Jake Knapp: The Founder’s Guide to Product-Market Fit

0:00Before you start to invest a lot in this thing, make sure you're seeing it click with customers. Make sure you're seeing on the one-to-one atomic level there's product market fit. It's five days to run a design sprint. You might have to run two or three design sprints before you hit that click. That's the voice of Jake Knapp, creator of the design sprint, co-founder of Character VC, and now the author of Click. Jake's work has shaped how some of the most ambitious startups test their ideas fast and build products that matter. This is Mike Maples Jr. of Floodgate, and it's go time with Jake Knapp.

0:38This is Mike Maples Jr. and welcome to the Pattern Breakers podcast, where we explore why some founders radically change the future and how they stand apart. Together, we'll learn about the counterintuitive mindsets and actions behind their remarkable success. Brace yourself for a world where chaos is welcome, naysayers are often a positive signal, and movements galvanize misfits who transform the impossible to the inevitable.

1:14Vince Lombardi used to say, winning isn't everything, it's the only thing. And for startups, I'm fond of saying something similar. Finding product market fit isn't everything, it's the only thing. especially in the zero to one phase. And the new book Click by Jake Knapp is a guide for startup founders who buy into this way of thinking. The key idea is that your product and customer need to click together like Lego pieces. This book helps you figure out who your customer is, what problem they have and how your idea stands out. And then it shows you how to test your idea quickly to see if it really works.

1:53It's all about moving fast, learning what clicks, and fixing what doesn't, so you stop guessing and start building something people truly need. Jake's done a lot of meaningful work throughout his career, from shaping products like Gmail and Google Meet to helping hundreds of startups find their footing. His earlier book, Sprint, was also a must-read, but Click might be his most impactful contribution yet. It's a book that's inspiring in its simple effectiveness. Let's talk to him.

2:29Jake, welcome to the podcast. Well, thanks for having me on, Mike. So you've got this new book, Click, but I think it'd be interesting to just talk a little bit about the books that you've written before and how they led you to this point. What was the foundation that those books laid? And then what question does Click answer that they don't potentially answer. The most important one to talk about is Sprint. And that was my first book with my co-authors, John and Braden. And we were working at Google Ventures at the time and we had taken the design sprint. So I created this method called the design sprint.

3:05I was at Google running this process with teams. It became my full-time job at Google. And then I left Google and went to go work at Google Ventures where we were, you know, had a portfolio of startups. And the idea was, hey, we'll run design sprints with the founders, with the teams and use it to help them move faster and figure out if they can find product market fit, give them more shots on goal. Because if you can run an experiment in a week, that's going to give you, you know, a big leg up on anybody else who's waiting until they've gotten MVP. We finally felt like, gosh, this method is working so well with so many different domains.

3:45We'd worked with startups who were building consumer apps, but we'd worked with startups who were in healthcare, who were in robotics, who were doing all manner of things. And this same format of, it's a very structured week where Monday, you make a map of the problem. Tuesday, you're sketching solutions to a target moment. Wednesday, you're deciding which of those solutions are the strongest and turning them into a blueprint. Thursday, you're building a prototype based off of that blueprint Friday, you're doing one-on-one customer interviews, showing them the prototype up against the competition, watching what happens, seeing how they react, seeing if it clicks with them.

4:24And that recipe worked so well for us that we started to share it, write it, blog posts about it, talk about it. People started to pick it up and do it. And so eventually we said, Hey, we, we got to write a book about this. So sprint was that book. And it's got some stories about some of these startups, Flatiron Health, Slack, Blue Bottle Coffee, or some of the ones who are featured in there, all of whom had pretty good exits afterward. That book got a lot of people doing design spreads. And it's kind of a cookbook for how to run your own. And to this day, so nowadays, I left Google Ventures a few years ago.

