2. From Code to Product Lecture 2 — Process — Slide 2 gidgreen.com/course
3. Lecture 2
Product development for startups
Or… Customer development
Or… How to avoid making an ice
cream glove
Or… How to discover the ice cream
glove is actually a great idea
From Code to Product Lecture 2 — Process — Slide 3 gidgreen.com/course
4. Lecture 2
• Companies vs startups
• Product—Market fit
• The idea
• The first version
• Collecting data
• Iteration and pivots
• Are we there yet?
From Code to Product Lecture 2 — Process — Slide 4 gidgreen.com/course
5. “Normal” companies
• Existing product
• Known market
• Established path to market
• Brand recognition
• Paying customers
• Revenue > Costs (usually)
• Incremental development
From Code to Product Lecture 2 — Process — Slide 5 gidgreen.com/course
6. Startup companies
• Existing product No product
• Known market Uncertain market
• Established path to market
• Brand recognition Totally unknown
• Paying customers No customers
• Revenue > Costs Zero revenue
• Incremental development Clean slate
From Code to Product Lecture 2 — Process — Slide 6 gidgreen.com/course
7. A company’s priorities
• Increase profit
• More customers
• More $ per customer
• Improve product
• New products
• New business area
• Acquire others
From Code to Product Lecture 2 — Process — Slide 7 gidgreen.com/course
8. A startup’s priorities
• Increase profit Don’t die
• More customers Find some users
• More $ per customer Get $ from users
• Improve product Create a product
• New products
• New business area Find business area
• Acquire others Get acquired
From Code to Product Lecture 2 — Process — Slide 8 gidgreen.com/course
9. Development by Waterfall
Requirements
Design
Implementation
Verification
Maintenance
From Code to Product Lecture 2 — Process — Slide 9 gidgreen.com/course
10. Development for startups
Requirements
Ideas
Design
Implementation
Collect Data
Verification
1 month or less… Maintenance
From Code to Product Lecture 2 — Process — Slide 10 gidgreen.com/course
11. Why do companies fail?
Surpassed Undercut
Superceded Attrition
From Code to Product Lecture 2 — Process — Slide 11 gidgreen.com/course
12. Why do startups fail?
• Running out of…
– Money
– Ideas
– Energy
– Faith
• Before reaching…
– Break even
– A (lucky) exit
From Code to Product Lecture 2 — Process — Slide 12 gidgreen.com/course
13. A startup is…
“…a human institution designed to deliver a
new product or service under conditions of
extreme uncertainty.” — Eric Ries
“…an organization formed to search for a
repeatable and scalable business model”
— Steve Blank
From Code to Product Lecture 2 — Process — Slide 13 gidgreen.com/course
14. Lecture 2
• Companies vs startups
• Product—Market fit
• The idea
• The first version
• Collecting data
• Iteration and pivots
• Are we there yet?
From Code to Product Lecture 2 — Process — Slide 14 gidgreen.com/course
15. Product—Market Fit
That incredible moment
when you realize that
many people truly
need (or want)
your product
Ideas and you can
make real
money
Implementation
from
Collect Data it
Time
From Code to Product Lecture 2 — Process — Slide 15 gidgreen.com/course
16. Startup stages
Product
Market
Fit
Idea Version 1 Product Efficiency
Time
From Code to Product Lecture 2 — Process — Slide 16 gidgreen.com/course
17. Lecture 2
• Companies vs startups
• Product—Market fit
• The idea
• The first version
• Collecting data
• Iteration and pivots
• Are we there yet?
From Code to Product Lecture 2 — Process — Slide 17 gidgreen.com/course
18. Sources of inspiration
Own needs Business experience
Current events Others’ success
Wouldn’t it be cool? Everyone’s doing it!
From Code to Product Lecture 2 — Process — Slide 18 gidgreen.com/course
19. Immediate questions
• Is it feasible?
• Why now?
• Why you?
• Who would want it?
• How will it grow?
• Could it make money?
• Is it defensible?
• Define success or failure
From Code to Product Lecture 2 — Process — Slide 19 gidgreen.com/course
20. Why now?
Critical mass New platform
Macro shifts
Troubled incumbent
Bandwidth No one thought of it!
