“Don’t touch my brownies! A child nutrition bill on its way to President Barack Obama — and championed by the first lady — gives the government power to limit school bake sales and other fundraisers that health advocates say sometimes replace wholesome meals in the lunchroom…
“‘This could be a real train wreck for school districts,’ Lucy Gettman of the National School Boards Association said Friday, a day after the House cleared the bill. ‘The federal government should not be in the business of regulating this kind of activity at the local level.’…
“Public health groups pushed for the language on fundraisers, which encourages the secretary of Agriculture to allow them only if they are infrequent. The language is broad enough that a president’s administration could even ban bake sales, but Secretary Tom Vilsack signaled in a letter to House Education and Labor Committee Chairman George Miller, D-Calif., this week that he does not intend to do that. The USDA has a year to write rules that decide how frequent is infrequent.’…
“‘These fundraisers are happening all the time,’ Wootan [of the Center for Science in the Public Interest] said. ‘It’s a pizza sale one day, doughnuts the next… It’s endless. This is really about supporting parental choice. Most parents don’t want their kids to use their lunch money to buy junk food. They expect they’ll use their lunch money to buy a balanced school meal.’”
***
“But the spiraling obesity rates Palin mocks are increasingly having an impact on health care costs, which in turn affects the way we must approach and debate reforms to the health care system. Those least able to afford health care disproportionately need it in large part because of the unhealthy food they eat — and that is served to their children in government-run schools. We’ve arrived at a point where inner-city children can’t identify common fresh vegetables and fruits, such as cauliflower, tomatoes, and potatoes.
“Perhaps you regard it as an intolerable violation of personal liberty for government to campaign for nutritional awareness? What then do we call the federal agricultural subsidies that have helped to lower the price of super-abundant junk food? Can you explain why it’s okay for government to campaign against smoking and in favor of seatbelts? Or do you also oppose those life-saving public safety campaigns? Or is it perhaps that you have decided that everything the Obamas do is so intrinsically wrong that criticism of the Twinkie now makes you un-American?…
“Here we come to the heart of the destructive craziness of what begs to be called Junk Food Conservatism. Palin, Limbaugh and the others may sincerely believe that “Big Government” is taking advantage of the increase in child and adult diabetes, heart disease and all-manners of obese-related illnesses to trample on our God-given freedom to guzzle soda and eat candy. But in the end, here’s the political message they are sending from their own wealthy, option-filled, Subzero-equipped enclaves to this country’s poorest and unhealthiest:
“Let them eat Twinkies.”
***
“Don’t get me wrong. I’m not opposed to instilling healthful behaviors in our children. What I’m opposed to is the government mandating those behaviors. It might help the cause further if the First Lady’s White House Task Force on Obesity Report delivered to the president’s desk last May were not filled distortions and mischaracterizations of the childhood obesity epidemic…
“In the meantime, maybe the First Lady and her hubby could set a better example by making their snack attacks—which include scarfing down ice cream, cookies, and fast food burgers—less conspicuous. The accompanying slideshow is made up of just a few of the snapshots taken in the time since Barack Obama was elected president. Healthy appetite, no?”
What is product/market fit?
In the beginning, the entrepreneurs should be obsessively focused on finding a product/market fit, and conserving cash to allow them as much roadway as possible. Mark Andreessen describes product/market fit as “the only thing that matters,” but what is it?
Basically, a startup has product/market fit when it has:
- A set of customers excited enough about your product to pay for it. Usually, that payment is cash, but sometimes it’s time. As Facebook, Twitter and Google have proven, if you can get enough customers spending time with your product, there’s usually a way to monetize it.
- A customer base large enough to create a viable business.
Andreessen says:
ou can always feel product/market fit when it’s happening. The customers are buying the product just as fast as you can make it — or usage is growing just as fast as you can add more servers ….