5:02My co-author, actually, John Zeratsky and I, along with our third co-founder, Eli Bleed Goldman, started a venture fund of our own, sort of a baby version of what you've been doing for a long time, Mike. And we make investments at pre-seed and seed stage. And our differentiator is that we run design sprints with the companies in whom we invest. And it still works great. But when we were now in this role of general partner, not design partner as we were at Google Ventures, but general partner and running the design sprints with founders, and particularly being there at that pre-seed and seed stage, where especially at pre-seed, the shape of the business, the shape of the company is still forming.

5:45We realized there was a gap. And as effective as the design sprint was, if a company didn't come in with clarity about their hypothesis, about what they wanted to test in the design sprint, it didn't go as well. And we realized that even founders who are very bright, have a very tight relationship with one another, you'll ask them, who's your target customer? And if you've got three co-founders, we often get three slightly different answers about who the target customer was. What problem are you solving? Three slightly different answers. Everybody's generally on the same page, but the specifics really matter when you're trying to build a prototype, figure out how you'd explain it and market it and show something hyper-realistic to people in a week.

6:29And reflecting back on those companies like Slack and Flatiron Health, who'd been so successful, we thought the common thread is those companies have this clarity going in about what their differentiation is. And sometimes they end up having to adjust it. But when the founders can get really clear about the hypothesis, it helps them get to that click moment faster. So click is a playbook for the earliest moments of any big project, but in particular, it's tuned for the earliest moments of a startup when you've got that idea, that insight, but you haven't yet turned it into a solution. So in Click, we want to help you go from essentially zero to here's our hypothesis.

7:12And from that moment on, you're ready to start experimenting. The book itself is, I think, I hope a pretty quick read. It's 10 chapters. They're short. Each chapter is a lesson, one kind of key idea. There are a lot of illustrations in it. And the 10 chapters also fit into three parts. So there's a part on the basics, the basics of what makes a good project, the basics of what makes a product successful that people love. There are some chapters about differentiation. And then finally, some chapters around the approach and experimentation on the approach. And so it's really meant to be a book that you can read on its own, get through, hopefully feel the lessons.

8:01Hopefully they'll stick with you on your own, but then you can also turn around and use the appendix and have a play-by-play, step-by-step guide to running this foundation sprint with your co-founders or with your team of whatever stripes that might be to establish that founding hypothesis and really build the core kernel of your strategy. So it's a one-sentence strategy that you'll have by the time you're done. So then how does the foundation sprint start then? You know, and like, how do you set the table and click to enable that? The foundation sprint really begins with wherever the founder is at or wherever, you know, if you happen to be at a team in a larger company, whatever, but wherever the leaders are at with their understanding of the customer, their understanding of the problem, their special insight.

8:50We don't ask people to do anything special before they begin. We want people to do this at the very outset of starting to think about a big endeavor that they're going to take on. So there's no real pre-work. I think if somebody is ready to start a big project, they've kind of done the pre-work. They're there. They're on the threshold. And we're like, great, let's use these 10 hours or so together. you know, split across two days to just get super crisp about what you believe to be true. And once you've made that really crisp, it's going to help you so much with everything that comes after because you can constantly be referring to that hypothesis and saying, well, is it true?

9:29Can we experiment? Is there any way we can learn more about this before we make a big commitment? And if it needs adjusting, we adjust it. And once we get it right, it becomes the guidepost for what we build. We're building something that delivers on this differentiation. How do you think about differentiation as a way to break industry norms? And how do you apply that sort of thinking to the foundation sprint process in Click? Yeah, well, man, Mike, I got to tell you, I heard you being interviewed talking about pattern breakers and talking about differentiation. And it was right after we'd sent the manuscript off for Click.

10:05And I was like, so excited to hear the way you spoke about it. And I also thought, oh, man, I wish I had talked to Mike before I could have gotten even more articulate on the topic. So we'll see what I could do here. But I think the companies that succeed, they're offering their customers a new way to look at the world. They're saying the framework that you used to use to evaluate whether you had a good solution here is not the right framework. Here's another way of seeing the world. Here's how we see the world. And if you agree with us, if you're willing to give us a try, this is going to blow away the previous solution you had.

