This presentation centers on the concept of Product / Market Fit: what it is, why it’s important, and how to achieve it. I propose my “Product Market Fit Matrix” that helps to characterize the issues of the start-up and presents various frameworks that can help guide development. In a sense the Product / Market Fit Matrix is a meta-framework.

For MIT alums 0-15 years out, in the Boston area, we’d welcome you to join in on our monthly meetings at the MIT Sloan Entrepreneurs Breakfast Club.

“I liken it to the Cambrian era 550 million years ago, which saw the development of multicelled life. While nature tried every kind of experiment possible, the creation of new species was offset by the extinction of others.”

Searching for the next killer app
So, as Bezos implies, the explosion in the hundreds of thousands of ’smartphone’ applications, may imply we’re just at the beginning of finding a killer app. Originally, it was voice, then text messaging, then e-mail; but what’s the next major application that will really spur the next phase of adoption and determine winners and losers?

So, I offer a classification taxonomy of how to think about various application forms, which may help determine where to look and think about what’s next. Rather than take a ‘genre-based’ approach like every other app catalog, or a technology-based organization, I’ve tried to build a framework based on customer needs, or as Clay Christensen would put it, the ‘jobs they do’, for people.

Here are 10 categories of where the next killer app may come from.

1) Communication
The mainstay of mobile so far, this comprises uses such as personal communication (voice, text, e-mail) but also deep & shallow forms of communications from developing ad-hoc networks (e.g. temporal group based on proximity); microcasting media of all forms (e.g. sending text, sound, image, video to Twitter); and let’s not forget the business uses such as web conferencing and virtual tours.

2) Checking status / staying current
This category covers anything that we see today such as scores, weather and stock prices to more innovative examples like “nanny cams”. Essentially this category is anything that connects you to a a quick “check-in” or update.

3) Experience augmentation
Ways to pass the current moment, or enhance the experience you’re having with elements such as casual & social gaming, music, books, or other entertainment related experiences.

4) Extending the desktop / keeping productive while on the go
There is certainly a category of making what you do on the desktop, or other platform, available on the mobile device. While the apps today such as presentations, spreadsheets, notes, and contact management exist, we may see better examples emerge that tie what is done well on one medium with that of another such as Salesforce.com, which allows entry in relevant setting where you would in mobile, but management to happen on the desktop.

5) Activity recording
The ability to capture photos and voice can help play into broader activity recording; however extending that with accelerometers and GPS also enables applications like like NIke+, and other exercise monitors. I’m sure we’re just scratching the surface in these few domains.

6) Device replacement
There are many applications that use the wi-fi, infrared, Bluetooth, sound, and sensing capabilities of the mobile device to replace another mechanical / electrical / electronic device. We’ve seen clocks, alarms, levels, flashlights, tuners, baby monitors, barcode scanners, electronic keyrings, universal remotes, and so many others — where there are many more to come in this category.

7) Contextual query / response (my fave)
One of my favorite categories, these applications look at accessing timely and relevant information based on where you are and what you’re doing (see my earlier post referencing these aspects of Search). From Google Goggles, to augmented reality apps, and even personal concierge type services, I think this category has the most room for really interesting developments when coupled with sensing devices.

‘8) Digital Wallet & Identity
Since the mobile device is this century’s wallet, it naturally lends itself to be a great ID authentication system. We’re already seeing it as a means of providing ticketing via 2-D or audio barcodes, and also (similar to #6) to be your garage door opener or remote car starter. Clearly melding some sort of biometrics in conjunction with the device could activate the correct functionality also.

9) Transaction Execution
As a follow-on to #7 and #8, it seems relevant to execute on on searches and authentication. Here we should see an extension from the classic web-based transactions (e.g. buy a book, make a reservation) to those that access funds from the device itself, akin to NTT DoCoMo’s service in Japan.

10) Utilities & Administration
Certainly with the proliferation of applications and devices we’ll need a way to organize, clean-up, and maintain the health of our devices. These may be tools such as offering “Norton Utilities” functionality, synching files and devices, to anything else that makes categories 1-9 faster or easier.

