 Hello, everybody. Thank you so much for tuning in today. Before we get started, quick disclaimer, everything I share here is my personal opinion, and Google is not responsible for any content opinions expressed by me. Content used is fully non-confidential. With that out of the way, little bit about me. I am Neha Bansal, and I've been in product for more than a decade. You can find all the boring details on LinkedIn. The interesting part is that about a year ago, I moved to an early-stage team within Google. So at this point, my Google product, along with a few startups that I had invested in, were trying to get their brand-new product off the ground. That's when I started reading books, meeting people to understand how do you get a product off the ground and find product market fit. In that journey, a senior director at Google recommended Andrew Chen's book, The Cold Start Problem. It was such an enlightening moment because it disentangled many theoretical concepts and gave me a framework for taking things from zero to one. And that's what I'm here to share with you all today. Let's make sure you are also the right, you're here for the right reasons. You are all early-stage founders or product owners, product managers at various sized companies looking to start something new, literally from a blank slate. With that, let's dive into the Cold Start Theory. Andrew Chen introduced this theory as a framework to think about different stages of a business. Cold Start Theory lays out a series of stages that every product team must traverse to fully harness the power of network effects. The primary five stages are, first is the Cold Start. Once you solve the Cold Start Problem, you hit a tipping point, post that, you find an escape velocity hitting the ceiling, and once you hit the ceiling, you find a moat in which you continue to maintain. I do wish that the framework had a different name because it's the same name as the first stage of the whole theory, which could be a bit confusing. But never mind, for our purpose, we will focus on what needs to happen to go from the first stage of the whole, from the first stage to the second stage. Visually, we will talk about this red dot which needs to happen somewhere on the lower side of this graph, meaning you need to solve the Cold Start Problem to find product market fit, and then you can grow and grow until you hit the tipping point. So how do you solve the Cold Start Problem? Well, the first step to solving the Cold Start Problem is identifying and building an atomic network, a network of users which is stable, engaged, and can self-sustain, and you defines it as the smallest possible network that is stable and can grow on its own. Once you have such a network, you have found a product market fit. Let's crystallize this concept with some examples. Any guesses on how Facebook first got started? Well, Facebook's first atomic network was college communities. They first got success at Harvard University, where Mark was, and then expanded rapidly, moving to other Boston-area schools and rest of the Ivy League that spring. Let's take another example of Uber. Uber started with five PM commuters at San Francisco Caltrain Station at 4th and King Street. I absolutely love the specificity here. With Airbnb, their atomic network was travelers attending conferences that cause shortage of hotel rooms in that city, which meant large conferences. Another fun example is Slack. Slack's atomic network was three people team within a company. Each of these product had to identify what the appropriate atomic network was for them in order to find product market fit in its early stage. There's another fun example, and I think that's my favorite atomic network story, which is about credit cards. So, Bank of America is the company that launched the first credit card and the city that they chose to do that was in Fresno, California. Now, you might be wondering why did they go so narrow and why did they choose Fresno, California? Well, on the demand side, 35% of Fresno residents already had some relationship with the bank. And on the supply side, most small businesses in Fresno downtown did not have a proprietary charge card, which was a thing back in the 1950s. So, with that information, they prioritized, they focused on Fresno, and then on one specific day, the credit cards arrived in the mailbox of 60,000 Fresno residents, no application process ready to use. These residents used the cards at the 300 merchants in Fresno downtown, and boom, they got the traction they needed to prove product market fit. I hope you're enjoying these examples, and if you're not yet convinced, let me give you some lesser known examples, but they're very close to heart for me. First is Homejoy. Homejoy is Kim Spalding's company that focused on matching professionals like electricians, carpenters, et cetera, to homeowners. When they started, their atomic network was locksmiths, just locksmiths. Once they've got product market fit, by matching locksmiths to homeowners, they expanded to cleaners and electricians, and the rest is history. They proved product market fit again and again, and eventually got acquired by Google to become the foundation of the Google local services product. Another fun example is Google's Shopping for Businesses. This is my project, which is very close to my heart, because I worked on it. So we started with building a marketplace for everyone, everyone being a business that needs to buy something. Electricals, plumbing, cleaning, material handling, arborists, lawyers, retailers. Obviously, not surprisingly, initially, we didn't see any traction. That's when we said, okay, we're doing this wrong. So we pivoted to focus just on one vertical. At that time, we chose plumbing for a variety of reasons, and suddenly, numbers started looking good. I'll share one final example with you of Circles. Circles was started by a very good friend, and the vision early on was they wanted to build TikTok for LinkedIn professionals. Turns out, this was too broad. After lots of iterations, the team accepted that they need to focus, find their atomic network. They decided to focus on law firms as an atomic network because turns out that they have deep pockets and horrible digital marketing skills. As I was going on and on about these examples with a good friend, Paul Gibbell, by the way, he hosts an amazing podcast called Product Momentum. He asked me that, why are you talking about going small when everyone talks about scale? Like, why go small? So in 2010, I read an essay by Chris Dixon. He's a partner at Andreessen Horowitz. He wrote an essay titled, The Next Big Thing Will Start Out Looking Like a Toy. When he talks about the disruptive technology theory, which says that disruptive technologies are dismissed as toys because when they are first launched, they undershoot user needs. For example, the first telephone could only carry voices a mile or two. The leading telco of the time, Western Union, passed on acquiring the phone because they didn't see how it could possibly be useful to businesses and railroads, their primary customers. What they failed to anticipate was how rapidly telephone technology and infrastructure would improve. The same was true of how mainframe companies viewed the PC and how modern telecom companies viewed Skype. Andrew extends this into target audience. The next big thing will start out