10:42So what I want to happen in the foundation sprint is that we get to the situation where the founders know precisely what that new way of looking at the world is. They can describe it. The best way that we've found to do that is to create a two by two chart, a business school 101 diagram, and to label those two axes and get really realistic and honest about your competitors, and especially the sort of 800 pound gorilla competitor that you're up against. and try out a lot of differentiators on that chart and be really honest with where you place the competitors until you get to the point where, if you think of the four quadrants, you obviously wanna be in the top right of the top right quadrant with your product.

11:26And those other three quadrants on the left, they form an L shape and I call that Loserville. So we're gonna keep going until all of the competition is in Loserville. And then we're gonna run experiments to prove that that's true because it's not enough for us to say that that's true and assert that that's true. We've got to then put our product in front of customers, watch how they react and see if it's, if they're convinced in our new framework. Why, why do you think the two by two is so effective? Why have you converged on the two by two over and over again? I think there's a couple of primary factors that make it work well.

12:00One of them is that it is visual in two dimensions. And I think the way our brains work, It's like so quickly and easily parsable that we can understand it as the builders of the thing. But I think that the essential thing that makes it work is we have limited working memory and two items is something that we really can stick with us. And if I imagine products that I love, products that I'm telling my friends about, I'm going to have one or two compelling reasons to tell them. It's kind of the limit of what I can expect them to pay attention to. It's kind of the limit of what I can remember. It's kind of the limit of the punchline or the moral of the sort of anecdote I might tell them about how great it works.

12:48I just think you get beyond one or two things, and it's just more than we care about. It's more than we can pay attention to. It's more than sticks in our head. And part of the reason why it's two and not one is you will get into situations where there's an alternative that's competitive with you on one axis, but you can blow them away on the other. And then you've got another competitor, they're competitive on the other axis, but you can blow them away on the first. And that benefit of clarity and a focus on one or two things, it benefits not only the customer, but also the team as they define and build what they're going to deliver to the customer.

13:30Yeah. So can you kind of walk us through how you use the two by twos, not just as a static endpoint document, but also as a as a kind of almost like an ongoing process of resolving the differentiation? So we set up differentiation by defining the basics. That's who's your customer? What problem are you solving? Who are the competitors? Which of those is the 800 pound gorilla? And what's your advantage? And your advantage is composed of three elements, motivation, insight, which is the same as an earned secret, and your capability. What special capability do you have? And so we want to start with those basics because I want people, when they get into that conversation and that mode of figuring out differentiation, I want them totally on the same page, totally primed with the battlefield they're on and the assets they have in this battle.

14:20And then when we start talking about differentiation, I want to start off with a standard set of differentiators that lots of products have used that are familiar to people. For example, if you picture a scale, a line with the two poles labeled, and one pole is labeled expensive and one pole is labeled free, we all understand the difference between free and expensive. So you can plot relative to your competitors, where do you think your product could be on the scale of free to expensive? And we've got a list of about 10 of these in the book. And they're the 10 that we use. You know, is it free to expensive, smart to not so smart, easy to use to hard to use, integrated versus siloed?

15:02There's about 10 of these obvious ones to me to start with. So we start by scoring. Where do we think we could be on those scales? And then the next activity is, OK, now let's write our own. Where do we think the real special advantages are? and we get people to write, you know, 10 or 20 different ideas for what might be our differentiators. And then we vote on them and we have the decider. We always have a decision maker. You know, typically it's a CEO who's going to pick. All right, let's try these two. So one at a time, now we're going to go in and score every competitor on that scale and score where we think we can be on that scale and say, if we're honest with ourselves, do we think we can beat them?

15:41If we're realistically optimistic about where we can get to, do we think we can beat them? And boy, this really helps founders dial in, what is it about what we're offering that's going to be so special? And of course, it's just a theory. We don't know if we can deliver on it. We don't know if customers will find it compelling, but we've at least captured that hypothesis. So now we can test it. One of the things that you talk about is Slack in the book, I think. I think you have to illustrate sort of this notion. Let's talk about how Slack applied this thought process. By the time I worked with them, what was clear to me thinking back on that was, gosh, they had identified that Slack was going to be fun.

