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Demystifying the conversations we're already here at RRE and with our portfolio companies. In each episode, your hosts, Will Porteous, Raju Rishi, and Jason Black will dive deeply into topics that are shaping the future, from satellite technology to digital health, to venture investing, and much more.
Raju: Okay, best toy product movie: Barbie, or Ted?
Jason: Ted.
Will: I don’t know. I didn’t see them. I have opt out.
Raju: Oh, my God. William? William, you going to—we’re going to have to put you in timeout for not having seen Ted. Ted was awesome.
Will: Welcome to RRE POV—
Raju: —a show in which we record the conversations we’re already having amongst ourselves—
Jason: —our entrepreneurs, and industry leaders for you to listen in on.
Will: Welcome back to our RRE POV. We’re delighted to have you with us. Today we’re going to be talking about product-market fit, that elusive quality that some companies have, and some companies don’t. I’d say in 24 years in this business, one of the things I’ve learned is that no amount of money can make up for it if you don’t have real product-market fit. So, let’s kick off with a discussion about what product-market fit is, when you know you have it, and when you don’t. Who wants to get started?
Raju: Go ahead, Jason. Jump in.
Jason: Oh, no, I was pointing to you, Raju.
Raju: Oh.
Jason: You were like—you were here, ready to come in hot.
Raju: Oh, I’m always hot. I’m always hot. I just—you know, body temperature is elevated—
Jason: Well, I will—I’ll just say like I think, you know, the framing of the question, the easy thing is, like, you got no sales, so it’s not moving: you don’t have product-market fit. It’s not moving, you’ve gone to everybody under the sun, and you built the wrong product, or—you can—there’s all sorts of diagnosis when it’s not working. We’re kind of I think the exploration here today is really about, like, doubling down on early indications of product-market fit that is kind of a false dawn is going to waste you a lot of time, cycles, and money, and not going deeper in a space that might look, maybe the sales cycles are longer than you expected, or you know, you’re getting more kind of pushback and friction in the system, but pushing through and getting the other side is actually going to lead you down maybe a different sales cycle than you expected, but maybe a very fruitful one. And so, it’s kind of the companies that are on the cusp, I think is what we’re really talking about today. It’s, like, when you’re getting those initial sales, sometimes you’re being massively pulled into the market, and it’s super clear, but a lot of times, you’re kind of in this interim.
You’ve taken one or two, kind of, product bets, or go to market motions, or ICPs that you think are going to be your ICPs—you don’t really know yet—and you’re kind of in that bit of, like, I’ve got some early stuff. How do I diagnose it? So, I want to kind of like level-set there. And, Raju, why don’t to kind of kick us off in that interesting, like, knife’s edge phase.
Raju: Yeah, the knife’s edge. So, I’ve been lucky to have—lucky is a bad word; I’ve been punished is probably a better word—for having run a bunch of organizations in my life that were bringing products to market, and, you know, you’re trying to figure out whether you have product-market fit or whether you don’t. And there’s a few signs, subtle signs, that you don’t have product-market fit that I’d just like to throw out there first. Because people think they have it. And I sit on boards, and I’m like, looking at sales cycles getting elongated, and I’m wondering whether you have product-market fit.
But in my stretch as an entrepreneur, I’ve found that there are a few signs that you don’t have it. One of them is that you have to do a high level of customization for each customer. So customer, you know, you kind of talk to them, they’re like, “Yeah, I love the product, but,” or, “I kind of need this new feature, this new integration, or new XYZ.” And, you know, you can close that deal—and I’m not talking about early on, I’m talking about sort of in the growth cycle where you’re like—you having to tweak a bunch of things relative to the product to get the customer over the goal line—you have to sort of step back as a product organization, as a leader of the company, and say, “What’s going on here? Why do I need this customization?”
A second sign that I’ve seen—and this one’s pretty subtle—is that you modify your sales PowerPoint for every customer. You go in there and instead of using the standardized PowerPoint, you’re sitting there saying like, “Oh, let me stress this feature. Let me downplay this capability.” And you’re spending the evening before you have a sales pitch, and you’re just like, basically tuning the PowerPoint for that particular client. Because the merits of the product just don’t sell itself; you’re having to sort of fine-tune things.
A third is customers telling you it’s a priority, but it’s not number one, two, or three. They’re like, yeah, you know, you kind of ask them, and they’re like, “Oh yeah, I mean, it’s a priority. Definitely a priority, but it’s, like, number five on list.” Five on the list is, like, not a priority. It’s probably never getting deployed.
Jason: Yeah. That’s such a key one right there.
