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  Step 1: It Begins with Product Market Fit

"Make something people want." —Paul Graham

You know what the single worst marketing decision you can make is? Starting with a product nobody wants or nobody needs.

Yet for years, this was a scenario that marketers tolerated and accepted as part of the job. We all told ourselves that “you go to market with the product you have, not the one you want.” And then we wondered why our strategies failed—and why those failures were so expensive.

What attracted me to growth hacking from the very start was that it rejects this obviously flawed approach outright. Growth hackers believe that products—even whole businesses and business models—can and should be changed until they are primed to generate explosive reactions from the first people who see them. In other words, the best marketing decision you can make is to have a product or business that fulfills a real and compelling need for a real and defined group of people—no matter how much tweaking and refining this takes.

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Take Airbnb, a start‑up now valued at some $30 billion. Today we know it as a site which, as co-founder Brian Chesky put it, “you can book space anywhere. It can be anything, and it really is anything from a tent to a castle.” But nearly ten years ago, in 2007, the business started as a way for the founders to turn the living room of their loft apartment into a little bed-­and-­breakfast. The founders named it airbedandbreakfast.com and put out air mattresses on their floor and offered free homemade breakfast to guests. But the founders wanted more.

Going back to the drawing board and hoping to capitalize on popular technology and design conferences, the founders repositioned the service as a networking alternative for attendees when hotels were booked up. This was clearly a better market, but the company sensed they could improve the idea further, so they pivoted slightly to target the type of traveler who didn’t want to crash on couches or in hostels but was looking to avoid hotels. This did better still. Finally, based on feedback and usage patterns, they shortened the name to Airbnb and abandoned the breakfast and networking parts of the business, redefining the service as a place for people to rent or book any kind of lodging imaginable (from rooms to apartments to trains, boats, castles, penthouses, and private islands).

This was explosive—to the tune of millions of bookings a year in locations all over the world.

Airbnb had a good idea in 2007, but the actual value proposition, if we’re being honest, was a little mediocre. The founders could have spent all their time and energy trying to force the “let people crash on your floor and feed them breakfast” angle and creating a small business around it. Instead, they treated their product and service as something malleable and were able to change and improve it until they found its best iteration. They went from a good but fairly impractical idea to an explosive and practical idea, and then as a result, a billion-­dollar valuation. This switch was undoubtedly the best marketing decision they ever could have made.

As a traditional marketer, I can think of precisely zero times when we went back to the drawing board after seeing a less-­than-­stellar response. It wasn’t permitted. Our only move was to put more muscle behind bad products and companies.

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It was a wake-up call to me to learn that Airbnb was by no means unique: Instagram started as a location-­based social network called Burbn (which had an optional photo feature). It attracted a core group of users and more than $500,000 in funding. And yet the founders realized that its users were flocking to only one part of the app—the photos and filters. They had a meeting, which one of the founders recounts like this: “We sat down and said, ‘What are we going to work on next? How are we going to evolve this product into something millions of people will want to use? What is the one thing that makes this product unique and interesting?’”

The service soon retooled to become Instagram as we know it: a mobile app for posting photos with filters. The result? One hundred thousand users within a week of relaunching. Within eighteen months, the founders sold Instagram to Facebook for $1 billion.

I know that seems simple, that the marketing lesson from Instagram is that they made a product that was just awesome. But that’s good news for you—it means there’s no secret sauce, and the second your product gets to be that awesome, you can see similar results. Just look at Snapchat, which essentially followed the same playbook by innovating in the mobile photo app space, blew up with young people, and skyrocketed to a $3.5‑ billion-dollar valuation with next‑to‑no marketing.

It brings to mind that well-known quote from Ralph Waldo Emerson: “If a man has good corn, or wood, or boards, or pigs, to sell, or can make better chairs or knives, crucibles or church organs, than anybody else, you will find a broad hard-beaten road to his house, though it be in the woods.”

The famous version of the quote of course is, although it is not clear that he actually said it, is: “Build a better mousetrap and the world will beat a path to your door.” As we just saw, if the product is amazing, you don’t have to be that good at marketing it. Contrast this with our usual marketing approach of hustling against the headwind of a broken product—we stand little chance when that is the case.

Some companies like Airbnb and Instagram spend a long time trying new iterations until they achieve what growth hackers call Product Market Fit (PMF); others find it right away.

