Lecture on Product Development with Michael Seibel

Introduction

• Michael Seibel: CEO of Y Combinator
• Founder of Justin.tv, Twitch, and Socialcam
• The lecture will discuss product development and insights from Justin.tv, early days at Twitch, and a case study on Poppy

Key Learnings from Justin.tv and Twitch

• Technical Founding Team: Crucial for overcoming technical challenges
• Low Burn Rate: Minimal spending allowed for higher risk tolerance and mistakes
• High Ego in the Product: Deep personal investment in the success of the startup

Product Development Insights

Identifying the Problem

• Understanding the Problem: Clearly define the problem you're solving in two sentences
• Personal Experience: Ideally, founders should have experienced the problem themselves
• Narrow Problem Definition: Start with a specific aspect of the larger problem
• Problem Solvability: Ensure the problem can realistically be solved

Example: Poppy (Uber for Babysitting)

• Problem Definition: Make it easy for parents to get babysitters for specific needs (e.g., infants)
• Skill Match: High skill required for babysitting infants, hard to match with available talent
• Scalability: Challenge in finding high-skill babysitters on an on-demand basis

Understanding Your Customer

• Target Audience: Be specific about who your first customers will be
• Use Case Frequency: Focus on problems that occur frequently
• Intensity of Problem: High-intensity problems are more likely to attract dedicated users

Pricing Strategy and Customer Willingness

• Willingness to Pay: Start with a higher price to gauge true demand and problem intensity
• Strategic Discounts: Use structured, time-bound discounts instead of giving away the product for free

Metrics and Tracking

• Appropriate Metrics: Use tools like Mixpanel or Amplitude for detailed user action tracking
• Simple Initial Metrics: Track 5-10 key actions to start
• Event-Based Tracking: Necessary for meaningful product data

Development and Iteration Process

• Product Specification: Write down detailed specs for development cycles
• Measurement and KPI: Track key performance indicators (e.g., DAUs for usage-based products, revenue for paying customers)
• Short Iterations: Operate in 2-week cycles for quick feedback and adjustments

Avoiding Common Pitfalls

• Arguments and Lack of Written Specs: Leads to misalignment and inefficiency
• Long Development Cycles: Increase risk and reduce agility
• Ignoring Users: Engage directly with users to understand needs and test solutions

Moving from MVP to Product Market Fit

• Testing the MVP: Ensure it solves the identified problem before broader release
• Iterative Improvements: Continuously refine based on user feedback
• Long-Term Commitment: Expect and plan for at least two years to find product-market fit
• Pivot vs Iterate: Change customers/problem for a pivot; change solutions for iteration

Real-World Examples

• Fake vs Real Steve Jobs: Emulate real Steve Jobs who iterated and improved based on feedback, not the idealized version who created perfect products from the start
• Justin.tv to Twitch: Success came from finally engaging with the dedicated user base and solving their specific needs

Final Advice

• Slow Burn and Low Lifestyle Cost: Helps in staying lean and adaptable
• Technical Team and Ego in the Product: Key factors that contributed to the success of Justin.tv and Twitch
• Networking and Mentorship: Reach out for help; Michael's email is available for support