From Entrepreneur to Product-Market Fit

Entrepreneur since the age of 19, I stopped my studies at 21 to devote myself to my passion. I’ve been launching startups for 7 years now. As a product entrepreneur, I execute on the following aspects of the business: Vision, Product strategy, UX design, customer support, and sales.

By launching a startup I mean the following steps:

- Idea and vision
- Market analysis (historical, talk to prospect)
- MVP development and design
- Launch, sales, and iteration

In seven years I launched four startups. I learned a lot by failing the first three. Failing = businesses that don’t reach profitability. The number one goal of any business let’s never forget it ;) For more context, the startups launched with my respective co-founders are the following:

Nice to Mate You

• Real Estate (web app)
• Marketplace
• B2C
• Product Market Fit: No
• Status: dead

Passing the first two selection steps of Y-Combinator W16

Go Away

• Chrome extension against spam (web app)
• SAAS
• B2B
• Product Market Fit: No
• Status: dead

Catalog Studio

• Shopify app for e-commerce product catalog (web app)
• SAAS
• B2B
• Product Market Fit: No
• Status: dead

Scribe

• Email signature made Smart & Sexy (web app)
• SAAS
• B2B
• Product Market Fit: Yes
• Status: Live and profitable

Today, I will share some of these experiences with you. In this article, I will only talk about the phase 0 to product-market fit of a business since it is the one I have experienced the most. The objective is to help you answer the following questions:

1. Entrepreneur?
2. Startup vs. IndieMaker?
3. Framework to help you validate the potential of a business idea.

Disclaimer :

If you have never launched a business and executed it by yourself, this article or any content on this topic will not be very useful. You have to confront your ideas and the interpretations of your different readings to reality through execution. There is a huge gap between ideas and their realization. Between what you think you understood and the reality. It’s like love. The cultural contents of these last millennia speak about the amorous adventure in all its forms and yet it is only when it happens to us that we understand it. You are suddenly able to associate your own feelings with the experience, which continues to be built up over the course of adventures.

Read this article, criticize it, question it, select only the information that seems relevant to you in relation to your past experiences. Nourish yourself and don’t forget to test. There are as many entrepreneurs as there are human beings. Always try to cultivate the uniqueness of your personality. If you can’t find a role model that suits you, be the first to become one. If you are an entrepreneur at heart, be patient. You have all your life to become who you are. Your experiences are a long, endless learning curve, not an isolated set of silos. Knowing how to connect their different learnings like a modern-day Leonardo Da Vinci is what will allow you to find yourself at the intersection of the secrets of man and the secrets of nature that have yet to be discovered.

One more thing. Let’s not forget that throughout this adventure, the only competition worth watching is ourselves ;)

Have a good read

Entrepreneur?

“Life is sacrifice and risk-taking, and nothing that doesn’t entail some moderate amount of the former, under the constraint of satisfying the latter, is close to what we can call life. If you do not undertake a risk of real harm, reparable or even potentially irreparable, from an adventure, it is not at an adventure…Scars signal skin in the game”

Nassim Nicholas Taleb — Skin in the Game

The sacralization of time

Every business consists of three key elements: Money + People + Time

• Money: the cash flow available to pay your fixed costs and finance your business growth.
• People: the talents available on the market to help you develop your business.
• Time: Factor inherent to the human condition that constitutes the time available to execute the development of your business until the validation of its product-market fit. Or the time available between your treasury, with which you buy the time needed to find your product-market fit, and the date of its death.

Of these three components, time is the only variable you cannot re-create. It is the variable that has the most value. Every time you make a decision, ask yourself the question: What is the time cost of this action? How can I optimize my time success equation within the system I’m in?

The time cost is even more important in the 0 to PMF phase since you are not yet generating revenue. Every moment that passes brings you closer to your death date.

As a reminder, the stages of business development are as follows:

1. Product Market Fit
2. Stacking the Odds or preparation of the growth machine
3. Scale and growth

Note that the time ratio of phases 2 and 3 are completely different from phase 1. As mentioned in the introduction we will only discuss phase 1 in this article.

