AI Can Help You Find Product-Market Fit Faster

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1:33There's no safe like SimpliSafe. From Entrepreneur Media, this is Problem Solvers, a show in which entrepreneurs do what entrepreneurs do best, solve unexpected problems in their business. We were completely wrong. And I'm just like, it's not selling. It was like, we have to start from scratch. Watch. I'm Jason Pfeiffer, the editor-in-chief of Entrepreneur Magazine.

1:58Here's a pretty crazy idea. It no longer takes that many people to make an incredible amount of value. A hundred person company can create a billion dollars in value. That's happening today. That's Jeff Busgang. He teaches at Harvard Business School and is the co-founder of Flybridge Capital, which is a seed stage investment fund that focuses on AI. And AI is the reason that Jeff thinks this. Next year, I bet we will see dozens of companies with a billion dollar of value with fewer than 10 employees. And how is that possible? Well, to start, Jeff says, consider how AI can change how you as a founder figure out product market fit.

2:43So if you think about the product market fit journey, it begins with coming up with a good idea, investigating that idea through a series of customer discovery exercises, and then building a prototype, testing how that prototype is received by your ideal customer profile, and then iterating from there. That entire workflow is now being dramatically automated and transformed through the power of AI. This is the reason that Jeff just wrote his book. It's called The Experimentation Machine, Finding Product Market Fit in the Age of AI. So the essence of the book is to take entrepreneurs step by step through each of those processes and show them how AI can act as a catalyst to speed up those processes and make those experiments more efficient and effective.

3:34And now I'll be honest, I am really interested in AI and I've been exploring it in my own ways, but I am skeptical when people talk about AI as transforming really complex processes and things that I think are just part of human exploration or part of some combination of human intuition and experimentation and trial and error and logic. And I think, how can you just AI your way through these things? How does AI really transform these fundamental parts of what it means to build a business? So I was really excited to hear someone as experienced and in this world as Jeff is, break this down. And as we got into it, I didn't plan to do this, but what you're going to hear is Jeff talked to me about how to use AI to truly accelerate product market fit.

4:31And then we apply it to specific product market fit problems that I have experienced in my own business, not Entrepreneur Magazine. That actually isn't my business. I'm just an employee of Entrepreneur Magazine, but I build businesses on the side. So we started to apply the very specific tactical things that Jeff is teaching to the challenges, the real life. I swear to you real because we're dealing with them right now challenges that I am experiencing as a co-founder of a business that is struggling with product market fit. What Jeff told me was really eye-opening and I'm excited for you to hear it on this episode of Problem Solvers.

5:10So that is what we're getting into right after the break. All right, we're back. So I'm talking with Jeff Busgang about how to use AI to accelerate your product market fit. And to start, I asked Jeff to just compare, like, what were the problems of finding product market fit in a pre-AI world? And then how does that change now? So if you think about the product market fit journey, it begins with coming up with a good idea, investigating that idea through a series of customer discovery exercises, and then building a prototype, testing how that prototype is received by your ideal customer profile, and then iterating from there.

5:52That entire workflow is now being dramatically automated and transformed through the power of AI. So the essence of the book is to take entrepreneurs step-by-step through each of those processes and show them how AI can act as a catalyst to speed up those processes and make those experiments more efficient and effective. Okay, let me tell you a company that I have co-founded that is trying to figure out its product market fit right now. And maybe we just use this as an example. The reason that I want to do it like this is because what you just said makes sense in theory, but I can imagine entrepreneurs who are struggling with product market fit thinking in practice, okay, I understand how to use ChatGPT for image and text generation, but I don't have the foggiest idea of what you mean that it can help me with my product market fit.

6:48So in very brief, Jeff, here's the situation. I co-founded a company called CPG Fast Track. And CPG Fast Track is a private network for early stage consumer packaged goods founders. What we do is when a member joins, they are put into a small group that meets twice a month of peers like them, but also with a leader who is an experienced CPG founder. And then we also have programming throughout the month that they have access to, for example, bringing in leaders from very established CPG businesses or sometimes investors like you to talk about how to approach investors and so on. And then there are a couple other benefits.

