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The Growing Pains of Going from Startup to Scale Up

Eric Prugh, Co-Founder & CPO, PactSafe

Are you making product assumptions that are misguided?

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When you launch a product startup, making assumptions is par for the course. These assumptions often come in the form of who your end user is, what they want and that they want it bad enough to pay for it to be fixed. 

Today, Christian and Anna are talking with Eric Prugh, Co-Founder and Chief Product Officer of PactSafe, about the assumptions he made that paid off - and the ones that didn’t.

You’ll hear how Eric was able to determine the best way to describe the product and position the company for growth and how, at the end of the day, assumptions can quickly be validated (or negated) through one simple task. What is it? Take a listen.

Read the full transcript below.

Eric Prugh: What is going to be the thing in the product that gets someone to buy it? I think that starts with getting people on the phone and talking to them about it.

Anna Eaglin: Better Product, the only show that takes a behind the scenes look into how digital products are created.

Christian Beck: The businesses built around them and how you too can innovate better product. I'm Christian.

Anna Eaglin: I'm Anna.

Christian Beck: Welcome to today's show.

Christian Beck: When you launch a product startup, you're often making assumptions like who your end user is, what they want and that they'll buy it, pretty standard. Today on the show, we're going to be talking with Eric Prugh, PactSafe co-founder and chief product officer on the assumptions he made that paid off and the ones that didn't.

Anna Eaglin: Eric's journey into product entrepreneurship started with the opportunity to join Brian Powers, CEO. PactSafe is a high velocity acceptance platform. It's a place where you can easily track, manage and update terms for online agreements.

Christian Beck: Yeah, it's like when you're, what's the...?

Anna Eaglin: It's like when you check that checkbox that says, "Yes, I definitely read that long scrolling text."

Christian Beck: Oh, right, thank you for the save there Anna. Anyway, Eric was excited about the potential market this product could serve in. Pretty much anyone who sells something online could be impacted by the solution PactSafe provides.

Anna Eaglin: You'll hear in our conversation how this initial understanding of the potential market may have been a bit off. You'll also hear how they determined the best way to describe their product as high velocity acceptance, isn't the most commonly used phrase or so he thought.

Christian Beck: When Eric joined the team, there was a working prototype but the real obstacle for him was building something scalable.

Eric Prugh: We had to plan for scaling to millions or billions of transactions every month from the get go because we were trying to sell to large e-commerce and SAS players. That was really the first thing, is making sure the product was going to work.

Anna Eaglin: Once they had a viable solution, they started building the tools to sell it like a website, creating decks and so on. What I love about Eric's story is that while they were still developing their messaging, they were already selling the prototype before it was ready for primetime.

Eric Prugh: I thought that was an important decision that we made because I feel very passionately and strongly that you should always be selling the vision of a product well ahead of when you're able to deliver it because it takes time to refine the message, to get people interested in the product and ultimately to close a deal because people should always be paying money for something, in my opinion, if it's valuable to them.

Anna Eaglin: When it comes to refining a message, having a prototype gave them the platform to demo while conducting discovery to learn what mattered the most to their customers from both a user experience and marketing perspective.

Christian Beck: This episode gets into specifics. The specifics of how you sell ahead of the actual product.

Anna Eaglin: Let's get right into it. And be sure to stick around to hear our take on how you can leverage some of the tactics that Eric shares.

Eric Prugh: Yeah, it's pretty simple in the beginning and there's not, you don't have a ton of data because you're not doing 25 or 30 demos of the product a week. We had some good fortune in that we had, our product is so unique in the problem that it solves. There's nothing in the market like it, period. We would get some attention and we would get a lot of meetings early on. We got a lot of hateful email responses back as well because we used scare tactics against lawyers which is always risky. We'd get meetings and ultimately we'd where we started to really hone in on the value that PactSafe provides was where we kind of moved to the next step honestly.

Eric Prugh: It took us a year and some change to really get that first big deal across the line and I think it was obviously, a combination of the right message, right time, right product, but it's also aligning to the right type of person that's going to align to the product and understand the value. They're doing things that are maybe more progressive within their company. That's a very common problem that you're trying to figure out in the beginning. Who's the right person? What's the right type of company? And that's taken us really almost four years to figure out and I think we've really honed in on it now. We've gone through some really interesting in depth analysis of how to go to market against those people.

Christian Beck: What's a messaging problem and what's a product problem?

