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🌱 5-Bit Fridays: 10 places to find PMF, self-serve onboarding mistakes, (not) paying attention to competition, welcome emails, and how to get alignment
👋 Welcome to this week’s edition of 5-Bit Fridays. Your weekly roundup of 5 snackable—and actionable—insights from the best-in-tech, bringing you concrete advice on how to build and grow a product.
Happy Friday, friends 🍻
Wednesday was a wonderful day. If you missed it, news dropped that Black Mirror is returning for a 6th season, which apparently will make us feel like we’re all inching closer to a grim, tech-infused dystopian reality. I’m excited.
In other news, ByteDance (the company behind TikTok) is pushing a new app in the US of A as TikTok faces a ban. The app, Lemon8, has gained popularity quickly and was the second most-downloaded lifestyle app in the last 30 days. I haven’t checked it out, but apparently, it’s a combination of Pinterest and Instagram.
And if you read my recent deep dive on ByteDance | TikTok, you’ll know why it’s already so successful…it’s built on the same AI and the same powerful middle layer that powers ByteDance’s $225B empire. Which makes me wonder: does ByteDance actually think this is a hedge against a TikTok ban? That’s like the Facebook→Meta rebrand. You can’t just change your name and pretend you’re different. Same same, and if TikTok is shut down because Uncle Sam is worried about Americans’ data in ByteDance’s custody, they will surely clamp down on another app they made for the same people with the same data…🤷
Anyways, let’s get to what you came here for.
Here’s what we’ve got this week:
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(#1) Ten places to find product-market fit
The only thing that matters is getting to product-market fit.
Marc is absolutely right. If you think about why startups (or new product launches) usually fail, it’s very simple: they fail because they run out of money before getting to product-market fit (PMF). Since PMF essentially means being in a good market with a product that can satisfy that market, you can see why it’s a race between you and your burn rate to get there. It’s super hard to get investment if you’re in a bad market, or if you’re in a good one and you’ve built the wrong thing.
If you have PMF — your product is working and people need it — then you’re in a great place to successfully grow. If you don’t have PMF, getting there should be your only goal before pushing for growth ahead of it.
Marc goes on to say:
You can always feel when product/market fit is not happening. The customers aren't quite getting value out of the product, word of mouth isn't spreading, usage isn't growing that fast, press reviews are kind of ‘blah,’ the sales cycle takes too long, and lots of deals never close.
And you can always feel product/market fit when it is happening. The customers are buying the product just as fast as you can make it — or usage is growing just as fast as you can add more servers. Money from customers is piling up in your company checking account. You're hiring sales and customer support staff as fast as you can. Reporters are calling because they've heard about your hot new thing and they want to talk to you about it. You start getting entrepreneur of the year awards from Harvard Business School. Investment bankers are staking out your house.
Now, it’s easy to get hyped up and misled by good acquisition numbers into thinking you’ve found your coveted product-market fit. But, just because people are signing up at a low acquisition price doesn’t mean you’ve found it.
At the end of the day, the data doesn’t lie: engagement and retention numbers will tell the real PMF story.
And most of the time, if people aren’t using your product and sticking around, it’s indicative that your product doesn’t yet have real value for the customer. Top-of-funnel growth means nothing if the users all churn.
This Venn diagram (inspired by Lenny Rachitksy) is an oversimplified cheat sheet to know if you have it 👇
And of those, the most likely to kill your business is the one at the top: not building something people want. This brings us to the general framework for finding PMF:
Figure out who your customers are
Find their unsolved problems, underserved needs, or desires
Define your value proposition
Build your MVP as fast as you can
Put it in front of people and test it with real customers
Have a feedback loop, and iterate until you find something people would be very disappointed to not have in their lives anymore
In our first bit today, let’s focus on #2. More specifically, how to look at startup ideas through the lens of PMF. Conventional advice for founders when it comes to finding an idea is to either (1) find a customer pain point and figure out a way to solve it, or (2) find a way to benefit the customer and present them with a “gain creator”.
That’s not wrong. But it’s definitely a broad simplification that doesn’t make it very useful. Luckily, in a post by Gigi Levy-Weiss from NFX.com, he gives some advice on more PMF-specific vectors to think about when looking for an idea. Here they are, with my favorite excerpts: 👇
1. Take an existing activity and make it 10X easier
If there’s something people already do that you can make dramatically easier, it’s likely to find product-market fit. You’ve already de-risked from a market standpoint because you have evidence that people actually do the thing your product enables.
The catch is that, for people to adopt it, your product has to make the activity dramatically easier. You have to hit a critical mass of ‘easiness’ to motivate people to switch from their existing habits to start using your product.
Example: DocuSign made it 10X easier to do signatures.
