Josh Tapp 0:05
What's up everybody? Josh Tapp here again and welcome back to the lucky Titan podcast. So today we have Shawn Shepherd with us here on the mic and Sean and I are here to talk about how to find product market fit, which you know, for a lot of people is one of the hardest questions that they try to answer when they're starting their business. I'm really excited to be talking about this with Sean. So, Sean, will you introduce yourself and tell us something interesting about yourself that most people don't know?
Sean Sheppard 0:29
Yeah, Sean Sheppard. Thanks for having me, Josh, founding partner at growth x and growth x Academy, where seed stage venture capital fund, we have a market development accelerator focused on helping our companies develop their markets and make money as opposed to most accelerators that are focused on helping companies develop products and raise money. We have growth FX Academy, which is a way to train talented individuals that want to work in growth roles and in high tech startups. We have a corporate innovation practice that works with large corporations to help them commercialize new innovations, invest corporate venture, run open innovation projects. We have a studios program, which I think is probably well suited for your audience based on what you're telling me, which is where we apply our market acceleration program framework to helping scallops get to that next level through market development and new revenue channels and and in ways to scale. And, and we help build ecosystems like we have out here in Silicon Valley for communities around the world.
Something interesting about it, yes, you asked me that beforehand.
there's a there's a few of them. I mean, I could I could go on. But like one is, as I helped select, and elect the president, the current president of the Ukraine, and it was a complete accident. And somebody took my idea and actually ran with it. And now you've got a new president in the Ukraine. is another is another say that. Another is I play golf every day for two weeks with Michael Jordan in the summer of 1993, just before he announced his retirement, his first retirement for basketball and I think that's pretty much relevant given the last dance that just came out and everybody's been watching it. Yeah. reminded me of my time with him and what an interesting and competitive fellow he is. And he's everything you think he is, if you watch the last dance, by the way, he's fantastic and Quick, quick story about that I I'm standing on, I'm standing in the parking lot shorting a golf club in Napa Valley, California, and I'm a young golf pro. I'm getting ready to go out to the range do Golf School, they had pro drives up and out of the car comes Michael Jordan and the head Pro. And he goes, Hey, Sean, how you doing? I'm so great. Roger, how are you? He says, well, neat. Well, you know who this is? And I said, I do. It's good to meet you. And he looks at me with a real serious stern face and his immediate responses. It's a good day for an ass weapon, huh? And I said, My immediate response was, are you giving Are you taking? And he says, Why you got game I said, I can play. He says, let's go. I said, I can't I'm teaching a golf school this morning is when you get off. I said three o'clock. He says, I'll be here. And sure enough, three o'clock, he was sitting there and his golf cart waiting for me to his bright blue silk, Air Jordan, golf slacks, which were just horrendous.
And, and so yes,
Josh Tapp 3:28
anybody else but it's Michael Jordan wearing his own pants. So
Sean Sheppard 3:32
literally, we stand on the first tee and he's like, what do you want to play for? I said, Whatever makes you feel uncomfortable, Michael. And he starts laughing. Because I was making nothing at this point, right? I'm probably making $50 a day in tips teaching golf. So. So anyway, we had a great time. We ended up playing golf every afternoon for like the two weeks that he was there. And he couldn't have been nicer but he's also highly competitive. He's not a degenerate Gambler, but he's definitely Really addicted to competition? Yeah,
that was there's something most people don't know.
Josh Tapp 4:06
See. And that's a really cool story. And I guess the one question all of us have is who won the tournaments?
Sean Sheppard 4:12
Did you did you know, I made more money off of him in two weeks that I made that entire summer?
Josh Tapp 4:19
gonna bet you my entire month's wages and he's a duck
Sean Sheppard 4:23
didn't matter that every thought we had to have a bit of a bet just about every scenario, but yeah.
Josh Tapp 4:30
Well, that's really awesome. And it's all thanks for sharing that story. I think a lot of us you know, that's, that's a dream of ours to work with people like like Michael Jordan and getting to see, you know, rub shoulders with some super high level people. I think that's the power of this podcast is people being able to rub shoulders with people like you. So Shawn, I know we could go on for days about your background and really the success that you've seen a lot of people will be able to see that in the show notes. But tell us a little bit about you know, what's, what really is working for you right now. When it comes to finding product market fit.
