The search for Product-Market Fit

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© Jerome Kehrli @ niceideas.ch
The search for Product-Market fit

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Agenda
Introduction – Product Market Fit1
Lean Startup Fundamentals2
Design thinking Fundamentals3
Reaching Product / Market Fit - Different perspectives4
The Measure Obsession5
Conclusion and take Aways6

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1. Introduction – Product/Market Fit

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A startup
“A startup is a company that's in the initial
business stage.”
(Most of the time …)
“A startup a human institution designed to
create a new product or service under
conditions of extreme uncertainty”
(Eric Ries - Lean Startup)
“A startup is a company or project initiated by an
entrepreneur to seek, effectively develop, and validate
a scalable business model.
(Wikipedia)

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The top reasons why startup fail
Most frequently cited reasons for startup failures
Source : CB Insights - https://www.statista.com/chart/11690/the-top-reasons-startups-fail/

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From Product-Market Fit to “Lean Startup”
Marc Andreessen
(Andy Rachleff)
Alex Osterwalder
Eric Ries
Ash Maurya
Steve Blank
2007
2011
2011
2012
2013

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Rachleff's Laws
Rachleff's Law of Startup Success:
The #1 company-killer is lack of market.
When a great team meets a lousy market, market wins.
When a lousy team meets a great market, market wins.
When a great team meets a great market, something special happens.
The market always wins!
Rachleff's Corollary of Startup Success:
The only thing that matters is getting to product/market fit.
Product/market fit means being in a good market with a product that can
satisfy that market.
Source : June 25, 2007 / Marc Andreessen - The only thing that matters (blog post)

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Other definitions …
@franciscohmello (Francisco @ Hackernoon):
“Product/market fit is when a startup has built a product that can satisfy a
market that’s big (has many potential customers) and that easily and intensely
buys/uses that product.”
Dan Olsen – The Lean Product Playbook
“Product-Market fit is that you have build a product that creates significant
customer value.
This means that your product meets real customer needs and does so in a way
that’s better than the alternatives.
For some people it goes even beyond and includes having a validated revenue
model.
For others, it also includes having a cost effective customer acquisition model.
I believe Product-Market fit is another way of saying “profitable” glosses over the
essential aspects of the idea.”

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So what is Product-Market Fit ?
Viability
FeasibilityDesirability
PMF
A confirmed business model that
can make the company real money
Large market of people who really
need this problem solved
A product that you are able to actually
build and that properly solved the problem
Source : https://medium.com/@briantod/about-product-market-fit-what-ive-learned-about-the-goal-the-process-and-the-nuance-e7b317740f43

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Another View
Source : https://startupdevkit.com/guide-to-product-market-fit-with-everything-you-need-to-know/
Competition
How are you different ?
Product
What do you do best?
Demand
What are your
customers looking
for?
PMF
Market
Relevance
Market
Opportunity
Market
Fit

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Being in a good market with a good product.
Myths about Product-Market Fit
Ben Horowith’s 4 myths about Product Market Fit
1. Product market fit is always a discrete, big bang event
2. It’s patently obvious when you have product market fit
3. Once you achieve product market fit, you can’t lose it.
4. Once you have product-market fit, you don’t have to sweat the
competition.
Source :https://blog.pmarca.com/2010/03/20/the-revenge-of-the-fat-guy/

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“Build it and they will come” is a recipe for disaster for most ventures
(there are exceptions)
A startup is not a scaled-down version of an established company.
A new born learning to walk is not a scaled-down version of a marathon runner.
A startup fails when its product does not fit into a receptive, enthusiastic,
profitable and accessible market segment.
Premature scaling during the iterative and empirical search phase most of the
time leads to the annihilation of the startup
Initial assumptions are always wrong. Only measured and validated learnings
count.
A first move advantage is a mythical concept and often leads to failure.
The path to failure

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Startups require an iterative and empirical approach to search for Product-
Market Fit with a business model to earn the venture’s survival, sustainability
and growth.
Failing fast and failing early is key to startups
When assumptions fail, new assumptions are made and pivots may be
performed in an iterative way as long as the sweet spot of Product-Market Fit is
not reached.
Successful startups first understand and build their customer segment and then
only iteratively improve their product features and functions.
Collecting direct feedback from the customers is key to test and validate any
faulty assumption / hypothesis about the product viability and demand
The path to success …

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More from Marc Andreessen
“You can always feel when product/market fit isn’t happening. The customers aren’t
quite getting value out of the product, word of mouth isn’t spreading, usage isn’t
growing that fast, press reviews are kind of “blah”, the sales cycle takes too
long, and lots of deals never close
"And you can always feel product/market fit when it’s happening. The customers
are buying the product just as fast as you can make it— or usage is growing
just as fast as you can add more servers. Money from customers is piling up in
your company checking account. You’re hiring sales and customer support staff
as fast as you can. Reporters are calling because they’ve heard about your hot
new thing and they want to talk to you about it. You start getting entrepreneur of
the year awards from Harvard Business School. Investment bankers are staking
out your house. You could eat free for a year at Buck’s."
Source : https://hackernoon.com/product-market-fit-heres-why-youre-probably-confused-about-it-1dr73zgd

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Dan Olsen’s PMF Pyramid
Source : https://www.mindtheproduct.com/the-playbook-for-achieving-product-market-fit/
Product-Market Fit
UX
Feature Set
Value Proposition
Product:
SolutionSpace
Underserved needs
Target Customer
Market:
Problem
Space

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Target Customer
UX
Feature Set
Value Proposition
Underserved needs
A first high-level process
Product-Market Fit
1. Identify precisely your target customer
4. Identity the minimum feature set and
design your MVP – Minimum Viable Product
5. Implement your MVP
2. Meet your target customer (many of its representatives)
and make sure you capture a precise picture of its needs
3. Shape a solution to its needs, design your value proposition
and meet your customer again, confirm your solution
6. Meet your
customer, test
your MVP,
confirm your
assumptions or
adapt and
repeat the
process.Meet your
customers !

