Tzakhi (00:01.507)
Ready?
Adi Joseph Shmorak (00:02.764)
Alright, it's time to go.
Tzakhi (00:04.515)
Welcome. I'm very happy to have you. We're at meet .capital startup podcast with Adish Morak, an expert, a detective for product market fit. You've worked with hundreds of startups. You're a mentor in some of, in a few Israeli accelerators and one international accelerator. That's Mass Challenge. You've been a CPO for several startups, interim CEO for one startup.
And you have a very interesting framework for product market fit that we want to talk about. Oh, yes. And you teach product market fit in Shenkow Design College in Tel Aviv. So I'm really looking forward to this conversation, especially since I've been looking on your website and your framework for product market fit, which you...
share as a giveaway on your website. And I'd really like to go over that with you and learn how startups can find their journey to product market fit. But before we start, is there anything you'd like to add about yourself to present yourself?
Adi Joseph Shmorak (01:15.724)
Well, first of all, thank you for having me here. I'm always happy to talk about product management and product market fit and Maybe just a bit about how I got there So my experience was in sales the marketing then innovation management, which was proper product management I was working for a corporate trying to find a new growth engine for that corporate so it was a lot about finding a new product a new solution or a new and Unmet need in the markets that we were operating it. I
So there was a lot of validation and MVPs and customer discovery and market research and all of that. Pilots, et cetera. And then at the end we focused on just one startup. And that was my first, that was almost 10 years ago. That was my first interaction with the challenges of product market fit. And I kind of fell in love with that world of problem. And I think the reason why I fell in love with it, it's because when I was a kid, I used to read a lot of detective books, mostly Sherlock Holmes. He was my childhood hero. And.
The way that he employed logic to solving mysteries or what is called backward thinking was something that really stuck to me. And in a way, searching for product market fit is a lot like solving some mystery. And that is why I kind of frame myself as a PMF detective, because it's about searching for answers rather than finding them yourself or kind of giving them yourself. It's not math. So that's kind of a bit about my background.
Tzakhi (02:40.995)
Yeah.
Tzakhi (02:45.603)
Okay, good. So let's get started. So although we're talking about product market fit, the first thing to work on is not the product. Am I right?
Adi Joseph Shmorak (02:58.139)
You're very right. And that is probably, I think the most common mistake startups make. They have this idea or epiphany or something and they said, wow, if there was only a product that would do that. And then they start chasing that product. They have that, what is called the field of dream fallacy. Like if I build it, they will come and they spend hundreds of thousands of dollars. They build it and nobody comes because there's no real fit with the market that needs that product.
Tzakhi (03:27.075)
Yeah, I think it's very tricky because I think a lot of people know that. And I can tell you that knowing what you just said, I made the mistake. Because you have such certainty that you have a product and you think you have validation for it, then you start focusing on the product. But you have a different process for working on that.
Adi Joseph Shmorak (03:54.056)
So I think that one of the biggest challenges with achieving product market fit is the internal struggle that we have with our own personality is kind of the mindset thing because in most cases we feel very, very uncomfortable with uncertainty. And looking for product market fit is about living and uncertainty. I'm not sure if that's the market. I'm not sure if that's the value proposition. I'm not sure if that's the product I should build and you're constantly validating. So you're constantly.
in that sense of uncertainty and the human beings, it's not specific person, human beings really have tough time handling that uncertainty. So the reason people run to the product, they actually run toward certainty rather than the product. That's where the certainty is. That's where I can pick the colors and I can pick the design and the UX and the UI and the features. They get a lot of sense of control and that's false.
Tzakhi (04:48.259)
Okay, so where is the right place to start?
