 Hello, I'm Kerry Rupp, Strategy and Innovation Consultant and Venture Partner at True Wealth Ventures. I was previously the CEO at Dreamit, a top 10 U.S. startup accelerator and early stage venture fund. I will be your moderator for today's global innovation through science and technology or GIST, Tech Connect. Our conversation is on product-market fit. Determining product-market fit has been identified as a first step to building a successful venture. Our expert panel and I will share our experiences with you and answer our questions on this vital topic. The GIST Tech Connects are led by the U.S. Department of State and implemented by Venture Well. GIST empowers young innovators through networking, skills building, mentoring, and access to financing through its various programs. Since its inception, GIST Tech Connects have reached tens of thousands of viewers for more than 80 economies worldwide and discussed entrepreneurial topics such as financing, ideation, and lab to market. You can learn more about our programs at our website, www.gistnetwork.org. For today, please use the hashtag GIST Tech Connect when tweeting about today's event. We are also collecting your questions to ask our panelists. You can send in your questions now and throughout the program by typing in the chat space beside the video or via Twitter. I would especially like to thank those of you hosting viewing groups and look forward to your questions. Now let me introduce you to our panel of experts. First, we're delighted to have Steve Blank joining us remotely from Silicon Valley. Steve is an entrepreneur turned educator who pioneered the lean startup movement through his work on the customer development methodology. Steve is the author of the Four Steps to the Epiphany and the Startup Owners Manual. He also created the National Science Foundation Innovation Core, which is now the standard for science commercialization in the United States. You can follow Steve's blog at www.steveblank.com and listen to his weekly radio show, Entrepreneurs Are Everywhere on SiriusXM. Next, I'd like to welcome with me here in the studio Blake Stevens, the Vice President and Senior Associate at Harris & Harris Group, a New York City-based early stage venture capital firm. Blake specializes in working with its earliest stage companies and is the COO of Tara Bio Systems. Finally, we also have in the studio Donna Harris. Donna is a co-founder and CEO of 1776, a global innovation network that enables startups, corporations and governments to work closely together to drive the digital transformation of our world's most important industries. Headquartered in Washington, D.C., with additional campuses in Dubai and San Francisco, 1776 serves hundreds of startups and institutions worldwide through its curriculum, mentorship, investment and programming. You can learn more about Donna in 1776 at www.1776.vc. Thank you all for joining us today for this exciting conversation. So now, as we wait for your questions to come in, I'd like to kick off the discussion by asking the first questions of one of our panelists. I'm going to start with Steve. Could each of you please share with us how you define product market fit? Steve, we're going to start with you. Sure. Product market fit kind of starts with, you know, an entrepreneur's instinct that there's a problem or a need that someone wants and therefore they could figure out what product or service they need to deliver. And so the market refers on one side to the potential customers and the product refers to what you think you're going to build to solve those needs or those problems. And that fit between you understood the customers well enough and the features of your product or service means you've kind of got product market fit. Sometimes, in fact, almost most of the time you're just guessing. And so you kind of miss what the customers want and therefore you don't have product market fit and you spend a lot of money and then you go out of business. So hopefully today we'll tell you how to get that correct. I hope so. Thank you, Steve. Donna, what are your thoughts? Yeah, well, I couldn't agree more with what Steve said. I mean, it is that mismatch is a real challenge. So really understanding, you know, who are these customers? Do they want what you're offering? It's more than do they have a problem that theoretically could be solved? Does your proposed product actually solve that problem and are they willing to pay you for it? Right? So it goes also beyond features and function to be business model pricing. How many of them are there? Are there enough of them to actually create a scalable company? So while we call it product market fit, it is really all about exploring. Can you find that match where they want to pay for what you have and there's a business that can fall out of that? Right. Okay. And Blake, how would you add to the product market fit definition? Yeah, I mean, I think Donna and Steve, you know, covered a lot of the basics. And so maybe just one example. So before I joined Harrison Harris Group, I was with a startup company and we were commercializing and environmental protection coding for electronics. So basically it would help make your electronics waterproof. And so in terms of the market, I mean, when we started, we envisioned, you know, the entire electronics market, which is seemingly infinite. And to Steve's point, we didn't want to waste a lot of money and we didn't want to go out of business. We wanted to be successful. And so we kept looking at the market and segmenting the market and trying to figure out exactly where our technology was a true scientific development. And so it's readiness fit with the electronics market. And so we looked at cell phones and laptops and tablets and automotive and solar cells. And what we found was really our first advantage and our first great fit was in two areas. It was in wearables because they have extreme environmental exposure. And so for them, it was really a feature they were looking for. And the other was e-readers. And e-readers was a good fit for where our technology was ready. It was a relatively simple product compared to a cell phone. And they were looking to differentiate and add some functionality as well. So one I'd say was a good fit for our technology readiness and one was a good fit for what their market need was. And so by attacking those first, the company which is still going strong and doing really well, not out of business growing every day, has really been able to now expand into other verticals kind of from those two initial markets. Got it. Okay. Yeah. And actually just to add on what Donna was saying, it's not just that the customer wants what you have, but that it's actually a must-have need for them, right? That it crowdsolves a critical pain point because a lot of times you actually are solving a customer need. But in the hierarchy of problems they have every day, it sort of doesn't even factor on their radar scale. And for you to find something compelling, you need to be in those sort of like the mouse-loves hierarchy of needs back in the really at the top of what really drives what I do every day and hitting one of those must-have pains. That's exactly right. So thank you all for these excellent insights. They've actually prompted already quite a few questions from our viewers. So we're going to start taking questions from you, our online audience, and those of you that are gathered at viewing groups around the world. So a viewer today is asking, can you give some examples of common mistakes of product market fit from companies you've worked with? So I'm going to pass that off to you, Steve, to start off. So what are some common examples of mistakes? Well the biggest mistake that most entrepreneurs make is believing that they're visionaries when in fact all the data kind of concludes that most of you are actually hallucinating. What that means is that all the thinking in the world in your office or with your friends or inside your building really doesn't count for much because your customers are outside your building. I think as our panelists know, and we kind of know now in Silicon Valley, the line is there are no facts inside your building, so get the heck outside. And so the biggest mistake is thinking that somehow you could pre-compute customers' needs, wants, and figure out product market fit from just thinking about it, and that's not what startups are about. And you