 Hello, thank you for tuning in. I hope you find this session valuable. I'm Tara Sakuja and I'll be talking about creating product market fit. So before we dive in, here's a little about me. I lead a team at Facebook within business integrity based here in the Bay Area. We work to ensure trustworthy connections between people and businesses. Now at our core, we build products that keep users safe on the platform whilst also helping businesses reach their advertising goals. Like many of you, I didn't have a very straight career path. I took a lot of detours along the way. Now I'm originally from Bombay in India. I did my undergrad in ancient history in classical archeology at the University of Warwick in the UK, not computer science. I went into law after graduation for a brief period followed by marketing and landed up in tech. I've worked across multiple markets in APEC in North America and that's helped me build products that keep users at the center of everything. Outside of work, I advise small businesses and startups on their product strategies and go to market. And for fun, I love sailing around the Bay and going on hikes with my dog, Leechie. So for today's agenda, we'll be talking through what product market fit means. How to use quantitative and qualitative data to prioritize your decision-making. How do you know when you've achieved product market fit and the differences between developing a new market versus penetrating an existing market? So the reason why we're all here, why is product market fit even necessary? Well, when you first introduce an idea for a product, whatever it may be, a photo sharing app, a self-driving car or even a flying car, it's going to sound amazing. But unless there's a market for it, it's unlikely that the product will succeed. And what I mean by market is that people understand the core value for what you're offering and want to try it. Now, we remember a few years ago when Google came out with Google Glass. It was a super flashy launch that featured on New York Fashion Week with DVF. Sergey Brin even walked the ramp. It was marketed as a stylish luxury accessory. But the problem was it was largely tech nerds who were wearing it and not fashion influencers. Now, we saw an amazing product with a lot of great possibilities just fade away because it didn't capture its market. And that's why finding product market fit is critical. So the term itself came from Andy Ratcliffe, the CEO of Wealthfront. And he breaks up product market fit into two categories. One, the value hypothesis and two is the growth hypothesis. Now, we'd be talking a bit about the value hypothesis. And to arrive at your value hypothesis, it starts with user understanding. It might sound basic, but you need to define the market that you're in and understand your user's habits and practices and their usage and attitudes towards different products in that market. Now, this can be done through a combination of quantitative and qualitative studies. Quantitative studies look like large-scale surveys and analyzing data patterns. Qualitative studies are in-depth interviews in focus groups. Now, this provides the foundational work for us to develop the value proposition. In fact, Mark Andreessen once said that the market pulls the product out of the startup. And I couldn't agree with this more. Now, to get a strong value proposition, you need a well-defined problem statement. What is it that the world might be struggling with that only you have a solution for? Anchor, every fiber of your product to this because through that, you'll be able to articulate the value of your product. Quite simply put, identifying compelling value is how you get to product market fit. It helps identify the features that you need to build, the audience that's likely to care and even the business model required to entice someone to use your product. Companies and product teams often go through many iterations before they ever find product market fit. Now, in the next few slides, we go through how to use quantitative and qualitative data to serve value to our market. Now, using qualitative data is all about understanding your audience better. You can do this through in-depth interviews and focus groups. A focus group is a group interview involving a small number of demographically similar people and studying their reactions to your product. Gathering this qualitative data is immensely valuable. A good way to do this is by breaking up your target audience into cohorts of what's relevant to you. It could be regional, it could be based off of age, their business verticals, the size of the business. There are a lot of different ways in which you can categorize your users. Leverage interviews and focus groups to understand which of the solutions they care about the most. Get signals on how important a particular solution is to them and how frequently they'll use it. Next, marry the two by creating a heat map of solutions against each cohort and grade them, with the red being as most important and yellow as least. Now, in the heat map shown over here, from a quick glance, I can tell that solution C is most important to largely every user cohort and should be the first thing I built, followed by feature E and D, whilst A is something that's apparently not very important to everyone. Through this exercise, you will be able to prioritize your resources and increase the probability of success for your product in the marketplace. Now, on to quantitative data. As we're creating product market fit, we work with quantitative data to measure interactions at the early points of our user's journey. The journey from discovery to adoption. The first step here is activation, whether your product is good at finding its users. Do your target audience discover it when they should need it? Next is acquisition. Is your product able to entice users to try it? And then we have retention. Are your users sticking around? Or quite simply put, do they like it? This gets us to product adoption. Are they coming back for more? Now in marketing, we say that it's defined as getting more consumers to use your product more often and more of it and be willing to pay a higher price. And you get to know very quickly if your product's concept is hot or not by measuring acquisition or trial. Other indicators are growth in search queries and online engagement with other elements of your proposition. But it's key to measure interactions and drop offs at each stage. Almost like a waterfall where you can easily identify where your product needs work. So now, if you're facing low numbers at the point of activation but the journey to adoption looks otherwise good, it's likely that your product or feature isn't discoverable. It might be hidden. And here you'd wanna focus your strategy on building awareness. If your product is discoverable but not enough people are trying it out, then you're facing an acquisition problem. At this point, you should offer free trials or a light premium version of your product so that people strongly consider it. Finally, if after trying your product, you're unable to keep users coming back, then you're facing a retention problem. Here, you should reevaluate your product. Conduct qualitative research studies at this stage. It helps quite a bit and one