7:30We have various perks that we provide them and they are part of an organization like a YPO or a chief for CPG. It's all virtual, but yes, exactly. So here's our challenge. For the members who join, and it's$3.99 a month to be a part of this. For the members who have joined, it is an incredible experience. They have seen very tangible value, increased conversion rates. We've helped them navigate rebrands, just lots of value. But we cannot figure out how to actually drive sales for this thing because it's too complicated to explain. We can't exactly figure out what it is that drives a conversion.

8:10And it's driving us crazy because we have built this thing that we think is really great. And we have early results showing that it's great. And we cannot figure out sales, which means that we have not figured out our product market fit. How on earth does AI help us do this? You can generate more qualified leads at the top of the funnel through AI tools, that scrape the internet, scrape LinkedIn, and provide you with more leads and the email addresses and a little bit of the background of those individuals. In fact, a briefing on each of the companies and maybe the key challenges those companies are facing in this moment, so that it's not such a generic outreach, but it's specific to that company.

8:52And then you can create a pipeline where you personalize an outreach video from you, which you use as a way of generating a personalized connection with the individual and tell them, look, I understand with your brand at Tide, you're struggling with the following things. I've been reading about your latest release and I think this is a really cool thing. Let me tell you how my, what's it called? CPG Connect? Fast Track. CPG Fast Track. Let me tell you how CPG Fast Track could solve your particular problem and have a meaningful ROI for you as a professional and for your business. Then you can create an AI persona for your ideal customer profile for your ICP.

9:34And then you can try some of your email messaging and some of your scripts against the AI persona to help you synthesize more effective ways to convert them from top of funnel to mid funnel and then mid-funnel to bottom-of-funnel. You can ask that AI persona to generate the three objections that they're most concerned about. You can also record all the calls that you're having using a tool like Granola or Fireflies. Capture all your top-of-funnel sales interactions, your mid-funnel sales interactions, feed them into the GPT and ask the AI to critique your sales pitch, critique your dialogue, and come up with better ways to handle upfront scripts, conversion, and pushing people through the funnel.

10:25Wow. Those are really compelling applications. What are your suggestions for the tools to do the kinds of things that you just described? For example, let's start with scraping LinkedIn data and identifying more leads, which you are absolutely right, would give us more shots on goal instantly. Right now, for example, we're doing it largely manually by either searching around, finding often pockets of early stage consumer packaged goods founders, maybe through awards, go through who were the semifinalists for various CPG awards, or we're hosting these monthly free webinars and then trying to market them as a way to bring people in.

11:08very old school funnel building. But what you're describing is far more automated. So what is a tool to even do that with? Some of the most effective tools are the general purpose tools like ChatGPT Research and the operator AI agent. You can also use Manus, which is another AI agent that's recently come out. And then you can use some of the more focused sales development tools that exist like Clay and 11X. So those are a couple of the tools that a lot of our most advanced startup companies are using. And then for persona creation, you can use just the regular tools and you can create a custom GPT using all the standard tools like ChatGPT and just create a custom GPT.

11:53You could use Notebook LM and feed a lot of your information to notebook.lm notebook.lm allows you to create a corpus of content that you train the model on and only answers based on the corpus that you create you can use some of the recording tools i mentioned like granola and fireflies to capture all of your sales conversations feed those transcripts into notebook.lm and then query how to improve as i noted and then finally the tools that people are using for video outreach and personalizing thousands of video outreach include HeyGen and Eleven Labs. So all those tools are available for relatively inexpensive pricing.

