Why the Lean Startup Approach Doesn't Work (as Often), Why PMF Surveys (Alone) Aren’t That Helpful, and Other Notes on Building Opinionated Software with June’s Co-Founder, Enzo Avigo

June-Enzo-Avigo-SaaS-Interview-Relay-by-Chargebee

In the following exchange (2024’s first :slight_smile:), June’s co-founder and CEO, Enzo Avigo (@Ozne), surveys the defining prerequisites for the current, bustling era of B2B software and traces how those essentials have informed their product’s own rigorous path.

Crossing the product-market fit desert
Why early-stage research is different
The discovery process that led them to June
The third (opinionated!) generation of B2B SaaS
Why measuring PMF requires multiple signals
The inspirational-yet-grounded positioning balance
Why June hasn’t anchored around product-led growth

The-SaaS-Baton-Relay-Newsletter-1


Crossing the product-market fit desert

Today, a lot of people are building stuff. We’re bombarded with products all day long. So there’s just an overall set of stronger expectations around the quality of solutions.

Because of which, trying to validate whether you’re on to something with your idea can, in many senses, take more time. Moving from “am I on the right track?” to “I’ve built something that people want” can be much longer than even just a couple of years ago.

The traditional, lean-startup approach (where: you talk to someone, they have a problem, you build something, then you charge them, and try to do all that in two weeks) doesn’t work as often.

You need to build more. You need to understand problems better. And it takes a while. That’s why starting with a problem that you’re convinced is real can help.

I call this stage, crossing the desert.

You’re doing so until you have some product-market fit signals. If the desert is vast and long and you don’t have a strong belief in the direction, it’s very likely that you’d give up.

Because starting up is tough. You might not find those early customers as soon as you expected. Maybe you’re not charging yet. Or not repeatedly enough to prove that you’re headed towards PMF sometime soon.

But you can always turn to your own convictions and be like, “I’m not crazy!” “There’s a problem. I know it exists. I had it. There must be other people that do, too.”

What you don’t know yet is how many other people will have it, if there’s a big market or you’re just a very special person with special problems. :))

That’s why you keep hearing about scratching one’s own itch, again and again and again.

June was the same story.

I had been a product manager for seven plus years. Having worked at a fintech startup, an enterprise ecommerce company, and a B2B scaleup, I had experienced the same problem everywhere.

That B2B scaleup was Intercom.

That’s where I met my co-founder and we decided to leave and build June.

That’s where I had the big epiphany.

Intercom is supposed to be among the really great companies for product management. And they are! I can’t say enough good things about them. Amazing people.

Amazing team. They figure things out. But we were paying more than $100K for the leading product analytics tool in the space and no one was using it. There had to be something that was broken.

Witnessing that validated the legitimacy of the problem. When we left and others (customers, employees, and advisors) joined us, all our past experiences helped prove that we were not insane. That there was something to this idea.

Why early-stage research is different

Product managers, in 90% of the cases, operate in the post-product-market-fit stage. Places where PMF has already been established. What’s needed is to iterate and solidify it.

Or if they’re lucky, maybe they’d get to work in some sort of innovation team. Where they get to expand PMF to a new vertical/persona with a new product, a new experience, or a new feature.

That doesn’t happen often, of course.

Most of the time, research at a post-PMF business means saying: “I know you’re an existing customer, I know you’re facing the following problems. I’ve collected and structured them. I’ve also tried solving them and I want you to tell me if I’m on the right track.”

There’s lots of usability testing. Lots of usage and qualitative data gets collected. But one thing which is true across all of this research is that once you’ve built a product, every piece of feedback falls within the realms of possibilities of the product.

That’s why, for June, an analytics product, feedback mostly takes the following color: “can I have an extra button here?” or “can you also do revenue analytics?” Very rarely do we have outliers. “Oh, June does my analytics, can it also drive my car?” :))

All this research that product teams do is extremely valuable. Because for large companies, the biggest risk is losing sight of their customers.

The PMs are there to say: “We’re big, we have a lot of layers. We’re maybe at the 50th floor of the building of the financial district and our customers are Gen Z and in high school. We never meet them. Not even in the streets when we get lunch.”

A PM’s job is to be a bridge between the real world and that 50th floor.

In the early stages, though, it’s a completely different job.

The discovery process that led to June

When we were starting out with June, we conducted proper user discovery.

In the most traditional sense of that discipline.

Which is a very broad-canvas exercise. As you need to talk to multiple potential customers and for each one of them you need to understand a wide set of problems.

Let’s say you have five personas with 20 problems each. We’re already talking about 100 different challenges. Then you might solve them in two/three different ways. Then we’re already talking about 100s of potential different startup ideas.

It’s a maze, honestly.

Going that broad into the discovery process can mean that you end up doing it forever.

That’s why you need to begin with a strong sense of who has the biggest pain that you’re motivated enough to fix with the shape of a solution you’ve long envisioned.

I think this is where most early-stage projects fail.