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Searching Product-Market Fit (1/3)
Ideas
Build
Product
/ Proto.
Meas-
ure
Data
Learn Problem
-Solution
Fit
Product
-Market
Fit
Busi-
ness
Model
The Lean Startup perspective
Searching Product-market fit is applying the Build-Measure-Learn
feedback loop comprehensively throughout the product
identification and design lifecycle and the business plan definition
to shape a product fulfilling perfectly the customer needs.
1
Customer
Discovery
2
Customer
Validation
3
Get new
Customers
4
Company
creation
Identify
a problem
Generate
demand
Product-
Market
Fit
Design / Implement the
Minimum Viable
product
Re-adapt the
product
The “Four steps to the Epiphany” perspective
(also Lean Startup)
Product-market fit is the result of the search phase, when the solution
to the customer problem is clearly identified along with its feature set,
market potential, business plan, foreseen evolutions, etc.

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The “MVP”-centric perspective
(somewhat again Lean Startup)
For many, searching product-market fit is iterating around a minimum
viable product. It is the result of a process centered around the MVP
design iterations, when the MVP and what we learned from it
enabled to identify the product fulfilling the market needs.
Possible products
Market
4. Product-Market
Fit
2. Value
Proposi-
tion
3. MVP
1. Target
Audience
Problem-
Solution
Fit
Product-MarketFit
The “Lean Canvas / Value Proposition” perspective
(Did I mention Lean Startup ?)
For others, Product-market fit happens when you succeeded in
designing great value propositions that match your customer needs
and jobs-to-be-done and helps solve their problems.

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The “Design Thinking” perspective
Product-market-fit is what happens when applying
successfully Lean-Startup principles to the last
design-thinking process stages to reach maturity
and the growth stage.
Empathize Define Ideate
Build
Market
Fit
Prototype
/ Test
Problem Space Solution Space
With the
people
you are
designing for
Insights and
opportunities
With idea-
generation
techniques
the idea to
make it
tangible and
to
allow user
testing
Design thinking
Lean Startup
Different perspectives
depending on your culture
but all related to Lean Startup in the end
which all boils down to the very same thing:
“Product-market fit means being in a good
market with a product that can satisfy that
market”
Reaching product-market fit is about
finding the good market and
designing the product to satisfy it

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2. Lean Startup Fundamentals

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Lean Startup
Lean Movement (1990)
Lean thinking is a business methodology that aims to provide a new way to think about how to organize
human activities to deliver more benefits to society and value to individuals while eliminating waste.
The aim of lean thinking is to create a lean enterprise, one that sustains growth by aligning customer
satisfaction with employee satisfaction, and that offers innovative products or services profitably while
minimizing unnecessary over-costs to customers, suppliers and the environment.
The Lean Movement finds its roots in Toyotism and values performance, visual management (Kanban)
and continuous improvement (Kaizen)
Lean Startup (2010)
Marc Andreessen
(Andy Rachleff)
Alex Osterwalder
Eric Ries
Ash Maurya
Steve Blank
2007
2011
2011
2012
2013

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Key Principles
•You don't have to work in a garage to be in a startup. The concept of entrepreneurship includes anyone
who works within Eric Ries' definition of a startup :
•A startup is a human institution designed to create new products and services under
conditions of extreme uncertainty.
•That means entrepreneurs are everywhere and the Lean Startup approach can work in any size
company, even a very large enterprise, in any sector or industry.
Entrepreneurs are
everywhere
•A startup is an institution, not just a product, and so it requires a new kind of management specifically
geared to its context of extreme uncertainty.
•In fact, Ries believes "entrepreneur" should be considered a job title in all modern companies that
depend on innovation for their future growth
Entrepreneurship is
management
•Startups exist not just to make stuff, make money, or even serve customers. They exist to learn how to
build a sustainable business. This learning can be validated scientifically by running frequent
experiments that allow entrepreneurs to test each element of their vision.
Validated learnings
•To improve entrepreneurial outcomes and hold innovators accountable, we need to focus on the boring
stuff: how to measure progress, how to set up milestones, and how to prioritize work. This requires a
new kind of accounting designed for startups-and the people who hold them accountable.
Innovation
accounting
•The fundamental activity of a startup is to turn ideas into products, measure how customers respond,
and then learn whether to pivot or persevere. All successful startup processes should be geared to
accelerate that feedback loop.
Build-Measure-
Learn

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The feedback loop
Ideas
Build
Prototype
/ Product
Measure
Data
Learn
Select the riskiest assumption or hypothesis
Build a Prototype, an MVP, a
simple mock-up, a schematic,
etc. whatever you can put in
front of your customer to test
Your assumption of
hypothesis on the market
Get feedback from the market, test the customer
reaction, measure his behaviour during the
experience, interview, live test, application
usage, etc. whatever is the best way to get data.
Understand the feedback and
learn if your assumption is
confirmed or contradicted, if
your hypothesis is valid or
wrong.
If it is confirmed, move on to
the next assumption or
hypothesis to be tested.
If it is contradicted, review
your hypothesis, adapt you
plan and come up with
something different.
A prototype, a Minimum
Viable Product, a simple
mocked-up application,
slides, whatever works and is
cheap and fast to build..