The mad scientist

“You will never fully convince someone that he is wrong; only reality can. Actually, to be precise, reality doesn’t care about winning the argument; survival is what matter. “

Nassim Nicholas Taleb — Skin in the Game

In the phase from 0 to product-market fit, an entrepreneur is like a mad scientist. You are in a laboratory testing many different hypotheses that will give you the magic formula of the PMF potion. Once you find it you can then automate its production and distribution like a pharmaceutical company that markets a drug after validation by an agency such as the FDA. Its own PMF validation phase, so to speak.

As you can see in the first step of the diagram below, like a scientist in his laboratory the understanding of the market reaction to your value proposition is done through manual experimentation. “Things that don’t scale” There is no point in trying to scale and automate processes that you don’t understand.

To find the answer to a problem and then validate it by his peers, the scientist will have to go through a rigorous process of experimentation. Every great scientist knows Socrates’ maxim which varies but is something like “the greatest sage knows that he does not know”. Starting from this statement, following his instinct added to the knowledge of his previous experiments, he will then start by writing a list of hypotheses that ask questions about different problems. He will then confront these different hypotheses with reality through tests. Or “Skin in the game” would say Nassim Nicholas Taleb in his book from the same name.

The results or data generated by these tests will then be meticulously collected and analyzed. The scientist knows that the success of his quest for the magic potion lies in the number of hypotheses tested and analyzed rather than in the endless meetings and talking of the anonymous ego club for wannabe.

You will need to adopt the mad scientist approach to find your product-market fit. It should be noted that not all mad scientist entrepreneurs have the personality to become CEOs once their business goes from the startup phase to a stable company with several hundred employees. Some will get bored in a bigger structure and will miss the piracy of the early days. The most talented entrepreneurs know how to recognize which category they belong to and when they have to start looking for a CEO to take this position. Richard Branson is a good example of this.

Focus or die

The Focus is the Chief Operation Officer of Time. This is the vital element that helps you avoid reaching the death date of your business. The focus in a pre PMF startup is very simple since it is the setting in motion of your execution around two variables: the product and the customers. Any other investment of time is unfocused and therefore an inevitable death.

The problem with unfocus is that it is vicious, by the time you realize it is already too late. If you don’t discipline yourself to recognize it when it appears unfocus is unconscious at first. It does not consist of a particular moment that would be easily identifiable to be avoided. On the contrary, it is rather a multitude of little bits of time that cumulatively take you out of the race. In a society where our attention is constantly solicited, those who master the focus create one of the greatest comparative advantage.

Being able to say No is one of the most effective weapons against unfocus. Knowing how to say no to the most beautiful ideas and be delighted about the death of one of them is a strength underestimated in entrepreneurship. I’m not talking about choices where the No is easy and does not imply any counterpart, sacrifice, or risk. Paradoxically, choices where No seems the hardest are those where the output is the greatest and diffuse over time. Steve Jobs sums up this paradox well when he said:

“People think focus means saying yes to the thing you’ve got to focus on. But that’s not what it means at all. It means saying no to the hundred other good ideas that there are. You have to pick carefully. I’m actually as proud of the things we haven’t done as the things I have done. Innovation is saying “no” to 1,000 things.” Steve Jobs

Imagine yourself in possession of Apple’s human and financial resources. Among a plethora of projects that seem to be as brilliant as each other, you have to choose the only one that will become the iPhone. Saying no in this situation is extremely difficult since each project you say no to can cost you billions. Consider that the same phenomenon is proportional at your scale.

This “No” is one of the mistakes of my entrepreneurial adventures that cost me the most. This underlying aspect of the focus took me a long time to understand through practice. And yet I find that I am still not radical enough on the topic.

Examples of unfocus

There are several types of unfocus. The accumulation of features in a product is one of them. As Sam Altman puts it so well:

“Do less thing. Do a few things really really really well.”

If we take the example of Scribe the cores feature of our product are the following:

For a user to reach his “aha moment” and become a paying customer, each of these features must together deliver the best experience. After talking to many of our users we know that their decision process to become a paying customer is made up of these four points.

• Is Scribe compatible with my email provider?
• Does the signature creation tool allow me to recreate the branding of my company while going even further in the existing one? This as quickly and simply as possible without having any coding or design skills.
• Do I have flexibility in the process of installing signatures within my organization as well as managing my co-workers? Can I deploy changes across my company quickly?
• Can I customize my signatures by department and have a customized marketing message?