Adi Joseph Shmorak (04:51.463)
So I think that if we look at the past 20, 30 years, world has significantly changed in the way that new products are introduced. So now that we have Facebook and internet and all those channels to audiences that are available to anyone, sorry, that are available to anyone from their own home, like with an internet connection, then things have shifted or changed or even flipped.
from I'll build a product or bring it to the market. In older times, it was literally the market. You would go to the market with the new product and people would buy. Now you can do the opposite. You can start with showing something or offering something to your market, see if they're interested and only if they're interested, build it. So in the past 20, 30 days since the Agile or the Lean Startup movement started, that is let's start with the market, not the product, the market. Let's first find that unserved need, that gap.
in the market that we can monetize. So first understand where is the biggest gap that you can fulfill. And only then you start building or even tailoring the product to that gap.
Tzakhi (06:02.691)
Okay, and how do you do that? What are the steps that you need to take?
Adi Joseph Shmorak (06:05.413)
So if we look at the market as the first part of the product market fit, we have to understand that the market is given. This is our anchor. We can't change the market. We can't change the product. So we should start with what is fixed and work around that. So what are the fixed or the constants that we have within the market? They're also changing, but they're not under our control. So the first thing that we need to understand is...
Who is our ICP? ICP stands for ideal customer profile. Who is the perfect customer to try our untested, unvalidated new tech startup product? That isn't anyone. Not anyone is going. Sorry.
Not anyone is going to opt in for our offer. Those people that will do that, first, they are early adopters by nature. They want to try new stuff. Second thing, they're desperate. They are really in a bind and if you can solve that one thing for them, they will opt in for your offer, even though it's unvalidated or something of that sort. Think of, maybe it's not a good analogy, but think of terminal illness. You will be willing to try any test drug because the situation is so severe.
So our ideal customer will have a severe problem, acute, most likely even chronic. So the frequency of that problem is very frequent and only then they will be willing to try out a new product. So we have to figure out who's that person. That's the first thing that you need to start. And for you to understand or to kind of test them and see if they are indeed that ICP, you have to run an experiment.
And the experiment, and that's the first experiment every startup needs to run, is put in front of that ICP. So first you have to define that ICP and where they hang out, what channel would work best to get them. And then you need to put two things in front of them. The first one is a value proposition. Basically it's an offer. If you're suffering from blah, blah, blah, if you find it hard, blah, blah, blah, then you should try this. And that offer is not the product in itself. The offer is...
Adi Joseph Shmorak (08:16.898)
transformation, it's a better future, it's a promise for a better future. And so you put in front of that ICP, hey, I can get you to that promised land. And the second thing that you put in front of them would be a CTA, a call to action. So if my ICP are, I don't know, let's say it's DevOps that are filling the load of work and they can't get to everything. And so their DevOps expenses are very, very high.
then the prompt stand would be kind of an optimizing your DevOps and saving on expenses or cloud expenses, whatever. I would need to offer them, hey, if you want that thing, like to know all your expenses in one place and how you can optimize them, then do that. And that is the call to action. It can be anything. And that's the thing. We don't need them directly in the product. We can say, jump on the consultancy call.
or maybe hop on a webinar that will show you a few tricks to get there. So anything that can get you closer to that promised land. And when you run the test, you can see people, you either see a movement, people showing up, people opting into that offer or not. And if you do multiple experiments, then you start benchmarking. You see some value propositions that work very well with some audience or some ICP. You can try different ICPs, but you can also see some that are
irrelevant at all. So you kind of cancel them out. And eventually you focus on that bundle of combination of ICP and offer or value proposition that works best, that creates a big movement toward your way. And then you start thinking about, okay, how can I build that product to get them to that offer to that value proposition?
Tzakhi (10:04.547)
Okay, just one question before we move to the next step. So I think it's kind of, you know, there are a lot of ways to test with consumers, but sometimes the type of client, the type of ICP you have is harder to reach and harder to interact with. Specifically, if we're talking about, for instance, enterprise software that you're building and the process of sales is going to involve a lot of stakeholders along the way.
How do you do that kind of validation, early stage validation in these cases?
Adi Joseph Shmorak (10:42.399)
So the idea of ICP is to make things easier for us, not for the market or anything. We're going to find where in the market it's best for us to serve that audience. So your ICP might be different than mine because maybe you have a different network, or you have different skill set or technology in hand that makes your way of solving maybe the same problem even to a different ICP. Maybe I'll do it for people that use...