Sean Sheppard 5:04
So I think it always starts with, there's three things that everyone needs to pursue when they're trying to find fit for a product in the market, the number one most important thing is is the truth. To find the truth about where your product fits in the market and what to do about it. The second is to create a functional learning organization out of a team of people responsible for pursuing that truth, knowing that they have limited time, money and resources to find it. And do it in the most capitally efficient and resource efficient way possible. And then the third is can you find predictable, profitable, scalable revenue along the way, or at least indications of it. And don't be afraid to pivot 50% of funded startups in the valley pivot at least once, a third pivot at least twice. And that's the ones that are most successful. The problem is, is that most failure exists to the markets and people not products and technology. And yet most founders are very much focused on their product and their technology. And they don't give equal weight to the importance of market development. Because we now live in this new economy, where I call it the age Applied Technology, where it's never been easier or cheaper to get products built and launched. Right results, it's also never been more difficult or expensive to get real traction for them. So we need to become much more oriented around problems and people instead of products and tech, and focus are areas on the things that help us learn quickly about where that product should go. And this really applies regardless of whether or not it's a b2c product or a b2b product. It's a technology, it's a service. It's a widget. It doesn't matter because it's about the it's about the dynamic of the Learning. When you take something someplace new, I call it h everything is h stage. It's all human to human. And this stage, it's not about stage of a company. It's about stage of a product in the market. And so my framework was just really designed to solve my own problems as an investor. I'm a serial entrepreneur turned investor, turn frustrated investor because companies weren't, weren't growing. They weren't growing not because again, they couldn't build a product. They were they were they weren't growing because they couldn't build a market. Right? And society as a whole doesn't teach us this stuff. Kids don't grow up say I want to be in sales. There is a there's a negative stereotype associated with right. And when they teach marketing in school, it's the it's the old school four Ps, which is just so out of date. It's not even funny.
Josh Tapp 7:46
Yeah. Doesn't work, right.
Sean Sheppard 7:49
And so, so people have to learn the hard way or they don't have the skills at all. Or they are they under emphasize it, or they just think their shits gonna fly off the shelves because they built it. It's amazing. And just ask them, right? A lot of founder and confirmation bias associated with that as well. Or they just look at sales professionals as a commodity. And in today's market, you can't do that. I would argue that, that in today's market, market developers are more valuable than product developers. Right. And so promoting that idea, and in getting people much more focused on market first product second, is a big part of of what we do to help reduce the failure rate and improve the scale rate.
Josh Tapp 8:37
Yeah, when you bring up an interesting point there because you're you're talking about don't build the product, build the market. And a lot of people say, Okay, well, you know, what does that mean? What What is it building a market even look like? And so when you're counseling people to to build a market, what's kind of the first steps that you direct them too, I mean, is that
Sean Sheppard 8:54
we actually have three very clear milestones and anybody who's listening to this can go Grew Up next calm and go to the hashtag gx MSP series and see every step in the market acceleration program laid out with a concept and even documentation you can use as a framework to follow along. The idea is to just ask the right questions in the right order so that you can determine where patterns might exist. And then you construct a hypothesis and you test it and you iterate on it until you validated or you pivot. And once you do that enough, and you develop the patterns or the patterns emerge, Product Market Fit emerges with it, but it unfolds in three key milestones versus market foundation and discovery. Second is market messaging and outreach. And the third is market results. So market foundation discovery. The structure has a set of goals, focus and outcomes. A goal is what you want to be able to do the focus areas is what you actually have to do systematically to achieve that goal. And then the outcomes are the actual tangible deliverables, and they're not always revenue related. They're tied to learning Because learning will ultimately lead to that revenue if you allow it to do it. But in the first one, what we're really trying to do is figure out what resources you have to execute today, how they're allocated, and are they allocated the proper way, because one of the biggest failure reasons is the missed allocation of resources. Right? And that means money. That means time, that means people that means expertise. And then the second thing that we immediately do after that, is we want to look at what's your best cut initial customer profile to go to market with or series of those? I like to say it's not about looking for Mr. Right? It's about looking for Mr. Right now. Because it's a different mindset in psychology of the people that are willing to take a risk on you. When you're new. Because this whole dynamic one of the metaphors I use is your when you're taking something someplace new, you're essentially a stranger with a strange offering going to a strange place, asking other strangers to do strange things with you. We don't, you don't necessarily realize that from your perspective, but that's how you're perceived. Right? You don't have credibility if you don't have a familiar relationship with the market. And so as a result, it requires a very different approach. Not just a series of methods, not just a methodology are a series of steps or the right questions asked in the right order. So you can do it more efficiently. But it's really about how you do it, you're not out there selling to customers, or you're what you're doing is recruiting partners, people who, who will share your vision, respect and understand your current reality and be willing to go on that journey with you and take the risks necessary to do it, and give you the two things that you need the most,
their time and the truth.
