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Identifying Product Market Fit

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My invited talk at SAP Startup Studio on Aug 11. The talk was part of the Inspire Us series at the startup studio and was well attended by SAP employees as well as the startups.

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Identifying Product Market Fit

  1. 1. Tathagat Varma Knowledgepreneur http://thoughtleadership.in
  2. 2. 90%
  3. 3. http://qz.com/682517/after-analyzing-200-founders-postmortems-researchers-say-these-are-the-reasons-startups-fail/
  4. 4. https://steveblank.com/2014/06/28/ customer-discovery-the-search-for- productmarket-fit-2-minutes-to-see-why/
  5. 5. —  Marc Andressan (2007): —  Product/market fit means being in a good market with a product that can satisfy that market. —  When you are BPMF, focus obsessively on getting to product/market fit. Do whatever is required to get to product/market fit. Including changing out people, rewriting your product, moving into a different market, telling customers no when you don't want to, telling customers yes when you don't want to, raising that fourth round of highly dilutive venture capital -- whatever is required —  Paul Graham (2008): —  Make things people want. —  Sean Ellis: —  Achieving product/market fit requires at least 40% of users saying they would be “very disappointed” without your product. —  PMF as a pre-condition to scaling up business! —  Michael Seibel (2016): —  Focusing on market first!
  6. 6. “You can always feel product/market fit when it's happening. The customers are buying the product just as fast as you can make it -- or usage is growing just as fast as you can add more servers. Money from customers is piling up in your company checking account. You're hiring sales and customer support staff as fast as you can. Reporters are calling because they've heard about your hot new thing and they want to talk to you about it. You start getting entrepreneur of the year awards from Harvard Business School. Investment bankers are staking out your house.” – Marc Andreessen
  7. 7. You can always feel when product/ market fit isn’t happening. The customers aren’t quite getting value out of the product, word of mouth isn’t spreading, usage isn’t growing that fast, press reviews are kind of “blah”, the sales cycle takes too long, and lots of deals never close. – Marc Andreessen
  8. 8. 1.  Determine your target customer 2.  Identify underserved customer needs 3.  Define your value proposition 4.  Specify your MVP 5.  Create your MVP 6.  Test your MVP with customers It is an iterative process. Iteration leads to feedback on MVP, which gets revised. When you MVP is valuable, easy to use, etc., you have found PMF! http://medium.com/lean-startup-co/a-playbook-for-achieving-product-market-fit-434a644a9b91#.k8b6q93dp
  9. 9. —  The Value Proposition Canvas zooms into the details of two of the building blocks of the Business Model Canvas —  Helps you create value for your customer
  10. 10. — Customer Profile: clarify your customer understanding — Value Map: describe how you intend to create value for that customer — You achieve “Fit” when value map meets your customer profile – when your products and services product pain relievers and gain creators that match one of more of the jobs, pains, and gains that are important to your customer.
  11. 11. http://www.slideshare.net/rishi12/finding-product-market-fit-introducing-the-pmf-matrix-presentation-by-rishi- dean-to-mit-sloan-breakfast-club
  12. 12. 1.  Product market fit is always a discrete, big bang event 2.  It’s patently obvious when you have product market fit 3.  Once you achieve product market fit, you can’t lost it 4.  Once you have product market fit, you don’t have to sweat the competition http://blog.pmarca.com/2010/03/20/the-revenge-of-the-fat-guy/
  13. 13. 1.  Your product is NOT “the product” 2.  Brainstorm multiple models and prioritize where to start 3.  Understand the three stage of a startup 4.  Focus on the right macro metrics 5.  Formulate falsifiable hypotheses 6.  Architect for learning 7.  Architect for speed 8.  Go only as fast as you can learn 9.  Validate qualitatively, verify quantitatively 10.  Systematically test your model http://www.slideshare.net/ashmaurya/10-steps-to-productmarket-fit
  14. 14. http://torgronsund.com/wordpress/wp-content/uploads/2011/04/Slide1.jpg
  15. 15. GET OUT OF THE BUILDING…
  16. 16. —  Product-Market Fit is all about finding the “resonance” between your customer’s needs and your value proposition —  You start with sketching your assumptions on paper. A tool like VPC or PMFC could be useful. —  However, you need to validate your assumptions! So, you build an MVP and test it rigorously. —  When you see your BMC is checked all green, you have no “guesswork” left unvalidated anymore. —  At that point, you have achieved PMF and have a playbook for next phase of growth.
  17. 17. —  http://web.archive.org/web/20070701074943/http:// blog.pmarca.com/2007/06/the-pmarca-gu-2.html —  http://productmarketfitcanvas.com/ —  http://rishidean.com/2010/03/15/finding-product-market-fit- introducing-the-pmf-matrix/ —  http://blog.pmarca.com/2010/03/20/the-revenge-of-the-fat-guy/ —  https://leanstack.com/achievingproductmarketfit/ —  http://www.startup-marketing.com/the-startup-pyramid/ —  http://www.slideshare.net/ashmaurya/10-steps-to- productmarket-fit —  https://www.quora.com/How-do-you-define-Product-Market- Fit —  http://www.themacro.com/articles/2016/06/the-real-product- market-fit/

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