Raju: Yep.
Jason: And it’s tough to, like, really get underneath that, like, where you fall on the priority list and how important it is, but if you can discern the priorities of your buyer, getting underneath that, like, asking about a similar product that was sold in and what had to get done, and how long that took, and things like that, can help you kind of diagnose that a bit. But it is, it’s a tough one. And being in the top three, most people are only working on important-urgent, right? There’s the ‘important’ gradient x-axis, and the ‘urgent’ y-axis. And most people are in one quadrant because they’re overrun, overworked, over this that or the other thing. Being important and urgent will really move things along. That’s a great point.
Raju: Yeah. And so, if you don’t have product-market fit, you know, I have some suggestions later in the podcast on how you can test things or, you know, shrink your universe a little bit to go find it, but you know, unless you guys have other sort of signs that somebody doesn’t have product-market fit, I have some signs where you do have product-market fit.
Jason: I think like you had mentioned in the customizations that you weren’t talking about the early stages. There is this kind of certain sense as well that, like, you kind of have to continuously be refining your product-market fit, like, as you scale. Because you know, your early customers, a lot of times, they’re not even really your go-forward. They’re not your scale customers. Sometimes you even have to fire early customers.
But then as the expectations rise, as maybe competitors come into the space, as you start to extend to a new geo or into new product category, like, you don’t necessarily bring along all the product-market fit. Like, the first, kind of like, sale that you made might be very different than your hundredth or your thousandth. And you may need to rethink, like, do we really have the product suite, or the go-to-market motion, or the ICP down for every, kind of, 2x or 3x, or 10x is a different way of, kind of like, architecting and selling. So, it’s not like a static thing: once you have it, you’ll always have it. You’ve got to continuously be working on it.
Will: I think that’s a great point, Jason, because you can see a sort of false product-market fit with early-adopter customers who might be more technical, who might be more sophisticated, who might be less price sensitive than your early majority, or even your mid-majority, which is where you’re ultimately going to have to be successful to build a really big business. And so, that evolution, product’s got to get easier to use, product’s probably got to get cheaper, product’s got to get easier to deploy, product’s got to improve on all of those vectors for the adopter that’s a little further down the curve.
Jason: Yeah. And I’d say the other thing that’s pretty clear that you don’t have product-market fit: so many companies think they’re a platform and that they can sell horizontally, and because they don’t have to change the technology. And maybe they literally don’t have to change the technology—usually they actually do and they won’t. They’re just like, “Well, you know, a little customization here or there.” But like, let’s set that aside.
If you’re selling into the games industry, then the food and beverage industry, then the pharma industry, and then have to sell into a CPG, Consumer Packaged Goods sale, and you’re telling me that all those are the same sale, it’s almost verifiably false [laugh] just by definition. And you’ll have these companies that convince themselves, like, because we haven’t changed anything in the platform, we have product-market fit. But I can guarantee you the—as you said Raju—those priorities, what’s urgent and important, that quadrant is going to look very different for each one of those industries because the industry dynamics are completely different.
Will: A hundred percent.
Jason: And so, maybe that’s a proof-point that you—it’s amazing that your technology can support these other industries, but you are going to burn tons of cycles. You don’t want to be building five concurrent sales teams that have to specialize industry by industry, then you have five sales teams, and then you have five different PMF horizons in terms of, like, how quickly you’re going to need to iterate on your product to stay up to the table stakes and the increasing expectations of the buyer base. So, I think that’s maybe one final false dawn, or just you know, area you can trip up.
Will: Yeah.
Raju: No, you can. I mean, you said it perfectly—I mean, both of you guys said it—product-market fit is not one-and-done. You know what moves? The market.
Will: Yeah.
Jason: Yeah.
Raju: The market moves. And so, if you have product-market fit, and you’re like, “Oh, this is great.” And then one day you’re like, “Hey, how come it’s taking longer to sell this thing? How come, you know, the customers are churning more?” Market moves. Competitors aren’t standing still.
Jason: Yeah. And as the market moves, the product’s got to move.
Will: Yeah [laugh].
Raju: Yeah, exactly. So, that’s called product-market fit [laugh]. But yeah, I totally agree with that you. Got to really kind of test that value proposition and look at the signs that you are losing product-market fit, and what you do to regain it periodically. And especially if you’re going into different verticals, or you’re trying to go international, or trying to, you know, sort of build an adjunct or additional capability, the product-market fit needs to be revisited, for sure.
