Product-Market Fit

Prismatic

There are endless early moves to help avoid pushing your idea toward someday. For instance, creative wireframing requires only a pencil. With a little visualized clarity in place, a couple exploratory conversations can also help.

First, meet with a mentor. This should feel like a supportive space but avoid rainbows and butterflies. Be realistic with exciting aspects of the idea, but also the challenges. As we learned in YDNTB, an early no is much better than a long, wrong yes. That said, playing it safe is easier than activating initiative, so don’t let early doubt slow you down. Instead, welcome it. Let curiosity uncover new understandings. Pivots are inevitable, and this exploration adds confidence as the original idea is tweaked toward product-market fit.

After transparently talking with that trusted mentor, the next meeting is with a potential customer. This will feel too early, but it’s not. You’re actually protecting your personal bandwidth by not swinging at a bad pitch too many times.

To optimize early innings, arrive prepared to ask good questions. Take notes and speak less so you can actively listen to how this potential early adopter is responding.

Are you building a pain killer or vitamin? Remember, feedback is data, and this is only one data point, but let this conversation infuse reality into the idea. Show up, stand out, follow up, stay connected, find a thoughtful way to accelerate their work, and then keep building.

The business model canvas is a tool to do so. While it’s impossible to predict the future, business model canvases help us continue to explore while curating a story that sells.

Most early business ideas don’t have a clear story. This can make it hard to know where to start within the business model canvas. While you can use this tool in endless ways, consider an approach that is less about the entire business and more about one story at a time. Instead of trying to boil the ocean, organizing a complete story for each customer segment creates a combination of more actionable insights.

To give it a try, use this special business model canvas. The areas are numbered to curate canvases that each highlight a customer story:

  1. Customer Segments – Start with the details of a particular type of customer. The goal isn’t to complete the Customer Segments box. It’s starting a story to follow through the rest of the canvas. Now lean into the pain as you move from box to box and watch as your solution transforms into a story.
  2. Value Propositions – What benefit(s) can you deliver?
  3. Channels – Where can you connect with this customer?
  4. Customer Relationships – Who are you working with and how will you make this customer feel?
  5. Revenue Streams – Will financial income flow? How?
  6. Key Activities – What actions make the customer care?
  7. Key Resources – What is needed to keep building, and how might needs change to maintain momentum?
  8. Key Partners – Who helps to make this sustainable?
  9. Cost Structure – What costs go into activating this customer segment? How is pricing organized to support realistic profit margins that align with a financial model?

                By telling the story of created value for one customer segment, hypotheses can be connected with context. Next, using a separate business model canvas, visualize more stories based on different customer segments.

                With separate business model canvases for each customer segment, merge everything into one business model canvas. To stay organized, select different colors to use for each customer segment. As everything blends together, the prismatic rainbow maps roads to reality.

                By Ben McDougal, ago

                Head Start

                The entrepreneurial lifestyle resists definition.

                Business owners paint with strokes of curiosity, determination, and innovation. When people build with creative ambition, experience is valuable, but the symphony of desire and attitude plays an equally important role. It takes heart to start and resilience to keep building. Executing early moves, managing focus, collecting feedback, building a team, and maintaining sales is such an art form.

                The best part about an entrepreneurial lifestyle is that it’s accessible to everyone. This can be seen as students explore projects that look like work to others, but feel like play to them. It’s intrapreneurs fueling positive change in existing companies. It’s startup founders achieving product-market fit with new ideas and others who build on existing momentum by acquiring an established business.

                Extra Shot

                This caffeinated contribution was written by Sheldon Ohringer. Sheldon has led large sales teams, is an active investor, a board member, and is now building Cocoon Growth to help others buy their first business.

                Starting a business is one way to explore the entrepreneurial lifestyle, but buying an existing business is also an interesting way to write your own story. While there may be a cost for the head start, acquiring an existing business presents an interesting side door to the entrepreneurial lifestyle.

                As you consider a business to buy, avoid future headaches by understanding industry requirements such as licenses, permits, zoning, and environmental requirements. As you work with existing ownership to determine a purchase price, a valuation based on capitalized earnings, excess earnings, cash flow, and tangible assets are all methods to guide fair negotiations. In the end, the right price is one that delights the seller and has the buyer excited.