12:38And one of the things I think entrepreneurs need to get better at, frankly, is experimenting with tools. We are in a world where it's such a dynamic environment. These tools are changing, new tools are coming up, old tools are improving dramatically and taking nonlinear leaps forward and capabilities. And entrepreneurs need to create not only for themselves, but for their entire organization, a culture of experimentation, where they're experimenting with different tools and trying different tools in their workflows. Yeah, I agree with that. But I'll tell you the challenge as a guy who doesn't have a lot of time is that there's a level of onboarding to these tools.

13:20And it takes a long time to learn. And it also, I'm going to use the word threatens because that's sometimes how it feels. Sometimes it threatens a change in process. And that starts to feel like a crazy cascade where if I'm going to change the way that I do this, then it's going to change this other thing that I do. And then it's going to change this other thing that I do. And that starts to feel extremely overwhelming. What's your advice for how to actually be experimenting with these tools? I think entrepreneurs inherently have a growth mindset. Otherwise, they wouldn't try to start a company from scratch.

13:57Yeah. They need to apply that growth mindset to their tools and experimentation efforts. It's a little bit of a attitude shift that entrepreneurs need to have, which is to say, yes, there are switching costs. Yes, there's ramp time. Yes, there are barriers. But have fun with it. Play with the tools. Take the attitude that you're on a learning journey. Run some experiments on the side. And when those experiments work out, you make the mainstream. If you look at the history of the best internet companies, Booking.com, eBay, Google, they run thousands of experiments today. They launch new features in New Zealand where no one can see them in the world except for New Zealanders.

14:43And when they get the data back, they tweak it and then they launch it globally. And entrepreneurs can do the same thing. You can launch these experiments in small pockets, try them in a new way, and then learn from it and evolve and expand from there. I was just recently having a conversation with one of the founders of Poppy. Do you know what it is? a drink no yeah this is the problem with calling your company poppy is that there are too many poppies out there no so this is get poppy.ai it is poppy with a y imagine a whiteboard and you can pull in anything that you want from the whiteboard so that's a youtube video or a document and then you visually connect all of those things that you pulled into the whiteboard to a chat and then you You can have a conversation that's informed by whatever you've pulled in.

15:34So it's a visual way of doing some of the things that you've described with others, like Notebook LM. But I really like the format. Anyway, the reason I'm telling you it is because this guy who I was talking to told me recently they implemented this new step, which was that when a customer signs up for Poppy and pays that they cannot actually use the product until they book and complete an onboarding call. And the reason for that was because they were finding that people would sign up for this thing because they thought it would be useful. And then they would get instantly overwhelmed because they don't really understand how to use it.

16:12And as a result, they would cancel. And so by creating this piece of friction, even though it annoyed some people, it actually dropped their cancellation rate in half. And I think that speaks to the challenge that we have here, which is that people know these AI tools are out there. They're starting to sign up to a ton of them, hoping to see some kind of instant transformation, but not calculating in the work of onboarding themselves. And so in this case, Poppy has created a smart way to ensure that people get to know the product. But if that doesn't exist, then you almost need to create some system for yourself to make sure that you get to know the product.

16:51Is that right? I think that's a really great point. And it speaks to something that we talk a lot about at Flybridge. The best products are going to be really well designed in terms of the human AI interface. These AI tools are so powerful, and some of them are so complex. The challenge is hiding that complexity and simplifying the onboarding and simplifying the discovery of those capabilities. And so the best entrepreneurs who are starting companies in the field of AI are going to be world-class at that human AI interface. Yeah. Let's go back to some of the other roadmap to product market fit that you had laid out for me.

17:30Another thing that really jumped out to me was taking in things that are said on a call with, I guess you were suggesting you're recording your sales calls and then having the AI identify patterns. Talk to me about what entrepreneurs in a pre-AI world might be missing in those kinds of calls that can then get flagged with AI. There are two answers to that question that I would share. One is entrepreneurs are so busy and consumed with their own articulation of what they're trying to build and presenting that to prospective customers, that sometimes they forget to listen. And having the AI as a listening tool and giving them the ability to look back later in a synthesized form and listen carefully as to what the AI is telling them, that can be extremely powerful.