Will: It definitely does. But maybe we can kind of loop back and just focus on that initial moment of product-market fit. Because we all know that for our early-stage companies that we’re principally investing in, that is a magic moment. And as investors, we spend an enormous amount of time listening for that. We can pick massively talented teams, we can focus on innovation that should be breakthrough innovation, but a lot of our due diligence, as investors, focuses in on listening to that customer or prospective customer, and listening for that urgent need to solve a problem. That for me is the beginning of product-market fit. And I get really excited when I hear it.
Raju: I know. [crosstalk 00:11:09].
Jason: Yeah. And I think, like, you know, that’s actually a really good point, Will. Like, a lot of our diligence calls with customers are kind of trying to suss out these things, right? Are they all kind of in the same industry? Are they all buying for the same reason? Are they all—you know, are their priorities—because, you know, it’s pretty easy for us as an investor to just say, like, “Hey, what are your top priorities for the year?” You know?
It’s a weirder question to come from a product that they’re buying [laugh] but, you know, as a kind of, like independent, outside person, like, it’s a little bit easier for us to suss out. And that’s what we’re looking for. I think we’re probably actually saying a lot of the things that we’re trying to suss out in these customer calls. Do you have something you want to jump in with, Raju?
Raju: Yeah, I do have a couple of things. I mean, it’s easy to—like, the prototypical signs that you have product-market fit is you got fast sales cycles, you got a lot of revenue [laugh] coming in the door, right? I mean, that’s kind of the obvious stuff. But there are a lot of subtle things that entrepreneurs should look for, like your deals start skipping sales stages, you know? You don’t need a demo, you don’t need a pilot.
All of a sudden, they’re saying, like, “You know, let’s just—let’s go right to contract.” You know, “Send me the contract,” legal red lines are kept to a minimum. You know, everybody’s legal department spends a fortune trying—like, they just like to rake you over the coals. And so, you get love letters from the customers, you get word-of-mouth referrals.
My favorite of all of them is that customers keep using the product even if it’s broken. Like you, like, “It sucks. Like, this shit doesn’t work. It’s so hard to get the data in there. But we can’t live without it.” You know [laugh]? And it’s like, man, that’s where I sit there and say because everything else is fixable, right? And now you’re sitting there saying like, “They’re still using it.”
And when I diligence calls on a product and somebody says, and I said, you know, like, “How do you like the product?” “Well, I like it, but it’s like, so broken.” I’m like, “Are you going to churn?” “No, I would never churn. This thing is amazing.” And I’m like, “Well, can you just tell me what’s broken?” “Like, the UI kind of sucks. It’s really hard to get the data in there.” I’m like, “I need to invest in this company yesterday.”
Will: [laugh].
Jason: Yeah it’s like using an iPhone with a broken screen and back, and people are like, “Well, you know, it’s my iPhone. Like, I have to—I’m going to keep using an iPhone, obviously.”
Will: Totally right.
Jason: Yeah.
Will: I’ve seen this a few times in my career where customers want a product so badly, it almost escapes, and escapes even before it’s ready. This happened to us with Nanit, our smart baby monitor company. We discovered that new parents are desperate for anything to help them navigate the journey of this new baby that they’ve brought home, teaching that baby to fall asleep, understanding that infant’s health, it’s an incredible moment of vulnerability for any family. And we stepped into that relationship with a product that helped parents understand the health of the baby in the crib, through computer vision and AI. But that gen one product of ours, ugh, so broken. Lousy UI, Wi-Fi dropouts all the time. We had parents sleeping under the crib when their gen one product would go offline because they couldn’t live without it. And that was, like, raw organic product-market fit. They were pulling the product off the shelves and online as fast as we could produce it.
Raju: Yeah. I love that.
Jason: Yeah. I think that’s—the other kind of clear—I’m just going to throw this in; it’s probably not the perfect time to do it, but I think when your customers can pitch your business just as well as you can, like, you know, you have product-market fit. I think when customers can articulate, like, your business and your product really, really well, like, what do I get out of this, I think that’s when—you know, if you have a misalignment, if you ask three different customers, why do you use our product? Why is it valuable? And you get three slightly different answers, that’s where you’re like, “Okay, something’s not quite aligned. Maybe there’s a little bit of tweaking and tuning and something that we need to do to, like, make sure everybody’s going.” But if everybody’s rowing in the same direction, and they can articulate exactly why they’re buying your product, I think that’s a really good sign that you have it.