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Four steps to Epiphany: customer development
1
Customer
Discovery
2
Customer
Validation
3
Get new
Customers
4
Company
creation
Identify
a problem
Generate
demand
Before Product-Market Fit (BMPF)
Search / Steering Phase
(Small funding team)
(Startup)
After Product-Market Fit (APMF)
Execution / Acceleration Phase
(Scale the team / formal roles)
(Scale-Up)
Minimum Viable
product
Re-adapt the product
Source : Steve Blank (various blog posts)
Product-
Market
Fit
Steve Blank studied the inherent patterns empirically validated
in successful and failed startups and offers key insights to
improve the probability of finding Product-Market Fit

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Four steps to Epiphany: customer development
Problem Solution
Fit
• State your
hypothesis
• Test Problem
Hypothesis
• Test Solution
Hypothesis
Product Market Fit
• Develop
Business Model
• Develop MVP!
• Sell to early
adopters
• Pivot
•
Scale Execution
• Marketing
Roadmap
• Position
development
• Launch
• Create demand
Scale organization
and operations
• Sell to
mainstream
customers
• Mission-centric
culture
• Departments …
Identify
a problem
Minimum Viable
product
Generate
demand
Product-
Market
Fit
1
Customer
Discovery
2
Customer
Validation
3
Get new
Customers
4
Company
creation
Our focus today

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A focus on practices
1
Customer
Discovery
2
Customer
Validation
3
Get new
Customers
4
Company
creation
Identify
a problem
Generate
demand
Minimum Viable
product
Pivot
Get out
of the Building
Problem
Interview
Solution
Interview
A/B
Testing
Measure
Obsession
Pizza
teams
Build
Vs.
Buy
Feature
Teams
Get out
of the
Building
Scaling
Agile
MVP
Fail Fast
Growth Hacking
Gamification / Viral Marketing
...
Pivot
Get out
of the Building
Problem
Interview
Solution
Interview
Measure
Obsession
MVP
Fail Fast

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Steve Blank
Pre-Product/Market Fit :
“One single good customer development interview is better for learning about your customers / product /
problem / solution / market than five surveys with 10,000 statistically significant responses.”

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The Minimum Viable Product is an engineering product with
just the set of features required to gather validated
learnings about it - or some of its features / aspects - and its
continuous development.
The Minimum Viable Product should have just that set of initial
features strictly required to have a valid product, usable for its very
initial intent, and nothing more.
In addition these features should be as minimalist as possible but
without compromising the overall User Experience. A car should
move, a balloon should be round and bounce, etc.
Eric Ries defines the MVP as:
"The Minimum Viable Product is that version of a new product a
team uses to collect the maximum amount of validated learning
about customers with the least effort."
MVP
(Source : Les pratiques des géants du web / Stephen Perrin – OCTO Technology –
http://fr.slideshare.net/sperin/les-pratiques-des-geants-du-web)

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Sidenote : Product Design artifacts
Source : https://www.slideshare.net/LeanStartupConf/a-playbook-for-achieving-productmarket-fit
Hand-
Sketch
Static
Wireframe
Mockups
Clickable
Wireframe
Clickable
Mockups
Interactive
Prototype
MVP
Fidelity
Interactivity

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Fail fast means getting out of planning mode and into testing mode, eventually for every component,
every single feature, every idea around your product or model of change and drop things that are not
working as fast and cheap as possible.
It’s totally OK to fail, as long as you fail fast.
Fail fast,
Learn faster,
Succeed sooner !
So how do you know when to turn, when to drop an
approach and adapt your solution?
How can you know it's not too soon?
Measure, measure, measure of course!
(Fail fast ≠Fail often)
Fail Fast

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“A startup pivots when
it changes its product
to answer a
new or different need
identified by
customer / market feedback
in its learning (search) phase”
Pivot

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When the startup changes its product
to meet either this new need or the
former need in a different way, it is
said to have performed a Pivot.
A startup can pivot several times
during its existence.
A pivot is ultimately a change in
strategy without a change in vision.
It is defined as a structured course
correction designed to test a new
fundamental hypothesis about the
product, business model and engine of
growth.
Pivot or Persevere

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Repeat a thousand times:
I will never again say
“I think that …”
but always
“I will measure if …”
(We’ll come back to this later …)
Obsession of measure

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The Lean Canvas
1
12
3
4
5 5
6
7
MarketProduct

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Hints and Pitfals
Pirates Metrics (by Dave
McClures)
Awareness (when users know
you)
Acquisition (when users find
you)
Activation (users have a first
experience)
Retention (users come back)
Revenue (when you make
money)
Referral (when users tell others)
For new products, the initial battle
is about how to get noticed ? How
will you get the customer’s
attention ?
Distinguish between customers
and users, customers pay you,
users don’t.
One of the riskiest
item on your
canvas !
Start testing from
day 1 !
- Social networks
- Newsletter
- Ads
- Friends
- Events
- SEO
- Etc.
Early adopters will help
you test and refine your
product AND BUSINESS
MODEL
Examples:
- Insider Information
- Personal authority
- A dream team
- Existing customers
- “Right” celebrity endorsement
- Large network effect
- Community
- SEO ranking
- Patents
- Core values
Calculate your
break-even
point

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Lean Startup : test your plan !
Using the "Build - Measure - Learn" diagram, the question then becomes, "What
hypotheses should I test?".
This is precisely the purpose of the initial Lean Canvas,
Test your plan !

