Advertisements

Yet Another (ex-)VC Blog

Cloud computing, startups, and venture capital

Posts Tagged ‘customer development

Gradients and illusions of product/market fit

leave a comment »

Every time you work on something new, whether it’s a new feature, a new product, or a new product line, recognize that you are searching for incremental product/market fit. The search is a continuous and never ending quest. Don’t confuse illusion with reality.

from The Illusion of Product/Market Fit for SaaS Companies.

Advertisements

Written by John Gannon

January 20, 2015 at 6:24 pm

The only monthly goals that matter for pre-product B2B startups

with one comment

Before your B2B startup has a product available you’ll want a few – but not too many – metrics to help you steer the ship in the right direction.

Based on my experience at a couple of startups that I joined pre-product or founded here are the handful of metrics that I suggest you measure/goal.

Customer Development conversations

It doesn’t matter what your startup is building if customers don’t want it. 

Get out of the building and make sure you are talking to potential customers often. This is the only way you’ll get a deep understanding of your potential customers’ needs.

When you’re getting started a good pace is somewhere on the order of 1-2 conversations (new potential customers) per business day. Once you reach 25-50 conversations you should have a good sense of whether or not your product idea has legs.

Don’t cheat on this metric by counting conversations with potential partners or investors as ‘customer’ conversations. These groups can provide useful feedback but their feedback shouldn’t be weighed as highly as what you hear from potential buyers (Customers rule!).

If you’re having trouble finding enough potential customers to meet your goals, here are 4 tips for finding those ‘earlyvangelist’ customers that are so important to a customer development process.

Potential employees met

If your  little startup starts to make progress you’ll need to hire quickly. Without a pipeline in place you’ll struggle to make these hires.

Start developing relationships now which may turn into hires down the road:

  • If you’re a technical founder without a counterpart on the business side you should make a point to meet a bunch of sales/marketing/product people each month.
  • If you’re a non-technical founder without a technical counterpart then make sure you’re meeting a bunch of software engineers each month.
  • If you have a complete team in place then just try to meet lots of great people each month.

Like anything in startupland, this is a numbers game. If you’re meeting 5, 10, 20 really sharp people per month you’ll quickly have built up a great pool of future talent for your company.

And if you can actually get them to quit their cushy job to join your budding startup before it’s on the tech community’s radar, then you may be on to something. On the flip side, if you’ve met 40 people and none of them want to come work for you, maybe that’s a signal you need to consider as well.

(Here’s some great guidance from Paul English, founder of Kayak, about how to make your startup really great at recruiting, interviewing, and hiring.)

“Marketing”

Even if you don’t have a product available you need to start your marketing engine ASAP.  Otherwise you’ll be caught completely flat-footed if/when you reach product-market fit and you want to scale up fast.

Pick one metric (be it leads, blog visits, Twitter followers, Facebook likes, or something else), set a goal for that metric, then execute.

Content marketing is probably your best bet – and most capital efficient way – to reach whatever goal you set (versus buying ads or paying to acquire traffic) at this early stage. And it is the gift that keeps on giving because you can re-use and re-purpose your content to drive future marketing efforts.

That’s why content marketing makes so much more sense when you’re at this early stage. You can develop an audience and a following by creating helpful, free resources to people in your target market.

If you do this content marketing thing right, that audience will be very eager to hear about what you have built once the product is finally available.

One more thing. Even though you are “marketing” don’t market your product. Because you don’t have one (at least not one that works) yet. Plus, the features you promise today may not (OK, 90% likely will not) be the ones that actually ship.

Product features completed

Last but certainly not least you should be setting product goals each month.

These goals should be focused on user facing features (“deliver user-facing feature X”)  and not platform features (“build interesting backend queuing system that a customer doesn’t actually use directly”).

One exception? Perhaps a system for your team to monitor customer usage. Kind of important, eh?

What metrics did I miss? Let me know in the comments or just tweet at me and I’ll respond.

Thanks to my enterprise software / SaaS savvy pals:

for their input on this post.

 

Written by John Gannon

June 27, 2014 at 9:12 am

Pivoting with limited data

leave a comment »

The kaChing team is quick to note that because they’re still closing-in on product/market fit, they’re less data-driven than they plan to be once they’re in optimizing mode. “We create hypotheses, and test them,” says Rachleff. “If something fails, we cut it off. If something seems to succeed, we pursue it aggressively. You have to have the courage of your convictions. With limited data, you have to make tough decisions.”

via Lessons Learned: Case Study: kaChing, Anatomy of a Pivot.

Written by John Gannon

August 9, 2010 at 9:13 pm

If you hear this question, you aren’t talking to an Earlyvangelist

leave a comment »

"Can you send me some documentation about your product?"

Written by John Gannon

August 5, 2010 at 3:46 pm

Pros and cons of Push and Pull product positioning and differentiation

with 4 comments

In my view, there are two types of product positioning and differentiation: Push and Pull.  Both have benefits and drawbacks.

Push

A Push positioning and differentiation strategy assumes that you understand the market and your customers well enough that you can come up with some positioning that sets you apart from the competition.  You have a vision and hypothesis about why you’re different and better, and you push that message to the masses, without extensive customer validation.

Pros: To develop this kind of positioning, all one has to do is look at the competition’s literature and come up with positioning that seems sufficiently different from the alternatives.  Potentially saves time because it can be done without speaking to customers.  Maybe a good first step in developing a go-to-market strategy.