You can always feel when product/market fit isn’t happening. The customers aren’t quite getting value out of the product, word of mouth isn’t spreading, usage isn’t growing that fast, press reviews are kind of ‘blah,’ the sales cycle takes too long, and lots of deals never close.
Lower your burn rate during the search for product/market fit
If your startup hasn’t reached product/market fit, you should obsessively focus on finding it and adjust your burn rate downwards to give yourself as much time as you need to get there.
The best way to find product/market fit is to get in front of customers and validate your assertions. Start early, and validate before you build anything. Use wireframes of the product to walk customers through your vision, then keep validating throughout product development.
Develop objective listening skills, and don’t get caught up in selling too hard. Often entrepreneurs only hear what they want to hear, a trait sometimes referred to as “happy ears.” When a customer disagrees, you’ll often hear these entrepreneurs say: “They just don’t get it.” This is a good indication the entrepreneur isn’t listening.
Also, ask yourself two questions about each of your assertions:
1. Is the problem you’re tackling important to the customer? Too often, companies chase problems that just aren’t important enough to spend money or time to solve. If the problem isn’t important enough, be prepared to drop the idea you’re currently working on and pivot to something different.
2. Do your solutions really solve the problem? Present the solution to the client, and ask them tougher questions such as:
- “Is this a must-have, or a nice-to-have?”
- “Would you commit to purchasing at this price if we build it?”
- “Where does this fall on your list of priorities on which you’d spend money?”
At my fourth startup, Watermark Software, we got a great response when we showed our software to potential customers; our launch went well; and even the New York Times was excited enough to dedicate a half page to covering us. But while it was cool, it wasn’t a must-have, and we struggled to sell it. After two more years of hard work, we found the vertical applications that were a better fit for our product and pivoted the product into a full solution for those verticals. The business took off.
We wasted a ton of money in those two years. Had we done a better job of customer validation up front, we could have avoided that waste. I made the mistake of listening with “happy ears” instead of being objective.
Reduce your burn rate; increase your time
No one can predict how long it will take to find product/market fit. To give yourself the greatest chance of success, you need your funds to last as long as possible. In other words, you need to set your burn rate as low as possible.
The ideal startup team should be the founders, the product development team, and one or two sales people to get the founders in front of customers. That’s it. The founders are the people best suited to interacting with customers to figure out if the experiments are working and to learn from the failures. This work is the key job of the entrepreneur, and cannot easily be delegated to others.
It may also be tempting to hire a large R&D team to get to market quickly.Recognize that few products are immediately ready for broad adoption, and you’ll likely need to go through a few revisions to get to product/market fit. Set your burn rate for a marathon, not a sprint.
There can be exceptions to this spending rule when you can find things that will clearly shorten your time to product/market fit: for example, a new hire that brings in a missing but much-needed skill.
Once you have evidence of product/market fit, you can then find a repeatable and scalable sales model, which I’ll address in my next post.
David Skok has been a General Partner at Matrix Partners since 2001. He founded his first company when he was 22, and since then, founded three companies, including SilverStream Software, and done one turnaround. Skok specializes in SaaS, enterprise software and cloud computing, and blogs at forEntrepreneurs.com.
Image courtesy of Flickr user tonylanciabeta.
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Steve Lopez: Dodgers divorce ruling good <b>news</b> for fans who want <b>...</b>
Around my office, the reactions were nearly unanimous recently when it came time to decide whether to keep our shares in a Dodgers season-ticket plan. One guy had the good sense to opt out; the rest of us saps, who...
Knight Science Journalism Tracker » Blog Archive » <b>News</b> from the <b>...</b>
Wikileaks is top news right now. And not only for political journalists. There is a science journalism perspective, too, proves the Frankfurter Allgemeine Zeitung (Jürgen Kaube). “Every social relationship depends on some, perhaps a lot ...
Hulu plans its own entertainment <b>news</b> show, but will anyone watch?
