Action plan: Build a strong thesis and talk to users
The rule of thumb for building a product: 1) You must have a strong thesis—clear winning aspiration and how to win in the market, and 2) you must start small—talk to users and iterate.
In October, we have discussed a lot about product/market fit. How you can build your narrative that will serve as an anchor. This post is a bit of a recap and provide you with a few action item you can consider if you’re building a new product. Have fun.
95% of startups fail
95%. That’s a lot. Recently, we heard about a shutdown for Google Stadia. It was a bet on cloud gaming. Google hopes that users without expensive gaming hardware can easily stream the game. But it missed the point.
Gamers love and already have gaming hardware and consoles: PCs, Xbox, Playstation, and Nintendo Switch. Why would they bother to move to Google Stadia? Moreover, consoles succeed because of their exclusive games: Legend of Zelda, Street Fighter, and God of War. Stadia didn’t have anything to compete.
Stadia also didn’t buy a license from Microsoft because of the cost and chose Linux. The problem is only a few game developers build for Linux—most of them create a game that only runs on Windows. This decision leads to just a few game selections that Stadia can access.
We can learn from this lesson how we approach product development. The Stadia is an example of having a compelling vision but failing to check the market needs and iterate to build an offering that’s compelling enough for gamers wanting to use the product.
It goes hand-to-hand: strong vision and user insight
Here’s a rule of thumb: 1) You must have a strong thesis—clear winning aspiration and how to win in the market, and 2) you must start small—talk to users and iterate.
You can’t build a product with just one of those.
Building products based on requirements is a recipe for disaster. When you build what your boss tells you to build, you’re building based on a vision—which is not entirely a wrong approach. We just need to recognize there’s a risk in that vision. A vision can be proven wrong or right. Google Stadia had a vision, but it failed to understand the market.
Building products based on what users tell you is also a recipe for disaster. While this sounds customer-centric in theory, it can lead to failure. In the 1990s, McDonald launched McLean Deluxe after the executives looked at the pools indicating that nearly 9 out of 10 consumers were willing to try the healthy alternative of low-fat beef. They listen to the customers. The result? McLean Deluxe is considered one of the most expensive flops in McDonald’s history. People go to McDonald's wanting something that tastes good, not healthy.
The balancing act is necessary here. Find that sweet spot.
Action item #1: Build your thesis
If you’re the founders or the product leader, it’s your responsibility to build this thesis. Analyzing the status quo and thinking about what the desired future you seek to make is.
My favorite tool is the Product/Market Fit narrative (Check the whole series about this). It strips down all the noise and focuses on the core elements of the business:
Target audience: Who are you targeting?
Problem to solve: What severe problem do they have?
Value proposition: How’s your solution will add value to their condition?
Differentiation: How’s your product better than existing solutions?
Growth: What channel would you use to grow the user over time?
Monetization: What’s your business model? Is it working?
It’s all hypothesis. Remember that after you write your first narrative, no matter how exciting the idea is for you now. Be intellectually honest and recognize which part you think you’re unsure about the most.
(I realized it might be hard to imagine how to write this for the first time. Later this month, I’ll provide an example of PMF narrative.)
Action item #2: Start small, talk to users, and iterate
Small target audience. Focus on the small group of particular people with a specific job to be done with a severe pain point and served by few or no competitors.
Do things that don’t scale. If you pursue scale too early, you will build a technology and process to support that. No point in doing that before you prove there’s a market that wants your product. At this stage, founders are still figuring out what needs to be built, and the best way to do that is to talk and iterate with the customers. Airbnb founders originally offered to take professional photographs for the renters to make their listings more attractive. Once they see the listing is improved, they build the team and process for that.
Recruit the users. Find people that fit with your target audience profile. Send cold messages to invite them for a 15 or 20 minutes talk. If you want to do research, check the 13 notes on user research. I also highly recommend a book called The Mom Test.
Listen to users' problems, not their ideas. Your customers are the least qualified people in deciding what to build. They don’t have the full context of your broader priority and roadmap. Whenever they give you an idea, ask them what problem that idea solves. Focus on the problems. Differentiate between need (problem) and want (solution).
Qualitative insights + Intuition. You will find yourself in a position where you need to decide without much data because the product is nonexistent, and you can’t get any quantitative data. At this point, lean to qualitative insights—observe users, and go to their natural environment if possible. Capture all the quotes and nuances in a document. Then, decide with some intuition. It’s okay to combine both.