1. Rishi Dean
rishi@rishidean.com
www.rishidean.com
[ The Quest for Product / Market Fit ]
MassChallenge
June 3, 2010

2. Founding
member
of:
Other
experiences:
Formal
&
informal
start-­‐up
advisor
(EIR
@MIT)
Hundreds
of
product
cycles…with
scars
to
prove
it
Rishi
Dean
–
www.rishidean.com
2

3. 6
out
of
1,000
funded
60%
fail
30%
flounder
,
<10%
+
returns <1%
get
big
,
Source:
.01%
”major
success”
http://bit.ly/
startupfailurerates
Rishi
Dean
–
www.rishidean.com
3

4. Rishi
Dean
–
www.rishidean.com
4

5. 1) Why
did
you
fail?
2) Why
did
you
run
out
of
money?
3) Why
do
you
have
no
customers?
4) Why
did
they
have
unfilled
needs?
5) Why
did
you
not
achieve
product
/
market
fit?
Unchecked
false
assumptions
kill
companies
Rishi
Dean
–
www.rishidean.com
5

6. *
 Start
with
a
firm
vision
 Design
&
develop
specifications
FAIL
 Follow
a
“waterfall”
development
model
 Converge
to
a
massive
“launch”
Source:
 Let
the
sales
roll
in
Steve
Blank,
The
4
Steps
to
Epiphany
Rishi
Dean
–
www.rishidean.com
6

7.  Globalization
increases
competition
 Lower
technical
barriers
to
entry
 Increased
capital
efficiency
 Cost
of
acquisition
is
near
zero
Markets
evolve
faster
‘Revolutionary’
innovation
is
harder
Rishi
Dean
–
www.rishidean.com
7

8. Rishi
Dean
–
www.rishidean.com
8

9. Rishi
Dean
–
www.rishidean.com
9

10. &
vs.
Rishi
Dean
–
www.rishidean.com
10

11. Rishi
Dean
–
www.rishidean.com
11

12. Rishi
Dean
–
www.rishidean.com
12

13. BEFORE
AFTER
Product
/
Market
Fit
Product
/
Market
Fit
 Customer
discovery
&
 Build
the
sales,
validation
marketing,
and
delivery
 Measure,
iterate,
pivot
machine
 Burn
as
little
as
possible
 Build
the
company
to
survive
 Get
big,
fast
But,
how
do
you
find
Product
/
Market
fit?
See:
http://bit.ly/8YwPIn
Rishi
Dean
–
www.rishidean.com
13

14. Rishi
Dean
–
www.rishidean.com
14

15. Market
Hypothesis
 Figure
out
where
you
really
are
Different
resources
and
Validated
“Technology
in
“Build
it
and
they
will

search
of
a
problem”
come”
inputs
will
determine
your
Product
Hypothesis
(MIT)
(Apple
/
37Signals)
starting
point
 Where
you
are
should
dictate
milestones,
revenue
projections,
funding
requirements,
etc.
Untested
“Good
hypothesis,
no
“Many
right
answers”
conclusions”
(McKinsey)
 Assume
you
know
less
(Google)
than
you
do,
until
revenue
proves
otherwise
Untested
Validated
Rishi
Dean
–
www.rishidean.com
15

16. Market
Hypothesis
 Locate
key
markets
with
compelling
dynamics
 “Where
else
would
it
Why
Not?
work?”
Validated
Rigorous
market
exploration
“Build
it
and
they
will
Product
Hypothesis
“Technology
w/o
a
problem”
come”
 Pick
a
few
applications
/
(MIT)
markets
and
identify
a
hypothesis
to
solve
for
 Look
for
markets
primed
for
speed
of
innovation
diffusion
Untested
“Good
hypothesis,
no
“Many
right
answers”
 Understand
the
flow
of
$
conclusions”
and
inject
into
an
existing
pattern
Untested
Validated
Rishi
Dean
–
www.rishidean.com
16

17. How
much
better
is
your
innovation
than
the
1)
Relative
Advantage
incumbent
solution?
How
easily
can
your
innovation
fit
with
the
2)
Compatibility
existing
infrastructure
and
ecosystem?
Is
your
innovation
easy
to
adopt
and
use,
3)
Complexity
relative
to
the
current
method?
How
easily
can
customers
see
the
4)
Observability
differentiation
and
benefits
of
your
product?
How
easy
can
customers
pilot
or
test
your
5)
Trialability
product?
Does
your
product
impact
current
social
6)
Social
Acceptability
norms?
Are
there
legal
or
bureaucratic
issues
related
to
7)
Regulatory
your
innovation?
Source:
http://bit.ly/diffusionofinnovations
Rishi
Dean
–
www.rishidean.com
17

18. Market
Hypothesis
 Lead
users
are
easiest
path:
transform
an
ad-­‐hoc
solution
to
something
mainstream
Validated
“Technology
in
“Build
it
and
they
will
“Imaginary
assistant”
Product
Hypothesis
search
of
a
problem”
come”

notion
Design
Thinking
Untested
“Good
hypothesis,
no
Design
Thinking
+
Agile
conclusions”
“Many
right
answers”
(McKinsey)
Untested
Validated
See:
http://bit.ly/webdesignthinking
Rishi
Dean
–
www.rishidean.com
18

