Notes from Two Questions Every Entrepreneur Should Answer
Yesterday I accidentally listened to an episode of the Tim Ferris Show. It seemed pretty informative for entrepreneurs.
(It was actually a hosted episode: Mike Naples Jr. interviewing Andy Rachleff.)
My primary takeaway was:
To achieve great success, yes your idea needs to be right, but you also need it to be non-consensus (unfamiliar / unpopular / innovative / disruptive). If you start with consensus (a popular idea) then you will have to face many competitors and copy-cats. But if your idea is unpopular at first, that’s a good sign that (if you are right) you may be able to dominate the new niche you discovered.
Some other notes I made:
How to know when you have achieved product-market-fit? Consumer side: Exponential organic growth (from word of mouth), and net promoter score. Enterprise side: Sales yield (sales team contribution / sales team cost), and volume of customer screams when you terminate the first proof-of-concept trial. (You know you’ve got it when you are screwing up, but the customer is still pulling the product out of your hands.)
Focus on satisfying and enthusing early adopters. Don’t rush to a reluctant market.
Ideally, you want to sell to the “pragmatists” (the largest target group) but they will not engage at first: they need social proof. So before you can get to the pragmatists, you have to sell to the “early adopters”. The enthusiastic early adopters will use word of mouth, and make recommendations that will enable you to reach the broader market. This may take some time. (Two more groups were mentioned: Eventually you may reach to the “conservatives”, who wait only until the new standard is established. But you will never sell to the “laggards”, who are by definition the group that doesn’t buy.)
Don’t pivot the product to what the customer wants early on. That would be moving towards consensus. The original product idea is your innovative idea. Pivot everything else (target customer, strategy, aka. who and how).
When you test the product and something surprises you, 100% of the value lies in that surprise thing. Don’t ignore it. Savour surprises. The goal of your experiment should not be to pass the test, but to learn something.
(VCs) Resist projecting your own tastes onto others. Just because you don’t like the product, doesn’t mean others will feel the same. So get external test results.
(Don’t focus on the sell side and ignore the buy side. He said there is a tendency to focus on the sell side of the “two sided marketplace” because that is usually the hardest side. But it isn’t always, so don’t ignore the buy side. https://en.wikipedia.org/wiki/Two-sided_market )
