Michael Seibel - Building Product

Y Combinator

5 Sept 201859:06

EducationalLearning

32 Likes 10 Comments

TLDRMichael Seibel, CEO of Y Combinator and founder of companies like Justin.tv, Twitch, and Socialcam, shares his insights on the startup journey and product development. He emphasizes the importance of having a strong technical team, living frugally, and being deeply invested in the success of the startup. Seibel discusses the need to identify and solve a clear problem, engage with customers effectively, and understand their needs and frequency of the problem. He also highlights the significance of setting up the right metrics, using tools like Mixpanel for tracking user actions, and incorporating measurement as part of the product specification. Seibel advises on running efficient development cycles, focusing on outcomes, and the necessity of iteration. He stresses the value of talking to users and building features that they want, rather than assuming what they need. Seibel's candid recount of his experiences provides a roadmap for aspiring founders to avoid common pitfalls and to build successful, user-centric products.

Takeaways

🚀 **Technical Team Strength**: Having a strong technical team is crucial for overcoming challenges and breaking rules in startup culture.
💸 **Frugality**: Living economically provides startups with the financial buffer needed to take risks and make mistakes.
🤝 **Founder Unity**: A unified founding team with a shared vision can drive a startup through tough times.
🧐 **Defining the Problem**: Clearly understanding and articulating the problem you are solving is essential for product development.
👶 **Identifying the Right Customers**: Knowing who your customers are and what they need is vital for creating a product that adds value.
📈 **Measuring Success**: Establishing key performance indicators (KPIs) and tracking them consistently helps gauge the effectiveness of your product.
💡 **Iterative Development**: Embracing an iterative approach allows for continuous improvement and adaptation to customer feedback.
🎯 **Customer Involvement**: Engaging with customers early and often ensures that product development aligns with their needs and expectations.
📉 **Avoiding Feature Bloat**: Focusing on core features and functionality prevents dilution of the product's value proposition.
📈 **Revenue as a Metric**: For most businesses, revenue or usage is the best metric to track the success and growth of the product.
🔄 **Pivots vs. Iterates**: Distinguishing between a pivot (changing the customer or problem) and an iterate (improving the solution) is critical for strategic product development.

Q & A

What were the three key factors that allowed the company to survive according to Michael Seibel?
-The three key factors were: 1) The founding team was extremely technical and unafraid of any technical challenge. 2) They didn't spend a lot of money, which gave them the ability to make mistakes. 3) Their ego was highly tied to their startup, making them unwilling to give up.
Why did Michael Seibel and his team live in a two-bedroom apartment during the early days of their startup?
-They lived in a two-bedroom apartment to minimize costs, giving them more flexibility to make mistakes and learn without the pressure of high expenses.
How did Michael Seibel's experience at justin.tv and twitch shape his approach to starting a company?
-His experience taught him the importance of a strong technical team, frugality, and an unwavering commitment to the startup's success. It also highlighted the need to understand the problem you're solving and to be willing to iterate and pivot based on customer feedback and product performance.
What does Michael Seibel suggest for determining if a problem is solvable?
-He suggests starting by defining the problem narrowly and then asking if it's solvable. This involves understanding who your customer is, how often they have the problem, and whether they are willing to pay for a solution.
Why is it important to identify the customer for a startup product?
-Identifying the customer is crucial because it helps in understanding who you're solving the problem for. Without a clear understanding of the customer, it's challenging to develop a product that meets their needs and to know whether the problem has been solved.
What is the significance of knowing the frequency and intensity of a problem when building a product?
-Knowing the frequency and intensity of a problem helps in determining the potential success of a product. Products that address frequent, high-intensity problems are more likely to engage users and be successful compared to those that address infrequent, low-intensity problems.
Why did Michael Seibel emphasize the importance of setting up metrics early in a company's development?
-Setting up metrics early is important because it helps to understand how the product is being used and whether it's effective in solving the intended problem. It also serves as a source of new product ideas and inspiration.
What is the recommended approach to identifying the first customers to target with a new product?
-The recommended approach is to target the most desperate customers first, those who are most in need of the solution and are willing to use an MVP (Minimum Viable Product) that may not be perfect.
How does Michael Seibel define a pivot in the context of a startup?
-Michael Seibel defines a pivot as changing the customer or changing the problem. It should be a rare occurrence and is a significant shift in the direction of the company.
Why did justin.tv initially ignore the gamers using their platform?
-Justin.tv initially ignored gamers because they were focused on other aspects of their business and did not prioritize the gaming community's needs. However, when they started focusing on gamers, it led to the creation of Twitch.
What was the turning point for justin.tv that led to the creation of the more successful platform, Twitch?
-The turning point was when the justin.tv team started talking to the gamers who were already using their platform and began building features tailored to their needs, which eventually led to the development of Twitch.

