Product-Market Fit and the Exit Paradox

Who is Anastasia Koroleva?

Anastasia ...is this entrepreneurial hunger, and we still couldn't quite figure out why people wanted us so much. Well, I always want to learn something new. I'm always curious about anything that's happening. It just became so crazy. Life is never black and white. Everything happens for a reason. Sometimes it takes time to understand what the reason is.

Kevin Well, I'm Kevin from Wavect, with Ernesto, of course, and today we're going to talk with Anastasia Koroleva. She has sold four companies successfully, the first one at a plus $100 million valuation. And in this episode, we talk about the exit itself, or kind of something like an exit paradox, actually, what happens with your inner self when you sell a company, when money is really not a big deal for you anymore. And also, we talk from a first-time founding company to what actually makes you successful. But we go through that journey, how to build a product people really love. And just a really cool conversation. And yeah, if you've got a couple of minutes, definitely check it out. There's a lot to learn, a lot of wisdom here. And yeah, let's go.

Why do founders keep starting new companies?

Kevin So, you sold four companies, the first one being at the valuation of plus $100 million.

Anastasia Yeah, that's correct.

Kevin An easy journey, I guess. So what made you push through all these hard times and doing it over and over again?

Anastasia Well, my motivation evolved over time. Like many of us, it started with a mix of financial hunger and insecurities and the desire to prove myself and just natural curiosity and creativity. Then over time it evolved into, well, the fear of stopping. Because after the first sale I was very worried of becoming irrelevant. I didn't understand it at the time, but I just felt it: actually the easiest way to feel good about myself again and to feel relevant was to start another business. So that was the real motivation, if I'm honest. But then over time I kind of grew up and developed the very healthy, very rewarding and fulfilling motivation I have now, which is to help others. I think for most of us, now that I look back and now that I've interviewed so many other founders, for most of us this is a common pattern. We just kind of grow and become less selfish over time and actually become really caring about our customers. Early on most of us just say we care about customers, but we start caring about them at some point. So that is basically it, that it changed over time.

Kevin That reminds me of these different sets of motivations, right? You mentioned a fear, also that urge to help. And if you recall it correctly, I read a post about it a while ago. Of course, monetary, extrinsic, intrinsic, there are a lot of different motivations. But it's always really interesting to hear that that core motivation of course evolves as we change, as our life changes, right?

Anastasia Yeah, change. I've learned an interesting lesson recently from my 18 year old son, who is very entrepreneurial. Because he started being very entrepreneurial around 13, and his motivation was purely financial and the desire to be important and all of that. And my first reaction was a bit negative. I was like, why are you like that? It's not whom I was trying to raise you to be. I want you to care about the world and making the world a better place. And then I kind of learned my lesson of humility through him, and I'm very grateful. Because I realized that, whatever our natural motivation is at the time, it's beautifully natural. And as long as we let it move us forward with energy, it's probably a good thing. It doesn't have to be this kind of idealistic thing of making the world a better place. If you are young and hungry and ambitious, it's absolutely perfectly fine to just want to get some money first and then see what happens.

What makes a serial founder successful?

Kevin That's really interesting. And I think that's really important. So maybe let me give you a quick context of work from my end. I funnily started from the other end. I was on the impact side first and then had to switch over because, of course, you need to gain these skills first before you, that's just my humble view right now, at least, and need to develop your entrepreneurial skills first. And that motivation usually comes with that focus: okay, I need to make money instead of just create an impact that my nature applies into the door. I don't know. Just out of curiosity, what was one of the biggest differentiators that you think made you successful personally?

Anastasia Probably curiosity. I have a lot of it. I can't tolerate being bored. And I see that trait a lot among other exited founders, we share that. And I think if I look back, if anything, I would nurture that trait even more. I think it's a very good motivator, kind of curiosity. Because, well, I always want to learn something new. I'm always curious about anything that's happening. I'm very curious about my own development over time. I like to understand what's happening. So it literally is curiosity about everything, which is a form of hunger, if you think about it. We may be hungry for money, which for a while, admittedly, always also were. We can be hunger for love. And we can be hunger for this kind of intellectual and emotional food. We want to travel, right? Or experiment with businesses. That's curiosity driven. And it is.

Kevin Is there some way you channel that? Because I can imagine that if you're curious about everything, right, you lose focus.