18:27And then secondly, an entrepreneur individually may have a conversation with a customer and ascertain some really nuanced insights with regard to the customer requirements, but their team members didn't get the benefit of those insights and having the ability for team members to also hear those insights or hear and see summaries of those insights, hear the voice of the customer directly. That's really powerful for every engineer, every co-founder, every salesperson, every product manager. You know what that also makes me think of, and I hadn't thought of it until you just said that, but so CPG FastTrack is, and I wouldn't recommend this, I'm sure you wouldn't recommend this, but we have five co-founders.

19:09And that means that you've got five people doing sales calls. And although at the very beginning, we were coordinating pretty well on the sales calls, and we would have a sales call, and then I would Slack, this is what was discussed, and this is what this person said, that just became too much. And it was impossible. And now I am sure that you have five very different paths of sales calls. And there is absolutely nothing that is identifying the patterns of success among that very distributed kind of communication. And this is a really good way to tie all that together. First of all, I have a case in my HBS class on five co-founders, and I make a joke that this is exactly the wrong way to start a company.

19:53In that case, four of them were PhDs, and one of them was a lawyer. It's the worst possible configuration of five co-founders you could imagine. That company, which is called Lightrix, they're the makers of Facetune. They later became a unicorn and a multi-billion dollar valued company. So it can work out. That gives us hope. Yeah, that's funny. Some hope. Yeah. But what I would say to your point, and this is just a great point, Jason, is that everybody in the company is running around doing their thing. It's impossible to keep everyone updated. You're gathering a ton of information in those interactions.

20:29And so having operational intelligence, a dashboard for all the conversations that are happening, and then perhaps even triggering Slack messages to synthesize key customer objections, key customer value propositions, prioritized features. That could be incredibly powerful. Having the most successful sales call of the week flagged by the AI and then sharing those best practices across the team could also be a very powerful technique. I love that idea. That's really powerful. And the other thing that I have been thinking about with these sales calls, which I'm now realizing AI could really help with is, okay, I think this comes out of the jobs to be done framework.

21:13You probably know this better than me, but - I talk about it in the book. We teach it at HBS. I teach it in my class. Clay Christensen, my now deceased colleague at HBS, was the inventor of jobs to be done. There's a little chart that a friend showed me once and she told me it came from jobs to be done. which is the way that she delivered it to me was when context, I want solutions so that benefit as a way of understanding the perspective of your consumer. And so just for those who don't know, in other words, the way to connect with a consumer is to be able to fill that out almost Mad Libs style.

21:44When there's a problem that I face, I want some solution to that problem so that I can achieve whatever goal I have in my mind. And the thing that was revelatory for me, the first time that was shown to me was that we mostly as entrepreneurs stop at solution. We end up talking all about solutions. We built the solutions. We're obsessed with the solution. We forget that nobody cares about a solution. What they actually want is the benefit that they get from that solution. So anyway, you know all this, but for those who don't. Point is that I see this happening even in my own calls where I feel very confident about the solution that we have to offer.

22:21I feel less confident that I understand the benefit, the specific benefit that my target consumer is seeking with the language that they use to describe that benefit. And I think I probably am so focused on those calls in describing the solution that I am not walking away with a really coherent idea of the benefit. And I'd say that is a thing that at SPG Fast Track we are largely lacking is a really good articulation of the benefit from the consumer's perspective. We think we know, but I don't think that we really do know. I'll give you a perspective on this. I love that you have a company that we're workshopping here live.

22:58Yeah. By the way, I'm not charging you at all for this consulting session. I appreciate that because we might not be able to afford whatever the actual rate is. But one of the things I like to talk about is the AIs you have in your pocket right now are the smartest entities in the world. They are PhD plus level insight when it comes to physics, biology, chemistry, mathematics, and everybody understands that. They're also PhD level insight into business strategy. And so having a co-founder who is the world's expert on going from zero to one and finding product market fit and scaling from one to 10 and making your sales motion repeatable and articulating your value proposition more effectively.

