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Weebly Founder: How to Find Product-Market Fit?
Speech: David Rusenko, Founder, Weebly
Compilation: Deep Tide TechFlow
Weebly Journey
Weebly is an easy way for entrepreneurs to build a website or online store. Before Weebly was created, the only way to do it was to learn to code it yourself. And now there are plenty of tools and services that let you drag and drop and build a website. Weebly grew rapidly, reaching 50 million users by 2018, and was acquired by Square for $365 million.
Half the U.S. population visits a small website every month, reflecting the success of entrepreneurs, people actually achieving success and seeing results through their own websites. Therefore, I think how to find a suitable product market is the primary problem that everyone has to face.
In 2006, I wrote the first line of code at Beaver Stadium in Pennsylvania. Six months later, my partners and I still haven't launched a product. I saw YC on Slashdot, spent two hours creating the YC app, and called a partner for input. The next day, we drove to the interview and were accepted. At first, we only had two servers and were worried that the servers would burn down. So it was decided to put users on a waitlist after signing up, and then contact them. After the media shock, the site's user numbers dropped extremely low until the entire site shut down.
In January 2007, after 11 months of hard work, my partner and I dropped out of school, packed all the servers in the car, and drove to San Francisco. We rented a two bedroom apartment and pushed three desks together to work full time, working till we were tired every day except Saturday. While we got some media coverage, the number of new users kept dropping, which meant we didn't have a product-market fit.
In May 2007, we had $100 in our bank account and the rent was going up. A week before the demo, we closed a $650,000 Series A round at a $2 million valuation. What was called a Series A round back then, today it would probably be called a pre-seed round, slightly above average.
However, there is no suitable product market for our products within 18 months. Everything changed in month 20, we started to get real traction and got a lot of users. Until February 2010 we had good results in the market.
Product Market Fit
The definition of product-market fit is very important in the development of a startup. Finding product-market fit and building a world-class team are two of the most difficult things for a startup. It's also challenging to make money and scale into a large, long-lasting company. In this process, don't forget to continue to refine and establish a suitable product market. The best companies create a new market, and finding hidden needs is the hardest part. Market research is not practical for creating a new market, you need to find a need that no one else is aware of.
In the summer of 2006, I went to a New York tech conference after writing my first line of code. After speaking with 1000's of people, I found out that the hidden need is that many people want to create their own website, but it's difficult. We recognized this need and built a service that makes it easy for people to create their own websites.
It's important to understand what jobs people want and then offer better alternatives.
When creating a new market, people can mistakenly think that you are only responding to a current market need and therefore need to build a great product.
Specifically, the third step is to write a market thesis and understand the client's needs and problems. Rapid prototyping and user testing are then performed to build the solution and test its effectiveness. If successful, the process is repeated continuously.
Rapid prototyping and user testing
The importance of talking to customers, listening to their needs and problems, not relying on market research in the creation process, but validating hypotheses through rapid prototyping and user testing. It is advisable to get a functional prototype as early as possible and face users, not to worry about scaling and monetization, but to focus on making sure the product experience is right. Then expect to need about 10 times as many iterations to refine the product.
This includes keeping the burn low, building a team that can iterate quickly, talking to and flexing your vision with your target customers, not overthinking it, showing product prototypes early, and building through tools like customer interviews, UX testing sessions, and metric tracking to improve the product.
Among them, a UX testing session is considered one of the most important things that need to get someone else to use the product or service, encourage them to give open and honest feedback, let them perform tasks without giving any help or tips, gather information about the product during the test Useful information about the experience. Three to five test sessions are recommended.
I think you only need three UX tests to find the most critical and important UX mistakes. As an example, we once launched a homepage and were trying to minimize the signup form fields to reduce the friction of weebly signup, so we removed the password confirmation bar.
In fact, email confirmation is no longer necessary, so we only require an email address and password. However, in the closed case, some people entered the wrong password, which caused their email to be reset. When someone enters both email and password, they will need to create a new account, but that's not a big deal.
We put the entry form on the page and said "Sign up here" in 100 font. However, there are still people who can't find the form in UX testing because they assume it's just a login form, not a signup form.
This prompted us to add a free field that only requires first name, so we can have three fields: email, password, and first name.
Only by testing iteratively can we find and fix these issues, so I recommend that you test iteratively at each stage.
When will the product be released?