will most likely fail if that's how you approach it. That's the biggest failure mode. Okay, great. You guys have other examples of mistakes? I think that is spot on. And to dovetail on that, it isn't just that they're hallucinating and guessing, it's that we're skipping one of the most important parts often, which is the problem. And have I actually spent enough time on the problem so that when I'm actually starting to envision the product, I'm tackling a big enough problem. The entrepreneurs that we work with around the world, they're attached to an idea. They're attached to a particular way to solve the problem in front of them. And when they do discovery and they actually do get out of the building, they have blinders on. So they're missing vital cues that the problem may actually be bigger than they anticipated, that the customer may actually want something slightly left of center of what they're thinking. So the biases that entrepreneurs have when they go into doing these kinds of discovery interviews, when they actually get out of the building, can result in skewed results. And then I also see a lot of entrepreneurs that view the customer discovery process solely through the lens of product. What feature do I need to build for you to get you to buy the product? And they miss the opportunity to use that, to ask vital questions around how they might want to pay for that, what the right pricing might be, what channels might I use. And so really thinking cohesively and comprehensively about the discovery process, it isn't just a race to get to a minimum viable product. It's really thinking holistically, is there a business here? Right, and I think I'll add to that, Donna, that just when you do customer discovery, I think one of the potential confusions is that you just have to talk to the person that you think is your customer, which you assume is maybe the user. But a lot of times what turns out, especially if you're in complex business to business markets, I'll take healthcare, for example. The person who uses the product may be the patient or the health care provider, nurse or doctor who actually gives it to the customer, the user. But there might be a whole nother set of parties that actually make the buying decision and who actually pay for it. So it might be a committee at the hospital that actually has to make the buying decision. And it may be a third party like an insurance company or an employer that's trying to make the decision about whether to pay for it. And if you just focus your questions around, hey, you user, would you like using this product? That only answers a subset of the questions and that the other questions might be, is anyone actually going to pay for this thing? This is a complicated market. And is the hospital even the right customer? Is it big hospitals or little hospitals? Is it private clinicians' offices versus public health systems? Really understanding what's fact and what's fiction in the process is very, very important. And it started with nothing but a bundle of questions. So understanding where those assumptions are in the process, so that you don't blindly move right past a core assumption. That really was a foundational issue for your business. If you get that wrong, the whole thing falls apart. Yeah. OK, so that's prompted another question. Our next question comes from a viewer named Rilomar, who asks, what does it take to have one's product inserted into a very competitive market? So I guess the context here is that there are already a number of players in the market. And so what do you need to think about? I think this really goes back to your competitive advantage. And I think it's something that is so critical to any startup. And I think sometimes, I mean, we see a lot of pitchers. It's sometimes almost overlooked. It's kind of, I think it's maybe gotten to the point now that it's assumed that you have a competitive advantage. But I always encourage companies that I work with, it's like really define it carefully. And so the more competitive the marketplace are going into, the more important that advantage is. And the more important it is that you can clearly identify it and state it. And so when you're doing your customer discovery and when you're trying to figure out exactly what piece of that market segment you're going to be able to attack first. And you have a great fit with. It's important to always keep in mind kind of where you think your competitive advantage is over others and be willing to change that. Because you might be encountering more information and more competition out there and say, OK, well, wait a minute, maybe our advantage, as we originally laid it out, isn't what it is. There's actually three other companies doing something similar. Is there something else that differentiates us in the market? Right. I mean, it actually speaks to the story you gave before, where you actually sub-centered the market. And you said, OK, electronics is the big market. But how might we sub-segment it into areas where we have a specific advantage? Where the component of being waterproof or whatever actually is more compelling for that sub-segment of the market. Steve, is there anything you want to add in here? Yeah, one of the things I remind startups is that we have only one word for the word startup. And it's startup. And that's a mistake. It turns out there are at least four types of startups. And the first question you need to ask yourself is, which one are you? You could be entering in an existing market with competitors. And if you are going to do that and attack them head on, you sure better have a higher performance product. In this case, performance is defined by your potential customers. It could be performance on speed. It could be better features. It could be something better. But if the incumbents have over 40-some-odd percent market share, a startup attacking them head on is usually going out of business strategy. So there are other things to do in an existing market. I call that resegmenting an existing market. You could come in as a low-cost supplier, get your products manufactured in some other country, or you could try to resegment the market, figuring out what niche or what strengths you have in a particular area. Or you could do something beyond the scope of this panel called the Blue Ocean Strategy. But those three strategies allow you to attack an existing market, but without having to have all those resources. There's a third type of market you might be in called the new market. A new market is exactly like it sounds, it doesn't exist. And you know it doesn't exist when you look around and there are no competitors, but there are also no customers. And a going out of business strategy that I see lots of startups fall into is trying to launch in a new market exactly as you're launching an existing market. You might as well just throw all your money in the street because that sales curve in a new market is the canonical hockey stick. The bad news is, is you're probably on that flat part for a long, long time, so preserve your cash. And then for our viewers outside the United States, there's another type of startup market called the clone market. And this is where you adapt and adopt a known and working business model from the US or some other part of the world and adapt it and adopt it for your local circumstances. So the first question I ask for, before you even think about competition is what type of startup are you? Great, thank you, Steve. So now we have another question from Husam in Iraq. How do I know if an idea for a startup is fitting for a specific market like in Iraq? Where do I start? And I think this is a great example where we talk about customer discovery, right? So I think the most important thing all of us would probably say is don't start inside in your room talking to yourselves about what you think the market wants because you're making a lot of presumptions about who the customer is and what really matters to them. So this is where Steve's mantra of get out of the building is probably absolutely the first start, but there's probably more specifics about what that really means. So when we talk about customer discovery, what are we saying? Like what's really the process? So, Donna, you wanna start in? How do you direct startups? Sure, so I think inherent in the question is an assumption, which is that Iraq is where you want to start. So I would label that as an assumption