2. Make an existing activity 10X better (& networked)
As with making an existing activity 10X easier, taking an existing activity and making the experience dramatically better — especially if it’s better because you made it a network — is also likely to find product-market fit.
Example: Slack took workplace conversations that already existed and made communicating 10X better with their simple interface, threads, and chat spaces.
3. Create new inventory to be sold in a marketplace
When you find significant new inventory that people couldn’t access before, and you’re able to unlock it for them, you’re likely to see the magic of product-market fit.
Example: Etsy and Airbnb bought people craft goods and unique homes that were previously much harder to access.
4. Discover new willingness to pay
This happens when you do something so well that users will pay for something that they hadn’t previously been willing to pay for.
Getting people to pay for things they have mentally classified as “free” obviously isn’t easy. You have to be much better than the free alternative for them to be willing to do it.
Example: Superhuman got people to pay a premium for email, something traditionally free, because they built the fastest email tool around — selling optimal productivity to people who need it most.
5. Connect a group of people that were not visibly connected before
This is getting harder to do as we go deeper into the era of social networks, but if you can find ways to connect new, previously disconnected communities of people, it’s often very fruitful.
This is what we’ve seen for vertical-specific social networks like LinkedIn (professionals), Github & Stackoverflow (developers), MapMyRun (runners), etc. Bringing communities together creates real value.
6. Give people a new or easier way to make money
If you can actually fulfill the promise of making money for your users, they’ll love your product. It’s especially relevant if your users are individuals or SMBs, as for enterprise users it’s harder to attribute making more money to your product (and sometimes enterprise users care less about the organization’s overall financial wellbeing).
Example: Uber unlocked a new type of gig for people, and they saw huge supply-side growth as people realized there was money to be made there. Same thing with Fiverr or Substack.
7. Turn something digital that isn’t digital
The first wave of companies in the digital era was mostly focused on this, so a lot of the low-hanging fruit has been picked. But where there still exist opportunities to digitize areas that still remain analog, products have a high chance of finding product-market fit.
The opportunities today for finding non-digital ‘islands’ are much smaller in the past. However, especially in the B2B space, we’re constantly surprised by how many processes are still manual or digitized only at the level of the spreadsheet
This is skeuomorphic design (i.e. mimicking the real world in a virtual space.)
Note: The new version of this may be something along the lines of “Turn something digital into something AI”.
8. Find a way to offer 0 pricing
This is a short-term driver of product-market fit, and it only works in situations where the prices were higher before. 0 pricing or low pricing is only sustainable if it’s used to bootstrap a network past the critical mass point so that you can get network effects going, or if the 0 price product has a high conversion rate to paying users.
Example: WhatsApp took off in Europe and Africa because SMS prices and data rates were high, so offering free chat led to huge demand growth.
9. Create a young version of a proven product
Some products that have been proven to work for one generation don’t work well for the next. Younger generations have different needs, and they especially don’t want to be where their parents are in terms of the products and networks they use.
Example: Instagram was the social media for millennials, then TikTok came along for Gen Z. And the next gen of dating apps like Bumble/Tinder/Hinge knew there was no chance that the younger audience would be on the same dating platform as their parents.
10. Find a new ‘pleasure center’ in the mind
This is when your product is something that makes it so fun for people that they become completely ‘addicted’ to it, even though they didn’t know they had such a desire before they encountered your product. It’s tough to predict products like these hitting well, and often it could just be a wild bet.
Example: Duolingo created a gamified product that makes learning a language fun and slightly addictive. TikTok, of course, is another example.
In an earlier deep dive I did on Superhuman, we unpacked their brilliant system for reverse engineering PMF. It’s super tactical and goes into the details of one of my favorite frameworks. Bias aside, I highly suggest reading it. (Read it)
First time reading? Make sure you don’t miss out on any of my newsletter’s main content: 👇
(#2) Self-serve onboarding mistakes PLG companies make
In a self-sign-up-and-discovery environment, your product has to sell itself.
Like going on a first date, the first experience people have with your product is the most critical. This is where you have their attention when they are interested but also judgey, and ultimately you have a very narrow window to impress them before they sneak out the bathroom window and ghost you.
And in the world of SaaS, drop-off rates (while slightly better than dates) after day 1 still hover around 40-60%+. That’s a lot of people not coming back after money has been spent to bring them into the funnel.
Simply…self-serve onboarding matters a tremendous amount. Drop-off rates aside, a good onboarding experience brings users to value much sooner and increases the odds they will activate, use your product how it’s supposed to, pay you, and keep paying you.
Yet, according to the PLG expert,(Openview Partners) — there are still very common mistakes PLG companies make with onboarding.
