Carlos Eduardo Espinal, partner at Seedcamp and the organizer of Mini Seedcamp during the Zero Day of RockPaperStartups, took the stage again on Day One to talk more about reaching Product Market Fit, how to reach that phase and what are some of the things startups should pay attention to.
Carlos first explained what is exactly Product Market Fit phase: It’s the moment when companies finally find a way to scale their business. He quoted Marc Andreessen:
When people buy your product at exactly the same rate you are producing it or when the increase of usage is complementary to your server expansion.
Company however, is not in this phase if it’s experiencing bad conversion rate, has no WOM (word of mouth) impact and sales cycle is too long.
Positioning and repositioning
For starters, it’s important to start working on MVS (Minimum Viable Segment) – MVP designed for smaller market segment. There are three reasons to do so: such method allows for a better differentiation from competition, easier recommendation (within the group) and far better use of recourses to meet the final goal.
Carlos then explained the difference between positioning and repositioning. While positioning determines how you are different from others in the eyes of potential customers, repositioning indicates a way of modifying the perception of yourself and/or competition.
After understanding your positioning strategy, Espinal suggested that you should create a MVP (Minimum Viable Product), i.e. to make a product which is good enough to test the hypothesis you are trying to prove. It is most essential to measure the customer interaction and to draw conclusions from those results which will then lead to alterations of your product.
Carlos also explained what Go2Market stands for. It’s a method which includes key partnerships and distribution channels in order to achieve the MVS. All this includes product price point and marketing methods (online and offline).
It is in human nature to focus on things we are good at, not the ones we are not. Founders and hackers love creating new things, but sometimes they get stuck at the MVP phase. Maybe they were creating and measuring a lot, but that doesn’t necessarily mean that they draw any conclusions from that process. Maybe they haven’t found a market big enough before the funds ran out.
How to fix it?
Choose your MVS. Not everything is for everybody, therefore choose something for somebody. Then target it with your “bullet”, which is the combination of your positioning strategy, your mvp, and your go2market strategy.
Carlos concluded by saying: Identify MVS, design the “bullet” of your company, test and measure, change only one variable in the “bullet”, rinse and repeat – or pivot.
Local startups should cooperate!
He also gave several tips specific for local startups:
The barriers in this region are high. U.S. companies tend to receive more funds. You have to have to nail it the first time because you are not a startup in the U.S. that can afford mistakes. You guys, here, are like a big family and events like these should bring you together even more. You must be mutually supportive.
Carlos finished his lecture by saying that local founders should get together and talk, without the fear of somebody stealing their idea.
For more reading about the Product Market Fit Cycle Carlos spoke about, visit his blog where he goes into detail about the terms and phases.