Cons: The competition may have it all wrong and have no idea about what customers really want, so trying to work around the competition’s messaging may be pointless, since they all have it wrong anyways-and you probably do too since you haven’t spoken to any customers!

Pull

A Pull positioning and differentiation strategy implies that your customers tell you what features, functions, positioning, and messaging that they find most compelling.  You use these “pulled” items as the crux of your messaging and positioning versus a hypothesis about the messaging and positioning that will resonate with a customer.  This is how the Customer Development guys would argue that you should develop your messaging and positioning.

Pros: You’re using positioning and messaging that has been validated by numerous potential customers in your target market.  These are the reasons they see your solution as different…and who are you to argue with the people who have the money?

Cons:  Requires extensive customer interactions to identify the things that customers feel are the differentiated features of your product.  Easier said than done and may require several, iterative cycles of customer interaction.

What are your thoughts on Push vs. Pull?  Are there certain markets or types of products where one strategy is superior to the other?

Reblog this post [with Zemanta]

Written by John Gannon

February 21, 2010 at 2:14 pm

Observations 6 months after leaving the VC business

leave a comment »

Two boys jumping & diving. Dos chicos saltando...
Image by Xosé Castro via Flickr

It has been a little over 6 months since I took the plunge and left L Capital Partners to join VMTurbo.  It has been a great move so far and a huge learning experience.  Unfortunately, this move hasn’t been helpful in maintaining a regular blogging schedule (See “Prioritize relentlessly” section below) so this post has been a long time coming.

I hope some of these personal experiences and observations are helpful to some of my VC friends who have always toyed with taking the plunge, as well as people who may be thinking about careers in VC or in VC backed startups.

And if you’ve played on both sides of the ball, or have thought it about it, chime in with your thoughts.

1) Prioritize relelentlessly. If I was 23, unmarried, with no kids, I could devote 80 hours a week to work.  In fact, that sounds like many weeks at my first startup.  However, I’m now 32, married, and have two kids. :)  Therefore I need to make every working hour as productive as possible-it is just not an option to work on the wrong things.   Fortunately, startups are about results and not “ass time,” so I can be creative with how and where I achieve them.  Another good reason to set 3 goals per day and per week, and devote yourself to crushing them, instead of having 10 TODOs and doing a mediocre job on all of them.  (Better get this blog post done and get back to work…)

2) Beware of spinning your wheels on way-too-early business development. So far I have not heard (or witnessed) any good reasons to put much effort into seeking partnerships right off the bat.  In the software biz, business development is all about taking your product and combining it with the products of other companies to develop a Whole Product.  When you are still doing Customer Discovery and Customer Validation (see Blank and 4 Steps to the Epiphany), you’re still trying to figure that stuff out and aren’t going to have much of an idea of where you can plugin with other companies to make that Whole Product.  An exception to this caveat would be opportunities to use APIs as business development, which in an ever more cloudy world would allow you to create a Whole Product without having to cut any deals.    However, for most behind-the-firewall enterprise software stuff, an APIs as BD strategy isn’t going to make much sense.  (BTW I have heard from friends doing mobile startups that BD is critical in the early stages…so your mileage may vary with this particular tip.)

3) Learn to love “The Ask“. In a startup, you’re constantly asking prospects to take the next step, asking for introductions, asking for feedback, asking for money, asking for references.  You’re constantly asking, when often it is not immediately clear to the receiver of “The Ask” what the benefit will be.  Nothing at a startup happens unless you make it happen-and making stuff happen usually requires an “ask”.  So get comfortable with it!

4) Business development skills and personal network are highly transferable between VC and startup...  Warm intros and getting people to take my calls/emails was a big part of my job as a VC, and its a big part of my job at VMTurbo.  If you’re looking for an escape hatch, moving from VC to business development at a startup is a pretty logical move, and one where your industry network will have the most impact.

5) …and those due diligence tools come in handy, too. Startups play in a world of imperfect information and compressed timeframes, as do their investors.  Being able to get a quick handle on markets, competition, and processes is very important when you’re trying to quickly determine the best route to market, or to pivot and investigate new processes or markets when the first set doesn’t pan out.

6)  Fail.  It’s OK-really. Given the uncertainty within and around early stage startups, there is a better than 50% likelihood that any decision you make on any given day will be wrong.  I’ve never been wrong so many times in such a short period of time :) Just means you need to fail faster.  Get your minimally viable product to the market as fast as possible, hear the feedback, iterate, lather, rinse, repeat.  This really hits home once you actually try it, because you find that erring on the side of releasing something what seems like “too early” is actually the best way to get feedback.  Customers engage most deeply when they can see and touch.  Slide decks and landing pages are nice and can certainly help gauge demand for a solution to a problem, but there ain’t nothin like the real thing.

Update: Here are some great perspectives provided by two other VCs who left the industry, Sarah Tavel (formerly of Bessemer) and Sam Gerstenzang (formerly of a16z).

Reblog this post [with Zemanta]

Written by John Gannon

February 2, 2010 at 9:47 pm

Strategy versus Relentless Tactical Execution

with one comment

Note, if you want to do “strategy” (which is a fine endeavor) and nothing else, you have just defined your career as one in large corporation or in a consulting firm. Stay out of startups. Tactics mean tenacious and relentless execution measured in years.

via SuperMac War Story 5: Strategy versus Relentless Tactical Execution — the Potrero Benchmarks « Steve Blank.

Written by John Gannon

April 2, 2009 at 9:19 am

%d bloggers like this: