Unlocking Product Market Fit from the Author of Lean Analytics

 

Ben is currently VP Product at GoInstant, a venture-backed startup focused on changing how we share and experience the web with co-browsing technology. GoInstant was recently acquired by Salesforce.com. He is also a Founding Partner at Year One Labs, which is an early stage accelerator in Montreal. They’ve invested in five startups: Localmind, Massive Damage, HighScore House, qidiq and Happy Stuff. Three of those companies have gone on to raise follow on capital.

Prior to that Ben was the CEO and co-founder of Standout Jobs, which sold in 2010. He’s been an entrepreneur in the web space for 15+ years. Ben is also involved in a number of different projects as an advisor, consultant and mentor. His main interests include: Web/mobile startups, game startups, product management, entrepreneurship, customer service and social media. Ben obsess over things like analytics, customer acquisition, viral loops, product/market fit and building great stuff.

Q: You’ve had over 15 years of experience as an entrepreneur and have gone through raising capital, building product, hiring an incredible team and had successful exits. What was the most important lesson you learned throughout your years as an entrepreneur? And why?

I don’t think there’s any one lesson that’s the most important over everything else I’ve learned. As I think about it today (particularly as I write Lean Analytics) I would say:

You need incredible vision and conviction to be successful. You also need incredible timing and an absurd amount of luck.

The risks are high (in terms of whether you’ll succeed or not–I don’t believe there’s much risk in actually being an entrepreneur, but that’s a separate point). Data and analytics helps de-risk what you’re doing. Data and analytics is the binding glue of intellectual honesty and realism that tempers your conviction (so you don’t blindly fall off a cliff) and helps you march (or dance) your way towards your big vision. Data and analytics can even help with timing and luck. The more you use analytics to measure your progress, the luckier you’ll get. Seriously.

What is the best way anyone can validate a startup idea that they might have using the lean startup processes in mind?

Use the process :)

Lean Startup isn’t a panacea. You can’t follow the process “perfectly” and win automatically. It’s a methodology. A framework. A guidebook. It’s not “the answer.” One of the reasons we (Alistair and I) wrote Lean Analytics was to shed more light on the process by which you can use a Lean methodology to succeed. A lot of what gets talked about publicly is the theory (which is important) but then words like pivot, experiment, etc. get overused and abused. I believe one of the areas where startups fail when applying Lean is on the “measure” step–they know they should build small things quickly and “get out of the building” but they don’t really measure their progress and they’re not really honest with themselves about the results. Entrepreneurs lie. It’s part of what we have to do in order to succeed. But when we lie too much we encapsulate ourselves in a powerful reality distortion field that only bursts when we hit the wall at 100-mph. Analytics is the antidote to this kind of blinded, painful failure.

Q: In your upcoming release of Lean Analytics you cover a wide range of topics relating to how smart founders can use data to build better startups faster. One difficulty startups at all stages are troubled with is building a business model. Where should a startup begin when creating a business model?

I would start with a Lean Canvas (see: http://leancanvas.com). The Lean Canvas is the best way I’ve found to define your business in a quick and constrained way. It should take 20 minutes max to fill it out. Then you look at all the holes and identify where the risks lie. A business model is more than how you make money, it’s everything: how you deliver the product, what the product is, who uses it, and so on. How you make money is one part of the business model. I think this is what you’re referring to in terms of what startups struggle with. There’s no easy answer because as much as we can draw similarities between businesses (and we do in the book) there are tons of differences as well.

Generally I would advise that you try and extract money from people sooner rather than later, or at minimum identify who will pay for what when, and see if you can’t de-risk that aspect of your business as quickly as possible.

Q: What advice would you give a startup that has been getting traction in their product, but having difficulty in finding their product market fit?

I’d ask them: Do you see a path by which you can get to product/market fit in a reasonable amount of time? (i.e., before the money runs out!) If they don’t see that path we have a problem. If they’ve run out of things to try that they can honestly say may have an impact, then it’s time to look elsewhere. It may be time for a pivot. But you can’t pivot blindly, you have to know where you’re pivoting. And that only comes from insights within the business. If that doesn’t exist, it may be time to try something else.

One way to look for things that can help is to truly identify the stage you’re at. For example, let’s say the company has a product in the market, but engagement is middling and not fantastic. For me you’re in the Stickiness stage (based on how we describe things in Lean Analytics) and you’re not ready for the next stage, which is Virality. So you have to focus on improving engagement and retention–you have to find a way to make your product crazy sticky and then you keep going. If you know engagement and retention are the problem, then you most likely can come up with experiments to improve those metrics. So let’s say you have a mobile app and you know that daily active users is a measure of engagement. Let’s say you’re at 5%. You know it’s not high enough; but you need to know what it should be at in order to say you’re successful. That’s the line in the sand you have to draw. It’s hard for startups to find a line in the sand–we try and suggest some in the book–but this takes some research, guessing and chutzpah. You need a line in the sand, otherwise how will you know if you’ve been successful or not?

So: identify the stage you’re at with your business, come up with a few ideas/experiments you can run (ideally in parallel to speed up the feedback cycle), know what metric you’re focused on (the One Metric That Matters), and have a line in the sand you’re aiming for.

Q: Apart from your work as an entrepreneur you’re also a founding partner at One Year Labs. What do most rejected startups miss when applying to accelerator programs?

It really depends on the accelerator and what they’re looking for. Most accelerators are genuinely making bets on teams (or should) because the ideas are usually so early they’re likely to change (and sometimes quite drastically). Investors almost universally say it’s “team first” in terms of criteria, but I’m not always sure that’s the case. But for accelerators it really should be. The bet you’re making (when you’re running an accelerator) is whether or not the applicants have what it takes to be entrepreneurs. You can teach elements of entrepreneurship, but I don’t think you can teach people to *be* entrepreneurs.

Beyond the team, I always looked for a genuine and broad understanding of the market. The market itself didn’t have to be huge, necessarily, but if I could identify five competitors with a simple Google search (or I knew of them already) but the applicants didn’t know they existed or didn’t consider them competition, I’d be very worried. Too many entrepreneurs live with blinders on –and while it’s OK to ignore competitors early on because you’re focused on what you’re doing, validating your business and finding your uniqueness– it’s not OK to be ignorant of them.

Q: How do founders go about the recruiting and hiring process for the first time?

This is one of the hardest things founders have to do and unfortunately most of them are terrible at it. The reality is that recruiting is a shit ton of hard work, and most founders just don’t want to put the effort in. It’s not a mystery how you do it and many people have published very prescriptive strategies for recruiting–it’s just most founders don’t want to put the time in.

Of course, founders are also insanely busy doing other things –we all get that– but if you screw up recruiting you likely kill your startup before it really gets anywhere.

Without overwhelming you with details (and much of this is on my blog already) here’s what founders need to think about and invest in:

* Network like crazy — but with the express purpose of meeting potential candidates or learning about what people are up to. Too many founders spend too much time showing up at events or hanging out with people and claim the time is well spent. It may not be. Network with a purpose.

* Know everyone — you have to be tapped into what’s going on around you. If someone’s having a bad day at work, if a company is going sideways, if a company is pivoting … you need to know about it. Why? Because there’s a chance that people at that company are starting to think about alternatives, and you want to jump in at the right moment. Timing in recruiting is insanely important.

* Go onto LinkedIn and do the heavy lifting — find everyone that looks interesting, see if you have common connections (and ask those connections to refer you). Ping people and pitch them on why your company rocks. Do it over and over again. Look on Facebook and Twitter. Connect and reach out.

* Have an intense and well-structured recruiting process — make sure when someone finally does express interest that you know how to “process” them. Have a great process for interviewing people and challenging them. Do it fast. Do it in a single day if you can. The best people are always highly sought after so you can’t mess around.

There are lots of other issues here. How much can you pay? How much is your equity perceived to be worth by candidates? Can you give more equity to early employees than the “norm”? (I believe you should.) Do you know what candidates really care about? Is it a great office space? Is it solving hard technical problems? Something else?

Recruiting is a crazy amount of hard, tedious work. But it’s essential.

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If you have any follow up questions or comments for Ben (available on Clarity), please leave a comment below.

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