Summing it all up
I’m sure I’m just barely scratching the surface of what’s possible here; moreover, interesting applications will also come out of hybrids of one or more of these categories. Which innovations will take off will certainly depend on various factors.

Let me know which categories I may have missed, or where you see mobile’s next killer app coming from.

Maybe he’s not stupid…just spineless
While there is likely a lot of gamesmanship on the part of Bettman to gain leverage with the IOC to set the terms of the NHL players participation, it’s plain stupid for him not to seize the opportunity to promote the game…especially since the NHL is in financial trouble. Saying things like the impact on season to great “balancing act”, and blaming “foreign Olympics” maybe coy; however, by not taking a stand Bettman comes across as a a weak commissioner, and calls into question whether he’s committed to delivering a great product for fans.

In situations like this it’s better to take a strong stance to say “the Olympics are great for our game and we’ll do what we can to be there” engenders more confidence than Bettman’s tip toeing. Fans (or customers), and the legions of prospective customers who were activated by Sunday’s game, won’t commit their attention unless their is a strong stance and identity….and Bettman blows the opportunity.

Follow the data
When faced with the decision to balance long and short term priorities, if you have data you must consider it. For instance can you model out the net financial impact of each option? In Bettman’s case there is a lot of precedent to draw from, using previous Olympics or even events like the Canada Cup and World Cup of Hockey…and if that doesn’t work, you can always look at yesterday’s SportsNation poll.

When the choice is clear, take a stand and move on
While making these trade-offs can be a difficult challenge for most start-ups, as life doesn’t often give you black and white decisions, here it’s pretty clear. So when you’re handed a decision like this on a silver platter make the right call and move on.

There is a stellar crop of EIRs that we hope to learn from as well:

Other newcomers

• Reed Sturtevant (Microsoft, IdealLab, Eons, Lotus) & Katie Rae (Microsoft Startup Labs, Eons.com, Lycos, AltaVista, Zip2, MirrorWorlds)

Existing Crop

• Jean Hammond (AXON Networks, Quarry Technologies, Spider Systems, ZipCar, HubAngels)
• Brian Halligan & Dharmesh Shah (HubSpot – and classmates of ours)
• Susan Whoriskey (Cubist Pharmaceuticals, Momenta Pharmaceuticals, Whoriskey Associates)

It’s really something to be back at MIT on a regular basis, and to be on the other side of the room. Also note, that for MIT alums, we’ve started a regular breakfast series for networking and discussing pressing issues – if you’re interested you can join our LinkedIn group.

Here we’ll look at some of these common decision traps, and how they can become roadblocks to qualitative customer research, on the road to finding product/market fit.

The 7 Decision Traps

1. Confirmation Bias: This occurs when you gravitate toward the evidence that reaffirms your original hypothesis or design. The “focus group” setting can often further contribute to this bias, as participants often go out of their way to avoid telling you your baby is ugly.
2. Reactance: Almost the opposite of #1, is the urge to do implement exactly what the customer tells you to do. While it’s easy to turn a customer wish-list into a task-list, guiding development via your product vision is especially critical for discontinuous or disruptive innovations.
3. Availability Heuristic: Customer stories tend to be most salient, and anecdotes tend to have a lot more social legs. Resist the urge to gravitate to these and spend more time meticulously recording and rigorously analyzing your data.
4. Negativity Bias: Often the negative feedback is the most tempting to act upon, since it’s actionable. Negative feedback must be separated in two groups: that from the people can live quite happily without your product (or those who you are too far away from satisfying) vs. that from people who like you’re product but need to see some tweaks. Moreover, though also spend time deeply understanding what customers love and why — building on love not only works in life, it also works in product development too.
5. Representativeness Heuristic: Weighing all feedback as equal, can result in a disjointed product experience. Careful segmentation and synthesis of all of your data can help to guide development, when prioritized by your product vision.
6. Focusing Effect: It’s easy to listen to what users are doing in the “now”, and their immediate reactions. Look for signs of what else they are doing around your product experience, such as exporting your data into a spreadsheet, building add-ons, or hacking it to solve another problem for themselves –> those are the lead users you want to build around.
7. False Consensus: In assembling a group of captive customers, it may be tempting to use their listening session, as a marketing commercial. However, doing so assumes that customers think the same way you do, and the session is a mechanism for building consensus and moving on. This approach really isn’t customer listening at all, and in effect is a one-way lecture.