From Code to Product Lecture 2 — Process — Slide 20 gidgreen.com/course
21. Some trends
Technology Society
• Cloud computing • Ageing in West
• Big data • Consultants
• Smartphones • Financial crisis
• HTML5 • BRIC countries
• QR codes • Mobiles in Africa
• 3D printing • Outsourcing
Be a trend spotter, not a trend setter
From Code to Product Lecture 2 — Process — Slide 21 gidgreen.com/course
22. Can it be done?
• Break into layers
• Find the hardest part
– Algorithm
– Performance
– Compatibility
– Scaling
• Find equivalents
• Do you know how?
From Code to Product Lecture 2 — Process — Slide 22 gidgreen.com/course
23. Who would want it?
• Talk to your ideal customer
– Use connections
– Cold calls / emails
– (Surveys)
• Search for competition
• Check search volumes
• Vaporware/prototypes
• Ask friends and family
From Code to Product Lecture 2 — Process — Slide 23 gidgreen.com/course
24. How will it grow?
Pure virality Self promoting
Word of mouth Search engines
Paid advertising Direct sales
From Code to Product Lecture 2 — Process — Slide 24 gidgreen.com/course
25. Could it make money?
• What’s the model?
– Is there enough pain?
• Is the market…
– Large enough?
– Long term?
– Growing?
• Is there competition?
• Are there per-customer costs?
From Code to Product Lecture 2 — Process — Slide 25 gidgreen.com/course
26. Is it defensible?
Economy of scale Technology
Accumulation Lock-in
From Code to Product Lecture 2 — Process — Slide 26 gidgreen.com/course
27. Is it defensible?
Network effects Brand awareness
First mover Outspending on
advantage advertising
From Code to Product Lecture 2 — Process — Slide 27 gidgreen.com/course
28. Lecture 2
• Companies vs startups
• Product—Market fit
• The idea
• The first version
• Collecting data
• Iteration and pivots
• Are we there yet?
From Code to Product Lecture 2 — Process — Slide 28 gidgreen.com/course
29. The first version
• “Minimum viable product”
• Identify early adopters
• Build quickly
• Design for learning
• No barriers to use
• Aim to fail fast
From Code to Product Lecture 2 — Process — Slide 29 gidgreen.com/course
30. What’s in?
• Simple interface
• Some explanation
• Metrics
• Feedback form
• Final product name
• Rapid deployment
From Code to Product Lecture 2 — Process — Slide 30 gidgreen.com/course
31. What’s out?
• Beautiful interface
• Peripheral features
• Lots of options
• Scalable infrastructure
• Business model
• Bugs and glitches
From Code to Product Lecture 2 — Process — Slide 31 gidgreen.com/course
35. Version 1.0
“If you’re not embarrassed when you
ship your first version you waited too
long… You can never fully anticipate
how an audience is going to react to
something you’ve created until it’s out
there.”
— Matt Mullenweg, WordPress
From Code to Product Lecture 2 — Process — Slide 35 gidgreen.com/course
36. Lecture 2
• Companies vs startups
• Product—Market fit
• The idea
• The first version
• Collecting data
• Iteration and pivots
• Are we there yet?
From Code to Product Lecture 2 — Process — Slide 36 gidgreen.com/course
37. Collecting data
• Change hats
• Observation
– Direct
– Remote
• Feedback emails
• Metrics
• Brand monitoring
From Code to Product Lecture 2 — Process — Slide 37 gidgreen.com/course
38. Direct observation
• Find subjects
– Advertise
– Public places
– Acquaintances
• Start from blank
• Don’t interfere
– Questions allowed
• Discuss at end
From Code to Product Lecture 2 — Process — Slide 38 gidgreen.com/course
39. Power of the few
25
90% certainty
20
Observations Required
15
10
5
0
!"# $!"# %!"# &!"# '!"# (!!"#
!"#$%&'()*+&%*,##-(
From Code to Product Lecture 2 — Process — Slide 39 gidgreen.com/course
41. Feedback emails
• Read by product team
• Answer them
• Feedback = pre-sales
• Keep a tally
• Metadata
• Watch for jewels
From Code to Product Lecture 2 — Process — Slide 41 gidgreen.com/course
43. Real metrics
• Unique visits per …
• Registrations per …
• Downloads per …
• Searches for product name per …
• Engagement per user
• Retention per user
• Revenue per …
From Code to Product Lecture 2 — Process — Slide 43 gidgreen.com/course
44. Vanity metrics
• Total …
• “Hits”
• Traffic from:
– Bots
– Script kiddies
• Publicity
• Purchased users
• One-time revenue
From Code to Product Lecture 2 — Process — Slide 44 gidgreen.com/course
46. The building
“In a startup no facts exist inside the
building, only opinions… Get the hell
outside the building.”
