All posts by Mukund Mohan

My discipline will beat your intellect
Entrepreneurship, Learning, Tips

What makes a product “fit” a market? Or how to achieve product-market fit?

5 Comments

A relatively young term in an entrepreneur’s vocabulary is “product-market fit” (PMF). Attributed to Marc Andreessen in 2009, this term, has a relatively simple meaning but one that’s hard to really get a sense of:

Product/market fit means being in a good market with a product that can satisfy that market.

If you go after an awesome market – growing fast, has excellent demand and a great growth curve, then you’ve got 90% product-market fit, even though technically 50% of the challenge in any startup is coming up with a good product.

Lets assume you are going after a great market.

How do you know its a great market? Besides the fact that its large (obvious) the speed of adoption is tremendous.

What then makes a product “fit” a market?

First there are 3 important assumptions I make:

1. The best team does not necessarily create the best product.

2. The best product does not necessarily win in the market.

3. It is rare for startups or entrepreneurs to create markets.

A product “fits” a market when

1. Your metrics for adoption of your product exceed adoption of all your “competitors” combined (Instagram had more downloads in 1 week than other competitors did in 6 months)

2. There are so many missing features in your product but its still being sought after (HotorNot had no other features except an upvote and downvote)

3. The problem you solve for the user is such a big one that they are willing to forgive the lack of “nice to have” capabilities (during its early days, Twitter kept crashing daily)

The first point (metric) answers the question – What should I measure to know when I have achieved PMF?

The second point (features) answers – How can I tell?

The third point is the most important. To know about problems that are painful and large there’s one thing you need to learn:

Learn how to ask the right questions.

—–

Relevant links that I would highly recommend you read:

1. Jeff Bussgang on why early in the product cycle entrepreneurs should be hunch and not data driven.

2. Andrew Chen on “When” has a product-market fit been achieved?

3. Ash Maurya on the 3 stages of a startup and why problem-solution fit comes before product-market fit

4. Patrick’s perspectives on steps to product-market fit.

P.S. Thanks to my good friend Dorai who asked me to write about this.

Learning

Learn how to learn

1 Comment

Christopher Lochhead was the CMO at Mercury Interactive during its renaissance. He’s the best speaker I have ever worked with. Period. He taught me more about marketing and speaking than anyone else I have ever known, read or worked with (yes, that includes Seth Godin). He had many one-liners that he would illustrate with examples that would drive home the point with humor. Being with him in a meeting (just one-one) would be like being in a surround-sound experience at a PVR.

There’s one thing that he said that I want to highlight. It was about experience and learning.

“50% of what you know, will be useless & invalid in 6 months”.

The point he was making was about experience & learning.

This plays in my mind daily. In every way possible. From the mundane to the arcane.

Examples (from the useless to the useful):

1. I thought I figured out the best way to get from home to work via a bunch of shortcuts and learned the right bus to catch at the right time, and change buses at the right stops. Bangalore traffic police though, have other intentions. Every road that was a one way is now a one way in the other direction. So much for “optimal way to get from point A to point B”.

2. Facebook advertising was simple until a few months ago when they introduced precise targeting. Now there are over 200 providers offering 2-3 day courses on facebook advertising and marketing.

I can give a lot more examples, but take anything you know and expect that you will not need to know it in a very short period. Since it will evolve, change and morph or more likely go away. Begs the question – why should I even learn it? And the answer is “it will teach you to learn”.

I believe there are 2 “kinds of learning” – that which is from first principles which gives you a lens or framework to learn anything new and that which is temporal in nature.

The temporal most likely is the one that pays the bills. Knowing a new language, like Ruby or Clojure will likely fall into this category. Learning how to learn a new language, though, falls into the former category.

What I have figured out is “I does not matter how much I know”.

I am constantly humbled daily by having no clue about something that I think I should know.

On the flip side, the only thing my experience has taught me is that if I learn with the intention to share / teach, its a lot more fun.

