achieving product market fit in startup context - the-state-of-practices and underlying theories
TRANSCRIPT
Achieving product-market fit in software startups –
theories and practices
Dr. Anh Nguyen DucSoftware Innovation Lab, IDI
Norwegian University of Science and Technology
Keynote @International Conference on Computing and Information Sciences (ICCIS2016)
Agenda
• Norway – NTNU – Myself
• Evolution of computing
• Startups – concepts and challenges
• Theories and practices on achieving product market fit
• Take away lessons
Department of Computer and Information Science
Source: https://www.ntnu.edu/idi/research/
My research profile
• Design metrics and defect prediction• Component based Requirement
Engineering• Coordination in Socio Technical system• Software Startup
The evolution of computing
1950-1960s 1970s 1980s 1990s 2000s 2010s
First computer Mainframe-based Client-server Internet-
based Social computing
IOT
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The evolution of computing
Source: https://www.interaction-design.org/literature/book/the-encyclopedia-of-human-computer-interaction-2nd-ed/socio-technical-system-design
Source: http://digest.dx3canada.com/2015/08/05/gartner-hype-cycle-2015-preview-predictions/
“maturity, adoption and business application of specific technologies”
Gartner’s Hype Cycle
Socio-Technical Gap
Product-Market Fit
Product-Market Fit
Customer and Market
Match
Constraint
Startup Companies are unique
… a newly emerged, fast-growing business that aims to meet a market demand by developing or offering an
innovative product, process, service…
Source: Sutton, Stanley M. "The role of process in a software start-up." IEEE Software 17.4 (2000): 33-39.
in US and Europe combined for startup companies in private investments
~570 Billion USD
Source: Pitchbook.com
Why should we care?
“A startup is a temporaryorganization formed to search
for a repeatable and scalable business model.”
- Steve Blank
“A startup is a temporaryorganization formed to search
for a repeatable and scalable business model.”
- Steve Blank
Ok. This is a definition but what do the startupsstrive for?
Market pull
Technology push
vs.
19
What are the key challenges software startups are
dealing with?
SURVEY – APPROACH
20
• 90 countries around the world
– United States 52,60%
– Canada 7,94%
– United Kingdom 6,71%
– Israel 5,30%
– India 4,50%
• Cover different market sectors (predominately in the consumer market, such as mobile and Internet, i.e. 64,40%).
• Young and small in size
SURVEY – RESULT
21
0 200 400 600 800 1000 1200
Reaching the Break-even Point
Staying Focused and Disciplined
Targeting a Niche Market
Defining Minimum Viable Product
Managing Multiple Tasks
Delivering Customer Value
Building Entrepreneurial Teams
Acquiring Initial Funding
Acquiring First Paying Customers
Thriving in Technology Uncertainty
# of Responses
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List of top 10 key challenges of early-stage software startups
Source: Wang et al. (2016). Key Challenges in Software Startups Across Life Cycle Stages, XP 2016, Springer LNBIP
The Lean Startup
Main idea:manage startup as a series of conrolled experiments
24
Minimum Viable Product …just enough features to gather
validated learning about the product
25
How are Minimum Viable Products (MVPs) were built
in reality?
Norwegian startups
Common types of MVP
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Common types of MVP
Four dimensions of MVPS
Product market fit is achieved by a successful MVP.
What is next ?
Source: Bajwa et al. (2016). “Failures” to be Celebrated: An Analysis of Major Pivots of Software Startups, Journal of Empirical Software Engineering
Software
Startups
Before Pivot(s) After Pivot(s)
Android Operating system for cameras Operating system for smartphone
(mobile handsets)
Flickr Neverending: a massive multiplayer
online role-playing game
Sharing photos online
Groupon thepoint.com: Social goods fund
raising site based on tipping point
Group buying site working on same
tipping point
Instagram Burbn: Location based service Photo sharing app having different
filtration criteria
Paypal Confinity: help Palm Pilot users
exchange money electronically
Online monetary exchanges
Pinterest Window shopping using mobile Collection of favourite items, and
sharing it with friends
Twitter Odeo: Personal podcasting service A microblogging platform
YouTube Video dating platform Sharing videos online
All startups change directions
The Hunter Gatherer Model
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Cynefin framework of sense making
Sou
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Rev
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–76
A Greenfield Startup Model
Source: Giardino, C. et al. (2016). Software development in startup companies: The greenfield startup model, IEEE Transactions on Software Engineering, 42(6).
• 13 cases (5 US, 8 EU, 1 NZL)
• Grounded Theory Method
• The model is formed by 128 sub-categories,
• clustered in 35 groups,
• and finally in 7 categories
Summary: Key Takeaways
• Customer value drives the invention and adoption of technology
• Software startups often fail due to both technological and market issues
• Product-market fit changes over time
• It is critical to have a light-weight, cheap and fast way of experimenting MVPs
• Much further studies needed to understand and support software startups
Customer Product Fit
Market Product Fit
Growth
First paying customer
First active users
Defining MVP
Initial funding
Delivering user value
Reaching break even point
Technical Debt
Growing teams
Targeting niche market
Transforming organization
Acknowledgement
• Department of Computer and Information Science, NTNU
• Software Startup Research Network
• Muml AS
Thank You!You can reach me at [email protected]