can pivot and navigate as the market needs because no one is gonna use something they don't need. In fact, when we have a strong product market fit, typically our products have the following characteristics. They offer entirely new services and benefits. They have a secondary benefit in addition to the key product benefit. They make comparative claims versus the existing competition and they eliminate an important category negative. Offering a higher quality than products that are currently available or a price advantage never hurts. So once you have repeat purchase or repeat usage, it's a clear function of product satisfaction and adoption. So how does one know that we've achieved product market fit? Well, it's when you've proven your value hypothesis. So the journey from value to growth. There are a lot of different schools of thought around this but I particularly like these two. So for consumer products, ask yourself if your product has reached a word of mouth virality. It's when organic growth is through users advocating for the product that you know that you're delivering value. And then for enterprise or business products, it's the 40% rule, which is if at least 40% of your surveyed users say that they would be very disappointed if they didn't have access to your product, that means that you've hit it. You've hit a fair point of product market fit. However, I do wanna warn you that finding product market fit isn't a one and done deal. You can lose product market fit if you're not careful. And you must constantly work to maintain it. Now, once you've delivered on your value hypothesis, the early stage adopters and hit the early stage adopters of your target audience, it's time to expand to the majority. Now, in order to employ the right growth strategies, you must know where your company's offerings, where within your company's offerings does your product stand. So to get there, we go through an exercise to understand the product market landscape. Knowing where your offering stands helps devise an appropriate growth strategy. Now, I like to use the thing called the answer of matrix. It's a tool that helps with planning growth and retention initiatives. Now, on the vertical axis of the matrix, we have our markets and on the horizontal, we have our products and services. Each sector corresponds to a different product market strategy and risk increases as we progress along each of the axes. Now, in the lower left quadrant, we have market penetration. This is the sweet spot. Here, we're using our existing offerings in our existing markets and we're pursuing what's called a market penetration strategy. This is the safest of the four options. You know how the product works and the market has a fewer surprises for you. Next, in the lower right quadrant, we have product development. When using new offerings in existing markets, we're pursuing a strategy of product development. Now, this option is slightly more risky because we're introducing a new product into an existing market. And then moving on to the upper left quadrant, we have market development. Here, using our existing offerings in a new market, we're pursuing a market development strategy. Now, you can do this by finding new use for a product or by adding new features and benefits to it. Similarly, this is a more riskier option than market penetration because you're putting an existing product into an entirely new market. Finally, in the upper right quadrant, we have diversification. This is where we're presenting new offerings in an entirely new market and here we pursue a diversification strategy. This is the riskiest of the four options because you're introducing new, unproven product into an entirely new market that you may not fully understand. So getting product market fit at this stage is the hardest. So once you know where your product falls in this category, it can help inform what necessary growth strategy you need to employ. Applying growth strategies. Now, when we look at our products and markets from this matrix, it helps us apply the right growth strategies. Think of the yellow as the core of our business and as we expand up into the right, we move further away with the blue being furthest from our current core offerings. For example, in the lower left quadrant of market penetration, our growth strategies focus on expanding the core of our business and reducing churn. People largely know our product and we just need a reason for them to choose it over the competition. Taking the real world example, let's apply this in the context of Apple. The iPhone is its core and it helps in penetrating the market. Now, if we were to move on up into the right and get into product and market development, we're moving just beyond our core and here we must use strategies that are slightly more resource intensive. With product development, your growth strategy focuses on expanding your product line. Here we use quantitative and qualitative data to best understand our current user needs and work to increase discoverability of the new product or features. Again, taking Apple as an example, iPads and iPads broke up to mind when we think about how they expanded their line of product offerings to their existing market. And now if we were to go into market development, our growth strategy of acquiring more users focuses heavily in understanding the market and being open to iterations. With Apple as an example again, the OTT Play and content streaming space with Apple TV Plus comes to mind. It was great because when they launched it, the subscription service almost came free to anyone who was already a part of the ecosystem. If somebody wanted it, who was outside of the ecosystem, they had to purchase it separately. And that was sort of a great way for Apple to tap into a much larger audience than they were already serving. So finally, that brings us to the top right corner where we're looking at big bets that are far from our current offerings. But these big bets are the future of the company. Now here are strategies lean towards breakthrough innovations. Any guesses of what would be in the right quadrant with our Apple examples? Well, yes, it's variable. So that's Apple watches and maybe even AR glasses. So that's essentially Apple's play to expand into an entirely new market where they're far from their current goal. And that's how you apply growth strategies and take a product from its value hypothesis to growth. Now we've talked about a lot of different concepts. So let's summarize everything. Identifying a compelling value proposition is key to finding product market fit. Once you understand the drop-off points in your adoption journey and you talk to users through focus groups or interviews, it helps you prioritize what you need to build. And then once you've focused on delivering value, that is when you should focus on growth. And the best way to focus on growth is by knowing where your offerings stand so you can devise the right growth strategy. I hope you found this valuable and I'd love to have you get in touch. You can follow me on LinkedIn and Twitter. I also write a newsletter on sub-stack about product and all exciting things in the tech world. Thank you so much for your time. This has been an absolute pleasure. Have a great rest of your day.