16:26It was fun for people to use, and it encouraged teamwork. An email is not fun. An email, because it's so siloed by every individual, is a teamwork inhibitor. And that differentiation was radical. But if you step back and you think I'm a person who's hearing of Slack for the first time, oh, you know, hey, Jake, here's this new messaging software to really get this to work with your team. You need to completely stop using email and learn this whole new framework. Use this, learn this new software, figure out how it works, convince your teammates to use it. It's a huge hill to climb. And the default way that we're going to look at everything is, well, you know, the old way, I already know it works for me and I don't have to do anything to change it.

17:16So you've got to have a compelling new lens to offer people if you're going to get them out of that inertia and fun and teamwork booster for Slack. That was this fantastic lens that got people motivated and energized. eyes of like, okay, I'm going to do it. I'm going to try it. And for them, I remember they said the key was we've got to get one person on the team super psyched about Slack. So they're going to go to their teammates and say, will you guys not use email for an entire day? Use Slack instead, and you're going to see the benefit. But they did it. And I think that lens was the key. So that lens was kind of the key with Slack.

17:57But then you also have beyond the two by two, you sort of have other ways of converting an insight into something that you can form a hypothesis around. How do we go from having an insight about where we're different to converting that into a founding hypothesis that we want to test? So over the course of the foundation sprint, and that's what Click is all about, is sort of this three-step process. The first step is the basics, which I talked about already, kind of who's your customer, what's the problem, who are the competition? The second part is differentiation. And then the third part is what's our strategy for building something that will deliver on that differentiation?

18:40That's the second half of it. You know, we actually spend the first day doing basics and differentiation. And the second day is all around, let's consider which approach we take before we invest more effort in it. And so in that process, we list off all of the possible approaches. Some teams, when they're starting off, they have thought of one approach and they're pretty locked in on it. They're like, this is the right approach for us. And in that situation, we say, great. But if you ran into a dead end with this one, if you had to pivot, what might your pivots be? But regardless of whether we're just sort of double checking the team's intuition about what the right approach is, or, you know, the CEO's intuition, founder's intuition, or whether we're really like trying to figure out from a state of confusion, we do an activity called magic lenses.

19:30We're trying to visually capture different perspectives on the question of what's the best approach. So I think about this as like, if you had advisors, if you had the perfect set of advisors, you'd have one advisor, who's a customer visionary, and they say, look, we've got to do best by the customer. So you make a two by two chart that represents what would their advice be? And then you plot your options on that chart. And then you say, okay, what would somebody who's totally pragmatic about building something in the cheapest, most efficient, most effective way, what would they say? You plot your options on that chart and so on.

20:06So we've got a set of a few standard views that we think are really important to consider. We also plot the different approaches is on that differentiation chart that we've already created. And then teams will create their own lenses. As they talk about it, they'll realize, gosh, you know, there's another criteria that's important to us to consider. What's cool about this activity, this magic lenses activity, is it gives you a moment to pause before you go into a tunnel of even experimenting on a particular approach. It's going to burn a lot of energy and time. So we want to pause and make sure we're well considered before we go into the tunnel.

20:43The other thing that's cool about it is you zoom out at the end and sometimes there's a pattern and it's just obvious. The same approach wins again and again, no matter which perspective you look at it through. And then you can feel a lot of confidence that, yeah, based on what we know now, this is the best thing for us to go forward on. And I think the more conviction you can give people in the beginnings of a big project, like starting a company, the better. No matter which way you go, this magic lenses activity allows the founders to take what I think is, to me, an overwhelming cognitive task of considering an argument from multiple perspectives, considering multiple options across multiple viewpoints.

21:25And it makes it tractable because as we were discussing earlier with that two by two thing, you're simplifying everything down and you're making it something you can look at instead of just think about. So we've talked about the two by two for differentiation and then the notion of turning insights into something compelling with the founding hypothesis. The next part that the book talks about in some depth is this idea of tiny loops and fast learning. How does that work and how does it flow from the things we've talked about so far? Well, the founding hypothesis sets the stage for this need to experiment.

