Category: Product Mgmt

One of the hot topics in startups is around product-market fit. Whether it’s how to know if you’ve achieved product-market fit or how product-market fit relates to raising money, there’s plenty of information available. Well, there’s another aspect of product-market fit that’s almost never talked about: losing it. Just because product-market fit is achieved, it doesn’t mean it’s going to stay.

Here are a few thoughts on losing product-market fit:

• When churn rates increase, product-market fit is likely slipping away (if churn hits 3% per month, you don’t have a business)
• When the sales team loses the majority of competitive deals, it’s a bad sign
• When the growth rate of the business stalls at modest scale, it’s likely the customers’ needs have changed

Markets move quickly and many startups that had a good thing going for a while get passed by when the next wave of innovation comes through. Don’t assume that achieving product-market fit also means that it will be maintained.

What else? What are some more thoughts on losing product-market fit?

One of the areas most first-time entrepreneurs struggle with is product focus. Whenever a new startup gets going, there’s a completely clean slate with which to build the application. As more early adopters and customers use the product, more ideas and feedback come in on how to enhance it. Entrepreneurs love selling and building things, so when a customer makes a product request, the natural inclination is to add that feature. Only, that’s the fastest way to build a product that’s no longer cohesive.

Here are a few thoughts on product focus:

• Have an opinionated vision for the future
• Don’t assume all customer requests are the same
• Make sure and say ‘no’ three times as often as saying ‘yes’
• Either have a product manager on the team or great get a great advisor that has strong product management experience
• More product code equals more technical debt, which slows down future development
• Read the book Getting Real by 37signals as it provides a number of solid anecdotes concerning product focus

Product focus is one of the biggest challenges for first-time tech entrepreneurs. Apply a lens to every feature request and continually asked the following question: does this apply to 80% of the customers that we want using our application.

What else? What are some other thoughts on product focus?

Om Malik, journalist and entrepreneur, put up a slide on his site titled Startups lessons from Netflix where he highlights a presentation from Adrian Cockcroft, previously of Netflix. Adrian highlights 7 startup lessons he learned from his time at Netflix:

1. Speed wins in the marketplace
2. Remove friction from product development
3. High trust, low process, no hand-offs between teams
4. Freedom and responsibility culture
5. Don’t do your own undifferentiated heavy lifting
6. Use simple patterns automated by tooling
7. Self service cloud makes impossible things instant

Product and engineering-oriented entrepreneurs would do well to read all the slides in Adrian’s Fast Delivery presentation.

What else? What are some more takeaways from Adrian’s presentation?

Being a part of the Atlanta Tech Village enables me to spend a good bit of time with entrepreneurs that have a working product and are seeking product-market fit. As a product-oriented entrepreneur, I enjoy talking about the software, how it works, how customers use it, and how the customer on-boarding process works. After writing about 5 Ways to Identify Product-Market Fit, I’ve come to the following conclusion:

Product-market fit is achieved when five new customers are immediately happy and don’t find any bugs.

Before, I was leaning towards a certain number of customers, or level of value received from the service. Now, I believe product-market fit is all about signing a small number of successful customers that don’t run into rough edges. Some startups sign new customers, but the customers aren’t happy and don’t end up seeing enough value in the product (there was more selling than buying). Also, the new customers might be happy, but they immediately run into bugs, and so don’t have a great experience (bugs are normal but need to be squashed quickly).

Product-market fit is difficult to achieve but readily apparent when new customers are successful and have a bug-free experience. Once fit has been achieved, the next step is shifting attention to building a repeatable customer acquisition model (see The Four Stages of a B2B Startup).

What else? What are some more thoughts on the idea that product-market fit has been achieved once five new customers are successful and don’t find product issues?

Yesterday an entrepreneur emailed me saying he’d like to talk after he gets his app built and has 10 customers. Naturally, I like this as my personal focus is on helping entrepreneurs scale from 50 customers to 500 customers, and not going from 0 to 10. Going from 0 to 10 is so industry and market specific, that I can’t add much value. Going from 50 to 500 involves building a repeatable customers acquisition machine, scaling the organization, and a number of other aspects that are more process and team oriented.

