From ICP to PMF: The Blueprint for Startup Growth w/ Dhevesh Mewawalla | Octopreneur Intel

00:00
Dhevesh Mewawalla:
It's almost taking a step back and saying if there were only 100 companies in the world and you got to define them and you got to choose exactly how they would behave and all the ways that they sort of like were similar in how would you describe it. And that's your first ideal customer profile list.

00:20
Anshika Arora:
Today we're talking all about how to balance ambitious revenue targets and achieving your product market fit while also operating a lean team with potential financial and resource constraints. We're honored to have Dhevesh on the podcast who empowers startups and scale ups between seed and Series A to nail their product market fit and new market expansion. He's the founder of Octopreneur intel, which is an organization created to enable highly talented immigrants with freedom of work in the UK. Today we spoke about some of the interesting frameworks, resources and strategies that businesses can use as they efficiently scale post production. I'm Anshika, the founder of Eternity, a CRM designed to streamline the wedding industry for both couples and businesses. And I'm so excited to be hosting the BAE LAB podcast today. Let's get into it.

01:07
Anshika Arora:
Thank you so much, Dhevesh, for joining us on today's episode of the BAE LAB podcast. We're so excited to have you here and be talking all things around building a business and reaching those really ambitious targets whilst also trying to stay lean and having financial strengths potentially. So let's get straight into it. So to start off, thank you. So to start off, when it comes to having this conversation around hitting those ambitious targets and product market fit, the first thing that's always suggested is really knowing who your ideal consumer is. So can you tell us a bit more about the best ways to really find your ideal consumer profile?

01:44
Dhevesh Mewawalla:
Yeah, it's a great question and obviously there's a few different frameworks that you can adopt and a lot of it is trial and error. Especially as an early stage startup, you're not going to necessarily nail it in the first attempt. But I always start with, you know, the idea of pain and risk and that's sort of like, is the foundation of what you're thinking about with whatever you're trying to solve, right? The reason someone is willing to put money against your product or service is because you're solving a problem for them. And I think people do understand pain. And so, you know, that's like our, like what is the, what's the beast that bothers people?

02:17
Dhevesh Mewawalla:
But I always think about that as an example, saying if you stab your toe against A table, you're going to feel pain, but what's the likelihood that you're going to do something about it? Are you going to go see a doctor for it? Probably not. Right. So pain is sort of an indicator, but you want to connect that to risk. So at the same time, if you've then got chest pain that happens consistently over the last week, might not be as high as stabbed your toe in terms of the pain threshold, but you're going to start worrying about the risk of not acting. And that's the aspect of sort of joining the dots to say there's going to be all sorts of pains.

02:49
Dhevesh Mewawalla:
The things that people will action in terms of making a buying decision or an engagement decision comes with the risk of not acting. And that starts to define who are those people that will not just be interested in what you're doing, but actually want to engage and go further than that first step. And often it's very easy as an early stage founder to get distracted by anyone showing interest, right? Because you're like, someone likes what I'm doing, like, I want to be involved, like I need to show them like a red carpet treatment, get them all of my product ideas and show them everything we can do. And we sort of get stuck with the idea saying, actually is there a risk for them not acting?

03:25
Dhevesh Mewawalla:
Because most people will probably only be able to solve their top three priorities in a year or a quarter or however you sort of look at it. So that's my sort of view of like the starting point is, you know, the pain. You can quantify it in some respect. Again, almost taking that sort of like medical lens of it, right? Like, what is the quantity of pain? What's the risk of unacting? Because that then gives you a pretty good idea of who should be in your ideal customer profile. And as you go into that, one of the things that I always like to think about is the casualty in your ideal customer profile. So who is it that you should not be speaking to?

04:01
Dhevesh Mewawalla:
And so when you are looking at an organization, particularly, lots of people will try and build businesses built for B2B, right? Because investors tend to like that has bigger application. There's also a temptation to be like, let's go to the most senior person and talk to them about our problem. Because if we've got the most senior person, then we've got buy in as a champion in the organization. But if you go talk to a CEO about here's something you might be able to use for your learning and development software might be interested because he wants his people to do well, or she might be interested because they want their people to do well. But are they going to solve that problem themselves? Are they going to delegate it down?