To get Scribe’s PMF you need to create an incredibly simple and frictionless user experience for each of these features. This takes time. To reach this level you have to keep reworking these features over and over again. In the case of Scribe we know that there is still a long way to go even if the product already has good foundations.

As can be seen in the diagram below, the classic mistake is to lose focus by adding extra features rather than focusing on mastering the foundation.

The right focus would look like this:

Your time resource is therefore dedicated to several improvement cycles for each feature. Each feature is itself made up of several use-cases whose ins and outs take time to be understood as a whole. In the 0 to PMF phase, the ROI of “adding” is always lower than the ROI of “improving”.

Your focus is simple as it is to create an execution loop which consists of :

1. Talking to your customers and selling them your offer in order to better understand their needs and market expectations.
   2. Translating these learnings into your product.
   3. Measure and analyze the results of your different iterations by seeing if your turnover increases.

At Scribe we have structured step 1 around internal and external customer feedback:

Internal feedback to Scribe

• Our chat on the platform

It allows us to collect feedback about product usage to quickly see the friction within the different steps of our funnel.

• Our product roadmap

It is public, accessible by our customers and prospects. The community can vote or post a feature request according to their needs. This allows us to prioritize our product development and thus have a positive ROI of our time input. It also has the advantage of federating a community that feels listened to and forces our team to be accountable since we are publicly committed to deliver.

• The data from our analytics on the conversion of our users within our funnel AARRR

During the 0 to PMF phase, it is used very little because the volume of data is too small, making it difficult to extrapolate or draw correct conclusions. Qualitative data, i.e. talking to your users, is more important at this stage of your business.

External feedback to Scribe

• Cold emailing campaigns

If the final goal of every sales campaign is to sign new customers, during the phase from 0 to PMF they are also very useful to test a wide range of hypotheses to find your ICP

The mail being the cheapest and most accessible acquisition channel at the beginning why deprive yourself of using it. This method can be used even if you don’t yet have a product to sell. If you send 100 emails with the value proposition of your business idea to people who seem to be the right target and you get positive feedback you are on the right track.

In the case of Scribe our emails ask questions and are not intended for immediate sale. For example, our campaigns test hypotheses around the following data points:

• Email provider used (G-Suite, Outlook) Do mailboxes using G-Suite convert more easily to Scribe’s value proposition compared to those using Outlook?
• Number of employees
• Country
• Industry
• Targeted profile (marketing director, sales, HR etc …)
• Revenue

The number of data points and hypotheses to be tested is endless and most of the time answers are in the details. The success or failure of these tests does not matter. It’s the learning that comes out of it that should excite you the most. Understand your market and these needs a little bit more every day. Discovering what no one has found before. This what all the fun is about. The crazier or more irrational the assumptions you test, the more interesting they are. Too many entrepreneurs and teams stay on the surface and don’t get to the bottom of the problem. Either because they think that the goal of the game is to always be right and therefore the ego is in the game which blocks the research and iteration. Or because getting to the bottom of a problem requires a lot of resilience, patience, and humility facing the fact that 95% of tests will not work. But the remaining 5% will allow you to reach your product-market fit.

“What if?”

What if for every decision you took 10 seconds more to question your choice, take a step back and ask yourself, “What if I do A instead of B? What would be the result? If you get into the habit of taking those 10 seconds for each decision, in the long run, the compound effect is huge and trains your brain to create that automatism. If you have to choose between continuously testing dozens of hypotheses vs. making quick decisions, choose the first one. Often people confuse the two.

“When you walk with purpose, you collide with destiny” said Tony Hsieh. Part of the purpose he mentions is the obsession of your curiosity to ask questions, to search, to test, and never stop learning. Actually, there is no end. You never find. We find by steps but each step opens new doors that lead to ever larger rooms.

Elon Musk was not an SEO expert before launching Zip2, an online payment expert before launching Paypal, an electric car and aerospace expert before launching Tesla and Space X. On the other hand, he is an entrepreneur who becomes an expert in every new subject he is passionate about.

Startup vs IndieMaker ?