looking like it's for a niche network. But the question remains, why go small? Well, the answer is that the more user you need, the harder it is to create something. That's why starting off with a group of users that is small allows you to analyze root causes of what's not working. You can pick up the phone and call the user and ask, like, hey, why aren't you signing up? What's stopping you from doing that? Help me understand. But imagine doing that if you launch something to everybody. Who would you talk to first? Okay, so with that, I hope we're all aligned on the power of the atomic networks and what is it and why you should be focused on that. The next question is, how do you build such an atomic network? I'm gonna try to summarize that in three steps. First step is identify the hard side of the network. This is the, these are the minority of the users that create disproportionate value and as a result have disproportionate power. For example, content creators for social network, drivers for Uber, developers for App Store, managers that create documents and projects for workplace apps. For marketplaces, it would be sellers. For Wikipedia, it would be volunteers who write all the articles. This is the hard side. These are the hard side of the network. Identify your hard side. And once you have done that, solve hard problems for this hard side of the users. You have to think about a lot of questions, such as what is the unique value proposition for this side? How will they use the product? How do they first hear about your product and in what context? Why will they come back more frequently and become more engaged? What makes them sticky to their network such that when a new network emerges, they will retain on your product. These are difficult answers and require a deep understanding of the motivations of your users. Understanding these diverse points of view make it easier to serve them. And finally, develop a simple to use killer product that solves the problem and ultimately deliver a magic moment to these users. Remember, your product should not be fully featured because you want it to be a dead, simple value proposition. While you're doing all this, ignore all questions around what is the market size? How scalable is your idea or how will you monetize it, et cetera? Your focus should be on getting traction with your atomic network. Use growth hacks, do whatever it takes to get this small group of users sticky. So yeah, when I say small, how small am I really talking about? Studying all the examples I have, I'd say maybe 100 users at a specific moment in time. Create magic moment with these users especially before consumer products. Now let's say you have already done this. How do you know if you have succeeded in creating those magic moments for your atomic network? Well, magic moment is a nice concept but it would be even more useful if you could measure it. The best way to do this might be even more surprising. So you start with the opposite of magic. The moments where the network was broken down and then start solving the problem from there. First, define your zero moments. For example, when Uber started at the Caltrain station, they gave their drivers and coordinators an app. I think it was called StarCraft that recorded the right completion. So anytime a rider didn't match with a driver, it was recorded as a zero. They continuously iterated to completely eliminate these zero moments. So define your zero moments, monitor them and finally get them down to zero. And that's how my friends product market fit is achieved. When a product starts generating magical moments with minimal zeros, you can claim to have found product market fit. Well, I know we're all data hungry people here. So let's define this in commonly used metrics in our world. Typically the best metric for PMF would be retention, which you would analyze using time-based cohorts. I was able to find some interesting benchmarks as well for consumer and SaaS products. So let's go over those quickly. For consumer products, you would want to see a daily active user to monthly active user ratio of 25% and above. A world-class leading down mal would be over 50%. There's a certain minimum for organic acquisition. So you would want to see hundreds if not thousands of signups per day. In terms of retention, day one retention should be at least 30%. 70% plus would be top notch. For SaaS products, you would look at these engagement metrics and also some additional monetization metrics such as 5% conversion rate when your user goes from free to paid. The three times CPA to LTV ratio. Monthly churn should be less than 2% and there should be a clear path to 100,000 of monthly recurring revenue. I hope that helps. Now, obviously this all seems very clear. So why do many startup projects and companies fail to find product market fit? Well, from my personal experience, the hardest thing about going so small is to commit. In my product where I was building a B2B marketplace, we chose to focus on plumbing. Now that was scary for the merchant onboarding team initially because they felt that they will not be able to find enough companies that wants to sell plumbing products. It's always a hard mindset shift. Also commitment involved saying no many, many times. For every feature idea I had, I would have to think that do plumbing businesses would they need this? If no, I'm not building it right now. And doing that was absolutely difficult. And finally, in a team setup, constantly reminding the team that this is just the first leg. We will go beyond this. I would be asked all the time. So are we now a plumbing marketplace? And then you are the one who has to remind the team that this is just where we're getting started. We will be going beyond. So in a nutshell, I think having a lot of self-control and commitment to only build for what is needed by that small atomic network is the hardest part. So let's say you found product market fit in your first atomic network. So what's next? Well, I suggest that you document your success playbook. Write down what worked for you and what did not and what did you do to fix those problems? Once you've done that, you rinse and repeat. Do it again and again. Going back to the Uber example, Uber found their product market fit at the Caltrin station at 4th and King Street. Once they did that, they used the same playbook to expand to nearby stations and eventually to the whole of San Francisco city and the rest of the area and then rest of the world. Doing writing down your playbook helps you rinse and repeat and move at a much faster pace. And you keep doing this until you hit your tipping point. If there is one thing I want you to take away from today, it is this slide. When you get back to work on your sort of project, write down the definition of your atomic network. For example, who is your user group? What is the intent in location and time? So let's say if you are a project management application, your atomic network could be a product team at Chase Bank who wants to plan for let's say the Q2Cycle, right? Be as specific as you can. With that, thank you so much everyone for tuning in. If you're interested in hearing more from me, you are welcome to sign up for my newsletter and follow me on LinkedIn. Also, I highly recommend this book from Andrew Chen called The Coal Start Problem. Have a great rest of your week and thanks again. Bye.