As Peter Kafka at MediaMemo reports, Hulu is currently casting for a presenter for the show which will be published daily, taking a 'Daily Show'-style satirical approach to the latest entertainment news. Hulu (backed by US TV giants NBC ...
bench craft company rip off magazine
Steve Lopez: Dodgers divorce ruling good <b>news</b> for fans who want <b>...</b>
Around my office, the reactions were nearly unanimous recently when it came time to decide whether to keep our shares in a Dodgers season-ticket plan. One guy had the good sense to opt out; the rest of us saps, who...
Knight Science Journalism Tracker » Blog Archive » <b>News</b> from the <b>...</b>
Wikileaks is top news right now. And not only for political journalists. There is a science journalism perspective, too, proves the Frankfurter Allgemeine Zeitung (Jürgen Kaube). “Every social relationship depends on some, perhaps a lot ...
Hulu plans its own entertainment <b>news</b> show, but will anyone watch?
As Peter Kafka at MediaMemo reports, Hulu is currently casting for a presenter for the show which will be published daily, taking a 'Daily Show'-style satirical approach to the latest entertainment news. Hulu (backed by US TV giants NBC ...
bench craft company rip off herbs
Steve Lopez: Dodgers divorce ruling good <b>news</b> for fans who want <b>...</b>
Around my office, the reactions were nearly unanimous recently when it came time to decide whether to keep our shares in a Dodgers season-ticket plan. One guy had the good sense to opt out; the rest of us saps, who...
Knight Science Journalism Tracker » Blog Archive » <b>News</b> from the <b>...</b>
Wikileaks is top news right now. And not only for political journalists. There is a science journalism perspective, too, proves the Frankfurter Allgemeine Zeitung (Jürgen Kaube). “Every social relationship depends on some, perhaps a lot ...
Hulu plans its own entertainment <b>news</b> show, but will anyone watch?
As Peter Kafka at MediaMemo reports, Hulu is currently casting for a presenter for the show which will be published daily, taking a 'Daily Show'-style satirical approach to the latest entertainment news. Hulu (backed by US TV giants NBC ...
bench craft company rip off pumps
Steve Lopez: Dodgers divorce ruling good <b>news</b> for fans who want <b>...</b>
Around my office, the reactions were nearly unanimous recently when it came time to decide whether to keep our shares in a Dodgers season-ticket plan. One guy had the good sense to opt out; the rest of us saps, who...
Knight Science Journalism Tracker » Blog Archive » <b>News</b> from the <b>...</b>
Wikileaks is top news right now. And not only for political journalists. There is a science journalism perspective, too, proves the Frankfurter Allgemeine Zeitung (Jürgen Kaube). “Every social relationship depends on some, perhaps a lot ...
Hulu plans its own entertainment <b>news</b> show, but will anyone watch?
As Peter Kafka at MediaMemo reports, Hulu is currently casting for a presenter for the show which will be published daily, taking a 'Daily Show'-style satirical approach to the latest entertainment news. Hulu (backed by US TV giants NBC ...
bench craft company rip off pill review
Steve Lopez: Dodgers divorce ruling good <b>news</b> for fans who want <b>...</b>
Around my office, the reactions were nearly unanimous recently when it came time to decide whether to keep our shares in a Dodgers season-ticket plan. One guy had the good sense to opt out; the rest of us saps, who...
Knight Science Journalism Tracker » Blog Archive » <b>News</b> from the <b>...</b>
Wikileaks is top news right now. And not only for political journalists. There is a science journalism perspective, too, proves the Frankfurter Allgemeine Zeitung (Jürgen Kaube). “Every social relationship depends on some, perhaps a lot ...
Hulu plans its own entertainment <b>news</b> show, but will anyone watch?
