, but I would never took their judgments about my products because they just, they are not in the market, they're not talking with the customers.
So yeah, that's one thing, because when people come to us, it's not like I just talk with you like two minutes and I can tell you, oh, your products will grow or your product will fail. I don't know. The only thing I can understand is, okay, you know this. The most common questions that for example, Y Combinator asks is the biggest accelerator in the startup world? Like, yeah, how, how many of your customers did you talk last week?
That's like, that shows everything actually.
And so, and in most of the cases, the answer is zero.
And that is how I can say that, okay, maybe, maybe you're not ready right now, but it's not like I'm judging your idea.
It is about the journey and things you should do to increase your chances.
[00:16:18] Speaker B: Yeah, it's not saying that it's a bad idea. It's like maybe get more feedback from your customers, people using your platform and then you'll know actually where you need to go. Some people are going to make assumptions what people, people want and then they build the entire thing and then five months later, like, crap, no one wanted. This was a complete waste of time. So that, I mean, that's kind of why the MVP exists. You just get a bit of A viable product out there and then you iterate. So I feel like when you get people with 80 pages coming to you, it's like you should have kept it five pages, made it very simple. We get the MVP on market and then we adjust and make it better as we go here. I feel that's probably a pretty common mistake but that was going to be actually like one of the questions I had for. Because I mean you've obviously seen a lot of product launch and I'm assuming probably a lot of products fail to. And I'd be curious to hear if there's any common mistakes thing that you see like founders, CEOs, startup founders, etc. Do when they go about wanting to build a product here.
[00:17:18] Speaker A: I think partially I already mentioned that but I would say that backlog, like product backlog is building based on founder thoughts, not customers and not, not sales calls.
And I think that it's the most common, maybe it's obvious thing, but it's still the case. It's still the case. I don't know. I, I've been in this startup world for last more than 10 years and I remember like when I read this first books like Lean Startup and some like back then and, and that time it was some revolution and people were saying that oh yeah, definitely you don't need to build first and then go on sale. You need to check this first. And it seems like okay, 10 years later I thought that everybody knows it, but it. Yeah, but they don't.
Maybe they know but they don't do it.
But definitely it is something And I always see like in even with our like previous customers another mistake that they stop talking with us. I mean for example, they did everything right at the beginning. Like yeah, we talked, we did this hypothesis, we build an mvp, we launched the mvp.
It has some, some success maybe or not.
And at some point founders say oh, okay now, now I know what to do. I already talked to a lot with customers, I now know I know what to do.
But yeah, but the problem is for the idea is that you should always be present and know all the details, updates and all this stuff. And when you build product backlog it should be built based, not based on your customers interviews, but I would say based on the value for your customers. But to know this value, you should talk with them especially at the beginning because you still don't have just enough of product analytics data. So of course you should collect it and do your decisions based on that. But in B2B world, especially at the beginning, you Just don't have enough of this data. It's not like you can calculate the conversion rate from one screen to another. Do some a B test. No, it doesn't work like that.
But still, you should feel. You should not feel, like, be confident in what you're doing. And you could be confident only talking with your customers.
[00:20:31] Speaker B: Yeah, but I liked what you mentioned. It's when you stop trying to collect feedback, collect user data, like, what your customers want, that's where it starts to stall. And I feel that's probably the perfect example. Like, if you compare business to, everything's going well, you guys are growing. And then you're like, okay, let's slow down on the gas pedal.
We're doing good. And then it starts slowing down. It's like, why is that happening? We had so much traction. It's because you stopped doing the one thing that was getting you the result. And I feel that is directly correlated with what you were talking about here. And one of the things I love to go through because you talked about it, like, very briefly, like, the AI side of things. And I feel like it's a very interesting, like, component within, like, doping software and all that fun stuff. And there's a lot of people that are like, AI makes it so cheap now that, like, any company can just, like, vibe, code it and just, like, do it as they want. But there's usually a bit more of a process behind. And I'd be curious to hear, like, what's actually happening when companies operate their way. Like, hey, we'll just do it ourselves. We'll build maybe, like, the 80 pages. Then just give it to Vitaly here.
Get him to figure it out. Because I'll tell you from firsthand, I've tried building an internal tool.
I think I'm close to having it built, but it took forever. So much iteration. I have no clue how to code. I just asked Claude to go back and forth. I pushed after Vercel, it pushes it, and then I'm good to go. But I learned a couple lessons doing that. I'm like, hey, maybe I should be hiring someone that knows what they're doing here.