04:39
Dhevesh Mewawalla:
Is it even going to be anywhere on their top 10 list, let alone their top three list? But then you've burnt your chance of actually making an impression because you're not speaking to the right person in the organization. So identifying a category of organization that associates with your offering, but then also the Personas within that is hugely important. And when you are trying to play that framework, I've got a little mirror board that I tend to use, but it's almost taking a step back and saying, if There were only 100 companies in the world and you got to define them and you got to choose exactly how they would behave and all the ways that they sort of like were similar in how would you describe it? And that's your first ideal customer profile list.

05:20
Dhevesh Mewawalla:
That's your idea to say, I can only go after 100 companies and I can only work with them. And that is really hard because you're like, well, but there's more than that. Like, my company is meant to work for millions, not just a these hundred companies.

05:32
Anshika Arora:
Yeah. And I love what you said because I think as founders, you're absolutely right. It can get so easy to want to do everything at once. But you're also going to hear a lot of people saying, I absolutely love your idea. And there's such a need for this. And that can be a bit of a vanity demand that you see. But actually there's that real demand of, okay, well, how much are you willing to pay for it? And that's really what follows through when it comes to finding product market fits. So I guess my next question is, what are some of the key leading indicators that founders should be looking at to suggest. Yep, you have achieved that. Right. Product market, then.

06:07
Dhevesh Mewawalla:
Yeah, it's, you know, I think you'll start to get some amount of clarity as you have paying customers already. Right. Because product market fit. There's one aspect of fit, saying there's someone willing to pay you for it, there's quite another for them to continue paying you for it. Renewal after renewal. Right. And that's an aspect of that. And so if you think about the central theme of what makes people engage is impact. So one side of it is the promise of impact. You're saying you have a problem. I feel like I have the right solution. Let me take you through this buying journey. So you start with the awareness. You then Sort of build the interest, then you sort of go through a decision process and you sort of say all of that is the promise of impact. Right?

06:49
Dhevesh Mewawalla:
But when you actually get them to sign, that's only half the battle because you only got them to step one of the, you then have to onboard them, which means you've got to deliver essentially immediate impact. Right? And immediate impact, depending on the kind of thing you are, might be as soon as they come in or the first three months, enterprise solutions tend to take a bit longer, but they still have something that you deliver. But then you also have this idea of recurring impact. The only reason someone will keep using what you're doing is because they constantly see that it adds value to that process.

07:17
Dhevesh Mewawalla:
And it's when you've gone through all three of those steps, when you've started to really be able to say I can get them through that journey, whatever I'm promising, I'm able to deliver and do it well consistently and I can keep improving that. And that's why they keep coming back to me. And until you've been through that journey, because there's a lot of companies who will spend a lot of resources, particularly money and time towards the sales funnel or sort of like that go to market side of let's just bring customers in. And as a startup what really kills you is you spent a lot of money and time bringing them in but then they churn in three months time and in six months time, like what? Like well what did we do wrong now?

07:54
Dhevesh Mewawalla:
But and that's again comes back to that ICP because you've probably got one enterprise client because you went to university with someone who works there and was able to get you in and a couple of mid market clients and 10 startups and you're like, well who am I solving the problem actually for? I've now ended up with this product roadmap that can go in so many different directions and I want to do it all now. But can you actually do it all now? Right. And so it's that sort of one singular stream that you can solve for continue to show recurring impact. And that doesn't need to be over multiple years, it could be over multiple months even. But you're starting to see that, that's, that stickiness comes in. I think those are your first signs to say someone's willing to stay.

08:30
Dhevesh Mewawalla:
And that's the story that I can use as social proof to build more in the same space. And then you start to see that flywheel start to kick in slowly.

08:38
Anshika Arora:
Absolutely. So I guess one of the key takeaways from that is you want to be looking at your onboarding metrics as well as your engagement metrics. You can't just look at won in isolation really. Right.