Here’s a simplified breakdown from his post, with concrete tips from Kyle on how you can avoid them: 👇
Your product is too confusing without sales or customer success helping out. This mistake stems from assuming people have enough context, but in reality, they might not even know what your product is for and what it does.
Actionable advice: “Ask new employees to sign up for your product and have them screen share as they do. You’ll be blown away by what you find.”
You have too much of a blank slate. Once people have signed up and are inside the product, if everything’s empty (i.e. a blank canvas), it’s much harder for people to visualize the promised land of what’s possible. The best PLG companies incrementally reveal things to users to move them along the value curve, they use templates to show and tell (e.g. Notion), and even use things like interactive demos to help people see the potential.
Actionable advice: “Curate help materials specific to key elements of your product and populate them in the relevant context. Then explore adding dummy data or pre-built templates so users can visualize the promised land before they’ve fully completed set up.”
You don’t explain “what’s in it for me.” During onboarding, you’re asking people to give over some of their information, and there’s no sales rep to explain why you need it. For instance, if you’re asking people to enable notifications, they may want to know what for. Where you have questions that could lead to resistance/drop-off, value-centric copy can go a long way in building trust and encouraging users to finish onboarding.
Actionable advice: “Audit your new user onboarding and find every major area where you’re asking for something from the user. Then write a 1-2 sentence explanation of why - from the user’s perspective. Loop in your Product Marketer if you have one.”
You rely too much on in-product tours. The keyword there is rely. Tours can be helpful, but they’re just a band-aid for bad/confusing design. If you’re finding you need tours to help people “get it”, take a step back to figure out what’s the confusion and then go build something more intuitive. A rule of thumb: if users are not getting something, it’s never their fault.
Actionable advice: “Carve out product and engineering resources to optimize your native onboarding experience in addition to any in-product tours.”
Your in-product guidance goes away too fast. People often skip welcome videos or in-product onboarding prompts in pursuit of figuring things out by themselves…only quickly to get lost and want it back again. Having resources easily available to guide users on what to do after the product tour has ended can be super useful.
Actionable advice: “Add a checklist or progress bar to the console during the user onboarding. Alternatively, pin the product tour so users can go back to it later.”
You make it too easy to sign up. Perhaps that sounds counterintuitive, but remember, not all traffic and not all users have the same intent/value. If you have a bunch of low-intent people coming into your funnel and easily joining through a simple Google sign-up, you’re likely to have inflated top-of-funnel numbers but shoddy downstream metrics like engagement, subscriptions, and retention. The real goal is to weed out people who are not a good fit for your product with some healthy friction. Quality> Quantity.
Actionable advice: “Ditch sign-ups as a core marketing KPI and replace it with activated sign-ups, which creates a stronger alignment between marketing and product. Then revisit your onboarding flow with the mindset of a low-intent user in order to spot opportunities to add more educational resources at pivotal moments. [Look to either] provide more nurturing, context, and community outside of your product in order to turn low-intent visitors into high-intent users, [or] redesign your onboarding so that you have a path for low-intent users who aren’t yet ready to activate.”
You send mixed and confusing messages. If you bombard people with too many touchpoints (i.e. emails, push notifications, marketing) after joining, you risk confusing people as well as annoying them. Together, it just makes it harder for people to focus on what matters.
Actionable advice: “Document every touchpoint that a new user receives in their first two weeks and then map those touchpoints on a timeline. Use those learnings to streamline the user journey and kill touchpoints that aren’t additive. Bonus points if you can shift towards contextual, trigger-based touchpoints personalized to a given user.”
For more PLG insights, don’t miss out on Kyle’s newsletter:
(#3) Should you pay attention to competitors?
It’s super easy to get caught up obsessing over what your competitors are doing. The question is, should you? Because there is a cost to it — distraction.
The short answer: it depends on what type of conflict you have.
Of which, there are three broad varieties:
Conflict with nature (i.e challenges in a new market, political issues, behavioral inertia, general macro headwinds)
Conflict with another person (i.e fighting for market share in an established market)
Conflict with yourself (i.e execution risk)
Depending on which type of conflict is most prominent to you and your product, this should drive how much stock you put into watching your competitors.
Casey Winters came up with this concept, and according to him:
The type of conflict you are facing affects a lot of how you build and what you focus on as a company. Spending some time to think through where the real conflict is can help focus the company on the right activities to win. This can affect how much you invest in marketing, the focus of the product roadmap, and even organizational structure. Tackling the appropriate conflict is where the real leverage is in growing a company.
