Journey to product / market fit explained. What do the start-up's first stages look like and what you should keep in mind when identifying a problem worth solving, creating a product and getting your first customers

1. Road to
Product / Market Fit
@MikkoSeppa

2. Mikko Seppä
Run / Advised / Invested in SaaS-
companies (10+)
10+ years working with all kinds of
startups (SaaS, Service, etc)
Serial entrepreneur: 2 x exit
Frequent guest lecturer in various
Start-up Accelerators & Universities
Author of 3 books

3. What I’m going to present here is based on
my own experiences & learnings,
no textbook theory examples.

4. 3 stages of start-up growth
Problem / Solution Fit Product / Market Fit Scale
0-12m 12-36m

5. 3 stages of start-up growth
Problem / Solution Fit Product / Market Fit Scale
0-12m 12-36m

6. No silver bullets in this presentation.

7. Problem / Solution Fit
HOW TO ACHIEVE

8. Three big questions to solve
1. Market
2. Problem
3. Solution
Who are your customers?
What is the problem worth solving?
What is a feasible solution?

9. 1. Who are your customers?

10. Problem & Market
1. Domain knowledge aka Solving your own problem
If you have worked with the problem previously, you might have
suf
fi
cient information about the problem.
2. Customer Research / Customer Development
Talk with customers / users, a lot. Gather understanding of the
problem & people.

11. There is no substitute for
talking to customers
Yes, you might have had the problem yourself, but you are not
your customer.
Do the customer research and learn how potential customers
perceive the problem & various ways to solve it
Too often our view of problem differs from customers’

12. Customer is not a…
- Company in [insert industry here]
- 38 year old Linda who likes traveling and books
- Fortune 500 company

13. It’s the job they want to get done
When you start, your ideal customer de
fi
nition should be more
about the people who share the same job to be done (JTBD)
When you reach PMF, you need to be able to de
fi
ne your ideal
customer pro
fi
le in more detail. At this stage the most important
thing is to nail the JTBD
Further reading: Intercom On Jobs To Be Done

14. 2. Identify a problem worth
solving

15. Love the problem,
not the solution
”

16. Why start-ups fail?

17. Most SaaS-companies fail because there’s
no market for their product

18. Please note!
Just because something is a problem, it doesn’t mean you should
start a business solving it. Not all problems are the same.
Just because you came up with a crazy cool product idea, it doesn’t
mean there will be a market for that
Just because YOU think something is a problem, it doesn’t mean
there actually is one.
Only way making sure is to complete the Customer Development

19. Is the problem you’re solving signi
fi
cant
enough?
Small problem
Big problem
Rare
Frequent

20. Is the problem you’re solving signi
fi
cant
enough?
Small problem
Big problem
Rare
Frequent

21. Is the problem you’re solving signi
fi
cant
enough?
Small problem
Big problem
Rare
Frequent

22. Is the problem you’re solving signi
fi
cant
enough?
Small problem
Big problem
Rare
Frequent

23. Is the problem you’re solving signi
fi
cant
enough?
Small problem
Big problem
Rare
Frequent

24. There’s a gap in the market,
but is there a market in the
gap
”

25. 3. Finding a proper solution

26. Don’t fall into the complete solution trap

27. x
x
x
x
x
x
x
Quality decisions = Quality product
🎉
x
x
x
x
x
x

28. Complete solution -trap
Find prospect Reach out
Contact /
company data
management
Pipeline
management
Close deals and
get signatures

29. Complete solution -trap
Find prospect Reach out
Contact /
company data
management
Pipeline
management
Close deals and
get signatures
Several products - not one!
By trying to build this you will run out of money.
This can be your end-game but you need to start smaller.