Time is always ticking as you try all these combinations of solutions. Whether you’ve raised money or are bootstrapping, reality soon kicks in.

For June, we interviewed people from around 80 companies. We spoke with folks we thought would have this problem. Data engineers. Product managers. Designers. And others.

We knew we wanted to build a data tool.

But we didn’t know it was going to be an analytics solution. So we went through a thorough jobs-to-be-done research where we asked them questions such as: what is the moment of the day where you involve data? What are the problems with that data?

In the end, we had this huge map with colors. Each persona was a different color.

That’s how we identified the first big problem we wanted to solve. And quickly learned that people weren’t willing to pay for it. We iterated. Got to another one. Which turned into June.

We started from the premise that the world doesn’t need another analytics solution. It’s a crowded, competitive space. We were certain we didn’t want to build there.

But after running the JTBD exercise again and again, we learned that no matter the number of data tools around, people just seem to hate them. It’s horrible.

So we decided on building something delightful.

Realizing that here’s a potential billion-dollar opportunity for us.

That’s what we’ve been after.

In case you’d like a detailed overview, my co-founder, Ferruccio wrote about it here.

The third (opinionated!) generation of B2B SaaS

“Opinionated software” can be a fuzzy phrase.

But, to me, it represents the current generation of B2B software.

The first generation with the likes of Salesforce was about digitizing the business world. You had servers, CDs, and records. Now they were on the cloud. Boom.

The second generation was all about verticalization and unbundling. Providing SaaS for all specific job functions/industries one could think of.

The third (ours) generation has been all about: “how can we do what the second generation software did, but 10x better?” This can mean 10x faster or 10x cheaper.

And you can’t automate things, streamline processes, or make software cheaper if you don’t have opinions. Really.

This is what we’re attempting with June as well.

When product analytics started 10-15 years ago, the tools were very generic. They were built to make sure they did everything and opened up to all use cases. Because product teams weren’t quite sure what to measure and then every business was different.

Turns out, 15 years later, PMs are among the most opinionated operators. They care deeply about adopting advanced best practices and constantly tap into each other’s expertise.

They demand more from their software.

Another interesting facet to this persona is that they never have time. Whether it’s 2010 or 2023, a startup or a huge enterprise company, PMs are always busy. And thus they want incredibly efficient software.

A last word here.

You and I have grown up with a lot of great B2C software. WhatsApp. Snap. Instagram. Maybe even Facebook. We text a friend on the WhatsApp app and then go back to our laptop and open Salesforce and freak out! Why??

That’s why HubSpot and other new-age CRMs are taking people away from Salesforce. We all want something modern that feels like it’s doing the job for us.

WhatsApp is a great example of this. Because it seems like a place where you can do everything. It’s not. The amount of decisions that WhatsApp makes for you is absolutely insane. Most users can’t even tell. That’s what great, opinionated software is about.

Why measuring PMF requires multiple signals

PMF is gradual.

A big misunderstanding is to get convinced of the opposite.

Because the startup stories that you read are often post-facto summaries. “We tried this, then this, then that, and then one day we pivoted and found PMF.”

Those stories happen. But mostly, there are multiple steps that inform PMF.

The first happens very early. When you start doing discovery, I think people’s willingness to talk about the problems you’ve identified is a good signal.

If you think there are issues with managing payments and you send over 100 emails to qualified folks who you feel might have those issues and you get no responses, there’s something off.

If you cannot book enough discovery calls, you really have to ask whether you’re headed in the right direction.

The next one is when you’ve built a prototype for the first few potential users and they take time to offer you feedback. That matters.

Another healthy early indicator of their interest for sure.

Then, further down the commitment chain. If people are willing to sign a letter of intent or pay for your prototype, you’re probably on to something.

Then, once you’ve put out a version 1, there’s product usage (combined with qualitative feedback). If you have great product retention, something above 40% in B2B and 60% in B2C at six months. With decent-sized (50-100) cohorts of people. That’s significant.

That’s why I love retention.

Sometimes people forget what lies behind good retention. In practice, it means that you’re part of people’s lives and it’s likely that enough of them will pay when you monetize.

There’s a qualitative take to this as well. The Sean Ellis survey which Superhuman helped popularize, I don’t think it’s that relevant. It’s nice to get some color on your PMF.

We tried it at June. Very early on. We were above 40%.

But I don’t think we were at PMF back then. Far from it. So I’ve always had doubts about it. And would prefer usage and then revenue as better indicators any day.

YC’s Paul Graham has this amazing article where he recommends if you can grow revenue 5-10% week over week, you’re clearly at PMF. Then there’s the Marc Andreesen take that you’d just know when you have it.

The reality, to be honest, is a mix of all of these things.

I wouldn’t just look at a single indicator.

The inspirational-yet-grounded positioning balance

What have we learned about positioning?

Positioning is always the way you want to go forward, what you want to become, what you want to evolve into. So, by definition, you can’t ask people for ideas about it. Because they’ll frame their feedback based on what you’ve already built.

