These slides were used to facilitate a discussion of entrepreneurial MIT alums, mainly from the MIT Sloan business school. My intention was to introduce many of the newer, leaner concepts of early stage start-up development to a group that often sees "technology first" businesses. This presentation centers on the concept of Product / Market Fit: what it is, why it's important, and how to achieve it. I propose my "Product Market Fit Matrix" that helps to characterize the issues of the start-up and presents various frameworks that can help guide development. In a sense the Product / Market Fit Matrix is a meta-framework. For more information please visit: http://www.rishidean.com

1. Rishi Dean
rishi@rishidean.com
www.rishidean.com
[ Using the PMF Matrix to uncover your killer app ]
MIT Sloan Breakfast Club
March 12, 2010

2. Founding member of:
Other experiences:
Formal & informal start‐up advisor (EIR @MIT)
Hundreds of product cycles…with scars to prove it
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3. 6 out of 1,000 funded
60% fail 30% flounder
,
<10% + returns <1% get big
,
Source:
.01% ”major success”
http://bit.ly/
startupfailurerates
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5. 1) Why did you fail?
2) Why did you run out of money?
3) Why do you have no customers?
4) Why did they have unfilled needs?
5) Why did you not achieve product / market fit?
Unchecked false assumptions kill companies
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6. *
 Start with a firm vision
 Design & develop specifications FAIL
 Follow a “waterfall” development model
 Converge to a massive “launch”
Source:
 Let the sales roll in Steve Blank, The 4 Steps
to Epiphany
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8.  Globalization increases competition
 Lower technical barriers to entry
 Increased capital efficiency
 Cost of acquisition is near zero
Markets evolve faster
‘Revolutionary’ innovation is harder
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13.  Engineers want to build for mass adoption by providing a high
performance and responsive system that will “satisfy” customers
 Fear that releasing “junk” too early will tick off customers and kill the
company
 But you don’t know what customers want, nor their access
patterns, until you release a “suboptimal” product
 If you release a “fully operational” system too late, it may not
conform to what user’s want and you’ve optimized for the wrong
thing  don’t build the elegant thing no one will use
 Get feedback. Learn fast. Move fast…after all, you’re a startup,
right? Source: http://bit.ly/engineersparadox
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14. BEFORE AFTER
Product / Market Fit Product / Market Fit
 Customer discovery &  Build the sales,
validation marketing, and delivery
 Measure, iterate, pivot machine
 Burn as little as possible  Build the company
to survive  Get big, fast
But, how do you find Product / Market fit?
See:
http://bit.ly/8YwPIn
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16. Market / Pain Understanding
 Figure out where you really
are
Product / Remedy Understanding
“Good hypothesis, no  Different resources and
Weak
“Many right answers”
conclusions” inputs will determine your
starting point
 Where you are should
dictate milestones,
revenue projections,
funding requirements, etc.
Strong
“Build it and they will “Technology in
come” search of a problem”
 Assume you know less
than you do, until revenue
proves otherwise
Strong Weak
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17. Market / Pain Understanding
 You will move between
Product / Remedy Understanding
blocks as business / market
“Good hypothesis, no evolve, or diversity across
Weak
“Many right answers”
conclusions” product lines
 You can remove
uncertainty over time, but
uncover others as you dig
deeper
Strong
“Build it and they will “Technology in
come” search of a problem”
Strong Weak
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18. Market / Pain Understanding
 Most start‐ups being with a
Product / Remedy Understanding
great deal of uncertainty –
“Good hypothesis, no goal is the same, but
Weak
“Many right answers”
conclusions” starting point differs
depending on available
resources
 Not mutually exclusive
models – overlapping
principles:
Strong
“Build it and they will “Technology in
come” search of a problem”  Prototyping
 Customer development
 MVP
Strong Weak
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19. 1) Rapid Prototyping: gain feedback fast 2) Cut to the core: it’s hard to take away
Subjective
Value
(Utility)
LOSSES GAINS
See: http://bit.ly/prototyping See: http://bit.ly/prospecttheory
3) Measure Everything: understand what
works, and more importantly ‐ what doesn’t
Source (Dave McClure):
http://www.500hats.com
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20. Market / Pain Understanding  Locate key markets with
compelling dynamics
 “Where else would it
Product / Remedy Understanding
work?”
“Good hypothesis, no
Weak
“Many right answers”
conclusions”  Pick a few applications /
markets and identify a
hypothesis to solve for
 Look for markets primed
for speed of innovation
Why Not? diffusion
Strong
“Build it and they will Rigorous market exploration
come”  Understand the flow of $
“Technology w/o a problem”
and inject into an existing
pattern
Strong Weak
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21. How much better is your innovation than the
1) Relative Advantage incumbent solution?
How easily can your innovation fit with the
2) Compatibility existing infrastructure and ecosystem?
Is your innovation easy to adopt and use,
3) Complexity relative to the current method?
How easily can customers see the
4) Observability differentiation and benefits of your product?
How easy can customers pilot or test your
5) Trialability product?
Does your product impact current social
6) Social Acceptability norms?
Are there legal or bureaucratic issues related to
7) Regulatory your innovation?
Source: http://bit.ly/innovationdiffusion
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22. Market / Pain Understanding  Lead users are easiest
path: transform an ad‐hoc
solution to something
Product / Remedy Understanding
Design Thinking mainstream
“Good hypothesis, no
Weak
Design Thinking + Agile
conclusions”  “Imaginary assistant”
“Many right answers”
notion
Strong
“Build it and they will “Technology in
come” search of a problem”
Strong Weak See: http://bit.ly/webdesignthinking
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23. Source: IDEO
Also see: http://bit.ly/webdesignthinking
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24. Market / Pain Understanding  Fundamental feedback
loop powers all startups:
Product / Remedy Understanding
Lean Startup IDEAS
Weak
Customer + Agile Dev’t
“Many right answers”
LEARN BUILD
“Fail small, fail fast”
DATA
CODE
MEASURE
Strong
“Build it and they will “Technology in
come” search of a problem”  Minimizes total time
through this loop until you
figure “it” out
Strong Weak See: http://startuplessonslearned.com
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25. Source: Steve Blank, 4 Steps to Epiphany
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26. Market / Pain Understanding  Works in incremental or
evolutionary innovation
Product / Remedy Understanding
 Slicker, quicker, better,
“Good hypothesis, no cheaper
Weak
“Many right answers”
conclusions”
 Technology‐driven
problems (e.g. cure cancer,
build a teleporter)
 There are special cases
Product Development where a firm vision (be the
Strong
Waterfall – but agile too “Technology in
search of a problem” customer) + iterative
“Build it and they will come” releases can work well
(e.g. 37Signals)
Strong Weak
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28.  Embrace ignorance
 Characterize your situation
 Pick the right starting point and employ the
requisite approaches to find PMF
 Set the business goals accordingly
 Common themes: prototype, listen, measure,
learn, iterate
 Traverse the matrix
 THEN scale up the business
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29. Blogs
 Lean Startup: http://startuplessonslearned.com
 Customer Dev’t: http://steveblank.com
Lots more like Dave McClure, Sean Ellis, Brant Cooper, Andrew Chen, Diego Rodriguez
Books
Customer Dev’t Design Design for Tech in search Prod Dev’t
Bible Thinking techies of a problem done right
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30.  E‐mail: rishi@rishidean.com
 Blog: rishidean.com
 Twitter: @rishidean
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