Raju: And a corollary to that, Jason, a corollary to that is that you can actually hire salespeople to sell it and the founders don’t need to be the only one selling it, right? Like, you know, you have product-market fit when you can get just somebody off the street, train them, and they’re closing deals [laugh], you know? As opposed to, like, it’s like, okay, how many deals were close this quarter? Three, and they were all by the founder, you know, and—because they’re the only one that can articulate the value proposition and get people over the goal line. I think you kind of know, when you have it, when you can just the product is selling; it’s not just the individual that’s pitching it. That’s—
Jason: Well, I know we’ve had a conversation about, like, can the CEO be too good at sales, right? Like, you know, where—
Raju: Totally different topic [laugh] but I agree a hundred percent.
Jason: Well, I mean, it’s kind of in that vein, right—
Raju: It is.
Jason: Where it’s like, you know, you talked about, you know, the CEO is the only person in the company that can just guarantee a product in the ro—or like, a feature of the product in the room.
Will: True, yeah.
Jason: With the authority to say that it’s going to get done because it’s the CEO. So, you know, it’s like, you got the sale done, we had to promise this feature. Like, your CRO, your VP of Sales, can’t promise a new feature. They’re not—they don’t have that kind of like authority, and so, you know, that is a critical junction, Raju, like, being able to have a separate person who doesn’t have the full authority of a CEO, and that gravitas, and that vision, you know, frankly. Like, half the time, these early sales are selling a vision of how things could be and how they could be better, et cetera. You know, eventually, as you scale, you’re going to need people coin-operated, as you said, like, right, off the street.
Raju: Correct. No, you’re right. They are very interrelated, and it is product-market-fit-oriented because you’re right, the CEO can promise anything. I think the CEO sales works great early on because you’re still trying to figure it out. Like, what is the repeatability?
And you kind of need that nimbleness of visionary sales guy is the same thing as a CEO salesperson that’s getting feedback back to the product organization, kind of making judgment calls. You get to a different stage of the company, you’re going to need to, like, turn the crank, and it’s got to be, you know, sort of independent individuals. And so—
Jason: Marc Benioff’s not every call.
Raju: Yeah, no.
Jason: He’s not on every call for Salesforce.
Raju: No, no. Not every call.
Will: Sadly, the product has to stand apart from the founder eventually [laugh].
Raju: Yeah, exactly, exactly.
Will: But in those early days, it really often does. I mean because customers become huge advocates. You know, this is part of when you know you have a great lighthouse customer program is when you have customers who really want to be in it because they want to talk about it. They want to talk about what it does for them. They actually want to tell their peers in the industry or in other consumer segments how it’s really changed their life and made things so much better for them.
It’s funny because we were putting this earlier in the context of the due diligence we do as prospective investors. To some extent, we’re just looking for this roar, right, this absolute signal coming from an early or potential customer set saying, “Please give me this. Fix it for me.” And it doesn’t need to be terribly nuanced [laugh]. It just needs to be really raw and powerful.
Raju: Exactly.
Will: And you can lean into that kind of demand with gen one or even less, probably most cases.
Raju: Yeah. Yeah. A hundred percent, I have some tips. I have some tips for entrepreneurs on how to find product-market fit, what to do if it’s a crowded market. We can jump into that now, or we can—
Will: Yeah, let’s jump into it, Raju.
Raju: Yeah, jumping, jumping, jumping.
Jason: Raju’s Tips Section.
Raju: I got tips.
Will: Is there a course I can take to find product-market fit? Is there a book I can read where—
Raju: No—
Will: [crosstalk 00:19:04] product-market fit? If I eat something, will I see product-market fit?
Raju: You can.
Will: How do I find it, Raju?
Raju: No, no. Well, it’s usually just—
Jason: Ayahuasca. It’s incredible.
Raju: You can take a nice walk with me.
Jason: [laugh].
Will: [laugh]. How much does it cost to go on the walk?
Raju: It’s got to be in a foreign country, first of all. Or Hawaii.
Jason: With your entire family, right?
Raju: Well—
Will: [laugh].
Jason: Yeah. A week long, fully-paid family trip and then—
Raju: It’s just a walk.
Jason: We’ll walk along the beach.
Raju: It’s a free walk, though.
Jason: It’s a free walk. Right.
Raju: The walk itself is free.
Jason: The walk is free. Exactly.
Raju: The arrival to the, you know, to the starting point is the expensive stuff. So.
Will: This is the point where you should pitching your bestselling book.
Raju: I’m selling my book now. And you guys just jump in because you’re going to resonate with this. So, I think one of the things that organizations make the mistake of is not understanding what they need to do… be the best at and what they need to be just good enough at. And I think what winds up happening is you really have to read the market and say, where does the market need us to be the best at, and what capabilities as part of this product, good enough is good enough? And I think if you want to get product-market fit and see that pull like Nanit had, right—Nanit was like, parents can sleep better, and that was the pitch.
