kbs+ ventures class 2 | finding product/market fit

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FELLOWS CLASS #2NOVEMBER 19TH, 2014

Wednesday, November 19, 14

• LAST WEEK’S READING / VIDEO• PRODUCT / MARKET FIT• COMPETITION• REAL WORLD PERSPECTIVE: SATISH POLISETTI, ADSNATIVE• HOMEWORK #1: PROBLEM LOGS• HOMEWORK #2: DILIGENCE (DUE DECEMBER 12TH)• QUESTIONS

IN TODAY’S CLASS...2


3 INGREDIENTS TO A SUCCESSFUL STARTUP:3

TEAM

PRODUCT

MARKET



TEAM

PRODUCT

MARKET

CALIBER OF THE TEAM DEFINED BY...

✓ SUITABILITY OF THE CEO

✓ SENIOR STAFF, ENGINEERS, AND OTHER KEY TALENT

✓ TEAM DYNAMIC

Will range from outstanding to remarkably flawed



TEAM

PRODUCT

MARKET

QUALITY OF A STARTUP’S PRODUCT CAN BE DEFINED AS...

✓ HOW USEFUL IT TO CONSUMERS✓ EASE OF USE✓ HOW DEFENSIBLE IS IT?✓ HOW MANY FEATURES?✓ HOW FAST IS IT?✓ HOW BUGGY IS IT?


Will range from a masterpiece of engineering to barely func7onal


Will range from a masterpiece of engineering to barely func7onal


TEAM

PRODUCT

MARKET

SIZE OF A STARTUP’S MARKET IS DEFINED BY:

✓ NUMBER OF CUSTOMERS✓ GROWTH RATE OF USERS✓ POTENTIAL REVENUE


Will range from booming to comatose.


WHICH FACTOR DOMINATES?7

TEAM, PRODUCT, MARKET, SHOOT!


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WHICH FACTOR DOMINATES?

GREAT MARKET WINS.

“BAD MARKET BEATS GREAT TEAM OR PRODUCT EVERY TIME. IT DOESNT MATTER, YOU’RE GOING TO FAIL”


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“IN A GREAT MARKET -‐ A MARKET WITH LOTS OF POTENTIAL CUSTOMERS -‐ THE MARKET PULLS PRODUCT OUT OF A STARTUP.”

-‐ MARC ANDREESSEN

WHICH FACTOR DOMINATES?


SECRET TO SUCCESS?10


SECRET TO SUCCESS?10

FINDING PRODUCT/MARKET FIT


FINDING PRODUCT/MARKET FIT11

• BECOME AN EXPERT IN THAT MARKET• OBSESSIVE RESEARCH• GET IN THE SHOES OF YOUR CUSTOMERS - LITERALLY• LISTEN TO YOUR CUSTOMERS• BE FLEXIBLE: MAKE CHANGES TO THE TEAM AND VISION• ITERATE YOUR PRODUCT: HYPOTHESIS, TEST, LEARN, REPEAT• BE SELF AWARE: KNOW YOUR STRENGTHS AND DEFICIENCIES

DO WHATEVER IS REQUIRED TO GET THERE...


FINDING PRODUCT/MARKET FIT: HOMEJOY12

TRY DOING IT YOURSELF READ UP ON IT JOIN THE COMPETITION START A BETTER BUSINESS


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GOLDILOCKS PRINCIPLE:SOMETHING MUST FALL WITHIN CERTAIN MARGINS, AS OPPOSED TO REACHING EXTREMES. IT’S USED IN THE “RARE EARTH HYPOTHESIS” TO STATE THAT A PLANET MUST NEITHER BE TOO FAR AWAY FROM, NOR TOO CLOSE TO THE SUN TO SUPPORT LIFE.


GOLDILOCKS PRINCIPLE14

BUT FOR TECHNOLOGY....

“TOO HOT” .... (“STRATEGIC” OR “CORE”) “TOO COLD” ....