22:03In the book, I tell the story of this company called Phaedra. Phaedra is founded by some folks from Google, an engineer from DeepMind who worked on the AlphaGo project, and a mechanical engineer and computer engineer from Google who had been designing data centers. And the two of them teamed up while at Google to run this project where they used deep reinforcement learning, which was the same method that AlphaGo used to develop an AI that they could run in the data centers to optimize the cooling. And they were actually able to save 40 % of the electricity usage in Google data centers. Remarkable.

22:44So these two left Google and with their third co-founder, the premise was we're going to take this idea of AI and these learning systems that can do a better job of running the controls. inside industrial plants. And instead of just doing this inside Google data centers, we can bring this to anybody's data center, to anybody's industrial plant and save electricity, save on the machine, wear and tear. Their target customer turns out to be the engineers who are in charge of making the plants run. The problem that they want to solve for those engineers is that actually monitoring all the controls all the time is tedious and something that they know is not maximally efficient and it's not the way they'd most like to be spending their time.

23:32So then they've got to figure out like, what's the, what's the best approach. And they believed it was to build a dashboard that would show how the AI was working that the engineers could refer to. And they believed that they were going to differentiate from the old way of doing things by being more efficient, but also being really trustworthy. The rubber hits the road when you hand a product to the customer. And so in this case, they interviewed engineers and they showed them a prototype and there's not enough detail. The engineers are like, no, I would not sign off on this. I don't trust it.

24:04I'm not seeing enough of the detail. And so they go back to the drawing board, you know, next week. Okay. We know a little bit more about the map. We're going to adjust that. We have some new ideas about what might build trust. We're going to prototype that. And the second time they went back, it started to click. You know, they had figured out the level of detail it required and the key questions that the engineers had. Now, for every product, there's a different landscape for what it is that it takes for the differentiation to come through, what you have to deliver to make it not just a marketing message, not just a two by two, but the nitty gritty of the product actually delivers on that promise.

24:40And sometimes what founders discover is, OK, after two or three takes of this running a design sprint, it clicks with customers and now we can predict this will have product market fit at some scale. But some of the time they find out we just can't get that differentiation to come through. We need a new lens. We need a new hypothesis. So you're doing the loops. How did that change in terms of what you're doing in Qlik from what you did in the sprint book, right? And maybe it's a good idea to even zoom out slightly to talk about how you've made Qlik an even tighter bound set of processes and ways of answering the questions than even the original sprint book, which was already pretty vast, right?

25:24It was a kind of a five-day version, and now you've even condensed it further. At the time that I wrote sprint, we were most interested in helping people go from, we've got an idea, we need a specific solution, and we want to test that solution. So we've got an idea about a problem to solve. We don't know what the solution is and we don't know if the solution will work. So with a sprint, you can do that in one week, come up with ideas for specific solutions, prototype them, test them. It's a play-by-play script for how you do that in five days. I think the challenge is that there's a moment before that and a moment after that that are really important.

26:02And the moment before that is, do you know the right problem? Have you really clearly identified the problem? And have you identified, have you really clearly identified your opinion and prediction about what's going to change in the world once you've delivered a solution, what makes for a good solution. So the foundation sprint with that founding hypothesis, it defines for you, a good solution delivers this differentiation and it delivers it so well that for this customer, it dislodges them from their previous solution. They are going to adopt yours. We're predicting this differentiation will do it.

26:37And now when I go into a design sprint, I know I need a solution that delivers that differentiation. The thing in click is saying, spend a couple days before you run a design sprint. And the other thing it's saying is, think of the design sprint as the first of many tiny loops that you should run. And you should run a tiny loop. And by a tiny loop, I just mean a loop that goes from your hypothesis to an experiment to potentially adjusting your hypothesis. Before you start to invest a lot in this thing, make sure you're seeing it click with customers. Make sure you're seeing on the one-to-one atomic level, there's product market fit.