Author: Matt Brocchini

Early this year I reconnected with an old friend. Martyn Crew is the founder and CEO of Bootstrap Marketing (bootstrap-mktg.com), one of the best Silicon Valley marketing agencies. If you are launching a new product, a new company, or breaking into a new market, Bootstrap is the partner you want.

But long before Bootstrap was even a glimmer in Martyn’s eye, he and I were colleagues at a software startup in San Francisco. I ran product management, and Martyn was in charge of sales. Working in a basement office on Townsend St, we were 20-somethings trying to figure it out in real time. (That neighborhood is now packed with startups. I wouldn’t be surprised to find another pair of young entrepreneurs just like us in that same basement at this very moment. Although, they probably don’t have to re-start their hard disks after a power failure by spinning the platter with a pencil eraser like I did! Ah, the good old days.)

Fast forward to this spring, when Martyn and I met for lunch. I told him about the work I had been doing with startups using the Quantitative Product-Market Fit (QPMF) framework. My colleague Chris Sorensen and I developed QPMF when we were both Entrepreneurs in Residence at a Silicon Valley Startup Accelerator, as a way to help founders clarify their customer’s needs and desires and focus product strategy on their most important differentiated benefits.

We created QPMF with product teams and product strategy in mind, but Martyn instantly recognized that it might be equally useful in a marketing context. As I mentioned, Martyn’s company specializes in launches; most of his clients are new startups, established companies launching new products, or foreign companies bringing successful products to the US market. The first step in a successful launch is a solid positioning architecture. Martyn asked me: could the QPMF framework help his clients with their positioning?

We decided to try it out. Our first client was an established player in natural gas transaction management. Next was a big data startup with an amazing new marketing analytics solution. Next, a European company that wanted to bring their very successful database replication technology to the US market. After that we helped launch an enterprise collaboration software company, a hybrid cloud IT infrastructure product, and a new crowd-sourced HR recruiting solution.

With a few launches under our belts, we knew we were on to something. By taking a few days at the beginning of an engagement to clarify the market segments, customer value dimensions, competitors, and differentiated advantages of any particular product, we helped these companies build a solid positioning architecture. And the positioning architecture is the foundation for everything else that is essential to a successful launch: branding, website, social media presence, sales collateral, PR strategy, PPC, direct marketing campaigns… everything.

Martyn and I have now integrated the QPMF framework into the Bootstrap Launchpad process, Bootstrap’s methodology for product and company launches. The basics are outlined in two short guides that are available on Amazon. This is one of the things I love about Bootstrap – in the best Silicon Valley tradition, they’ve “open sourced” their methodology and made it available to all. If you’re getting ready to launch something new, you will probably find these guides useful.

Check out the Bootstrap Launchpad guide (http://amzn.com/151687918X), and for a deeper look at QPMF see the Bootstrap Product-Market Fit Guide (http://amzn.com/151715362X). I think they’ll help you make sure that your launch takes you where you want to go.

I’m writing a series of guest blog posts on Quantitative Product Market Fit for Marketers for Bootstrap Marketing, a silicon valley marketing agency that helps startups launch.  Check it out on the Boostrap site or read on…

Case Study: To Get the Right Answer You Need the Right Question
One of the most valuable aspects of the QPMF methodology is that it quickly reveals your assumptions about what’s important to your customers, how well your product or service delivers on those customer needs and desires, and how you stack up against the competition. And with the assumptions out in the open, you can take action. A prime example of this can be seen in Bootstrap Marketing’s implementation of the QPMF methodology.

In early 2015 the Bootstrap team went through a QPMF analysis to uncover assumptions about their own product-market fit. They wanted to explore a particular type of Bootstrap customer: technology start-ups that are moving into their growth stage and need to execute a launch that will quickly build awareness and revenue. These tend to be companies that have established a strong need for their product with a small number of customers, but are still relatively unknown to the majority of their target customers.

