10 steps to product/market fit

Ash Maurya
Ash MauryaAuthor and Creator of Lean Canvas
Hashtag: #leanstartup
ASH MAURYA
@ashmaurya
spark59.com
PracticeTrumpsTheory.com
10 STEPS TO
PRODUCT/MARKET FIT
9/10startups fail
products
66%drastically change their
original plans
Not a better Plan A but a path to a
plan that works before running out of
resources.
A plan that works = Product/Market Fit
What is
Product/Market Fit?
“... customers are buying the product just
as fast as you can make it - or usage is
growing just as fast as you can add
servers ...”
-Marc Andreessen, The Pmarca Guide to startups
“If you have to ask whether you have
Product/Market Fit, the answer is simple:
you don’t.”
-Eric Ries, The Lean Startup
Getting to Product/Market Fit can
be done systematically.
01 Problem/Solution Fit
AGENDA
02 Early Traction
03 Product/Market Fit
01 Problem/Solution Fit
AGENDA
02 Early Traction
03 Product/Market Fit
01 Problem/Solution Fit
AGENDA
02 Early Traction
03 Product/Market Fit
Do I have a problem worth
solving?
01 Document your Plan A.
Reasonably smart people can rationalize
anything but entrepreneurs are
especially gifted at this.
Business Model versus Business Plan
Business Model versus Business Plan
A document investors make you
write that they don’t read
Business Model versus Business Plan
A single diagram of your business
Problem
Top 3 problems
Solution
Top 3 features
Unique Value
Proposition
Single, clear,
compelling message
that states why you
are different and
worth paying
attention
Unique Value
Proposition
Single, clear,
compelling message
that states why you
are different and
worth paying
attention
Unfair Advantage
Can’t be easily
copied or bought
Customer
Segments
Target customers
Problem
Top 3 problems
Key Metrics
Key activities you
measure
Unique Value
Proposition
Single, clear,
compelling message
that states why you
are different and
worth paying
attention
Unique Value
Proposition
Single, clear,
compelling message
that states why you
are different and
worth paying
attention Channels
Path to customers
Customer
Segments
Target customers
Cost Structure
Customer Acquisition Costs
Distribution Costs
Hosting
People, etc.
Cost Structure
Customer Acquisition Costs
Distribution Costs
Hosting
People, etc.
Cost Structure
Customer Acquisition Costs
Distribution Costs
Hosting
People, etc.
Revenue Streams
Revenue Model
Life Time Value
Revenue
Gross Margin
Revenue Streams
Revenue Model
Life Time Value
Revenue
Gross Margin
Revenue Streams
Revenue Model
Life Time Value
Revenue
Gross Margin
Lean Canvas is adapted from The Business Model Canvas (http://www.businessmodelgeneration.com) and is licensed under the Creative Commons
Attribution-Share Alike 3.0 Un-ported License.
PRODUCT MARKET
10 steps to product/market fit
Problem Solution
Unfair
Advantage
Key Metrics
http://runlean.ly/why-lean-canvas
02 Formulate an implementation strategy.
10 steps to product/market fit
Facebook won on strategy not vision.
03 Hone in on early adopters first.
Problem Solution Unique Value
Proposition
Unique Value
Proposition
Unfair
Advantage
Customer
Segments
Problem
Key Metrics
Unique Value
Proposition
Unique Value
Proposition
Channels
Customer
Segments
Cost StructureCost StructureCost Structure Revenue StreamsRevenue StreamsRevenue Streams
Your early adopters define the business model
10 steps to product/market fit
Build an MVP (Minimum Viable Product).
An MVP is the smallest solution that
delivers customer value.
(BONUS: And captures customer value.)
01 Problem/Solution Fit
AGENDA
02 Early Traction
03 Product/Market Fit
01 Problem/Solution Fit
AGENDA
02 Early Traction
03 Product/Market Fit
Have I built something people
want?
In God we trust,
all others bring data.
-W. Edwards Deming
Startups don’t starve,
they drown.
-Shawn Carolan, Menlo Ventures
What you wanted
WTF
The reality
04 Establish a standard measure of progress.
Financial accounting Innovation Accounting
ACQUISITION
ACTIVATION
RETENTION
REVENUE
REFERRAL
How do users find you?
Do users have a great first experience?
Do users come back?
How do you make money?
Do users tell others?
Dave McClure’s Pirate Metrics
05 Deliver value before growth.
ACQUISITION
ACTIVATION
RETENTION
REVENUE
REFERRAL
How do users find you?
Do users have a great first experience?
Do users come back?
How do you make money?
Do users tell others?
Value Metrics
06 The terrain before Product/Market Fit is riddled
with qualitative learning.
You don’t need lots of users to learn.
Just a few good customers.
10 steps to product/market fit
01 Problem/Solution Fit
AGENDA
02 Early Traction
03 Product/Market Fit
01 Problem/Solution Fit
AGENDA
02 Early Traction
03 Product/Market Fit
How do I scale?
07 Identify your engine of growth.
ACQUISITION
ACTIVATION
RETENTION
REVENUE
REFERRAL
How do users find you?
Do users have a great first experience?
Do users come back?
How do you make money?
Do users tell others?
PAID
STICKY
VIRAL
Growth Metrics
A startup can focus on only one metric.
So you have to decide what that is and
ignore the rest.
-Noah Kagan
What’s stopping your business
from growing 10X?
-David Skok
08 Measure everything as a cohort.
You cannot step in the
same river twice.
-Heraclitus
Signups
Activation
Paid Conversion
Signups
Activation
Paid Conversion
09 Build a continuous feedback loop with
customers for rapid hypothesis generation.
10 steps to product/market fit
10 steps to product/market fit
10 steps to product/market fit
10 Breakthrough insights are usually hidden
within failed experiments.
A pivot not grounded in learning is a
disguised “see what sticks” strategy.
10 steps to product/market fit
“There is no such thing as a failed
experiment- only unexpected outcomes. ”
- Buckminster Fuller
THANKS!
Available now in bookstores
Get more content like this:
http://runlean.ly/InnovationAccounting
Ash Maurya | Author, Running Lean | Founder, Spark59 | @ashmaurya
Life is too short to build something nobody wants
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10 steps to product/market fit