Unlocking Sustainable Growth: Expert Shares How to Dial In Product/Market Fit

Episode 40 January 19, 2021 00:56:46
Unlocking Sustainable Growth: Expert Shares How to Dial In Product/Market Fit
The Breakout Growth Podcast
Unlocking Sustainable Growth: Expert Shares How to Dial In Product/Market Fit

Jan 19 2021 | 00:56:46


Show Notes

Is it just luck that determines which companies successfully find and harness Product/Market Fit? Or are there specific strategies teams can employ to systematically take ideas through this elusive gate? 


In this episode of the Breakout Growth Podcast, Sean Ellis digs in with product management coach, speaker and author, Itamar Gilad to answer these questions and explain and uncover what every organization--from early startup to established team--can do to find and capitalize on product/market fit. 


On BreakoutGrowth.net, the new companion site to this podcast, Sean and Ethan share their Principles of Sustainable Growth, and at the top of the list is the importance of “Dialing-in the ‘Must-Have’ Experience” first. Itamar, who developed his own GIST framework to help companies achieve breakout growth success, deconstructs his process for finding this fit and explains why many companies fail when they focus on validating solutions instead of truly understanding their customer needs.


But this isn’t just a discussion for early-stage startups. Itamar and Sean explain that Product/Market Fit is not just an obstacle to overcome, but the foundation of growth. Organizations must continuously work to optimize and iterate to stay relevant, meet changing needs, and expand their audiences. Even new features in well-established products need to be evaluated through their own product-market fit lenses.


So whether you are two co-founders with an idea, or leading the next big idea for an enterprise business, this discussion can help you find the focus, tools, and approaches to best position your organization to unlock growth.


We discussed:


* Itamar’s experience from software engineer to product lead at companies including Microsoft and Google (3:17)


* Why many companies fall into the trap of trying to grow without Product/Market Fit (7:14)


* Why Fit matters for both startups and established organizations (8:38)


* Itamar’s GIST Framework for sustainable growth success (11:12) 


* Why it can be so hard to accept that your idea is wrong (14:30)  


* Whose job it is to find Product/Market Fit (17:45)


* The “Renaissance Rep” and how this role can help understand needs (18:40)


* How finding fit varies in B2C, B2B and Enterprise (22:24)


* The role of luck and how to make your own (35:00)


* Why these concepts should always be in focus if you want to stay relevant (46:21)


And much, much, more . . .

