RIP Product Market Fit, long live Business Model Fit!

Remember Product Market Fit?

The ‘holy grail’ chased by all wannabe unicorns?

Guess what?

It’s dead!

Visionary founders with hyper growth plans raked up b$llions from VCs and family offices around the world thanks to their ‘proven product market fit’.

Growth was the Key Performance Indicator (KPI) for success, at all costs.

1,000% yearly growth!

Tens of m$llions in revenue!

People loving the product/service!

Wow!!! OMG!!! Unicorns everywhere!!!

Take my money!

Where do I sign!!!

There was a small problem though: for the vast (and I mean really vast) majority of these hyper-growth companies the growth was alienated / subsidised / call it what you want but basically these visionaries were buying their growth at a loss.

Investors confused Product Market Fit (PMF) — the fact that people/customers/users/etc liked a product/service and used it/paid for it — with the fact that a business need a solid business model in order to survive.

Allow me to give a silly example…

I love wines (I have a family vineyard and lost lots of money in wine retail in the UK).

Imagine if I launched an online subscription service that for just $19,99 sent directly to your home a case of the best Bordeaux, Barolos, Champagnes every month.

I can guarantee that I would have PMF in a blink!

How long could I survive?

As long as I can find investors who can ‘subsidise’ my enormous losses every month ;-)

The ‘winter of discontent’ that descended upon startups post Covid/Inflation/Wars caused investors to — finally — reconsider the key traits sought in companies looking for funding.

Growth alone is not enough.

The single most important determinant to the chances of success of any business is what I like to call Business Model Fit (BMF).

While PMF is important — your customers clearly must like your offering somehow! — without BMF you are going NOWHERE.

In my mind BMF can be defined in a pretty straightforward way with 5 key questions:

1. Have you identified a ‘real problem’ that your solution solves?

2. Is there anyone who is going to be willing to pay for it?

3. How much are they going to pay? Is the price enough to cover the sale effort and leave you with at least 50% gross margin (less than 50% is tough as it gives little space for manoeuvring)

4. Do you have a ‘moat’? Enough differentiation from competition and defensibility?

5. How will you scale your revenues?

Question 3 is the most important. The one that somehow investors forgot to ask in the past years.

Things have now changed. Sense — or some of it at least — has returned to most investors.

If you want to raise money today I suggest you work on having a really good answer to question 3 as I suspect that with it you will struggle to get interest in your brilliant and disruptive idea.

Best of luck to all my fellow entrepreneurs out there battling the odds.

Artificial Intelligence is the Future of Healthcare

Artificial Intelligence is the Future of Healthcare

by Matteo Berlucchi, CEO, Your.MD
@matteoberlucchi

London, 29 February 2016

Artificial Intelligence (AI) is currently a hotly debated topic as there are fears that it is becoming so powerful that one day it will actually replace jobs currently done by human beings.

In a speech given at the Mobile World Congress this week in Barcelona, Mark Zuckerberg said that AI is not good enough to match human thought since “we are nowhere near understanding how intelligence works” but it will become crucial to a number of areas - specifically citing healthcare.

As AI continues to develop at breakneck speed, companies like Your.MD are within reach of being able to reproduce the primary care advice that in many cases a doctor would traditionally dispense.

For the record, I don’t think that AI can completely replace doctors, far from it! What I believe is that many of the interactions between doctors and patients, in particular the ones where there is only an exchange of information, could be replaced by an automated solution based on AI.

This way, doctors could be relieved from a lot of the pressure they are experiencing today and could have more time to focus on patients with more serious issues. In the UK alone it is estimated that around 60 million doctor consultations every year involve minor ailments which could be handled through self-care (NHS Cambridgeshire and Peterborough Clinical Commissioning).

The free service that Your.MD is developing (already available in beta from http://get.your.md) will assist doctors worldwide and help hundreds of millions of people at the same time.

Information Is The Cure!

When you are not well you typically require 3 things:

1. Find out what’s wrong with you
2. Get trustworthy information on your condition (often this is enough to get healthy)
3. Get actionable advice to get well again

Until now, the only source of this information is your doctor.

The AI Personal Health Assistant developed by Your.MD - the first of its kind - can offer the same 1,2 and 3 for all those who need it, when they need it.

1. Personalised - With Artificial Intelligence

In the majority of cases, and given sufficient initial information, our AI system is able to understand the unique problems of patients and their personal probability of suffering from a specific condition. Thus, our AI makes the information highly personalised.

2. Trustworthy - NHS Choices Advice

Your.MD has collaborated with the UK’s National Health Service (NHS) to provide best in class advice and information to its users. Uniquely, this information is both clinically assured and written by journalists to be more accessible to the general public.

3. Actionable - A Health Marketplace

Once you know what may be wrong with you, you need to find the best, most suitable and safest service providers to help you get the right prescription drugs, get a blood test, or perhaps see the best specialist. We are building a health marketplace (launching next month) which will enable people to find the best services and products in their local area.

The Real Value of Artificial Intelligence

I believe companies like Your.MD will have a huge impact in both emerging and developed economies.

Access to healthcare is a fundamental human right, yet in emerging markets half of the population has no direct access to a healthcare professional. Your.MD can fill this enormous void, putting relevant and trustworthy information in the hands of anyone with a mobile phone.