Bootstrap has an excellent track record helping start-ups like this develop launch strategies that deliver results. But what they wanted to better understand was what these start-ups look for in a marketing partner.

In an accelerated two-hour session, we went through the analysis and defined the key Value Dimensions for the segment, selected a set of competitors to evaluate, and scored everything. Because the QPMF process forced the Bootstrap team to quantitatively rank every Value Dimension in terms of how important it is to their customers and how well they and their competitors perform, it immediately revealed interesting results.

First, the process revealed that Bootstraps two primary competitors are virtually identical in terms of how they appear to customers.

Second, it revealed that when start-ups are about to launch and are looking for a partner to help them do it, there are two main qualities they look for:

Strategy—Given the complexity of the communication challenges that disruptive start-ups face, they need an experienced team that understands how to focus marketing energy on the right audience and craft a positioning and messaging strategy that will inspire customers to take action.

Marketing Execution—Start-ups need a partner that can deliver high-quality marketing content and programs quickly and efficiently.

The team agreed that strategy and execution were the two most important Value Dimensions; however, the QPMF analysis uncovered a question the Bootstrap team could not answer with confidence: “What do our customers value more? Our strategic capability or our marketing execution skills?”

So they did what smart marketers do—they asked the customer. A survey went out, and the results came in: the clear message that customers deeply value is Bootstraps ability to help start-ups with BOTH developing an effective strategy AND skillfully executing marketing programs.

With this knowledge of what their customers value, Bootstrap has dramatically improved communications with their audience.

QPMF led them to the right question; the question led them to the right answer.

I’m writing a series of guest blog posts on Quantitative Product Market Fit for Marketers for Bootstrap Marketing, a silicon valley marketing agency that helps startups launch.  It will be a five-part series.  Check out part 1 on the Bootstrap site or read on…

A couple of years ago, after my company was acquired and I had put in my 18 months at the new place, I joined one of the big Silicon Valley startup accelerators as an entrepreneur in residence.  My job was to listen to startup pitches, give feedback, and work more intensively with a few of them to help them get from where they were to where they wanted to go.

I loved working with these entrepreneurs.  They were smart, engaged, amazingly open-minded, resourceful people who were just fun to hang out with.  But I quickly realized that most of them had a problem: in order to get from where you are to where you want to go, you need to know two things:

1) Where you are

2) Where you want to go

Sounds simple, right?  But it is not simple.  A startup’s job is to create a new product that a lot of people will buy.  They’re operating in a complex environment – different market segments have different needs, existing products are evolving rapidly, and other startups are chasing the same opportunities.  It is a high stakes game, and every player is working with partial information.  It is complex enough that frequently members of the same team have very different assumptions and beliefs about those two basic questions.

So I asked myself: how can I help these teams develop a solid, shared concept of their core value proposition?

Lucky for me, I didn’t have to come up with the answer on my own.  My fellow entrepreneur in residence Chris Sorensen was struggling with the same issue, and he had the insight that the solution had to be based on a clear-eyed assessment of product-market fit.  “What kills most startups?” Chris would ask.  “Running out of money before achieving product-market fit.”

So together we got to work on a process to help our startups develop a clear, shared, actionable vision of where they are and where they need to go to succeed.  We wanted something that would include these elements:

1) Who is my product for?

2) What’s most important to those people?

3) What are their alternatives to buying my product?

4) How does my product stack up against the alternatives?

5) What could happen to erode my competitive advantage?  What do I need to watch out for?

6) What can I do to increase my competitive advantage?   What should my strategy be?

Over the course of a few months, we refined this into the strategic framework that we call Quantitative Product Market Fit™.   We designed it to mentor startups in the art of profitable innovation.  It worked, and we continue to use it today to help both startups and enterprise product teams optimize their product strategies.