View Full Transcript

Episode Transcript

Speaker 0 00:00:08 Welcome to the breakout growth podcast, where Sean Ellis interviews, leaders from the world's fastest growing companies to get to the heart of what's really driving their growth. And now here's your host Sean Ellis. Speaker 1 00:00:25 So to the breakout growth podcast, we explore one of the fundamental factors of growth product market fit. So for the discussion I invited Itamar Gilan former PM of growth for g-mail and now a product management coach speaker and author in 2019 Itamar. And I ran a workshop together in Barcelona, and I was really impressed with his expertise on product market fit. So is product market fit simply based on luck or is there a systematic way for teams and organizations to achieve product market fit and actually improve their product market fit to accelerate growth? So this is what NMR and I dive into. These are the questions we try to figure out and unlock what teams can do to maximize their odds of success. So EMR also explains why he believes his just framework can help us and walks us through some of the key details of the framework. Speaker 1 00:01:21 So this is a particularly relevant discussion as Ethan Gara, and I just launched our new website, breakout growth.net, where we shared our principles of sustainable growth at the top of the list we placed dialing in the must have experience in other words, optimizing product market fit. So please take a minute to check out the website for additional content and guidance to help you drive breakout growth. And so that's a breakout growth.net. So today's podcast discussion really isn't just for early stage startups, product market fit has ramifications for every organization from B2C to enterprise. And in this discussion, you will find insights. You can apply to your own business really at any stage. So let's jump in with you tomorrow, Speaker 0 00:02:16 Tomorrow, Speaker 1 00:02:17 The breakout growth podcast. Hi show. I'm very happy to be here. Um, I'm excited to have you on, so this is going to be a bit of an experiment, um, a different approach. Normally I'm interviewing someone who's inside a fast growing company, but I have a lot of respect for what you've done in the product area. And you've worked on some great products in the past, and I really wanted to dig into the topic of product market fit with you because interview after interview, it is something that comes up as a really key driver of growth. In fact, if I had to estimate, uh, that the impact that product market fit has, I would say it's probably, you know, more than half of the growth success in the companies I've interviewed up to this point, probably it's been product market fit, the rest being execution. So if product market fits so important, I figure we should, we should dig into that as a topic and go pretty deep on it. But, um, before we, we get into that topic, how about you give us a bit of information on your background and what you've, what you've been doing over the years and what you're up to right now. Speaker 2 00:03:17 So currently I'm a product management and strategy coach. I am a speaker, a, I write a newsletter on product management and strategy topics, and I'm also publishing a book on product management. Uh, before that for about 15 years, I was a product manager in various companies. I worked at startups, but I also worked at Microsoft and at Google and Google, I worked mostly on g-mail for a number of years, uh, both as a product manager and as a head of growth. And prior to that for about five or six years, I was a software engineer and then engineering lead. Speaker 1 00:03:53 Wow. So the head of growth role at Gmail, I think is probably something that, uh, puts you right in line with a lot of the interviews that we've had, um, up to this point. But, but I do think again, kind of digging into product management. I know as you, as you mentioned, you've got a book coming out and that your, a lot of your approach is really about kind of dialing in a product to really understand and customer needs. So, um, how did you, how did you go about learning your product management skills? Speaker 2 00:04:22 So I kind of got pushed into it, to be honest, I was an engineer and then, uh, there was an opening, uh, but all through my time as an engineer, I realized that actually, uh, the, the magic is in marrying software with business one. They both need each other one cannot live without the other. And I felt that I want to be a part of both in product management, kind of open up as an opportunity. And it turned out to be the right thing because I ended up doing it for 15 years afterwards. Right. Speaker 1 00:04:55 And then how long have you been on, on your own now and more of a coaching role Speaker 2 00:05:00 Since the beginning of 2017, so three and a half years. And do you, Speaker 1 00:05:07 So do you kind of embed with a company or is it mostly sort of lighter touch workshops or how what's, what, what does your typical engagement look like? Speaker 2 00:05:16 Typically these days I would come and train the company with, uh, with my own system called <inaudible> or with a strategy workshop, if that's what they're interested in. And often there'll be, follow-ups where I coach them on someone or implementation of some of these topics. Um, but it varies from company to company. Okay. Speaker 1 00:05:36 And, um, and then is product market fit a topic you talk a lot about with company? Speaker 2 00:05:42 Absolutely. It's one of the topics I teach in my strategy workshop and I consider it a foundational topic of product management at large. Speaker 1 00:05:51 Excellent. So how about we get a definition of at least how you see product market fit being defined. Speaker 2 00:05:58 So as you know, it, it came from a venture capital investment and, and, and the ranch life. And, uh, Mark Anderson were the first to kind of point out that in the lifecycle of a startup, that is this crucial milestone where the startup discovers a good market, which in their terms is a market that is either big or growing and as a real severe needs, that needs to be satisfied. And they are able to come up with a product that kind of satisfies that need it. Doesn't have to be great. Those are the words of mock Congress that just needs to satisfy it. And this point, this product market fit milestone kind of dramatically changes the dynamic with the market and accordingly also the valuation of the startup. And in my perspective, product market fit is so important because it's the first time where your interest in the interests of the customers are aligned. That basically what you're giving them is actually what they want to receive. And that kind of opens the door to, to switch into business and into growth. Speaker 1 00:06:58 So, so ultimately it's the it's, it's kind of that key, that key step in, in being able to have something that will grow. And, um, what, what happens if you try to grow without product market fit? Speaker 2 00:07:14 That's actually an all too common phenomenon that I'm sure you've seen a million times. And I, I see all the time as well. A lot of companies are kind of impatient or just trying to plan the growth as part of the roadmap is in a sense it's like, let's design it, let's build it, let's launch it and then let's grow it. And there isn't this anticipation of, we will need to iterate over it. We will need to try it out in for an indefinite amount of time, until we are convinced that we actually came up with something that the market really desires, that there is a market out there that wants this. And without that thing, uh, that the results are very disappointing. The, the sales and marketing team sometimes already targets that they need to achieve around the product that hasn't reached product market fit. So they work tremendously hard, pushing people into a leaky bucket. And the product teams often distracted and are director to help the pro the