1. Product-Market Fit © 2020 Rick Rasmussen
Plus others with credit

2. the Customer Development Method
Customer
Validation
Customer
Creation
Company
Building
Product
found
A Repeatable
Sustainable
Sales Process
Customer
Discovery
Problem / Solution Product / Market

3. the Customer Development Method
Customer
Validation
Customer
Creation
Company
Building
Product
found
A Repeatable
Sustainable
Sales Process
Customer
Discovery
Problem / Solution Product / Market
SOMEONE IS
WILLING TO
PAY YOU

4. the Customer Development Method
Customer
Validation
Customer
Creation
Company
Building
Product
found
A Repeatable
Sustainable
Sales Process
Customer
Discovery
Problem / Solution Product / Market
SOMEONE IS
WILLING TO
PAY YOU
PRODUCT-
MARKET
FIT

5. PRODUC
T
MARKET
FIT3 SECRETS TO STARTUP
SUCCESS

6. Not just one: three
SECRETS to
STARTUP
SUCCESS

7. SECRET 1:
WHY DO SO MANY STARTUPS DIE?

8. SECRET 1:
WHY DO SO MANY STARTUPS DIE?
SECRET 2:
HOW DO WE CONVINCE PEOPLE THAT WE
HAVE A CHANCE TO BE HUGE?

9. SECRET 1:
WHY DO SO MANY STARTUPS DIE?
SECRET 2:
HOW DO WE CONVINCE PEOPLE THAT WE
HAVE A CHANCE TO BE HUGE?
SECRET 3:
HOW DO WE PICK THE BEST MARKETS?

10. SECRET 1:
WHY DO STARTUPS
DIE?

11. SECRET 1:
WHY DO STARTUPS
DIE?
YOU TELL ME!

12. WHY STARTUPS
DIE
gave up – too

13. WHY STARTUPS
DIE
gave up – too

14. WHY STARTUPS
DIE
went broke

15. WHY STARTUPS
DIE
went broke
😢

16. WHY STARTUPS
DIE
couldn’t build the

17. WHY STARTUPS
DIE
couldn’t build the

18. WHY STARTUPS
DIE

19. WHY STARTUPS
DIE
not enough

20. SECRET 1:
WHAT’S THE #1 REASON
STARTUPS DIE?

21. THEY DON’T GET
CUSTOMERS
THE NUMBER ONE
KILLER OF
STARTUPS

22. “THE #1 COMPANY-
KILLER IS LACK OF
A MARKET.”
-BEN HOROWITZ,

23. “THE #1 COMPANY-
KILLER IS LACK OF
A MARKET.”
-BEN HOROWITZ, There’s just one
mistake that kills
startups – not
making something
users want.
-Paul Graham, YC

24. THEY DON’T ACHIEVE
PRODUCT-MARKET
FIT
THE NUMBER ONE
KILLER OF
STARTUPS

25. GET TO
PRODUCT-MARKET
FIT
HOW DO YOU
PREVENT YOUR
STARTUP FROM
DYING?

26. WHAT IS PRODUCT MARKET
FIT?

27. “Being in a good market
with a product that can
satisfy that market.“
(obsessed with market)-
>
WHAT IS PRODUCT MARKET
FIT?

28. “There are ten people
outside your network
paying for your
product.“
WHAT IS PRODUCT MARKET
FIT?

29. It’s simple:
customers are buying what
you’re selling, as fast as
you can sell it.
WHAT IS PRODUCT MARKET
FIT?

30. It’s simple:
customers are buying
what you’re selling.
WHAT IS PRODUCT MARKET
FIT?

31. NOT
JUST
YOU
R
MOM

33. SECRET 2:
HOW DO WE CONVINCE PEOPLE
WE HAVE A CHANCE TO BE
HUGE?

34. ENTREPRENEURS SPEAK
“PROBLEM”
VENTURE
CAPITALISTS SPEAK
MONEY!

35. SECRET 2:
HOW DO WE CONVINCE PEOPLE
WE HAVE A CHANCE TO BE
HUGE?
ANSWER: A GIGANTIC TAM,
A REALLY BIG SAM, AND A
PRETTY GOOD SOM!

36. HOW BIG SHOULD YOUR MARKET
BE?

37. VCs like businesses that can
scale up to $100M per year in
revenue.
HOW BIG SHOULD YOUR MARKET
BE?

38. VCs like businesses that can
scale up to $100M per year in
revenue.
That means you should
target a TAM of $1 billion or
more.
HOW BIG SHOULD YOUR MARKET
BE?