Anastasia Yeah, yeah, yeah. That's why so many entrepreneurs self-diagnose themselves with ADHD, because we just feel we're all over the place. And for me, like for many others, that has been a big challenge. I'm definitely the type, not everyone is like this, but I'm the type: I want everything all at once. My husband makes fun of me all the time because he's not like that. And channeling it is a skill. It's a skill. It means learning to say no to things you really want, which is a fantastic skill to have anyway. It's making this choice, understanding why something is more important than something else, developing the muscle to be disciplined about it. It's not easy. I'm not perfect. But I think I'm much better than I used to be.

Kevin There's this saying in business that you have to unlearn previous lessons. Would you agree with that? Basically saying, okay, to get into business, you have to be curious. You have to question everything. And then you have to unlearn that to get focused again. Is that statement true? Do you agree with, or are there other points?

Anastasia No.

Kevin Okay.

Anastasia No, I don't. I don't, because I think life is never black and white. And more often than not, I like lessons to be building one on top of another into a beautiful structure. I think unlearning, first of all, is not possible. And second is silly, because every experience teaches us something. Instead, we could focus on how we control that process, how we direct that process, what exactly we learn from each thing. Looking back, I don't regret any experience I had or any lessons I've learned, which basically means that there was no need to unlearn anything at any point. Everything happens for a reason. Sometimes it takes time to understand what the reason is.

How do you find product-market fit?

Kevin Yeah. I can imagine. I mean, maybe let's get back to the companies that you have founded. To get to this valuation, of course, you need to build something the market truly wants, right? You need to have some kind of product market fit. And I know there's not some kind of recipe for that or something like that. But how would you, what's your process of trying to build something you love, the market craves?

Anastasia Okay. So in each of the four businesses, that happened very, very differently. I'm a big fan of a product market fit, and I think it should be the number one priority for any business. No question about it. In the first company, it took a very long time, partially because we were too early for the market. So the market actually, in a way, caught up with us. I think that's what happened. And then we had a product market fit, but it took a very, very long time. But then when we hit it, we started to build. We started growing like crazy. We experienced that exponential growth once we've hit it. So it required a lot of perseverance and trying. And then my second business, I was incredibly lucky. It just never happens like this. Because what happened was that we came up with a new method to connect phone calls. And we actually patented that method. And then we tried to turn it into a business and created the world's ugliest website. And just put it out there. And we did nothing. And for a couple of weeks, nothing happened. And we didn't expect much to happen. And then suddenly, the thing started growing like a mushroom. It just became so crazy. And we couldn't understand why. And 12 months later, we had 15 million in revenue. And we still couldn't quite figure out why people wanted us so much. Because we were so busy just feeding hungry customers the product. We spent zero money on marketing. No marketing effort whatsoever. So it was a dream. And that dream actually, in a way, spoiled me. Because after that, I didn't want to do anything that didn't have that. And then it took me a while to kind of become realistic. Because, of course, a big part of it was just luck. And in a way, it was very dangerous as well. Because when you have such an incredible and sudden product market fit, it's quite hard to be disciplined about building an organization properly, hiring people, doing all these boring things. Because everything is so incredibly exciting. And then, of course, what happened was that a bunch of our competitors raised crazy amounts of money. One of the biggest competitors raised like 125 million in Series A. But all they did was just infringe on our patent. And I was very upset about it. And we ended up suing all these people. Because we had the patent and we were not happy with what they were doing. And that wasn't a good idea. Because we should have just focused on building the business. It's a lesson I learned, that being distracted with competition is extremely dangerous. It's dangerous even for such businesses like that one I had. But anyways, I sold that one. And then my next business was actually quite interesting. Because I followed a different formula. I created a business that I wanted to exist myself. And I wasn't sure whether it would work or not. But it did work. And the fourth business was yet another idea, when I objectively saw an opportunity in the market. And I thought, okay, I can see that customers would need this product. Even though I didn't necessarily need it. So four completely different paths to finding a product market fit.

Kevin Very interesting. Thanks for sharing that. Just, did your approach to achieve product market fit or to building products change due to the experience that you gained? Or is it more, do you, let's say, that business, that was the best approach for that one and so on and so forth?

