Which Is More Important: The Product Or Market?

Posted on October 21, 2020 by harborcapitalgroupinc

The question of which is more important, product or market, is an ongoing question, and the answer depends on who to talk to. It’s a question every entrepreneur has to address before and during the development of a startup.

Author Tren Griffin at 2sig.com (Andreessen Horowitz et al.) put together some great “answers” from people who would know.

Why markets matter more than anything else. (Investment approach).

“Give me a giant market, always.” You find a great market, and you build multiple companies in that market—author Dan Valentine.

Looking at all three parts: people, market, and innovative products. All three are required for success. Note, you can’t change a market, but you can change your product. “By Andy Radcliffe

Founders have to choose a market long before they know whether they will reach a product-market fit. Chris Dixon.

What is product-market fit?

It’s a verified Value Proposition. Customers buy your product and like it so much, they tell others, giving you organic sales.

“To reach delighted customers isn’t just product-market fit, but product-market scale” Casey Winters.

“getting the product right means finding product-market fit. It does not mean learning the product or launching the product. It means getting to the point where the market excepts your product and wants more of it. Fred Wilson

When you are not at product-market fit, focus on getting to market-product fit. Change whatever you need to do. Forget everything else until you get product-market fit.

Marc Andreessen argues that any startup’s life can be divided into two parts: Before product-market fit and after a product-market fit.

How do you reach product-market fit?

You can reach product-market fit serendipity, but the process to get to serendipity is incredibly consistent. Andy Radcliffe First, you need to define and test your value hypothesis. Once proved, move on to your growth hypothesis.

“ in the early days of a product, don’t focus on making it so robust. Find product-market fit first, then harden“ Jeff Lawson.

Product market fit is not a magic elixir. It signifies an important milestone that is necessary but not sufficient for success. Once you have product-market fit, you must still find a sustainable growth model and create a moat against competitors.

Until you get product-market fit, you want to live as long as possible and iterate as quickly as possible. Sam Altman.

How can you tell whether you do or don’t have a product-market fit?

You have product-market fit if you have organic sales, media attention, cash building up, etc. Sales without advertising require huge word-of-mouth, which requires delighted customers.

A problem for entrepreneurs is “they don’t have actually have a product-market fit when they think they do. Alex Schultz.

Is first to market critical?

“ first to market seldom matters. “ “First to product-market fit is usually the long-term winner. “ Once a company has achieved product-market fit, it is challenging to dislodge it, even with a better or less expensive product“ Andy Rachleff.

Note: Neither Apple, Google, and others were first to market.

What are some product-market myths?

Product-market fit is always a discrete, big bang event.
It’s plenty obvious when you have product-market fit.
Once you achieve a product-market fit, you can’t lose it.
Once you have product-market fit, you don’t have to sweat the competition.
Markets and competition are always changing. Constant adoption is therefore required to retain product-market fit. Ben Horowitz.

What problems are caused when you only think you have product-market fit?

One of the most common ways startups fail is premature scaling. This means spending money on growth before achieving product-market fit. Sales from the early adopters are not the mainstream market. Startups need 2 to 3 times longer to validate their market than most founders expect. Steve Blank

Conclusion

Product-market fit is a critical goal for every startup. While the definition appears simple, the ability to get there, know when you have it, and how to exploit it is complex. Where are you at in this journey to product-market fit? Before, on the way, or After?

How To Be One Of The Few Successful Startups

Posted on July 1, 2020 by harborcapitalgroupinc

How To Be One Of The Few Successful Startups

Most startups don’t achieve the successful startup goals needed to continue in business. Why?

The main reasons given are they couldn’t find product-market fit, couldn’t generate enough revenues and ran out of money.

But, It doesn’t have to be like that. No one can guarantee a successful startup,

but if you follow the strategies used by successful startups, your chances of success are 9X better.

Now, You Can Build A Successful Business On A Startup’s Budget

Where to start

You think you have a great product or service idea but you need to make sure. So, you ask a couple of friends.

They all tell you, “yea, it looks like a great idea to me”.

There are no consequences for their answer and they don’t want to hurt your feeling, so they agree.

You now have some opinions, but no facts. To get facts, talk to people in you’re targeted audience. But, don’t tell them what your product is.

Instead ask them, during the conversation, if they are having n(the problem you want to solve) and ask them if they also have that problem.

If the answer is yes, ask them how they handle the problem and how big of a problem is it.