Decision Traps can impede your search for truth
Qualitative feedback sessions are integral to understanding the full customer experience and psyche. However, falling prey to the seductive allure of these decision traps can cause you to overlook the real gold. These traps stem from need to synthesize a lot of information under the time pressure of getting a product to market or making revenue projections. The increased need to quickly synthesize and implement feedback in turn fuels these biases, and causes teams to fall into the traps.

You can avoid these by removing the artificial pressures by conducting qualitative feedback sessions much more often, and throughout all parts of the design and development process. Secondly, maintaining a nearly religious commitment to collecting, quantifying, and analyzing all collected data can remove the allure of making snap judgments. But let me turn to someone who says it better than I ever could:

“Men occasionally stumble over the truth, but most of them pick themselves up and hurry off as if nothing ever happened.”
-SIr Winston Churchill

For More Information…

J. Edward Russo’s book, Winning Decisions.

1. “Why don’t you just…” This also crops up under variations such as: “What you need to do is…”. To me, this one implies that you aren’t doing something obvious, and that obvious thing is simple to execute. This phrase is most uttered by current MBAs who just read a case study, or management consultants.
2. “That was my [friend/aunt/cousin's] idea…” Now I don’t mean this as they actually started a business, more that they had a tangentially related idea in the shower, or over beers, and never did anything with it….Kind of like how I “thought of” LinkedIn in 2001.
3. “Since you work for yourself, can’t you take today off?” Uttered by those who don’t understand your internal sense of urgency driven both internally (your desire to change the world), or externally (customers, competitors, or distaste of Ramen noodles).

Intentional Omissions

• “That’ll never work” Contrary to what you may think, this doesn’t get me upset, instead it gets me fired up. I think a lot of entrepreneurs have a bit of chip on their shoulder, or something to prove (in addition to wanting to change the world, of course), which enables this phrase to serve as an extra kick of inspiration.
• “Why didn’t I think of that?” While you could view this as trivializing your invention, I see this one as the highest forms of flattery. Usually this happens after the “this will never work” time, so to make this a natural, and “obvious” innovation.

What we say to ourselves…
This is a list of phrases I find me and my colleagues saying to each other over and over again, when things are tough.

• “It is what it is” The acceptance that “stuff happens”. Daily life can be like a rollercoaster, and if you get too caught up in the highs and lows, you’ll be a basket case.
• “Pay to learn” If you take an analytical, or test driven approach, to understanding your product-market fit, and sales channels, you will undoubtedly have more mini-failures than successes. This is all part of the process.
• “If it were easy everyone would do it” My all-time favorite line, which signals “hey, we’re doing something important here. It’s not going to be an overnight success”.

Of course, there is always the standard “you can do it!” kind of stuff but I honestly don’t know anyone who’s been at it a long time that still thinks that holds any water in of itself…well, except for these guys:

What are some phrases you love to hate?

What I want
With that application comes my needed, enabling feature: simple, cross-device cut & paste. That is, to take a hand drawn sketch from the tablet and seamlessly “beam it” over to a laptop or mobile device and have it ready for use immediately, just like you can across applications on a single platform.

What I don’t want
What I don’t want is to take a picture –> send it to a holding application –> pull it down on the other device –> insert it where I want. There are tools like Evernote and Dropbox for that. Nor am I relying on the long-held promise of “Pen Computing” where I have to add another expensive device to the mix.

Customer Empathy Story* #1:
I’m a rabid whiteboard user, and often use a notebook (I mean, a real pen & paper notebook) for concept sketches and diagrams. I often find it easier to draw a diagram or chart than to write text. Sometimes I’ll take a picture of the whiteboard with my phone, and other times I’ll try to recreate the sketch in my notebook. However, this all bottlenecks trying to clean it up and share the image more broadly (like in a Basecamp thread). This is often a painstaking process to clean up the image (I have terrible handwriting), or to recreate it in a drawing program. I’m impatient, hence the reason I draw in the first place. So, I’m looking for a quick way to transcribe diagrams developed by-hand into a format I can quickly clean-up and share.

