Finding Product / Market Fit: Introducing the PMF Matrix - Presentation by Rishi Dean to MIT Sloan...

[ Using the PMF Matrix to uncover your killer app ]

MIT Sloan Breakfast Club March 12, 2010

Rishi Dean [email protected] www.rishidean.com

Foundingmemberof:

Otherexperiences:

Formal&informalstart‐upadvisor(EIR@MIT)

Hundredsofproductcycles…withscarstoproveit2RishiDean–www.rishidean.com

3RishiDean–www.rishidean.com

6outof1,000funded

60%fail,30%flounder

<10%+returns,<1%getbig

.01%”majorsuccess”Source:

http://bit.ly/startupfailurerates

1)  Whydidyoufail?

2)  Whydidyourunoutofmoney?

3)  Whydoyouhavenocustomers?

4)  Whydidtheyhaveunfilledneeds?

5)  Whydidyounotachieveproduct/marketfit?

Uncheckedfalseassumptionskillcompanies


  Startwithafirmvision  Design&developspecifications  Followa“waterfall”developmentmodel  Convergetoamassive“launch”  Letthesalesrollin

FAIL


Source:SteveBlank,The4Steps

toEpiphany

*

  Globalizationincreasescompetition  Lowertechnicalbarrierstoentry  Increasedcapitalefficiency  Costofacquisitionisnearzero

Marketsevolvefaster‘Revolutionary’innovationisharder


  Engineerswanttobuildformassadoptionbyprovidingahighperformanceandresponsivesystemthatwill“satisfy”customers  Fearthatreleasing“junk”tooearlywilltickoffcustomersandkillthe

company

  Butyoudon’tknowwhatcustomerswant,northeiraccesspatterns,untilyoureleasea“suboptimal”product

  Ifyoureleasea“fullyoperational”systemtoolate,itmaynotconformtowhatuser’swantandyou’veoptimizedforthewrongthingdon’tbuildtheelegantthingnoonewilluse

  Getfeedback.Learnfast.Movefast…afterall,you’reastartup,right?


Source:http://bit.ly/engineersparadox


BEFOREProduct/MarketFit

AFTERProduct/MarketFit

  Buildthesales,marketing,anddeliverymachine

  Buildthecompany  Getbig,fast

  Customerdiscovery&validation

  Measure,iterate,pivot  Burnaslittleaspossible

tosurvive

But,howdoyoufindProduct/Marketfit?See:

http://bit.ly/8YwPIn

“Manyrightanswers” “Goodhypothesis,noconclusions”

“Technologyinsearchofaproblem”

“Builditandtheywillcome”

Market/PainUnderstanding

Prod

uct/Rem

edyUnd

erstan

ding

Strong Weak

Weak

Strong

  Figureoutwhereyoureallyare

  Differentresourcesandinputswilldetermineyourstartingpoint

  Whereyouareshoulddictatemilestones,revenueprojections,fundingrequirements,etc.

  Assumeyouknowlessthanyoudo,untilrevenueprovesotherwise






Prod

uct/Rem

edyUnd

erstan

ding

Strong Weak

Weak

Strong

  Youwillmovebetweenblocksasbusiness/marketevolve,ordiversityacrossproductlines

  Youcanremoveuncertaintyovertime,butuncoverothersasyoudigdeeper






Prod

uct/Rem

edyUnd

erstan

ding

Strong Weak

Weak

Strong


  Moststart‐upsbeingwithagreatdealofuncertainty–goalisthesame,butstartingpointdiffersdependingonavailableresources

  Notmutuallyexclusivemodels–overlappingprinciples:

  Prototyping  Customerdevelopment  MVP


GAINSLOSSES

SubjectiveValue

(Utility)

1)RapidPrototyping:gainfeedbackfast 2)Cuttothecore:it’shardtotakeaway

3)MeasureEverything:understandwhatworks,andmoreimportantly‐whatdoesn’t

See:http://bit.ly/prototyping See:http://bit.ly/prospecttheory

Source(DaveMcClure):http://www.500hats.com

Weak

“Goodhypothesis,noconclusions”

“Manyrightanswers”

Strong



Prod

uct/Rem

edyUnd

erstan

ding

  Locatekeymarketswithcompellingdynamics

  “Whereelsewoulditwork?”

  Pickafewapplications/marketsandidentifyahypothesistosolvefor

  Lookformarketsprimedforspeedofinnovationdiffusion

  Understandtheflowof$andinjectintoanexistingpattern

Weak

Strong

WhyNot?Rigorousmarketexploration

“Technologyw/oaproblem”



1) RelativeAdvantage Howmuchbetterisyourinnovationthantheincumbentsolution?

2) Compatibility Howeasilycanyourinnovationfitwiththeexistinginfrastructureandecosystem?

3) Complexity Isyourinnovationeasytoadoptanduse,relativetothecurrentmethod?

4) Observability Howeasilycancustomersseethedifferentiationandbenefitsofyourproduct?

5) Trialability Howeasycancustomerspilotortestyourproduct?

6) SocialAcceptability Doesyourproductimpactcurrentsocialnorms?

7) Regulatory Aretherelegalorbureaucraticissuesrelatedtoyourinnovation?

Source:http://bit.ly/innovationdiffusion


“Goodhypothesis,noconclusions”


WeakStrong

Strong


Prod

uct/Rem

edyUnd

erstan

ding

  Leadusersareeasiestpath:transformanad‐hocsolutiontosomethingmainstream

  “Imaginaryassistant”notion

DesignThinkingDesignThinking+Agile


Weak


See:http://bit.ly/webdesignthinking


Source:IDEOAlsosee:http://bit.ly/webdesignthinking


Strong



Strong


Prod

uct/Rem

edyUnd

erstan

ding

  Fundamentalfeedbacklooppowersallstartups:

  Minimizestotaltimethroughthisloopuntilyoufigure“it”out

Weak

Weak

LeanStartupCustomer+AgileDev’t

“Failsmall,failfast”


LEARN BUILD

MEASURE

IDEAS

CODEDATA

See:http://startuplessonslearned.com


Source:SteveBlank,4StepstoEpiphany



Weak

Weak

ProductDevelopmentWaterfall–butagiletoo


Strong

Strong


Prod

uct/Rem

edyUnd

erstan

ding

  Worksinincrementalorevolutionaryinnovation

  Slicker,quicker,better,cheaper

  Technology‐drivenproblems(e.g.curecancer,buildateleporter)

  Therearespecialcaseswhereafirmvision(bethecustomer)+iterativereleasescanworkwell(e.g.37Signals)


  Embraceignorance  Characterizeyoursituation  PicktherightstartingpointandemploytherequisiteapproachestofindPMF  Setthebusinessgoalsaccordingly  Commonthemes:prototype,listen,measure,learn,iterate

  Traversethematrix  THENscaleupthebusiness


Blogs  LeanStartup:http://startuplessonslearned.com  CustomerDev’t:http://steveblank.comLotsmorelikeDaveMcClure,SeanEllis,BrantCooper,AndrewChen,DiegoRodriguez

Books


CustomerDev’tBible

DesignThinking

Techinsearchofaproblem

Designfortechies

ProdDev’tdoneright


  E‐mail: [email protected]  Blog: rishidean.com  Twitter: @rishidean

Finding Product / Market Fit: Introducing the PMF Matrix - Presentation by Rishi Dean to MIT Sloan...

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Transcript of Finding Product / Market Fit: Introducing the PMF Matrix - Presentation by Rishi Dean to MIT Sloan...