Case Study: SiliconCFO CEO Jacob Sheldon Used Unscalable Methods To Create A Scalable Market With Product-Market Fit
It's the things you do that don't scale that allow you to grow big and fast.
Introduction:
SiliconCFO was started to help startup founders with financial operations, management tasks, and responsibilities. Initially, they were a consultancy helping startups themselves. The company quickly realized that the best solution for each startup was different, and usually not them. That’s why they built up their talent pool of experts and transitioned from a consulting firm into a marketplace. Now, they connect startups with the right part-time CFO solution for their needs.
Problem: It isn't easy to get the right financial management and operations assistance for your company. You can either seek out someone through your network or go with one of the current mainstream options which are all grossly overpriced and mainly for high-growth startups.
Market: Our target customers are early-stage startups and bootstrapped companies, but we have helped many other types of companies. The size of this market is massive, and although we wanted to focus on just US-based companies to establish our niche, we found just as much traction with non-US companies.
Solution: SiliconCFO matches startups and small firms with the right part-time CFO for their needs.
Team: I started siliconCFO as a consulting practice, but it has evolved into the CFO matching marketplace it is today. The team now includes a full-charge bookkeeper, Mylene Reyes, along with a roster of interns.
Executive Summary:
Problem: Trying To Balance Supply And Demand
Marketplaces are like a chicken-and-egg problem; what comes first, supply or demand? Jacob’s team had to figure out which side had the market power in any given transaction between the two.Market: Satisfying Demand By Cultivating The Supply First
Through further customer research, SiliconCFO opted to build the supply-side of the marketplace first to attract startups and SMBs that were in need of fractional CFOs.Solution: Unscalable Tactics Led To A Scaleable Marketplace
Jacob and his team purposefully used unscalable tactics such as manual check-ins with their customers to validate demand and PMF before building technology to scale or automate key functions first.Team: Passion And Humility Make All The Difference
Jacob looks for teammates who have an undying passion for the customers and the business, but more importantly, the humbleness needed to work and support a team.Takeaway: Constantly Talk To Your Users
It’s important for founders to stay close to their users as they build - getting separated from them too early can lead you astray and away from PMF.
Case Study: SiliconCFO
Problem: Trying To Balance Supply And Demand
Tell me about a problem or set of problems that you’ve had to solve on your journey to product-market fit.
As with any marketplace, the balancing of supply and demand is incredibly hard in the early days. We found it easy to onboard new candidates from the start, but it was harder to find startups actively searching for a Fractional CFO and willing to use our bootstrapped and scrappy marketplace to hire one. The most important thing to seed the marketplace and reach PMF was delaying building tech and managing the marketplace manually via email and internal systems. This way, we spoke with every single candidate and startup founder to provide the best possible experience to both. Alongside providing a great experience, talking to everyone gave us deep insights into the problems and untapped opportunities in the space.
Why were these problems so critical to solve? What was it like personally struggling to overcome these challenges to achieving PMF?
What was it like personally struggling to overcome these challenges to achieving PMF? - This was a critical problem to solve due to the nature of how marketplaces work. Personally, solving this was very time-intensive. It was a lot of face time with candidates and employers, and being an introvert did not help! I’ve interviewed about 300 fractional CFOs and 150 startup founders seeking a CFO in the past year and a half.
The most important thing to seed the marketplace and reach PMF was delaying building tech and managing the marketplace manually via email and internal systems.
Market: Satisfying Demand By Cultivating The Supply First
Let’s get deeper into the pain point or points you were trying to solve. Imagine I’m a customer thinking about using your product or service. How do you go about understanding my pain and creating a solution to address it?
It’s important to understand that marketplaces hit an inflection point at a certain size and breadth when the supply-side is sufficient to solve the needs of the vast majority of the demand-side. With every employer that used our marketplace from that point forward, providing the right solution was a matter of matching them to the ideal candidates on the supply side. For us, this was at about 100 fractional CFOs that covered experiences in most industries and situations that startups were looking for in a candidate. Once we got there, we had essentially taken our first step toward PMF.
Assuming you’ve managed to address the pain points I face as a customer, what additional information did you discover in your journey to PMF that there’s a large market in need of a solution to the existing problem?
Alongside solving problems for startup founders, we validated the need for this marketplace through the conversations we had with candidates. I heard time and time again the same feedback from hundreds of candidates over 18+ months, which proved to me that they needed SiliconCFO. At a high level, we learned that most freelance executives struggle with finding new clients and working within multiple clients’ systems at once.
How did you narrow your scope of what portion of the market you wanted to tackle first? Who did you decide would be your first beachhead customers and why?