Anastasia That's a very good question, Kevin. I don't think anybody asked me that. And I never asked myself that question. So thank you for that. Makes me reflect. I think it was purely impulsive, to be honest. I don't think I have a formula for that. The only thing I know for sure is that after the second one, I just became very hungry for that quick product market fit. And had less patience and less tolerance for a business that wouldn't have that. Because besides these four, I had some other attempts to build businesses, which failed. And looking back, some of them failed simply because I didn't want to wait for that product market fit. I thought, you know what, I didn't hit it fast enough. I don't see a clear way to pivot quickly. I'll go somewhere else. And I'll never know if it was the right decision or not. But that was my logic at the time.

What is the exit paradox?

Kevin Was that maybe also a time where the reason why you do business changed?

Anastasia The reason why I did business changed, yeah. It's what we talked about, in terms of motivations. And what was actually quite interesting: when I had my third business, I suddenly experienced this delayed reaction to my first exit. Now I understand much more about it, because I work with exited founders a lot and write about it. But what happens often after you sell your business: for a while you're very happy. And you're going to go with the same momentum. And everything seems to be fine. And you kind of know what you're doing. But then something happens. And your motivations change quickly. Completely. Because you are no longer, for example, financially hungry. And you wake up in the morning and you're not sure why you should be working very hard. Right? And with lots of us, it causes quite an existential crisis. Because you think your very essence is this entrepreneurial hunger. And when you don't feel it, you miss it. And you feel very inadequate. And something is terribly wrong with you. Right? It can hit you very hard. And with that third business is when it hit me. And it really distracted and demotivated me for quite some time. I know your audience are mostly people who haven't sold a business yet. But I think it's very important to at least have an idea that when you sell a business, it's not the end of something. It's not the solution for your problems. If anything, it's the beginning of yet a completely new beginning. It's a completely different journey. And it's good to be at least a little bit mentally prepared for it, which I wasn't. I thought my problems will all disappear beautifully as soon as I sell a business. It doesn't happen.

Kevin I mean, there's a reason why you created your own podcast, why the Exit Paradox works. So if one of the viewers here watches or sold a business or is planning to do so, check it out. Imagine that this is definitely a crushing experience. Right? There's this saying I probably really like. Right. People that are successful don't have something you don't have. They usually lack something you have. I'm curious if you agree with that.

Anastasia Oh, yeah. Absolutely. Absolutely. Like what I just said, you're much more motivated when you're hungry. And you know this famous quote from Steve Jobs, stay hungry, stay foolish. I changed the way I interpret it quite dramatically over time. At first, I thought it was all about not settling for sufficient money or whatever. And then later I realized there is much more wisdom in it: that we need to find a source of motivation, source of hunger, which can never be satisfied. And that actually is that motivation, which I experienced much later. When you just want to help people, this can never be satisfied. And that's so beautiful, because you're no longer afraid to hit that crisis that I hit when you're financially satisfied.

Kevin That basically just reminds me of all these metaphors, all the entrepreneurs I came up with. Like the infinite game from Simon Sinek and so on and so forth. It's about the process. At first, it sounds somewhat shallow, right? But it absolutely makes sense.

Anastasia Yeah. You know, that moment can come much earlier.

Kevin Yeah. Yeah. I had it even before I did business, with other things too. It's definitely something I think is also tied to your own character as well. Like how much in a need you are something, until you have to change your inner workings, your goals.

Anastasia Yeah. But again, I think it's a matter of growth. And we don't necessarily need to beat ourselves up to grow faster. It's like, if you beat up a tree, it's not going to grow any faster. I think it's very important to just also respect the fact that we go through changes in our personal development. And that's beautiful. That's what life is about.

Kevin Quick intermission. If I could ask you for one single favor, it would be that you hit subscribe onto this channel, because it helps our channel more than you can imagine. And you know, the bigger the channel gets, the bigger the guests get. So thank you very much for watching. And let's continue with the episode.

Anastasia We stop growing, we start dying. I really believe so.

What makes a product truly great?

Kevin I mean, you know. And yeah, about the products that you have bought, right? Four of them are like four big ones, let's say it that way. I'm pretty sure there are tons of failures as well, as most often. And I would love to hear about them too. But over all these years, what makes something truly great? Like a product, for example. What were some of the modifications that you have made? Are they true?