Mac on their computer and you'll do it for people that use Windows on their computer. That's a fine differentiation between ICPs because it makes the product different. Mine would be maybe an app or a Mac app and you'll be a Windows app. So if that ICP is not someone I can reach, then either I change that ICP, maybe I dial the value proposition bit down so I can address someone that is at a lower kind of stakeholder level.
so I can get my foot in the door because again, I want something that's easy for me. So if that audience is CEO with Fortune 500 and I have no way of reaching them, change the problem, change the ICP because it's not ideal, it's not easy for you. That's the criteria. Is it easy for me? And for them, the offer is like a must have. If you don't have those two questions as yes, then that's not an ICP, change the ICP.
Tzakhi (12:02.563)
Okay, yeah, I think when you're...
the more complicated the sales process is, it's probably also harder to run the validations ahead of time because you need to basically validate not only the need for your solution, but also the ability to have the whole sales process come through and lead to an actual sale. And then you have to kind of get validation from different types of stakeholders.
Adi Joseph Shmorak (12:33.98)
Validation is an iterative process, it never ends. So, the first thing that you wanna validate is there is a real need in the market and that you can offer them something that they want. And the experiment that I said, like put an offer in front of those ICPs and see if there was movement, that's the first basic thing. It doesn't involve a product and it doesn't involve a sales process. This can be something that is not necessarily that complex. Again, we're trying to make things easier for us.
So like you take a big problem, you can't solve it, you break it like into smaller problems. That's the same idea. You break things down. So if the sales process is too long, it takes longer to kind of close deals, et cetera, in the validation process, let's break it down. Let's see if I can just get them on a call. I won't make the sale, I'll just get them on a call. Maybe I'll do some customer discovery on that call. Maybe I'll do some other validation just to see what they're using, what they're happy with, what they're not happy with.
maybe learn about the process, the sales process that they have, but I won't necessarily make a sale at that position in time. And as you progress and you find things out and you get to a point when you understand exactly who's your ICP, it's not just Fortune 500 CFOs, for example, it's those that are, I don't know, about to do a merger or something of that sort. And you know that they're seeking something very, very specific that is very hard for them to name down themselves.
then you put that offer, then the sales process is going to be a bit easier because now you've hit a real pain point. But you have to do the work before that to figure out exactly what that is.
Tzakhi (14:04.964)
Okay, so first step is to find the ICP and like a very sharp definition of an ICP, which is a certain kind of person or role and also a certain point in time perhaps that that person is at.
Adi Joseph Shmorak (14:20.091)
Just to kind of a few tips on finding your ICP, the best way that works for me and my customers is just apply filters. It sounds very basic. So take the entire total addressable market CFOs and start thinking what filters can I apply to find so they'll be easiest for me. They're on LinkedIn, they're active on LinkedIn because I want to reach out on LinkedIn, it's going to be easier for me. And they work, they use that, I don't know, financing system.
Maybe because it's easier for the integration for me, so I wanna make things easy for me. I don't wanna make integration for five things. I just do that. So only those that work with that. And so those filters can be tech stack, like they're working with this or that software. It can be an event. Like I said, they were about to do a merger or just completed merger. It makes it easier for you to find those ideal customer profiles because of the situation that occurred. Like even in the copy of the ad, completed the merger or.
looking to find a way to blah, blah, blah with your merger, some people will not, this will not resonate with, but those that are your ideal customer, they will find it interesting, relevant, and they will opt in or at least read that ad and maybe engage with the conversation. So apply filters to your total addressable market so you take out all those that you can't reach, that they're not very desperate, it's not very frequent, that the pain that they're having are not very severe until you find a very specific niche.
Tzakhi (15:47.107)
Okay, so once you define your ICP, then you start with validation process, which is to see that they're willing to make an effort to solve a certain problem, right? And then...
