🙋♀️ Quantifying product market fit
GM, this is Podup #9. Your no-bullshit friend who sums up your favourite podcasts for you. You're one of the first 94 subscribers - thanks for your continued support.
Congrats, you saved yourself 3 hours & 15 mins listening time
What you need to know
🙋♀️ Quantifying product market fit
⏰ 90 seconds of suffering
💀 Survival mode for you business
💰 Buying small software businesses
When have you reached the promised land?
Entrepreneurs on Fire: Exact Growth Playbook: From Idea to Seven Figures with Jim Huffman on App...
3 min read vs 39 mins listening
What’s your favourite podcast episode? One that inspired you, changed the way you think, or taught you something that made a significant impact on your business.
This week, we’re starting off with a recommendation from Saloni, a fellow Podup reader. If you like it, I’ll include a reader recommended episode every week. Reply with your thoughts and let me know your favourite episode.
What they say
Define product market fit
You hear the phrase product market fit. How do you know you have that and how do you even quantify that?
Sean Ellis came up with the phrase growth hacker and ran growth at Dropbox.
He quantifies it by a simple one question survey 'How would you feel if this product or service went away?'
If over 40% of people are devastated if it goes away then you know you’re on to something.
You kind of know it when you have it. You can’t keep up with demand, you’re trying to hire people, you’re trying to figure how you can fulfil all of the asks that people have.
I’ve been a part of startups that have it and don’t have it. The ones that don’t have it, you’re kind of in denial where you’re like 'We’re so close, we’re one partnership or feature away, these people will buy it if we do x, y and z.'
If you don’t know if you have it or not, you probably don’t have product market fit.
Jim Huffman
Surprise and delight your customers
If you’re just starting out, the first tactic I like to start with is asking yourself the question 'How can you absolutely delight or wow your customer to where they become this brand ambassador who’s going to talk about you to their friends or colleagues.'
Usually these are things that don’t scale and I would absolutely embrace that.
For example, if you launch a fashion line, how can customers talk to the founder to hear about the quality of the products.
Really embrace those things that don’t scale early on. Do the things that will bring in people who will love your brand for the long haul.
Jim Huffman
What I say
Why it matters: Product market fit gets thrown around indiscriminately. Don’t get me wrong, it’s a great lens to view your business through. But the ambiguity can lead a lot of founders and early stage employees to bury their heads in the sand and not face reality. It’s important to be able to quantify success, however rudimentary your method.
With Sean Ellis’s one-question survey, you have a good indicator to assess traction on, compared to a finger in the air approach. It’s also super cheap and quick to implement. Run a pulse check on your business to find out if you have product market fit. Want to collect more data while you’re at it? Here’s a good 8 question template you can use.
Between the lines: What I love about these quotes is that they go hand in hand. If you’re able to surprise and delight your customers, you’ll create meaningful relationships and receive valuable feedback. Assuming you take this onboard and refine your product, you’ll be well on your way to product market fit.
How expensive is your happiness?
My First Million: One Question Friday: Someone Stole My NFTs on Apple Podcasts
Show My First Million, Ep One Question Friday: Someone Stole My NFTs - 6 May 2022
4 min read vs 24 mins listening
There’s a lot of chaos in the world right now. Russia is still committing war atrocities in Ukraine and global markets are crashing all around us. It’s not an easy pill to swallow, so I’m passing on the mindfulness baton from Tony Robbins, to Shaan Puri, to me, to you.
What they say
The price of your happiness
[The monk said] don’t make your happiness so cheap Tony Robbins. That guy did a small thing and took your happiness, so your happiness had a very low price, it only took a very small thing to acquire your happiness and take it away from you.
So my takeaway from this is you want to be the Louis Vuitton of happiness. You want your happiness to be very expensive, so it takes a very, very big event for something to take it away.
You have to decide the price of your happiness. Is your happiness going to go away if someone cuts you off in traffic or your pizza delivery gets delayed? Are you going to get upset? Not upset in a big way but you lose that joyful state of mind you could otherwise be in.
Shaan Puri
The 90 seconds technique
It’s really annoying when bad things happen and the advice you’re getting is 'It’s ok, don’t worry about it, just shake it off.'
But in the moment I feel bad and some semblance of loss, so it’s very hard.
A technique you can use is a Tony Robbins technique that he calls 90 seconds of suffering.
He goes 'So I started to notice these little moments when I was no longer in that happy, grateful, optimistic, enthusiastic state of mind.'
He’d say 'I can’t prevent that feeling but I can contain it. I’m going to give myself 90 seconds to suffer and after that 90 seconds I’ve got to let it go.'
What happens is if you don’t time box it, it’s very easy to have something ruin your day, or even get you down for a week or a month or a year.
The funny thing is within like 24 seconds you’re like 'All right, whatever, I don’t even need to do the whole 90, if it’s going to end at 90 anyways then you end up not even doing 30.'
That technique of giving 90 seconds of suffering whenever something happens has been game changing for me.
Shaan Puri
What I say
Why it matters: How does this count as a business podcast? Because anything to do with becoming a happier, better leader directly impacts your ability to build and grow a business. We all face hardship at times. It’s how we respond that matters. Rather than reacting to a situation purely based on emotion, you can adopt these frameworks, take some time to reflect and think, and then respond in the right way.