And it’s like, holy shit, I have a baby, and I’m going to be able to sleep. You know, what was good enough? Good enough was like, hey, the Wi-Fi kind of fell out a little bit here and there, right? Like, actually, it wasn’t even good enough, right? Like, he had to fix that. But there were probably other pieces of that product were like he didn’t have a perfect UI yet. That was okay. But I can sleep, you know?
So, you got to really kind of nail that element of where you really need to be focusing all your energy, and not trying to be great at everything—because you’ll probably be poor at everything, if you’re trying to try to be great at everything—but you got to be great at one thing, and that’s what the market really cares about. And that’s, like, understanding the priorities of your customers and talking to your customers: like, what’s the one thing they can’t live without? So, that’s a tip. I don’t know if you guys want to expand on that or not.
Jason: Oh, I totally. I mean, that’s a huge one, actually because it’s going to save you a lot of time, and money, and stress, to just—if you can just figure out what do I definitely need to be best in the world at, like, the rest, you know, you can go crazy, right? You have these teams that are, like, “We’re going to build everything in-house,” and it’s like, all of a sudden, they’re like building a payment processor. And it’s like Stripe, you know, they do a good—they do a pretty bang-up job of payment processing. Like, we could take down off the plate. Do we need to build our own CMS? Probably not. Let’s take one of those off the shelf.
Like, you’re already making these decisions, naturally, you need to apply those decisions to your own, kind of, product, where it’s like, these are the things we cannot ever compromise on because these are the things that are driving the core value of who we are and what we are, and we’re going to protect that and invest in that, regardless of, you know, any other priority. And the rest, just as much as you’re not building a payment processor, or your own content management system or your own CRM—unless those things are core to your business, right? Some people will need to, you know, build their own payment processor because they’re doing, you know, cross-border payments or something like that, right, and in that case, like, you do need to have the best [rails 00:22:31]—but you need to figure out what’s those top things for you because it takes a lot of pressure off the rest of your plate. And it also, to me, says that the entrepreneur knows what is most important about their business, and what is—you know, it’s like, sometimes you get—you know, the product breadth is great, but if you don’t know what that center of gravity is, that’s also, like, something you got to figure out. Because those are the areas you got to really double down.
Will: I’m so glad you said that because for a long time, that’s been part of my rubric for thinking about whether I want to back an entrepreneur is whether they have a deep understanding of the problem that they’re solving, and what the crucial elements are of that solution. And I find my favorite entrepreneurs are often mid-career people who’ve stumbled upon a problem like that, and they’ve been looking at it from different angles, and playing with possible solutions for it for a long time by the time they walk into our office, they’ve thought about all the various permutations, and why certain substitutes aren’t good enough, and they’ve got a very clear vision for what that early product should be and why it merits building an entire company around. And when I meet people with that total understanding of the product that they need to build, in many cases—and I think we’ve all seen this in our entrepreneurs—it’s such an all-consuming passion that you know it’s going to happen. It’s going to happen, whatever happens in terms of our conversation with them, you know, it’s going to happen because they’re so driven to fill that market need because they have such a clear understanding of the product that they know can be built.
Raju: Yeah, I agree. So, what happens if you don’t have product-market fit, and you know, like, understand, like, oh, you got to be best at something and good enough and other stuff. But one of the things I suggest to entrepreneurs, and this goes counter to capitalism… goes counter to capitalism. It’s like, what is the smallest market that can sustain you that you do have product-market fit? Because we are trained as venture capitalists and entrepreneurs to go wide. And it ain’t wide, it ain’t worth it, right, so you want to go.
But, like, if you’re struggling to find product-market fit, you know, the tip I have for you is go narrow, right? You have it somewhere, right? There are customers that aren’t churning, that love your product that are—hopefully. Hopefully you do. If you don’t, we got a bigger problem, but, like, hopefully there’s a handful of them out there, and there are some consistent elements to them.
