This article was written by Taylor Wescoatt, one of Seedcamp’s Experts-in-Residence. Follow Taylor on Twitter @twescoatt.
When I became an Expert-in-Residence at Seedcamp, I was asked to drive product thinking deeper into the portfolio. Makes sense, supporting your investments in the Product Market Fit challenge, but product can sometimes be a slippery concept to grasp. “You know it when you see it” or “20 per cent month-on-month growth” are a few ways to tell when you’re “there” with your product, but how do you know if you’re on the right track?
Let’s start with what product means. In all cases, the product is connecting the user to the business. In early-stage companies especially, product “is” the business, since the user’s response is all that really matters in growing your business. Until you’ve got users happy, and doing what you want them to, you may have a product, but you don’t have a business.
Here are a few questions I have learned to ask, or better put, ask that founders ask themselves, to check if they’ve “got” product;
- Do you accurately understand your user’s pain? (aka problem, challenge, need, etc.)
- Are you crystal-clear on the “switch” you are asking users to make?
- Are you actively (and frequently) engaging with your users to validate your ideas?
- Are you measuring real user-value?
Easy to toss out general questions like this, I know, but what if I flesh them out a little bit in order to make them actionable.
- Customer Pain, aka, “the problem”. Describe it concisely, make sure you hear this from your customer unprompted. Not a general “it’s hard to plan a night out” but a very specific step in their journey that is inefficient, frustrating, or unfulfilling, like “there are no up-to-date lists of what’s both happening and accessible on weekend evenings“. Make sure it’s significant so that it’s worth their time and effort to try to overcome it (by switching to your product). Otherwise, you may have a solution looking for a problem.
- The Switch, what makes your product at least 20 per cent better than the overall experience they have now? Inertia is your enemy. Understand and describe this in full context, that is, in the user journey. What specific step, what ‘behaviour’ exactly are you asking them to change. A good product then delivers on this 20 per cent improvement, which must be greater than the cost of the switch. Target this, demonstrate this credibly with your product. Inertia is your enemy.
- Customer Engagement, no shortcuts. There are lots of ways to do this, and you should be doing it *very often*, (at least every two weeks, forever ideally) in multiple forms (at least interviews and prototypes) around your product. You (including the CEO and the developers) should also be doing this *before* you build, to validate your assumptions, test for value to the customer, and experiment with user experience.
- Measuring Real User Value– since only user value creates persistent company value, be clear on the difference between ‘vanity’ metrics (e.g. visits, even first-time purchases) and ones that indicate you are creating lasting value for your users. The kind that they will tell their friends about, the kind that will make them come back again and again. Things like repeat purchases, habitual usage, and referral are good measures here. How do you know they *enjoy* using your product? Why? What is this measurement for your business?
If you are doing these four things, I would say your product thinking is in place. In any given situation, I too would rather be lucky than good, but over the long run, the startups I have seen win it, have won with the latter. Being customer centric will deliver you a massive competitive advantage, and is fundamental to your success.
For a list of all my articles: https://seedcamp.com/eir-product-articles/