marketing and sales teams succeed instead of focusing on iterating on product market fit. And it creates a lot of friction internally. It creates a lot of bad vibes, and it's something that I try to teach a lot of companies to avoid and to give themselves this breathing room of finding product market fit. Speaker 1 00:08:29 Yeah. And so, as, as product market fit, mostly a startup thing, or, or does it, is it something that's important for, for more established companies as well? Speaker 2 00:08:38 I think it's important across the board. Um, I th product market fit now is a general topic to medium and large companies as well. And they're very, very interested in it. I think it's, it's, it's kind of a model that applies in every case, even if you're working on an product that is already an established user base, you cannot assume that the next big feature is actually going to have its own product market fit. All of these users will naturally gravitate towards your new feature. You really need to validate that the need is there and that the users out there and other phenomenon you can find in a bigger companies is that they have a few products. Usually one or two that found product markets in long ago became the, the golden goose that laid the gold, the golden eggs. But, um, the other products are kind of riding the waves after these other products. And, um, once I explained the topic, a lot of times PA product managers and product teams tell me, we're not quite convinced that our product has product market fit. It's kind of working because we have this audience, but it's not necessarily wouldn't have worked on its own. Speaker 1 00:09:49 And so is, uh, so how, how do you help them get to PRI I mean, is that something that you work with companies to get to product market fit? Do you do workshops around it, or is it once I know what it is then, then you can kind of give them a roadmap to get there, or how does that work? Speaker 2 00:10:05 So typically the first step would be to identify whether or not they have product market fit. I mean, in some cases it's kind of obvious there's a need, there's a product they're doing well. And then what we do is mostly about driving more value in iterating. Uh, but in other cases they're not convinced and here's what they were. They're not convinced as the reason to suspect they don't have product market fit. And then we go into evaluating data, looking at interviewing customers, running the very famous Sean Allie survey, um, or doing any other sort of analysis of research and either looking at existing evidence they have, or generating this evidence, generate doing research and looking for evidence that will support the, the assumption that they have product market fit. And that's usually very instructive. Um, then if they don't, we work towards it. And I use the, my, my own system called Joost, which is really based on many other systems that were already developed by much smarter people than me, including growth hacking, by the way, it's very, very much influenced by it. Speaker 2 00:11:12 Uh, but I break it into four legs. So we start with goals and we establish what would product market fit look like for us in our market? And we set it as a goal to actually hit that milestone. And usually it comes with a few metrics, usually not, not more than five. Then we establish ideas, how to reach them, how to move closer to that goal. And usually it's about improving the various metrics, or sometimes we realize we don't have good ideas. We go out and we research and we come up with more ideas and there are, I like to use ice in order to evaluate the ideas. And especially, I, I, I emphasize using evidence cause I've seen that evidence really helps people stay grounded. And I have my own tools to kind of evaluate evidence and weight. Then we try to develop the ideas and test them as fast as possible. Speaker 2 00:12:06 So we to ride through build, measure, learn loops, I call the steps and the end of each step, there's a learning milestone. We learn something about the idea about the assumptions. We make a decision, whether or not to persist or to change it, or maybe dump it and switch to another idea. And the last layer of just is tasks where we basically connect all of this to whatever agile method that the development team is using. But we kind of pull out the development team to be part of the entire, just stack the goals, the ideas, the steps, et cetera. So it's a true cross-functional activity, including business people, including engineering, cruising managers. It's a kind of a cross functional system. Speaker 1 00:12:48 No, no. What happens? You know, there's a lot of startups that, that kind of start with say two founders and that's it. Maybe one's an engineer one's sort of a business person. Um, does this, does this approach work? And in that case, is it something that they should be super systematic this way? Or, or can they be a little looser in validating the need by just talking to lots of customers and prototyping things? Or how, what, what sort of, how does this apply kind of from, from that extreme edge of that brand new startup to, to much more established companies where cross-functionally, it's gonna make sense for them to have, uh, a system to work together like this. Speaker 2 00:13:31 I want to say that the fifth in my mind at least, uh, works for them as well, but it's much less structured. And as you say, it's much more qualitative at this stage than quantitative. The key thing is to actually focus them on setting a goal that is about achieving product market fit. I don't know how many, two, two founders in the garage I've spoken with. The thought that their mission is to really just implement the idea that is in their mind and launch it as soon as possible. Right. You've probably met these guys too. Speaker 1 00:14:01 I, I think I've been one of those guys it's uh, yeah. I mean, it's one of those things that T to get, to have the guts or confidence to, to, to take a leap on an idea, you have to believe in that idea a lot. And then it's really hard to, um, to say maybe, maybe I'm wrong and maybe I'm going to need to adjust as I learn more about the customer and the market and, and tweak the vision of the solution that I have. And so, um, yeah, it's, I think that's a, particularly for the really early stage company, I'd say, um, it's, it's, it's a big challenge. Speaker 2 00:14:36 Yeah. And they also sell the investors on that idea. They're very committed to the idea. So everyone's kind of pushing them to just launch it as soon as possible. But I think it's our role as coaches to stop them and say, hang on, your goal is not really to launch this idea. Particular, your goal is to help those people and find the real need that they have in that market segment that you're focusing on. And it may mean the changing the idea, but the goal at the end of the day is to prove to yourself that you're helping them to prove to yourself that you found product market fit. What does that translate to in consumers? It may mean having that many consumers actually using the product with a certain level of retention and filling up the survey with at least 40% thing. I will really be very disappointed if you take away the print, the product in businesses or larger businesses, it may mean finding six businesses that are willing to use the product on a consistent basis. Speaker 2 00:15:32 And the sales cycle is shorter than say, six months old. You can come up with metrics for each type of market and business model. And once you put this in front of them, they freak out. It's like, it's a really tough challenge finding product market fit. It's really hard. And, um, but that goal is actually the thing they need to align themselves on this target to, to budget themselves, to, to, to fund themselves. It's also aligns them with the investors. This is the goal. You really want to show the investor and say, listen, I'm not just building