Here’s some more detail on each type of conflict, as well as, how to think about what to do in each situation. 👇
Company Vs. Nature
Every founder I speak with can name dozens of competitors. That does not mean they are in conflict with another company. Take Grubhub, for example. When I joined, we had raised $1 million in venture capital, and had three competitors all about the same size, but with different strengths and strategies. But this was not a competition about who would become the leader in online ordering for food delivery. This was a competition against nature and to make food delivery more attractive to consumers, and if they were ordering delivery, competing against calling restaurants on the phone. At the time, 99% of people were not ordering food online.
This is the most common type of conflict for a startup, simply because startups are usually trying to do something novel and create new market space. The more Blue Ocean your idea, the higher the chance you’ll be up against the status quo or some other barrier to adoption.
If your main goal is to grow the category and make people want its value prop in general, obsessing over the competition isn’t very helpful.
But, if you’re trying to do that while another startup is finding a lot more success than you — that does become a different type of conflict. 👇
Company Vs. Another Company
In many markets, companies fight vehemently against competitors. Companies are embroiled in a Red Queen effect, where each company is trying to out-innovate or outwork others in the market to gain market share. Think of Uber vs. Lyft as a recent example. Startups frequently think they are in this type of conflict when they are not. I have seen quite a few startups emphatically compete before they are even sure the category will be successful. In many of those cases, it would be better to cooperate and grow the category faster by being coordinated.
If you start focusing on this too soon you end up getting distracted from the main risk in front of you. Instead, becoming overly involved in tracking everyone's moves, overreacting to competitors’ new features, their pricing changes, new press, yadda yadda yadda.
Company Vs. Self
The third type of conflict within a company is one many founders and employees seem to forget: competing with themselves. In this type of conflict, the primary fear of the company is not that the market doesn’t unlock or that a competitor will take your opportunity; it’s that the opportunity isn’t realized because the company cannot execute on the strategic vision. This type of conflict can be dominant for many reasons:
Lack of focus
Execution issues e.g. technical and process debt
Investors frequently call this “execution risk.” A company in conflict with itself means the vision is definitely technically possible (hence, not technical risk), but the company struggles to build toward it either due to being unfocused, people internally competing vs. cooperating, or building is very difficult due to technical or process issues.
(#4) This single email generates $6K/month on autopilot
This email is great. Steal it.
It’s just a simple welcome email, nothing too salesy. It’s personal, relevant, shows the value of the product, and has a clear CTA that creates FOMO.
Welcome emails are a really important touch point. It’s the first time you reach out to someone who’s just signed up for your product, and it sets the tone for your style of communicating with them. It’s also your first opportunity to validate the user’s decision to create an account, subscribe, etc.
(#5) Alignment is not a checkbox…
…it’s a continuous process that requires constant communication, feedback, and iteration.
With that in mind, here’s's advice for PMs on how to create and maintain alignment — the glue of building product (and a company for that matter). 👇
Alignment is when everyone involved in the product development process has a clear understanding of:
The why: Why are we building this product? What problem are we solving? What value are we creating? What impact are we making?
The what: What are we building? What are the features, deliverables, outcomes, and benefits of our product?
The how: How are we building it? What are the strategy, roadmap, priorities, trade-offs, and decisions of our product?
The who: Who are we building it for? Who are our customers, users, stakeholders, partners, and competitors?
The when: When are we building it? What are the timelines, milestones, deadlines, dependencies of our product?
Alignment ensures that everyone is on the same page and working towards a common goal. Alignment helps avoid confusion, conflict, and wasted effort. Alignment also builds trust and confidence among the team members and stakeholders.
To achieve alignment, you need to:
Start with why: Explain the why behind your product vision and strategy. Use data, facts, and quotes to support your why and make it compelling and credible.
Involve your stakeholders early and often: Solicit their input and feedback along the way. Use various methods to involve them, such as interviews, surveys, workshops, brainstorming sessions, etc.
Communicate clearly and consistently: Communicate your vision, strategy, and roadmap to your team and stakeholders in a clear, concise, and compelling way. Use multiple channels and formats to communicate.
Align on outcomes, not outputs: Focus on the benefits, results, and impact of your product, not just the features and deliverables. Use frameworks such as OKRs or JTBD to define and align on outcomes.
Seek feedback and iterate: Seek feedback regularly from your team and stakeholders, as well as from your customers and users. Adjust your vision, strategy, or roadmap if needed, and keep everyone aligned on the changes.
Alignment is not a checkbox. It’s a mindset.
Top shelf, as always. For more, check out his newsletter
🌱 And now, byte on this if you have time 🧠
And that’s everything for this week!
If you learned anything new and would like to support this newsletter, I’d really appreciate it if you helped others discover my writing by hitting the like, share, or restack button below. Thank you. 🙏
Otherwise, have a great weekend and I’ll see you on Wednesday for our next deep dive.
Until next time.
— Jaryd ✌️