Better information. Better decisions.

Create your strategy

This means defining your objective. Not your goal, but a specific, reachable and measurable objective.

You will then be able to diagnose the problem and create an insight into how to solve the problem.

Then, decide what your company will do and will not do.

This is difficult because you do not have the resources to do everything. And ts hard to say no, we will not do that.\

Once that is done, you need to prepare a coherent plan on how to execute your strategy.

Your strategy is your story.

Keep refining your strategy (core story) into your value proposition:

what you do, how you do it, what the results are, and how the customer benefits.

Get your story now to one or two lines.

Your strategy is your story, marketing is how you tell your story.

Embed your story into a marketing and sales messaging program designed to sell.

Your story will enable you to get away from just facts and features. For example, stop selling just grass seed and start selling greener lawns.

And if your product is technical, use simple language, analogies, and metaphors to sell your product.

A good example is when Steve Jobs introduced the iPod which held 5 Gigabits of storage.

No one could relate to 5 gigabits, so he held up the iPod and said you can put 1,000 songs in your pocket. That, they understood.

Use your story/strategy to become investment-ready

Successful startups also start immediately to use their story to become “investment-ready.”

The first question investors ask is “What’s your story?”

Because your story is your strategy, you will be prepared to tell investors

what your company does, why they do it, why customers buy from you,

and why this company represents an opportunity these investors will not want to miss.

Equally important, because you have done your homework and facts to back up your story, you will be able to answer their questions.

Answering their questions is critical. That is where they will go into depth with their questions and judge you and your idea.

Conclusion

Are you ready to learn the secrets of successful startups?

If you would like to learn more about the secrets of how successful startups are developed.

How you can develop your strategy, reach product-market fit quickly, create a business model that supports your story,

turn your marketing into a sales machine, and get investment-ready, grab a look at our website. You will be happy you did.

We have three options starting at only $39 per month, for three employees, including free email questions and with no contract. Cancel any time.

Why Start Developing A Company Before Having Product-Market Fit?

Posted on May 28, 2020 by harborcapitalgroupinc

People have product ideas all the time. Many of them are probably not winners. The number one reason they fail is achieving product-market fit. Yes, not enough money is also a big reason for failure, But money alone cannot make a startup successful. Remember Pets.com. They started with several hundred million dollars, blew it all in two years trying to find product-market fit, and went bankrupt.

So why would an entrepreneur want to start spending money developing a product before having a product-market fit? No matter how good you think, the idea is, you may be the only one in any zip code that thinks so.

So, how do you get a product-market fit? Don’t you need a product to show potential customers to see if it solves their problem and the problem is serious enough that they would spend money to buy it?

No, you don’t. However, you must have a product or service idea that solves a high priority problem, and a solution that makes sense to the buyer, and at a price, the buyer is willing to pay.

OK. What do you do? You start doing your homework. Mostly, your homework is a time requirement, not a cost problem. Be frugal and resourceful. Frugal people are generally more resourceful and, therefore, more creative than people with lots of money to spend.

Start by defining the problem, What is the problem you are trying to solve? That is not easy to answer because there isn’t a large market with a common problem. Geographic and demographic markets are filled with people who will interpret the issue in many different ways. Seth Godin, author, and entrepreneur, wrote in his book “Tribes” about how markets consist of people with a certain mindset in any zip code. Which mindset in which zip codes are you going to select?

Then, what is the solution? The solution is your story (which is also your strategy) about the problem, solution, results, and why prospects should buy from you. If you define, create, and prepare a story to explain what you offer — your value proposition, you are ready to begin talking to prospects and getting their feedback before you spend development money.

You could prepare to present your story in many different ways. For example, you could do it with a slideshow, a white piece of typing paper with hand-drawn illustrations showing key elements ( I have done that, and it works perfectly) of your story. You could produce an animated whiteboard video that would allow you to show a five-minute presentation in less than two minutes. You could use an easel with paper and make key points as you tell your story. As I said before, be resourceful. A good story packed with facts and emotion plus a visual will enable you to tell a compelling story.

No matter how technical or complicated your product is, select a story format that allows you to tell the story without jargon, and without technical terms, the audience will not understand. An excellent simple story and some illustrations will enable you to tell a compelling story,

These simple presentations will get you the information you need to find out if your value proposition could be a winner. Also, the questions you ask, and they ask you will offer insights into how you can keep revising your product until they say, “you can do that?”