[00:22:03] Speaker A: But I bet that when you just started building it and did, like, the first version, you had this idea in your head, wow, I built it, like, in one hour. Now in two hours, it will be done.
Did you have something like that?
[00:22:26] Speaker B: I feel like I definitely underestimated how long it would take. Like, I like most, like, the entire, like, platform built. I was like, I'm almost done here. Like, that Was not too bad whatsoever. And then what I started doing is I started going to my team. I didn't have like actual like customers or like users, but I started going to a team. I'm like, hey, like this is like what I've built so far. And then I would collect feedback from them, I would talk to them like crap, like we need this, like we need this, this, this, this. And then I end up like 30 things that I need to make it actually work. And it just adds up. There's a new bug and it's a pain in the ass to put it simply. But
[00:23:05] Speaker A: I would say that AI brought us, I can't even say it's like new category of customers because all customers changed with AI what we now see, like in many, many cases it's like, hey, we already built an MVP in lovable on replit or in somewhere else.
It almost works. It almost works. Like just something wrong with backend. There is something we can fix. Could you please check this out?
And honestly, it's so hard to communicate with such customers at the beginning.
Why? Because usually this type of customers, they don't have technical background and for them like front end, it's like 90% of the product because it's something you can see, right? And you see, you click like you see the different screens and you think that okay, it's almost there.
And our job here is to explain them that it's not.
We do this code review and usually.
There is like beautiful front end
[00:24:43] Speaker B: in
[00:24:44] Speaker A: some cases with hard coded data, no real API, no database, no business logic, super insecure and it looks like a product but it's not.
What I'm trying to say. It's not bad actually. Overall it's great how industry is evolving and you know, comparing when customers came to us like I don't know, years ago and tried to explain what they want to build, in some cases it was super hard to understand them. Now they come with. Even with this front end, it's much easier for us. Oh, okay, I got it, I got it. What you want to build and we can help you with that. So it definitely makes the process faster, easier.
Everything is great with that. But you asked what the cost, so what is wrong with that and what is the cost of doing that?
The cost is not just this technical depth which you are getting by wipe coding without technical knowledge.
I would say the cost is six months or so founders spend believing they are 90% done when they're actually 10%.
By the way, I'm not telling that it's your case. Maybe in your cases longer than I
[00:26:36] Speaker B: thought it would be. But yes, you got me.
[00:26:39] Speaker A: Yeah.
So that's like false sense of progress is what I would say kills and can kill early stage companies.
[00:26:52] Speaker B: Yeah, yeah, no, it's definitely been an interesting learning experience to say the least. It's like I should have maybe just hide someone to do this. But then you're like, I know how to do this. I can figure it out. Like, I'm almost there. And then so like, oh, another piece of the puzzle. We're almost there. And just add so on, adds on. But I'm being free of Italy. Like I think I'm there. I've tested it multiple times. I got feedback from my team, it was working. So I think we're almost there. But you know, I might be totally wrong and ends up being like another month. I don't think so, but hopefully that's not the case here.
[00:27:26] Speaker A: But let me add something here. Sure.
I figured out this formula not a long time ago, but I think it makes it super clear when you build a product there are two directions, your sales pipeline and your product backlog. And you always need to understand where is your main issue right now in the sales pipeline or in product backlog and when you. So and you should start from sales pipeline. If the issue is like, if the issue is still in the sales pipeline, you don't even have to do something with the product.
The only like good timing for your product building when you really have the issue with like there. And what does it mean? It means you already have a pipeline of customers who are ready to pay you or who are on a waiting list and they are really waiting for your product or for some feature in your product. Then you understand that. Okay, it seems like my problem is it's product side and I need to build it before you have it.
You don't need it. And that's always this question like, where is this weakest part right now? Sales pipeline, product backlog.
[00:29:08] Speaker B: Yeah, that's fair. And I know we talked obviously about like the Domid side of things, AI, all that fun stuff, but one thing that I thought is like interesting is that you're also like a VC scout where you're evaluating like these early stage like startups, so you're basically seeing like what investors are actually looking for, but at the same time you're in like the weeds, like the building, like the product aspect of things. And I'd kind of be curious to understand like how that like dual perspective kind of shapes the way that you think about what it takes to, to build something that doesn't just like ship, but something that actually like scales and actually like grows. Because a lot of products are just going to fall flat on their face and it's not going to grow whatsoever here.
