Here’s how to nail product-market fit

At XSeed Capital, we invest in seed-stage startups that are often still searching for the right product-market fit. As they start to see the tantalizing evidence of something compelling, they need to decide what to include in the product, and, just as importantly, what to exclude.

While nailing the user experience is crucial, neglecting other equally important elements of product definition could cost you valuable time in achieving product-market fit.

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In working with our companies, I have found it helpful to consider the following four boundaries, or interfaces, around a product:

1. User Interface
2. Application Interface
3. Data Interface
4. Buyer Interface

Systematically thinking through these interfaces will help you extract more valuable insights during customer interviews and will help you prioritize roadmap items as your product takes shape. This framework was developed with software products in mind since I primarily work with software startups, but many of the ideas are applicable to hardware products as well.

User Interface

This interface covers all the ways in which your users interact with your product. The goal is to deliver a user experience that feels natural for the job to be accomplished. Common questions you may want to consider are:

• Whose needs is the product trying to serve?
• What is the environment in which they would be using the product?
• How much input would a user need to provide in order to start getting value from the product?

The key is to immerse yourself in the user’s world to the point where you can readily tell the story of what a day in the life of your users is like. In the early days of Pulse, a visual news-reading app that won a design award from Apple and was later acquired by LinkedIn, the team chose to work out of a coffee shop to get rapid feedback from their target users as they iterated on the user interface design.

Application Interface

This interface governs how your product interacts with other applications. It is critical to get this right if the job performed by your product belongs to a larger workflow. Questions to be considered here include:

• What are your users doing before using your product, and after?
• What are the applications they use today to perform those tasks?
• Who do your users work with upstream and downstream in their workflow, and what are their needs?

Identify opportunities where integrating with these applications delivers additional value to your users, such as how Marketo integrates with Salesforce. Once you have embedded your product in your user’s workflow, you have overcome a common retention challenge — reminding your users to come back to your product — leading to a lower churn rate.

Data Interface

This interface determines how data gets into and out of your product. If external data sources are required, what are the best ways to receive them? Batched or streamed? Automated or manually curated? Does it make sense to invest in API integration up front, or can you get away with a more rudimentary approach in your first release?

ClearStory Data, a data intelligence company, offers built-in support for popular data sources such as Salesforce, as well as drag-and-drop file-based input for less common data sources.

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As for the data generated by your product, it is important to think through how this information is going to be consumed. Do you need to support any industry standard data format? Should the data be made available via an API? What are the most appropriate data visualizations for your users? Lex Machina, a legal analytics startup and an XSeed portfolio company, found that supporting PDF export increased both user engagement and inbound leads.

In addition to defining your data interface, you will want to develop a data roadmap as well. See this blog post by my colleague Jeff Thermond for his recommendations.

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Buyer Interface

This interface defines how potential buyers discover and purchase your product, directly impacting your revenue ramp rate and how you are going to build your business. While this area seems to belong squarely to the “business” side of your company, your decisions here have ramifications for the design of your product. Here are a few questions to get you started:

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• Who are the buyers, and what goes into their decision making process? Does the product need to deliver value to those stakeholders?
• What’s your pricing model and price scaling metric?
• If you are going to tier your offerings, which features and services are you going to include in each tier?

For example, Atlassian, a collaboration software company known for scaling its business without hiring salespeople, designed its products to be easily discovered and purchased by developers.

Fully considering all four interfaces of a product puts you in a proactive position to address the challenges that stand between you and product-market fit. If you have insights to share in this area I would love to hear about them. Find me at @alanchiu on Twitter.

Alan Chiu is a partner at XSeed Capital, with over 15 years of product development expertise in enterprise software and data storage. Alan was previously Director of Product Management at Bycast (acquired by NetApp), an object storage software company with a global customer base that included some of the largest digital content repositories in the world. Prior to Bycast, Alan served as an engineering manager at a network security startup and helped develop the digital prepress workflow system at Creo, which Kodak acquired for $1 billion in cash.

 

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