Although we see ourselves as a tech-enabled fractional executive marketplace, we had started with fractional CFOs because that was what I had been doing for about a year prior. Starting with CFOs was ideal because there are very few marketplaces doing something similar for matching startups with CFOs. We were able to establish ourselves as the only CFO marketplace very quickly.
It’s important to understand that marketplaces hit an inflection point at a certain size and breadth when the supply-side is sufficient to solve the needs of the vast majority of the demand-side.
Solution: Unscalable Tactics Led To A Scaleable Marketplace
How did you build your solution to maximize its relevance with the customer and ensure product-market fit? If you haven't found PMF yet, what have you learned? What are the blockers for getting to PMF?
Since our solution and PMF are directly correlated with the quality and breadth of candidates on our marketplace, we made sure to expand our marketplace early and even onboard candidates from 25 other countries. We learned that having a large selection of options from the start gave us a much higher chance of solving the needs of any given customer.
What are some of the things you did that “didn’t scale” to shape your solution today?
Almost everything we did, in the beginning, was not scalable. These non-scalable aspects of the business included but were not limited to personalized candidate vetting, hand-matching employers to candidates, and manual introductions and follow-ups. Even some of the things we do now are not scalable, but we saw it as necessary to validate our concept and hit PMF before investing a lot of money or time into a scalable solution.
What did you learn to best engage with your customers? How did you build a tight feedback loop with your customers to rapidly improve your solution to their problems?
When we started, it took us a lot more time to match startups with candidates. So we decided we needed to reduce the time to matching and therefore tightening the feedback loop by re-organizing and tagging the data we had on the candidates in our talent pool. This reduced the time it took us to match startups and candidates by about 75%.
Walk me through how you landed your first few customers as you were building your product or service.
Utilizing social media, and Twitter specifically, to get in front of startup founders was one of the most important strategies we used to get our early users. This was just one strategy we used, and in combination with our content strategy, we were able to gain our first handful of users through Twitter and our established networks.
Even some of the things we do now are not scalable, but we saw it as necessary to validate our concept and hit PMF before investing a lot of money or time into a scalable solution.
Team: Passion And Humility Make All The Difference
What key qualities did you look for in key early hires to increase your chances of discovering product-market fit, and how did you prioritize what types of hires you needed to make first?
The main qualities I look for in key early hires are passion and humility. We’ve kept our team very lean, so the two key hires I’ve made so far are my Co-founder/CTO and Head of Operations. I prioritized bringing in a CTO earlier this year because the business was ready to expand and needed someone to design and build the tech to facilitate expansion and scalability. Bringing in our Head of Operations was a decision we made after raising an angel round. We knew that we needed to bring in someone talented to orchestrate the internal operations, assist with the launch of our platform, and cultivate our community of candidates. Fortunately, we brought in someone I had previously worked with and knew his capabilities, passion, and humility were in line with our expectations.
If there was a potential employee of your startup reading this Case Study right now, how would you convince them that joining your team is the next best step in their career?
Working at a startup is not for everyone and sometimes not the best next step in someone’s career. On the flip side, if you’re looking to work at an early-stage startup with people who work hard, have fun, and have a passion for the future of freelancing, joining SiliconCFO may be the right next step for you.
The main qualities I look for in key early hires are passion and humility.
Takeaway: Constantly Talk To Your Users
What are the key lessons have you learned so far from your journey to achieve product-market fit?
The most important thing we learned is that talking to your users on a regular basis keeps you grounded. We’ve explored a number of different directions for our business, but we always come back to our core of helping both startup founders and freelance executives. Constantly talking to them reminds us of who we care most about and what problems they need us to solve for them.
What’s the hardest problem you’re facing now after solving the prior one(s)?
At the moment, our sights are set on launching our platform as soon as possible. With that, our focus is on carefully shifting from a service business to a product-led business. We’ve never done a transition like this before, so I’d say it is the biggest task we’ve undertaken so far in this venture.
The most important thing we learned is that talking to your users on a regular basis keeps you grounded.
Three Cool Founders You Should Know About:
Sheldon: Here are three founders you should check out next!
David Shi, Founder of Operator: Operator empowers finance & accounting teams to build custom software and automate manual tasks without writing any code.
Ishmael Samuel, Founder of Paragon: Paragon’s core products are a visual workflow and API builder.
Howard Katzenberg, Founder of Glean: GLEAN is an AI-powered spend intelligence solution that saves companies money by analyzing expense drivers and finding line-item level insights often overlooked by finance teams and budget owners.
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