Adi Joseph Shmorak (16:01.111)
So the ICP is also a validation. So once you validated the ICP and the way to validate the ICP is testing, it might be you're testing multiple ICPs with multiple value propositions, see which one gets most movement. So once you validate them in pairs, like the ICP, you validate it by using a value proposition, and then you actually validate both. Like that's the ICP and value proposition that really works well. That's the gap that I can bridge. That's the first and second half. The first and second,
step toward achieving product market fit.
Tzakhi (16:34.979)
Okay, what comes after that?
Adi Joseph Shmorak (16:38.198)
So once we know there is a gap in the market, like these people, these very specific people really want to get there. So they're in A, that's the pain point. They want to get to B. Now we have a good understanding and we validate it. These are the audience that we want to work with and that's where they want to get. Now you can think, okay, what's the best bridge for me to get them from that point to that offer, to that promised land, to that better future. And that's the product.
But the thing is that, and I think all our listeners already are familiar with the concept of MVP. So just, so the third step would be the MVP. It comes third and two words that are very important in MVP, minimal and viable. So minimal, it means that it takes as least effort on our end. And there are two reasons for that. One, we want to make it quick and fast. Second thing, we don't want to get detached. So you build the MVP.
Like I said, in experiment, once it's done, it's duty. Once you've learned what you needed to learn with it, it should be lean enough, small enough so you can throw it away without any shame or like loss or thing of that. You want the MVP to be something that you can toss aside without a second thought. The second word, the viable is very important. The MVP needs to be viable. To be viable, at least in my perspective, is it has to create some value to your customers.
It doesn't have to create all the value that you want to take. Let's say that I'm at point A and that's a bad spot to be at and I want to get to point Z, which is the promised future. The MVP doesn't have to take me all the way to ATZ. It should give me enough value. So it does have to take me to a milestone. Like maybe in Z I have everything set up and here I just have some of it set up, but it's still enough for me to generate value, real value. So that's the MVP and that's the third step.
And it's an additional layer of validation, not only who's your ICT and your value proposition, because that repeats that validation, but also that you can solve their need in some way.
Tzakhi (18:50.435)
Okay. And then comes the building of the actual product when you get validation for your MVP.
Adi Joseph Shmorak (18:57.492)
So there is never kind of a water flow like I have the MVP and then I have the whole product and then I have versions or whatever. From when zooming out, you can have that perspective and look at, I don't know, like an iPhone and say, well, that was the first iteration and that was the second, but it's a continuous effort. So the idea is to take the MVP, learn as much as you can from it, what works, what doesn't, what can be optimized, what can be even more effective.
in delivering value because that's the role of a product. The role of the product is a transformation mechanism or a value delivery mechanism. And the product in itself is never the actual value. So when you have the MVP and you understand, okay, that's the mechanics of value, that's how I can create value for my customers, then you just need to constantly optimize it, make sure that you're creating more relevant value in a better and more convenient way for yourself, for your customers.
And that iterative process will make your MVP bigger and bigger and bigger. You might toss aside the MVP and build scratch, but in that scratch, you'll still have the core value that you had in the MVP just maybe delivered in a better way or a different way. And that way you'll expand your product constantly and increase your value either to new ICPs or to the same ICP, but more value. So that expansion is not a...
kind of like steps, it's a narrative process that constantly evolves.
Tzakhi (20:32.483)
How do you, where do you draw the line between what the product actually does and how you market it? Meaning the same thing used with different words will get much better results. That's marketing, right? And then how do you differentiate between those two types of validation?
Adi Joseph Shmorak (20:58.736)
So I'm not sure that I got the question. Let me see if I can answer it right. So.
From marketing perspective, the product is irrelevant. And that's what a lot of people get wrong, especially in B2B, because products in B2B are about productivity, are about achieving an outcome. Some products are about just engaging and having a good time, like Netflix, for example. It's not a productive product. It's just meant to spend your time in a pleasant way. But if you look at a simplest product like my Gmail, email client, whatever,
It's about productivity. It needs to get me interacting with the people in the best efficient way that can be. So from a marketing perspective, I want to communicate faster and better with clients. Email is just a methodology or a way for that to work. That's how the product is framed, but that's not the value that I'm getting. I'm not getting an email client. I'm getting the ability to interact with people. If you look at superhuman, they allow you to interact faster and more efficiently.