Only, in the entrepreneur’s email, he said he needed eight months to build the product and get the first 10 unaffiliated customers. Eight months is too long to wait to know if an idea is good or not, so it’s critical to get customers as quickly as possible. Here are a few thoughts on getting 10 unaffiliated customers after running a customer discovery process and building a simple product:

• Users are oxygen for a product otherwise the human tendency is to enhance a product in a vacuum, and build functionality that isn’t highest priority
• Unaffiliated customers are ones that don’t come from friends, family, or colleagues (friendly customers are fine, but focus on unaffiliated customers until there’s a critical mass of impartial customers)
• Unaffiliated customers provide more direct feedback, aren’t worried about hurting the entrepreneur’s feelings, and will be more demanding (it’s key that money changes hands and that they aren’t a free user)
• Implement a marketing process like Traction to systematically find 10 unaffiliated customers (e.g. use cold calling, pay per clicks ads, social media, etc to get 10 customers in the door)
• Listen to the customer requests while maintaining an opinionated vision for the future

One of the most common entrepreneur mistakes is taking too much time to prove they are on the wrong path. Of course, it’d be great if every new product idea was successful, but most of the time they aren’t. By getting to “no go” as soon as possible, it provides more time to pivot/iterate and try the next direction. Grinding it out is hard, but critical to achieve entrepreneurial success.

What else? What are some more thoughts on getting 10 unaffiliated customers as quickly as possible?

Yesterday I was talking to an entrepreneur about their recent product launch. The application looks solid and has a minimum respectable feature set (one level above a minimum viable product). Only, he thought the product was sufficient for now and wouldn’t need as much engineering attention for a month or two.

A new product never survives contact with customers. Never. Customers always find bugs, problems, inconsistencies, and issues. In fact, it never stops, and it’s a good thing.

Here are a few thoughts on customers finding bugs:

• Acknowledge the bug when found and graciously apologize to the customer
• Allocate some amount of engineering time on a recurring basis to address bugs
• Incorporate exception handling software that automatically registers product errors in a third-party service that notifies the engineering team (e.g. Airbrake)
• Add automated tests (e.g. unit tests, integration tests, synthetic browser tests, etc.) as new issues arise to ensure core elements of the application are always working

Customers finding bugs is a normal part of the software experience. Develop a process and best practices for handling them when they occur and work hard to make customers happy.

What else? What are some other thoughts on customers finding bugs?

Atlanta-based FullStory just announced that they raised $1.2 million in a seed round led by Google Ventures. FullStory offers an amazing SaaS-based product that records every user interaction with a website/web application so that marketing, support, and user experience teams can play it back to see precisely what a user did — it’s a game changer, especially when plugged into help desk products like Zendesk.

Only, this great team didn’t start out doing what they’re currently doing. Like most startups, their original vision was something completely different. The core team had worked together many years ago building a web application front-end toolkit that was acquired by Google. After deciding to leave Google a few years ago, they originally set out to build a marketing project management system based on agile principles. Generally, the idea was that the same way that agile software development replaced the waterfall model, so too was that change going to take place for marketing teams.

After building a very slick project management tool for marketers, and working closely with end-users, they finally reached the conclusion that marketers weren’t looking for new project management tools and that the agile process was many years away from becoming mainstream. Many marketing departments were happy with Basecamp or Google Spreadsheets to coordinate projects. They had built a vitamin and not a pain-killer.

While talking to end-users, and doing consulting work to keep the lights on, they realized that a huge pain in the market was understanding how people interacted with websites and web applications. Sure, things like Google Analytics will show macro data of site visits and user flows, but it doesn’t show individual user sessions and how the user moved the cursor around the screen. Web analytics tools don’t provide the full story that marketing, support, and user experience people desperately want to see.

Now, the startup is doing great, signing customers, and raising money from institutional investors. Even an early amount of success requires a tremendous amount of effort and many twists and turns. I’m looking forward to watching the company grow and building a great business. If you know anyone in marketing, support, or user experience that wants to truly understand how their end-users use their site/application, send them over to FullStory.

What else? What are some other thoughts on FullStory?