and not a fact. Is what is the rationale for that? Are there geopolitical reasons in which case, okay, let's put that fence around it. If not, let's open that assumption up and poke at it a little bit. Get out of the building, go and meet with your customers, potential customers, not only people who you assume are your customers, but people who are adjacent to those people, people who are the antithesis of those people. You wanna be exploring through as many and diverse conversations as you can be having to really figure out, am I making the right set of assumptions here? You also wanna figure out what is unique about the landscape in your country? Is there some unserved needs specific to Iraq that allows you, as Steve I think said so aptly, to create a clone market and take your product into market in a way that it might already be existing in another market, but geopolitical boundaries allow you as a local entrepreneur to take an opportunity and run with it where an outsider from outside your country couldn't. But the key really can't say it enough, get out, go talk to people, everyone and anyone in and around the problem to really explore whether there's someone other than you who thinks that there's a big enough problem and that your specific idea for solving it is a good one that they're willing to pay for. Great, okay. So our next question comes from the US Embassy Monrovia. How can we make our products more attractive when the customers have less disposable income? So I guess we're addressing here specifically countries that are in a different economic state than maybe the United States. So Steve, do you wanna talk about how you've worked with companies, startups in other countries to address those issues? Well, sure, I mean, part of product market fit is matching the market that you're in and selling $10,000 watches in countries with the disposable income of a lot less is also another going out of business strategy. So back to the previous comment, you have to decide whether your market is local or regional or global or have a better pricing mix. This is again, good wishes and gee, I wish I had these customers with this disposable income isn't gonna make a business. You need to either match the product price or find different customers. Right, so it's a classic product market fit question here around, well, what is actually the need of that customer and can you actually deliver something that actually matches up with that need? Can I add something to that? I couldn't agree more with that and I think there's also another opportunity. I think we tend to look at the idea of disposable income as problematic as opposed to an opportunity. And if we look at companies that have taken the best of what technology has to offer today, digital, data, devices, social, mobile, it opens new opportunities to serve lower income populations in really compelling ways. If you look at one of the companies that we invested in a company called Twiga Foods in Nairobi, they are literally tackling that lack of disposable income head on by looking at the supply chain for how disposable and consumer goods are getting into the hands of consumers. So it doesn't have to be something that we look at as a negative and how do we overcome it. You can also look at it as an opportunity to say how do I bring the best that entrepreneurship and technology has to tackle this in a way that it makes new products accessible to an entire new demographic. Great, thank you. Yeah, could I just- Of course, I have to jump in. Just on the last two questions, I just wanna make sure emphasizing something that I see is really important and Donna mentioned it first, I think Steve followed up with it, which is really understanding the market on your customer discovery process. I think it's often the case when I'm working with entrepreneurs who are very early in the process, they wanna go out and find out a lot about their technology or their solution or their product so that when they go and they talk to customers, they're talking about where they think the need is for their product and they ask questions around that and they get a lot of great information around their solution. But I think that both of the last questions were kind of more market based and so I would just make sure when you're out there talking to customers that you're exploring the overall needs of the customer, you're exploring the overall market of your geographic area or where you're targeting and you're asking broader questions that are going to inform you about an overall business strategy, not necessarily the product itself that you're trying to offer, the solution that you're trying to offer. I think to Donna's point, I think that's really important is you can really uncover in a case where there maybe isn't a lot of disposable income, something that's so critical or would be so valuable that it would actually be part of their regular spending or part of their process and those are the solutions that can really make an impact. So yeah, I'm hearing you kind of speak to something that Donna mentioned earlier which is that there's a likelihood of potentially biasing. You go out and you do all these interviews but if you go in with a mindset that you have a certain expectation you can bias the interviews and so when you talk about asking these broader questions, when we think about that common mistake question a lot of entrepreneurs will go out and say if I gave you a product that looked like this, would you like it? And the natural human inclination is to want to please the person and say, oh sure, that looks nice. If you overlay the fact that typically when we're doing discovery we're doing it with people we already know and we're comfortable the odds they're going to say no are lower than if you're talking to a total stranger who doesn't have a vested interest in how you feel about their response. So the level of bias that is happening when people actually do get out of the building to do discovery is really a big challenge to overcome. Yeah, and I heard you talking using a lot of words like hypothesis and assumption and the reason we use these language that you think of more in science is to try to start thinking of putting a real structured process around this where I have an experiment. I presume that it is true that Iraq is the market for this product. What are the questions I need to go ask a neutral third party audience that doesn't actually want to make me happy by pleasing me and saying what I want to hear to make sure I get a true answer to those questions the way you would in a scientific study as opposed to kind of going out there and having people promote and the product idea that you have just to be nice. I always ask startups what have you done to validate that someone other than you and your mom think this is a good idea? Yeah, and it's a really big deal. I mean, I think we see it a lot as the mistake entrepreneurs make is asking the wrong kinds of thinking that they're doing the getting out of the building and doing customer discovery by going and asking questions and it turned out they either asked the wrong people or they asked the wrong questions. And so really putting some thought into that is an important part of the process. So here's another question. What is the difference between a product and a company? And I know Steve has a great answer for this so I'm going to pass this over to him. Gee, then maybe you could remind me what it is. So, you know, I'll just remind you what a startup is. You know, a startup is a temporary organization designed to search for repeatable unscalable business model which is a fancy term for what you're building that some of you might think you're building a company is actually right now just temporary. The goal is not to have a couple of views sitting in a room. Hopefully for some of you who are building a startup that could scale, you're looking for something much bigger. And so you're looking for something repeatable. A product is just the first beginning of that. But if you have a better instance of what I said, you're still free to repeat. That's okay. You guys want to jump in on the difference between what you think is a product versus a company? Yeah, I think Steve said it well. I mean, you can find a technical or physical way to solve the problem. But the bigger question where more entrepreneurs stumble is who is going to pay you for this thing? Are there enough of