Other

Fund raising – is it a game of chess or poker?

7 Comments

I have always operated under the assumption that being open and transparent is good for me. It reduces unnecessary clarifications and confusion at a later day. As I have more experience dealing with investors now, I understand the shades of grey that exist in the startup world. This post is based on my experiences of raising funds from institutional funds and is valid for those entrepreneurs who wish to raise money from a VC or an angel network.

Most technology entrepreneurs would know chess, but many may not know poker. Both games are largely strategy driven and there’s relatively more luck involved in poker than chess.

When it comes to fund raising is it more like a game of chess – your opponent can see all your pieces and is aware of your moves but not your strategy OR is it more like poker –  the winner is determined by the ranks and combinations of their cards, some of which remain hidden until the end of the game.

Lets focus just on the initial rounds of funding (after series B, fundraising is more like craps :).

At the friends and family round, it does not matter which game it is more like. Since your F&F are betting on you, they don’t like to play regular games, only mind games – “I was saving this money for your sister’s / niece’s wedding, but since you are starting a business, I know  you will return the money many-fold in 2 years”. (Cue: forced laughter, but quickly realize this is true).

At the seed round (lets say this stage comes after the F&F round), most entrepreneurs are going to angels, angel networks or venture capitalists (those who invest in seed stage). With most individual angels the game is boring. They either like you & your space and invest or not.

With angel networks and VC’s, it gets interesting.

There are very few investors who you are going to play chess with. The large majority are keenly aware that the game is one of poker.

Industry executives and analysts often mistakenly talk about strategy as if it were some kind of chess match. But in chess, you have just two opponents, each with identical resources, and with luck playing a minimal role. The real world is much more like a poker game, with multiple players trying to make the best of whatever hand fortune has dealt them. In our industry, Bill Gates owns the table until someone proves otherwise. ~ David Moschella

Am I suggesting you hide information from your potential investors? That might be what you take away from this post, but that’s not what I am implying.

Most investors will tell you they like transparency, but it only applies to you (there are some exceptions to the rule, and Shekhar Kirani & other Accel folks are ones that comes to mind as upfront folks) and your data. They need not disclose the other 4 investments they are considering in the same space, nor that they are merely kicking the tires with no real intent to invest in this area.

So what are the things you need not disclose upfront:

1. Who are the other investors you are talking to? This needs to be treated as your confidential, proprietary information.

2. What are the criteria you would chose an investment from them versus other competing firms? You can put a wish list, but its really not going to change things much.

3. What stage are you at in your fund-raising process? Have to talked to many folks or a few? Do you have term sheets from anyone else? This is largely for these investors to understand the “level of competition” for this deal. I would not advice you share this information with them.

P.S. As with any game, (s)he who cheats is asking for trouble. They may win a round or two, but in the small world of startups, everyone knows who the cheats and unethical folks are. So, don’t lie and certainly don’t withhold any material information such as customer losses, co-founder issues, etc. You will open yourself up for unnecessary legal trouble if you don’t disclose those.

Be a force of good.

Entrepreneurship, Focus

May you be blessed enough to make a thousand mistakes once, not one mistake a thousand times

3 Comments

I have a good friend (lets call him Bob) who worked at a Fortune 50 IT technology company for 21 years. After reaching the top of his organization (partnerships), he then left, for a startup to head up their partnership and business development efforts. He was their first “suit” / “business guy”. The startup was funded by a very well known venture firm in Sand Hill, had 21 people (mostly engineers, product managers and the like) and a hot product in the networking (infrastructure) space. The interview and courting lasted many months, so he was confident he made the right choice.

He could not have been more excited during the first week at work. There was creative energy and fresh thinking daily, new and yet unsolved problems that had no obvious solutions and he felt he was finally “learning again”.

In in the 2nd week the cofounders and he had a catch-up lunch, when they told him “they needed to go another direction and his position was to be eliminated” and they’d like him to leave. No other reason was given, but just that they were not ready for a BD person at this time, since the company was going to pursue another route.