08:49
Dhevesh Mewawalla:
Exactly. And I think most people get very excited by winning something and you should absolutely celebrate your wins. But you know, that's not where you're going to get an investor throwing money at you to say, oh, you won something, well done. It's hard work, but being able to keep that is really important. And that's again, you know, sometimes you might have, depending on the offering, you might have pilots, so you might have engagements that go before you actually even complete the sale. Are they constantly using it? Is there a free trial where they then want to click through that button? And those indicators tend to be sort of like leading indicators to suggest that there is something there. Even if they're giving you feedback, you know, very few. I think it's like single digit percentages of users that actually give you feedback.

09:31
Dhevesh Mewawalla:
Even if it's the worst feedback in the world, the fact that someone took out the time to write the feedback is a good. Right. And are you collecting that and are you making that easy enough to allow people to give 30 second feedback every few months and be able to give you that information that you need? I'm going to get the lights back on.

09:49
Anshika Arora:
Perfect. Amazing. And so when it does come to getting that feedback and doing that onboarding process, ultimately your feedback of existing clients, whether it be retained clients or churn clients, leads to your strategy to get newer clients. But often startups are in a position where they have to stay very lean and they have very limited resources. So what advice would you give to a startup up on the right outreach strategies to be using with those limited resources?

10:16
Dhevesh Mewawalla:
I'm going to give you a very boring answer in that. Obviously it depends. Right. And I think the aspect that you need to think about is what's the one sliver of the market that we feel like we do best and we've got something of real value. Right. Because if we're going after that sliver, then we're trying to do one thing over and over again really well. Right. And so if you're trying to then build a community, then you're going to start to think about, well, I don't have the kind of resources where I can deploy salespeople to go after, you know, people to sign up onto this community or a product led motion.

10:51
Dhevesh Mewawalla:
But then I've got to have a really engaging way for them to be on socials or for them to sort of like come in and get instant impact within the first five minutes of using the tool and then like a user community that's really active, that does events and stuff. So then you've got a very different methodology, build your resources to say I actually will never invest in salespeople, right? My entire funnel is built on marketing and then obviously the engagement. But all of that is sort of, you know, automated to a large degree and I'm not necessarily using people for it because the community interacts with itself and that's what the likes of.

11:23
Dhevesh Mewawalla:
When you think about like what Slack and Notion have done, you know, you probably don't go through speaking with anybody in that journey unless of course you're an enterprise buyer and that's a slightly different journey. But most of us would sort of engage with it completely without any external support, additional help. Whereas you're building something that is, let's say a larger average contract value in a recurring business you're then going to need to think about, well actually I can't deploy all my resources towards social media. I need to be quite targeted saying if I need to get in front of these 10 very large companies I need to be able to meet all six people in their decision community.

12:00
Dhevesh Mewawalla:
And I know that's going to take me two years but then how do I then make sure that I'm not getting distracted by somebody else in the meantime? Because that is my focus. I need to meet these 10 companies, these six people, these 60 people, everything that we do revolves around them. And that's the sort of classic account based marketing and sort of like named accounts and how do you then have like an account manager instead of a CS rep that will take them through that journey of saying not only have I have to talk you through this like pilot and unsigned, but I've got to make sure that all the people in your company use this software or this tool because that is a whole different kind of journey, right?

12:31
Dhevesh Mewawalla:
And so before you sort of go and say well what should I do? And often again the average temptation is let me try a bit of everything because if this doesn't work, this might work and if that doesn't work, this will work. That's the really hard thing. And that lack of focus, that lack of definition and I've been very lucky with access to resources and I can recommend there's a course called Revenue Architecture by Winning by Design. There's a book as well which we can share as a link if you like, but that talks a little bit about like picking the right go to market motion for the right kind of business model you need to deploy.

13:05
Dhevesh Mewawalla:
So if it's like high users, low contract value, very different to what you have was like low number of users, small amount of like customers that you need to acquire, but high customer value and that sort of like gives you a little chart of how you can build around it.

13:19
Anshika Arora:
Very good. I think that'd be really helpful. I would love to read that book. And one thing that really struck out to me there when you've said it's is I'm making sure that everyone is using your proposition or your product or your service or whatever it may be. But I think as founders you sometimes think actually have a limited amount of time in the day being one of the resources. So how, what advice would you give to founders in terms of splitting their time to say you don't have a CS rep or you can't afford one yet and it is just predominantly founder led sales or founder and one founder's associate, what should be the priority?

