Timestamps:
2:11 - Typical pivoting mistakes
5:41 - Finding the right customer
15:32 - Generating your first revenue
18:49 - Maximizing growth
25:19 - Product-market fit
The episode in 60 seconds
Pivoting your business idea to success.
Mistakes to avoid
- Waiting too long to pivot because you have gotten emotionally attached to the solution or somehow locked yourself in too early.
- Iteration cycles which are too long. Building out a finished and polished product for every iteration will make you slow and waste large amounts of resources.
The Startup Pivot Pyramid by 500 Insights
- The Pyramid gives you an idea of how aspects of your product build on each other (customer, problem, solution, tech, growth).
- This helps you understand, for one, which areas you need to define first in order to move up the pyramid, and two, how consequential a potential pivot in one area is for other areas of your business (i.e. a pivot in customers you are addressing is far more consequential than a pivot in the tech stack you are using)
Customers and their problems
- Finding enough customers in a big enough market that have the same problem is always the first problem you’ll want to solve when looking to achieve product-market-fit.
- Talking to potential customers under the pretense of collecting data for a survey can be a subtle entry point to start a conversation.
- Your primary goal in customer conversations should be to evaluate how the problem you are trying to solve for them ranks amongst their other problems and how much they’d be willing to pay for solving it. Ideally, if the problem is big enough, customers will ask about buying your solution once it’s live already at this stage.
- Try to interview 50 to 100 potential customers and narrow down the hypothesis about your customer profile as you go.
- Analyze the results of your conversations based on the $ amount each type of customer is willing to pay to have their problem solved.
- Clarify the 3 whys for your customers in detail: why buy anything, why buy us and why buy now. As for the “why buy now”, it often pays off to have a fix point to create urgency: a product release, a trade show, a board meeting or something else your customer cares about and that encourages them to move the deployment of your product along quickly.
Solution
- Once you think you have an idea of who your customer is and what problems you are solving for them, come up with the simplest version of your product that addresses the most pressing points of the problem.
- You’d be surprised how much can be faked in these early product versions. Don’t worry about having efficient code and well-trained algorithms. Most likely, hardly anyone will be using this first version anyway and you’ll have to rebuild your tech stack anyway as you learn and scale.
Growth
- Today it’s cheap to run growth experiments across different channels, so there is really no excuse not to do it.
- Notice that growth sits at the top of the pyramid. There is really no point in throwing money into growth marketing if you are not certain yet that you have found the problem and solution that really works for your customers.