The goal here is clearly defining the conditions under which a hypothesis can be absolutely proved or disproved. Otherwise, you can easily fall into the trap of accumulating just enough evidence to convince yourself that your hypothesis is correct.\n\nReasonably smart people can rationalize anything and entrepreneurs are especially gifted at this.\n\nBefore Product/Market fit, you typically do not have enough traffic to afford waiting for statistically significant results. The good news is that if you are maximizing for learning and picking bold outcomes, that naturally works to your advantage. Your initial goal is getting a strong signal (positive or negative) which typically doesn&#x2019;t require a large sample size. You might be able to do this with as few as 5 customer interviews1.\n
In a pivot experiment, you attempt to validate parts of the business model hypotheses towards finding that plan that works. In an optimization experiment, you attempt to refine parts of the business model hypotheses towards accelerating a working plan. The goal of the first is a course correction (or a pivot). \n\nThis may sound like a subtle distinction but it has a significant impact on both strategy and tactical execution. Before Product/Market fit a startup needs to be architected for maximizing learning. In order to maximize learning, you have to pick bold outcomes versus chase incremental improvements. So, rather than changing the color of your call to action button, change the entire unique value proposition. Rather than experimenting with different prices, experiment with different pricing models.\n
PivotCamp #1A start-up event focused on trying to make more successful startups in Montreal Fred Lalonde & Hugh McGuire
Confession: Book Oven was a disaster for hundreds of reasons,but the most important one:
Things that don’t matterWhat technology you use How much money you raisedYour “development methodology” Having big wigs on your board ofPatents directors/advisorsYour business plan P&L & Pro forma budgetsYour marketing strategy How many Twitter followers you have“Viral Anchors” Traction on your blogUsability Articles about you in the NYTimesGraphic Design Presenting at SXSWBranding User signupsWorking 80 hours a week Getting great response atFlexible office hours DemocampFree expresso & a foosball table How many employees you haveAn Employee Stock Option Plan How much you pay themGet Satisfaction/Uservoice How many features you buildSurveys If you are funded or who funded youWinning Start-up awards Integrating Facebook ConnectWhether your friends like your idea Adding featuresWhether anybody likes your idea Articles about you in TechCrunchHow robust your servers are Financial projections Whether you like your idea
Things that do matter Product/Market Fit Traction Running out of money
A Better WayProblem/Solution Product/Market Scale Fit Fit Finding a plan that works. Accelerating that plan. Build - Measure - Learn - Pivot Expend capital. Grow. Optimize.
Stage 1: Problem/Solution FitDo I have a problem worth solving?1. Solve a problem that a lot of people have.2. Solve problem that is close to large amounts of money.3. Find a better way to do something that a lot of people do.4. Invent something new that a lot of people want. Document your “Plan A”.
Stage 2: Product/Market FitHave I built something people want?• The customer is willing to pay for the product.• The cost of acquiring the customer is less than what they pay for the product.• There’s sufficient evidence indicating the market is large enough to support the business.* or *40% of users saying they would be “very disappointed”without your product.
The Goal: Minimum Value Product (MVP)A product with the fewest number of features required to getusers to pay*.*with some form of a scarce resource.
The Validated Learning Loop Build Measure Learn
Building a validated learning loop1. Formulate falsifiable hypotheses2. Design a time-boxed experiment3. Validate Qualitatively, Verify QuantitativelyBAD:We want to become market leaders in mobile blah-blah-blahfor the blah-blah segment.GOOD:If we build a free iphone app that does blah, can we get 1out of 10 people who download it to use it every day?