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Problem Solution Fit
Problem-SolutionFit

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Product Market Fit on the Lean Canvas
Product-MarketFit

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The Value Proposition Canvas
Describe what a specific
customer segment needs
to do. It can be tasks they
try to do, problems they
need to solve or the needs
they try to satisfy. It can
also be legacy processes
or tasks that need to
evolve. Also indicate the
precise context in which
this happens, with its
constraints, etc.
Describe the benefits
your customer expects,
desires or would be happily
surprised by. This includes
functional utility, efficiency,
social gains, positive emotions,
cost savings, etc.
Distinguish improvements
from new benefits.
Describe negative emotions,
difficulties, undesired costs and
situations and risks that your
customer experiences or could
experience before, during or
after getting the job done.
List all the products and
services your value
proposition is built
around, those that help
your customer get a
functional, social or
emotional job done or
satisfy his needs.
Products and
services can be
tangible,
digital,
financial,
etc.
Describe how your products
and services create customer
gains. How do they create the
benefits your customer expects,
desires and would be surprised by,
including functional utility, social gains,
positive emotions or cost savings.
Describe how your products and
services alleviate customer pains.
How do they eliminate or reduce
negative emotions, undesired costs,
situations and risks your customer is
experiencing before, during or after
getting the job done.

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3. Design thinking Fundamentals

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Design Thinking is
an iterative process in which we seek to understand the user, challenge assumptions, and redefine
problems in an attempt to identify alternative strategies and solutions that might not be instantly apparent
with our initial level of understanding (Creative thinking, Outside-the-box thinking, ...),
a way of thinking and working,
a collection of hands-on methods.
Design Thinking revolves around a deep interest in developing an understanding of the people for whom
we’re designing the products or services.
Experience says customers are not likely to communicate their needs clearly. It’s not how the human brain
works. We have a natural tendency to think in terms of solutions.
It is based on the assumption that designers’ work processes can help us systematically extract, teach,
learn, and apply these human-centered techniques to solve problems in a creative and innovative way
Design thinking
originated in the late 60's in the development of creative techniques
rose significant interest in the 2000s
went mainstream in academy and R&D departments in the 2010s
Design thinking

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1.
Empathize
2. Define
3. Ideate
4.
Prototype
5. Test
Design thinking Process
Design thinking starts with Empathy and uses collaborative
and participatory methods, repeating all 5 steps as many
times as needed to achieve a complete solution
Observe and listen to the problem
or situation without preconception.
Make it yours
Define and express the problem
based on the evidences of the
observation
Generate as many ideas as possible
for potential solutions to the defined
problem (brainstorming), then converge.
Research and build working
examples of ideas.
Apply example prototype
to original situation or
problem

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Different views
Steph Di Russo – Understanding Design Thinking in Complex Environment
“This argument is valid, albeit in a very crude form, as it is crude to say that
anyone who picks up an instrument is a musician”
“It’s talent, mastery and experience that together classifies a professional
from an amateur”
Tim Brown- IDEO:
“Design thinking is for everybody!”
Source : https://www.slideshare.net/ChrisJackson43/i-design-think-therefore-i-am-a-uxer

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1.
Empathize
2. Define
3. Ideate
4.
Prototype
5. Test
Design thinking Framework
1. Empathize
Observe and listen to the problem or
situation without preconception.
Make it yours.
- Interviews
- Shadowing / “Live my life” sessions
- Seek to understand
- Non-judgmental
2. Define
Define and express the problem based on
the evidences of the observation
- Personas scenarii
- Roles and objectives
- Decisions
- Challenges
- Pain Points
- Stakes and assets
5. Test
Apply example prototype to original
situation or problem
- Understand impediments
- What works ?
- Role Play
- Iterate Quickly
3. Ideate
Generate as many ideas as possible for
potential solutions to the defined problem
(brainstorming)
- Share ideas
- All ideas worthy
- Diverge / Converge
- “Yes and” thinking
- Prioritize
4. prototype
Research and build working examples of ideas.
- Mockups
- Story Board
- KISS
- Fail fast
- Iterate quickly

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Traditional thinking vs. Design thinking
Traditional thinking Design thinking
Style Directed Emergent
Process Planning of flawless intellect Enlightened trial and error
Path to success Avoid failure, secure Fail fast
Factor of success
Expert Advantage Ignorance advantage
Right answers Right questions
Rigorous Analysis Rigorous Testing
Subject experts Process experts
Rituals Presentations and meetings Experiments and experiences
Communication Telling Showing
Base Headquarters In the field
Customer involvement
Arm’s length customer research Deep customer immersion
Periodic Continuous
Activities Thinking and planning Doing

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Example
Customer
I need a
faster car
Designers
(5-whys – Kaizen)
Need to go to
work faster faster!
Designers
- Faster Horse?
- Faster car?
- Faster train?
Designers
Let’s think outside the
box.
Where does men travel
the fastest?
How?
No air, no friction!
Designers Designers
In space!
How to do it on
earth?
Remove friction!
Designers