this idea. I'm actually trying to iterate towards a solution. And it may mean changing the idea. Speaker 1 00:16:13 Yeah. I mean, one of the mistakes that you mentioned earlier is that, um, having not having product market fit, but having sales targets and having growth targets. And so I think that's one of the challenges. If you're not aligned with investors or in a, in a company that's maybe more established that's, that's less about VC just stakeholders and, you know, the, your whoever's really sponsoring a new product inside, uh, an established business. If you know, one of the, one of the big challenges, I think just as you, as you hit on is having, is having growth targets when you don't even know if anyone likes the product yet. Speaker 2 00:16:50 Yeah, exactly. And so, yeah, so instead of pitching ideas, I suggest them to, to start with a goal and then it's done, it's really the time to move to the ideas level, try out your big idea, be very open to changing it, which you learn that somethings don't work about it, or maybe the entire thing. And we all know of stories of startups that really pivoted in a big way and managed to find a completely brand new product brand new market Twitter, as an example. And, um, and at the end of the day, they, they, it's better for their they're better for it. Speaker 1 00:17:25 Absolutely. So in terms of really whose job it is to get the product market fit in a, in a, you know, two guys in a garage situation, that's probably the founders as the company gets bigger. I'm, I'm assuming it's primarily driven by a product team. Is that, is that right? Or what, what do you think there? Speaker 2 00:17:45 I would say that at the stage of we're looking for product market, it is mostly the product team, but for me, it's a function of product management. And for me, product management is just a set of processes that the entire organization is taking part in because product management involves also chief executives and it includes business stakeholders and includes a lot of different people that all need to contribute in some way. So it's true that the product team needs to do most of the heavy lifting, but there definitely can be supported by the business teams, for example, as we're iterating towards product market fit. Uh, one of the concepts, for example, a lot of B2B companies asking me about this, uh, for, for example, how to launch a new product when the enterprise customers are very conservative and are not willing to try anything that is, um, not completely done and ripen and ready. Speaker 2 00:18:40 So one concept that some companies use is what's called the Renaissance rep. It's basically a type of sales person that is able to operate without sales tools without actually knowing what the product is yet is just he or she, or just helping the product team find out what this product is. But that person is able to open those, to acquire potential customers, to an interesting, just really early, early adopters, and to get them to actually try the product. And it's a really important role that not a lot of companies have today. Most of the companies have traditional salespeople that are just given quotas and are there to sell. So absolutely the business side can help with obtaining product market fit. Speaker 1 00:19:25 Right. So it's interesting in, in some of the, uh, so I first heard about the concept of product market fit, or maybe not, I don't even know if he used the words, but Steve blank, just this idea that, uh, that the process of customer development, customer validation and, and you have to get to a certain point before you can scale the business. And one of the things he talked about is, uh, that you don't want to have, you don't want to have your typical sales person. This might be the same thing that you're saying going out and doing that customer development work, because they're, they're less about listening and more about convincing, and this is not a time to necessarily be convincing. It's more about trying to see does that need actually exist. And, um, it may be, it may be kind of stage dependent to where what you're talking about is okay. The, the, the initial version of the product is already out, and now we need someone to try it. Um, at what point does sort of the product team validate the needs side of things, and then this Renaissance salesperson, uh, try to try to really motivate people to get in there and try it. What's what's that handoff time. Okay. Speaker 2 00:20:35 So for me, the, the Renaissance rep is there from the get-go that's someone who was really assigned to the cross-functional team and trying to help them get moving. And that person can be in ideation, that person can be involved in the market definition, the needs, et cetera. Uh, and I think having the right person there and, and contributing the business aspect is very interesting and very powerful. Speaker 1 00:21:02 And are they, are they like collecting feedback as well, and, and sort of, um, are an information gathering person, or is it, is it primarily, is it primarily about motivating people to come in and try it? And then others gather the information? Speaker 2 00:21:16 I think, um, we need someone to open the door, someone who can be persistent in making the calls and making the connections and being there. But I think it's very important for the product manager and sometimes other members of the team too, to meet the customer immediately. Another anti-pattern of finding product market fit in B2B is all the communication goes through sales or through customer success or customer support. And there's no direct connection between the product team and the customer. And, and that's, that's actually an antepartum because all the information you will get will be filtered or the process will be slower. And we really want at the early stage prior to product market fit, to find those early adopters that are willing to work directly with the product team, that's part of the incentive for them, essentially because they're themselves become design partners and helped you create the product that will serve them later. Speaker 1 00:22:10 So what, what's the biggest difference on, on consumer products, getting to product market fit versus this, uh, this more B2B or even, uh, business to enterprise kind of sales. Speaker 2 00:22:24 So obviously it's a wide gamut. You have all the way out to consumers and all the way out to what we just talk, which is big enterprise customers. And you have everything in the middle, which gradually transitions from this consumerish to the more enterprisey, uh, I think in consumer, and you'll have a lot more experience on this because you work with so many different startups and companies it's much more quantitative. It's much more once you get into the market, it's much more about retention. I think that's the key thing you, you, you keep looking for. And, but even in the early stages, as you said, it's qualitative, you go out, you start meeting those customers face to face. You don't have the Renaissance rep, you do the work yourself, you, you find these early customers, you do customer development and you gradually build up the, the confidence to, to scale it up. But, but even scaling too early in consumer is, is a, is a bad pattern. Anti-pattern Speaker 1 00:23:27 Right. So yeah, one of the things that I found really interesting that you touched on earlier is the, um, you know, in consumer, we, we do focus so much on, on retention. If you can retain customers, then you could probably grow the business. And then it's just about figuring out the customer acquisition channels in, in B2B, or particularly in business to enterprise, just because you can retain them. If you don't have a real efficient way to acquire them. And you talk even about the length of the sales cycle, um, what, you know, in really kind of defining what product market fit looks like. Let's say, let's say you have a company who over