Eric Prugh: For us, it was about we knew the product was different. We knew it's an important problem because we had read case law, we know people had faced huge lawsuits over issues related to this so we knew there was someone that needed it. We didn't know who and so for us it was the two primary things, the product is never going to be, you can sell any product I think with the right messaging and an understanding of the right persona. As long as you take the time to constantly refine and work through that process of selling it, you will ultimately get someone to buy it. Once you get somebody to buy it, then you can make the product what it needs to be to suit the market.

Eric Prugh: I think one thing we really learned in some of our early first few deals, if we didn't have customers to talk about that were using the product, if we didn't have the stories that related back to the real value that PactSafe provided, that's what got us to the right messaging. That's what got us to the right personas and to think about things the right way. It's getting people to buy it.

Eric Prugh: To me, it's that's where a lot of the efforts, especially on the product side, should be focused. Is what is going to be the thing in the product that gets someone to buy it? I think that starts with getting people on the phone and talking to them to about it and getting their feedback.

Anna Eaglin: It's interesting you say that in order to really build your messaging it's like you have to have those customers and you have to have those stories, it almost feels like a chicken or the egg approach. In order to really get that messaging, you got to have those customers but to get those customers you have to have the right messaging.

Eric Prugh: It is 100% a conundrum. I think for us, it was moving on quickly especially early on, and trying to integrate customer stories even if it's somebody that was paying us $700 a year to try to get the big guys across the line. I think my experience lends itself well to trying to tell a story through the lens of the prospect we're selling to and putting ourselves in their position to say, "This is your world with PactSafe. And this is what it can mean for you." And we did try to do that and I think we did it pretty well in a lot of cases. As we started to sell bigger and bigger deals, we really would dive, we'd dive into how do we make this a real solution for the prospect that we're talking to?

Eric Prugh: I guess what I mean when I say that is, how do we look at truly where it comes in and customizing every bit of our messaging to use the words that they use. Everybody calls what we do something different and so how do we at least start using the words and how they describe the value and ultimately that helps us get to a place. We call ourselves the high velocity acceptance platform. That word, high velocity, was given to us by a customer. It's things like that that we incorporate back in that constantly helps us refine and know that what we're doing is being validated.

Christian Beck: Let's pivot the conversation here with Eric. We set the stage on how they got their first active customer base, they were building the product, seeking feedback and were letting the customer drive to the point of really doing anything for them. As a result, they ended up building features they may not have built had they truly understood who their end user was. How did they figure that out? They took a step back and said, "Okay, out of all our existing customers, who are ideal?"

Eric Prugh: And we identified 20 to 25 of our customers, out of a 120, which is kind of sad. But 20 to 25 customers that were really, really ideal for where we wanted to take the business and where we feel we're most differentiated and where we drive the most value. From that, we crafted an entire in depth approach to look at where is that customer throughout their journey? Where is that buyer within the organization? What problems are they trying to solve? What parts of the product are they going to use? And really detailed out a ton of information that we're now using to bubble up key messaging concepts that we're able to leverage in unique ways throughout that buying journeys and in various content around it.

Christian Beck: You said that you built features you probably wouldn't have built, when you look back, I'm curious, do you think that that's a natural part of the learning process for a product team? Or do you genuinely think, or do you look and say, "No, this was wasted time and money?"

Eric Prugh: Now as we're taking a more holistic approach and looking at the right customers, are they retention? Or is it growth revenue? How are we kind of prioritizing how we move and maintain this differentiated technical moat of capabilities on the click through side and worry a little bit less on the e-signature side where a lot of the features we were developing were just me too features that helped retain smaller customers.

Eric Prugh: For us, it's the most recent challenges that we faced is how do we balance the development of features that are going to help us win deals on the e-signature side? And also will help us take our click through customers and bring the e-signature use case to those customers because they typically will use two different providers for each respective solution. How do we balance that with maintaining and building completely greenfield features that no one's even asking for? Maybe case law is dictating that needs to built at some point but that's been a really interesting challenge.

Christian Beck: When you took a step back to look at your customers, you said a 150, a 120, at that point did you let any go by the wayside or was everybody kind of put in those two buckets where it's like it's going to be you're mostly on the e-sig side and we're not going to necessarily innovate much more there and the rest of these click through rates, we're going to focus on there. Or were there others that you sort of just had a wrong fit or something?

Eric Prugh: I wouldn't say we let them go by the wayside but certainly the requests, the way they're using the product et cetera, we didn't really focus a ton as far as how we looked at what they were doing and really evaluated if we improved that part of the product. The product roadmap was really driven by the three core applications of the use cases of the product and then we are prioritizing percentage wise each area based on what we've all decided. And that we're prioritizing marketing spend, we're prioritizing sales investment, organizing sales teams around those use cases and applications based on what we think the opportunity is.

