2 — Process

From Code to Product

gidgreen.com/course
From Code to Product Lecture 2 — Process — Slide 2 gidgreen.com/course
 Lecture 2
!  Product development for startups
!  Or… Customer development
!  Or… How to avoid making an ice
cream glove
!  Or… How to discover the ice cream
glove is actually a great idea
From Code to Product Lecture 2 — Process — Slide 3 gidgreen.com/course
 Lecture 2
•  Companies vs startups
•  Product—Market fit
•  The idea
•  The first version
•  Collecting data
•  Iteration and pivots
•  Are we there yet?

From Code to Product Lecture 2 — Process — Slide 4 gidgreen.com/course

 Lecture 2
•  Companies vs startups
•  Product—Market fit
•  The idea
•  The first version
•  Collecting data
•  Iteration and pivots
•  Are we there yet?

From Code to Product Lecture 2 — Process — Slide 5 gidgreen.com/course

 “Normal” companies
•  Existing product
•  Known market
•  Established path to market
•  Brand recognition
•  Paying customers
•  Revenue > Costs (usually)
•  Incremental development

From Code to Product Lecture 2 — Process — Slide 6 gidgreen.com/course

 Startup companies
•  Existing product No product
•  Known market Uncertain market
•  Established path to market
•  Brand recognition Totally unknown
•  Paying customers No customers
•  Revenue > Costs Zero revenue
•  Incremental development Clean slate

From Code to Product Lecture 2 — Process — Slide 7 gidgreen.com/course

 A company’s priorities
•  Increase profit
•  More customers
•  More $ per customer
•  Improve product
•  New products
•  New business area
•  Acquire others

From Code to Product Lecture 2 — Process — Slide 8 gidgreen.com/course

 A startup’s priorities
•  Increase profit Don’t die
•  More customers Find some users
•  More $ per customer Get $ from users
•  Improve product Create a product
•  New products
•  New business area Find business area
•  Acquire others Get acquired

From Code to Product Lecture 2 — Process — Slide 9 gidgreen.com/course

 Development by Waterfall
Requirements

Design

Implementation

Verification

Maintenance

From Code to Product Lecture 2 — Process — Slide 10 gidgreen.com/course

 Development for startups
Requirements
Ideas

Design

Implementation

Collect
Verification
Data

1 month or less… Maintenance

From Code to Product Lecture 2 — Process — Slide 11 gidgreen.com/course

 Why do companies fail?

Surpassed Undercut

Superceded Attrition

From Code to Product Lecture 2 — Process — Slide 12 gidgreen.com/course

 Why do startups fail?
•  Running out of…
–  Money
–  Ideas
–  Energy
–  Faith
•  Before reaching…
–  Break even
–  A (lucky) exit

From Code to Product Lecture 2 — Process — Slide 13 gidgreen.com/course

 A startup is…
“…a human institution designed to deliver a
new product or service under conditions of
extreme uncertainty.” — Eric Ries

“…an organization formed to search for a

repeatable and scalable business model”
— Steve Blank
From Code to Product Lecture 2 — Process — Slide 14 gidgreen.com/course
 Lecture 2
•  Companies vs startups
•  Product—Market fit
•  The idea
•  The first version
•  Collecting data
•  Iteration and pivots
•  Are we there yet?

From Code to Product Lecture 2 — Process — Slide 15 gidgreen.com/course

 Product—Market Fit
That incredible moment
when you realize that
many people truly
need (or want)
your product
Ideas and you can
make real
money
Implementation
from
Collect Data it

Time

From Code to Product Lecture 2 — Process — Slide 16 gidgreen.com/course

 Startup stages
Product
Market
Fit
Idea Version 1 Product Efficiency

Time

From Code to Product Lecture 2 — Process — Slide 17 gidgreen.com/course

 Lecture 2
•  Companies vs startups
•  Product—Market fit
•  The idea
•  The first version
•  Collecting data
•  Iteration and pivots
•  Are we there yet?

From Code to Product Lecture 2 — Process — Slide 18 gidgreen.com/course

 Sources of inspiration

Own needs Business experience

Current events Others’ success

Wouldn’t it be cool? Everyone’s doing it!

From Code to Product Lecture 2 — Process — Slide 19 gidgreen.com/course

 Immediate questions
•  Is it feasible?
•  Why now?
•  Why you?
•  Who would want it?
•  How will it grow?
•  Could it make money?
•  Is it defensible?
•  Define success or failure

From Code to Product Lecture 2 — Process — Slide 20 gidgreen.com/course

 No good answers?

From Code to Product Lecture 2 — Process — Slide 21 gidgreen.com/course

 Why now?

Critical mass New platform

Macro shifts
Troubled incumbent

Bandwidth No one thought of it!