Because that's really what you're looking for, for success, a mutually beneficial outcome and relationship at that stage. So it's developing that initial customer profile, and then establishing a market milestone that says in order for me to To find product market fit or learn what I want to learn, I need to have X amount of wit of wins. And then you define a Windows, I need three customers to run through a proof of concept with me within this period of time under these conditions with these criteria, in order for me to get what I need, and then what do they need, and then you put those two things together, and then you reverse engineer a funnel from the bottom up and say, in order for me to get three wins, I need 10 qualified opportunities in order to get 10 qualified opportunity to have 30 qualified conversations in order to get 3530 qualified conversations, I got to reach out to 300 humans, right? Everything's a funnel. So you can reverse engineer outcomes from the bottom up. So that's milestone one. milestone two is all about how do I now now that I knew who I want to go after, and I've prioritized for it, I know how to allocate my resources towards it. And I've got an organizational objective in the form of market milestone. How do I talk to these people in a way that gets them to tell me the truth and give me their time because we live in a world now. Josh, where people don't tell us the truth if it creates more work or conflict. So part of that approach of acknowledging that you are a stranger going to the strangers is, is positioning yourself in such a way that it makes it safe and easy for them to give you the tell you the truth and give you their time. And then you learn from that. And that's building a market message map and a series of value propositions and selling propositions centered around the value hypothesis that I think I can help you in this way. And I'd love to know if that's true. Then you build a conversational framework around it, not a script, but a conversational framework that helps you find fit with those people you're trying to recruit right now. And no was the second best answer. Right. The quicker you can disqualify someone from your from your funnel, the quicker you can get on to the right people because once again, opportunity costs can kill a company when you have limited time, money and resources and runway. Yeah, like one of the biggest things I see constantly is See a b2b SaaS company that that has six months of runway in the bank trying to work on 18 months sales cycles with an enterprise company that just doesn't move at the same pace. If you're a fly with a three day Half Life talking to an elephant that's going to live for 80 years, right? It's just not a fit, right? So you've got to figure out stage relevant partners to learn from, and then milestone, and then out through that messaging, we actually set up and perform outreach and execute campaigns that will allow us to attract the right kinds of customer profiles and have those conversations and learn and then iterate on messaging based on those experiences. And then milestone three is all about market response and results. It's all right, what am I learning? Is everything that I've initially hypothesized in milestone one and two still true, and not what's true now, until those patterns begin to emerge, and then how do I drive this iterative learning loop between the market and the product team, right? The role of the market developer is to be the translator between the market and the product team. Or as I like to say, the humans and the engineers in tech. They can talk to humans and engineers. But the idea is that you start to build a more fully formed product because 90% of what you take to market initially is wrong. You just need to accept that the goal is to be 89% wrong tomorrow based on what you learned today. And so if you can drive that in a very efficient way, you can change the entire structure of how the whole world looks at and invests in opportunities. You can make them much more capital efficient early, and then pour more fire on when it's ready to scale. Once that product market fit has been found. And what is that product market fit? By the way that is when the market is pulling you and you're not pushing against it? Things get easier pricing is clear. contracts are clear the structure Relationships get more clear, its sales cycles get shorter, the demand goes up and your ability to fulfill that demand becomes more challenging. That's what product market fit is and feels like. Yeah. And you will find it. If you do all the appropriate things, ask those questions, get those answers and adjust accordingly.
Josh Tapp 16:23
Yeah, well, john, let's put this into context a little bit, because you know, a lot of our listeners have built their company with maybe one or two employees or partners, or maybe they're outsourcing everything. So who is the person who should be responsible for this initially, does it need to be the CEO or should this be something you can outsource or
Sean Sheppard 16:42
I don't you don't you shouldn't outsource your learning.
