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By Patrick Vlaskovits, March 4, 2010 5:29 pm

I attended the most recent Startup2Startup event and after the presentation, the discussion turned to how one might define Product-Market Fit and what might serve as a proxy for Product-Market Fit, given various types of business models.

The Sean Ellis 40% rule-of-thumb was quickly invoked as were other ideas.  However, I thought it worthwhile to share one insight that came from an experienced start-up entrepreneur at the table.  While we were talking about triangulating on the various signals available to an entrepreneur as to what constitutes Product-Market Fit, he recounted a story — really an accidental natural experiment — on how he unequivocally learned his start-up hadn’t achieved Product-Market Fit.

To wit, his site had gone down for a few hours, and he hadn’t known about it.  In the interim, there had been nothing but silence.  None of his users had squawked or had made it publicly known that the site was down and they were angry/frustrated/furious/going to switch providers/fed-up-with-this etc., etc.

This lack of frustration/noise is a data-point.  In this case, it meant his start-up had a ways to go on iterating to finding Product-Market Fit.

As a contrast, we might choose to look at what happens when Twitter goes down.

So, for the more intrepid of you out there, perhaps try “accidentally unplugging” your servers and see what happens.  (Clearly, this has significant risks such as alienating users, but it may be a useful signal to know when you don’ t have Product-Market Fit, if you were wondering.)

BTW, I believe Dave McClure has advocated a very similar idea with regard to features.  If I recall correctly, he suggests removing features from a web app and waiting to hear if users complain loudly.  The intensity of the complaint is likely correlated with the usefulness of the feature.

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By brantcooper, February 3, 2010 12:10 pm

Because of the overwhelming response and great feedback for the the Customer Development image I recently shared, I decided to share another from our upcoming book. Please let me know what you think.

Figure 2. Ries' Lean Startup: Customer and product development interrelatedness

*CPS = Customer-Problem-Solution

As shown in Figure 2, customer development and product development are two distinct, but interrelated and iterative processes. As Eric Ries describes, the Customer Development team works on testing the problem-customer-solution assumptions, while the Product Development team tackles the solution.  The product development process receives input from customers indirectly through customer development, and (in the web world) directly through measurement of product usage.  The product development process actively iterates on the product, releasing new or different functionality directly to the customer as quickly as possible.

The customer development process receives input from customers indirectly through product development reports on feature usage, but also directly from customer development processes and analytics.  The customer development process iterates on core business assumptions, product functionality, and acquisition and conversion assumptions, resulting in updated hypotheses, honed messaging, positioning, marketing tactics, and feature requirements.

In the Customer Discovery context, a lean startup is not one that necessarily uses lean manufacturing precepts per se, but rather one that uses fast, iterative development practices in conjunction with customer development methodologies in order to:

1)       Validate core hypotheses (customer-problem-solution),

2)       Produce an MVP,

3)       Achieve Product-Market fit,

4)       Produce a development and marketing roadmap for scaling.

Creating a proper iteration loop requires you to predefine success and failure for each stage, and a means to measure your progress.  For example, in the web-based world, Dave McClure’s AARRR metrics (Acquisition, Activation, Retention, Referral, Revenue) might be applied to measure the stages from concept to product-market fit.

(BTW, if you are interested in being notified when the book is published, sign up here.)

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By brantcooper, January 13, 2010 2:32 pm

Based on input from Steve Blank and others, I updated the Customer Development image I created a few weeks ago.  Steve suggested I attempt to structure the image so that it was business model-independent.  So it is, but with a web-based model serving as an example.  Image has explanatory tool tips, as suggested by Valto in comments.

Click to Enlarge and see tooltips

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By brantcooper, December 16, 2009 9:44 pm

When I first started blogging about Customer Development, last February, I felt like there were only a handful of people talking about it.  I’m sure that’s just a matter of perception.  The likes of Sean Ellis, Sean Murphy, Nivi at VentureHacks, Dave McClure, Hiten at KissMetrics, and Eric Ries had already thinking and blogging about it for many months (years?) before.

By March it was clear to me I had stumbled across something that was catching on.  It’s not insignificant that Twitter had just reached its “tipping point.”  Customer Development would ride the wave.  I first learned the value of Twitter through the promotion of great posts written by start-up superstars, many of which contained elements of customer development.  Rich Collins created the Lean Startup Google Group in June and it quickly grew to a couple hundred members.  There are now over 1700 members!

All of which leads me to this question, done in full cliche-riddled, end-of-2009, year-in-review regalia:

What is the State of Customer Development?

Continue reading 'The State of Customer Development'»

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By brantcooper, December 8, 2009 10:10 pm

For some reason, I’ve always wanted to try and put Steve Blank’s Customer Development, Eric Ries’ Lean Startup and Dave McClure’s AARRR[G] in one slide.  Here’s what I’ve come up with:

Is this at all helpful? Let me know if you have any suggestions or comments.