As Peter Kafka at MediaMemo reports, Hulu is currently casting for a presenter for the show which will be published daily, taking a 'Daily Show'-style satirical approach to the latest entertainment news. Hulu (backed by US TV giants NBC ...
bench craft company rip off videos
“Don’t touch my brownies! A child nutrition bill on its way to President Barack Obama — and championed by the first lady — gives the government power to limit school bake sales and other fundraisers that health advocates say sometimes replace wholesome meals in the lunchroom…
“‘This could be a real train wreck for school districts,’ Lucy Gettman of the National School Boards Association said Friday, a day after the House cleared the bill. ‘The federal government should not be in the business of regulating this kind of activity at the local level.’…
“Public health groups pushed for the language on fundraisers, which encourages the secretary of Agriculture to allow them only if they are infrequent. The language is broad enough that a president’s administration could even ban bake sales, but Secretary Tom Vilsack signaled in a letter to House Education and Labor Committee Chairman George Miller, D-Calif., this week that he does not intend to do that. The USDA has a year to write rules that decide how frequent is infrequent.’…
“‘These fundraisers are happening all the time,’ Wootan [of the Center for Science in the Public Interest] said. ‘It’s a pizza sale one day, doughnuts the next… It’s endless. This is really about supporting parental choice. Most parents don’t want their kids to use their lunch money to buy junk food. They expect they’ll use their lunch money to buy a balanced school meal.’”
***
“But the spiraling obesity rates Palin mocks are increasingly having an impact on health care costs, which in turn affects the way we must approach and debate reforms to the health care system. Those least able to afford health care disproportionately need it in large part because of the unhealthy food they eat — and that is served to their children in government-run schools. We’ve arrived at a point where inner-city children can’t identify common fresh vegetables and fruits, such as cauliflower, tomatoes, and potatoes.
“Perhaps you regard it as an intolerable violation of personal liberty for government to campaign for nutritional awareness? What then do we call the federal agricultural subsidies that have helped to lower the price of super-abundant junk food? Can you explain why it’s okay for government to campaign against smoking and in favor of seatbelts? Or do you also oppose those life-saving public safety campaigns? Or is it perhaps that you have decided that everything the Obamas do is so intrinsically wrong that criticism of the Twinkie now makes you un-American?…
“Here we come to the heart of the destructive craziness of what begs to be called Junk Food Conservatism. Palin, Limbaugh and the others may sincerely believe that “Big Government” is taking advantage of the increase in child and adult diabetes, heart disease and all-manners of obese-related illnesses to trample on our God-given freedom to guzzle soda and eat candy. But in the end, here’s the political message they are sending from their own wealthy, option-filled, Subzero-equipped enclaves to this country’s poorest and unhealthiest:
“Let them eat Twinkies.”
***
“Don’t get me wrong. I’m not opposed to instilling healthful behaviors in our children. What I’m opposed to is the government mandating those behaviors. It might help the cause further if the First Lady’s White House Task Force on Obesity Report delivered to the president’s desk last May were not filled distortions and mischaracterizations of the childhood obesity epidemic…
“In the meantime, maybe the First Lady and her hubby could set a better example by making their snack attacks—which include scarfing down ice cream, cookies, and fast food burgers—less conspicuous. The accompanying slideshow is made up of just a few of the snapshots taken in the time since Barack Obama was elected president. Healthy appetite, no?”
What is product/market fit?
In the beginning, the entrepreneurs should be obsessively focused on finding a product/market fit, and conserving cash to allow them as much roadway as possible. Mark Andreessen describes product/market fit as “the only thing that matters,” but what is it?
Basically, a startup has product/market fit when it has:
- A set of customers excited enough about your product to pay for it. Usually, that payment is cash, but sometimes it’s time. As Facebook, Twitter and Google have proven, if you can get enough customers spending time with your product, there’s usually a way to monetize it.
- A customer base large enough to create a viable business.
Andreessen says:
ou can always feel product/market fit when it’s happening. The customers are buying the product just as fast as you can make it — or usage is growing just as fast as you can add more servers ….
You can always feel when product/market fit isn’t happening. The customers aren’t quite getting value out of the product, word of mouth isn’t spreading, usage isn’t growing that fast, press reviews are kind of ‘blah,’ the sales cycle takes too long, and lots of deals never close.