Anastasia You know, that's a good question. But I personally know only one method to get there, which is trial and error. I think trial and error, there's no other formula. I know, if you find out, please let me know. You tweak, you tweak, you tweak until it works. That's all it is. And then you know when it works, because your customers tell you. And they also tell you when it doesn't work. And that's painful. And sometimes it works. And then it's fine. And then it stops working. But again, that's the rule. That's the game, right? That's the game of entrepreneurship. That's the game of creating a product. That's how we talk to our customers, through improving the product.

Kevin Really? I mean, in the end, they pay for it. Not if they don't need it.

Anastasia Yeah. They walk away.

Should you sue competitors who infringe your patent?

Kevin Absolutely. Yeah. I mean, of course, there are a lot of, I can imagine, difficulties that you have faced in your businesses. Are there some major challenges that are still on top of your head when you think through all that? When you evaluate, should I do another business? What are some of these mind cinemas, mind movies that you have? Like, oh, there are many you want to make out of them.

Anastasia Absolutely. The biggest one is to not go to court. It's the story I remember I told you about, when we had such a beautiful, natural product market fit and a fantastic product, and I got distracted by the competition. That was very painful, horrible waste, not worth it, and I don't want to do it again. And I was actually a lawyer before I became an entrepreneur, and a fantastic and very successful litigation lawyer told me early on that. Yeah. And he actually, he dedicated his life to going to court. But he said, you go to court, sorry, you fail the moment you sue someone. You already fail. You already lose. And I only fully understood it when I went through this. Because when we go to court, we lose so much right away. We get distracted. We have to pay lawyers regardless of the outcome and all of that. So, no, not doing that.

Kevin I mean, just an emotional interaction. Yeah. It's a big drag, right? There are a lot of toxic emotions involved in that, on both sides usually. That makes it really difficult.

Anastasia Yeah. And these toxic emotions, they kill the very entrepreneurial, creative drive that you need to cultivate. And I did not realize that at the time. But that can kill you. Because we won all the lawsuits, all of them. We either settled well or won them, but it doesn't matter. We still lost.

Kevin That's a really interesting perspective. Because at what point would you say you would still sue someone today?

Anastasia Well, I would do everything in my power to avoid it. And regardless of what potentially great outcome my lawyers promised me, I would do anything and everything. Of course, there are situations when it's probably unavoidable. But I'm determined to avoid them.

How do you go from M&A law to founding startups?

Kevin Lawyers win always, right? I mean, if you recall correctly, you have been into M&A, is that correct?

Anastasia Yeah. I was an M&A lawyer. Yeah.

Kevin The pattern. Oh, I think I see a pattern. Yeah. Do you think that contributed more or less to at least your first three years?

Anastasia You know, it's interesting. I worked at this law firm called Skadden Arps in New York, and it was a fantastic experience in certain ways. For example, the standards in that firm are so high. There are no exceptions for this exceptionally high standard. They make you work so hard that it doesn't matter how hard you work afterwards. It's not going to be as hard as they make you work. So they really prepare you, in a way, as a person, for entrepreneurial grind. But there was also a negative push for me from that experience. Because after five years in that law firm, while I've learned so much, I also realized that it's so not my thing and that I never want to go back to that life. And I was pushed very hard out of it and towards entrepreneurship, because at the time I experienced Silicon Valley for the first time. And I just fell in love madly with the whole culture and the charm of it and startup ecosystem. I felt like a fish in the water. I was like, finally, I'm in my tribe. This is where it is. It was so beautiful. So I was very pulled towards that and at the same time pushed away from that experience of being a lawyer. And I never looked back. I never regretted leaving the law firm, even though it's a fantastic place for the right people. But you learn about yourself through this kind of experiences, right? It's the only way to know what you actually want.

Kevin That American or Silicon Valley vibe definitely, it colors your life. You should keep on the business, right? It helps you staying within yourself. It helps your industry, because you know the true pain points. You know how things work. But in your case, if I don't misunderstand something, you just went into tech directly, right? From a legal perspective.

Anastasia Yeah, that was luck. That was luck. I basically, I met someone who introduced me to that world of tech, and that person already had a little startup, which I joined. So it wasn't me just leaving my job and going into nowhere and starting a completely new startup. I had it a bit softer, that transition, because I joined someone else's startup first, which was great.

