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Product/Market FitTwists and Turns

David JonesFounder StreetHawk, Mentor StartMateFounder ThreatMetrixFounder/CEO EmUTech->Surfcontrol

FOUNDERSINSTITUTE

MAY 13

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This talk is “Pivot”-free

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Focus or FailIn Australian you have limited resources and cash reserves

then focus is your most valuable disciplineif your hypothesis wrong at least you “fail fast”

(picture credit: Mick Liubinskas/Pollenizer)

Don’t let Perfect be the Enemy of the

Good

Don’t let Perfect be the Enemy of the

Good

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GET TO THE CORE!!!

DON’T GET HYPOTHESIS BACKLOG

The mistake we all make is to generate product ideas without

proving they are so valuable that your customer “must have it”.

Have a look at Lean Canvas:- Method is to break out biggest risk hypothesis- Test first to prove/disprove

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Revenue is a deodorant

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Validation Tip of the day: Look them deeply in the eye and ask for money

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Caveat

I really don’t know “Consumer” – observation is based on experience in enterprise.

What I do know is nobody in Australia has baked a consumer success without a revenue model. i.e “Twitter”

The funding just isn’t there (typically)

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Validation Tip of the day: Look them deeply in the eye and ask for money

Because if you can’t get to product/market fityou will never get to sustained ARPU

1.You will never get initial purchases2.If you do, the leaky bucket has a big hole.

Average Revenue Per User. Also LTV = Lifetime Value

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Talk to the right people1. Incumbent rejection/deferral is actually a strong positive signal2. But make sure you have 10x differentiation in your core.3. Find the core because there are many conflicting signals4. Don’t validate with your mum

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Your Product is not your product(Ash Muraya)

CustomerAcquisition

& Monetization

CustomerAcquisition

& Monetization

The Actual

Product (Code)

The Actual

Product (Code)

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Case 1: Benefit of Knowing Your SectorIteration/Evolution Hind-sight Axiom

Email Filtering for corporate Client asked for 1st iteration and developed to.I knew the problem, worked with a customer

In ENTERPRISE, “Get out of the building” works.

Spam Detection CEOs secretary gets a porn spam. Trial immediately approved and invoice paid.

Be a pain-killer not a vitamin.

Melissa/Lovebug virus released

We were well-positioned for an unforseen event.

Catch the wave as its breaking.

Exit to Surfcontrol Acquirers make build, buy decisions to catch up

1 year later Major AV vendors deliver email products

Catch the wave as its breaking

4 years later IronPort exits to Cisco to >$800M

Ride the wave requires big revenue or big VC

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Case 2: A History of “Twists”

Iteration/Evolution Hind-sight Axiom

SpamMATTERS forensic tools for enforcement

“early adopters have same affliction as entrepreneurs”

Don’t validate with your Mum

Botnet tracking/IP Reputation for security

OEM Model not a scalable revenue model in security

Know your investor. “Begin with the end in mind”

IP Reputation for fraud prevention

IP addresses not enough granularity

Be 10x betterValidate with target market early and often“Markets Shift”

Device Intelligence for eCommerce

Listening to Gorilla’s tell you about the future. Respond to customers needs

“Get TO the conversation”

Real-time fraud prevention and enabling ECommerce

Virtual GoodsVirtual CurrenciesSocial/FB GamingMassive transaction scaleMachine Learning

Be aware of “tectonic” shifts(US Gov stops gambling)(New Commerce models)(Privacy Laws)

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Non Vanity Metrics – keep yourself honest

• See “Revenue is a deodorant” slide

• Especially useful in “Consumer”

• Startup Metrics for Pirates (McClure)– Its about the pipeline to revenue baby

• Assert(LTV > CPA)• Retention/Churn• Install/Visit->Login->Engagement->Transaction• “Vanity Metrics” debate

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Reading/Repeating startup tips is easy - Internalising is hard

• “Enterprise” startups– Measurement is not easy– No large base of consumer feedback– Solution: Solve a big problem– Ask for money when MVP feature-set agreed– Grind out the case studies and references

• “Consumer web/mobile” startups– Is it in your DNA?– ***Your product includes user acquisition***– Don’t believe end-user conversations– Measure everything – use the key things– Pivot (company is “built to learn”)

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Great Tools for Enterprise

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Delusion: Picking the wrong metrics

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Axiom: “Be aware of tectonic Shifts”

Mega-vendors:- Apple vs Google- Microsoft vs Google- Social vs Search (FB vs Google) Revenue Models:-Licence vs Monthly-Credit Card vs Virtual Goods

Deployments Models:-SaaS vs Enterprise install- Desktop vs Mobile

Form Factor:- Mobile vs Web vs Tablet- No easy acquisition on mobile- No easy “Wallet” on mobile

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Oz related challenges/opportunities

• Cons– If you are not a “subject matter expert” then get them or get out– Often OZ startups say “No money to validate”? – Get advisors in the target market (don’t underestimate this value)– To overcome isolation – get TO the conversation. You MUST use:

• Adwords->Analytics to learn what matters/resonates• Leadlander (or some origin based analytics) – What companies are on your site?

• Surveys/Feedback (Google Docs, Wufoo forms, SurveyMonkey)• Social data mining (If enterprise product LinkedIn groups for segment is valuable and leadgen)

• Tradeshows (enterprise). Spend the money that gets you into the conversation

• Gorillas (talk to eBay etc). Spend the money that gets you into the conversation

• Pros– Aussie companies are good early adopters (has pros/cons)– Leverage Gov Grant Funding to get target market validation

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http://www.google.com/profiles/david.jones

@djinoz

Slides at http://slideshare.net/djinoz

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Product vs Sales Matrix

Product needs selling, strong sales piece. This is a sales-driven company.

Product sells itself, strong sales piece. This is ideal.

Product sells itself, no sales effort. Does not exist.

Product needs selling, no sales effort. You have no revenue.

Credit: Thielhttp://blakemasters.tumblr.com/post/22405055017/peter-thiels-cs183-startup-class-9-notes-essay