[*TANGENTIAL RANT: I've deliberately avoided calling this a "user story" after the popular XP term, as I think those are "works like" descriptions or "I want" lists, not true stories. My version aims to create customer empathy by giving more color and insight into who the user is, what they want to achieve, and how they fill that need today. So it sets up the later description of how to solve their problem with your "works like" description.]

Customer Empathy Story #2:
My wife is an interior designer. She often uses her laptop to go show clients in the field concepts, and ideas. Yet, she still finds it faster and easier to use her trusty notebook for quick sketches, and note taking. Adding those notes to a client summary document, or recreating her sketches in her design tools is also an excruciating process. She would love to carry a “digital sketch pad” that would allow her the best of both worlds, and make later development of those ideas easier.

Commentary
In both scenarios it should be abundantly clear that a digital pen & paper solution, with augmented software to support them, makes a ton of sense. I think that development is inevitable, and someone smart will develop tools that help me “clean up” the boxes, arrows, and text I write on the fly (using OCR), and make importing the files I create into other programs easier. What I’m looking for is a way to quickly send it to another device. We have Bluetooth, devices can be set up as “trusted” peers, we have gesture technology, so I’m pretty sure we can do this.

If you’ve seen Minority Report or Avatar there are scenes where a user grabs an image form the big screen and throws it on his tablet, which he then walks over to share that tablet with another person. While what I’m asking for need not be that dramatic, but the general idea is the same.

If someone can do that with their tablet, I’ll line up to buy one, and I though that Apple who has the iPhone, iPod, MacBook, and now iPad would be first to figure it out. I guess I’ll have to wait for the “gPad”, or Microsoft’s Courier…if it ever gets out of the lab.

Engineers want to build for adoption, that is a carefully designed system that accommodates user adoption with the requisite features and performance they require, or else they will risk losing customers. Yet, to truly understand what users want, and how they will use the system, one needs to release a “suboptimal” product in order to gain customer feedback.

So, if you release junk early, no one will ever want what you build, but if you release a fully operational system too late, it may not conform to what user’s want. So, let’s see how we can find a happy medium…

Overcoming the Paradox
Getting to MVP requires a disciplined desire to understand the real market use cases, and how the product can adapt to that. So it is essential to compromise the technology in search of that. To do so you can:

• Find a group of dedicated users who can give you active feedback on your intended solution
• Find a group of desired users who you can watch do their common tasks, using their existing methods, otherwise known as ethnography
• Find as many real applications as you can to “dogfood” your own product
• Show off your demo to as many people as you can – no “stealth mode”

All of the above need a comfort with the notion that technology is easily adjusted, but building markets is difficult. So, rather than build the elegant thing no one will use, instead try to engage the market as soon as possible through various prototypes. Moreover, if you have a close relationship with an early market, where you show genuine effort to incorporate feedback and respond quickly, you’ll be surprised how much they’re willing to tolerate. So, the overall approach is a great way to manage their user experience.

The greatest perfection is imperfection
I’m sure Lucilio Vanini wasn’t referring to product-market fit, when he said “perfection depends on incompleteness” (or “perfectio propter imperfectionem”).

If you’re still concerned, take comfort – odds are no one will use your early product anyway.

2) Building a team
Here, I largely reiterate what I’ve written previously: a good product person needs brains, guts, charisma, and character.

3) Converging to product-market fit
After a number of anecdotes, we discussed a lot of the Lean Start-up principles, including the MVP (minimum viable product) concept. We also examined how to find the optimal bundles of features, and why product managers (and other stakeholders) feel mental anguish to cut something once it’s in the product, as I’ve written about previously. Before we moved on, I also made sure to talk to about how this process is applied to non-software / tech products, such as our product The Barmaid, specifically how we went about honing our market focus given a relatively fixed product.