And basically, you know, we get pushed to smooth out the work, make it softer, widely applicable, but if you’re having trouble with product-market fit, you’re getting a lot of churn, and you’re—you know, just go find that piece of the market where you just are killer. Like, they love you, they love your product, they’re not going to churn, and figure out how to get a few more of those, and then get the adjacencies around that. So, sometimes you have to sort of shrink it a little bit to grow it, and—because you’ve tried to do too many things, you know, indigestion/starvation thing—you’ve kind of, you know, tried to bite off too many verticals, you’ve thought it was a platform, like Jason said, and it’s not really a platform, it’s really more applicable in a particular vertical—and then figure out how to crack the code on an adjacent vertical, or a slightly different type of customer, and what features, what capabilities do you need to hit product-market fit with that? That doesn’t mean that you basically change the trajectory of the company altogether. It’s just a short term. You’re trying to do it in the short term, so you’re not burning a lot of capital and churning a lot of customers.
Jason: Totally agree. I see this in companies that are afraid of longer sales cycles as well, where they were kind of intending to be kind of low six-figure, and there are a couple opportunities that kind of come about. They’re almost afraid to go down like an 18-month sales cycle, even though there might be a big rainbow on the other side because that kind of like pigeonholes them into a smaller thing, and it kind of changes the math a little bit on their expected sales. Maybe there’s a slightly different point, now I’m talking through it, but it’s another one of those where if you got to go kind of punch through a new hole in the market, recognize it, number one, as a bet, as a hypothesis, as something that is unknown, get buy-in from the people around the table on the team and all this stuff, and then go make, you know, a discrete number of test bets to see where that next bed of acceleration can come from.
And kind of do that with a serious amount of rigor as well. Like, that’s, like, a listening tour, right? There’s a lot of listening, if you’re trying to figure out product-market fit or re-find it. And yeah, you’ve got to remove some of those degrees of freedom, take some risks, and go hard at something. Because he can’t discover it, kind of like, haphazardly. I think it’s very rare for you to, like, bump into, like, oh, my gosh, there’s this whole other area [laugh] over here that we should be building in and selling into. There’s some trade-offs, right, and it’s worth going and exploring those.
Raju: Yeah. And, you know, sometimes entrepreneurs, you get later in the game, and it’s another, sort of, roadblock that comes up is, you got product-market fit, now the markets getting crowded, right? Other people have jumped in, there’s not a lot of feature differentiation, and so what do you do, like, you know, do just out-compete on features? And I would say that companies can hang their hat on other execution elements, if that happens. And what I mean by that is that, you know, we can guarantee that you’ll be up and running in X number of weeks, that can be, like, a massive product-market fit differentiator, you know, we can guarantee you X percent sales lift or, you know, engagement by your clients or something like that, that the market cares about, but it’s more of an operational element, and not just a product market, you know, thing.
So, those things can get elusive. So, it’s not just a product-market fit. It’s also like, the ancillary functions a bit can be used to differentiate once the market gets crowded. But you know, that’s just another tip I have as companies get bigger.
Jason: Well, my final one, talking about ancillary stuff, is like PMF gets all the attention. But, you know, you got to remember that it’s the product, the market, and the team, and the fits go in all different directions. There’s team-product fit, there’s team-market fit, there’s product-market fit, and there’s a ton of attention spent on the latter, but also sometimes figuring out that flywheel is thinking through how can we bolster this team to better understand the market? How can we bolster this team to better build out product’s going to meet that market need? And you know, we think through that a lot as well, as investors, and particularly during diligence.
You know, is this the right team? Is this the right market dynamic? Is this the right product? And all those interactions between that in terms of that trio are really important, and still do interact? The PMF side is mostly on, kind of like, the sales and that’s the sexy side of that triangle, but the rest of the triangle is there and worth thinking through. And certainly we do as we’re doing diligence on these companies.
Raju: Right. Shall we move to the Gatling gun [unintelligible 00:30:02]?
Jason: Gatling gun.
Raju: Do I do the Indian voice now?
Jason: We’re still working on the audio, the music intro.
Raju: Oh no, it’s [imitates club beat].
Jason: Right, Gatling gun.
Raju: Gatling gun. Okay, I’m making it easier this time. I’m going to actually do Gatling gun because—
Jason: Oh, fantastic.
Raju: —you guys give me a hard time that it was like a musket or, like, a triple—
Jason: It was a musket round.
Raju: Musket round. I’m not doing musket.
Jason: Yeah, Gatling gun is this or that, or some form of multiple choice.
Raju: Fine, fine.
Jason: Let’s do it.
Raju: [laugh]. You don’t understand how—it’s hard work preparing Gatling gun.
Jason: I k—[laugh]
Raju: It takes effort.
Jason: This is the most important—this is what people listen to the podcast for.
Raju: All right, fine. Fine. Okay, worst product-market fit in history? I’m going to give you categories. So, this is for electronic devices: Microsoft Zune or Amazon Fire Phone?
Will: [laugh].