So now you might be asking: “Didn’t you say you were going to talk about Product-Market Fit for Marketers?”  I did indeed.  I have to give credit to Martyn Crew, founder and CEO of Bootstrap Marketing, for the insight that the QPMF framework and process could be just as valuable to marketers as it is to product teams.  Martyn invited me to introduce his team to QPMF, and we employed it for a few clients.  Those successes led to this series of articles.

My goal with this series is to help marketers create more effective positioning, branding, content, and strategies by using the tools of QPMF to clarify the true competitive position and the possible strategic directions of the products they are marketing.  Because after all, Marketing is about doing three things:

1) Communicating the competitive advantages of a product

2) Enhancing the competitive advantages of a product

3) Creating new competitive advantages for a product

A solid QPMF-based understanding of your product and target market can help with all three.  The better you connect the real desires and needs of your target audience with the differentiated advantages of your product, the better your marketing will perform.

Coming Next: QPMF: A Secret Weapon for Marketers

 

Poor RadioShack is getting it from all sides. Trading was halted earlier this week, and as the stock price has slid from over $23 in 2010 to 59 cents now, business and technology journalists have been eulogizing the firm with great energy.  Some of them wax poetic about the good old days, when hobbyists like Steve and Steve  used to hang out there and buy the bits and pieces that they spun into giant new industries. But other people have been asking: why has it taken so long?  Who buys anything at RadioShack anymore?  We all know that the last decade has been a tough one for bricks-and-mortar electronics retailers.  Circut City closed its last store in 2009.  Why is RadioShack still here?

RadioShack is still here because it has been able to outperform competitors in one vital Value Dimension.  But the latest chapter in the story has an interesting twist. It looks like RadioShack’s killer is missing the one thing it needs to deliver the final blow – and that one thing could be RadioShack itself.

For a company to have any market share, it has to outperform competitors in some way, for at least some customers, at least some of the time.  (Technically, it needs positive Delta V in at least one Value Dimension – see Delta V and The Innovator’s Secret Formula if you want to dig into the details of how it works.) Over its 9-decade history, RadioShack has performed well in many different Value Dimensions.  But in recent years its primary differentiated advantage was ubiquity: with over 7.000 stores, you are never far from one.  So if you need a cable or unusual battery or another electronic accessory RIGHT NOW you can always get it at RadioShack.  For the last few years, this has been the one Value Dimension where RadioShack has had the lead.  It didn’t have the best prices (Amazon), it didn’t have the best selection (Amazon again), and it wasn’t a cool place to shop (Apple), but if you needed something right this minute you could probably get it at a RadioShack store nearby.

RadioShack’s lead in this dimension is eroding.  I now get free two-day shipping from Amazon on pretty much everything.  And one-day shipping is not that expensive.  And now I can get same-day delivery from Google Express.  RadioShack’s lead in it’s last Value Dimension is slipping away.

But the lead has not slipped to zero – yet.  Which made my ears perk up when I read this in the Wall Street Journal:

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Amazon to Open First Brick-and-Mortar Site

The New York City Location to Handle Same-Day-Delivery Inventory, Product Returns

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And this in the New York Times:

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“…within the next 12 months Amazon will be opening hundreds of “dark” stores, which are places where people can pick up things, or make a “transformative acquisition” along the lines of Best Buy or Radio Shack.”

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What? Amazon buying RadioShack?  So it can open “dark stores” to provide “same-day delivery?”

Sure it is just a rumor, but think about what it means.  RadioShack’s last advantage was being able to satisfy the I NEED IT RIGHT NOW customer.  Amazon has eroded that advantage by providing two-day and then one-day delivery.  If Amazon could offer same-day delivery, RadioShack’s last advantage would be gone.  But same-day delivery requires a local presence throughout the country.  Amazon does not have that.

But there is somebody who does have it, lots of it, and a market cap under $70 million. So what’s the cheapest, fastest way for Amazon to acquire the infrastructure it needs to offer same-day delivery?  Shake out some pocket change and pick up RadioShack.