I recall him telling me over lunch a few weeks later, when he mentioned that he was not totally shocked, but it surprised him for sure. We did some Monday-morning quarterbacking and figured it must have been either his inability to fit into their “culture”, which was very developer-centric or his relatively higher salary.

A few years went by and he continued to be friends with the co-founders and met one of them for a catch-up lunch.

The conversation was enlightening for sure. The co-founder was more candid and particularly said “most of the engineers said the amount and breadth of experience that my friend possessed was narrow and limiting”. Which shocked Bob, since he had really “21 years of experience”. He had dealt with all types of ISV‘s – small and large, had experience with all the system integrators, from consultants to outsourcers and had connections at every level.

The cofounder then said “Yes, but you did practically the same thing for 21 years, not 21 different things in a year”, which skewed your thinking to solving every problem literally the same way.

Bob was shocked for sure, but he took it in stride and in the meanwhile had started his own BD consulting company, helping many startups navigate the large ecosystem of partners.

Over the next 2 years of his consulting he claimed to learn a lot more than he had in his 20+ years at the F50.

What did he learn that he did not know before?

“I found more ways I could be wrong and more mistakes I made daily” he said. “With a large brand name on my business card, those mistakes were largely ignored. They were a lot more magnified when you are dealing with others who now have that large brand name on their business card.”

Entrepreneurship, Marketing

The perfect startup team: Asterix and Obelix

7 Comments

Asterix vs. Caesar

As a child (and even now) I was a huge fan of Asterix and Obelix. I would spend hours reading and re-reading Asterix and son and imagine what it would really be like if I had special magic powers. The possibilities were endless.The names were funny. The fights were amazing. The adventures were awesome.

I did believe for the longest time that the Silicon valley folklore of “Two guys and a dog startup” came from Asterix and Obelix.

On a more serious note, I think there are 3 amazing things about them that make them the perfect startup co-founders.

1. They really respect and enjoy each others company. You can see it in every book and episode. Obelix is the one everyone makes fun of (since as we know he fell into a cauldron when he was a kid) but he’s also the most dependable. They each have their quirks (Obelix loves boars and Asterix, is just nuts for most parts).

2. They compliment each other amazingly well. One is a superhuman (magically gifted) and another learns (or drinks magic portion) his way into super-power. Asterix is supposedly the smarter of the two, but Obelix shows his smarts (Corsica, Spain).

3. They are both focused. I love this the most. They do fight (like most people do) but they know the real enemies are always the Romans. Most episodes do have some fight between the two, that brews for a few pages or panels, but put them in front of a common enemy and they are back to being old friends again.

If you are a startup team, I’d highly recommend you read a few of their comics and keep a few in your office. Things always get tough in small startups and when the going gets tough, the tough laugh it off.

If you have read any of the comics, which one is your favorite?

Marketing, SaaS, Tips

Dont remind me that I am “stup*d”. I know that already. SaaS Application User Experience

4 Comments

I had a teacher in 6th grade who disliked me. Not sure why. He was both our class teacher and taught us English literature. I was the new kid in town and new to the school and (worse) I was from Bombay (Mumbai to you younger folks). That automatically meant my Hindi was way better than my English.

He’d point out every mistake I’d make in front of the entire class for the first few weeks. Grammatical errors, misplaced pronouns, adjective modifiers, were all mentioned in every essay, every book report and composition for everyone in the class to mock. Seemed to me he liked picking on me. In fact since this was the ’80’s even calling my “stup*d” was par for the course.

What’s he got to do with SaaS applications?

Many of the applications I use are like that teacher. I hate them. I have to use them, but I hate using them.

I make mistakes. Every user makes mistakes. As humans we are all prone to making mistakes.

Your application does not have to make me feel stup*d each time I make a mistake. We all have significant others who perform that role very well thank you.

Your application has to help me recover from that error. 

Let me give you an example:

I was trying to setup an account with a new SaaS app.