Kevin That's just the entry barrier, right? But how difficult was it for you to make that shift?

Anastasia Very easy. Very natural. Again, because I was so pulled in that direction. And so pushed away from my old life.

Kevin You saw a lot of pain that meant you had changed.

Anastasia Yeah. It was also, that new world was so much more welcoming and relaxed. People also work extremely hard, but somehow in a more relaxed manner than in a Manhattan law firm.

Kevin Are there some scenarios where you said, except of the law schools, I am not sure if I want to do this anymore? What were some of these biggest moments?

Anastasia Yes, a few. One I mentioned before, when I no longer felt financially hungry, and that was a period of time when I needed to find that motivation again. Again, another moment was when my children were born, and then I think very naturally they became so much more important and so much more interesting than the business, that they distracted me quite a bit. So these two moments were when I doubted I wanted to be doing any business.

Why should founders prioritize mental well-being?

Kevin Yeah, I mean, priorities change, right? And as you said, we have to accept that, right? Or at least we should be willing to work on it. Because in the end, what do we want? We want to have a life that's worth living. It looks different for everyone. Is there a very good point on your end that you say, I think that, and that's maybe something most people wouldn't agree with?

Anastasia I think, I firmly believe that we need to prioritize our mental well-being as founders, not just because it makes us happier, but because at the end of the day, we need to be in the optimal state emotionally and physically to make these decisions. But we also need to have very clear, simple principles for making these decisions. So, for example, for me, the main principle, which I wish I adopted even early in life, is for any important decision to spend time, to stop and really think through the root cause, and find that root cause and then address that. And in pretty much every problem I can think about, if I didn't do that, I would be addressing the symptom. And I'm so happy I didn't. And of course, I'm not perfect. So there were situations when I would forget to stop and look for the root cause, just to realize that I went completely off course and started addressing the symptom, and made it to go back and reverse the decision or correct it.

Kevin Do you have an example for that?

Anastasia Well, this actually may happen anywhere in life, right? We can talk outside of a business context for a change. So, we can talk outside of a relationship. Sometimes your partner becomes unreasonable and angry at you, and you may just become protective, and that's the natural reaction, to protect yourself from their anger. But if you stop and think why they do it, more often than not, they actually are asking you for love or appreciation or something like that. And instead of focusing on yourself and protecting yourself, you can just completely break their pattern by giving them that love and affection or appreciation that they actually look for. And it usually is the fastest, the most effective solution. And similarly with employees: they also more often than not get unhappy because they didn't get enough appreciation for their work, and if you don't address it properly, they may walk away, and you may think that you underpaid them, and that wasn't the case. So, the root cause needs to be identified. Otherwise, a problem cannot be solved.

What are your biggest leadership lessons for founders?

Kevin You've all said, I mean, everyone has different reasons why they do something, right? Employers are a great example as well. I mean, some people want to have titles, some people want to have more money, some people want, as you said, appreciation, whatever, right?

Anastasia Yes. Or growth, leadership.

Kevin Are there like two things that you would share with younger founders? Like principles for leadership that they believe in. Whatever you can come up with.

Anastasia Well, one painful lesson is to never hire friends or family. I guess it's not leadership. It's more hiring issue. But in terms of leadership, I think it's very, very important to accept the responsibility for others' well-being and happiness. Sometimes you hear people saying no one is responsible for your happiness, and it's true. You can't expect anybody to be responsible. But if you're a leader of a group, you need to accept that responsibility nevertheless and be very aware of it. There are other aspects that are really helpful. I think that's super important. And another one is respect. I think giving people proactively respect all the time is extremely important. Way before they ask for it, for no particular reason, but just doing it. Because when people feel respected, they encourage to do the best work they possibly can.

Kevin How do you show respect?

Anastasia Just that. By seeing respectful things. That's the best job. By making it clear in many different ways, many times a day, with your body language, that you listen to the person, that you look into their eyes, that you pay attention to them, that they matter. Again, I'm definitely not perfect at this, but it's a principle of mine, which I deeply believe in.

Kevin There are a lot of different leadership styles as well, right? I know they're basically from the book and it's a spectrum. But where on the spectrum are you? Have you been more on the stricter or authoritative side of things, or what was your leadership style? Put us a little bit through it. How did you get your team to do great things?

