Before building what became Plaid, Zachary Perret and William Hockey started out with a consumer budgeting product. What’s perhaps less well known is that they built 6 different versions of budgeting, expense management, and analyzing spend tools — that didn’t get any traction.
As we were developing First Round Capital's PMF Method, we learned so much from Plaid’s early journey — so grateful Zach generously shared takeaways for other founders. 🙏
Would highly recommend watching his interview and reading our new essay in full, but sharing a few of observations here:
🔑 𝗧𝗵𝗲 𝗰𝗵𝗲𝗮𝘁 𝘁𝗼 𝗣𝗠𝗙 𝗶𝘀 𝘁𝗵𝗲 𝗽𝗶𝘃𝗼𝘁.
“A friend who was one of the early engineers at Venmo said, ‘Hey, your consumer products are not so good, but I'd like to license the backend that you've built.’ It took awhile, but eventually we decided to make this pivot.
The cheat to product market fit is oftentimes the pivot because a company doesn't generally pivot into something unless it's very clear that it's a good idea. If you read anything on the internet about founding a company, they tell you to focus. And so pivoting into something new is a big decision, where you're effectively betting the entire company.”
Now things have come full circle, with hundreds of consumer budgeting apps powered by Plaid. As Zach puts it: “I'm so proud of the entrepreneurs who have built great products on Plaid and saved us from the terrible product that we built early on.”
📈 𝗚𝗲𝘁 𝗰𝗿𝗲𝗮𝘁𝗶𝘃𝗲 𝘁𝗼 𝗰𝘂𝗹𝘁𝗶𝘃𝗮𝘁𝗲 𝘁𝗵𝗲 𝗺𝗮𝗿𝗸𝗲𝘁 𝘆𝗼𝘂𝗿𝘀𝗲𝗹𝗳.
“The challenge for us wasn't finding a product that people would buy — the bigger challenge was that the market didn't really exist. We had to convince people to build products in this market. That was our job, more so than even building the platform itself.”
It’s key to remember the timing here. This was back in 2012, before fintech even had a name.
“We would do all of these crazy things to try to convince people to build fintech products. For example, when we got our first-ever office, we started doing these monthly events called ‘Plaid Outs' where we'd invite everyone we knew who might possibly want to start a company to come to our office and have beers. It eventually started to create this community, and we think that then inspired many people to actually build products on top of Plaid.”
📲 𝗚𝗲𝘁 𝗰𝗹𝗼𝘀𝗲 𝗲𝗻𝗼𝘂𝗴𝗵 𝘄𝗶𝘁𝗵 𝘆𝗼𝘂𝗿 𝗰𝘂𝘀𝘁𝗼𝗺𝗲𝗿𝘀 𝘁𝗼 𝘁𝗲𝘅𝘁.
“For our early customers at Plaid, we didn't consider it to be a successful customer unless they were on a texting relationship with us. When I would onboard a customer, I’d say, ‘Hey, what's your number? Can I text you and get feedback on this?’ And then even if I didn't have big questions for those people, I would find a way to reach out to them once a week or two.
We wanted to create very tight relationships between ourselves and our early customers to inspire them to both give us great product feedback, but also to refer us to others.”