4) Building a biz model
In this section, we chatted about how to build a real business model around your product (because otherwise it’s a hobby). We shared stories and looked at specific case studies, but there are some good tools out there as well. Personally, I’m a big fan of Alex Osterwalder’s Business Model Canvas concept, as well as David Skok’s blog.

5) The role of analytical measurement
I’m a big proponent of M.O.M, that is Measure, Optimize, Monetize — hey, it’s my day job after all. So there was undoubtedly lots to discuss here, including the amazing book: “Inbound Marketing” by the HubSpot founders, as well as DaveMcClure’s Startup Metrics for Pirates. We also discussed qualitative ways to assess market needs and demand, and how / when to use proxy metrics when certain measures are difficult to obtain.

Here are the slides:

Gummi’s keys to excellent product management
In his post Gummi argues that to be successful, one needs the following core traits:

• Deep technical understanding
• Speed of execution and juggling skills
• Obsessive enthusiasm about the product experience

While I wholeheartedly agree with Gummi (and I would highly encourage you to read his post to fully understand his perspective), here’s another way to think about what it takes to be a great PM…

My take: Be like Jake

Yes, shamelessly capitalizing on Avatar’s popularity, I think the core traits a good software product manager needs are well embodied by Sam Worthington’s character in Avatar: Jake Sully. These are simply:

• Brains
• Guts
• Charisma
• Character

Here’s how good product managers use each of these.

But first, the basics – your admission ticket
There are some baseline skills that are necessary, but not sufficient, to be a successful PM – you gotta have them to even be in the game, far less being a star performer. The first of these traits is impeccable communication skills that include telling great stories (presentations), distilling ideas, writing specifications, and most importantly listening. Secondly, great organizational abilities are a must, enabling one to develop processes / systems
, plan schedules, and manage time effectively.

“I dissected a frog once”

1) Brains: Both right & left
As Gummi mentions technical chops are critical, but also having a deep understanding of the customer pains and needs is key as well. In addition to the standard “left-brained” problem solving, you also have to factor in the “right brain” creativity to imagine unseen possibilities to develop truly unique and novel solutions. Often, I think that raw intellectual horsepower (from both the right & left brains) helps, yet there needs to also be a healthy does of curiosity and an overall willingness to learn.

“Then teach me!”

2) Guts: Taking a stand, making a call, and being accountable
The ability to synthesize information from multiple sources on the fly, and to make a decision under uncertainty is of paramount importance. Sometimes it means a data-driven decision, but many times it requires some good old fashioned intuition, as options are rarely crystal clear. It’s that ability to do what you believe is right when there is abundant ambiguity, in a timely manner, while staying cool under fire. If you’re wrong, you’re wrong and you’ll learn fast and take corrective action – but that ability to stand up and take responsibility when you don’t have complete control of the situation is key.

“Let’s Dance”

3) Charisma: Leading teams and building relationships

The ability to build, motivate, and lead an effective team is also a key skill. Often times product management epitomizes the “influence without authority” adage, as it entails driving cooperation and consensus between a cross-functional team of engineers, designers, salespeople, marketing, and of course the customers. So the ability to articulate and manage a vision, negotiate and reconcile dissenting points of view, and still maintain a strong, cohesive product is really, really hard.

“They’ve sent us a message that they can take whatever they want. But we will send them a message that this is our land.”

4) Character: Attitude over aptitude
This final trait is all about how someone is wired. It’s difficult to extract this from a basic interview, but in a work setting it doesn’t take long to know who’s got it and who doesn’t. The most important of these qualities is integrity; simply put, if you can’t trust this person to watch your kid, you can’t have them oversee your product line. After that the next thing is that internal burning desire to make something happen, or a bias toward action. Finally, the person has to wants to see results and be accountable for them. At the end of the day, it’s about the hunger and desire to do what’s right, so in this regard I value the person who “has it” but may not have the experience, over those that are experienced but complacent or untrustworthy.

“Maybe I was sick of doctors telling me what I couldn’t do”

What do you value?
So if you find someone like Jake Sully that has brains, guts, charisma, and character, you’re all set. What are the major traits that you think good PM’s need?