39. VCs KNOW STARTUPS
NEVER GET THE ENTIRE
MARKET.
That means you WANT A SAM
THAT IS >$100M (or >$1B).
RULE OF THUMB:
HOW BIG SHOULD YOUR MARKET
BE?

40. SECRET
3:
HOW DO WE PICK THE BEST
INITIAL MARKETS?

41. SECRET
3:
HOW DO YOU EAT AN
ELEPHANT?

42. STARTUPS NEED TO
LAUNCH IN SMALL TARGET
MARKETS.

43. STARTUPS NEED TO
LAUNCH IN SMALL TARGET
MARKETS.
YOUR MARKET WILL GET
PROGRESSIVELY BIGGER OVER
THE COURSE OF YOUR COMPANY.

44. EXAMPLE: WHAT
MARKET DID
FACEBOOK START IN?

45. HARVARD
EXAMPLE: WHAT MARKET DID
FACEBOOK START IN?

46. HARVARD ALLCOLLEGES
EXAMPLE: WHAT
MARKET DID
FACEBOOK START IN?

47. HARVARD ALL COLLEGES EVERYONE
EXAMPLE: WHAT
MARKET DID
FACEBOOK START IN?

48. EXAMPLE: WHAT
MARKET DID AMAZON
START IN?

49. EXAMPLE: WHAT MARKET DID
AMAZON START IN?
BOOK
S

50. EXAMPLE: WHAT
MARKET DID AMAZON
START IN?
BOOK
S
MERCHANDISE

51. EXAMPLE: WHAT
MARKET DID AMAZON
START IN?
BOOK
S
MERCHANDISE CLOUD

52. SECRET
3:
HOW DO WE PICK THE
BEST INITIAL
MARKETS?
A CUSTOMER THAT IS BEING
EATEN BY SHARKS (BIG
PAIN)
A MARKET WHERE YOU CAN

53. QUOTE
“When you have an idea for a startup, ask
yourself: who wants this right now?
Who wants this so much that they'll use
it even when it's a crappy version one
made by a two-person startup they've
never heard of?”
- PAUL GRAHAM, YC

54. 3 SECRETS TO
STARTUP SUCCESS
PRODUC
T
MARKET
FIT

55. raise a little capital
experiments
customer development
spending money
slowly
raise a lot of capital
acquire customers fast
clear connection of
spending money to
customer growth
spending money fast!!!!!
before
product market fit
after
product market fit

56. Growth for
Startups
Gustaf Alstromer
Partner Y
Combinator

57. 1. Product Market fit & Retention
2. Growth channels & tactics
3. Making decisions with A/B testing
What I will cover today

58. Product
Lead,
Partne
r

59. Airbnb Growth team 2015

60. Most startups have
nothing

61. “If you build it, they will come”

62. “If you build it, they will come”
“If you build it, they won’t come”

63. “- This idea will not
scale”
- Every MBA in YC

64. Airbnb 2009

67. “Go to New York”
(Talk to your users and
watch them use your
product)

68. Lesson:
Startups take off because
founders make them take off.

69. One way to grow when you are
small:
Doing things that don’t scale

70. Product Market Fit

71. How to use data to
understand If you’ve
made something
people want
Product Market Fit

72. 1. Identify the metric that represent the
value my users get from my product
2. Measure the repeat usage of that metrics
Product Market Fit

73. Measuring product market fit
Company Metric that represent value Ideal frequency
Airbnb Bookings / Stays Annual
Instagram Active users Daily
Gusto Running employee payroll By-weekly/Monthly
Lyft Riders Weekly/Monhtly

74. Now, measure your retention

75. Metric
(in %)
Tim
e

76. Measuring retention. This is a bad
product
0%
25%
50%
75%
100%

77. This is a great product with product market
fit.
0%
25%
50%
75%
100%

78. 30% after 2 months. 21% after 20 months.

79. Doordas
h

80. 80% after 1 month. 30% after 60 months

81. Github

82. Retention is the best
way to determine
product market fit

83. Other (worse) ways to measure PMF
1. Net promoter score - not great
2. Surveys - often biased
3. “How would you feel if you can
no longer use this product”

84. These are not good metrics for PMF
1. Registered users
2. Visitors
3. “Conversion rate”
4. “Customers that aren’t
paying”

85. 1. Start by doing things that don’t scale
2. Measure your retention / PMF
3. Build a culture of experimentation
Growth for Startups - Summary

86. gustaf@ycombinator.co
m
http://twitter.com/gustaf
Thank
you