Product/Market Fit Twists and Turns
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david DOT jones AT gmail DOT com | skype://djinoz | Cell:+61 412 683 111 | @djinoz
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
david DOT jones AT gmail DOT com | skype://djinoz | Cell:+61 412 683 111 | @djinozdavid DOT jones AT gmail DOT com | skype://djinoz | Cell:+61 412 683 111 | @djinoz
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
david DOT jones AT gmail DOT com | skype://djinoz | Cell:+61 412 683 111 | @djinozdavid DOT jones AT gmail DOT com | skype://djinoz | Cell:+61 412 683 111 | @djinoz
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
david DOT jones AT gmail DOT com | skype://djinoz | Cell:+61 412 683 111 | @djinozdavid DOT jones AT gmail DOT com | skype://djinoz | Cell:+61 412 683 111 | @djinoz
Revenue is a deodorant
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Validation Tip of the day: Look them deeply in the eye and ask for money
david DOT jones AT gmail DOT com | skype://djinoz | Cell:+61 412 683 111 | @djinozdavid DOT jones AT gmail DOT com | skype://djinoz | Cell:+61 412 683 111 | @djinoz
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)
david DOT jones AT gmail DOT com | skype://djinoz | Cell:+61 412 683 111 | @djinozdavid DOT jones AT gmail DOT com | skype://djinoz | Cell:+61 412 683 111 | @djinoz
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
david DOT jones AT gmail DOT com | skype://djinoz | Cell:+61 412 683 111 | @djinozdavid DOT jones AT gmail DOT com | skype://djinoz | Cell:+61 412 683 111 | @djinoz
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
david DOT jones AT gmail DOT com | skype://djinoz | Cell:+61 412 683 111 | @djinozdavid DOT jones AT gmail DOT com | skype://djinoz | Cell:+61 412 683 111 | @djinoz
Your Product is not your product(Ash Muraya)
CustomerAcquisition
& Monetization
CustomerAcquisition
& Monetization
The Actual
Product (Code)
The Actual
Product (Code)
david DOT jones AT gmail DOT com | skype://djinoz | Cell:+61 412 683 111 | @djinozdavid DOT jones AT gmail DOT com | skype://djinoz | Cell:+61 412 683 111 | @djinoz
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
david DOT jones AT gmail DOT com | skype://djinoz | Cell:+61 412 683 111 | @djinozdavid DOT jones AT gmail DOT com | skype://djinoz | Cell:+61 412 683 111 | @djinoz
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)
david DOT jones AT gmail DOT com | skype://djinoz | Cell:+61 412 683 111 | @djinozdavid DOT jones AT gmail DOT com | skype://djinoz | Cell:+61 412 683 111 | @djinoz
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
david DOT jones AT gmail DOT com | skype://djinoz | Cell:+61 412 683 111 | @djinozdavid DOT jones AT gmail DOT com | skype://djinoz | Cell:+61 412 683 111 | @djinoz
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
david DOT jones AT gmail DOT com | skype://djinoz | Cell:+61 412 683 111 | @djinozdavid DOT jones AT gmail DOT com | skype://djinoz | Cell:+61 412 683 111 | @djinoz
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
david DOT jones AT gmail DOT com | skype://djinoz | Cell:+61 412 683 111 | @djinoz
http://www.google.com/profiles/david.jones
@djinoz
Slides at http://slideshare.net/djinoz
david DOT jones AT gmail DOT com | skype://djinoz | Cell:+61 412 683 111 | @djinozdavid DOT jones AT gmail DOT com | skype://djinoz | Cell:+61 412 683 111 | @djinoz
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