13:52
Anshika Arora:
Or does it have to be that balance between existing customers, retaining them, making sure they're happy, but then making sure that you're also hitting your new targets and your new metrics for that month?

14:04
Dhevesh Mewawalla:
Yeah, I think, look again I'm of the view that the more you do in satisfying existing customers, the more that creates long term value in what you sort of do there. Right. But there is an aspect of pragmatism in there where you almost need to talk to your investors or your board in what is the steer. Right. It's very different when you're a VC backed business that is expecting you to run at 100 miles an hour versus if you're a bootstrap business that you can do things organically and you're not worried about that pressure. Right. So there is obviously, you know, I don't want to preach an idea that this is what every should do, which is not again realistically achievable.

14:38
Dhevesh Mewawalla:
But that's a conversation that again if you have an investor and if you have a board then you know, you could ask for help in saying look, I can only split my time so many ways. Right. What is it that I should be working on? And if depending on the kind of business you are, sometimes it does make sense to forfeit that money in the first bid to just make sure you're building like this obviously like very prominent stories like canva they didn't make money for years until they sort of had about 14 million users before they started monetizing. And that was a different kind of business. How many of us are trying to build the next Canva? Probably not many.

15:13
Dhevesh Mewawalla:
And again, the entire ecosystem's changed where no one's really giving you a check anymore without some amount of money coming through the books. Right. But can you actually do that with a great sales engine and then realize that no one actually stays with you? Because you might get your first checque, but I promise you're not getting a second. Right. Because that's obviously the only reason investors come in is because that's the aspect of like recurring revenue which then obviously affects the valuation.

15:38
Anshika Arora:
Absolutely. Very helpful. What are some of the most common pricing mistakes that you see founders making? So they have these really ambitious revenue targets. Often you're into the market and you try and understand, actually, am I targeting my customer correctly? Is my product the right value high or low? But do you see some very common pricing mistakes that founders make?

16:00
Dhevesh Mewawalla:
I would say pricing strategy more broadly, because again, the sort of evolution of attraction towards SaaS has meant that everyone's sort of idea is I need to get annual subscription. And I think particularly with the onset of what Gen AI is doing, there's more of a pull towards consumption, which means you're not necessarily paying for something unless you use it. And I think that's the tricky balance, right? Like, everyone wants to be able to go back to their investors and say, I've got annual contract with my customers and that means I've got ARR. I can show that my multiple comes from there. Especially as a startup, I think that hurts you more than helps you because obviously you're doing something right if someone's willing to sign annual contract with you.

16:40
Dhevesh Mewawalla:
But then if you've got your pricing wrong, you're stuck with it and you can't move it and you can't drive engagement and you can't actually, you're sort of like forced by it. And I often like to think that most people, even in B2B, it's difficult necessarily to get everything down to monthly, but I see very few people go down quarterly. And I think that's a really good starting point because you're just like saying, look, we're building, right? We're building as we're driving and we want to make sure that you're using it. And actually, I don't want to be having a massive amount of customers on my book. That are all going to turn all together at one go because that's going to really hurt me. But if I'm building quarterly and I'm thinking about achievable steps, right.

17:18
Dhevesh Mewawalla:
Like it's like, can I actually deliver this value within a small amount of time so that they keep coming back? And at that point after the first couple of quarters, you're like, we now know this engagement. We can actually gather feedback around it and we can deploy that to say actually I've helped you save a million dollars and I'm only charging you $1,000. That doesn't make sense. Right. And so I can't then make that $100,000, but I can at least make it five. And then you're sort of saying, well, because I'm still delivering enough value. But there's assumption or this, this sort of almost need to jump to annual contract as soon as someone is willing to sign. Right. And you almost. And again, it doesn't help you. Right. Like you're forcing it.

17:57
Dhevesh Mewawalla:
Buyer doesn't like it because they're like we don't even know if you'll be here a year later. Like, you know, we don't necessarily want to be in that situation. You don't necessarily. You like it because your investors want it and it gives you some, might give you a bit of a cash flow boost and it might give you a sort of certainty of revenue.