Eric Prugh: I'd like to say, we definitely care about every customer but as far as roadmap goes, we've really had to prioritize where the key focuses are and opportunities are for the business. One of the victim, I think I've fallen victim to being an owner of customer success coming up through implementing our customers and things like that. We definitely fell prey to being too responsive in the beginning. I think there's a little bit of residue of that even today where we've started to institute more rigid development processes and prioritization but we still a lot of our customers expect us to be very responsive and that's starting to change as we shift our focus a little bit more to the more visionary things.

Christian Beck: How do you make that transition from being completely responsive to everything to now almost having some prioritization in your mind and communicating that out and letting it drive the roadmap?

Eric Prugh: As far as how we've worked to institute processes that better communicate to the customer realistic timelines that also align to the other priorities that we're working on, it's a problem that we're working through and is probably one of my biggest challenges right now is as we go through this transition. I would say we have set up as opposed to saying, "We're going to get that fixed tomorrow," we regularly meet on customer issue requests, bugs, et cetera now on a weekly basis and then provide rough estimate timelines after that.

Eric Prugh: It's been about just working that into the communication process with our customer success team to say, "Hey, I don't know when this is going to be fixed. We're going to meet on this and then I'll a better answer on when we're going to estimate getting that into the roadmap and things like that."

Christian Beck: You say that to actual customers?

Eric Prugh: Yes. Say, "Hey," we kind of have a triage process that helps ultimately it does get to the development backlog if we feel it's warranted and from there, it's anywhere from a four to six week timeframe to get it, if it's a higher priority item on our roadmap. It's definitely not perfect and still something we're working through. It's one of the biggest challenges. You got things that, dozens of features that you've built over the years that have either you shipped because somebody needed it or you wanted to get it out there to see if it was going to work for you and maybe it didn't. You still do have customers that pick that up. We've just been trying to balance how we move the needle on some of those things. How maybe we communicate to customers that that's not something we're going to be advancing moving forward. Or just helping the customer try to find work arounds that make sense.

Anna Eaglin: What do you think the biggest challenges have been that you've had to navigate in that transition from being kind of a scrappy startup company to now kind of really moving into a solid scale up territory?

Eric Prugh: As far as moving from start to scale up, I'm not sure I feel like we're a scale up yet. We're still, there are a lot of things that we're doing really well and I feel we're really mature in a lot of areas of the business. I feel we have an incredible go to market plan. I think the way we're starting to message the product and developing some consistency on the sales side is really great and is definitely I think a sign that we're a scale up or certainly on the right track.

Eric Prugh: On the product side, I think because we have these very different experiences and use cases in which our customers use the product, the biggest effort and priority for us is how do we bring those things together? How do we make the experience for the end customer more seamless? And what's interesting about that is it benefits both sides of our product and helps us realize our vision. Even though a lot of what we're doing is just rebuilding what we already have, it's going to be monumental for how we help realize our vision and demonstrate what we're trying to achieve to our prospects and customers.

Eric Prugh: As far as the maturation of the process, there are a few things that we've done that I'm really proud and I feel where we're very mature and that's building right foundation of we're building a new app from the ground up, a new UI, building the right foundation so that it will allow us to iterate much more quickly as we're getting new product to market. I think whenever you build a product the first time, it's going to be a little bit of a Frankenstein product because you're trying to move fast and you're listening and you're being responsive. There's almost always a time where a decision will come that you need to rewrite the app or you need to rebuild core components of your system that will better serve the company that you are now and the company that you want to be.

Eric Prugh: It's probably going to happen even again in the next few years, I don't know. But, at that point in time, it's a very hard decision to let that process take a year plus and you're going to have to manage things, going to have to manage multiple things in parallel, an old product and a new product, when is the new product ready? What kind of feedback are you getting as you're sharing it? We're introducing brand new concepts that we're have to socialize a lot more than I'm really comfortable with because I want to get the new product out there and I want people to be using it. Big part of our transition is patience. Patience from our customers as well as patience for myself and our executive team as we're trying to execute on a lot of things that we've spent time building out. That has probably been the hardest part but the most rewarding, is these things are really starting to pay dividends now that they're materializing.

Christian Beck: What are things that you're focusing on on the product team? Product marketing? Product development? Product management? What does that look like over the next 12 months?

Eric Prugh: We have really, we've started to invest a lot on the product marketing side of the house. I feel like as you start to hit scale up stage, product marketing becomes a big function where there's generally a blind spot in the business because you have founders that are out there selling that are creating the message on the fly that may or may not be something that everyone else can use. Because founders just speak so much better to where the company's come from and people that are buying from founders love that they're dealing with founders.