Whereas, a positioning exercise should make us think at least 3-6 months ahead.

Not 5-10 years ahead. That’s too far off. And will lead us to something inaccurate/misleading. Users will sign up expecting one thing and get surprised by the actual state of the product.

There’s this tension you ideally want to play with. A tension between what you have and where you want to be. That gives folks a compelling reason to join.

Positioning is also a way to filter out people who might not be a fit for your product.

Our earliest positioning was around Segment, because we had only built on top of it.

The thinking there was not, “if you don’t have Segment, don’t sign up,” it was more about evoking something like: “oh, this company has deliberately chosen Segment as a platform and has spent a year developing, they must have done it the right way.”

We also wanted to convey that they could just plug and play.

Over time, we evolved. We brought in more sources. So we dropped the Segment version. Grew into the plug-and-play idea as “instant product analytics” which also resonated with a persona (founders) we were targeting.

Then we realized that positioning ourselves only around product analytics, even though that’s what we then did mostly, might be too restricting for June’s future.

So we tried, “a toolkit for great product teams.”

A lot more aspirational, but also somewhat fuzzy.

People didn’t immediately get what that “toolkit” might comprise.

Across our experimentation with taglines we’ve tried striking a balance between being too broad and being too direct, between evolving our product vision and immediate conversion rates.

The frame of positioning needs to be inspiring enough to help you stand out and grounded enough to tie well with the current product.

It’s tough.

Probably among the toughest things startups need to do well.

We’re actually releasing a new positioning soon, building upon JTBD interviews with our most passionate users. We think we’ve addressed the tension really well this time. Stay tuned. :slight_smile:

Why June hasn’t anchored around product-led growth

At one point, June’s positioning was: “product-led analytics.”

But we didn’t keep that one for long.

My issue with phrases such as “product-led” is that they’re often coined by companies when it’s in their interest to make some concepts popular. So that when you look for that phrase, you end up finding the said companies.

If you were to search for, “product-led,” product-led.org (Product-led Growth Collective) would be among the first few (if not the first) results. Which is a site owned by Appcues.

I love Appcues. And I don’t know if they did this on purpose or whatever, but I know that people searching for that phrase will end up on that entity.

I spoke about the PMF survey earlier. And I mentioned Superhuman in the same vein. I don’t know whether this was a part of their plan to get traction, but very few people talk about that survey without noting Superhuman.

Both cases seem like amazing acquisition tactics. I’m not saying they had an ulterior motive here but startup founders should be mindful of integrating such popular phrases into their core messaging.

But I do believe that there’s something major happening. That we’re in a new era of building companies. Which is essentially all about putting the product at the core of strategy.

Product-first/design-first/product-driven, however we want to describe this, is certainly a new (and thriving) class of companies. We were in the marketing-first era for a long time, where the loudest, the best branded, the best distributed companies won.

Of course, even product-first teams need a good GTM, but what separates them is the foundational belief that they can grow a lot with a better product.

Spotify is a great example. They have more paying customers than Apple Music. Even though Apple’s distribution power is a blast. Perhaps because Spotify produces a better product. At least I prefer it. Telling from their growth, a lot of people prefer it.

I’m not going to lie. This trend/shift has been huge for us.

June has definitely gained from this increased attention on how well products get built.

Most businesses starting today will want to instrument their product, getting their first engineers to implement something that allows them to understand product usage.

This new crop of outlier companies like June or you folks at Chargebee, and other startups can come in and build brilliantly better products. We can better acknowledge the humans using our products on the other side. We can grow into market leaders.

PLG itself seems way too overused, even a bit dangerous, so we do not anchor around it too much. But this shift in how products get built is solid and isn’t going away for many, many years.

The-SaaS-Baton-Relay-Newsletter-2


Related reading from the Relay archives:

Cord’s co-founder, Nimrod Priell, on why MVPs worked in a different era
Dragonboat’s founder, Becky Flint, on the three pre-PMF questions founders ought to ask
Contenda’s co-founder, Lilly Chen, on the ever-rising bar of B2B software (and why it’s okay)

1 Like

Thanks for sharing these notes on Relay, @Ozne! June’s is such a true-blue B2B SaaS story. A long-time operator addressing the most pressing problems of their discipline as a founder. A place where, as you’ve noted, great opinionated software can stem from.

Being opinionated also requires saying no to the conventional ways of doing things, what have been some of the product decisions at June that reflect that? And what’s your favourite operating principle from your time at Intercom, something you keep going back to?

1 Like

About Intercom, probably starting small, yet delivering value. We’ve used this principle again and again, and it helped us a bunch!

Re. Being opinionated. I’d say zooming into an ICP that competitors don’t serve has been one of the best rule for us. Whenever we have a product question we ask ourselves « would our ICP benefit beyond what other products can serve? ». If the answer is yes then it’s often a good candidate :slight_smile:

1 Like