WorkOS’ Path to Product-Market Fit — Why Your ‘Bad’ Idea Might Actually Be the Best One

WorkOS founder/CEO Michael Grinich sits down with First Round partner Todd Jackson to tell the story of how he identified a huge untapped market and built a “minimum awesome product.”

EXPLORING IDEAS

After leaving Nylas in the summer of 2017, Grinich took a year off to travel and contemplate his next move (“Sort of the entrepreneur version of Eat, Pray, Love,” he jokes).

During this exploratory period, he kept a notebook in which he scribbled down ideas for products or companies. It was the blank canvas upon which he could experiment with anything that sparked his curiosity, no matter how unfeasible or bizarre.

Some of the ideas that landed on its pages include building technology that could de-radicalize people ("I don't think that's a business, but probably a great dissertation to write,” he says in retrospect), or making a video using deepfake AI so that one person appeared as every character in the movie. The point of this exercise was not to decide on a winning product idea; the point was to practice thinking outside the box.

“I believe a lot of entrepreneurship is very creative,” Grinich says. “You have to find ways to get your creative juices flowing. In studying other types of people who do that for a living, like musicians or artists, it's always a mixture of finding ways to enrich their daily experiences so they have inspiration and then just working at it really hard.”

Finally ready to start another company, Grinich pored over the contents of his notebook in search of an idea that met all of the following criteria:

• It was in a market undergoing a major transition. “I didn't want to work in a stagnant area.”
• It was something he already had experience and skills in. “I didn't want to go into a totally new discipline. I wanted to apply everything I knew quickly so I could pursue this opportunity faster.”
• It was in a huge market. “If the market is gargantuan, you have a lot of room to maneuver and pivot and land on something.”
• It was an idea that looked bad to some people but good to him. “If you have something that looks like a good idea to enough people, you risk getting into a situation where, within six months, there's a ton of companies just like yours.”
• The timing was right. “Timing is the most important of all the criteria on this list.”

As he mulled over the list, he reflected on his time at Nylas and realized he’d already been exposed to a problem space that met all five criteria: getting a SaaS product enterprise-ready.

VALIDATING THE IDEA

Creating a tool to help developers build enterprise-ready apps met all of Grinich’s criteria around market, experience and timing, but he was in no rush to ship. He was willing to spend the time ensuring that his new company had the highest chance of success — which ended up being about a year-and-a-half-long endeavor.

That began with validating his idea by interviewing three key audiences:

• Founders of software companies currently trying to cross over to enterprise.
• People who had successfully done it at other companies.
• IT admins.

From those early conversations, Grinich learned that software company founders were actually really turned off by the idea of enterprise.

But, he found that the problem he’d landed on was a real pain point for IT admins. “The people on the IT side were the most frustrated because they were the ones constantly having to say no to adopting new products and services that weren't enterprise-ready,” he says.

With his idea validated by customer conversations, Grinich felt ready to start building.

BUILDING A "MINIMUM AWESOME PRODUCT"

It was now January 2019. The first engineering hire would be onboarded the following month, but it would be more than one year before the first version of WorkOS made it to the hands of a real customer.

Grinich was committed to taking the time to build a product that wowed its users at first sight.

At WorkOS, one of our operating principles is building a ‘minimum awesome product.’

Those four pillar features were:

• Single sign-on (SSO)
• Directory sync
• Audit logs
• Role-based access control

Grinich wanted to ship within roughly a year, so his team spent about one quarter building each of the four features, starting with SSO.

LAUNCHING

Through the many months of development, Grinich had to have faith that what he learned in the validation stage held true.

The plan had been to fly the whole team to San Francisco in March 2020 to launch at SaaStr, a major conference for SaaS and cloud enthusiasts — but then Covid hit and the event was canceled, and along with it, WorkOS’ launch plans.

So instead they launched WorkOS on Hacker News and Twitter with a tagline that immediately resonated with their audience: “Plaid for enterprise IT systems.”

Post-launch, in a span of three weeks, he did demos and hand-onboarded 73 early- to late-stage companies across a huge swath of industries. “We had a super wide breadth of stages and sectors in our initial signups and demos.”

FUNDRAISING

Grinich’s hunch on the huge market size was proving to be spot-on — and gave him a necessary nudge to start fundraising.

When he pitched WorkOS to VCs in Silicon Valley, they instantly got it — in many cases literally within seconds.

“Our round was led by Lachy Groom, who was early at Stripe.

PRICING

At the time of launching WorkOS, Grinich and his team still hadn’t nailed down pricing.

Initially, WorkOS charged based on the number of end users. But this pricing model didn’t end up working for WorkOS.

Today, based on user feedback, WorkOS charges per organization.

HOW TO HARNESS THE POWER OF SELF-DOUBT AS A FOUNDER

No matter how solid your product is or how enthusiastic your early customers are, it's normal to question whether you’ve made the right decisions.

Grinich has the following advice for founders questioning whether their idea is a dud or if success is on just the other side of a long stretch of unmarked territory:

• Know the difference between productive vs. unproductive self-doubt.
• It’s okay to seek occasional external validation.
• Accept that self-doubt never goes away.

LOOKING FORWARD

Three years post-launch, it’s safe to say Grinich’s seemingly “bad idea” has proven to be a good one.

Despite launching amid a global pandemic, in less than two years, WorkOS managed to amass more than 350 paying customers across the globe. In October 2021, the company raised a Series B of $80 million and in June 2022 made its first acquisition, Modulz.

Grinich’s startup has come a long way from being a few words scribbled on the pages of a notebook in 2018.

“Fall in love with the problem space rather than falling in love with your solution,” he says.