The Holy Grail of Customer Development: Product-Market Fit

1. The Holy Grail of Customer Development:
Product-Market Fit
European Innovation Academy
Nice France
July 6, 2016
Mike S. Lee
Digital Entrepreneurship & Enterprise Systems
Viterbi School of Engineering

2. Markets & Customers
2

3. Markets
• TAM or Total Available Market is the combined revenues (or unit sales) of all the
companies in a specific market. Typically, an investor will want to know the TAM in the
US, or North America, and the Rest of the World, and its growth over next five years. You
need to be aware of the “1% of China” market fallacy.
• SAM or Serviceable Available Market is the share of Total Available Market that the
companies providing a specific solution can fulfill. For example, if the Total Available
Market for all shoes in the US is $20 billion a year, the Served Available Market for
companies making running shoes will be a slice of TAM.
• SOM or Serviceable Obtainable Market is the percentage of SAM a particular company
currently serves (or plans to achieve, in the case of projections).
3
-
https://www.caycon.com/blog/2013/10/understanding-market-size-or-demystifying-tam-
sam-and-som/

4. Target Markets vs. Customer
• Target Market is a more broad group of potential customers defined by
ranges. For example, for your business, a target market might be ages 18
to 34, or a certain income bracket.
• Target Customer is the person you've identified as most likely to
purchase your products.
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- CHRON and Entrepreneur.com

5. Problem / Early Adopters
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Real Customers
Landing Page
Awareness & Following

6. 6
RECAP

7. Problem / Early Adopters
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8. Offer – at end of Product Solution Fit
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“Food delivered to
your seats so you
wont miss a
second of the
game”
Script
$2

9. 9
Problem, Customer Segment, Early Adopters, Existing Alt
High Young Adult
Unemployment Rate
Customers
- Hospitality Cos in
Nice
Users
- EIA Students
Customers
- Companies
Users
- Young Adults

10. 10
Added Unique Value Proposition and Solution
“Get hired in 60 days”

11. Real Customers
11

12. 12

13. 13
Then he said…
What do you think I did after that?

14. I kicked him out of class
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15. 15

16. 16

17. 17

18. 18
TODAY & TOMORROW

19. “A minimum viable product (MVP) is a
product with just enough features to
gather validated learning about the
product and its continued development.”
– Eric Reis
19

20. MVP technique What is it
In-person Interviews Talk to people to learn about them and their problems
Landing Page / Adwords Use a product description to test actions from lots of people
Mockup / Wireframe Paper or digital non-functioning iterations to test reactions
“Parasite” Ride on top of an existing network to speed up data collection
Concierge People do work of a not yet built system
Video Show what it’s like to use it
Crowdfund Sell the idea and a promise to deliver
Prototype Actually build a basic version
All Talk to people to learn about them and their problems
All Use a product description to test actions from lots of people
- Paul Orlando

21. MVP technique What can go wrong
In-person Interviews Delays, Bad interviewers, Wrong interviewees, Can’t find interviewees
Landing Page / Adwords Don’t know what to measure, distribution
Mockup / Wireframe Disbelief, No data collection, Becomes design and feature focused
“Parasite” Disbelief
Concierge Can’t actually build it
Video Cost distribution
Crowdfund Can’t meet funding objectives. Unable to deliver on promises.
Prototype Time, cost, can’t build it
All Can’t get enough people (or the right people) involved
All No real hypothesis
- Paul Orlando

22. Landing Page
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25. 25

26. 26
PROD DEV
??
Week 1
Week 2
Week 3
Week 4
Week 5
Week 6
Week 7
Week 8
Week 9
Week 10
Week 11
Week 12
Week 13
Week 14
Week 15

27. 27
Then he said…
What do you think I did after that?

28. I digitally kicked him out of class
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29. 29

30. 30

31. 31

32. 32
All without a functional built product
2k+ followers in less than a month
100s of Sherpas

33. 33
PROD DEV
??
Week 1
Week 2
Week 3
Week 4
Week 5
Week 6
Week 7
Week 8
Week 9
Week 10
Week 11
Week 12
Week 13
Week 14
Week 15
BUSINESS
$$
TRACTION
100s of Sherpas
2000+ followers less than one month
23 calls
30 partnership sales with Chinese firm

34. 34

35. Awareness & Following
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43. 43

44. Additional Tools
• Market Data: Statista
– Basic (free account)
• Landing Page: Unbounce.com (30 day trial)
– http://try.unbounce.com
• Social Media Management: Hootsuite Pro (3 months free)
– See your email or ask one of your teammates
• Content Research: BuzzSumo (14 day trial)
– http://buzzsumo.com
• Google Analytics
• Mailchimp
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45. Additional Channels
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• SEO & PPC
• Opt-In Email Lists
• Authoring Books/Print Media
• Supporting/Sponsoring Events
• Press & Public Relations
• Thought Leadership
• Community Building
• Influencer Outreach
• Blogging
• Public Speaking
• Earned Social Media
• Word of Mouth & Viral
Marketing
• Content Creation & Marketing
• Organic App Store Visibility
• Video Content
• Crowdfunding
Source: Rand Fishkin/Moz.com

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46
Questions