52
Design Thinking is essentially
a problem-solving approach specific to design,
which involves assessing known aspects of a problem and
identifying the more ambiguous or peripheral factors that contribute to the conditions of a problem.
It contrasts with a more scientific approach where the concrete and known aspects are
tested in order to arrive at a solution.
Design Thinking is
an iterative process to identify alternative strategies and solutions that might not be instantly
apparent with our initial level of understanding.
often referred to as ‘outside the box thinking’, as designers are attempting to develop new ways of
thinking that do not abide by the dominant or more common problem-solving methods – just like
artists do.
At the heart of Design Thinking is the intention to improve products by analyzing how
users interact with them and investigating the conditions in which they operate.
Design Thinking offers a means of digging that bit deeper to uncover ways of improving
User eXperiences.
Take away

53
4. Reaching Product / Market Fit
Back to the Different perspectives

54
Now back to the four perspectives
1. The Lean Startup Perspective
2. The MVP-Centric Perspective
3. The Lean Canvas-Centric Perspective
4. The Design Thinking Perspective
Ideas
Build
Prod-uct
Meas-ure
Data
Learn
Problem-
Solution Fit1
Customer Discovery
2
Customer Validation
PMF
Ideas
Build
Prod-uct
Meas-ure
Data
Learn
Business Model
Ideas
Build
Prod-uct
Meas-ure
Data
Learn
Product-Market
Fit
Possible
products
Market
4. Product-Market
Fit
2. Value
Proposi-tion 3. MVP
1. Target
Audience
Problem-
Solution
Fit
Product-Market
Fit
Build
Market
Fit
Prototype
/ Test
With the people
you are
designingfor
Insights and
opportunities
With idea-
generation
techniques
the idea to
make it
tangible and to
allow user testing

55
2.1 – Reaching PMF – The Lean Startup Perspective (1/2)
Ideas
Build
Prod-
uct
Meas-
ure
Data
Learn
Problem
-Solution
Fit
Identify
a problem
Generate
demand
Design /
Implement the
Minimum Viable
product
1
Customer
Discovery
2
Customer
Validation
3
Get new
Customers
4
Company
creation
PMF
Re-adapt
Ideas
Build
Prod-
uct
Meas-
ure
Data
Learn
Business
Model
Ideas
Build
Prod-
uct
Meas-
ure
Data
Learn
Product-
Market
Fit
The Lean Startup way to product market fit
“4-steps to the Epiphany” as a high level process
Lower-level process is represented by the Lean-Startup Feedback Loop
First Problem-Solution Fit
Then Business-Model validation
Eventually Product-Market Fit
MVP happens late in the process, most assumptions are verified during
interviews with mock-ups and prototype (Lean-by-the-book)

56
Customer-centric – Get out of the building / work with your customers
Understand your customer’s problem
Understand if your solution works for your customer!
Understand your market!
Little investment up-front – MVP developed at the latest stage, after Problem-Solution Fit
Data-driven: make an hypothesis, test it, measure, learn
Product-Market Fit is reached when the metrics measured from the MVP confirms it.
ADVANTAGES
Little investment on MVP, everything remains
theoretical before Problem-Solution Fit and Business
Model validation – Lean by the book!
Only when most assumptions are verified one moves
to developing MVP (which requires money!)
KEY ASPECTS
DRAWBACKS
While this approach - working a lot upfront before
starting to work on an MVP - is seducing (less
investment required), it is also challenging.
The first feedback we get from the MVP often
challenges a lot the initial assumptions, even
though they were validated with customers.
This is because users and customers have a
strong tendency not to be able to clearly state what
they need and want before something concrete us
put in front of them
2.1 – Reaching PMF – The Lean Startup Perspective (2/2)

57
2.2 – Reaching PMF – The MVP-Centric Perspective (1/2)
Possible products
Market
4. Product-Market
Fit
2. Value
Proposi-
tion
3. MVP
1. Target
Audience
The MVP-Centric approach puts the iterations on MVP at the center of the process
Fundamental Idea
Jump to the MVP development stage as fast as possible - without neglecting Problem / Solution
fit though - and iterate on MVP as long as required to reach PMF
Getting IRL – In Real Life – and live as fast as possible to optimize feedback
Very relevant approach for online and very wide audience services

58
Some believe that reasoning on a concrete MVP is the best way
MVP-centric
Build MVP, put it live in real-life and start getting feedback
Feedback and metrics collection automation is key
A/B Testing / UX Metrics / etc.
Significant investment up-front – Need to develop the MVP
Problem-Solution fit is not neglected, but shorten as much as possible to reach the more concrete MVP stage faster
Product-Market Fit is reached when the metrics measured from the MVP confirms it (as usual)
ADVANTAGES
People have difficulties reasoning on abstractions
and customers have trouble expressing clearly what
they need as long as they don’t see anything
concrete (the infamous “that’s not what I wanted”
Moving AFAP to the MVP enables to address this
and get feedback on the real-thing as fast as
possible
Very well suited for online and wide audience
services (e.g. Netflix, Google, Facebook, etc.)
KEY ASPECTS
DRAWBACKS
More up-front investment, need to develop the MVP
and put it live
Does not apply to all businesses / products - how to
develop an MVP in Pharma, Bio-tech or heavy
industry?
2.2 – Reaching PMF – The MVP-Centric Perspective (2/2)

59
2.3 – Reaching PMF – The Lean-Canvas Perspective (1/2)
Problem-SolutionFit
Product-MarketFit
The Lean-Canvas centric approach puts a strong
emphasis on the theoretical work and customer
representatives / market experts interviews
instead of the MVP
The Lean Canvas and the Value proposition
Canvas form a formidable tool to drive
researches with customers towards Product-
Market fit and discussion with Investors.
They sum up the findings and validated
assumptions based on theoretical work (such as
prototype, academic research, scientific findings,
etc.) leads to theoretical product market-fit
before actually building anything on the product
Developing, evolving and maintaining these
canvas is
Useful during the search phase for every
startup
Essential when an MVP is not possible or very
expensive. These canvas provide a guiding line
for the theoretical search phase.
Describe what
a specific
customer
segment
needs
to do, achieve
or needs
they need
to satisfy.
Describe the
benefits your
customer expects,
desires or would be
happily surprised by.
Describe negative
emotions, difficulties,
undesired costs and
situations and risks
that your customer
experiences
List all the
products and
services your
value
proposition is
built
around
Describe how
your products and
services create customer
gains and benefits them.
Describe how your
products and services
alleviate customer pains.