Jason: That’s a really good one. I’m going to say Zune.
Will: Yeah, Zune.
Jason: I think that if Amazon continued with the Fire Phone, they could have probably made something work.
Raju: I don’t know. I think… I think they’re equally as bad, frankly. I had a Zune. It looked really cool, but—and I had a Fire Phone, also because I’m just a gadget guy, but I agree with you. Pro—I’ll go with Zune, also. I’ll go with Zune.
Will: Okay. So, let’s break this down a little bit further, though. Those are big companies who could throw a lot of resources at things. So, how about favorite venture-backed failure from a product-market fit standpoint? I’ll give you two: Segway or Juicero?
Raju: Okay, I’ve got Juicero in another section, but fine. I’m going to go with I’m going to go with… I’m going to go with Segway.
Will: Segway is by far my favorite.
Raju: Yeah.
Jason: I mean, it’s my favorite because it’s like, I was so excited about it, when I was like, in—I think it came out—like, the articles came out when I was in, like, high school or something like that, and I was like, “Oh, my gosh, this is going to be so cool.” But yeah, that’s probably it.
Raju: Yeah, I think Segway, only because many, many more people got injured on the Segway than the Juicero.
Will: [laugh].
Jason: That’s true. I just love that they’re still around and still in use. Like, you’ll still see, like, a college campus tour of, like, people wearing helmets on Segways [laugh].
Raju: Did you see Paul Blart: Mall Cop?
Will: You took the words right out of my mouth. Like, there you are. The premiere Segway user.
Raju: Okay, next Gatling gun question. Worst product-market fit in social media: Google Groups or Meerkat?
Will: [laugh].
Jason: [laugh]. Oh man, these are great. I’m going to say I’m going to say… I’m going to say Meerkat.
Will: I’ll probably go with Google Groups because Google was never for Groups [laugh].
Raju: I’m going to go with Groups because I think they spent a hell of a lot more.
Jason: Oh, you’re not talking about Google Circles, right? You’re talking about Google Groups? Because Circles was distinct. Google Groups is still around circle.
Raju: Circles.
Jason: Circles.
Raju: Circles. Circles. I meant Circles.
Jason: Circles. Okay.
Will: Yes. That’s [crosstalk 00:32:52].
Raju: That’s how bad it was. I got the name wrong. That’s how bad it—
Jason: Well, they constantly change the naming and stuff like that. But—
Raju: Yeah. Yeah, yeah.
Jason: Yeah. They at least kind of had a shot. They have a built-in user base, so it’s like, okay.
Raju: Yeah. They should have worked.
Jason: Yeah.
Raju: Google Circles should have worked, but it failed miserably.
Jason: I would have gone Clubhouse. It’s like Clubhouse or Meerkat.
Raju: Fine.
Jason: But that’s a different one.
Raju: All right. Food product-market fit: Soylent or Juicero?
Jason: Has to be Juicero. Like, no contest. Soylent’s still in CVS.
Raju: Okay, fine.
Will: Dude, we need to play this at a much bigger level: New Coke.
Raju: Oh, shoot. New Coke.
Jason: I still like the Juicero.
Raju: Yeah, I like the Juicero better, too. Because it just didn’t work.
Jason: That was an epic fail though, the New Coke. I want a bottle of New Coke. I’m sure… I bet you can buy them on eBay.
Raju: I bet you can. You could buy anything on eBay.
Jason: That’s true.
Raju: And you could 3D print it if you can’t buy it. You know, just 3D print it.
Jason: [laugh]. I don’t know if we’re at the 3D printing liquids quite yet. But—
Raju: Did you see Star Trek? I saw Star Trek. You could 3D print anything, man.
Jason: Oh, that was, uh, real. That was a documentary?
Raju: No [laugh].
Jason: Star Trek: The Documentary.
Raju: [laugh]. Okay. All right. Best product movie for cars. Ford versus Ferrari or Gran Turismo?
Jason: Well, Gran Turismo was like an entire—that was almost shot as an ad, so I’m going to say that [laugh] one.
Will: [laugh].
Jason: Like, it’s the—it’s Nissan, right? That was the main sponsor of that one?
Raju: Yeah.
Jason: Yep. That it was just like a—it was watching, like, an extended—and it was pretty good, but it was basically, like, a two-hour-long advertisement for Nissan, which I thought was hilarious.
Raju: I’m going to go with Gran Turismo, also. I love that movie. I’d like Ford versus Ferrari too.
Jason: Me too. It was a good, like, movie, movie.
Will: I love Ford versus Ferrari because I love the history.