Lower your burn rate during the search for product/market fit
If your startup hasn’t reached product/market fit, you should obsessively focus on finding it and adjust your burn rate downwards to give yourself as much time as you need to get there.
The best way to find product/market fit is to get in front of customers and validate your assertions. Start early, and validate before you build anything. Use wireframes of the product to walk customers through your vision, then keep validating throughout product development.
Develop objective listening skills, and don’t get caught up in selling too hard. Often entrepreneurs only hear what they want to hear, a trait sometimes referred to as “happy ears.” When a customer disagrees, you’ll often hear these entrepreneurs say: “They just don’t get it.” This is a good indication the entrepreneur isn’t listening.
Also, ask yourself two questions about each of your assertions:
1. Is the problem you’re tackling important to the customer? Too often, companies chase problems that just aren’t important enough to spend money or time to solve. If the problem isn’t important enough, be prepared to drop the idea you’re currently working on and pivot to something different.
2. Do your solutions really solve the problem? Present the solution to the client, and ask them tougher questions such as:
- “Is this a must-have, or a nice-to-have?”
- “Would you commit to purchasing at this price if we build it?”
- “Where does this fall on your list of priorities on which you’d spend money?”
At my fourth startup, Watermark Software, we got a great response when we showed our software to potential customers; our launch went well; and even the New York Times was excited enough to dedicate a half page to covering us. But while it was cool, it wasn’t a must-have, and we struggled to sell it. After two more years of hard work, we found the vertical applications that were a better fit for our product and pivoted the product into a full solution for those verticals. The business took off.
We wasted a ton of money in those two years. Had we done a better job of customer validation up front, we could have avoided that waste. I made the mistake of listening with “happy ears” instead of being objective.
Reduce your burn rate; increase your time
No one can predict how long it will take to find product/market fit. To give yourself the greatest chance of success, you need your funds to last as long as possible. In other words, you need to set your burn rate as low as possible.
The ideal startup team should be the founders, the product development team, and one or two sales people to get the founders in front of customers. That’s it. The founders are the people best suited to interacting with customers to figure out if the experiments are working and to learn from the failures. This work is the key job of the entrepreneur, and cannot easily be delegated to others.
It may also be tempting to hire a large R&D team to get to market quickly.Recognize that few products are immediately ready for broad adoption, and you’ll likely need to go through a few revisions to get to product/market fit. Set your burn rate for a marathon, not a sprint.
There can be exceptions to this spending rule when you can find things that will clearly shorten your time to product/market fit: for example, a new hire that brings in a missing but much-needed skill.
Once you have evidence of product/market fit, you can then find a repeatable and scalable sales model, which I’ll address in my next post.
David Skok has been a General Partner at Matrix Partners since 2001. He founded his first company when he was 22, and since then, founded three companies, including SilverStream Software, and done one turnaround. Skok specializes in SaaS, enterprise software and cloud computing, and blogs at forEntrepreneurs.com.
Image courtesy of Flickr user tonylanciabeta.
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Steve Lopez: Dodgers divorce ruling good <b>news</b> for fans who want <b>...</b>
Around my office, the reactions were nearly unanimous recently when it came time to decide whether to keep our shares in a Dodgers season-ticket plan. One guy had the good sense to opt out; the rest of us saps, who...
Knight Science Journalism Tracker » Blog Archive » <b>News</b> from the <b>...</b>
Wikileaks is top news right now. And not only for political journalists. There is a science journalism perspective, too, proves the Frankfurter Allgemeine Zeitung (Jürgen Kaube). “Every social relationship depends on some, perhaps a lot ...
Hulu plans its own entertainment <b>news</b> show, but will anyone watch?
