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Determining proof of life for your startup
Growth Hacker, User Acquisition Expert
Determine proof of product/market fit by looking at your penetration in the diffusion process.
Ask: Have your innovators and early adopters stuck around? Do they like the product?
Make sure you are delivering value over the long term within a specific subset of users.
Lesson: Scaling User Growth with Maud Pasturaud
Step #4 Finding Fit: Determining proof of life for your startup
There is something about Snapchat that gets people hooked. I think it's just a principal of the content of going away after 24 hours. If someone, if your friend sends you content and you need to watch it in 24 hours, first it's you know your friend is sending you something personal, they're sending it into your inbox, and its something great. Its a picture or its a video, or its something fun. So just the actual content of it is interesting. But also you know you received it from a good friend because you based on your phone graph.
And lastly, you need to watch it within 24 hours. When you think about, they're a genius. The actually product in itself, was designed for to drive that retention, drive people back. So that’s genius and they achieved probably, I would assume some type of retention engagement that is similar to Facebook right now.
If you're building a B2B business, you have a product market fit. I was talking to a B2B company who was building this platform for ecommerce. They got two of the biggest ecommerce players to test out their product. They're continuing to test it and they're really happy with it. This is product market fit. If they stick around, they give you feedback, they make your product better and they tell you they're happy with it, then you can go out because you tested some of the best in the field. So for me, that's product market fit. The addressable market is not that big. So having two large customers proving your product is good.
If you're looking at consumer products, its a bit harder. If you look at Secret for example, product market fit is, you need to have enough users who need to draw conclusions. All those KPIs that we talked about, if you have a sample size of 10, its probably not going to be helpful. You need to have a minimum number of users.
I think you need to look at that curve that we talked about, the fusion of innovation. Look at how many people use your product. And if it is the innovators or early adopters and they're sticking around, then I think you got the right type of product penetration and you also got, because you're sticking around, the proof that you have product market fit.
Its important to keep those percentages in mind that we talked about regarding the theory of diffusion of innovation as a proxy. It is really hard to define. Retention, looking at retention out 30 days or 60 days, you can't really predict a year from now yet. It might be that a year from now a lot of users are going to drop off. You really don't know. So I would say, try your best, trying to figure out within your addressable market, do you have enough users to give you feedback on the product and to tell you that this is good and this is going to be able to grow.
I think the KPIs that matter before market product fit, your number one thing is you need build a product that has value to users. Again, if it doesn't deliver value, you're going to get a lot of users and they're not going to come back. So how do you look at the product market fit. You want to make sure that you're delivering value over the long term, within a specific subset of users.
The Net Promoter Score is very important. You may not have a big enough product for you to do the K Factor. You're not going to have enough data. You don't have millions of users yet. Just have a subset of users who are telling you "I love your product and I'm going to come back. I'm going to tell my friends about it." You need to look at the Net Promoter Score.
Second is you need to look at retention, even if you don't have a critical mass of users yet, you need to show that they're coming back and that they're coming back maybe more often or they're going to come back for a long term. So you need that retention curve. It's the second most important thing to show product market fit.
It doesn't really matter that you have an acquisition curve that's really high because you haven't really started yet. You're just proving that your product delivers value. People are happy with it and they're coming back to the product and those are the two single metrics that are really important.