[00:29:51] Speaker A: Firstly, yeah, I think it helps me a lot, like talking with founders and I think that usually I surprise them with my questions because my questions are not even sometimes, but most of my questions are from this investors side because investors ask questions not just to ask questions. They want to figure out if this business can be successful and they put their bets. All right? So they want to increase their chances. So basically it means that they know what to ask and it helps me a lot. So but answering about the question of the scale, I would say there are two parts of scale, like business scale and technical scale.
And I understand that there are cases where people built something and then they started to grow really fast and everything started to crash, like from a technical perspective.
But I can say from my experience that is something, you know, that is huge problem that you need to, you know, like obviously you have to think about your architecture from day one. You have to do it right. But in the same case it should be a balance. If your goal is to check this out fast on some like MVP level, you don't need to think about scalability, like technical capability. You will think about it later.
So I can't say from my experience that it's the part when lots of startups fail.
I would say that business scale is something different and that's where a lot of startups fail. And it could be like two scenarios. They start to scale too early.
[00:32:09] Speaker B: Yeah.
[00:32:10] Speaker A: As I did by the way, with one of my startups, we build an mvp.
We got our first traction, we got investor like refund, race some money. We race first round.
[00:32:30] Speaker B: Okay.
[00:32:31] Speaker A: And then, and then I felt like, I felt this pressure, okay. Investors gave us money to grow, we need to grow. We need to grow. And we started to, to burn our money into get more customer base. But our MVP was shitty. It was empty. So it was, it was, it was good for this like 10 customers, but it's not good for another 50 customers.
And it's not also about the architecture. It's more about like how this product should look like what it's like, it's a little bit different. But you can start scale too early.
I can say that you can, of course you can start to scale too late.
I don't see it super frequently.
I would say that usually people or they Start to scale too early or they just don't scale.
And it's also.
To scale a business, right? It is why investors asked these questions in the beginning. Like questions about the market size, about your go to market strategy, about your competitors, how you plan to grow. Because the thing about this MVP and what we talked earlier, it's like crucial. You should build this first version, get this first customers and then go step by step. But there are so many cases when I just doing this I didn't calculate the market size and in a school like I got I don't know like five, 10 customers and then at some point you calculate the market size and your market size is I don't know like $2 million. Like overall. Yeah, it means that you will never build a big company in this niche. Like it's just impossible.
So I would say that for business scale it's like this research again.
And the thing about research is same as with customers interviews, you should do it all the time, not only at the beginning, but then usually most of startups do pivots on the go and when you do the pivot you should do this exercises again and again and again, always knowing, okay, how the market looks like, how our competitors landscape look like and what our go to market strategy.
[00:35:34] Speaker B: No, I agree with you. I have a little reminder on my calendar like every two weeks to go do a bit of market research, see what other competitors are doing. And I am guilty of not doing it every two weeks to be honest with you. But I try to just like be a little bit more in tune like what's going on in the market. And I feel that yes, it's like you say you want to always be kept in tune like what's going on the market, how you can innovate, how you can stay ahead of trends. And I feel like a lot of people just end up being left behind if they don't do that here. But no, we covered a lot of ground here today. So I really appreciate you like coming on the show and what we'll do for telly is we're going to add like obviously all your info and like the show notes. But for anyone that wants to get in touch with you, they want to work with Gehart. What's kind of the best way to get in touch with you here?
[00:36:17] Speaker A: What is the best way?
I mean our website, my LinkedIn profile on the website and on the LinkedIn you can find actually link to my calendly and just book a call with me right away and yeah, we can talk love it.
[00:36:39] Speaker B: Gearheart.com, right? Or is it IO.
[00:36:42] Speaker A: No. Oh, sorry. Yeah, it's Gearhardt Pipel.
[00:36:45] Speaker B: Okay, Gearheart IO, cool. So here at that everyone, Gearheart IO, head over that. Go follow Vitaly here on LinkedIn, all those other social media here. And then, yeah, if you've enjoyed this episode, like, subscribe, comment, all that fun stuff here. And again, thank you so much for coming on the show and keep pushing
[00:37:01] Speaker A: and we'll see you next time.
Thank you, Vlad. Thanks for having me. It was nice talking to you.
[00:37:08] Speaker B: There you go.