On the other hand, in the developed economies, Your.MD can help to fill the huge gap between the demand for health services and the supply. With only 4 doctors and nurses to every 1,000 people (New England Journal of Medicine, 2014), waiting times to see a healthcare professional can be as high as 18.5 days in major US cities (Washington Post).

Since it’s very slow and expensive to increase the supply (the number of doctors), Your.MD can dramatically reduce the demand by servicing hundreds of millions of people so they don’t have to visit a doctor in the first place.

Your.MD can change the economics of a country’s national health service at virtually no cost. This is transformational.

Help Us Help Everyone

You can help us make this dream a reality in a very simple way: download our app from http://get.your.md, use it and tell your friends to do the same.

Through machine learning, all anonymised data logs are collected and added to the system. This means that Your.MD will get smarter and more accurate at giving the best possible assistance. In a nutshell, the more you use it, the better Your.MD will become!

Join us on this amazing journey to bring health for all.

Why you should hire PIEs

Last week I was chatting with a friend who needs to build a new team and he asked me what were the key things I looked for in people I want to hire.

The best people I have had the privilege to work with over the past 20 years all shared 3 key traits:

1. Pragmatism
2. Empathy
3. Intellect

Pragmatism
Also known as being 'streetwise', pragmatism is by far the most important trait of the best people I worked with. People who are pragmatic can choose the best solution in most situations, they have a gift at finding the best compromise in order to maximise the outcome. Pragmatists do not waste time (it's not pragmatical!), do things by themselves if they know it's the best for the company instead of delegating to the wrong person, they can negotiate the best deals that keep the customers happy while maximising profitability and so on.

Empathy
Without empathy it's very hard to understand what people around you want. If you can't understand what your customers want, what your colleagues want, your boss, your suppliers or partners you will have a very hard time knowing what to do and clearly this will slow down the development of the company. Empathy is needed to build long lasting relationships and a company con only succeed through the connections with the ecosystem it operates in. No empathy, no ecosystem. Plus, empathy helps building stronger teams as people who care about others are better managers and in general create a better atmosphere and culture within the company.

Intellect
Not being thick helps. Intellect is required to solve problems in creative ways, it's useful if you are trying to be innovative, it helps decoding the market trends and signals around you, but on its own it is pretty useless. We have all met clever people who lack empathy and pragmatism and these generally are not very productive members of a team.

The order of importance of these traits is the one laid out here (PEI) but PIE it's easier to remember and more fun, hence the title of the post ;-)

What about the standard traits like experience, qualifications, seniority, etc? I think that the 3 traits above are good enough as anyone who is pragmatical, empathic and intelligent can do pretty much anything very well.

So, if you meet somebody who scores highly on all 3 I'd suggest you offer them a job straightaway. If you are not sure it means you are probably not very pragmatical so please introduce them to me and please do not apply for any vacancy I may be advertising in the future.

Does Piracy hurt digital content sales?

Or 'Does rain affect the amount of sunshine in a country?'

I am a bit surprised about this piece on piracy published today by Digital Book World.

Michael D. Smith, professor of information technology and marketing at Carnegie Mellon University, speaking at the Digital Book World Conference + Expo said that 'piracy hurts digital content sales'. This is like saying that 'every day that rains reduces the amount of yearly sunshine in a country'.  Even if only one copy of an ebook is pirated by someone who would have bought it under different circumstances it will clearly reduce the sales of ebooks (by one)!

While it's eminently clear that piracy hurts digital sales I would have framed the problem in a different way.

People who consume digital content fall broadly into 3 categories.

1. Hard-core pirates: these guys won't pay for anything. Ever. Full stop. They think content should be free, they will go the extra mile to strip any DRM off and they will happily help pirated content proliferate as they think it's a human right to have access to content for free. These guys are not lost customers as they would have never spent even 1 cent on digital content. Thus, I think it's wrong to class the content consumed by these guys as 'lost revenue'.
   
2. Circumstantial pirates: these are the people who pirate a movie/ebook/etc mostly because of 'external reasons'. These reasons are generally linked to either lack of availability or price. Classic examples are popular series going on air but not being available digitally, hardbacks not having an ebook counterpart at the time of publishing or the ebook version costing $25. This is the kind of piracy that hurts sales but it is mostly self-inflicted by content owners and publishers because of their own decisions around marketing, pricing, windowing, etc.
   
3. Honest folks: there are the guys who pay for their content and don't fall in the previous category because they don't even know how and where to go to get pirated content. These people are the ones that publishers and content owners should not worry about but guess what? These very customers are the ones plagued by DRM and other cumbersome, user-experience-destroying ideas which cost the industry money ($0.12 per ebook was the price for the DRM the last time I checked). DRM not only negatively affects the honest users but also helps incumbents like Amazon keeping customers in their silo using it as an excuse (for which they can happily blame the publishers). In the case of digital music, thankfully this is now history.

Any conversation about piracy should focus on pushing the content owners to be more flexible and open about the way they market their content. Removing DRM, making the content available in more formats and countries at the same time and sensible pricing will do more against piracy than anything else.