Outlines

00:00

😀 Founding a Company with Technical Savvy and Frugality

Michael Seibel shares his experience founding companies like Justin.tv and Twitch. He emphasizes the importance of having a technical founding team unafraid of challenges and the frugality that allowed them to take risks. He also discusses the high stakes of the startup's success being tied to their personal identity, which drove their perseverance.

05:01

🤔 Identifying the Core Problem and Customer

The necessity of clearly defining the problem a startup aims to solve is highlighted. Seibel stresses the importance of understanding the customer, the frequency and intensity of the problem, and whether it's solvable. He uses the example of Poppy, a babysitting service, to illustrate the challenges of narrowing down a problem and identifying the right customer base.

10:03

💰 The Importance of Charging Customers

Seibel argues against the common startup approach of offering products for free. He suggests that charging for a product, even at an initial stage, can help determine its value and weed out users who aren't genuinely interested or facing the problem the product aims to solve.

15:07

📈 Setting Up Effective Metrics for Product Usage

The need for event-based metrics using tools like Mixpanel or Amplitude is discussed. Seibel criticizes the use of Google Analytics for detailed product usage, advocating for a focus on user actions within the product. He also emphasizes that metrics should be set up from the early stages of product development.

20:09

🚀 Rapid MVP Development and Customer Feedback

The importance of quickly building a Minimum Viable Product (MVP) that solves the identified problem is highlighted. Seibel advises against treating a product like a work of art, instead focusing on its utility and iterating based on customer feedback.

25:09

🤝 Engaging with Desperate Customers

Seibel talks about targeting the most desperate customers first, as they are more likely to use an MVP and provide valuable feedback. He warns against relying on friends or investors for feedback, as they may not represent the core user base facing the problem.

30:10

🛠️ Structuring Sales and Incentives

The strategy of using structured discounts and incentives to speed up sales is discussed, using the example of Zenefits. Seibel explains how incorporating deadlines and discounts based on third-party benefits can create a sense of urgency without giving away the product for free.

35:11

📝 The Product Development Cycle

Seibel outlines a successful product development cycle that includes setting clear KPIs, brainstorming sessions with all team members, categorizing tasks into easy, medium, and hard, and writing detailed specs for each feature. He emphasizes the importance of a regular development cycle and the involvement of the whole team in the process.

40:13

🎯 Focusing on the Right Customers and Problems

The final paragraph emphasizes talking to the right customers and focusing on the right problems rather than just the solution. Seibel shares the story of how Twitch was developed by engaging with gamers, who were already using Justin.tv, and building features that catered to their needs.

45:13

💡 Final Thoughts on Product Development

Seibel concludes with advice on not being a 'fake Steve Jobs' who dictates how the product should be without customer input. Instead, he encourages being like the 'real Steve Jobs,' who released an MVP and iterated upon it, stressing the importance of customer feedback and iterative development.

Mindmap

Keywords

💡Product Development

Product Development refers to the process of creating a new product or improving an existing one. In the video, Michael Seibel emphasizes the importance of a structured approach to product development, which includes identifying the problem, creating an MVP (Minimum Viable Product), and iterating based on user feedback. The process described by Seibel is crucial for startups to efficiently address customer needs and market demands.

💡Minimum Viable Product (MVP)

An MVP is a version of a product that has just enough features to satisfy early customers and provide feedback for future development. Seibel discusses the common pitfalls startups face when creating an MVP, such as losing sight of the initial problem they set out to solve. He suggests that the MVP should be a tool to test the market and user interest, rather than a final product.