60
2.3 – Reaching PMF – The Lean-Canvas Perspective (2/2)
Designing a lean-Canvas, maintaining and evolving it , along with a Value proposition canvas, always makes sense and should
always be done to drive the initial assumptions on the Problem solution fit, the Business Model and the Product Market-Fit and
their evolutions.
But most of the time, coming back over and over again to the Lean Canvas is dropped in favor of iterations around the MVP
and it’s predominant usage to capture customer feedback and converge to Product-Market Fit
When working with and around the MVP is not possible – heavy industry, Bio-Tech, Pharma, etc. – the lean canvas and its
maintenance remains the principal guideline when searching for Product Market Fit
Every customer interview, expert consulting, scientific research should lead to evolving the Lean Canvas and the Value
Proposition Canvas. The Lean canvas is the Big Picture of the Business Plan leading discussions with investors
The Lean canvas is the map to the data points that need to be collected before talking to investors.
ADVANTAGES
The Lean-Canvas helps create a quick visualization of an
idea, share it and get feedback
The Value Proposition canvas helps capture how Product
Market fit will be reached
Sometimes – when working with an MVP is not possible –
every single word on these canvas capture an essential
assumption that has been verified and that is key to build
the eventual product and the company.
KEY ASPECTS
DRAWBACKS
Again, if working with these canvas is important in the
initial stage and perhaps at later stage when discussing
with potential customers and investors, iterating and
evolving these canvas takes a lesser importance in favor
of working with an MVP as e move forward in the search
phase.

61
2.4 – Reaching PMF – The Design-Thinking Perspective (1/2)
Build
Market
Fit
Prototype
/ Test
Problem Space Solution Space
With the people
you are
designing for
Insights and
opportunities
With idea-
generation
techniques
the idea to
make it
tangible and to
allow user
testing
Design thinking
Lean Startup
The Design-Thinking Perspective is actually a way
to structure and formalize the Problem-solving
approach in the search phase.
There’s some overlap between Lean Startup
and Design Thinking
Design thinking emphasizes on Problem /
Solution Fit, MVP design and UX as ultimate
results from a Design perspective,
while Lean Startup focuses on reaching
Product Market Fit before scaling.
Both are very complementary!
The design thinking process is a very good fit
for the Lean-Startup Search Phase
Lean Startup doesn’t give much processes and
tools on how to get to Problem / Solution Fit
(aside from some general principles, Get out of
the building, Problem / Solution interview, etc.),
how to design the MVP, etc.
This is where Design thinking kicks in
Applying the Design-thinking process to the
required brainstorming in the Lean-Startup
search phase is a striking fit.

62
2.4 – Reaching PMF – The Design-Thinking Perspective (2/2)
Lean-Startup insists on the need to reach Problem Solution Fit, a working Business Model and eventually Product
Market fit and gives principles and practices to it (Get out of the Building, Converge to MVP, Lean Canvas, etc.).
But Lean startup doesn’t give much recipe for how to conduct brainstorming, how to search for solution, how to
design the MVP, etc.
Here comes Design thinking!
The Design thinking process can be applied every time a solution to a problem, a design job or simply a brainstorming
exercise has to be performed in the search phase … or after.
Design thinking and Lean Startup share some genes (getting feedback, iterate, etc.), but they are rather very much
complementary with each other.
ADVANTAGES
Helps structuring the search for solutions to various
problems and aspects in the search phase
Problem-Solution fit (striking application for the
design thinking process)
MVP Design
Commercial and marketing issues
Very much relevant only when a lot of thoughts need
to be put in the design of the product or the search
for a solution to the customer problem.
KEY ASPECTS
DRAWBACKS
When the solution is clear after the sets of interviews
with key customers, or on the contrary when
searching for a solution requires a lot of scientific
research, Design thinking is out of scope.
If the solution is crystal clear, a structured
brainstorming process such as design thinking is
not required.
If the solution requires a lot of scientific research,
design thinking is not of a great help

64
“In god we trust, all others must bring data “
(Source : Les pratiques des géants du web / Stephen Perrin – OCTO Technology –
http://fr.slideshare.net/sperin/les-pratiques-des-geants-du-web)

65
Honestly there is no magic silver bullet and it can in fact be pretty difficult to pick up the right
metric that would be most helpful to validate a certain hypothesis.
However, metrics should at all cost respect the three A's. Good metrics
are actionable,
can be audited
are accessible
An actionable metric is one that ties specific and repeatable actions to observed results.
The actionable property of picked up metrics is important since it prevents the entrepreneur
from distorting the reality to his own vision.
We speak of Actionable vs. Vanity Metrics.
Meaningless metrics such as "How many visitors ?", "How many followers ?" are vanity metrics and
are useless.
Ultimately, your metrics should be useful to measure progress against your own
questions.
How to choose good metrics ?