them? How will you reach them? Is there a profitable way to do that and can you make money from it? And so we think about product company, scalable company, right? Because then the next layer to that is are there enough of those people? Is it a big enough market? Is there a channel to effectively reach these people that I can create something more than a nice small business? So it's a really important question for entrepreneurs to ask themselves because they often get attached to a market that isn't big enough. And they exert all the discovery effort to create a product and an MVP and get out and sell it only to discover that the maximum market size isn't big enough for venture capitalists or investors to be interested in. And then they're frustrated that they're not getting the capital that they need to grow. So it's all connected to this entire process around product market. Yeah, so how do you turn it into a business? I mean, I think this was really classic when the app store concept came to be. There are plenty of apps out there that people actually enjoy the product and the product features, but there's actually not a business necessarily around people either willingness to pay for it or enough of a market of people who like that specific product to really actually have enough revenue coming in to support the infrastructure that a company requires. So you might have a cost of customer acquisition that's covered by the lifetime value of that customer but just barely. And when you try to take it to market and make it bigger and you need to have an office and you need to have staff, et cetera, you actually can't get enough profit margin from that business to actually sustain something big. And so it's not like you didn't find a product that someone cared about, but you didn't find a business that could actually scale and go to market. Right, and I think that I made a really important difference also going to the next level is a business and a scalable business. And I think most of us are kind of coming from the investor background and so we're approaching this as investors. And I just want to make the point that it's a very small percentage of startup companies or entrepreneurs who actually go out and get institutional or venture capital financing. The vast majority go out and either bootstrap it or grow on their own or create really amazing companies that might not scale to the level where institutional or venture investor would invest in it, but that's okay. I mean, it's totally great and it's really, it drives, I think almost all of the economies are these smaller companies that develop great businesses that are on great business models but either don't fit the requirements of a venture capital firm or don't need the venture capital investing to be successful. So I always want to remind young entrepreneurs of that as- That's an important distinction. And I think where the challenge comes in is entrepreneurs racing because they think getting venture capital is the sort of holy grail of validation that they're real and they're a startup success and they don't make the connection that there are economics attached to the market size, how long it takes you to scale, how big can it get that would preclude many businesses from even being considered for venture capital investment. And that's an important question to ask yourself during the discovery process. If that's something that you have in your mind's eye that you want to do, you really need to understand that it isn't just will the customers pay you, are there enough of them, how big and how scalable. But it's perfectly acceptable to say that's not the path for me. I don't want to take venture capital. It's a very smart decision oftentimes to say let me let the customers be the revenue that drives my growth. And it's just knowing which path you want to take and what you need to do in your product market fit process to go down the path that you've chosen. Right, no I think it's a really good point. Steve jump in. So one of the things our listeners outside of the US might be laughing at is that there is no venture capital in your region or country. And so you might want to consider what type of business are you starting. And I think our panelists have kind of articulated some of the opportunities. So let me put it in a frame. You could be one of four different types of startups and entrepreneurs. You could be doing a lifestyle business where you actually are doing entrepreneurship working for yourself and starting something. But your passion really is somebody somewhere else. You're doing entrepreneurship just now to put food on the table and put a roof over your head. There's nothing wrong with that but you ought to understand that lifestyle businesses typically don't scale and you may not have a couple of employees but when whatever else comes up you're going to drop that and move on. As I thought most entrepreneurs actually fall into the category called small businesses. And small businesses are you work for yourself. You might hire friends or family or local employees but the odds are you're not going to scale. Meaning you're not going to grow to multiple locations or multiple cities. And what that also means is I think as our panelists clearly pointed out you can't raise what's called risk capital. Venture capital that wants returns or money back at a very large multiple much bigger than a bank because small businesses tend not to give that type of return. Or you might decide you want to be a scalable startup. You want to be Facebook or Google or Apple or something else. That requires you to be able to talk about when we talk about product market fit. A market much bigger than your local community or city or maybe even your country. You need to be thinking about startups that kind of match huge opportunities. And so therefore when you're starting to talk to each other the first question to ask is are we going to be happy running a small business or do we want a local startup or do we want to go global. And there's no limitations nowadays and you'll be able to do that. But if you look around your local community and you want to go global and there is no risk capital then the thing you might want to think about is how do I get to a place where it exists. That's my solo. Great. Thank you Steve. Okay. So we've got another viewer question coming in. This is coming from Dauda and she asks what method do you suggest to identify the best value proposition of a business idea. Okay. So this is about value propositions and maybe we ought to define that term because it gets confused a lot. A lot of times when entrepreneurs go out to talk about their product to customers they talk about the features or what the product actually physically does. So it's waterproof or it has a red button or et cetera and you talk about what the product is capable of. But the thing that the customer really cares about is what that does for them, what the benefit is to them. Does it save me time? Does it save me money? Does it make me faster? That kind of thing. And that's what we talk about with the value proposition. And so the key thing here is the question of what, great, how do I find out what the value propositions are? So do you guys have some examples of startups you've worked with and how they've gone about finding the best value proposition? Yeah, I can just tie it back to that earlier example of the water protection company. I think that's a very clear one and it was interesting to see as you got out there and talked with potential customers which is I think one of the best ways to really understand and define that value for them is how different companies would approach value totally differently. You could go to one company and they would say, oh, this is environmental protection so I'm gonna get fewer returns on my devices due to water damage. That's great, it's gonna lower my costs and it's gonna make my customers happy and that's what they cared about. You could go to another company and say, wow, we've actually been struggling with our device and actually selling it because it requires environmental protection and we haven't been able to achieve it at a high enough standard. So by adding your technology to our product, we're actually able to have a product ourselves. Right now they have something that's kind of deficient in the marketplace. And then occasionally, which was always surprising, you would walk into a