The end goal is the same, however, and it’s to have the product and its customers in perfect sync with each other. Eric Ries, author of The Lean Startup, explains that the best way to get to Product Market Fit is by starting with a “minimum viable product” and improving it based on feedback—as opposed to what most of us do, which is to try to launch publicly with what we think is our final, perfected product.


As Eric Ries said, “Oftentimes the Minimum Viable Product is simply an experiment that allows customers to sign-up, would you even have to create page 2 where you apologize that the product isn't even available yet?”

Today, it is the marketer’s job as much as anyone else’s to make sure Product Market Fit happens. Your marketing efforts are wasted on a mediocre product—so don’t tolerate mediocrity. OK?

But rather than waiting for it to happen magically or assuming that this is some other department’s job, marketers need to contribute to this process.

THE BEGINNINGS OF ZAPPOS — CASE STUDY

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Take the example of the founder of Zappos, Nick Swinmurn, who before starting the company didn’t know if people would actually buy shoes online. He decided to take it one step at a time. He didn’t actually buy any shoes at the start, he wasn’t fully convinced if his idea is going to work. He decided to test it first and make sure it’s a viable idea.

As he later told the story, “... went to a couple of stores, took some pictures of the shoes, made a website, put them up and told the shoe store, if I sell anything, I'll come here and pay full price. They said okay, knock yourself out. So I did that, made a couple of sales.”

His approach is the opposite of what we usually do. We tell ourselves: “I know it’s going to work.” Often, our very first interaction we have with our customers is usually very far down the road. Which is why it is always great when people are trying to find a shortcut between an idea and some customer interaction. This gives you valuable feedback you can directly incorporate.

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Isolating who your customers are, figuring out their needs, designing a product that will blow their minds—these are marketing decisions, not just development and design choices.

The imperative is clear: stop sitting on your hands and start getting them dirty. Optimizing a product to spread and be well received by customers, by the media, and by influencers is something that you, as a marketer or a growth hacker, are uniquely qualified to do. You are, in effect, the translator who helps bridge the producers and the consumers so they are in alignment.

And this is true whether you’re making some physical gadget, designing a menu, or creating an app. Someone has to be the advocate for the potential market (customers), and the earlier their influence is felt in the process, the better.

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Amazon has actually made this part of their basic procedures. Ian McAllister, general manager at Amazon, calls this approach “working backwards from the customer.” For new initiatives, employees begin by creating an internal press release that announces this new potential project as though it was just finished. It’s addressed to the customers—whoever they happen to be—and explains how this new offering solves their problems in an exciting or compelling way.

If the press release cannot do that, the initiative is tweaked and tweaked and tweaked until it can.

According to McAllister, Amazon encourages product managers to think like Oprah—that is, would she rapturously shout about this product if she were giving it away to her fans as a gift?

The exercise forces the team to focus on exactly what its potential new product is and what’s special about it. I guarantee that someone with a mind that bends toward growth hacking put this policy into place.

No longer content to let the development happen as it happens, we can influence it with input, with rules and guidelines, and with feedback. The growth hacker helps with iterations, advises, and analyzes every facet of the business. In other words, Product Market Fit is a feeling backed with data and information.

As Marc Andreessen put it, "A full executive team with a salesforce and all that stuff before you have a killer product is a complete waste of time."


HOW DO YOU GET PMF?

Because Product Market Fit can be overwhelming as a technical business concept, allow me to explain it by dropping the jargon and presenting an analogy. As it turns out, I was familiar with PMF long before I read Andrew Chen’s famous article.

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Much of the marketing I do is with authors and books. I’ve worked with dozens of bestsellers in the last five years—and, of course, I’ve also worked on many books that weren’t successful. In my experience, the books that tend to flop upon release are those where the author goes into a cave for a year to write it, then hands it off to the publisher for release. They hope for a hit that rarely comes.

On the other hand, I have clients who blog extensively before publishing. They develop their book ideas based on the themes that they naturally gravitate toward but that also get the greatest response from readers. (One client sold a book proposal using a screenshot of Google queries to his site.) They test the ideas they’re writing about in the book on their blog and when they speak in front of groups. They ask readers what they’d like to see in the book. They judge topic ideas by how many comments a given post generates, by how many Facebook “shares” an article gets.

They put potential title and cover ideas up online to test and receive feedback. They look to see what hot topics other influential bloggers are riding and find ways of addressing them in their book.

The latter achieves PMF; the former never does. One is growth hacking; the other, simply guessing.

One is easy for me to market. The other is often a lost cause. One needs only a small shove to get going. The other has a strong headwind every step of the way.

