Road to product / market fit
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Journey to product / market fit explained. What do the start-up's first stages look like and what you should keep in mind when identifying a problem worth solving, creating a product and getting your first customers
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Road to product / market fit
- 1. Road to Product / Market Fit @MikkoSeppa
- 2. Mikko Seppä Run / Advised / Invested in SaaS- companies (10+) 10+ years working with all kinds of startups (SaaS, Service, etc) Serial entrepreneur: 2 x exit Frequent guest lecturer in various Start-up Accelerators & Universities Author of 3 books
- 3. What I’m going to present here is based on my own experiences & learnings, no textbook theory examples.
- 4. 3 stages of start-up growth Problem / Solution Fit Product / Market Fit Scale 0-12m 12-36m
- 5. 3 stages of start-up growth Problem / Solution Fit Product / Market Fit Scale 0-12m 12-36m
- 6. No silver bullets in this presentation.
- 7. Problem / Solution Fit HOW TO ACHIEVE
- 8. Three big questions to solve 1. Market 2. Problem 3. Solution Who are your customers? What is the problem worth solving? What is a feasible solution?
- 9. 1. Who are your customers?
- 10. Problem & Market 1. Domain knowledge aka Solving your own problem If you have worked with the problem previously, you might have suf fi cient information about the problem. 2. Customer Research / Customer Development Talk with customers / users, a lot. Gather understanding of the problem & people.
- 11. There is no substitute for talking to customers Yes, you might have had the problem yourself, but you are not your customer. Do the customer research and learn how potential customers perceive the problem & various ways to solve it Too often our view of problem differs from customers’
- 12. Customer is not a… - Company in [insert industry here] - 38 year old Linda who likes traveling and books - Fortune 500 company
- 13. It’s the job they want to get done When you start, your ideal customer de fi nition should be more about the people who share the same job to be done (JTBD) When you reach PMF, you need to be able to de fi ne your ideal customer pro fi le in more detail. At this stage the most important thing is to nail the JTBD Further reading: Intercom On Jobs To Be Done
- 14. 2. Identify a problem worth solving
- 15. Love the problem, not the solution ”
- 17. Most SaaS-companies fail because there’s no market for their product
- 18. Please note! Just because something is a problem, it doesn’t mean you should start a business solving it. Not all problems are the same. Just because you came up with a crazy cool product idea, it doesn’t mean there will be a market for that Just because YOU think something is a problem, it doesn’t mean there actually is one. Only way making sure is to complete the Customer Development
- 19. Is the problem you’re solving signi fi cant enough? Small problem Big problem Rare Frequent
- 20. Is the problem you’re solving signi fi cant enough? Small problem Big problem Rare Frequent
- 21. Is the problem you’re solving signi fi cant enough? Small problem Big problem Rare Frequent
- 22. Is the problem you’re solving signi fi cant enough? Small problem Big problem Rare Frequent
- 23. Is the problem you’re solving signi fi cant enough? Small problem Big problem Rare Frequent
- 24. There’s a gap in the market, but is there a market in the gap ”
- 25. 3. Finding a proper solution
- 26. Don’t fall into the complete solution trap
- 27. x x x x x x x Quality decisions = Quality product 🎉 x x x x x x
- 28. Complete solution -trap Find prospect Reach out Contact / company data management Pipeline management Close deals and get signatures
- 29. Complete solution -trap Find prospect Reach out Contact / company data management Pipeline management Close deals and get signatures Several products - not one! By trying to build this you will run out of money. This can be your end-game but you need to start smaller.
- 30. Feasible solution Economical: It’s actually possible to build the product with the resources you have Legal: It’s according to the law in the market your operating. e.g 3rd party cookies / ePrivacy Technical: It actually can be done and your technical solution will be valid within 5 years
- 31. CASE: BUILDERHEAD Once problem was validated, they acquired pilot customers 20 pilot customers, 5 paying customers. All customers use their time and provide feedback. Faster way to validate the solution with co-creation
- 32. Don’t build product that creates more problems Most solutions actually cause more problems for customer than what they actually solve Think: Google+ Circles Watch what customers do, not what they say.
- 33. Should we do a private beta? ”What do we need to learn as early on as possible?” If you have big crucial assumptions you need to validate, private beta might just be right for you. Further reading: Nick Lesains on How to run a successful beta in 7 steps
- 34. How do you know you’ve achieved Problem / solution fi t
- 35. You’re there when… …feedback (on mockups or MVP) is great and customers say they’d buy your product) ….customers want to share the news about your product and are happy to refer you forward …you no-more have unvalidated big assumption about the problem, solution or customer
- 36. Product / Market Fit HOW TO ACHIEVE
- 37. PMF - What you need to nail 1. Sales 2. Marketing 3. Data & analytics 4. Product 5. Processes
- 38. 1. How to get your 1st customers Talk with the people you talked when you validated problem Cold outreach: email / LinkedIn / calls Test the messaging / value proposition / RTB AND different audience segments. This takes much more effort than you think and everybody on the founding team should do it. Yes, even the ”CTO”.
- 39. GTM-model € €€€ No humans Humans Further reading: Advance B2B - Mission Matrix (GTM model)
- 40. DO NOT HIRE SALES REPS BEFORE YOU… …have sold 10-50 by yourself and you have 3-5 customer reference cases …know how to create demand / leads …have strong positioning and can differentiate your product
- 41. Repeatable is the prerequisite to scalable ”
- 42. 2. Marketing Your fi rst priority should be a product marketer. Person who ideally sits in the intersection of product & marketing Person who’s keen on understanding user motivation, can help with messaging, positioning and all things in on-boarding
- 43. 3. Data & Analytics In order to succeed, you need to instill data driven / data-informed culture in your start-up. Make sure you master at least these What Tools Product usage How people use your software. Amplitude / Heap / Mixpanel Subscription data Retention + upsell data Chartmogul / Baremetrics / Pro fi twell Acqusition How well you market & sell HubSpot / Pipedrive / Salesforce Customer happiness How happy customers are SurveyMonkey / HubSpot Feedback Qualitative feedback from different user groups Talking to customers, chat transcripts, emails, support tickets
- 44. 4. Product Build what you sell, sell what you build Find which features makes your product stick and what are nice to have. Double down on your strengths, don’t build more weak features Design systems, documentation etc. Further reading: ThinkGrowth HubSpot’s playbook for going from startup to scale up
- 45. 5. Processes You don’t have PMF if you don’t have key business processes in place. Marketing, sales, success People processes: Hiring, promoting, development Product: Learn how to support other things besides creating new - Improve a feature (Customer satisfaction) - Getting more people to use feature (adoption rate) - Getting people to use feature more (frequency)
- 46. How do you know you’ve achieved product / market fi t
- 47. How do you know you’ve succeeded Retention: Customers use your product and you’re able to retain them ”How would you feel if you no longer couldn’t use the product” —> >50% very disappointed is ok When customers understand your product and use it right way AND can successfully solve the problems they got it for You have at least 2-3 channels that bring you customers, with suf fi cient unit economics (spend less money that what pay to get)
- 48. Last remark Product / market fi t is not something you achieve once and live happily ever after. You need to achieve PMF every time you… • Start selling to new market / new audience • Introduce a new product • Every 3-5 years since you don’t live in vacuum
- 49. Thank you! @MikkoSeppa from XCalibur. f