That's what email at the beginning is for, communicating efficiently. So when marketing, in marketing you talk about the transformational effect, impact, the value, the benefit, the world after. The best way to describe is it like, you know, when there's like selling your diets online or something and you have this before and after picture, that's marketing, like before and after. You have, you're now unable to blah, blah, blah. And...
with my product, you can do that and that, and that's a better future for you to have. And how you get there, nobody cares, at least not at the beginning.
Tzakhi (22:44.515)
Yeah, what I'm trying to understand is where do you draw the line between iterating the way you present your product and what you're actually building as your product?
Adi Joseph Shmorak (22:54.605)
So that's, I spoke at the beginning that the market is a given and the product is for you to decide. And I think that's where creativity and your unique perspective on life in general comes into play. So the market has a need, whatever that need is. Some ICP, they're at point A and they want to get to point Z. Now, when you look at that and you give that situation, that market gap to a hundred people and say, how would you solve that? You'll get a hundred different.
answers and that's where product comes into play. That's where you can choose what mechanism you're going to use to create the transformation. And so if we look at a headache, let's say that I have a headache, there are so many ways that I can solve that problem. I can take a pill, but I can take different pills like you have paracetamol, you have ibuprofen, but I can, I don't know, take a bath. I can do some albuma therapy. Maybe I can do acupuncture. Maybe I can do meditation, drink cold water.
drink hot tea, whatever, there are so many ways that I can do a solutions. Commercials will say take a drug, that's the easiest, take a drug, but that's fine, but it's not the only solution. So the way for you to fill that gap is up to you. Any way you decide is efficient and it's going to work well and it's going to deliver value in a very efficient way that you can build it, that's your product, but it's for you to decide.
And that's your uniqueness, that's what you bring into the world.
Tzakhi (24:28.387)
Okay. Now, Adi, help us a bit. How to do this process alongside while you're raising capital and how does the process of reaching product market fit work to support your capital raise?
Adi Joseph Shmorak (24:44.587)
So it depends at what stage you are, but if you're pre -seed or even seed, then you're probably pre -PMF. And so you should present your investors, not just the dream like, hey, we're going to do this, blah, blah, blah. You need to show them that you have a plan to take their 100K, 200K, 1 million, whatever you raise this pre -seed or seed, and how you're going to utilize this capital to get to product market fit. If you already have good assumptions about who's the ICP, why they should buy,
and where do they wanna get to, then that's already good. You can present it in your deck and you should show how you got to those assumptions by talking to researching and all that. If you're not yet there, you can still frame those as assumptions and then say, with your money, I'm going to do one, two, three, four, I'm going to do surveys and run experiments and put some value offers in front of multiple ICPs and multiple value propositions and see which one works best. So,
I can start focusing on that gap and build that product to exactly fit that gap. And that would be my MVP. So if you're just at the seed pre -seed stage, having a good solid PMF strategy is what's going to help you get that investment. If you're post seed, like maybe round day or somewhere in between, then you should already have a good indication of product market fit, but you still need to show that you're...
going to get to that apex point in that hockey stick job that you're going to shoot out. So you need to show them that you know who's the ICP, how to motivate them. And if you've done the PMF right, then you will already have all the data, you will already have all the validations. We tried these value propositions with this ICP, this work best, we used this to generate this amount of leads at that cost. So now you start having like unit economics and we have that MVP already running and these are the attractions that we're getting with the product and these are maybe...
We haven't spoken about the last step, but the last step is the business model. The business model is about retaining some of the value that the product is creating. So if you've done that right, you should already have at the post -seed stage good numbers to show about how you're not only creating value for your customers, but you're also retaining that for yourself, usually as profit or MRR, et cetera.
Tzakhi (26:46.147)
Okay.