Amazon, for its part, has a couple of other easy suggestions for you if the advice “write a hypothetical press release” doesn’t quite work for your situation. Their CTO, Werner Vogels, suggests trying to write an FAQ for this product you’re developing. (That way you can address, in advance, potential user issues and questions.) Or try to define the crucial parts of the user experience by making mockups of pages, writing hypothetical case studies so you can actually start to see what it would look like and who it would work for and how. Finally, try writing the user manual, which as Werner explains usually has three parts: concepts, how‑to and reference. (Defining these means you understand your idea in and out from the customer’s perspective. Also, he says, if you have more than one type of user then write multiple manuals.)

I love those ideas. They might feel like homework, but they force you to imagine your product from someone’s perspective other than your own. That’s the best way to get to PMF—because ultimately this isn’t about you; it’s about the people you’re trying to turn into customers.

Perhaps you’ll get to PMF with one 'aha' moment like Instagram, or it may be incremental 1 percent improvements. As Marc Andreessen—the entrepreneur behind Netscape, Opsware, and Ning who, in addition to running a major venture capital fund, happens to be on the board of directors for Facebook, eBay, and HP—explains it, companies need to “do whatever is required to get to product/market fit. Including changing out people, rewriting your product, moving into a different market, telling customers no when you don’t want to, telling customers yes when you don’t want to, raising that fourth round of highly dilutive venture capital—whatever is required.”

In other words: everything is now on the table.

APPSUMO CASE STUDY

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Before we move to the next section, let’s look into one more case study. This time it’s how Noah Kagan built AppSumo.

If you are not familiar, AppSumo sells tools which make you better and more productive. This is Noah Kagan’s seven-figure business and he started it with a simple $100 test. Instead of spending tons of money, he knew that reddit.com had an affordable advertising system and he needed to find a product that he could sell. Noah shot an email to Imgur, the photo sharing service, which has a Pro tool, a paid version. Noah emailed his list with a sales pitch of the imgur pro accounts. His thinking and goal was simple: if he could sell 100 of them, he had a valid goal.

And that’s how AppSumo was born.

As he describes the process in his famous post, “Before we started the ad campaign, I set a personal validation goal for 100 sales, which would encourage me to keep going or figure out what was wrong with our model…By the end of the campaign, we had sold more than 200 Imgur pro accounts. AppSumo.com was born.”

When Noah has an idea, he always tests it and validates it as cheaply as possible with real customers. Only then he invests more fully into the idea.

The lesson is clear. Always try to think: How can I as cheaply as possibly experiment with this idea?

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OPEN UP TO FEEDBACK

Part of this new approach is having the humility to accept that marketers are not necessarily the most critical members of the team. It’s true. Sometimes the best thing marketers can do is to not let people get distracted by “marketing” for a minute. Sometimes the outward-­facing part of the job is exactly the least important part.

Take Evernote, a startup that offers productivity and organization software, which made the company-wide decision to delay spending even a penny on marketing for the first several years of its growth.

As Evernote’s founder, Phil Libin, told a group of entrepreneurs in a now-­classic talk, “People [who are] thinking about things other than making the best product, never make the best product.” So Evernote took “marketing” off the table and instead poured that budget into product development. This undoubtedly slowed brand building at first—but it paid off. Why? Because Evernote is far and away the most superior productivity and note-­taking application on the planet. Today, it practically markets itself.


"We just try to pay 100% of the attention to making the best product possible, and we don't really think about what other people are doing. We don't try to look backwards. Phil Libin

Perhaps this is what you need to do. I know you’re probably reading this looking for some immediate tips you can put into action—places you can deploy your budget or resources. But let’s think outside the box— outside the budget—and consider whether improving your product might be the best strategy.

That’s not to say you shouldn’t do anything at all. Evernote still came up with a bunch of clever tricks to get people to see its products while marketing was on their strategic back burner. After hearing customers complain that their bosses were suspicious of employees using their laptops in meetings, the Evernote team produced stickers that said, “I’m not being rude. I’m taking notes in Evernote.” Thus, their most loyal customers were turning into billboards that went from meeting to meeting.

FLESHLIGHT CASE STUDY

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Or, take the cautionary example of Fleshlight, the world’s most successful sex toy (you can read more about here), that needed to pivot to achieve Product-Market Fit.