18:11
Anshika Arora:
Yeah.

18:11
Dhevesh Mewawalla:
But then if those are customers you forget about because then you're hunting for the next ARR customer that's going to give you an ACV again, then you're not really building, but you're sort of on your feet a bit more when you're trying to make that barrier entry a little bit smaller. And that's what I'd like to see more of because I think we are shifting to a world where people are going to want to buy consumption based value. So you can have a subscription element, but then you can top it up with credits or usage that you can sort of see when there's an aspect of variable, particularly when you're dealing with the smaller end of buyers in the customer journey. Larger enterprise customers will typically want certainty because that's how their budgets and their cycles work.

18:48
Dhevesh Mewawalla:
But then they're talking about usually multi year contracts as well.

18:52
Anshika Arora:
I love that idea around quarterly contracts because I know as a business we currently have monthly and annuals and some of the things you said though really resonate with where you sign annual, then you're chasing the next annual and with monthly, you're scared of how you're going to leave in the next month. Whereas quarterly is a really nice sweet spot, which I've not seen done enough. So maybe something that we should implement ourselves. But when it comes to that, and especially where I've just spoken about what I've gone through in my own business, how can fund, how can founders ensure that they have the right pricing to maximize their revenue without scaring off early customers, for example?

19:29
Dhevesh Mewawalla:
I mean again, it is, it's a balancing act, right? Like how desperately do you need that to be money that is reflected into its profitability or sustainability towards the business? Because if you're building a venture backed investment, then I suspect your interest is to be able to say that we can scale this, right? And even if it means we've charged them the wrong amount to start with, that's okay because you're learning a lot from your early customers. And so you almost take the friction point of way of saying like, actually we don't even know what we should charge for this. And you almost say that to a customer early in that journey to be like, what do you think this is worth? Right?

20:06
Dhevesh Mewawalla:
And if you have enough of a dialogue and a relationship to be able to say that, then you almost price those first five customers to be almost like, this is what we think it is. Do you agree with it? Again, most customers reaction would be to try and bring your price down. And that's okay, they will do that the first time. But again, back to the sort of point, if you've got a quarter renewal and then you've seen that they're using it all the time and they're getting so much value out of it, you've almost embedded yourself into that process to be like, well, you know, I've realized that just to run this, we're spending a lot more money, even the acquisition of it all. So maybe this isn't $1,000, maybe it's $5,000.

20:42
Dhevesh Mewawalla:
And then you'll start to see, well, like, can I get the next quarter for three before I go to five? Because like, I then need to stream it down. But you'll start to get some insights from that, right? And I think that's where most people just try to overcomplicate it because you're trying to think about all these things that you need to factor in. And as a startup, all your metrics are going to be quite skewed. It's good to have a pulse on your metrics. And like, I'm a big fan of the unit economics behind all of what is being built. But you don't need to over engineer it. You almost need to do some of that stuff back of the envelope. To say this is like pass the smell test.

21:15
Dhevesh Mewawalla:
And if we realize that this is more valuable than what it should be, then let's try and make sure we have that dialogue much before a new human comes up to say, look, this is what we're learning. We'll give you a discount for the next couple of quarters because if you give me a story, I can do acquire 10 more customers. And that's more valuable than making money from you in the first place. Right. And so the Series AI worked with got product market fit, had 5 million of revenue. But I think the first 20 customers that we acquired were on special pricing because they were almost like the founding cohort of our community. And we're like, it's fine, we're going to leave them on that pricing where they never get corrected because we wouldn't have got here without them.

21:52
Dhevesh Mewawalla:
And you want to give some of your customers that treatment.

21:54
Anshika Arora:
Yeah. And it comes back down to what were saying before we actually started the call where business nowadays is all about also building that right community and the ethos that you build the business on as a startup is very different. Sometimes when you look at established businesses and you think, oh, they're very strict on their pricing and I shouldn't budge on mine, but actually they operate really differently, don't they?