As Peter Kafka at MediaMemo reports, Hulu is currently casting for a presenter for the show which will be published daily, taking a 'Daily Show'-style satirical approach to the latest entertainment news. Hulu (backed by US TV giants NBC ...
small bench craft company rip off
Steve Lopez: Dodgers divorce ruling good <b>news</b> for fans who want <b>...</b>
Around my office, the reactions were nearly unanimous recently when it came time to decide whether to keep our shares in a Dodgers season-ticket plan. One guy had the good sense to opt out; the rest of us saps, who...
Knight Science Journalism Tracker » Blog Archive » <b>News</b> from the <b>...</b>
Wikileaks is top news right now. And not only for political journalists. There is a science journalism perspective, too, proves the Frankfurter Allgemeine Zeitung (Jürgen Kaube). “Every social relationship depends on some, perhaps a lot ...
Hulu plans its own entertainment <b>news</b> show, but will anyone watch?
As Peter Kafka at MediaMemo reports, Hulu is currently casting for a presenter for the show which will be published daily, taking a 'Daily Show'-style satirical approach to the latest entertainment news. Hulu (backed by US TV giants NBC ...
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Steve Lopez: Dodgers divorce ruling good <b>news</b> for fans who want <b>...</b>
Around my office, the reactions were nearly unanimous recently when it came time to decide whether to keep our shares in a Dodgers season-ticket plan. One guy had the good sense to opt out; the rest of us saps, who...
Knight Science Journalism Tracker » Blog Archive » <b>News</b> from the <b>...</b>
Wikileaks is top news right now. And not only for political journalists. There is a science journalism perspective, too, proves the Frankfurter Allgemeine Zeitung (Jürgen Kaube). “Every social relationship depends on some, perhaps a lot ...
Hulu plans its own entertainment <b>news</b> show, but will anyone watch?
As Peter Kafka at MediaMemo reports, Hulu is currently casting for a presenter for the show which will be published daily, taking a 'Daily Show'-style satirical approach to the latest entertainment news. Hulu (backed by US TV giants NBC ...
view company's website
Steve Lopez: Dodgers divorce ruling good <b>news</b> for fans who want <b>...</b>
Around my office, the reactions were nearly unanimous recently when it came time to decide whether to keep our shares in a Dodgers season-ticket plan. One guy had the good sense to opt out; the rest of us saps, who...
Knight Science Journalism Tracker » Blog Archive » <b>News</b> from the <b>...</b>
Wikileaks is top news right now. And not only for political journalists. There is a science journalism perspective, too, proves the Frankfurter Allgemeine Zeitung (Jürgen Kaube). “Every social relationship depends on some, perhaps a lot ...
Hulu plans its own entertainment <b>news</b> show, but will anyone watch?
As Peter Kafka at MediaMemo reports, Hulu is currently casting for a presenter for the show which will be published daily, taking a 'Daily Show'-style satirical approach to the latest entertainment news. Hulu (backed by US TV giants NBC ...
bench craft company rip off herbs
Steve Lopez: Dodgers divorce ruling good <b>news</b> for fans who want <b>...</b>
Around my office, the reactions were nearly unanimous recently when it came time to decide whether to keep our shares in a Dodgers season-ticket plan. One guy had the good sense to opt out; the rest of us saps, who...
Knight Science Journalism Tracker » Blog Archive » <b>News</b> from the <b>...</b>
Wikileaks is top news right now. And not only for political journalists. There is a science journalism perspective, too, proves the Frankfurter Allgemeine Zeitung (Jürgen Kaube). “Every social relationship depends on some, perhaps a lot ...
Hulu plans its own entertainment <b>news</b> show, but will anyone watch?
As Peter Kafka at MediaMemo reports, Hulu is currently casting for a presenter for the show which will be published daily, taking a 'Daily Show'-style satirical approach to the latest entertainment news. Hulu (backed by US TV giants NBC ...
bench craft company rip off magazine
Steve Lopez: Dodgers divorce ruling good <b>news</b> for fans who want <b>...</b>
Around my office, the reactions were nearly unanimous recently when it came time to decide whether to keep our shares in a Dodgers season-ticket plan. One guy had the good sense to opt out; the rest of us saps, who...
