Alan Chiu: Nailing Product-Market Fit
One of the first things you want to do is to keep in mind that at the end of the day you need to build something useful for somebody. So, one of the first tasks is to figure out who is that somebody. Who are you really serving? And what is the job that they're hiring you to do? And looking at it from their perspective will often yield insights that are hidden from the product owner or entrepreneur if we're purely looking at it from the product-centric perspective. A lot of it is about being in the right place at the right time. While you don't have control over timing, you do have control over two variables, the product, and the market. How you define the product, what goes into their product, and as importantly, what is left out of the product? And the other variable is the market. Who are you going to sell it to? Often times, it's much more helpful to start with the market. Yes, you have a set of hypotheses about what your product is going to deliver to whom. It often costs you much less to start testing your product value proposition to a different market segment. You're just talking to different people. You're not investing any engineering resources to revamp your product, to build something different. That's expensive, and that limits the number of iterations you can go through. But talking to different customers, you can do that all day long. So, start with a set of hypotheses and go and test with your customers, and iterate on the customer side as rapidly as you can. And it's not just about getting customer feedback on your product or your prototype. It's actually even more important to understand the world that your customers live in because you would often find that the original pain point that you thought existed might not even matter all that much to them. But there are adjacent pain points that are much more important, much more valuable, and by going after those you could extract a lot more value. And since there are pain points adjacent to the original pain point you wanted to tackle, you might be so lucky that your product doesn't need to change all that much to solve a much more valuable, more immediate, and urgent pain point for the customer. The framework consists of four interfaces of the product: user, application, data, and buyer. The user interface is usually the one that product designers tend to focus on first because it drives the whole user experience. And that's usually important. It should deserve a lot of attention.
You need to really understand, what is the job that the user is trying to do in order to design your product accordingly, in a way that fits into their world. So, that's the user interface part, and most product designers have that very well-understood. The second interface is the application interface. And what I mean by that, is how does your product interact with other products that exist in your end-users world or your customer's worlds? What does your user do upstream or downstream around your product? What are they doing before they engage with the product, and what would they be doing afterward? Now, understanding this is important because one if you could better integrate yourself with these other products that are used by your users. You'll have a much higher chance of becoming embedded in part of the standard routine, the standard workflow, which means you're more likely to become part of the daily habits. And that solves one of the biggest problems in subscription businesses, which is churn if your users have to keep reminding themselves to come in and use your product, chances are you have much higher churn. But if you become part of the daily habit or part of a standard workflow, they just follow steps one, two, and three, and step two is your product. It gets used all the time. You're going to have a much lower churn. A third benefit of thinking through your application interface is if you have identified upstream and downstream applications that work well together with your product.
Now, you could go to a customer and offer a complete solution, not just a point product that delivers a lot more value. And you could also leverage these applications, other application vendors as your partners to bring you into their customer base. The third interface is the data interface, and what I mean by that is, think about what input data you need from the user or other sources, in order to do the job that your users have hired you to do. What is the format that the data will be coming in? What are the channels? What are the best ways to collect that data, and what is the minimum amount of data you require your users to manually enter in order to deliver value? The more data you ask from a user the less likely they are to do it actually because you're increasing the cost of adopting your product. But if you could minimize the manual data input required of the user, and try to automate the process of delivering value as much as possible. And sometimes by inferring conclusions or making predictions based on other data sets that you could automatically ingest into your product. Chances are you'll be able to deliver a high-level value with a lower cognitive cost to your user. So, that's the input side. On the output side, you need to think about how the data is going to be consumed. If the data you generate is a report, for example, that is read by a human being you want to make sure the visualizations are crisp and engaging. If on the other hand, the data that you generate is going to be consumed by machines or other products downstream, you might need to think about how best should I format the data and through what channel should I be delivering the data. So, that I maximize the likelihood of the data being consumed and made valuable by a downstream product And then the last interface, buyer interface, refers to the interface between the product and buyer, which may not be the end-user. And this is often times the interface that is most often neglected by-product designers because designing a product that is easily consumed by a buyer, or purchased by a buyer, requires a deep understanding of how your buyer makes purchasing decisions. And this set of activities are often viewed as something owned by sales or marketing, not by product and engineering. But without understanding how a buyer discovers and purchases your product, you miss out on the opportunity of optimizing the design of your product to be purchased as easily as possible. I'll give you an example. If an organization requires a certain trial period for a product before they will decide to buy.
You would want to design a product in such a way that the trial period could be self-served by the customer or prospective, or potential customer without requiring a lot of pre-sales resources on your part. Otherwise, it would be much more costly for you to qualify a lead and scale your revenue. So, this is a simple example of how understanding the buying process has an impact on your product design decisions. What the most common trap that entrepreneurs fall into, is if you're getting some level of traction, you're seeing some level of growth, but it's just not explosive. And that's a hard zone to be in because it's hard to give up. You have customers. You are seeing growth, it's just not explosive growth. But if you're not driving explosive growth, then it's hard to become a dominant player in your industry. So, that's probably the most difficult zone to be in because you are always being drawn to staying with what is somewhat working in the market. That what the entrepreneur needs to do in that case is to look for ways to get to that perfect part of market fit, so that your revenue would start picking up exponentially. It could be by pricing a product differently, positioning differently, or going after an adjacent market segment without changing your product all that much.