66
Some examples
1. NPS - Net Promoter Score
2. CLV to CAC Ratio
3. Retention Ratio
4. Growth Rate
There are many others!
(Hint : search for “Pirate Metrics” by Dave McClure)
Metrics Proposal
Product-
Market Fit

67
Net Promoter Score, or NPS, is a metric that has become a standard for measuring customer loyalty and
satisfaction by many companies.
Built on the power of one simple question — how likely is it that you would recommend your product to a friend
or colleague?
it’s now used by companies of all sizes in virtually every industry all over the world.
While NPS is a good leading indicator of business growth, it can also be a vanity metric if used alone
without looking at the context of why your customers would recommend (or not recommend) your product.
If your company is committed to measuring NPS, here’s a tip that you can use to understand the ‘why’
behind your NPS score and potentially increase it.
Follow up the standard NPS question with one additional question, “What would it take for you to recommend my
product to someone you know?”, and target the people who are not your promoters, which means they rated their
likelihood to recommend your product an 8 or lower. You can then analyze those open-ended responses to identify
key trends in the data.
Net Promoter Score (1/2)

68
Net Promoter Score (2/2)
Source : https://www.netigate.net/articles/customer-satisfaction/nps-ultimate-guide-to-net-promoter-score/
Net Promoter Score
=
% Promoters
-
% Detractors
Rule of thumb:
- A positive value is OK
- A value above 20% is
what you want to reach
- A value above 50% is
extremely good

69
CAC - Customer Acquisition Costs - is the figure representing what it cost to your company in average to
acquire a new customer.
It’s the total cost of converting a prospect or convincing a potential customer to become an actual customer.
It’s the total cost devoted to your sales and marketing effort – cross department, domains and worldwide.
𝐶𝐴𝐶 =
𝑆𝑎𝑙𝑒𝑠 𝑎𝑛𝑑 𝑚𝑎𝑟𝑘𝑒𝑡𝑖𝑛𝑔 𝑠𝑎𝑙𝑎𝑟𝑦 + 𝑀𝑎𝑟𝑘𝑒𝑡𝑖𝑛𝑔 𝑇𝑜𝑜𝑙𝑠 𝑐𝑜𝑠𝑡 + 𝐶𝑎𝑚𝑝𝑎𝑖𝑔𝑛𝑠 + …
𝑁𝑢𝑚𝑏𝑒𝑟 𝑜𝑓 𝑁𝑒𝑤 𝐶𝑢𝑠𝑡𝑜𝑚𝑒𝑟𝑠
#over average customer lifetime period
CLV – Customer Lifetime Value (or LTV in the literature) - is the figure representing how much money you make
in average with one of your customer. CLV is more difficult to compute and not formula working out of the box can
be expressed easily since one need to account upselling, sales model such as subscriptions vs. one time license,
etc.
One can however simplify it by considering incomes only incomes from new customers
𝐶𝐿𝑉 =
𝑇𝑜𝑡𝑎𝑙 𝐼𝑛𝑐𝑜𝑚𝑒 𝑓𝑟𝑜𝑚 𝑛𝑒𝑤 𝐶𝑢𝑠𝑡𝑜𝑚𝑒𝑟𝑠 ∗𝐺𝑟𝑜𝑠𝑠 𝑝𝑟𝑜𝑓𝑖𝑡 𝑚𝑎𝑟𝑔𝑖𝑛
𝑁𝑢𝑚𝑏𝑒𝑟 𝑜𝑓 𝑁𝑒𝑤 𝐶𝑢𝑠𝑡𝑜𝑚𝑒𝑟𝑠
#over average customer lifetime period
The CLV to CAC ratio gives you an indication of how much your business is profitable.
The metric is computed by dividing LTV by CAC. It is a signal of customer profitability, and of sales and marketing
efficiency.
CLV to CAC ratio (1/2)

70
CLV to CAC ratio (2/2)
Mike Volpe, former CMO, Hubspot
Strong B2B companies in their growth stage should have an CLV/CAC ratio of 3-5.
Jordan McBride, Marketing Manager, Price Intelligently
The best rule of thumb is spending 33% or less of your customer’s lifetime value.
Sources : https://www.klipfolio.com/resources/kpi-examples/saas/customer-lifetime-value-to-customer-acquisition-cost
https://www.forentrepreneurs.com/startup-killer/

71
Acquisition isn't the whole answer. Retention is even more important!
Definitions:
N-Day Retention: The proportion of users who come back on the ‘Nth’ day after first use.
Retention Curve: A line graph depicting the average percentage of active users for each day within a specified timeframe.
At a high level, retention is a measure of how many users return to your product over time.
It is the mathematical inverse of the customer churn (which can be another metric)
“The point is, every improvement that you make to retention also improves all of these other things—virality,
LTV, payback period. It is literally the foundation to all of growth, and that’s really why retention is the king.”
- Brian Balfour, former VP Growth, Hubspot & Co-founder, Reforge
A good way of visualizing retention rate is by plotting a retention curve:
Retention can actually indicate if you have a product-market fit problem; if you plot out your retention
numbers as a percentage of active users over time and you have a flat line that reaches zero instead of a
curve that stabilizes—you need to solve a product-market fit problem, not a retention problem.
Retention Ratio / Curve (1/2)

72
Retention Ratio / Curve (2/2)
Source : https://amplitude.com/mastering-retention/why-care-about-user-retention

73
The Growth Rate is the rate at which your business is growing.
Measuring the growth rate is tricky since
Imagine a situation where the growth would be 10% monthly, composed by 40% new customers every months and 30%
customers leaving or stopping to use the product
In such a situation, even though the monthly growth seems interesting, the company is actually losing all its customers
every 3 months!
Under such conditions, the survival of the company is almost impossible after the hype effect passes.
Growth Rate (1/2)
Sources : https://tribecap.co/a-quantitative-approach-to-product-market-fit/
https://www.lightercapital.com/blog/how-to-establish-product-market-fit/
For this reason, the growth
rate metrics needs to account
the ability of the company to
retain its customers, the churn
rate, etc.
This makes the growth rate
computation a quite
complicated metric to
compute.

