THE PRODUCT MARKET FIT CYCLECarlos Eduardo Espinal @cee

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A QUICK JARGON BUSTER...

•What is Product / Market Fit

•What is Positioning?

•What is an MVP? and an MVS?

•What are Pirate Metrics?

•What is a Go 2 Market Strategy?

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PRODUCT MARKET FIT

•When it is not happening:

Poor conversions, no word of mouth, slow usage growth, long sales cycle, and high churn

•When it is happening:

“The customers are buying the product just as fast as you can make it — or usage is growing just as fast as you can add more servers.” - Marc Andreessen

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POSITIONING

•What is Positioning? - It is “how you differentiate yourself in the mind of your prospect.”

•What is RePositioning? - It is “how you adjust perceptions about you and/or about your competitors.”

• ..And... It’s not just about a ‘positioning statement’

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POSITIONING

• Avis ‘We Try Harder’

• Positioned around customer service & experiencevs. car count or availability which Hertz led

• Re-Positioned the leader as not caring about you

• Success = In 1 year, Avis went from -$3.2 million to +$1.2 million for the first time in 13 years.

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MVP & THE LEAN STARTUP

• Build a ‘good enough’ product that fits the minimum criteria to test out your hypothesis

•Measure interactions with the product

• Learn from the results and generate new ideas

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MINIMUM VIABLE SEGMENT (MVS*)

• Building an MVP for a small segment (vs. the whole market):

• Allows for better differentiation with out-group competing products

• Allows for easier referrals in-group

• Allows for efficient capital use in reaching your market

* Defined by Michael J. Skok (Northbridge Ventures)@cee

PIRATE METRICS* - AARRR

*As defined by Dave McClure

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GO 2 MARKET

• Includes key partnerships and key distribution channels to reach your MVS

• Includes pricing strategies, sales strategies, and marketing methods (internet marketing, direct marketing, PR, etc)

•Note: Make sure to include cost ‘assumptions’

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RESUMING THE BROADCAST...

•What has been going wrong?

•What is the solution?

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HACKERS ARE REALLY GOOD AT BUILDING

• It is human nature to focus on what you are good at not on what you suck at

and...

•Most Founders are ‘hackers’ and love building

so....

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FOUNDERS CAN SOMETIMES:

•Get stuck at the “MVP stage”

• Build and Measure quickly but not necessarily be “Learning”

•Not find Product Market Fit fast enough (before the money runs out)

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THE DIAGNOSIS

• The identification of a specific Minimum Viable Segment

• The definition of a clear positioning strategy that shapes their MVP

• The testing of a complimentary go 2 market strategy

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DEFINE “THE TARGET”

Minimum Viable Segment

You cannot beeverything

to everybody

so pick somethingfor someone

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DEFINE “THE BULLET”

• The Positioning Strategy = The Shell

• The MVP = The Projectile

• The Go 2 Market Strategy = The Powder

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The Product Market Fit Cycle

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SCALING PRODUCT MARKET FIT

• Find Product Market Fit THEN Scale

•Otherwise = Inefficient Scaling

• Shouldn’t optimize around growth (growth hacking) until you have found product/market fit

Sean Ellis’s Growth Stage Pyramid

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THE PRODUCT MARKET FIT CYCLE SUMMARY

• Identify a MVS

•Design your Company’s ‘Bullet’ - Positioning, MVP, & Go2Market

• Test & Measure w/ Pirate Metrics

• Iterate on MVS or one variable within Bullet

• Rinse & Repeat or Pivot@cee

THE SEEDCAMP LEARNING PROGRAM

•New Companies go through each part of the cycle with mentors starting now & cover the basics of cycle in first week

•Our Program is designed around the Product Market Fit Cycle

• Annual Program focuses on each aspect of the cycle but “in depth”

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