✓ POTENTIAL PARTNER BUILDS IT IN HOUSE

✓ POTENTIAL PARTNER SAYS YES, BECAUSE THE PRODUCT IS SO DEFENSIBLE

✓ POTENTIAL PARTNER ACQUIRES TECH








✓ NOT USEFUL TO POTENTIAL CUSTOMERS

✓ NOT USEFUL TO POTENTIAL PARTNERS

✓ RE-LOOK AT YOUR PRODUCT/MARKET, AND LIKELY PIVOT THE BUSINESS








✓ NOT USEFUL TO POTENTIAL CUSTOMERS

✓ NOT USEFUL TO POTENTIAL PARTNERS

✓ RE-LOOK AT YOUR PRODUCT/MARKET, AND LIKELY PIVOT THE BUSINESS

TO BE A SUSTAINABLE BUSINESS, YOU NEED TO BE “JUST RIGHT”


YOU’LL KNOW WHEN IT’S HAPPENING...15

• DEFINED PROBLEM• LARGE # OF POTENTIAL CUSTOMERS• WILLINGNESS TO PAY• CAPACITY TO PAY• EASY TO REACH• EASY TO TARGET• PRESS OPPORTUNITIES• LOW FRICTION• CLEAR BUSINESS MODEL• HIGH BARRIERS TO EXIT• NETWORK EFFECT• COMPETITION• NATURAL MONOPOLY


AND WHEN IT’S NOT HAPPENING...16

• CUSTOMERS AREN’T SEEING THE VALUE• WORD OF MOUTH ISN’T SPREADING• LOW CONSUMER ADOPTION• PRESS REVIEWS ARE “BLAH”• SALES CYCLES ARE TOO LONG• DEALS DON’T CLOSE• TEAM MORAL DECLINING


TITLE / HEADER17


GENERAL RULE OF THUMB:“ACHIEVEMENT OF PRODUCT/MARKET FIT CAN BE MEASURED ACCORDING TO A SPECIFIC METRIC.

WHEN, IN A SURVEY, AT LEAST 40% OF USERS SAY THEY WOULD BE “VERY DISAPPOINTED” WITHOUT YOUR PRODUCT OR SERVICE.”

-‐ STEVE BLANK, 4 STEPS TO THE EPIPHANY


FINDING “FOUNDER/MARKET FIT”18

“PEOPLE WHO PERSONIFY THEIR PRODUCT, BUSINESS AND ULTIMATELY THEIR COMPANY”


https://www.youtube.com/watch?v=ZUG9qYTJMsI



COMPETITION19

NEVER UNDERSTATE THE COMPETITION•THINK ABOUT YOUR COMPETITION BROADLY - DON’T “DOMINATE BY DEFINITION”


COMPETITION19


“ONLY BRITISH FOOD IN PALO

ALTO”


WHAT’S THE MARKET FOR ALL RESTAURANTS IN PALO ALTO?

COMPETITION19



ALTO”


WHAT ABOUT RESTAURANTS IN NEARBY TOWNS?

WHAT’S THE MARKET FOR ALL RESTAURANTS IN PALO ALTO?

COMPETITION19



ALTO”


• WHAT IS THE CORE VALUE PROPOSITION?• BE ABLE TO CLEARLY DEFINE YOUR MARKET POSITION• WHAT IS DEFENSIBLE, OR EXCLUSIVE TO YOUR BUSINESS?• ARE THERE HIGH BARRIERS TO EXIT?• WHY SHOULD YOUR CUSTOMERS CARE?• WHO ARE YOUR DIRECT, OR INDIRECT COMPETITORS?• WHO, OR WHAT, COULD PUT YOU OUT OF BUSINESS?

COMPETITIVE CHECKLIST20


REAL WORLD PERSPECTIVE21

SATISH POLISETTI• CEO AND CO-FOUNDER• SERIAL ENTREPRENEUR• DOUBLE MAJOR IN MECHANICAL & ELECTRICAL ENGINEERING• RECOGNIZED AS A “30 UNDER 30”

FOUNDER SPOTLIGHT!


SATISH SLIDES22


REFRAMING THE PROBLEM23

• DEFINE A “SUPPORTING BELIEFS” • SHARE AN INSIGHT THAT HASNT BEEN CONSIDERED• WHAT’S THE OPPOSITE OF THE SUPPORTING BELIEFS?• ASK “WHY”


HOMEWORK ASSIGNMENT #224

DILIGENCE REPORT: (EITHER 5 SLIDE, OR 2 PAGE OVERVIEW DOCUMENT)• WHAT IS THE MARKET PROBLEM / INEFFICIENCY YOU ARE SOLVING?• WHAT’S THE MARKET SIZE?• WHO IS YOUR CORE CUSTOMER?• WHAT ARE THEIR PAIN POINTS, AND HOW ARE THEY CURRENTLY SOLVING IT?• WHO ARE YOUR COMPETITORS?• HOW WILL YOUR GET YOUR FIRST CUSTOMERS / USERS?• WHAT FEATURES WOULD BE INCLUDED IN YOUR MVP?• COME UP WITH A STARTUP NAME

DUE: PRESENTED IN THE FRIDAY, DECEMBER 12TH CLASS


kbs+ ventures class 2 | finding product/market fit

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