From Code to Product Lecture 2 — Process — Slide 22 gidgreen.com/course
 Some trends
Technology Society
•  Cloud computing •  Ageing in West
•  Big data •  Consultants
•  Personal genetics •  Financial crises
•  Self-driving cars •  BRIC countries
•  Cryptocurrencies •  Mobiles in Africa
•  3D printing •  Outsourcing
Be a trend spotter, not a trend setter
From Code to Product Lecture 2 — Process — Slide 23 gidgreen.com/course
 Can it be done?
•  Break into layers
•  Find the hardest part
–  Algorithm
–  Performance
–  Compatibility
–  Scaling
•  Find equivalents
•  Do you know how?
From Code to Product Lecture 2 — Process — Slide 24 gidgreen.com/course
 Who would want it?
•  Talk to your ideal customer
–  Use connections
–  Cold calls / emails
–  (Surveys)
•  Search for competition
•  Check search volumes
•  Vaporware/prototypes
•  Ask friends and family
From Code to Product Lecture 2 — Process — Slide 25 gidgreen.com/course
 How will it grow?

Pure virality Self promoting

Word of mouth Search engines

Paid advertising Direct sales

From Code to Product Lecture 2 — Process — Slide 26 gidgreen.com/course
 But… Google’s early growth
100,000,000 100%

10,000,000 75%

Queries per day

1,000,000 Monthly growth 50%

100,000 25%

10,000 0%
Dec 98 May 99 Oct 99 Mar 00 Aug 00 Jan 01

From Code to Product Lecture 2 — Process — Slide 27 gidgreen.com/course

 Could it make money?
•  What’s the model?
–  Is there enough pain?
•  Is the market…
–  Large enough?
–  Long term?
–  Growing?
•  Is there competition?
•  Are there per-customer costs?
From Code to Product Lecture 2 — Process — Slide 28 gidgreen.com/course
 Is it defensible?

Economy of scale Technology

Accumulation Lock-in

From Code to Product Lecture 2 — Process — Slide 29 gidgreen.com/course

 Is it defensible?

Network effects Brand awareness

First mover Outspending on

advantage advertising

From Code to Product Lecture 2 — Process — Slide 30 gidgreen.com/course

 Lecture 2
•  Companies vs startups
•  Product—Market fit
•  The idea
•  The first version
•  Collecting data
•  Iteration and pivots
•  Are we there yet?

From Code to Product Lecture 2 — Process — Slide 31 gidgreen.com/course

 The first version
•  “Minimum viable product”
•  Identify early adopters
•  Build quickly
•  Design for learning
•  No barriers to use
•  Aim to fail fast

From Code to Product Lecture 2 — Process — Slide 32 gidgreen.com/course

 What’s in?
•  Simple interface
•  Some explanation
•  Metrics
•  Feedback form
•  Final product name
•  Rapid deployment

From Code to Product Lecture 2 — Process — Slide 33 gidgreen.com/course

 What’s out?
•  Beautiful interface
•  Peripheral features
•  Lots of options
•  Scalable infrastructure
•  Business model
•  Bugs and glitches

From Code to Product Lecture 2 — Process — Slide 34 gidgreen.com/course

 Early Google

From Code to Product Lecture 2 — Process — Slide 35 gidgreen.com/course

 Google now

From Code to Product Lecture 2 — Process — Slide 36 gidgreen.com/course

 Early Amazon

From Code to Product Lecture 2 — Process — Slide 37 gidgreen.com/course

 Amazon now

From Code to Product Lecture 2 — Process — Slide 38 gidgreen.com/course

 Early Facebook

From Code to Product Lecture 2 — Process — Slide 39 gidgreen.com/course

 Facebook now

From Code to Product Lecture 2 — Process — Slide 40 gidgreen.com/course

 Version 1.0
“If you’re not embarrassed when you
ship your first version you waited too
long… You can never fully anticipate
how an audience is going to react to
something you’ve created until it’s out
there.”
— Matt Mullenweg, WordPress

From Code to Product Lecture 2 — Process — Slide 41 gidgreen.com/course

 Lecture 2
•  Companies vs startups
•  Product—Market fit
•  The idea
•  The first version
•  Collecting data
•  Iteration and pivots
•  Are we there yet?

From Code to Product Lecture 2 — Process — Slide 42 gidgreen.com/course

 Collecting data
•  Change hats
•  Observation
–  Direct
–  Remote
•  Feedback emails
•  Metrics
•  Brand monitoring

From Code to Product Lecture 2 — Process — Slide 43 gidgreen.com/course

 Direct observation
•  Find subjects
–  Advertise
–  Public places
–  Acquaintances
•  Start from blank
•  Don’t interfere
–  Questions allowed
•  Discuss at end
From Code to Product Lecture 2 — Process — Slide 44 gidgreen.com/course
 Power of the few
25
90% certainty
20
Observations Required

15

10

0
0%  20%  40%  60%  80%  100% 
Problem Likelihood 

From Code to Product Lecture 2 — Process — Slide 45 gidgreen.com/course

 Remote observation

From Code to Product Lecture 2 — Process — Slide 46 gidgreen.com/course

 Feedback emails
•  Read by product team
•  Answer them
•  Feedback = pre-sales
•  Keep a tally
•  Metadata
•  Watch for jewels