company and you would say, we know we can help you with environmental protection and they'd say we have no problem with environmental protection. And you'd say, all right, well, you sell devices that are electronic into the marketplace, do they fail from water? They said yes. And you said, okay, so it doesn't that mean we have a problem? They said no because we don't accept returns from water damage. And so we sell them. If there's a problem, it's not our problem. And so for them, we actually generated no value. And so it was again, great to understand that. And then when we think about segmenting the market, even when we thought we found the segment that was important, you still had to go more finite and understand, okay, well, what are your drivers for value for your customer? How is your business set up? You know, are you responsible for the turns or not? Have you outsourced that? And trying to understand their motivation was so critical in making the sale. And then it turned out, right, that you have like a different approach. Now, you know, it takes it to the next level. So when we're selling to that first group of customers, the marketing messages and the way we're gonna go to market is about a very separate set of things than that second group. And then you also wouldn't want to waste your time trying to find these third set of people who really aren't interested. And so now you've got to understand what are the characteristics of this group versus this group versus this group that we thought at the beginning were all one group so that we know who we're targeting. And to your earlier point, example about the hospital system is even within one customer set, because we were selling to large corporations, different pieces of their corporation are gonna have different, see different value in the product, right? And so... And frankly, probably different people, right? Oh, yeah. You know, a hospital isn't a customer, right? Because it's a building, not a person, right? So it may turn out that the person who's responsible for building the product doesn't care because once it's out the door, it's not in his department, right? But it's the customer service department that gets maybe all the returns that he cares about. Exactly, exactly. And so I guess tying back to the question, again, just going out, talking to your customers and asking those broader questions about motivation and trying to dig in on that is gonna be so critical to understanding where your value fits in with their product and solution. Great. Okay, so this question is Jamila from Bermuda. How do you determine when you have enough validation from customers in order to proceed with your new product? Is there a magic number that you need to shoot for? Wouldn't that be nice? So this is a great question, right? It is, okay, so I'm going out there, I'm asking all these questions. How do I know when I've got it? What is the defining moment for product market fit? Steve? 43. We're done. Great, okay, cool. So it turns out, obviously, it depends on the product and service. If you were selling enterprise software, that is million dollar software packages to large companies, if five of those people have given you a million dollar orders, you could probably declare you have product market fit. On the other hand, if you had a product in the app store and or on the web and you've got five orders, you could logically say, we don't have enough data. And so this also depends on not only the type of industry and market you're in, it also depends on what type of startup you are, because if in fact you have venture investors, they might be willing to take more of a risk than you would if this was your own small business. And so you also have to weigh risks, because your venture capitalists have 10 of you in their portfolio, but when you're a small business, you have one of you in your portfolio. Great, okay, cool. So the questions are coming in from all over the world, so I'm going to jump to the next one. A viewer from our embassy in Dakar asks, what is the best strategy for technology innovation to promote a new product? Okay, so we're talking about the tech industry and about promoting something brand new. So I think like Steve talked about earlier, there are different markets. Do you guys have examples of how startups do that? Well, I don't think there's a one size fits all answer to this and probably most of the questions that we're going to get today as Steve just mentioned. There are many, many options, but it really comes down to knowing your customer and knowing your market. So simply saying you're going to do Facebook advertising when your buyer is the chief financial officer of a healthcare system, you want to have alignment between the strategy you're using and the market you're trying to reach. There are no shortages of mail campaigns, Twitter, Facebook, old fashioned op-eds and earned media. There's no shortage of strategies. It's the question that comes back during the discovery process. What can you learn about your market and how they hear about new technologies, how do they embrace new technologies that will give you some clues as to things that you might use. I use the word might because you then want to design an experiment. So if your hypothesis is that you're going to reach them with an email drip campaign, then test that. Have a hypothesis that if I send out 100 emails to the person with a specific title in a specific kind of organization, I will get say three people to be a lead for me, execute that campaign and see what happens. Were you correct? If you weren't correct, how do you adjust and adapt? But you want to think about it in terms of a hypothesis and a test based on what you've learned in the discovery process. Right, so how does the customer basically want to be reached? What's the right way to reach them for that market? It doesn't mean that it's formulaic. So if they only get their information historically in trade press, that's the only way to do it. You can certainly have a hypothesis that the old way isn't the new way. But don't just make the assumption that I'm gonna just blanket the world with Facebook ads or Twitter posts or an email campaign and people are miraculously going to find me, test it. Do a small scale, low cost tests to see if you're correct. Great, okay. So now we have Luis from Columbia asking, what are some good examples for a successful elevator pitch? Okay, so this is a tricky one. I mean, just as a definition, if it's not known everywhere around the world, the elevator pitch is the short answer to the question, what is it that you're working on or what do you do? That you could maybe deliver in the time it takes to get from one floor to another in the elevator. So the important thing is to be really concise, right? Yeah, so at our firm, we see probably in the order of 500 pitches or business plans a year, and there's only a few of us on the deal team. So you can imagine you're going through these quickly. And what I will say to every entrepreneur who I help craft that deck or craft that pitch presentation, my opinion is that the entire story needs to be captured within the first three slides of a presentation, which you can equate directly to your elevator pitch. So you can have a 20-slide or 20-minute presentation, but if you can't kind of set the hook or capture the audience in the first couple of minutes, you're gonna lose them. And so what I encourage is, assume that your audience knows more than you think they might know about your market, and so you don't necessarily have to bring them up to speed on the problem that you're addressing and just dive one sentence on the market and then dive right into your solution and try to capture that in three sentences, and then you're good. Yeah, I think the only thing I would add to that to clarify is also make sure you don't use a lot of jargon or language that's, you know, we're a SaaS solution platform for, assume that the audience wants to hear something in the way that you would speak to them as a natural course of conversation. Everything I would add to that is there's a lot of great examples online from organizations like Ours and other venture funds and accelerators that run demo days that you can watch the pitches happen, and there's some great examples that you can begin to see what is the cadence and the rhythm and the sort of outline they tend to follow. Once you've watched 50 or 100, or in your