the course of three years has acquired 20 customers and has never turned a single one of those customers and they, and they use it, but they have a really hard time building pipeline and trying to grow that business is that product market fit because it can retain them or just kind of maybe a lack of execution on the acquisition side, or would you say that that's suspicious that it's even product market fit? Speaker 2 00:24:35 Um, I think it really depends. It's really hard to generalize just from the data that you presented, but it might be that you, you hit on a real need in, in a market and you build a real general purpose, um, product, but it's just a market that's very hard to acquire for whatever reason it could be. What you actually did is you built a core of a product, and then you did 21 offs. So each one of these enterprise customers actually asked for a different set of features and you basically built a custom solution for them. And in that case, you then find product market fit. You just turn yourself basically into service provider, uh, but with a very bad business model, cause probably you're charging them like a technology company. So, um, really you need to look closer into the relationship with each one of those, whether they're all pertain to the same customer segment, uh, whether or not there's enough commonality between them and yeah, the slow sense cycles usually are a signal that the market is not that keen on the product because the thing that really shortened the sales cycle is that the value that just screams at them and they they're willing to cut corners and willing to embrace it. Speaker 1 00:25:56 So as far as maybe just really not selling to a known need, maybe you get them in the door and they, and they try it and ended up liking it. But if, uh, if they don't have the need, then that's part of product market fit is validating that they, that, that, that the need is, is pretty strong for something like that. Um, another question that, that, um, you kind of triggered as you were going through, there is this idea, and I see it on a lot of, um, larger established companies of, of these one-off projects, um, where, where, you know, a customer has a need and, and the company kind of thinks, Oh, let's, let's, let's fulfill that need and, and build a new product line based on that need. And we're starting with a potential customer of one and that's better than guessing. And, um, do you ever see that work? And, and if it works sort of, how do you go from a potential one-off project to, to making sure that there's a, a, a broader opportunity there that you can scale into? Speaker 2 00:27:01 I think when you're doing through enterprise, every enterprise is an opportunity. Every big enterprise that's willing to talk to you and willing to open the doors is that opportunity. You cannot just turn down, so you should explore it. You should understand them, but I always recommend to customers, to my clients. And that's true for consumer as well as enterprise, always try to step back and try to map the value, what it is that these people actually require. What is it that we can help them with the most? And often it's not what they asked for behind the, the, the, the need they express. There's another need. Sometimes it is deeper. And then what's the generalization that applies to many more customers. If you cannot find a generalization, it's completely a one off unique situation that they got into through some weird merger and acquisition, or who knows what, then you should be brave enough to say where we're going to turn off this opportunity and move on to the next thing. Speaker 1 00:28:04 Or we're a services business. And we, and we chase the one-offs and we just price accordingly. But, uh, it may, it may not, you know, you may be delusional in thinking that one-off is the, is the seed to, uh, the next great business opportunity. Speaker 2 00:28:17 Absolutely. And, and, and consumer, by the way, the temptation is to do the big feature, the feature that someone or enough customers ask for. And it's like, this feature is going to be a huge thing. And you have a few very vocal, usually power users that are asking for this thing. And you're kind of convincing yourself that this is the thing that you need to build to serve the entire market. But a lot of time, that's actually not the case. And you need to be willing to also let go of this kind of power user features. Speaker 1 00:28:49 So what do you think, um, if you could generalize the, the biggest challenge that companies face in trying to get to product market fit? Why, why is it so hard to, Speaker 2 00:29:02 To, to create Speaker 1 00:29:04 Product market fit? What's, what's the biggest thing that prevents it from happening? Speaker 2 00:29:09 Well, in all honesty, I don't think that there are that many underserved needs right now that are easy to serve and build a sustainable, uh, product and business around. Uh, there's there's a lot of companies chasing a lot of opportunities and most people don't really live in a world of problems where they're suffering from something so much, and they have no solution. Uh, so, uh, you need to be persistent. You need to be lucky. You need to look into many, many different things until you stumble on that thing that actually requires your attention. And the second problem is that most consumers and companies are quite conservative. They have the thing they use today. It's maybe suboptimal, but they have mastered it to some level. They know it. And when you present them with something new that may require them to change the way they work may require them to learn, may require them to scratch their head and ask themselves, how do I use this? Most of them will turn it down, unless there's tremendous value. Some someone wants that it needs to be nine times at least more value than what they use today. Uh, and that's very hard to, to generate that kind of sense of, you know, this wow moment where they say, all right, this is something I must adopt. Speaker 1 00:30:27 Right. And it sounds like those two, even, even go together that the, that, that good enough thing that they're using means that it's probably not an underserved need where there's that, that 10 X opportunity in terms of what an alternative solution could, could fulfill. And so, and so, you know, they're, they're going to be less, uh, open to considering other products, because as you said, they've kind of built a habit around the old way of doing something. And it's, it's not that bad. So it's, it's, it's maybe slightly underserved, but not so underserved that they're, they're willing to be open to a different solution. Speaker 2 00:31:04 Absolutely. And that's why it's important to use evidence. I mentioned my Jeff's a framework when you evaluate ideas. And when you test ideas, you always focus on hard evidence that actually suggested not just European in is that the, this product is going to knock the socks off them, but they actually indicate this in their behaviors. And, um, once you get into the habit of actually using evidence, a lot of, uh, false positives, or kind of, uh, dismantled a lot of this drive to let's just build it and market it fall apart, fall to the sideways because you realize you're not there yet. The evidence suggests that this idea is not strong enough. The market is actually not responding favorably to whatever it is it's you offering it. And that kind of pushes you to iterate faster to experiment. It's basically a growth hacking, but for products it growth hacking prior to product market fit in a sense, uh, combined with build measure, learn of course, from Lynn combined from, uh, elements of design thinking, none of this is my invention, obviously, but the evidence really forces the company to be realistic. And that's, you know, how easy it is to be delusional when you're a startup is when you work in a big company and you have a big opportunity in front of you. Uh, we