It was started by Steve Shubin, an L.A. SWAT officer who decided to get into the sex toy business. He developed the world’s most realistic sex doll—totally lifelike, mimicking a real woman in every way and spent significant amount of money. However, after “more than a quarter of a million dollars into the project, not a single mannequin had been sold.” At some point, a friend of his was visiting from out of town and was impressed with what he saw. As the friend was leaving he asked Steve to send him just the genital part. The founder opposed only sending part if his product—he insisted on sending the entire body. The response was not surprising: “Oh, no, no, no. Please don’t do that. I’ve got children,” he said. “I could never bring something like that into my house.”

This is the situation we are trying to avoid. One would hope that this realization would come before the founder would spend quarter of a million dollars.

As the founder recalled, “My gosh, if I can’t give a product away to a friend, how can I ever expect to sell one of these?” He hadn’t bothered to talk to prospective users or put himself in the shoes of a prospective customer. In the end, he pivoted to just the genitals. That became Fleshlight: the best sex toy of all time with hundred of million dollars worth of sales.

You need to think what your customers’ lives are like and what they need. Achieving PMF requires empathy and willingness to open yourself to feedback from existing and prospective customers.

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Once we stop thinking of the products we market as static—that our job as marketers is to simply work with what we’ve got instead of working on and improving what we’ve got—the whole game changes. Now we are not helpless, repeatedly pitching a product to reporters and users that is not resonating. Instead, we use this information to improve the product, with the idea of ultimately refining our idea into something that can in many ways sell itself.

The race has changed. The prize and spoils no longer go to the person who makes it to market first. They go to the person who makes it to Product Market Fit first. Because once you get there, your marketing efforts become like a spark applied to a bed of kindling soaked in kerosene. The old way? It’s striking a match . . . and hoping it starts a fire somewhere.

The point is: marketing as we know it is a waste of time without PMF.

Of course, there are many tools to help get you there.

From Google to Optimizely to KISSmetrics, there are great services that allow you to see what your users are actually doing and responding to on your site. This insight will get you closer to a fit than gut instincts ever will.

WRITING BOOKS — CASE STUDIES IN FINDING PMF

Going back to my experience in book publishing and book marketing that I mentioned, I’ve written four books and they have all started as blog posts. I originally wrote a post on Stoicism on Tim Ferriss’s site, and I’ve written a post on my own site. The book on that topic came out 5 years later in May 2014. But I’ve been writing about the subject online for an extended period of time.

The Growth Hacker Marketing book also started as an article and you can read more about that journey in a separate lecture in this course.

My new book, Ego Is The Enemy, it started as a blog post that I wrote in May 2008 (the book came out in June 2016). That process is the opposite of the myth of authors staying up all night and pouring out their genius. Most book ideas are best developed in collaboration with an audience.

For example, one large part of a book proposal by Tim Ferriss was illustrating how popular one of his blog post was. Tim had all the data to show all the terms bringing people to his website. Based on the interaction with the audience you know what people want.

You can be right accidentally but also you can build something that nobody wants which is very discouraging to a writer or any creative person.

To go back to my own books, for Ego Is The Enemy, several chapters of the book have been tested as articles online and have done very well. I am always asking myself: Is it generating a reaction? Does it stand the test of time?

The Growth Hacker Marketing book first came out only in a digital edition, so before creating the paperback, I went on Amazon where it shows what were the highlighted passages from readers. I would expand the sections people were interested in and highlighting. I was also curious to know what style of writing will get the most reactions.

In summary, if your article or product is not getting a reaction, more marketing is not the answer.

As Eric Ries wrote, “The first step is figuring out the problem that needs to be solved and then developing a minimum viable product (MVP) to begin the process of learning as quickly as possible. Once the MVP is established, a startup can work on tuning the engine. This will involve measurement and learning and must include actionable metrics that can demonstrate cause and effect question.”

To continue with the articles example, I am not looking at them and asking how many pageviews they got. Instead I am asking:

  • Are they getting a reaction?
  • Are they getting comments?
  • Are they standing the test of time? The fact that the articles become perennial pieces it makes them worthy of expanding.

Once you have those answers you also need to be interacting with the audience and ask: How did you find about it? What’s holding you back from referring it to your friends? What’s missing? How can it be better? What was your favorite part?

SIDENOTE: BREAK DOWN WALLS

I want to mention an important lesson here for people who are in existing organizations and are looking to innovate and create new products.

In a lot of organizations there is usually a wall separating the people who make stuff and the people who market stuff. You can get faster to product-market fit with different projects just by tearing down these walls inside organizations.