Eric Prugh: When you start hiring people that are out trying to deliver that message in the market, the product marketing side of the house becomes super important. Refining the messaging in a way that everyone can use that's repeatable. Creating content that can be use for the sales team. Another big effort that we're going through right now is, as we've built all these features over the years, really honing in on what's being used, what's not being used, sunsetting things that aren't being used and also trying to activate features that we feel will add value that we've built really fast. We shipped for a few specific customers that had a need but maybe haven't done a great job of activating.

Eric Prugh: That's I think a natural part of how our product organization has matured. There's all sorts of different things that we could do better as far as better managing the roadmap, better preparing things before we launch them, all that sort of stuff. Product marketing I think is one of the big areas where we're going to get a ton of leverage as we move into scale up phase.

Anna Eaglin: What does better product mean for you?

Eric Prugh: Better product improves people, eliminates friction and provides an approach to a problem that's different and allows people to achieve something new.

Christian Beck: That was Eric Prugh at PactSafe. You can connect with him on LinkedIn or head on over to pactsafe.com.

Christian Beck: Today, at the end of our show, we're going to recap it with one of our resident experts and also intimately familiar with PactSafe, Tina Hafer. Tina is one of our executive product partners at Innovatemap and one of founding members and her expertise lies a lot in helping companies think about how their product needs to scale through messaging and hierarchy. She's going to be a great person to have a conversation with here as we talk about what it means to actually take your product from startup to scale up and what that means from a marketing standpoint.

Christian Beck: Welcome Tina.

Tina Hafer: Thank you.

Anna Eaglin: One thing that Eric said that he called it the classic startup mistake where PactSafe out of the gate, their messaging was very general because again, they have a solution that's applicable to pretty much anyone on the internet who does any kind of commerce or has to agree to something. In your experience working with startups, especially startups who are kind of moving into that scale up phase, what do you see when it comes to kind of the more generalized messaging and how can people avoid that?

Tina Hafer: I don't necessarily think that it's a classic startup mistake. I think it is a learning process. I think that as they were moving through that timeframe, that they were continuing to hone and refine their messaging and really start to focus it in on their personas that were applicable for their particular target market.

Tina Hafer: I think though, that you need to have a strong foundation to begin with. They have that. I also think another way that you can get out in front of it is to actually talk to your buyers. Talk to your prospects, talk to folks out in your target market or your perceived market and understand truly what their pains are, what's the solution that they're looking for and trying to really uncover what the benefits are that they're trying to drive forward with.

Tina Hafer: I think that it is a learning process but if you have that strong foundation in place, as you move through and as you're testing these messages out, it's a wash, rinse, repeat type of exercise. You have to get out in front of them, talk with the buyers, start to test this message and then you can continue to refine it.

Tina Hafer: Now I know with PactSafe too, when they are focusing on the legal persona or an IT persona, that they have now refined that messaging that is going to very easily resonate with those particular buyers' pain points.

Anna Eaglin: When you say a strong foundation, what do you mean by that?

Tina Hafer: I think that with when we look at creating a positioning strategy, we continue to focus in on really the foundational statement and that is considered to be your north star for an organization. It is should be relevant to the buyer's top pains that they're trying to solve. It should be repeatable across both internal channels, across your entire organization as well as external channels. And it should be simple. No flowery word, no 10 cent words as I usually say. But it needs to have that strong kind of core foundation to it.

Tina Hafer: Then you can start to build the marketing messaging around that. But that foundational statement is truly your north star that's going to drive all of our communications internally and externally.

Christian Beck: Do you think that startups when they're starting to figure something out, do you think it's likely that most of them are just trying to figure it out in the beginning? Or do you see some that actually have a very clear understanding of who their buyers are going to be?

Tina Hafer: I think it's all a little bit of trial and error. I've seen some that come in with a really good hypothesis of what they think is going to resonate with their buyers and we can test that out and figure out if it truly is going to work for them or not. I don't think anybody has the right answer. Nor do I think that there is only one right answer for a company. I think it's going to continue to evolve and change over time but I think if you have a good basic idea of what it should be for your buyers, that's a good place to start. No, I don't think anybody has the right answer when they start off.

Christian Beck: That's probably comforting advice for startups to know that you're not going to have the answer. I was also thinking too about Jon Gilman, the CEO of Clear Software who was on a few episodes ago as well and he was talking about, it was very obvious for him because he was in the market he was trying to serve later with Clear Software and thought, okay, there's a clear pain here. It's going to be pretty obvious but then realize that as he was trying to go sell the product, he was talking to a different person.