Between the lines: I’m a terrible poker player. My face tells you everything you need to know. But I recently started working on my body language with my own technique. I take three deep breaths whenever something bad happens to collect myself and reframe the situation. This has been my 90 seconds of suffering before I knew it existed, and has helped me to manage challenges at work in a more measured way. You don’t need to adopt either of these techniques, but it’s important to have a tool you can use to better manage challenging situations.
Wartime CEOs are coming
All-In with Chamath, Jason, Sacks & Friedberg: E80: Recession deep dive: VC psychology, macr...
3 min read vs 1 hour and 41 mins listening
Sorry for being the bearer of bad news. It’s time for you to switch your mindset from peacetime to wartime. We’ve already been warned by Fast’s implosion last month. Now unicorns like Zwift and Carvana are reverting to mass layoffs. Even Meta, Twitter and Uber have enacted hiring freezes.
What they say
Be more conservative
If your survival risk is on the table, you really have to act differently.
It’s kind of like the difference between a poker tournament and a cash game.
In a poker tournament, players are much more conservative. Why? Because once you’re out you’re out.
Whereas in a cash game you can just rebuy. We’ve gone from being in a cash game where people can rebuy to a tournament.
In a boom, you can always go out and raise more money. Now you really have to think about survival. You can’t let yourself bust out of the tournament.
David Sacks
The markets have shifted
Roughly 1/3 of public biotech stocks are trading below their cash balance.
The reason is 40% of them have less than 20 months of cash, 60% of them have less than 2.5 years worth of cash.
Historically biotech companies run an R&D cycle to prove their biotech product will work.
The capital markets are now gone for them. They’re still burning whatever it is, $20M, $30M, $40M, $80M, $100M a quarter. They’ve only got a few hundred million dollars in the bank.
Everyone’s like 'Hey, look, even if your product works, the odds of you being able to get the funding to get through the next phase of clinical trials is much lower, therefore the ascribed value of your business is negative.'
David Friedberg
What I say
Why it matters: The market has spoken. It’s time to act. Product roadmaps and customer growth are no longer your main priorities. Your sole focus should be on survival. As of today, you should put all expenses under a microscope, review all non-essential projects and personnel, and give your company at least 2 years runway to weather the storm.
Between the lines: Ben Horowitz’s article Peacetime CEO/Wartime CEO is a must read as we abruptly enter a dark and challenging business environment.
You may not like it, but you’ll need to make a lot of hard decisions over the next 12 to 24 months. I’ll leave you with my favourite quote from the article to reinforce the mindset shift that’s necessary to survive:
"Peacetime CEO knows that proper protocol leads to winning. Wartime CEO violates protocol in order to win.”
Buying micro-SaaS companies
Business Brainstorms: Flipping Wordpress and Shopify plugins for fun and profit with Vikas Singh...
3 min read vs 31 min listening
Andrew Wilkinson makes a lot of noise about buying businesses rather than building them. He’s proven this can work at scale. His company, Tiny, owns 35+ companies with enterprise value of $1B+, including Dribbble, MetaLab, Girlboss, and Unicorn Hunt.
But, you don’t have to spend big to get started. Micro-SaaS businesses are every solopreneur’s dream. Once the flywheel gets going, they can be inexpensive to run and extremely profitable. Vikas Singhal is Founder of Express Tech, a 40 person company that buys G Suite, Shopify and WordPress apps and plug-ins.
What they say
Vikas’s acquisition criteria
When I evaluate something, I mostly look at what kind of potential this plugin or app has. Is it a top 10 or 20 use case on an ecosystem? Even if the product is great, you won’t find that many buyers if it’s a very niche use case.
The second criteria - is the plug-in bringing in more revenue to customers? For example, can an e-commerce merchant increase their revenue? The top performing plugins are mostly marketing plugins, SEO plugins, pop up plugins, and analytics plugins.
Third is obviously the revenue numbers, the ask price, where the seller is from, what churn you are looking for, when can you get your ROI back.
There are some nuances that are very important like how open the seller is in discussing their details. If the seller is saying I’ll show you the numbers once I have a letter of intent, that’s a big red flag.
The last point that I’ll say is the tech stack because not every tech stack is supported by you or your team. Let’s say you’re a solo founder, then you’re not going to want to learn a new programming language just because of that startup.
Vikas Singhal
What I say
Why it matters: This evergreen advice can be used to help you buy a business or give you a set of principles to live by when selling a business. Speaking of selling, it’s likely we’ll see a slowdown in M&A activity now that recession is upon us. As a potential buyer, this gives you an opportunity to pick up distressed businesses on the cheap. As a potential seller, you should start preparations for a quick sale.
Between the lines: Some of the best generational businesses were born out of the 2008 financial crisis (think Airbnb, Uber and Square). Buying or building a business in today’s climate will make you into a more fiscally disciplined entrepreneur in the future. MicroAcquire is a great resource for learning about buying and selling startups, and for checking out startups that you can buy today.
To bring this full circle, Andrew Wilkinson has only one caveat to buying a business: learn as an operator first. I tend to agree. If you want to buy a business and you don’t work at a startup - join one. If you want to buy a business and you already work at a startup - buy one. This isn’t financial advice so you need to make the right decisions for you. But ask yourself if you don’t buy now, will you ever pull the trigger?