74
Growth accounting framework
Working with Compound Monthly Growth Rate over past X months
More information: https://tribecap.co/a-quantitative-approach-to-product-market-fit/
Product Market Fit is confirmed when these indicators – the cmgr3, cmgr6 and cmgr12 go
up consistently
Growth Rate (2/2)

75
6. Conclusion and take Aways

76
So there is a recipe for success.
Entrepreneurship has a magic power, it triggers positive energies and it leaves people with an irresistible willingness to
start doing things.
However, all these positive energies can very easily become negative when they are not channeled in the correct
direction. And by negative we mean: having quit a day job, having spent most of our savings, having re-mortgaged the
house and ultimately having trouble explaining to our life partner, family and friends why we have done all of that and we
still haven’t been able to succeed. That’s awful.
Luckily there is a process that we can follow, developed after having worked with hundreds of entrepreneurs.
Instead of starting to develop a product and hiring people immediately, these are the questions that we need
to answer in order to build and launch a product that customers need and for which there is market demand:
Which problem are we going to solve?
Who has the problem in our market?
Who are the early adopters?
What is the value proposition able to satisfy their needs?
How much are they willing to pay for it?
What is the minimum set of features required for launch?
The way to answer most of these questions is to engage with customers from the very early stage of a new
business idea, get to know them profoundly, create a value proposition based on the insights captured that relies on
the company’s key strengths to create a competitive advantage customers care about, and test and iterate that
proposition on the market until we reach Product-Market Fit.
Take Aways (1/2)

77
Most of this can be done before investing any substantial resource into the business, and that’s really the best
thing about Lean Startup methodology. The most difficult thing is to resist from the instinct to jump into “build mode”.
Instead, we invest some time to de-risk an idea before investing heavily in it. Everyone is in love with their idea, and
the last thing we want to know is that it’s not a good one. But the sooner we realize an idea is flawed – i.e. there is no
market need for it – the better it is.
In terms of practical steps, this is a possible process to validate a new business idea and achieve product-market fit:
1. Compile a lean canvas to have clarity of a business idea (with Value Proposition Canvas)
2. Identify the riskiest assumptions for the business idea.
Hint: usually these are the ones around target segment, problems and market size.
3. (Problem Interview) Conduct a round of qualitative interviews with target customers, to understand if they have the
problem, how big it is, and what they currently do to solve it.
4. Run a collaborative workshop with the entire team to refine the value proposition based on customer insights collected so
far. This is how disruptive ideas are generated!
5. Prepare a cheap and quick form of a prototype.
6. (Solution Interview) Conduct another round of qualitative interviews with target customers, to understand if the solution
prepared solves the problem and if they are willing to pay for it. At this stage it is mandatory to attempt to get a
commitment from them.
7. Iterate the solution, and conduct new interviews if they didn’t commit already.
8. (MVP) When we get enough commitment, we define a MVP (Minimum Viable Product) and start proper development
(when an MVP is not possible – heavy industry, pharma, etc. – we conduct additional confirmation research and engage
with more potential customers)
9. Put MVP on the market, collect feedback on MVP and evolve / adapt / pivot as required until reaching Product-Market-Fit
Take Aways (2/2)

78
The Innovator's Dilemma?
A new solution achieves PMF, and manages to capture the lion's share of the market.
They become the dominant player, and stay that way, until new technology appears and
supersedes their solution.
By failing to stay ahead of changing technology, the incumbent company loses market share
to a smaller, disruptive business, who in turn, go on to dominate the market.
Rinse and repeat.
In this narrative, the market for a product evolved over time, and the definition of
Product/Market Fit changed with it. As a result of developing technology, a solution that
fits the market in the here-and-now might not fit the same market in the future.
PMF is like an ongoing health check for your business, allowing you to periodically test the
key assumptions that underpin your business:
Does the problem we solve still exist?
Is the problem important enough?
Is the market for our product still a 'good' market?
An on-going health check

79
DevOps / Lean Startup / Agiliy– why are these important ?
Maturity/Difficulty
Agile Development
(e.g. Scrum)
DevOps
Lean Startup Company-wide
Kanban
Scaling Agile /
Agile corporation
eXtreme Programming (XP) Practices
Digital
Company
Dependency

80
Old School Product Management
Report to:
Marketing
Output:
Requirements / Specifications
Methodology:
Waterfall
Product Lifecycles:
Years
Decision Making:
Opinion Driven
Modern Product Management
Report to:
CEO
Output:
Design, Prototype, UX
Methodology:
Agile
Product Lifecycles:
Weeks
Decision Making:
Data Driven
Modern Product Management
Source : https://www.slideshare.net/bussgang/product-management-101-the-search-for-productmarket-fit

81
TheperiodictableofAgilePrinciples
andPractices
The Periodic Table of Agile Principles and Practices
https://www.niceideas.ch/roller2/badtrash/entry/periodic-table-of-agile-principles

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