19. Source:
IDEO
Also
see:
http://bit.ly/webdesignthinking
Rishi
Dean
–
www.rishidean.com
19

20. Market
Hypothesis
 Fundamental
feedback
loop
powers
all
startups:
Validated
IDEAS
“Technology
in
“Build
it
and
they
will
Product
Hypothesis
search
of
a
problem”
come”
LEARN
BUILD
DATA
CODE
MEASURE
Lean
Startup
Untested
Customer
+
Agile
Dev’t
“Many
right
answers”
 Minimizes
total
time
“Fail
small,
fail
fast”
(Google)
through
this
loop
until
you
figure
“it”
out
Untested
Validated
See:
http://startuplessonslearned.com
Rishi
Dean
–
www.rishidean.com
20

21. Source:
Steve
Blank,
4
Steps
to
Epiphany
Rishi
Dean
–
www.rishidean.com
21

22. Market
Hypothesis
 Works
in
incremental
or
evolutionary
innovation
(slicker,
quicker,
better,
Organic
Startup
cheaper)
Validated
“Technology
in
Agile
grounded
in
clear
goals
Product
Hypothesis
search
of
a
problem”
“Build
it
and
they
will
come”
 Technology-­‐driven
(Apple
/
37Signals)
problems
(e.g.
cure
cancer)
where
“invention
risk”
is
the
key
 Organic
startups
(be
the
Untested
“Good
hypothesis,
no
customer)
with
a
firm
“Many
right
answers”
vision
+
iterative
releases
conclusions”
(e.g.
37Signals)
Untested
Validated
See:
http://http://bit.ly/pgorganic
Rishi
Dean
–
www.rishidean.com
22

23. Rishi
Dean
–
www.rishidean.com
23

24. Market
Hypothesis
 Data-­‐driven
feedback
matters
more
to
help
find
a
market
Validated
“Technology
in
“Build
it
and
they
will
search
of
a
problem”
come”
 With
a
strong
sense
of
the
Product
Hypothesis
(MIT)
(Apple
/
37Signals)
market,
experience,
“intuition”
and
the
synthesis
of
qualitative
feedback
drive
the
process
Untested
“Good
hypothesis,
no
“Many
right
answers”
conclusions”
(McKinsey)
(Google)
Untested
Validated
Rishi
Dean
–
www.rishidean.com
24

25. Market
Hypothesis
 Disruptive
companies
with
an
unproven
market
have
inherent
uncertainty
Validated
“Technology
in
“Build
it
and
they
will
Starting
point
differs
Product
Hypothesis
search
of
a
problem”
come”

depending
on
available
resources
–
goal
is
the
same
 Not
mutually
exclusive
models
–
overlapping
Untested
“Good
hypothesis,
no
“Many
right
answers”
principles:
conclusions”
 Prototyping
 Customer
development
 MVP
Untested
Validated
Rishi
Dean
–
www.rishidean.com
25

26. 1)
Rapid
Prototyping:
gain
feedback
fast
2)
Cut
to
the
core:
it’s
hard
to
take
away
Subjective
Value
(Utility)
LOSSES
GAINS
See:
http://bit.ly/prototyping
See:
http://bit.ly/prospecttheory
3)
Measure
Everything:
understand
what
works,
and
more
importantly
-­‐
what
doesn’t
Source
(Dave
McClure):
http://www.500hats.com
Rishi
Dean
–
www.rishidean.com
26

27. Market
Hypothesis
 You
will
move
between
blocks
as
business
/
market
Validated
“Technology
in
“Build
it
and
they
will
evolve,
or
diversity
across
Product
Hypothesis
search
of
a
problem”
come”
product
lines
 You
can
remove
uncertainty
over
time,
but
uncover
others
as
you
dig
deeper
Untested
“Good
hypothesis,
no
“Many
right
answers”
conclusions”
Untested
Validated
Rishi
Dean
–
www.rishidean.com
27

28. Rishi
Dean
–
www.rishidean.com
28

29.  Engineers
want
to
build
for
mass
adoption
by
providing
a
high
performance
and
responsive
system
that
will
“satisfy”
customers
 Fear
that
releasing
“junk”
too
early
will
tick
off
customers
and
kill
the
company
 But
you
don’t
know
what
customers
want,
nor
their
access
patterns,
until
you
release
a
“suboptimal”
product
 If
you
release
a
“fully
operational”
system
too
late,
it
may
not
conform
to
what
user’s
want
and
you’ve
optimized
for
the
wrong
thing

don’t
build
the
elegant
thing
no
one
will
use
 Get
feedback.
Learn
fast.
Move
fast…after
all,
you’re
a
startup,
right?
Source:
http://bit.ly/engineersparadox
Rishi
Dean
–
www.rishidean.com
29

30.  Embrace
ignorance
 Characterize
your
situation
 Pick
the
right
starting
point
and
employ
the
requisite
approaches
to
find
PMF
 Set
the
business
goals
accordingly
 Common
themes:
prototype,
listen,
measure,
learn,
iterate
 Traverse
the
matrix
 THEN
scale
up
the
business
Rishi
Dean
–
www.rishidean.com
30

31. Blogs
 Lean
Startup:
http://startuplessonslearned.com
 Customer
Dev’t:
http://steveblank.com
Lots
more
like
Dave
McClure,
Sean
Ellis,
Brant
Cooper,
Andrew
Chen,
Diego
Rodriguez
Books
Customer
Dev’t
Design
Design
for
Tech
in
search
Organic
Bible
Thinking
techies
of
a
problem
startup
case
Rishi
Dean
–
www.rishidean.com
31

32.  E-­‐mail:
rishi@rishidean.com
 Blog:
rishidean.com
 Twitter:
@rishidean
Rishi
Dean
–
www.rishidean.com
32