need to grasp the evidence in order to protect against this. Speaker 1 00:32:31 And so do you think, um, do you think that the, that, that, uh, companies, or whoever's trying to build a solution that they, they don't spend enough time validating the underserved need and, and, and quickly jump into solution mode and, and, and that, you know, it obviously takes a lot more resources to build something to then to validate that that an underserved need exists. And, um, so do you, do you think that that's part of the problem is that they're, they're jumping from the, from the, like, just acceptance that, that, that need is underserved and important, or, um, or is it that they're just not getting the solution, right? Speaker 2 00:33:13 No, it's, it's absolutely the former, I think we, all of us, our product people will get excited about building stuff. Uh, it's less exciting for us to go and ask people, do you really have this problem? Uh, so w we just feel that the best way to move forward is to build whatever idea is ringing in our head, and then to launch it. And then we will discover, and probably we'll just need to iterate a little bit. Cause it's a solid idea. Obviously. Um, the solution though, is not to push people. I found at least for myself and people I work with to push them, to always explore the problem space. Cause just looking for problems is also sometimes taxing. And, uh, and you may end up not finding anything because you don't know what to look for. Sometimes if you have an idea, the best thing is to take this idea, put it into your idea bank or to whatever it is, wherever it is that you're managing ideas and ask yourself, okay, assuming this idea is valid. Speaker 2 00:34:14 What, what metrics, what goals, uh, sorry, what metrics will indicate that it's actually working. And then just as important question is to ask what goals is this idea serving? Is it going to move me towards product market fit? Is it going to enhance product market is going to deliver more value. A lot of ideas don't do anything, honestly, once you consider what's behind them and then actually giving the idea a shot. But if it's a lot more kind of skepticism, actually building the smallest version of this idea of putting it in front of users as early as possible, and then learning from that. And that's a really good way to kill ideas or to improve them or to pivot, uh, early on. Yep. Speaker 1 00:34:59 Okay. That, that makes sense. And, and, you know, you touched on luck earlier being, uh, being part of the formula. And I, I completely agree that that luck is, uh, is important because, you know, to, to kind of get that right intersection of a solution and a need and doing something that, um, you can, you can cost effectively get customers to consider the solution and, and, and apply it to, to the need that they have getting all of those things. Right. Um, it luck is, uh, is a big factor there, but I, but I also feel like that if, uh, if you, if you're, so actually before that, that, that getting to that luck, as you said, you know, more swings at bat, more, more tries. You're more likely to kind of stumble into that luck. But if you're, if you're trying with multiple iterations of solutions to a problem, people don't have, you're never going to stumble into the solution to that nonexistent problem. So I, I do feel like, uh, that, that, you know, again, just, just really validating the problem side. And then if you're, if you're going to iterate and try to get it right, hopefully you're iterating on an actual problem that, that exists. And then, and then multiple tries on the solution. Maybe you're going to get lucky and get, get the right solution. Would you agree with that assessment or, or how would you maybe think differently about that? Speaker 2 00:36:23 No, no, I, I agree completely. And I think there's two types of activities that product teams within established companies, at least do startups, all kind of a case on its own one is they need to get into the habit of doing a kind of generative research and just going out to them, to the market of informative research and interviewing people, observing them, doing field research, analyzing the data, all of this research activity that is not specifically idea driven, but it's more kind of trying to detect patterns that may indicate that there's either a need or desire that is not well served today. And sometimes there's things just, you read an article in a magazine and it hits you. You never know, but you need to validate it. I agree. Sometimes you will hit with an idea and an idea comes to you, and it's really hard to let go of these ideas. Speaker 2 00:37:15 Sometimes this idea lands in your lap from your manager or from the CEO directly. So it's hard to let go of this idea. And then it's very tempting to build an old project around the idea. So in those cases, I recommend doing what I suggested, which is first checking. If this idea aligns with any goal that you have at the moment, maybe I need to create a goal. Maybe you found a new goal and second, try to validate their ideas. As soon as possible, the two together create a much more agile and, uh, customer focused kind of company. Speaker 1 00:37:47 You also even just work backwards from that, that idea. So if it started as an idea, then saying, why do we think this idea will be successful? And, and then you start kind of drilling into the, into the need or a problem that it's solving. And then, and then, you know, maybe, maybe you find that maybe you weren't inspired by the problem you were inspired by the idea, but then that it turns out that when you kind of dug deeper into the idea that it actually is addressing an unmet need, um, or maybe it's not, but, but it feels like you could still start with the idea and actually end up with a good business. If you just, if you just challenge yourself on that idea and didn't, didn't just accept the idea at face value, that it will be successful. Speaker 2 00:38:30 Let me give an example, maybe in a very large scale, which I experienced as I joined g-mail the project I worked on was connecting Gmail with Google plus inside, uh, inside Google, where your user of Google plus maybe for a day, exactly, that's kind of the reaction, but it was actually a very big deal at the time. And there were early on signs that it's catching on because the early users in this case early users is in tens of millions, probably were very enthusiastic and very active and very gait. So there are signs that this idea is good. Uh, so Google kind of went all in, in on following the, the core idea, the strategic idea of building a new social network, um, and that became the goal. So that's why when we build a social network that was very rich and full of features, uh, and we integrated it with basically every product within Google, but at the end of the day, what Google plus is trying to address is the need of being social and being social through Google products, right? Speaker 2 00:39:36 And being social doesn't necessarily equate to having a new social network. For example, after Google plus failed and parts of it were kind of spun off, it turns out that people are willing to be very social around photos. Like there's a very successful photos app now where people, I assume many, many people are sharing actively everyday many photos with friends and family, and basically being social through a Google Google product. So there could have been other ideas that could have addressed the same goal. So, so that's my point. If you have the idea and working back and asking what is the goal, and then asking yourself, what other ideas should we try is crucial in order to iterate towards product market fit, which obviously eventually Google press didn't succeeded. And, um, data thing that you can learn from this is the earliest thickness of sometimes misleading. You find this first one to 5% of users that really are engaged with your product. And you