22:12
Dhevesh Mewawalla:
Yeah. And again, it's not to say that you should always be like that. Right. I think it's getting through that first inflection point of I've been able to sell something of value, people are using it and people keep coming back. And at that point you can then establish what that bar is because then you want to sort of say, well, my first set of customers took that risk on me. I want to give them that flexibility because of the relationship that we've built with them. But my second set of customers are not sort of, you know, the ones who have taken any of that risk. So why should I pass on that benefit? At that point we have a much more formal pricing policy.

22:47
Dhevesh Mewawalla:
You know, we might do discounts in year one or we might sort of give them exit clauses to basically say, look, if you're not going to like get value, that's fine, we'll get that. You go, but then you want to make sure you're more stringent with those rules there. And at that point you start paying attention to those numbers more because if you then start doing the math and saying, actually, if we don't do something here, my CAC is going to be really bad. I'm not going to be able to get a good investment round next, you have to start worrying about that. But in those first ones, especially when you're talking about angel rounds or pre seed rounds, I can't imagine any invest just going and saying to you've completely messed up your pricing strategy and that's why you're uninvestable.

23:24
Dhevesh Mewawalla:
It's just not a thing.

23:25
Anshika Arora:
Absolutely. Thank you so much. I've learned so many actionable takeaways from our conversation and I definitely want to check out that book. So we'll try and link it down below as well. As with any BAE podcast, we always ask the same few questions for our community, the first of which is, who are three British Asians who you think are doing incredible pieces of work that the audience should check out?

23:46
Dhevesh Mewawalla:
Yeah, I'm going to upset a few people because it's hard to narrow down to three, but I'll try and give you people you may not have heard of. So one of them is Paras Patnani. He is the founder. Well, he's a serial founder. He's got two businesses he's running at the moment. One is called Seed, which is more on the edtech space, helping people sort of work, go abroad and study there. And the second is called Honey Twigs, which is a completely different world, but he's doing sort of single use Honey Sachri in sustainable sort of measures. So check Paras out. He's just all over the world figuring these two things out. The other one is Anushka Desai, also works in EdTech.

24:22
Dhevesh Mewawalla:
She has a business called Application Ally, trying to help people from sort of mostly Asian communities to be able to go abroad and get into top universities. And she is a force of nature, definitely someone to check out. And then the one who introduced us, it's very hard not to get excited about what Cien Solon is building with Launch Lemonade in the world of AI especially. And she's just, you know, I never know if I'm actually talking to her in person or if I'm talking to an AI. But she's created of herself. Like, I think she's one of those people way ahead in the world with all those things. So definitely keep pulse on her.

24:56
Anshika Arora:
I'm blessed to have Cien as my mentor and she is.

25:00
Dhevesh Mewawalla:
Or do I still speak to Cien or do you speak to a robot? She felt I don't.

25:03
Anshika Arora:
We never know. Shout out to the BAE mentorship program there as well. How can people find out more about you and your company?

25:10
Dhevesh Mewawalla:
I got a website, it's called Octopreneur Intel. As a first time startup I've realized that I should have picked a better name that people could spell, including myself. I keep spelling it wrong. So yeah, I will send you a little link for that as well.

25:22
Anshika Arora:
Amazing. Perfect. And how can our audience help you?

25:25
Dhevesh Mewawalla:
This is the part I suck at. I don't really. I'm not good at asking for help, but I do a lot of sort of what we talked about. I do teach some courses for seed stage companies as they sort of go on. I typically do that with partnerships with the seeds itself. And so yeah, if there's impact focused PCs that you know in your network who would benefit from this for their portfolio, you know, would love introductions to that.

25:46
Anshika Arora:
Amazing. Any final words from you?

25:48
Dhevesh Mewawalla:
No. This has been really fun. I feel like, you know, I should be asking you some more questions because you're building a really interesting business so we should flip the equation next time.

25:55
Anshika Arora:
Next time. Thank you so much for joining us on today's podcast. It was a pleasure to have you.

26:00
Dhevesh Mewawalla:
Likewise.

26:05
Amardeep Parmar
Thank you for watching.

26:07
Amardeep Parmar
Don't forget to subscribe.

26:08
Amardeep Parmar
See you next time. 

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