💡Technical Team

A technical team is a group of individuals with specialized skills in technology-related fields, such as software development, engineering, and design. Seibel highlights the significance of having a strong technical team, as it allows a startup to overcome various challenges and pivot quickly. In the context of the video, the technical team's ability to understand and implement solutions was a key factor in the success of Justin.tv and Twitch.

💡Customer Feedback

Customer Feedback is the input received from customers about a product or service. It is used to identify areas for improvement or to confirm that a product meets customer needs. In the video, Seibel stresses the importance of engaging with customers to understand their problems and to build products that cater to their needs. This approach helped Twitch to grow by addressing the specific desires of its gaming community.

💡Ego in Product

Ego in Product refers to the personal attachment or pride that a founder or team has in their product, which can sometimes cloud judgment and hinder objective decision-making. Seibel mentions that having a high ego in the product can be beneficial as it drives commitment, but it should not override the need to listen to customers and iterate based on their feedback.

💡Slow Burn

Slow Burn describes a situation where a startup or project takes a long time to gain traction or success. Seibel reflects on his experience at Justin.tv, where they lived frugally and focused on building their product without immediate financial success. This approach allowed them to endure the ups and downs of startup life and eventually find their niche with Twitch.

💡Iterating

Iterating in the context of product development means to make successive changes or improvements based on testing and user feedback. Seibel differentiates between iterating and pivoting, with the former being about refining the current solution and the latter involving a fundamental change in the customer base or the problem being solved. He encourages startups to iterate quickly and frequently to find product-market fit.

💡Metrics

Metrics are the measurements used to assess the performance or success of a product or business. Seibel emphasizes the importance of setting up the right metrics to track how well a product is being used and to derive new product ideas. He criticizes the use of Google Analytics for this purpose and recommends event-based analytics tools like Mixpanel, which provide more detailed insights into user behavior.

💡Problem-Solution Fit

Problem-Solution Fit is the alignment between a product's solution and the problem it aims to solve for its customers. Seibel discusses the need to clearly define the problem and ensure that the product effectively addresses it. He suggests that startups often fail to identify the problem they are solving, which leads to products that do not meet market needs.

💡Pivoting

Pivoting is the act of changing a company's strategy or product direction based on performance and market feedback. Seibel defines pivoting as changing the customer or the problem, which should be a rare occurrence. He advises startups to iterate on their solution rather than pivoting too quickly, as finding the right solution to a well-defined problem is more likely to lead to success.

💡Customer Desperation

Customer Desperation refers to the urgency or need that customers have for a particular product or service. Seibel suggests targeting 'desperate customers' during the early stages of a product's development, as they are more likely to use and provide feedback on a product that is not yet perfect. This group is particularly valuable for startups seeking to refine their MVP and understand their market deeply.

Highlights

Michael Seibel introduces the product development deep dive series, starting with his experiences at Justin.tv and Twitch.

Seibel highlights the importance of a technical founding team, low expenditure, and high commitment to the startup's success.

Discusses the pivotal shift from personal broadcasting on Justin.tv to a broader platform allowing anyone to broadcast live.

Emphasizes understanding the specific problem your product is solving, which is crucial for startup focus and direction.

Seibel advises on defining the problem in a concise manner and ensuring the problem is one the team has experienced.

The importance of narrow problem definition in early stages to address achievable goals.

Uses the example of Poppy, an 'Uber for babysitting' startup, to discuss problem solvability and market fit.

Discusses the significance of knowing your customer well to properly tailor the product to their needs.

Highlights the necessity of understanding the frequency and intensity of the problem being solved to prioritize development efforts.

Explains the critical role of early and honest user feedback in refining the MVP (Minimum Viable Product).

Discusses how pricing strategies can influence product validation and user acquisition.

Talks about setting up effective metrics for tracking product usage and improvement over time.

Shares insights on the iterative nature of product development and the importance of frequent, structured team meetings.

Advises on prioritizing development tasks based on their impact and complexity to optimize resource allocation.

Seibel concludes with personal anecdotes on customer interaction and the iterative process based on direct feedback, using Twitch as an example.

Transcripts

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