case, several hundred, you begin to see the good ones have some common characteristics and how they're laid out. Yeah, that's just a great example of all the resources that are available. So now we have a viewer from our embassy in Pretoria asking, can pricing affect my product market fit? So absolutely, Steve, why don't I pass that one off to you? Sure, I mean, you know, pricing, and by the way, pricing is a tactic. The bigger question is, you know, what's my revenue model? That is, pricing assumes it's a direct set, but you could also decide maybe this is a subscription or maybe it's a freemium product or maybe I'm licensing IP. So I will just observe that, yes, almost everybody jumps first to what's my price, but you might wanna think go up a level and go, what's my revenue strategy? And of course, to answer your specific question, you wanna test pricing, and you wanna test the bounds of pricing because that helps you figure out product market fit. When I used to sell, for example, enterprise software, software to large companies, I would start out by saying my products a million out and the customer would look at me and their eyes would go wide and say, Steve, you know, we never paid more than $375,000 for products like this. Guess what, $375,000. I just figured out where the upper bound to the product is. And so you could run different pricing experiments, but I would suggest you first think about revenue strategy. Great, okay, that's a helpful answer. Do you guys have anything you wanna add to that? No, I think that was great. Okay, great. Okay, so from the Secure Viewing Group in Pakistan, Mosheen asks, companies like TechCrunch are driving the tech world with some amazing high growth companies. It is, is it more important to focus for us to focus on being scalable or being innovative? So I think one of the challenges here is that the media, you know, as always, there's a lot of hype and there's a lot of excitement that can be found to sort of seeing what's happening on a global scale through the media, but this all the more sort of drives us back to understanding who's your customer and what are you actually doing for them and what kind of business do you wanna be building? Being innovative for innovative's sake often means that you've got something super cool that it's ahead of its time or it's, you know, it's so innovative that it actually only addresses the current market needs of a really small segment and so you actually don't have, you know, you're stuck in that, we've got a product but we don't have a business problem. And so I think both of those goals are really sort of about the big picture and you need to start with the who fundamentally is my customer and what am I trying to serve here? So Blake seems like you've got something to add here. Yeah, I think, you know, we invest in a lot of technology that's being spun out of university labs that are highly innovative and carry to your point. Timing the market is extremely challenging. So our firm has had a 30 year history investing in these type of companies and it's almost, I don't wanna say impossible because obviously we get it right sometimes but I'm not convinced it's chance or if it's skill. And so, however, innovation is key and it goes back to the earlier discussion around a competitive advantage and so you need, you know, you need to have that advantage somehow and whether that's your innovation or a business model or just a really great interface it needs to be powerful and I think it's critical to any sort of startup company. Can I just add like what, when we traveled the world with our competition challenge cup we see thousands and thousands of startups and the majority of them are solving really basic problems, right? They're incrementally improving what's already happening, they're applying technology and solving a problem that's right in front of us and there's absolutely nothing wrong with that. There's enormous amounts of opportunity to simply take the best of technology and apply it to the way the world already works. There is a subset that are saying, okay, how do we completely rethink how this market operates? But I wanna alleviate the pressure that maybe many of the entrepreneurs around the world feel that somehow they have to be coming up with some sort of world changing technology that nobody's ever thought of and applying it in such creative and innovative worlds that they're gonna completely disrupt the world. I'd love to throw that word disrupt right out. Oftentimes some of the best businesses are just taking the best of technology and applying it to a problem that you know really well or that's right in front of you. I mean, which is an example when Steve was talking about the different types of businesses that are out there. The clone is a great example of that. So seeing something that worked in one market like in the United States and taking it to Germany and doing the German version of it, right? There are great business opportunities that way and it's not innovative in terms of the new idea but it's innovative in being in that market and adjusting it for that market. So certainly great opportunities there. A viewer from our embassy in Monrovia has a question. Do you think partnerships are important when starting a small business? So Steve, why don't you tell us about partnerships? Sure, so one of the things startups need to do is think about all the activities that is the things they need to do to make the product market fit happen. That is, are you gonna need software engineers? Are you gonna need manufacturing? Are you gonna need finance? Do you need to become experts in supply chain or regulatory issues? So once you figure out these activities then you could sort them into two buckets. One is, what are the resources I need to own as part of my startup? That is, which one of those need to be employees or things that I have and what are things that I can have third parties or partners do? And so you need to, again, start with what are the strategic activities? What can I afford or need to have and what can I outsource to partners? And so that's how I approach partners. The second thing to note about partners is it's very easy to kind of write down company X will be our partner but much like you've got out of the building and discovered about customers, you also need to get out and discover whether those partners work with startups or what are their criteria and how did they work and what's in it for them to work for you. So I would treat them just like a customer. I hope that helps. Yeah, I think that's a really key point is understanding not only you as a smart startup want this partnership but what does the partnership get out of working with you? And especially when you're small that can be a little bit of a chicken and egg kind of problem. So you really do need to understand their motivations to know why there's no benefit for them to work with you as a startup. So Kemi from Trinidad has a question. If you focus on a particular customer segment do you limit your opportunities and potential for market scalability? So Donna why don't you, or Blake it looks like you've got an answer for that one. I mean I think in any sort of startup usually you're limited by resources of some kind. It could be your time if it's just you or your small team it could be financial resources. And so we think it's very important to focus early on a product or a market segment. So focus is not a bad thing. I would say that as you scale and as you grow and as your resources grow with hopefully your market it's okay to start to broaden. So you might perceive it as limiting at first but if you can execute extremely well in a narrow focus it's probably gonna be much easier to broaden that focus later than trying to go after everything and diluting your resources and doing your effort across the whole field. Right I mean when I think about that elevator pitch at the beginning and those two to three slides that you talk about I wanna know what you're gonna do now with the resources you have now to make it really seem achievable and feasible to do it but probably like if Blake lets me get to like slide eight or nine of my 20 slide deck I'm probably gonna tell you and hey once I've achieved this guess what these other markets are that I could go after and so there's usually a vision for my product and I can do this thing for this huge group of people but the reality is that there are baby