Do not outsource your learning the fastest, the fastest path to learning is direct experience. In fact, it's the number one principle of accelerated learning and growth x Academy
I don't invest in founders who aren't required for closing their first initial cohort of customers, yeah, they have to have that experience themselves. We don't invest in solo founders, oftentimes because they don't have the balance between product and market development on their team. unless they've been a solo founder. That's one in the past that, to me, they're not investable. I want to see somebody who owns product and I want to see somebody who owns marketing, I want to see them work together as one.
Josh Tapp 17:24
That's awesome. And I mean, that will be the advantage of starting with more than one person. So you can diversify. I mean, we find that all the time when we work with with newer entrepreneurs, especially as they're, they're so excited about the product. And like you said, they're not building that market. And I really love the way that you frame that with your framework, because it's talking about how do you you know, identify the people and their problems and then you're going to bring your product that's 90% incorrect to the to the beginning of it, and then you're going to iterate and change and Do you find that most companies ever get to the hundred percent point where they're 100% correct product for their correct market?
Sean Sheppard 18:05
No, I don't think there's I don't even think that's such a thing. I think it's an endless pursuit of perfection that just is unattainable. And here's why. Because every use case, and every activity creates new information, new insights, and a new set of problems and challenges. And so I wrote this article on this piece, and I've done a keynote on it many times called the lasting mover advantage. And I lay out that Google wasn't the first search engine and that Facebook wasn't the first social network and that Amazon wasn't the first big ecommerce player. Netflix wasn't the first live streaming environment, right. But why do they last? What's different about them? What's different about them is they they're lifelong learners. They never stop trying to define new use cases, leverage the data for key actionable insights. Use that to drive their customers behavior and ultimately own The relationship in the age of Applied Technology, the most defensible thing any of us have our relationships? Yeah, I
Josh Tapp 19:08
love that. When and the thing that's kept all of them going, I really love your example there is I mean, they've, they've stuck to what they know, which is that data interpretation and continue to iterate. I love that. I know that you'll want to do my MBA, they talked about that a lot. You know, when you're, if you're not iterating, you're dying. Very few companies will survive, especially once you've surpassed the multiple million dollar mark in your business. You're not going to survive very long if you don't iterate
Sean Sheppard 19:34
quick. Well, you know, now, I mean, in 1970, the average tenure on the s&p 500 was 70 years today, it's about 12. Yeah. And and there's in there, and it's, it's shrinking. And in many of the biggest companies in the world Devaney, you haven't even heard of yet. Right? And will continue to grow because of those sorts of things, but they can all be disrupted out. I mean, Bezos even said it to the market publicly last year. I'm worried about whether Not Amazon's even going to be around in 2030 you think about that? Yeah, right. But what do they do better than anybody? This is what I love. They don't make anything except all of us satisfied. Right obsession with with the customer experience is what's brought them to the forefront.
Josh Tapp 20:21
Yeah, I love that. Yeah, well you've dropped a lot of value bombs here. I hope people go back and study this episode. This was once you have to listen to multiple times. And really I met the process out and and showing you actually have a place people can go to learn more about, you know, the product market fit and basically your entire framework. So where can people go to gain access to that?
Sean Sheppard 20:43
Sure, they can go to growth hacks, calm as I said, they can look at that hashtag GSM XP Series. They can email me directly if they want to talk about our studios program and how we can help scale ups. And in startups, find product market fit Shawn achor effects calm. I'm always here. Follow me on twitter at Shawn a shepherd. connect with me on LinkedIn. You know, Google me I'm out there.
Josh Tapp 21:10
Find him. He's visible. Well Sean, before we sign off today, can you give us just one last parting piece of guidance? Yeah What's the one thing you'd like to just stick in the mind of our of our listeners
Sean Sheppard 21:21
here? Never fried bacon in the nude.
Josh Tapp 21:25
have to explain that one?
Sean Sheppard 21:30
No, I think mindset is everything and do everything you can to be a learned all and not a know it all.
Josh Tapp 21:37
Love that. Learn it all not to know at all. Well, Shawn, thank you so much for coming on today and sharing your wisdom with us and we will catch you later.
Sean Sheppard 21:46