Username, password (twice) and 3 seconds later:

“That username is taken already” in BOLD RED.

10 seconds later, new user name, password (twice again) and again:

“That username is taken already” in SCREAMING BOLD RED.

15 seconds later, new user name, password (twice) and:

“Your passwords dont match” in BLOOD (mine) RED.

I gave up with the signup.

What you could do?

1. Give me username suggestions that you believe dont exist in your database already.

2. Check after I have typed the password the first time and give me some responsive feedback before I submit the 2nd time so you can see if the passwords match.

3. Use my email address as a user name.

But dont remind me that I am “stup*d”. I know that  already.

P.S. That teacher from the 6th grade. Turned out to be my champion by 8th. The trick – my mom’s bisi bele bath. Two days a month I’d get mom to cook rich, flavorful and finger-licking BBB and suddenly he was my “protector”. The way to a man’s heart is absolutely through his stomach.

Marketing, Sales

A new trend in pricing pages at SaaS applications

4 Comments

<Wordpress has eaten up 4 versions of this post, so I am removing all images and only providing links, apologies>.

The pricing and signup page of any SaaS application is the most critical part, which is the main reason companies spend weeks and months, A/B testing and validating pricing, options and packages.

A new trend I have noticed in 2 particular websites – Highrise and GetBallPark is something very different from most websites.

If you did not go to the links above and notice the change – they have put their highest priced offering on the left and the least priced offering on the right.

This was counterintuitive to me at first, since “everyone else” does the exact opposite. Progressively expensive options should go from left to right.

Most website heatmap track research suggests users read from top to bottom and left to right. So, I guess there are higher chances of getting someone to sign up for your highest priced offering if you put it on the left.

Any other reason others might think of designing the price offerings the “opposite” way?

Entrepreneurship

Great convocation speeches (graduation speeches) to read again and again

1 Comment

I was trying to collect great convocation / graduation speeches so I could share it with my daughter. Here are the 5 best I have read so far.

Don’t work. Be hated. Love someone.

Steve Jobs with Be hungry. Be foolish.

J K Rowling and the fringe benefits of failure and the importance of imagination.

Bill Gates and improving your odds doesn’t guarantee success.

Larry Page and finding a path to make your dreams real.

Entrepreneurship

Usage matters more than distribution; Or why every startup will start to hire “psychology majors”

The usual challenges that entrepreneurs face with a new idea is first the execution of the idea itself. I.e. come up with a product / service that solves a problem or does something new and different.

Then the problems of gaining customers (or users) becomes top of mind. “How do I increase awareness of our product?” is the irst big question. Which is why most potential investors ask questions around “marketing & distribution” model, which primarily is a way to find out how are customers going to a) find out about and b) gain access to the product.

Awareness is still a large challenge for most companies, but digital marketing (SEO, paid search, facebook advertising, etc.) helps solve that problem for most startups in a way that can scale.

For companies who target audiences who are not primarily on the Internet (which is rare, but still those audiences do exist) their options are still old school (newspaper ads, radio, etc.)

Distribution typically becomes the next challenge after awareness. Now that people are made aware of your product, how do they consume it? Channels help solve the problem in some ways. E.g. If you are building a smartphone application, app stores are a great way to ensure your customer’s can access the product via the store. Now the only challenge is back to awareness, which can be solved by the mechanisms mentioned before.

The new age challenge though is all about usage or “customer engagement”. Assuming awareness and distribution are solved, the problem is purely one of getting people to use your product.

Which is why with most new products the selling starts after the sale is done.

After a customer buys and downloads or signs up for your product, you have to get them to use it. Which although is within your control, is a huge issue. Why?

Primarily because there are way too many things competing for the users attention.

The best ways companies have solved this “usage and engagement” problem is to focus on answering the question – how can I make the product a natural fit into the users “habit loop” – which is cue, routine, reward.

I think going into the future every startup will start to have a psychology or human sciences major to understand how to deeply ingrain their product into users natural habits.