Summaries Business and Entrepreneurship Discovering Product Market Fit with Peter Reinhardt at Segment

This is a summary of a YouTube video "Peter Reinhardt on Finding Product Market Fit at Segment" by Y Combinator!

4.4 (62 votes)

Segment provides an open source library and hosted version to help companies organize customer data and provide a better customer experience, and has optimized their office environment to reflect their values of support, getting stuff done, and careful prioritization.

• 🤝
  00:00

  Segment helps companies organize customer data to provide a better customer experience through an open source library and hosted version.
• 🤦‍♂️
  03:05

  After a long fight, we figured out a way to build a business around an open source routing library and pitched it the next day.
• 🤯
  11:02

  Launched a lightweight MVP to get customer feedback and experienced the feeling of losing control as people used the product in unexpected ways.
• 🤔
  19:11

  Be mindful of the Airbnb example and focus on finding someone who believes in your idea, and use the Medic MEddic methodology to qualify customers and test product market fit.
• 💡
  26:08

  Test different messaging to find the best product-market fit, and go deep into the market to understand customer needs better.
• 🤔
  31:49

  Segment values people who support each other, get stuff done, and prioritize carefully, and has optimized their office environment to reflect these values.
• 💰
  36:06

  Early stage startups should focus on demo day, networking, and forming trusted networks for support and learning.
• 🚀
  43:17

  Experienced management and strategic investments enabled us to grow from zero to 50 people and raise our series from a million to fifteen million dollars.

Detailed summary

• 🤝
  00:00

  Segment helps companies organize customer data to provide a better customer experience through an open source library and hosted version.

  • Segment helps companies organize their customer data to provide a better customer experience.
  • We help companies move from a one-on-one relationship with customers to a digital world where CRMs don't make sense.
  • The initial growth of the open source library was completely unpaid and came from small companies and founders on Hacker News looking for better ways to instrument their web and mobile apps.
  • The open source library for transforming and fanning out data is not actually solving the problem, so most people use the hosted version instead.
• 🤦‍♂️
  03:05

  After a long fight, we figured out a way to build a business around an open source routing library and pitched it the next day.

  • After raising $600k, we deployed a complicated classroom lecture tool at the start of the fall semester, but it was a total disaster.
  • We discovered that 80% of students were on Facebook instead of using the desktop app, so we had to call back all the investors and figure out what to do with the money.
  • We built an analytics tool to give advanced segmentation and understand how different classes were using it, but weren't succeeding in getting any customers.
  • We had spent half a million dollars and had nothing to show for it, prompting a "come-to-jesus" moment to rewind back to the first week of YC.
  • We created a library to send data to multiple analytics tools, open sourced it, and people started using it, leading to a conversation with Paul Graham.
  • After a long fight, I figured out a way to build a business around an open source routing library and pitched it the next day.
• 🤯
  11:02

  Launched a lightweight MVP to get customer feedback and experienced the feeling of losing control as people used the product in unexpected ways.

  • Put up a landing page on Hacker News to get an overnight explosion of interest and experience the feeling of losing control as people use the product in unexpected ways.
  • Once people start using a product, they will have more requests and be willing to pay more over time.
  • Customers were using an S3 bucket as an initial endpoint input into an ETL pipeline.
  • We built an infrastructure to process hundreds of thousands of user actions per second and our hosted version delivers the most value to business people.
  • Founders debated whether to build out a full product and test for product market fit or launch a lightweight MVP to get customer feedback, and the latter was chosen as the cheaper test.
  • Metrics go haywire when people lose control of a situation.
• 🤔
  19:11

  Be mindful of the Airbnb example and focus on finding someone who believes in your idea, and use the Medic MEddic methodology to qualify customers and test product market fit.

  • Iterating on a bad idea for years is unlikely to lead to success, so be careful of following the Airbnb example and focus on finding someone who believes in the idea.
  • Having a skeptic on the team to question and push for the fastest reasonable test can be enormously helpful.
  • Test product market fit regularly with skeptics who have different perspectives and are willing to try hacky ways to test ideas.
  • Founders should talk to customers in a sales process rather than relying on a polished pitch and demo to decide if customers are interested.
  • Sales reps use the Medic MEddic methodology to qualify customers and determine if their product is a fit for the customer's problem.
  • It is dangerous for authors to be too persuasive when selling a product that does not yet exist.
• 💡
  26:08

  Test different messaging to find the best product-market fit, and go deep into the market to understand customer needs better.

  • Finding the right messaging for a product is difficult, but Diana and Holly have refined it over the years.
  • Test different ways of explaining the product to customers to find the best messaging.
  • To achieve product-market fit, you need to go deep into a particular market and understand the problems people have.
  • To find product-market fit, start with something interesting to you personally and then go deep to understand the market, ecosystem, and customers better than they do themselves.
  • A company has a team of 6 people who do data QA and spend 750K a year on salaries.
  • Sales qualification and discovery is being used for product development to better understand customer needs.
• 🤔
  31:49

  Segment values people who support each other, get stuff done, and prioritize carefully, and has optimized their office environment to reflect these values.

  • Asking questions and understanding customer problems is key to building a successful team culture at Segment.
  • We strive to have a positive impact on the world by providing value to customers, doing the right thing for end-users, and helping companies understand their own first-party data.
  • We value people who support each other, get stuff done, and prioritize carefully.
  • We've done research on how to optimize office environment, focusing on sound decibel levels and acoustic shape of the office, resulting in four values that are pushed into all areas of the workplace.
  • We have a citrus prize and a culture interview with four values that we measure and give feedback on.
• 💰
  36:06

  Early stage startups should focus on demo day, networking, and forming trusted networks for support and learning.

  • The founders went offsite to synthesize their values and identify what they were proud and not proud of.
  • GDP-R, a new EU regulation, gives end-users rights about their data and negatively impacts third-party data brokers.
  • Segment's GDPR compliance is an exciting new feature that allows customers to delete user data from multiple systems.
  • When selling a product, be prepared to ask for more money than you're comfortable with.
  • YC was instrumental in helping Segment reach its current success, with only a dozen customers needed to reach a six-figure amount.
  • Early stage startups should focus on demo day, networking with founders, and forming trusted networks for support and learning.
• 🚀
  43:17

  Experienced management and strategic investments enabled us to grow from zero to 50 people and raise our series from a million to fifteen million dollars.

  • Having a clear product vision for the long-term can help decide whether to integrate a customer's requested feature or not.
  • Feel free to move things around based on customer feedback, but don't add or remove major things.
  • I've learned a lot about finance since starting YC, such as raising money, managing a business, and leveraging it for success.
  • We hired a part-time CFO and HR advisor which was impactful and enabled us to raise our series from a million to fifteen million dollars.
  • Hiring the first team of execs at 10 million in revenue was a huge turning point.
  • Segment went from zero to 50 people with experienced management, and Ryan Pique discussed exciting companies building rocket engines and drones for industrial inspections.