I think minimum salient product is appropriate, not minimum viable product, because it implies that you can launch the worst product you can think of.
Instead, we should focus on making a great product and releasing it when it becomes better than the existing product.
In the end, I think the best way to prioritize is to focus on the things that will get you to the next milestone, and optimize learning to solve your current biggest unknown.
I think there are three key metrics to track:
Which metrics should not be included?
The first is the registration rate, we will focus on active users, because a good repeated use and registration conversion rate can bring more active users. However, if the user experience is poor, registrations will stagnate and the number of active users will decrease at the same time. Even if your sign-ups grow, if user usage isn't high, that number will probably go down with it.
The second is the conversion rate, because when you think about building a SAS business, the conversion rate is very low at the beginning, and over time, I will look at other metrics.
What do you feel when you are product-market fit?
You'll know when you've made it when your customers walk through your door. If you don't feel that way, everything will be difficult. It's like pushing a huge rock up a hill, you're trying to nudge the client toward a solution. They might be nice and not want to turn you down, but they don't really come back or use your product. However, when you have that feeling, the whole world will come to your door, everyone will want to use your product, and the media will cover it. So if you don't feel like the client is pulling you in a certain direction and heading for your door, then you probably haven't made it. As your business scales and over time, you may find yourself smarter than you thought, but that's for a later date.
Beyond Product Fit
I think there are three things you need to do when building a successful startup:
However, sometimes even if you make a product that works well in the market, it can still become obsolete because the way you charge for it may not suit people's needs.
Therefore, when formulating a business model, it is also necessary to pay attention to the matching between channels and models.
Team Size
Also, before increasing the size of the team, one should keep the team small in order to micromanage, learn all the important information, and make really great decisions. Once product market fit is achieved, aggressively scale and build a motivated and thoughtful team. However, in any given year, the company should never be more than twice the size of the company, or else the skyscrapers will collapse. When you find a product-market fit, scale aggressively.
establish a brand
Building a brand is also important, but it's not worth spending too much time thinking about it, especially in the early stages.
Great brands are built on an insight into consumer behavior that may hold some truth but has yet to be acknowledged. Ideally, this insight is built on the same foundation as your product. So if you can identify that insight early on and incorporate it into all your messages and products, it can be very powerful and become the foundation of the brand.
For example, Virgin America discovered in its early days that people choose airlines for only four reasons: schedules, prices, destinations, and a bad flight experience.
So they decided to create an airline that offers an amazing flying experience but at a slightly higher price than other airlines, all practices around the flying experience, and through staff training, public relations activities and many other ways to make these airlines their brand and product base. They created a new reason for people to buy tickets, and they were very successful.
It's important to understand this and incorporate it into the product to become the foundation of the brand over time.
Motivation
I think it was us being young and stupid, but it was actually very helpful.
A lot of people think that entrepreneurs have to be risk-takers, but I don't think most entrepreneurs I know are risk-takers. Instead, I think they are risk-takers with a plan.
In my opinion, an entrepreneur needs to have two main qualities to be successful:
First, they must be optimists, so where others see risk, they see opportunity;
Secondly, they have already made a decision, so they will only move forward unswervingly and will not give up easily.
In my opinion, these two qualities are usually two different things. Your company will only fail if you give up, and as long as you keep working by definition, it will continue to exist.
So I don't think with that kind of determination, I'm not going to blindly strategize even if all the evidence says the plan isn't working. But at the same time, as long as you stay committed and have the confidence that what you're building is what people want, continuing to work is key.
Verticalization
Typically, niche-specific recommendations are vertical. In other words, we need customized products to meet the needs of specific target groups.
In some cases, however, we may choose to act in reverse and not follow this pattern. This is because in our particular case, the vertical market was not deep enough to support the large investment we needed.
In fact, what we need is a full-featured platform, including all necessary functions such as blogging, e-commerce, forums and CMS. However, no single vertical market can fully support such a platform on its own.
Generally speaking, website builders or e-commerce platforms like Weebly and Just adopt the model of starting from the vertical market. Over time, they gradually add all the necessary functionality to the platform and eventually start customizing the vertical market.
So, in our case, we chose to go against the traditional model. While customizing for a specific vertical is usually good advice, in our case it wasn't the best approach.
Create a market
When you create a market, the key question is how do you make people realize that they need a new product that they didn't recognize before. In my experience, this is often the first step in market innovation.
