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A systematic approach for going from idea to product/market fit.
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Hashtag: #leanstartup
ASH MAURYA@ashmauryaspark59.com
PracticeTrumpsTheory.com
10 STEPS TO PRODUCT/MARKET FIT
9/10 startups failproducts
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
AG
END
A
02 Early Traction
03 Product/Market Fit
01 Problem/Solution Fit
AG
END
A
02 Early Traction
03 Product/Market Fit
01 Problem/Solution Fit
AG
END
A
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 CostsDistribution CostsHostingPeople, etc.
Cost Structure
Customer Acquisition CostsDistribution CostsHostingPeople, etc.
Cost Structure
Customer Acquisition CostsDistribution CostsHostingPeople, etc.
Revenue Streams
Revenue ModelLife Time ValueRevenue Gross Margin
Revenue Streams
Revenue ModelLife Time ValueRevenue Gross Margin
Revenue Streams
Revenue ModelLife Time ValueRevenue 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
Problem SolutionUnfairAdvantage
Key Metrics
http://runlean.ly/why-lean-canvas
02 Formulate an implementation strategy.
Facebook won on strategy not vision.
03 Hone in on early adopters !rst.
Problem Solution Unique Value PropositionUnique Value Proposition
Unfair Advantage
Customer Segments
Problem
Key Metrics
Unique Value PropositionUnique Value Proposition
Channels
Customer Segments
Cost StructureCost StructureCost Structure Revenue StreamsRevenue StreamsRevenue Streams
Your early adopters de!ne the business model
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
AG
END
A
02 Early Traction
03 Product/Market Fit
01 Problem/Solution Fit
AG
END
A
02 Early Traction
03 Product/Market FitHave 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 !nd you?
Do users have a great !rst 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 !nd you?
Do users have a great !rst 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.
01 Problem/Solution Fit
AG
END
A
02 Early Traction
03 Product/Market Fit
01 Problem/Solution Fit
AG
END
A
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 !nd you?
Do users have a great !rst 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 Breakthrough insights are usually hidden within failed experiments.
A pivot not grounded in learning is a disguised “see what sticks” strategy.
“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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