One of the most important things you can do is to figure out how you can increase the collaboration between the idea people and the marketing team, the more you are thinking, discussing and bridging the gap between how to sell the thing as you are making it, the better off you would be.

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ALWAYS BE QUESTIONING

But the most effective method is simply the Socratic method. We must simply and repeatedly question every assumption. Who is this product for? Why would they use it? Why do I use it?

Ask your customers questions, too: What is it that brought you to this product? What is holding you back from referring other people to it? What’s missing? What’s golden? Don’t ask random people or your friends—be scientific about it. Use tools like SurveyMonkey, Wufoo, Qualaroo, or even Google Docs, which make it very easy to offer surveys to some or all of your customers.

For the first time we can ask these questions because we intend to do something about it. No more privately complaining to friends, coworkers, and spouses that we’re stuck with a product nobody wants.

Not to say that you must use all the data that comes back, but you should have it. The black-­box approach is no longer necessary. Change is possible—which means you need to make yourself available and open to it.

MAKE IT A PRIORITY

I was recently asked after a talk about whose priority PMF should be it for a startup. In fact, Product-Market Fit has to be the entire company’s priority. The CEO has to insist on this more than anyone else. Nothing else exists if PMF is not there—this is why we aim to achieve it before we kickstart our growth engine. It has to be an organizational priority. Occasionally, the products that I’ve worked with that were not successful were the ones that had an artificial deadline that required the team to ship the product and nobody wanted to change and fix the underlying issues and decided to go with the launch anyways.

Once the product is out, the feelIng you get is similar to when you see a movie and you feel that somebody compromised here and there. This is why you need someone in the company that says, “We’re not going to proceed until this is handled. It doesn’t matter that we need to ship it by X, we need to get this other thing first.”

Never forget that you can only launch once. You can only use a lot of your assets that you have—contacts of bloggers, journalists, announcements on different websites—once and you need to use them when you are 100% sure it is the right time. And you should only do it once you have absolutely nailed Product-Market Fit.

SIDENOTE: AND KNOW WHEN TO STOP — THE SUNK COST FALLACY

One of my favorite examples to illustrate this fallacy is when you go to see to the theater to see a movie and you have already bought your ticket but during the movie you realize it is actually terrible. Most people stay because they “paid for it.” But whether you stay or not doesn’t change anything—you’ve already bought the ticket! The question is: Would you continue watching it for free?

This is why it is important while you are building your product and trying to get to PMF to pause and think like this for ideas: “If I start right now, would I continue? If I was a third-party and I haven’t invested my own money, time and energy into this, would I recommend that this project continues?”

And don’t forget that there are real opportunity costs if you decide to stick with the status quo! What else could you be doing with your time and resources?

The cost can be that instead of making new products, you are holding on to old stuff and the marketing team would be struggling and marketing something people don’t want. But if you come up with a new and exciting product, it would more than make up for the losses of a product that is not selling.

For example, in TV, every year they do a lot of pilots for TV shows, but they know that only one might work. They can’t afford to stick to the ones the audience didn’t like.

CONCLUSION

Product Market Fit is not some mythical status that happens accidentally. Companies work for it; they crawl toward it. They’re ready to throw out weeks or months of work because the evidence supports that decision. The services as their customers know them now are fundamentally different from what they were at launch—before they had Product Market Fit.

But once these companies get PMF, they don’t just wait and hope that success will come along on its own. The next step is to bring the customers in.

But why do you need to get to PMF before you do the growth work? As Brian Rothenberg, who grew Eventbrite describes it: “There’s a saying that there are only two phases in a company’s life, pre-product-market fit and post-product-market fit, and I’m a firm believer in that. If you’re pre-product-market fit then, seriously, you don’t want to be focusing on growth. A huge mistake people make all the time is trying to find a magic bullet growth solution that will prove they’re on the right track, but that doesn’t exist. Or if it does, it’s a spam tactic that won’t work for very long and will only do more harm in the long-run.”

You need to ask and make sure you have the answers: Does anybody actually want this product? As well as: What does your product do for people. Is it entertaining? Does it help people in some way? What are offering? What are people paying for?

Rothenberg also gives a great example coming from Sean Ellis who says “you should survey your user base before doing growth work. At least 40% of your users should say they would be very disappointed if your service or product went away overnight.”

As Paul Graham put it: “The best way to increase a startup’s growth rate is to make the product so good people recommend it to their friends.”

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Now, let’s bring the customers in.