From Code to Product Lecture 2 — Process — Slide 47 gidgreen.com/course

 Feedback tools

From Code to Product Lecture 2 — Process — Slide 48 gidgreen.com/course

 Real metrics
•  Unique visits per …
•  Registrations per …
•  Downloads per …
•  Searches for product name per …
•  Engagement per user
•  Retention per user
•  Revenue per …

From Code to Product Lecture 2 — Process — Slide 49 gidgreen.com/course

 Vanity metrics
•  Total …
•  “Hits”
•  Traffic from:
–  Bots
–  Script kiddies
•  Publicity
•  Purchased users
•  One-time revenue

From Code to Product Lecture 2 — Process — Slide 50 gidgreen.com/course

 Brand monitoring

From Code to Product Lecture 2 — Process — Slide 51 gidgreen.com/course

 The building
“In a startup no facts exist inside the
building, only opinions… Get the hell
outside the building.”
— Steve Blank

From Code to Product Lecture 2 — Process — Slide 52 gidgreen.com/course

 Lecture 2
•  Companies vs startups
•  Product—Market fit
•  The idea
•  The first version
•  Collecting data
•  Iteration and pivots
•  Are we there yet?

From Code to Product Lecture 2 — Process — Slide 53 gidgreen.com/course

 Iterate to increase…
•  For customer
–  Features
–  Usability
–  Marketing
•  For you
–  Engagement
–  Growth rate
–  Revenue

From Code to Product Lecture 2 — Process — Slide 54 gidgreen.com/course

 Iteration priorities
•  Bugs first!
•  Show stoppers
•  Popular requests
–  But maintain your vision
•  Easy improvements
•  Jewels = market openers
•  Avoid specials

From Code to Product Lecture 2 — Process — Slide 55 gidgreen.com/course

 Serve, don’t obey
“If I had asked people what they wanted,
they would have said faster horses.”
— attributed to Henry Ford

“A lot of times people don't know what

they want until you show it to them.”
— Steve Jobs

From Code to Product Lecture 2 — Process — Slide 56 gidgreen.com/course

 Don’t be scared!
1000000

800000 From 1,000 to

1,000,000 users at
600000 10% per month
Users

400000

200000

0
0 2 4 6 8 10
Years

From Code to Product Lecture 2 — Process — Slide 57 gidgreen.com/course

 Persevere or Pivot?
•  Metrics improving?
•  Still learning?
•  Stuck serving the few?
•  Frustrated?
•  Is failure defined?
•  Be brave, be swift

From Code to Product Lecture 2 — Process — Slide 58 gidgreen.com/course

 Product Pivots
•  Zoom in
•  Zoom out
•  Platform ↔ Application
•  Technology
•  Application of technology
•  Reuse accumulated data
From Code to Product Lecture 2 — Process — Slide 59 gidgreen.com/course
 Other Pivots
•  Business model
•  Target customers
•  High margin ↔ High volume
•  Sales channel
•  Clean slate

From Code to Product Lecture 2 — Process — Slide 60 gidgreen.com/course

 Famous Pivots

From Code to Product Lecture 2 — Process — Slide 61 gidgreen.com/course

 Lecture 2
•  Companies vs startups
•  Product—Market fit
•  The idea
•  The first version
•  Collecting data
•  Iteration and pivots
•  Are we there yet?

From Code to Product Lecture 2 — Process — Slide 62 gidgreen.com/course

 Are we there yet?
“Startups occasionally ask me… whether
they have achieved product/market fit… if
you are asking, you’re not there yet.”
— Eric Ries

“In a great market — a market with lots of

real potential customers — the market pulls
product out of the startup.”
— Marc Andreesen
From Code to Product Lecture 2 — Process — Slide 63 gidgreen.com/course
 Painting a picture
“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.
And you can always feel product/market fit when it's
happening. The customers are buying the product just as
fast as you can make it... Money from customers is piling
up in your company checking account. You're hiring sales
and customer support staff as fast as you can. Reporters
are calling because they've heard about your hot new…”
— Marc Andreesen
From Code to Product Lecture 2 — Process — Slide 64 gidgreen.com/course
 A rule of thumb
“In my experience, achieving product/
market fit requires at least 40% of
users saying they would be ‘very
disappointed’ without your product.”
— Sean Ellis

From Code to Product Lecture 2 — Process — Slide 65 gidgreen.com/course

 Sustainable growth
Viral arc Referrer

Hearing Retenti
on
Active
Stranger Inbound Visitor Onboarding
User
Adverts

Paying
Money arc Customer

From Code to Product Lecture 2 — Process — Slide 66 gidgreen.com/course

 Books

gettingreal.37signals.com

From Code to Product Lecture 2 — Process — Slide 67 gidgreen.com/course

 A story…

From Code to Product Lecture 2 — Process — Slide 68 gidgreen.com/course