23:42why aren't you taking advantage of having that co-founder who's basically free and available to you? And so using it as your best business strategist, one of my colleagues at HBS did a study in Kenya where he looked at farmers on their mobile phones using ChatGPT just to see if the bottom of the pyramid could benefit from using these AI tools. And he found that those farmers improve their productivity and their profitability 30 % just by using these AI tools. So you as a founder, if you're not using these tools, you're crazy. I say this at the beginning of the book. AI is not going to replace founders anytime soon, but founders who use AI effectively are absolutely going to replace founders who don't.

24:26We've been largely on my company, which is trying to figure all this out, but I think it would be helpful for you to give a case study of some kind of a company that did start to implement this in their, let's just stick vaguely however you wanna zoom in on it to just figuring out the product market fit to reaching more customers more effectively and what they did and how it helped them. Yeah, I'd like to talk about, for that example, and I feature them in the book, my portfolio company, Topline Pro. Topline Pro is a platform that helps landscapers, service providers, lawn care folks, painters, electricians, build websites and handle customer relationships.

25:13And it's effectively a marketing platform. Think of it as Shopify or HubSpot for service pros. What's amazing to me is the company has instrumented its use of AI throughout all of its processes, from sales and marketing, where they use AI tools to qualify leads and do outbound emails to even more sophisticated personalization. They do customized videos for every pro that they reach out to. And they record that video by scraping the pro's Facebook page and Instagram page, creating a demo for the pro of the website they would build, and then doing an outbound video demo for the pro all using AI.

25:52And then they have a customer service AI tool they call Titan. What Titan does is it communicates with the pros to allow the pros to edit their websites. So if a pro is on a roof putting on shingles, they can text a picture of the roof to the chat bot and the chat bot puts it on their website and describes the job they're working on. So it's an incredible use of these AI tools for really a business that's quite pedestrian in many ways. How much human oversight does this company have of its AI output? So for example, if they're using AI to create these demos that they're then sending to prospective clients, is a human reviewing that?

26:37Is a human directing that? How much human activity is involved here? Their customer service inquiries are handled 70 % by the chatbot AI. It's incredible to see. That's crazy. How do they feel confident that things are not going to go haywire? They do have human oversight and they have humans reviewing things throughout the entire process and pipeline, but they're able to execute and grow their business so much more efficiently. I talk about this in the book, a hundred person company can create a billion dollars in value. That's happening today. I recently published a research report called the Rocket Ship List, which has a dozen companies that are over a billion dollars in value with fewer than 100 employees.

27:23Next year, I bet we will see dozens of companies with a billion dollar of value with fewer than 10 employees. And perhaps in 2027, 2028, we're gonna see solo entrepreneurs create billion dollar companies. Wow. Jeff, this has been so interesting and helpful. And don't send me the bill for whatever it would cost to normally talk to you about this stuff. So remind us about the book and how people can follow your work. The book is called The Experimentation Machine, Finding Product Market Fit in the Age of AI. And you can keep track of my work on LinkedIn and also at jeffbusgang.com. Fantastic. Jeff, this has been so great.

28:02Thanks so much. And that's our episode. But hey, let's keep the conversation going. I write a newsletter called One Thing Better, where each week I offer one way to be successful and satisfied and build a career or company you love. You can find it at one thing better dot email. That's a web address. Just plug it into a browser. One thing better dot email. And if you respond to any of those emails, I'll get it. And I promise to reply back. Problem Solvers is a production of Entrepreneur Media, and it comes out every Monday morning. So make sure you're subscribed so you don't miss an episode. Thanks to the team at Entrepreneur and particularly Deepa Shah for production.