Christian Beck: I think a lot of times maybe that's the issue too is, even if you know it really well as being a potential end user of your product, you don't know it the way that you've got to say it to somebody who's buying it.

Tina Hafer: Right. And I think that's a really good distinction. I think it's a big difference between you viewing yourself as a potential end user, as you just mentioned, versus who is the buyer of this? Those may be one and same or they may not. You need to get at the heart of who's writing the check for this and really understand what their pains and problems are that you're wanting to address.

Anna Eaglin: Talk to me a little bit about scaling a founder and scaling that message and that persona and how does that work inside companies?

Tina Hafer: I think that is a process and it is a process that requires a concerted effort and a very focused effort to scale the founder. Because if you think about it, the founder has been seeing this in their sleep. They've been living it, breathing it, eating it, drinking it, saying it every day and practicing it nonstop and they know in their heart of hearts, what works and what doesn't work.

Tina Hafer: Being able to take that sort of tribal knowledge and codify it to help the organization to scale the messaging I think is so important. Coming from the background of not only product marketing but also field enablement and sales enablement, I think that there are a lot of processes that should be put in place to help to create a common language for an organization. In a lot of cases, there are nuances to that language that maybe only the people within their four walls understand but being able to translate that in a way that is going to make sense externally is important.

Tina Hafer: I know a lot of times when we work with clients, we'll put out swear jars so as we're helping them transition into this new way of speaking, this new language, they have to really internalize it. The other key part of this is that it needs to have a regular, it needs to be practiced. It needs to have a regular cadence. You need to get out in front of the sales folks, in front of the marketing folks, in front of customer service, all of your internal teams but it needs to be repeated. It's not a once and done, set it and forget it exercise. You have to continue to reinforce this new language, this new way of speaking. Make sure everyone understands what those pains are. Everyone understands very specifically what the solution is that you're offering to that market and then what are the values that you're driving towards?

Tina Hafer: It is a very concerted effort that needs to be put in place and it needs to be practices. There are a lot of tactics that can go along with that to make sure that everybody in your organization is coming along right alongside you. That's the only way that you're going to be able to scale a founder and be able to scale that messaging. We talked about creating that foundational statement so you create this framework that's flexible and allows the messaging to evolve over time but you have to get that in their hands. You have to get it in the field's hands and help them to practice through that and help them to trial and test this messaging out. They have to make it their own, they can have a variation on the theme but that main theme has to be consistent and it has to be constant across the entire organization.

Anna Eaglin: You mentioned basically solidifying the messaging inside the organization. Repeating it, making sure everyone is speaking the same. We talked a lot about that with Cara Wagner, I think she's kind of in the middle of that process. Making sure all of Mimir is talking about Mimir the same way, using the name the same way, especially when it come to kind of their brand hierarchy. You also mentioned kind of out in the field. Talk to me a little bit about kind of sales enablement as a part of product marketing and kind of the importance of that.

Tina Hafer: I'll talk about it from the perspective of a startup or a scale up. I think in larger organization that has its own role, own potentially department that is focuses purely on sales enablement. I know in my past life that I had responsibility for both product marketing and sales enablement and I believe that in product marketing, it is such an important role to also handle that function of sales enablement in a startup or scale up organization because you are kind of the hub for communication and for doing that translation from product to sales, to marketing, to customer. You're that hub.

Tina Hafer: I think as a scale up organization and a product marketer within a scale up organization, as an example, you also have responsibilities for the sales enablement. And that is ensuring that that customer facing team, sales, account management, SDRs, BDRs, whatever you want to call the organization, but they all have that consistent message and I think it is important to make that translation. There are different needs that they have. They want to make sure that they are able to, there's no friction in the sales process and so you need to be very clear and concise and the message that they need to then communicate to their prospects and customers.

Tina Hafer: I think that is a very critical responsibility of a product marketer in a scale up type organization.

Christian Beck: I think what you described is really useful to understand that. As you're scaling messaging or in PactSafe's case, finding the right messaging, it's not just about iterating it in the market and figuring out what works but then once you figure out how it works, making sure everybody internally is saying the right things and operating under the same language.

Anna Eaglin: Thanks so much for listening to the show this week. If you haven't yet, be sure to subscribe, rate and review this podcast. Until then, visit innovatemap.com/podcast and subscribe to learn how you can take your product to the next level. As always, we're curious, what does better product mean to you? Hit us up on Twitter @innovatemap or shoot us email at podcast@innovatemap.com

Christian Beck: I'm Christian.

Anna Eaglin: And I'm Anna and you've been listening to Better Product.

Christian Beck: Better Product.

Anna Eaglin: Drop mike.

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