 

Chad McAllister recently posted a great summary of some of the core Quantitative Product-Market Fit concepts on the Everyday Innovator blog. In his post, he mentions the Apple Newton as an example of a product that failed to achieve product-market fit. As he says, it was packed with innovation but did not succeed with customers. There were a lot of reasons. McAllister cites the awkward size and easily-lost stylus. I would add the high price and dependence on handwriting recognition that never worked as well as it had to. But let’s allow the poor thing rest in peace.

I bring it up because McAllister’s mention of the Newton reminded me of my first experience with that product, back when it was unveiled at MacWorld Boston in 1993. My flight back to San Francisco from Boston was packed with Silicon Valley execs on their way home (including Apple CEO John Sculley, who hid behind a copy of the National Enquirer for most of the flight). Most of the execs were playing with their new Newtons. It was amazing to look down the rows (in first class anyway) and see a Newton in every other seat.

Fast forward 17 years to the release of the first iPad in 2010. It seemed that within just a few weeks, every plane flight I boarded was packed with people staring at their iPads. They are now so ubiquitous they sometimes seem to provide most of the illumination in the cabin!

The very high product-market fit of the iPad has made it a common sight on virtually every plane flight in the world today.  Which was true for the Newton only once: on that flight back to California from MacWorld Boston in 1993.

– Matt Brocchini

There is a nice article on Forbes today that refers to our book The Innovator’s Secret Formula and briefly describes the Three Laws of Disruption.  Check it out:

http://www.forbes.com/sites/neilkane/2014/06/16/the-three-laws-of-disruption/

– Matt Brocchini

Today’s San Francisco Chronicle includes this article about friction between Uber and the company’s drivers.  This got me thinking about the possibility that Uber will have to disrupt itself in order to stay competitive, possibly not too long from now.

Uber and competitors such as Lyft and Sidecar are taking market share from traditional taxi services by providing a product that outperforms traditional taxis in three key value dimensions: convenience, reliability, and predictability (and, you could argue, coolness). When I need a ride, I can get out my phone, open the Uber app, and immediately know where the cars are that can pick me up and how long it will take for one to get here.  It sure beats waiting on the curb and praying for good luck, or calling yellow cab and hoping the dispatcher understood me.

In order to make the service work, Uber needs drivers, and the Chronicle article illustrates that getting a network of high quality drivers will require skillful execution.  For Uber to thrive, one of the things the company is going to need to get good at is creating and maintaining this network of drivers.  It is essential to their success.

But will it eventually become irrelevant? In our chapter The Five Moves in the Innovator’s Playbook we describe how Netflix had to disrupt itself in order to transition from a business powered by postal mail DVD distribution to one based on streaming media.  One of their core competencies, an amazingly fast, super automated method of getting DVDs by mail to just about anywhere in 2 days (or less!), had become irrelevant.  It was a cornerstone of their success, until suddenly it wasn’t.

Is Uber looking at a similar self-disruption, when it transitions from it’s driver network to self-driving vehicles?  How far away is that day? And when it does get here, how much will we tip our robot drivers?

– Matt Brocchini

I first suspected that we were onto something with the ideas of Q-PMF and Delta-V when I noticed that I was seeing the world differently.  Then as I noticed the same thing happen with the executives and entrepreneurs we work with, I was sure of it.  Something about these ideas made us change the way we thought about things.  We were all asking the same questions, but we were coming up with better, more useful, and more insightful answers.

To say that it was like Neo taking the red pill might be overstating the case, but it really did feel like the fog was lifting and the true dynamics of innovation and disruption were revealed.  Here are a few questions that suddenly had clearer, better answers for me:

When you ask these questions from a Product-Market Fit perspective, you get a new point of view.

In the Disruption Decoded blog, we are going to explore questions like these and see what kind of light we can throw on them.  Do you have a question or idea for us?  Let us know.