Anastasia Well, I think my superpower is inspiration. And, it works.

Kevin Yeah. So it's like, let's do this. I'm like, this is the vision. And like that Steve Jobs approach, basically.

Anastasia Yeah, yeah. That's a compliment to be compared to Steve Jobs, but yes. Oh, well, you're right. But with Steve, I think his superpower is also his complete personal obsession with his purpose, which was building useful, helpful and beautiful products. And he was sacrificing anything and everything for that, and was willing to sacrifice other people's emotions and feelings and happiness for that as well. So he was quite extreme. People who were aligned with his purpose were very inspired. Others were quite discouraged. So I don't think, as a personality, I am similar to that, not at all. I like to think that I'm more considerate of others. But I admire him. I admire him for who he was, for sure.

Kevin Yeah. I mean, there are a lot of personalities out there, right? And it never makes sense to just, I don't know, agree with a hundred percent of something or someone, right? And so no worries about that. Yeah. They're very interesting is, in terms of managing your team, where there are some moments that were personally really, yeah, the change the way, how you leave, whether it's, what are you doing? What were some of the key lessons?

Anastasia I guess there's so many, I'm not even sure which ones would be particularly interesting, because again, it's a trial and error. For me, at the end of the day, the biggest lesson is to take responsibility for my state, to be sure that I don't vent with my team, I don't use them to feel better about myself, I don't rely on them to help me be happier. I think the leader is the one who accepts that responsibility for others, which means, first of all, taking a very good care of our own state.

Kevin That mean you would agree with the statement that everything bad happens is your fault as a leader. Everything good happens.

Anastasia Yes, yes, yes. I think it's extremely important. I think it's the right attitude. You know, yesterday someone canceled the call with me last minute, which is okay. It happens. And then they said, oh, it's because my PA messed up with my calendar. And I don't know the person very well, so I don't know if it's true or not. Maybe it's 50/50, if they're blaming the PA or it's something else. But then I realized that either way, it's not the right thing to do. Because even if it's true, I don't think you should say that. If you are in the leadership position, you should actually accept that responsibility. And it was a great mental note for myself. I thought, you know what? I will always accept that full responsibility, even if it's not true. It was a bit of a difficult decision, because on the one hand it's not true. On the other hand, what's more important? And I think it's more important to always have the attitude that you protect people who work for you.

Kevin Yeah. I mean, love that. It's definitely a really difficult mindset to keep top of your mind. Right. Because I had things happen all the time. And especially if you are not involved with certain aspects of the business yourself, it's sometimes really difficult to put the blame on yourself. But in the end, you hired them. Right. So that's the kind of, that's the last argument one could have.

Anastasia Yeah, that's a good connection. That's a very good connection. Yeah.

Kevin In the very beginning, you said the connection to what you would tell your younger self. Like first business, or when you just started, what were one or two things that would have helped you?

Anastasia If I'm honest, I'm back to taking a very good care of myself and not seeing it as a luxury. I think I had a very wrong attitude. I was willing to sacrifice everything, and I thought it was the right thing to do. I was proud of it. Now, looking back, I think it's very irresponsible. You cannot do it. If you lead other people, you have to be in the right space and place yourself, right state. It's very important. So I wish I had a shift in mindset early. And then the second thing, again, religious focus on root causes, because this is where a lot of waste happens. Generally, mastering decision-making is so extremely important, and finding something that works for you in that.

Kevin What are some key takeaways you want people to remember from this session?

Anastasia Finding the root cause of any problem before designing a solution for it. Enjoying and accepting evolving motivations, and not thinking that it has to be the same forever. Just listening to your own motivation. And the last one is taking full responsibility of your state as a leader at all times, not because it's a luxury, but because it's the responsibility we accept.

Kevin Love that. Thank you, Anastasia, for your time, for your wisdom recommendations, everything you just left on the table. It's awesome. Learned a lot myself. Thank you so much.

Anastasia And yeah, I mean, thank you. Thank you. You're very kind.

Kevin I hope you enjoyed it, and I'm pretty sure the audience did as well. Hope I didn't promise too much. It was for me personally a really exciting episode, and yeah, Ernesto and I learned a lot personally, and I hope so you did as well. Yeah. Let us know what you think and who we should talk to next. See you next time.