assume that the rest of the market will be like that, but everything you launch, we'll find one to 5% of people that are all kind of interested in it, but eventually this is not a strong enough signal you need to ask yourself, can you scale this larger than just, just these early adopters? Speaker 1 00:40:54 Were you there when Google pulled the plug on Google? Plus Speaker 2 00:40:59 I think it was a very, very gradual process and the official pull, the plug for consumer happened after I left Google. And I think Google plus itself is still exists as a combination of it exists as a part of the G suite as an enterprise product. So it does have a niche of its own, but it wasn't that nation that we thought of initially. Speaker 1 00:41:24 Right. Okay. So I was going to say at what point do you know to pull the plug, but, uh, yeah, it sounds like, it sounds like, at least from that example that you, uh, that, that it maybe was pull the plug on the mainstream opportunity and, and hone in on some more niche opportunity, but that it was, it was not something that was like, uh, uh, uh, a very fast, okay, clearly we're not hitting the goals. This is not something that, that the world doesn't need. Another social network. Let's just pull the plug. There was, there was, uh, didn't seem to be that, that kind of a definitive decision at some point, Speaker 2 00:41:57 I would say that if you ask today Google folks, and I'm sure even the most senior ones that were involved with this, they would say we quit. We should have failed quicker. We should have determined that we should pull the plug or people much earlier. Maybe we persisted a little too much Speaker 1 00:42:16 Like Google glass for example, was something that they seem to pull the plug on pretty quickly. Speaker 2 00:42:21 I don't know about the timeline of that one, but yes, obviously it didn't go beyond the prototype level or the first version. Speaker 1 00:42:30 Yeah. I mean, I don't know the exact details. I just know that it was sort of quite a few profiles on LinkedIn and others of people wearing Google glass. And it was the, it was sort of some excitement around it and then they moved on. So it doesn't have to happen relatively fast. Speaker 2 00:42:48 And it's the same early adopter kind of, uh, technology enthusiasts that really send you this message, that this is the best thing ever. A lot of the tech press by the way is the same. So a lot of, uh, bloggers and journalists out there will write raving reviews on your new product once you launch it, because it's tacky because it's cool because it's exactly the sort of thing they like to cover, but it doesn't really represent a majority, uh, user. Uh, and I experienced also the opposite. I launched the tabbed inbox, which was directly targeted at the casual user, the user that is not a power user that just wants Jima to self-organize without them having to do any work. And all the reviews we got basically from the tech press were very lukewarm, essentially, because we then designed this for the tech press that these people are done. Don't need this system. They are completely capable of managing g-mail in their own ways. Uh, they were much more excited about inbox by G-Man, for example. Uh, but that signal didn't bother us because we had so many other signals from the market that we hit product market fit by, by the point we already launched it. Speaker 1 00:43:57 Right? Yeah. It's funny how practical is boring. You know, innovative is exciting for tech press, but, but the majority of, uh, of customers out there particularly like mainstream consumer customers, innovation is not something that excites the majority of people out there, like practical benefits to real problems they have, um, tends to be tends to be something that, that defines a successful product, but not something that, uh, that, that the press gets all that excited about. So I wanted to go full, full circle back to this concept that we started with that product market fit is really foundational to growth. You cannot grow a business if you can't retain and monetize and, and ultimately, you know, cost efficiently acquire customers on a product. And yeah, I think it's become pretty accepted in the startup world that you, that you need to achieve some level of product market fit before you should even try to grow. And so with that premise in mind, if, if product market fit is something that you need enough of to be able to grow, should you always be striving for more product market fit? Is that a potentially strong lever to, to accelerate growth even more, if you can dial in product market fit even more than, than with, beyond the minimal need that you need to be able to support any kind of growth. Speaker 2 00:45:22 Absolutely. I mean, I don't think it ever ends really a product market fit is an obstruction. It's a model, right? Uh, and models are in obstruction of reality. That helps us deal with the complexities of realities through this obstruction. It's a very useful obstruction because it helps companies realize that there's a step where it's too early to go into growth. And there's a phase where it's okay to move into growth. And, uh, and this diagram with the, you know, the knee where all of a sudden you hit product market fit. And then it's then, and I think you did a lot of the work of kind of communicating this to the world that this, that growth comes after product market fit, but the product, the product team, once you quote, unquote hit product market, which is usually not an overnight phenomenon, it's usually like a process, a gradual process where you start feeling that the market is pulling the product from your hands. Speaker 2 00:46:21 They cannot just rest on their laurels and say, all right, we're done with product market fit. We can move on. You need to keep thinking of ways to drive more value into expand the, the relevance of the product to more and more people to grow kind of your core group of users. And you also need to worry about falling out of product market fit. If you think of Gmail that hits really strong product market fit in 2004, when it launched, it did that because of the features that were like one gigabyte of the start, I think a tremendous amount for the time, a threading and no spam amazing product market fit for 2004. If you launch this product today, it will be completely irrelevant. All the other email providers have great spam filtering. That's not no longer the issue. If you look today at the marketing pages of Jimmer, the value proposition is completely different. Speaker 2 00:47:18 We moved on into productivity and privacy and many other things that are now top of mind for the customers. So every company has to realize this, that even if they have that lucky success of finding product market fit, we need to keep making this product relevant. Uh, an example of a company that's doing this tremendously well is Apple. They found product market fit in say 2008 with the iPhone. And it's essentially the product we use today is not significantly different from that product. It's still a multitouch, it still has the same kind of interface in UI, but they found gradual incremental ways to build more and more value into it, to, to tie it into their info, into their ecosystem, et cetera. And they, they just keep the, the customer is very, very engaged and retained with the product. Speaker 1 00:48:14 Yeah. And it seems even with iPhone, that it's, uh, that it has part of their goal is to, is to solve new needs with new versions of iPhones so that you are compelled to upgrade from the previous version. And it's, uh, it's, it's this constant battle. They maybe they don't need the 10 X, but they, they definitely need a, uh, a big enough improvement for you to want to want to upgrade, unless, unless it's simply a status symbol to have the 10, instead of walking around with a six or something. Speaker 2 00:48:45 Absolutely. I mean, the, the, the nemesis of the iPhone 