steps to get there and the first market I'm gonna go prove my viability in is this and then I'm gonna grow to eventually be this great big company that can do all these things but you really have to take it in steps. So our next question is from Noman from Pakistan asking once you have a patented innovative product for global scale markets what is the standard procedure to approach venture capitalists from other parts of the world? Okay, so Donna you are working with a lot of startups that actually are global. We do, we are an investor that invests all over the planet so I think and there are an increasing number of firms like ours that are looking for deal flow all over the world and recognizing that as ecosystems develop in cities everywhere the odds that there is an investable opportunity are increasing. The key is really everything that we've been talking about today doing the customer discovery process, market, product market fit, having your hypothesis, doing a very data oriented approach to your company so that when you're putting your pitch deck together and you're getting it over to us it is a really compelling first foot forward. So you wanna make sure that you're taking advantage of the resources that are available. What do other companies that are pitching say about their company? How are they describing their market opportunities? Can you hear them thematically weaving in the things they've learned from their customer discovery process into their pitch decks? There are a good number of firms now that if you can send those decks over they're willing to take a look at those companies and are willing to hear pitches virtually and will do the due diligence primarily virtually as well. So the key is a really good first foot forward. The second is that it is always of course easier to get someone's attention when you're introduced by somebody who knows that person. So the good news is technologies like LinkedIn make it easier for you to figure out is there somebody that can help make that introduction? And there again, this is where many of your local ecosystems become important. If you're part of a hub or a incubator or a program locally, odds are they're connected to some of these investors that are deploying capital all over the world. So figure out how you can use your network, put your best foot forward by employing much of what we've been talking about today for product market fit. Great, yep. And so from a tactical perspective, that first approach was send your pitch deck over the transom to the website or the interview but more importantly, try to see if you can get an introduction. And just one follow on to that is all of us, I mean we do receive a lot of those kind of over the transom just inbound pitch decks or inbound business plans. So don't be afraid to follow up. Don't follow up the next day or even the next week but if a month goes by it's okay to ping me and say, wow Blake, I emailed you last month, did you see it? Maybe it slipped through the cracks or maybe you didn't have a chance to read it but I just wanted to let you know or send it again. Also it's always fantastic if you can give some added information. I contacted you last month and the last month we've done X, Y and Z and I just wanted to update you on that. Not sure if you're interested but I wanted to make sure you had the latest information. Yeah, actually Blake, that's such a good point because I've always found like, if you email me on day one and you tell me you have 100 customers, I kind of don't know if that's good or not good but if you email me and I see a change over time, so 30 days later you tell me you have 1,000 customers and I see you had a 10x increase over a period of a month. Now I know relatively that that's a pretty impressive growth perspective and so actually being able to track progress of an entrepreneur over time gives a prospective investor more insight into, hey they said they were gonna achieve these things and they outperformed, that's pretty compelling. So it's often a process of getting to know an entrepreneur, not a point decision in time that helps an investor make a decision. That's right. So now we're gonna, Steve jump in. So one of the flags that I heard in that question though is now that I have a patent and I think this trips up a lot of entrepreneurs in the US but most definitely outside the US thinking that a patent matters and the answer is a patent most of the time, not always but most of the time doesn't matter particularly if you're doing a web or mobile app. If you're into life sciences, please ignore everything I just said and don't leave your bedroom without a patent but somehow technologists in other countries think therefore I have a patent and then I must have a business and I just wanna put up that flag that says no you might be confusing all the time you've been spending trying to get a patent from the time you should have actually been outside the building trying to figure out product market fit. Yeah that was a really good catch Steve, thanks for following up on that. So our next question is what kind of skills do you need to actually do that to get out of the building and successfully find product market fit and what if it turns out that you're not comfortable with the skills that are required and how might you mitigate that challenge? So what do we mean by get out of the building and go ask these questions? What does that actually entail? Well I mean much like everything knowing what something is and being able to do it are two very different things. So I think it's important to recognize that for many entrepreneurs particularly if you're more the product technical side actually getting out and doing the interviews and talking to customers may feel intimidating. So getting comfortable with asking for someone's time going in in an unbiased way. Can you recognize your own biases and go in with the right language so that you're not biasing? So the communication skills and getting comfortable is often a challenge. I do think networks are a challenge for many people. They are picking markets where they may not have deep expertise and they may not have. Hundreds of people they can immediately start interviewing and that's also true in many of the cities and countries that our viewers are in. And that's where you have to get comfortable networking, asking for introductions, introducing yourself virtually or physically to people you might not know and getting into a place where you can offer your ideas up but explore. And then I think the listening and interpreting is the other key skill. If you can let go of your biases on the front end, how do you also make sure that you're not biasing what you're hearing on the back end? Are you interpreting it correctly and analyzing what you're hearing to hear the trends of every time I mention X, their eyes open up and they ask how quickly they can have the product. You really need to be able to interpret what you're hearing well. Can I just, one personal story on the networking. When I started my career, I came out of a PhD program of material science and I was around a lot of brilliant scientists and engineers which sometimes play into those stereotypes. And I was working with a gentleman who just had an amazing network and was just great at working the room and could go out and meet anyone. And I was just so impressed and I said, wow, it would be really, how do you do this? It just must be born with it. And he said, no, no, I was totally introverted when I started and I would set goals for myself and you just get better at it. It's a skill that you can learn. And so when I was starting out, I said, okay, I go to a conference, I go to a event or I go to a session at an incubator and I say, okay, I'm gonna collect two business cards. And then I'm gonna go back into my shell and be uncomfortable at this event. But I can go out there and collect two. And then the next month, all right, now I'm gonna try to collect three and get three new contacts. And you do that enough. And over time now, it's not, I'm sure I'm still a little awkward but I'm not as awkward as I used to be and I can go out and make those connections and build that network. And so I just wanna say to anyone out there, it is a skill, you can develop it. It's not something that you're born with. I mean, some people are, but not all of us are. And so it's okay. We'll just go out there and try. Yeah, pushing out of your