Jason: Yeah.
Raju: Yeah, yeah, yeah. Okay, best toy product movie: Barbie, or Ted?
Jason: Ted.
Will: I don’t know. I didn’t see them. I have opt out.
Raju: Oh, my God. William? William, you going to—we’re going to have to put you in timeout for not having seen Ted. Ted was awesome.
Jason: What’s your answer, Raju?
Raju: I’m going to go with Ted. I’m going to go with Ted.
Jason: Okay.
Raju: All right, I got—if you guys have product jokes, you can go for it, otherwise I got a product joke.
Jason: Let’s do it, Raju. Here we go.
Raju: I got to tell a joke. I got to tell a joke. Okay.
Jason: It’s basically one—like 25% comedy podcast.
Raju: Yeah, we—just, listen. Got to keep it entertaining for our listeners.
Jason: Of course. Yeah. All right. Hit us with the joke.
Raju: Keep it entertaining. Okay, so. So, a guy steps off a plane, and he heads to baggage claim and retrieves his luggage. And he’s walking with his luggage, stops, speaks into his watch, and he says, “Hello, watch. Call wife.” And a 3D image of his guy’s wife pops up out of the phone. And he says, “Honey, I just landed, and I’ll be home in 45 minutes. I’ll make it in time for dinner.” She goes, “Oh, okay, great.”
He hangs up the call and picks up his bags and keeps walking. There’s a guy walking behind him and he’s like blown away. Like, he’s seen the Apple Watch, but this holo-watch, he’s gotta have it. It’s, like, mind-blown. So, 30 seconds later the guy stops again, and he speaks into his watch. He says, “Holo-watch, call my assistant.” And up pops a picture of his assistant, you know, 3D, you know, in the works. He says, you know, “I did the email on the plane. I already sent the proposal. No need to contact the potential customer because I’ve already done it.” And she goes, “Great.” Hangs up.
So, the guy is still walking behind the gentleman with the holo-watch, and he stops him. He says, “Hey man, that’s, like, the coolest product I’ve ever seen.” And he said, “Oh, thank you. It’s just a prototype.” The guy says, “I have to have it. I have to have it.” He says, “No, it’s not really for sale. It’s just, you know, it’s kind of my thing. It’s the next generation communications.” And he goes, “I’ll tell you what. I’ll give you anything for it. I’ll give you, like, $10,000.” And he goes, “Nah, $10,000 is not going to work.” He goes, “$50,000. I’ll give you $50,000 for the holo-watch.” So, the guy goes, “All right. Fine. You know it’s 50 grand. That’s a lot of R&D and capability.” So, he takes off the watch, and hands it to the guy, and then he hands him his luggage. He says, “What are the bags for?” And he goes, “Well, those are the batteries.”
Will: [laugh].
Jason: The commitment to the joke is unwavering and commendable.
Raju: I honestly—
Jason: That was—Raju, you just the longest setups for these things. But that was good. The batteries. There you go. 50 grand. Did he get it in Bitcoin first? He got two confirmations on the blockchain?
Raju: I don’t know. I don’t know.
Jason: That’s what you got to do.
Raju: See, that’s not—that’s bad product-market fit.
Jason: There you go. Yeah, the batteries.
Raju: It’s not good. It’s not good.
Will: Yeah. Echoes of the Apple Vision Pro external battery pack [laugh].
Jason: I was just about to say. Yeah, yeah, yeah, the external battery pack. By the way—
Raju: I didn’t want to—
Jason: Also this—
Raju: I didn’t want to say it.
Jason: —needs to fit in your pocket.
Raju: I didn’t want to say it.
Jason: And if you don’t have pockets, good luck.
Raju: Yeah.
Jason: Well, I always do the wrap, I guess. That’s a wrap, guys. Thank you for listening to our podcast on product-market fit. I hope you enjoyed it. If you didn’t enjoy it, I hope you enjoy the comedic session at the very end. If you are interested in hearing a full RRE comedy podcast, please write in.
We are @RRE on Twitter. We are info@rre.com on the interwebs and email protocols, and you can find us—well, you’re already listening to us, so just like follow us, Give us that five star, even if you don’t believe it, and it helps us out. So, we’ll see you on the next one. Thanks for listening in.
Will: Thank you for listening to RRE POV.
Raju: You can keep up with the latest on the podcast at @RRE on Twitter—or shall I say X—
Jason: —or rre.com, and on Apple Podcasts, Spotify, Google Podcasts—
Raju: —or wherever fine podcasts are distributed. We’ll see you next time.