Knight Science Journalism Tracker » Blog Archive » <b>News</b> from the <b>...</b>
Wikileaks is top news right now. And not only for political journalists. There is a science journalism perspective, too, proves the Frankfurter Allgemeine Zeitung (Jürgen Kaube). “Every social relationship depends on some, perhaps a lot ...
Hulu plans its own entertainment <b>news</b> show, but will anyone watch?
As Peter Kafka at MediaMemo reports, Hulu is currently casting for a presenter for the show which will be published daily, taking a 'Daily Show'-style satirical approach to the latest entertainment news. Hulu (backed by US TV giants NBC ...
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“Don’t touch my brownies! A child nutrition bill on its way to President Barack Obama — and championed by the first lady — gives the government power to limit school bake sales and other fundraisers that health advocates say sometimes replace wholesome meals in the lunchroom…
“‘This could be a real train wreck for school districts,’ Lucy Gettman of the National School Boards Association said Friday, a day after the House cleared the bill. ‘The federal government should not be in the business of regulating this kind of activity at the local level.’…
“Public health groups pushed for the language on fundraisers, which encourages the secretary of Agriculture to allow them only if they are infrequent. The language is broad enough that a president’s administration could even ban bake sales, but Secretary Tom Vilsack signaled in a letter to House Education and Labor Committee Chairman George Miller, D-Calif., this week that he does not intend to do that. The USDA has a year to write rules that decide how frequent is infrequent.’…
“‘These fundraisers are happening all the time,’ Wootan [of the Center for Science in the Public Interest] said. ‘It’s a pizza sale one day, doughnuts the next… It’s endless. This is really about supporting parental choice. Most parents don’t want their kids to use their lunch money to buy junk food. They expect they’ll use their lunch money to buy a balanced school meal.’”
***
“But the spiraling obesity rates Palin mocks are increasingly having an impact on health care costs, which in turn affects the way we must approach and debate reforms to the health care system. Those least able to afford health care disproportionately need it in large part because of the unhealthy food they eat — and that is served to their children in government-run schools. We’ve arrived at a point where inner-city children can’t identify common fresh vegetables and fruits, such as cauliflower, tomatoes, and potatoes.
“Perhaps you regard it as an intolerable violation of personal liberty for government to campaign for nutritional awareness? What then do we call the federal agricultural subsidies that have helped to lower the price of super-abundant junk food? Can you explain why it’s okay for government to campaign against smoking and in favor of seatbelts? Or do you also oppose those life-saving public safety campaigns? Or is it perhaps that you have decided that everything the Obamas do is so intrinsically wrong that criticism of the Twinkie now makes you un-American?…
“Here we come to the heart of the destructive craziness of what begs to be called Junk Food Conservatism. Palin, Limbaugh and the others may sincerely believe that “Big Government” is taking advantage of the increase in child and adult diabetes, heart disease and all-manners of obese-related illnesses to trample on our God-given freedom to guzzle soda and eat candy. But in the end, here’s the political message they are sending from their own wealthy, option-filled, Subzero-equipped enclaves to this country’s poorest and unhealthiest:
“Let them eat Twinkies.”
***
“Don’t get me wrong. I’m not opposed to instilling healthful behaviors in our children. What I’m opposed to is the government mandating those behaviors. It might help the cause further if the First Lady’s White House Task Force on Obesity Report delivered to the president’s desk last May were not filled distortions and mischaracterizations of the childhood obesity epidemic…
“In the meantime, maybe the First Lady and her hubby could set a better example by making their snack attacks—which include scarfing down ice cream, cookies, and fast food burgers—less conspicuous. The accompanying slideshow is made up of just a few of the snapshots taken in the time since Barack Obama was elected president. Healthy appetite, no?”
What is product/market fit?