comfort zone is kind of part of the challenge here. So, all right, we have time for just a few more questions. An online guest asks, how do students, particularly high school students, balance their studies with their entrepreneurship efforts? Well, when you're in high school, can't you stay up all, you have so much more energy than the rest of us. You can, you actually have more hours in the day. Well, it's an interesting question whether or not you can actually find a way to incorporate this into your schoolwork and whether the projects you can do at school can actually be, when you're assigned a project, can it be your company's project. But it is a hard balance and you sort of have to trade off what are my activities gonna be. And so maybe instead of playing soccer, your activity is your startup, right? So that's a fun opportunity. Have you worked with any high school students in your program, Steve? Yeah, it turns out in the US, there's a school called Hawkins School that now trains K through 12 teachers on how to teach lean methodologies in middle and high school programs. And actually turns out that these students are fearless. Turns out when you're in high school, you don't quite know that you're not supposed to be calling on people and that CEOs shouldn't return your calls. You also have an advantage that most people are actually happy to talk to students. If you just say, hi, I'm a student at X and I'm just trying to learn how to do this and you'll most often get into places that a salesperson won't. And so I encourage high school students to do this. These are the skills that you're gonna need in the 21st century economy. So get your hands on it now. Cool, great. Okay, a viewer from the Malawi Polytechnic Group asks, how does an individual in a developing country convince first world countries to buy its technology? Steve, have you guys faced that scenario where you've got a third world country product coming into the US or another European country? We do and I think it's important to understand again the market. You keep hearing that theme throughout everything we're talking about today. Don't just make an assumption that the first world is your market and by the way, that's a place, not a market. How do you segment within that? So it sounds a lot more intimidating to say, I'm gonna convince a first world country to buy my technology, but who are your specific customers? Are they teachers? Are they moms? Are they 20 something kids that use an Android phone really parsing out who you think your market is and what's your hypothesis for why they would want to buy your product? I wouldn't let geographic boundary dictate whether you do or don't pursue a market, particularly with technology and the ability to use virtual networks. There is an ability for you to reach beyond your own borders much easier than there has been in past years and the further we go into the digital economy, the more that's going to be the case. So figure out who your customer is without artificial boundaries around how we see something as first world versus third world. That's great, yeah, okay, so we can take one more. Let's take one from Jorge from Cuba. What financial support mechanisms are available to startups? Well, I think some of this is contingent on where you are and where you're looking and what size company you're looking for. So do you have some examples of tools? I mean, I'm familiar with the U.S. tools. I mean, you have your classic, you have your friends and family financial resources. You have non-dilutive capital in the form of grants and so there can be government grants at the city, state or federal level available here and also institutional investors, so venture capital or other private equity sources. But let's not miss the most important financial mechanism which is revenue, customers and revenue, which is something that any startup in any country or city in the world ought to be focusing on first and foremost. Yeah, I mean, it's the best proof point for customer or for product market fit is that someone actually is willing to pay you to use the product, right? So customer revenue is a great one. So I think we're getting close to the end of the hour and we really appreciate the time that you've had with us today. As we finish, we wanna briefly ask each of the panelists what you think the most important takeaway was today about product market fit. So Donna, I'm gonna start with you. Sure, well, I won't steal Steve's line because we know what Steve will say, but I will say, check your biases, right? Check what your assumptions are, separate fact from fiction and don't make assumptions about anything. Get in and test everything and think beyond product to every aspect of your business. Okay, and Blake? I would just say, again, when you're looking at the product market, don't forget to focus on the market and understand the overall geography of the market that you're selling into. And Steve, I think we know what you're gonna say, but let's go for it. You know, you would think I would say there are no facts inside your building, so get the heck outside, but instead what I'm gonna say is for those of you outside the US who wanna grow big, you're either born global or you're gonna die local. All right, okay, I like it's a new one. Unfortunately, we're at the end of the question and answer session for today's Tech Connect. Thank you so much to our wonderful panelists and everyone viewing today. I also wanna give a special thanks to the hosts of the viewing groups that we have from around the globe. So I'm gonna quickly run through everyone who has been here with us today. We have embassies from Bogota, Bucharest, Budapest, Guatemala, Mexico City, Monrovia, Consulate Karachi in Pakistan, Pretoria and Pristina. And then we also have local organizations that are hosting viewing parties around the world, including the Protik Innovation Center in Albania, Femme Coters hosted by Soliderit Tech Hub in Cotonou, Benin, Universidad de Antioquia in Colombia, Universidad del Valle de Guatemala, Utex Technology Innovation Center in Jamaica, Youth Network for Reform, Impact Hubs Copia in Macedonia, the Malawi Polytechnic, Pico Circa International hosted by the Women Development Center in Abuja, Nigeria, Starlight Group in Rwanda, Arma in Senegal, and 1776 with viewers from the Ukraine, Singapore and India. And then we also have a few viewing groups in Tunisia, including the Alotabib Project, ARA and the Career Center at Tunis Business School. And then several viewing groups in Pakistan, including the Institute of Business Administration, Sikur, the Shah Abdul Latif University, Herpur Mir, the Institute of Business Administration, Karachi Zabist Larkana, Mehran University of Engineering and Technology, Jamshoro, Butel Kuzdar, and Butem's Kedah. So now we will end with special remarks from Deputy Secretary of State, Antony J. Blinken. We hope you found our insights today useful and we wish you all the best of luck. Hello. It's a great pleasure to connect with so many talented and passionate entrepreneurs from across the globe. Thank you for joining us, and thank you to our panelists for sharing their expertise on navigating and nurturing a global innovation and entrepreneurial ecosystem. The GIST network is really about one thing, celebrating the vital role that you and entrepreneurs around the world play in your own communities, from college towns to refugee camps, from rural villages to urban hubs. I make it a point when I travel to visit incubators, accelerators, or makerspaces, to meet with local innovators, entrepreneurs, and students. Regardless of where I am, a modern Paris, Silicon Valley, or Ho Chi Minh City, I hear the exact same excitement, the same creativity, the same curiosity, even the same frustrations with how slow government can be to sometimes catch up to the warp speed you're all moving at. It's your passion, your ingenuity, your willingness to take risks that are society's greatest assets. The challenges we face today are beyond the capacity of governments, let alone any single government to solve on our own. If we're going to meet those challenges, the great challenges of our time, challenges of rising seas and warming temperatures, of protracted conflicts and persistent poverty, of violent extremism and cyber terrorists, we need your ideas to take root, your ventures to launch, your businesses to grow. 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