— Steve Blank
From Code to Product Lecture 2 — Process — Slide 46 gidgreen.com/course
47. Lecture 2
• Companies vs startups
• Product—Market fit
• The idea
• The first version
• Collecting data
• Iteration and pivots
• Are we there yet?
From Code to Product Lecture 2 — Process — Slide 47 gidgreen.com/course
48. Iterate to increase…
• For customer
– Features
– Usability
– Marketing
• For you
– Engagement
– Growth rate
– Revenue
From Code to Product Lecture 2 — Process — Slide 48 gidgreen.com/course
49. Iteration priorities
• Bugs first!
• Show stoppers
• Popular requests
– But maintain your vision
• Easy improvements
• Jewels = market openers
• Avoid specials
From Code to Product Lecture 2 — Process — Slide 49 gidgreen.com/course
50. Serve, don’t obey
“If I had asked people what they wanted,
they would have said faster horses.”
— attributed to Henry Ford
“A lot of times people don't know what
they want until you show it to them.”
— Steve Jobs
From Code to Product Lecture 2 — Process — Slide 50 gidgreen.com/course
51. Don’t be scared!
1000000
800000 From 1,000 to
1,000,000 users at
600000 10% per month
Users
400000
200000
0
0 2 4 6 8 10
Years
From Code to Product Lecture 2 — Process — Slide 51 gidgreen.com/course
52. Persevere or Pivot?
• Metrics improving?
• Still learning?
• Stuck serving the few?
• Frustrated?
• Is failure defined?
• Be brave, be swift
From Code to Product Lecture 2 — Process — Slide 52 gidgreen.com/course
53. Product Pivots
• Zoom in
• Zoom out
• Platform ↔ Application
• Technology
• Application of technology
• Reuse accumulated data
From Code to Product Lecture 2 — Process — Slide 53 gidgreen.com/course
54. Other Pivots
• Business model
• Target customers
• High margin ↔ High volume
• Sales channel
• Clean slate
From Code to Product Lecture 2 — Process — Slide 54 gidgreen.com/course
56. Lecture 2
• Companies vs startups
• Product—Market fit
• The idea
• The first version
• Collecting data
• Iteration and pivots
• Are we there yet?
From Code to Product Lecture 2 — Process — Slide 56 gidgreen.com/course
57. Are we there yet?
“Startups occasionally ask me… whether
they have achieved product/market fit… if
you are asking, you’re not there yet.”
— Eric Ries
“In a great market — a market with lots of
real potential customers — the market pulls
product out of the startup.”
— Marc Andreesen
From Code to Product Lecture 2 — Process — Slide 57 gidgreen.com/course
58. Painting a picture
“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... 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…”
— Marc Andreesen
From Code to Product Lecture 2 — Process — Slide 58 gidgreen.com/course
59. A rule of thumb
“In my experience, achieving product/
market fit requires at least 40% of
users saying they would be ‘very
disappointed’ without your product.”
— Sean Ellis
From Code to Product Lecture 2 — Process — Slide 59 gidgreen.com/course
60. Sustainable growth
• Old business → New business
• User driven
– Virality
– Self promotion
– Word of mouth
• Sales driven
– Lifetime value > Acquisition cost
– (beware competition)
From Code to Product Lecture 2 — Process — Slide 60 gidgreen.com/course
61. Books
gettingreal.37signals.com
From Code to Product Lecture 2 — Process — Slide 61 gidgreen.com/course
62. A story…
From Code to Product Lecture 2 — Process — Slide 62 gidgreen.com/course
