How to Find Product Market Fit – founder of Segment (2017) [video](youtube.com)
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How to Find Product Market Fit – founder of Segment (2017) [video]
https://www.youtube.com/watch?v=_6pl5GG8RQ4
24 comments
Finding an “idea” is a mistake that most startups make. Ideas alone are worthless. The phrase you’re looking for is “finding a need”, preferably the kind you can address and charge a lot of money for solving. This is the hard part that most startups fail spectacularly at.
throwaway84742, you are correct. That is why I said, "thing that customers wanted" and not "idea." Even having the kernel of the idea was insufficient.
Low hanging fruit is everywhere - essentially anything that has not been done yet. All ideas look "low hanging" in retrospect.
Respectfully disagree with _pdp_ here. Many ideas are not low hanging in retrospect. The three pre-internet businesses I cite are obvious needs (trade, oil refining & transportation) and yet had requirements that made them untenable business ventures for people without the specific advantages required by those business models. Government support, a superior position in the supply chain or access to vast amounts of capital provided barriers to entry for potential competitors. Having demonstrated that the second claim is false, I will not address the first claim.
Something that has not been done before is not low hanging fruit. To be sure, it is difficult to know if there are fewer good businesses to be started today, but the economic evidence has been stacking up for 30 some years now. Here are some papers showing the slowdown in productivity and new starts:
- http://www.nber.org/papers/w21974
- https://www.brookings.edu/wp-content/uploads/2016/03/ByrneEt...
- https://www.nytimes.com/2017/09/20/business/economy/startup-...
Part of this is a sclerotic antitrust regulator that has been defanged by lobbyists. Part of it is the internet removing information asymmetries, leading to natural monopolies. Part of it is probably the cheap "bits" businesses crowding out "atoms" investments in VC. Another part is probably that we are simply running out of easy defensible businesses to create. This is ok! People will have to get more creative and humanity will progress more slowly, but from a higher base.
Something that has not been done before is not low hanging fruit. To be sure, it is difficult to know if there are fewer good businesses to be started today, but the economic evidence has been stacking up for 30 some years now. Here are some papers showing the slowdown in productivity and new starts:
- http://www.nber.org/papers/w21974
- https://www.brookings.edu/wp-content/uploads/2016/03/ByrneEt...
- https://www.nytimes.com/2017/09/20/business/economy/startup-...
Part of this is a sclerotic antitrust regulator that has been defanged by lobbyists. Part of it is the internet removing information asymmetries, leading to natural monopolies. Part of it is probably the cheap "bits" businesses crowding out "atoms" investments in VC. Another part is probably that we are simply running out of easy defensible businesses to create. This is ok! People will have to get more creative and humanity will progress more slowly, but from a higher base.
I've been thinking about striking out on my own, having both run a contract software business and worked for a startup recently.
I'm inclined to think that the best way to find fit is to make sure people are willing to _overpay_ you for services. For instance, I have a great deal of expertise when it comes to graphics, and I could probably insist on being overpaid in this realm.
If I could automate what I am overpaid for at scale I might have a business.
I'm inclined to think that the best way to find fit is to make sure people are willing to _overpay_ you for services. For instance, I have a great deal of expertise when it comes to graphics, and I could probably insist on being overpaid in this realm.
If I could automate what I am overpaid for at scale I might have a business.
What does "over pay" here mean? More than what you perceive the value of the product or service to be?
I think the key here is shifting your mindset to see value as percieved by the customer.
Percieved value is actual value.
I think the key here is shifting your mindset to see value as percieved by the customer.
Percieved value is actual value.
As an example the iPod solved an problem people had. As a counter-example the iPhone solved a problem people didn't know they had.
The iPhone solved known problems. It was a phone, It was a media player, It was an Internet browser. People knew the problems, the iPhone was just one of the early convenience focused products on the market.
Easy to say in retrospect, but solving many problems in one device was revolutionary. Earlier PDAs weren't actually that personal which was the tipping point.
What problem do you think iPod solved?
Both of those devices were beneficiaries of Apple's marketing: they weren't first-of-a-kind by any reasonable measure.
best in class user experience != marketing.
I believe every accelerator should show this video. Very helpful!
Everyone should block Segment requests when browsing. If you have EasyPrivacy installed, then you're all set.
Can you elaborate?
Same reason people block google analytics, ad analytics pixels, facebook iframes, etc?
It helps keep more of your data out of the hands of 3rd parties. The website you're actually using will still usually work just fine.
(though as a developer, many of these, including segment, are quite useful...)
It helps keep more of your data out of the hands of 3rd parties. The website you're actually using will still usually work just fine.
(though as a developer, many of these, including segment, are quite useful...)
Seems a bit disingenuous to lump Segment in with ad pixels etc.? We don't use it, but I know of several other SaaS apps who use them to integrate their web app with support tools like Intercom etc. If you block Segment in these cases, sure the web app will work, but the in app chats etc. won't.
True, but segment provides many integrations and the user won't know where that data is getting sent or for what purpose. See the list of advertisers with integrations here: https://segment.com/catalog
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Fantastic video, the best on the topic of pm fit if you ask me.
he's probably very smart and works hard, but is humble about his success, which most people would attribute to the former.
The biggest thing that hits me this go round is that staying alive is key. PG may have said, you burned $500k and have nothing to show for it, but if they had quit then, they would never have made it through the Great Startup Filter(tm) https://en.wikipedia.org/wiki/Great_Filter. The lack of great businesses (90% failure rate) reveals that the hardest part of building a company is starting a company.
In earlier times when there was more low hanging fruit, the hardest part of starting a company was scaling it. You had to have government backing (e.g. East India Company) or sit in an important part of the supply chain (e.g. Standard Oil) or cover really high capital expenditure (e.g. FedEx). Now that it's easier than ever to start a company, the good ideas are mostly already picked, so finding one is harder.
In economics, this called the explore/exploit or multi-armed bandit problem. What is so interesting to me on this viewing is that Peter Reinhardt's unrelenting enthusiasm and self delusion were a feature, not a bug. There is no way they would have stayed in the game long enough to find product market fit without that. Even though the kernel of the idea existed early on, they needed to taste true desperation to humble themselves enough to do the simplest, stupidest thing that customers wanted.