Tzakhi (27:06.179)
Okay, can you give us now like a summary of the four step framework? So we have a clear overview of what we discussed.
Adi Joseph Shmorak (27:16.839)
Yeah. So first let's understand that the journey to product market fit has two main areas of focus. The first one is the market and that's a given. This is a discovery phase in which we need to discover a gap. The gap is already there. If you do the proper work, you'll find a good gap that you can fulfill. And that gap is described by first the ICP. Who's the most, who's the one that's suffering most from that gap?
He's losing the most money, he's stuck like no one else, he's desperate. Who's that person that has that gap affecting him so severely that you would be a good offer for them? And so that's the first step. The second step is what do I wave in front of him or her that they will say, I want that, I want that. If I'm stuck in traffic for, I don't know, an hour every morning and someone says, I have this teleportation thing that can get you to your workplace in a second. Interesting. This is like, okay, I might be afraid to...
I mean, be myself up, but that would be an interesting value proposition because the problem for me is frequently severe. So what value proposition is the second step? The offer that I can present to the ICP and they will click, they will come, they will put their skin in the game. Those two steps, it's us to discover what exactly the nuances are with the ICP and that's what value proposition and that's the type of experiments that I run with my customers. And that's the first part.
two steps of the first part. Next, the second part, it's about the product and the business model. This is where we can get creative. It's not about discovery, it's about creation. So what product can we build that will create that transformation in the best way possible, in the most efficient way? Because in delivering value, we don't want to have drop -offs in the value. We don't want people churning, we don't want too many friction points.
So how do we build that? That's up to you. That's a creative process. That's another place where I help. Once you understand the market, you can better scope the MVP. So it can be linear and minor and way more effective, but it's still, it's up to you to come up with the right mechanism to deliver that value. And the second thing, okay, how do I retain some of that value for myself? That's the last step, the business model. So we had the ICP and the value proposition.
Adi Joseph Shmorak (29:42.788)
and then the product or MVP at the beginning and the business model. And so the business model has to effectively and efficiently retain some of that value that you're creating for your customers. If you're saving your customers, improving their return on ad spend by 50%, then your business model should be able to retain some of that value. The more you're saving for them, the more you should earn yourself. And that business model is again, is up to you.
come up with something that is very effective in capturing that value for yourself.
Tzakhi (30:18.979)
Yeah, I think this is a very iterative process that you have to repeat a lot of the steps as you go further. I think it would be great for people to go over the content that you provide on your website with a full framework. So where should people find you, Dee?
Adi Joseph Shmorak (30:45.25)
First of all, feel free to connect on LinkedIn, just search Adi Joseph Shmork. That's the first thing. You can go to adidacta .com, A -D -I -D -A -C -D -A dot com. And there's a section says, Got PMF. You can go there and download the quick guide. It's going to explain more on the four steps for you to achieve product market fit. And if you're interested, just reach out on LinkedIn or anywhere. I'm always happy to talk product market fit. I mean, I think that...
One of the things that have helped me help my customers is that I meet founders on a regular basis. And so I think in the past five years that I've been doing that, I've met close to maybe even 1000 startup founders. And I learned from every interaction. That is why I always say yes, happy to talk because I learn, I get a lot from dealing with these challenges. For me, they always come up with a problem and I need to solve it. So for me,
Tzakhi (31:29.444)
Nice.
Adi Joseph Shmorak (31:43.137)
It's always interesting to meet new founders and it's never, I'm not the solution guy. I'm the question guy. I'm the one that's going to first ask the right questions and then come up with good ways to find those answers. And so whenever you present a riddle for me, it's exercise for me. So that's, that's my favorite thing.
Tzakhi (32:02.563)
Awesome, awesome, Adi. Thanks so much. If you're listening, subscribe to our newsletter at meet .capital. And of course, subscribe on YouTube or Spotify or wherever you're listening to this for our next episode. Thanks so much. Bye, Adi. Thank you so much for coming, Adi. Bye -bye.
Adi Joseph Shmorak (32:19.457)
Thank you everyone and thank you.
My pleasure.