Once you get to a point where you think you have a product-market fit for this specific product design and this specific audience, you will have the confidence to begin the development process.

Also, see our blog,” Five Quick, Effective Ways To Tell Your Business Story.“

Jim Zitek/ Harbor Capital Group

We empower entrepreneurs with information, insights, and the conviction they need to find, develop, and embed their stories throughout the development process to build successful companies.

Why Customers Not Products Drive Successful Companies

Posted on October 7, 2019 by harborcapitalgroupinc

Before getting into the details of Value Proposition, we need to take a more general look and value proposition and customers first.

Do you know why customers will buy your products or services? Most entrepreneurs think it’s because of their product or service and its features, functions, and benefits. That is what entrepreneurs ask potential customers about, and that is what established, competitive
companies fight over. This attitude is a short-term, transactional mindset.

Successful companies know what their potential customers want. They are customer-focused rather than product or company focused. They know that customers want to buy products and services from companies whose products and services were created for them. When that happens, they become long-term, loyal customers.

For example, Apple said they wanted to design computers that would empower individuals and be easy to use. That purpose drove the company to make computers that a segment of customers wanted and was willing to pay a premium to get it. Customers believed what Apple
believed. This outward, customer-focused approach led to long-term, loyal customers.

Here is an example of the opposite inward product looking approach. Honeywell started a computer division in the 1960s and claimed they were “The Other Computer Company,” taking the assumptive position that they were second only to IBM. But customers didn’t see it that way.
They didn’t believe it. Honeywell’s computer features, functions, and benefits were not broad enough to displace IBM. They only had short-term, transactional customers and were forced to sell the computer division after several years of losses.

Startups need to start with what the customers want, not what the founders want. You still need to ask critical questions about your value proposition and determine the importance of each feature, function, and benefit. And you have to ask about every aspect of your product offering, including quality, functionality, packaging, service features, ease of use, reliability, and more.

It would be best if you also had a lot more than demographic information. You need to get into the market and talk with prospects so you can get into the minds of buyers, users, influencers, decision-makers, and even people who could kill the sale. And you need to classify these potential customers by
the reasons they buy.

How Do You Get Product-Market Fit

Posted on October 7, 2019 by harborcapitalgroupinc

Product-market fit is when your product/service benefits match your customer’s profile. Marc Andreessen, entrepreneur, and venture capitalist stated that it is when you get organic growth. We are going to discuss both of these, but we have to understand the customer first. The first question to ask does my product/service create the ability for the customer to do things they can’t do now). Or does it relieve the customer of current pains? This question applies to their work and home life.

Make sure you see the “job to be done” from their point of view, not yours. Also, distinguish between the types of jobs customers are trying to get done.

stated that We are going to start by putting some context around customer pains and gains’ First, the way we need to look at jobs, the pains and then gains.

Types of Jobs

Functional Jobs. When a customer performs a specific task or tries to solve a particular problem, Social Jobs.Situations where the customer wants to look good or gain status. Personal/emotional Jobs. When the job makes, the customer wants to feel good or secure.

Supporting Jobs is when the customer is playing a supporting role. For example, comparing product offers or when they are co-creators such as offering feedback or terminating value such as disposing of a product or service.

It is vital to take note of the context in which the job takes place because the framework can impose certain limitations or open up liberties. Also, not all jobs have the same importance.

Now Let’s Look at Customer Pains. Pains are anything that annoys the customer when he/she is trying to get the job done. Pains can also be potential risks the customer faces in trying to get the job done. There are three types of pains.

Functional Pains. The solution doesn’t work well, has adverse side effects, emotionally frustrating, or the job is tedious. Obstacles. Things that prevent getting the job started or completed Risks. Undesirable outcomes.

When examining these jobs and their pains, be as specific as you can. Are there any metrics you can use to clarify these pains (time, dollars, satisfaction, etc.)

Now Let’s Look At Customer Gains. Gains are outcomes and benefits that customers expect and are desired. These include performance, emotional, and cost savings. There are four types of gains:

Required Gains. It provides the basic or minimum positive gains expected.

Expected Gains. These are some additional gains we expect from the basic gains.

Desired Gains. These are gains we expect that go beyond what we expected.

Unexpected Gains. These are exceptional gains never imagined.

Again, when evaluating gains be as specific as possible. Can you use metrics to measure these gains rather than terms that could be misinterpreted? When you know precisely how to measure gains, you will be able to design a better value proposition.