11 is not Android. It's the iPhone 10. You need to, to create enough value for people to be compelled, to move to the new thing with a strong brand. Like Apple's, it's easier to do that, but a lot of companies struggle because the new, great thing that they wanted to build and convince people to use. We experienced this too with inbox by g-mail, uh, the biggest competitor to inbox by Jim. It was Jimmy and for a lot of people, general was good enough. There wasn't enough of a value hike to switch over to inbox. It only attracted those users that really had that sort of lifestyle and those sorts of needs that inbox addressed very, very well. Speaker 1 00:49:31 Yeah. So I have, uh, one, one interesting tidbit, and I'd love your feedback on this. It's something that I've recently learned about product market fit. That kind of, kind of blew my mind a little bit, maybe for other people it'll, it'll sound sort of obvious, but the idea that your product market fit is ultimately at least in a consumer business, you try a product and you like it enough that you keep using it and that, that you stay long-term retained on it. And if, if enough of the people who try it, they stay long-term retained. Um, so the co-creator on a new program. I have go practice that IO a, uh, a simulation. He had explained to me that product market fit works in the same way with features where it's, if you try a feature and you stay long-term retained on that feature. And the, and the analogy that he gave me was actually, I think this is triggered it as the iPhone that, you know, if you think of an app as really just a feature for the iPhone and, you know, people try an app and they keep using it, then that app probably has product market fit. Speaker 1 00:50:40 If they try an app and they don't like it anymore, then, um, maybe it doesn't have product market fit, but being able to sort of take that, that feature development approach the same way that you would think of product market fit. Do you think about features that way and does your just framework work with feature development in the same way? Speaker 2 00:50:59 Yeah, absolutely. Uh, I mean, feature development is most of what we do once we have the product established and each feature and needs to find product market fit. If you look at the usage pattern of features in any product, any product that has enough features, you'll see the same kind of sad Paolo. Most people are using just the core four or five features. And then there's a sharp drop-off. And most other features don't enjoy a lot of usage at all. Sometimes it's okay, we'll build those other features just for a subset of users, just for particular types of users. But most often those features were expected to be, to have a general appeal and they just failed. And simply because the teams that build them didn't think with product market fit in mind, they were just like, again, great idea. Let's just build it and launch it and learn. And it just doesn't work also on a feature level. Speaker 1 00:51:55 Yep. Yeah. So it's interesting. I think the difference is that, um, you know, taking that analogy of the iPhone, that I actually just did this recently with the iPhone, you can go through and you could clean up those apps that you haven't touched in six or 12 months and, and kind of, you know, why, why do I even bother keeping these on my phone? I'm going to delete a bunch of them. Unfortunately, most products don't allow you to delete the features that you don't use. And so over time, you kind of get that bloatware because people aren't looking at the feedback loop of does that feature actually matter for people and as a result, they, you know, it, it becomes bloated. And, and to me, that's, that's a little bit of, you know, back on the, the growth story that, where you really can leverage product market fit to accelerate growth, it's about sort of understanding what is that key benefit and making sure that the, the messaging and the onboarding and that the customers that you're reaching and all of everything is really pointing the right people to the right benefit and streamlining the delivery of that benefit. Speaker 1 00:53:01 Then you build a really tight flywheel over time that, uh, that, that has, uh, a clear identity around the benefit that that product delivers and the wider you go in trying to chase multiple benefits. The more likely that, that, uh, flywheel gets a little off kilter and doesn't, it doesn't grow with the same, um, kind of velocity that it would if it was really tightly focused around a key benefit at that's my perspective on it. I don't know if you have any, uh, any thoughts on that. Speaker 2 00:53:29 It's all part of the same thing for me, it's about finding value and delivering it to the market and that value that you determined during the pre product market fit. The thing that gets you to product market fit is also the thing that will shoot you through the, the growth curve. Uh, just going deep on that and really maximizing the value you deliver. And I would argue another point by the way that product market fit is not just for products. It's also for a whole wide range of things, including methodologists, as you probably know, cause you, you popularize the growth hacking, but I would argue that there was a point where you felt the market actually pulling growth hacking out of your hands. Speaker 1 00:54:12 Yeah, for sure. Lots of different definitions and, and know people explaining that growth hacking is things that I never intended it to be. So definitely. Speaker 2 00:54:20 Yeah. And, and I felt this the same for juice. I published an article about yeast and that's very same week someone that I never talked with contacted me and asked me, can you give me a workshop on this or two to my company? So these signals in the market come in a variety of ways and they can apply to a variety of things. So this product market fit, eh, frame of thinking is actually very useful in many aspects of life. Speaker 1 00:54:48 Well, this has been a fantastic conversation. So, um, I guess two things, one I want to ask you, if there's anything like any last things that you might've left out about product market fit, that would be helpful for people. And then, and then secondly, uh, how, how can people get in touch with you? What, what should they be doing in terms of following, uh, material that you're putting out there that could be helpful on this topic? Speaker 2 00:55:13 Um, so I think we had a pretty good conclusive discussion about product market fit and why it's so important. Uh, people are interested in following up on some of the things I mentioned can visit my site. It's simply <inaudible> dot com, ITA, M a R G I L a d.com. And there there's a resource section where you can find a bunch of downloads, uh, in videos that explained some of the topics I mentioned, including a tool that I think also growth, uh, hackers might find useful called the confidence meter. It's basically a calculator or a spreadsheet where you input the evidence you had found, and it kind of spits out a number between zero and 10 and tells you, you should have that much confidence in this idea. Speaker 1 00:55:56 Excellent. Part of the ice score that can, that can help with your, your C and the ice score. Speaker 2 00:56:02 Yeah, exactly. It's, it's a completely inspired by the ice cores. Of course we were invited by you. So, so this is the sort of thing you can find on my website and you're welcome to get in touch with me through my website as ways to do it, or through Twitter or LinkedIn, happy to talk to anyone. Speaker 1 00:56:19 Well, excellent NMR. I thank you so much for sharing your insights, this and for everyone Speaker 0 00:56:24 Listening. Thanks for tuning in. Thanks for listening to the breakout growth podcast. Please take a moment to leave us a review on your favorite podcast platform and while you're at it subscribe. 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