For the first three to four years of Weibull's history, we mostly focused on convincing people that they could easily build their own website. This is challenging because most people think they can't build their own website unless they have programming knowledge.
We spent a good four years researching and telling people that it is indeed possible to build your own website. Eventually, more and more people try and master the skill, and a market forms.
Services like Uber and Airbnb are good examples of market creation. At first, I was uneasy about using a stranger's car or lodging, but as more people tried and recommended them, they gradually became accepted services.
Once the market is successfully created, the focus turns to product expansion and improvement. At this time, the problem is no longer how to convince people that the product is necessary, but how to make more people use and be satisfied with the product.
Therefore, market innovation is a long and difficult process, but as long as the market is successfully created, the next step is how to promote and improve the product.
Key Performance Indicators
We didn't monitor and measure these metrics, which is probably why it took us 18 months to get the product rolling.
In fact, it may just take less time to fix. That's what most people look at when considering signings, but it's a poor metric.
If we look at the conversion of registered users to active users, we see it is very low. Also, looking at our registered user numbers on a daily and weekly basis, they are both trending down.
Therefore, everyone agreed that our product market fit was not good enough, and we needed to continue to iterate until we finally got the result we wanted.
Product Pricing
In the beginning, the prevailing thinking in Silicon Valley was that there should be no fees, no money to be made. This is because they think that once you have revenue, your business becomes less attractive. The best thing to do at the time was to sell the dream and not make money, because that would make the company more valuable. So from 2006 to the summer of 2008, our product was essentially free.
But over time, we realized we needed to start making money. In January 2008, we decided to launch a paid version, weebly pro, for $4 per month. When we talked to our friends before the launch, we had high expectations for sales, but the reality is that we were 10 times less than the lowest estimate.
While the results were not ideal, we continued to grow and achieved positive cash flow in January 2009, allowing us to continue operating the company. Throughout the rest of our company's history, we have continued to develop and grow.
What aspects should I focus on when determining to count active users?
Even when users are depressed, I think counting active users can still be done the same way and still be a valuable metric.
The key is to determine if they are successfully using your product, and even if they don't come back every day, they might come back every six months.
So in this case, I still think metrics are useful because it provides some data that you would otherwise be blindly making decisions about.
Discontinuous improvement
I think discrete improvements work when you're making big leaps. Sometimes small incremental improvements won't help you make that big leap. For example, if you started out with a Palm Treo, you could try to continually improve the operating system, the applications, or improve the keyboard, whatever. But if you're creating a new market, it usually takes big steps and discrete improvements. That means iterating quickly, finding hidden needs, figuring out what people want, and building solutions. In this process, optimizing learning is very critical. So we need to keep asking ourselves questions, discovering uncharted territory and looking for answers.
Fundraising Process
Most companies cannot raise capital until they reach the traction stage, and only after they enter the traction stage. But the reality may be different, maybe you have some friends and family who are willing to invest early, or you can enter an accelerator program like YCombinator.
However, most companies need to experience a certain historical accumulation, such as founders who have created successful products before, have huge influence in this industry or other fields, etc.
This might be a realistic expectation if you're hoping not to raise money until you gain traction early on. But how? It's a chicken and egg problem, and everyone solves it in a different way. Currently, many people do it by splurging on fairness, bringing smart people together, building what they need, keeping costs low, and building as fast as they can until they hit their mark.
Why is it more important to focus on customer needs than to follow competitors?
When you have something better than your competition, bring it to market. To create a comprehensive product, not just a simple list of features.
If you only focus on features, you'll never win because you'll always be behind. I am more inclined to the concept of "customer first", because if you keep watching your competitors, then you will always be in the position of following.
Whatever new product they've released recently, they've been doing it for three months. So when you launch your product and lead the market, they start copying your product.
I remember a South African company that raised $40 million and we only raised $650,000. They completely copied our interface and launched a similar product, but it turned out that they didn't do a very good job.
Therefore, we must focus on the customer itself, not the competitor. This has nothing to do with a list of product features, as your product should have unique features or benefits. Maybe it's ease of use and usability, maybe it's a specific feature that helps you break into a brand new market. This feature may also be what people need to make them buy your product.
Therefore, your product does not necessarily have more functions than other products, but your product can better meet the needs of customers, which is the goal you want to pursue.