In the beginning, the entrepreneurs should be obsessively focused on finding a product/market fit, and conserving cash to allow them as much roadway as possible. Mark Andreessen describes product/market fit as “the only thing that matters,” but what is it?
Basically, a startup has product/market fit when it has:
- A set of customers excited enough about your product to pay for it. Usually, that payment is cash, but sometimes it’s time. As Facebook, Twitter and Google have proven, if you can get enough customers spending time with your product, there’s usually a way to monetize it.
- A customer base large enough to create a viable business.
Andreessen says:
ou can always feel product/market fit when it’s happening. The customers are buying the product just as fast as you can make it — or usage is growing just as fast as you can add more servers ….
You can always feel when product/market fit isn’t happening. The customers aren’t quite getting value out of the product, word of mouth isn’t spreading, usage isn’t growing that fast, press reviews are kind of ‘blah,’ the sales cycle takes too long, and lots of deals never close.
Lower your burn rate during the search for product/market fit
If your startup hasn’t reached product/market fit, you should obsessively focus on finding it and adjust your burn rate downwards to give yourself as much time as you need to get there.
The best way to find product/market fit is to get in front of customers and validate your assertions. Start early, and validate before you build anything. Use wireframes of the product to walk customers through your vision, then keep validating throughout product development.
Develop objective listening skills, and don’t get caught up in selling too hard. Often entrepreneurs only hear what they want to hear, a trait sometimes referred to as “happy ears.” When a customer disagrees, you’ll often hear these entrepreneurs say: “They just don’t get it.” This is a good indication the entrepreneur isn’t listening.
Also, ask yourself two questions about each of your assertions:
1. Is the problem you’re tackling important to the customer? Too often, companies chase problems that just aren’t important enough to spend money or time to solve. If the problem isn’t important enough, be prepared to drop the idea you’re currently working on and pivot to something different.
2. Do your solutions really solve the problem? Present the solution to the client, and ask them tougher questions such as:
- “Is this a must-have, or a nice-to-have?”
- “Would you commit to purchasing at this price if we build it?”
- “Where does this fall on your list of priorities on which you’d spend money?”
At my fourth startup, Watermark Software, we got a great response when we showed our software to potential customers; our launch went well; and even the New York Times was excited enough to dedicate a half page to covering us. But while it was cool, it wasn’t a must-have, and we struggled to sell it. After two more years of hard work, we found the vertical applications that were a better fit for our product and pivoted the product into a full solution for those verticals. The business took off.
We wasted a ton of money in those two years. Had we done a better job of customer validation up front, we could have avoided that waste. I made the mistake of listening with “happy ears” instead of being objective.
Reduce your burn rate; increase your time
No one can predict how long it will take to find product/market fit. To give yourself the greatest chance of success, you need your funds to last as long as possible. In other words, you need to set your burn rate as low as possible.
The ideal startup team should be the founders, the product development team, and one or two sales people to get the founders in front of customers. That’s it. The founders are the people best suited to interacting with customers to figure out if the experiments are working and to learn from the failures. This work is the key job of the entrepreneur, and cannot easily be delegated to others.
It may also be tempting to hire a large R&D team to get to market quickly.Recognize that few products are immediately ready for broad adoption, and you’ll likely need to go through a few revisions to get to product/market fit. Set your burn rate for a marathon, not a sprint.
There can be exceptions to this spending rule when you can find things that will clearly shorten your time to product/market fit: for example, a new hire that brings in a missing but much-needed skill.
Once you have evidence of product/market fit, you can then find a repeatable and scalable sales model, which I’ll address in my next post.
David Skok has been a General Partner at Matrix Partners since 2001. He founded his first company when he was 22, and since then, founded three companies, including SilverStream Software, and done one turnaround. Skok specializes in SaaS, enterprise software and cloud computing, and blogs at forEntrepreneurs.com.
Image courtesy of Flickr user tonylanciabeta.
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