Facebook vs Basecamp

It is important to know the rules of the business game you are going to play. This will allow you to know what to say no to. There are two major games — business startups and IndieMaker business. These two types of businesses differ in their financing model and their relationship with growth.

Startup

Example: Early days Facebook

“A startup is an organization formed to search for a repeatable and scalable business model. A startup is a company designed to grow fast. The only essential thing is growth. Everything else we associate with startups follows from growth. “ Steve Blank

To reach such a size and dominance in a market, a startup must, at a certain stage of its development, call on external capital, traditionally via VCs. In order to be profitable with its own investors (LPs) and to cover the financial losses of a high mortality rate among start-ups (1/10), a VC aims at a minimum ROI often 10 times its initial investment. The buyout or IPO by a startup of its portfolio is therefore inevitable. If a startup meets its product-market fit then it takes an average of 5 to 10 years for a buyout or IPO. It is therefore a game that involves a certain choice of life and a commitment to many external collaborators.

IndieMaker

Example: Basecamp

An IndieMaker business is usually based on a bootstrap financing model. Which is characterized by the self-financing of the business through its revenues. More and more startups are starting to boost their business but always end up raising funds if they meet their PMF. On the contrary, a boostrap business deliberately chooses not to call upon external capital funds to remain independent and not be forced to pursue an endless growth objective.

The founders of Basecamp are known to defend this type of self-financed and independent entrepreneurship while reconciling professional and personal balance with business success. (Basecamp has 3.5 million paying users).

Neither of these two types of business is superior to the other. They just represent different life choices and commitments. A different adventure. It is important that this choice is clear to you because it will be one of the key foundations of your company’s culture. It will send a clear message to your potential collaborators, employees, VCs, and clients. Throughout your life as an entrepreneur, you will of course be able to build both types of business. The majority of their knowledge remains common.

Which variables should be evaluated to validate the potential of a business idea?

Now that you know more about the relationship to time, the importance of focus, and the type of business that can be build, we can move on to the part about evaluating business ideas. Note that the best criteria of the success of a business is having paying customers who are not churning. But more you launch business and fail more you have data about which ideas have more chance to find their PMF.

By asking myself the same questions to evaluate the potential of a business, I ended up creating a framework to allows me to quickly see if an idea is worth investing my time in.

This framework is both a mix of my entrepreneurial experiences and the great Julian Shapiro blog which talk about similar topics.

Why?

The first question is a personal one and asks the question of why your adventure. It is essential since it is through one of these criteria that you will draw the energy necessary to continue to move forward in the hardest moments. It will also allow you to find collaborators whose interests are aligned with your own. As shown in the picture below our values change throughout our lives. Feel free to always re-order the values that matter most to you at a T-point in your life.

Value proposition

Does your idea solve a real problem? What is the existing offer on the market? Why would your solution be better?

MVP

What resources are at your disposal to execute your idea as quickly and inexpensively as possible.

Growth Marketing & Product Channel Fit

In an information-saturated world where war for attention is raging distribution is king.

The distribution power of a product is almost more important than the product itself. It is therefore vital to understand the distribution DNA of your business idea.

Paradoxically, the distribution channels have become more accessible but, as a result, much more saturated. It is such a vital part of a business that we even talk about Product Channel Fit rather than Product-Market Fit. You can find more information on the notion of Product Channel Fit in the very good essay by Brian Belfour.

B2B Business type

A specific framework for B2B business ideas. Make sure you understand your unit economics.

Conclusion

“Never doubt that a small group of thoughtful citizens can change the world. Indeed, it is the only thing that ever has, wrote Margaret Mead. Revolutions are unarguably driven by an obsessive minority. And the entire growth of society, whether economic or moral, comes from a small number of people.”

Nassim Nicholas Taleb — Skin in the Game

Entrepreneur, in the 0 to Product-Market Fit phase of a business, is a mad scientist who sacralizes time and understands the power of focus. Startup or Boostrap? Depending on the game he chooses, is commitment will be different.

Why? Value proposition? MVP? Growth Marketing & Product Channel Fit? are the questions he will ask himself to evaluate the potential of a business.

I wish you a great entrepreneurial adventure.

NB: I first published this article in French in Livementor blog.