                As details come together, partner with legal and accounting experts who focus on mergers and acquisitions to document the transaction. A letter of intent, confidentiality agreement, contracts, leasing documents, financial statements, tax returns, and sales agreements are all important documents to talk with your M&A team about. Many transactions include a vesting schedule as well, so stay in-tune with these details to avoid unwanted surprises.

                There are a variety of strategic ways to acquire a business, but once the transition takes place, new owners are given keys to a kingdom that hails an established team, customer base, and operating procedures. As we see in the Exit section of the Results chapter in YDNTB, there will be challenges during these transitory times, but in the end, virtuous leaders listen to keep the culture balanced. All the good that comes with a business is important to maintain, but an honest audit of negative aspects are important too. Intentional candor with areas to improve allows new owners to build on past success, while charting a renewed vision for lasting prosperity.

                By Ben McDougal, ago

                Phygital

                Blending a physical reality with digital depth is something humanity has experimented with for decades. Catchy names, memorable phone numbers, short URLs, and QR codes are simple methods that guide a physical interaction to details online.

                Augmented Reality (AR), Bluetooth, Near Field Communication (NFC), Radio Frequency Identification (RFID), biotech, and smart materials all take it up a notch. Each of these technologies provide a path to phygital experiences.

                To spin some yarn, let’s stitch this nerdy good term into the world of fashion. Phygital clothing now has passive chips embedded behind a patch or hidden in the garment. When tapped by a phone, the tiny chip is given enough electricity to pass data. This prompts a notification that links to digital destinations. The destination may be a website just for fun, but for larger brands with dollowers, the loyalty contest is given all-new levels. Imagine the status game of a global fan base that unlocks digital assets by working together. An elbow bump from someone wearing your favorite brand can now highlight ownership and unlock gamified layers.

                With ownership determined by code and real-time incentives connected to the owner, this nerdy good phygital term quickly becomes apart of the web3 taxonomy. That said, the flex is not about being high-tech. It’s introducing a remarkability factor.

                When remarkability matters, as it often does, phygital twists offer an edge. There are endless examples of digital depth revolutionizing every industry. Computers and smartphones link a physical device to digital experiences and the first smart vending machine in 1982 would lead to an entire microcosm we call the Internet of Things (IoT). Today’s chips are cute, but nanotech (think a computer on every cell) and neurotech (think brain-computer interfacing) represent a direct line where input and output will require no physical movement. Edges dull as new becomes commonplace, so the time to get phygital is now.

                As the world continues to be phygitized, more physical products will be mirrored by digitized counterparts, ownership will be obvious, and an augmented experience will be increasingly invisible as our perceived reality is reinforced by the phygital world all around us.

                By Ben McDougal, ago

                Allergy Shots

                I’ve embarked on a campaign to cure my seasonal allergies. Trying to understand the details of this immunotherapy reminds me how clarity effects confidence.

                With allergy shots that require weekly visits for the first several months, then monthly visits for 2-5 years, you’d think there would be a sharp collection of resources to highlight treatment options, insurance codes linked to cost of care, and benefits/risk comparisons.

                Proactively investing in your health is hard enough. Feeling like you’re taking a gamble without clarity on how a long-term effort may (or may not) come together, makes it way harder. I understand that healthcare is complex because everyone’s body and health habits are different, but there’s seemingly enough commonality to allow for a solid base of standardization, paired with different options and disclaimers to keep the variables in focus. Wish me luck, but this decision-making process has been cloaked in fog.

                Extra Shot

                “Imagine life as a game in which you are juggling five balls in the air. Work, family, health, friends, and spirit. And you’re keeping all of these in the air. You will soon understand that work is a rubber ball. If you drop it, it will bounce back. But the other four balls – family, health, friends, and spirit – are made of glass. If you drop one of these, they will be irrevocably scuffed, marked, nicked, damaged or even shattered. They will never be the same.” –Bryan Dyson

                As we look through the lens of entrepreneurship, delivering fearless clarity may put you on the hook and will turn some prospects away, but it adds efficiency to the sales process and leads to more satisfaction from better customers.

                This does not mean we simplify everything. Simplification is polarizing, so delivering confidence through clarity is more about sequencing. Try delivering less information to ensure clarity, then support a well communicated slowness with connected resources to meet a prospect’s specific needs. This sequenced effort gives people what they need, when they need it. When everyone feels informed, confidence increases and the opportunity for more lasting collaboration is refined.

                By Ben McDougal, ago