30. Feasible solution
Economical:
It’s actually possible
to build the product
with the resources
you have
Legal:
It’s according to the
law in the market
your operating. e.g
3rd party cookies /
ePrivacy
Technical:
It actually can be
done and your
technical solution
will be valid within 5
years

31. CASE: BUILDERHEAD
Once problem was validated,
they acquired pilot customers
20 pilot customers, 5 paying
customers.
All customers use their time
and provide feedback.
Faster way to validate the
solution with co-creation

32. Don’t build product that
creates more problems
Most solutions actually cause
more problems for customer than
what they actually solve
Think: Google+ Circles
Watch what customers do, not
what they say.

33. Should we do a private beta?
”What do we need to learn as early on as possible?”
If you have big crucial assumptions you need to validate, private
beta might just be right for you.
Further reading: Nick Lesains on How to run a successful beta in 7 steps

34. How do you know you’ve
achieved Problem / solution
fi
t

35. You’re there when…
…feedback (on mockups or MVP) is great and customers say they’d
buy your product)
….customers want to share the news about your product and are
happy to refer you forward
…you no-more have unvalidated big assumption about the
problem, solution or customer

36. Product / Market Fit
HOW TO ACHIEVE

37. PMF - What you need to nail
1. Sales
2. Marketing
3. Data & analytics
4. Product
5. Processes

38. 1. How to get your 1st customers
Talk with the people you talked when you validated problem
Cold outreach: email / LinkedIn / calls
Test the messaging / value proposition / RTB AND different
audience segments.
This takes much more effort than you think and everybody on the
founding team should do it. Yes, even the ”CTO”.

39. GTM-model
€
€€€
No
humans
Humans
Further reading: Advance B2B - Mission Matrix (GTM model)

40. DO NOT HIRE SALES REPS
BEFORE YOU…
…have sold 10-50 by yourself and you have 3-5 customer reference
cases
…know how to create demand / leads
…have strong positioning and can differentiate your product

41. Repeatable is the
prerequisite to scalable
”

42. 2. Marketing
Your
fi
rst priority should be a product marketer.
Person who ideally sits in the intersection of product & marketing
Person who’s keen on understanding user motivation, can help
with messaging, positioning and all things in on-boarding

43. 3. Data & Analytics
In order to succeed, you need to instill data driven / data-informed
culture in your start-up. Make sure you master at least these
What Tools
Product usage How people use your software. Amplitude / Heap / Mixpanel
Subscription data Retention + upsell data
Chartmogul / Baremetrics /
Pro
fi
twell
Acqusition How well you market & sell HubSpot / Pipedrive / Salesforce
Customer happiness How happy customers are SurveyMonkey / HubSpot
Feedback Qualitative feedback from different user groups
Talking to customers, chat
transcripts, emails, support tickets

44. 4. Product
Build what you sell, sell what you build
Find which features makes your product stick and what are nice to
have. Double down on your strengths, don’t build more weak
features
Design systems, documentation etc.
Further reading: ThinkGrowth HubSpot’s playbook for going from startup to scale up

45. 5. Processes
You don’t have PMF if you don’t have key business processes in
place.
Marketing, sales, success
People processes: Hiring, promoting, development
Product: Learn how to support other things besides creating new
- Improve a feature (Customer satisfaction)
- Getting more people to use feature (adoption rate)
- Getting people to use feature more (frequency)

46. How do you know you’ve
achieved product / market
fi
t

47. How do you know you’ve succeeded
Retention: Customers use your product and you’re able to retain them
”How would you feel if you no longer couldn’t use the product” —>
>50% very disappointed is ok
When customers understand your product and use it right way AND
can successfully solve the problems they got it for
You have at least 2-3 channels that bring you customers, with
suf
fi
cient unit economics (spend less money that what pay to get)

48. Last remark
Product / market
fi
t is not something you achieve once and live
happily ever after.
You need to achieve PMF every time you…
• Start selling to new market / new audience
• Introduce a new product
• Every 3-5 years since you don’t live in vacuum

49. Thank you!
@MikkoSeppa from XCalibur.
f