How to get ahead of 99% of businesses (in 2024)

Summary

• Invest heavily in improving your product because a good product can significantly reduce the need for extensive sales and marketing efforts, making them more efficient and almost non-existent.
• Spend more time directly communicating with your customers to understand how you can improve your product, as it is common for founders to overestimate the amount of customer interaction they actually have.
• Continuously iterate your product to maintain its relevance and desirability in the market; successful companies never let their products become static.
• Establish rigorous systems for product iteration and customer interaction to make sales and marketing efforts easier and more effective, as demonstrated by the success of the two largest companies in our portfolio, each exceeding $100 million.
• Great CEOs like Bill Gates, Larry Ellison, Steve Jobs, and Mark Zuckerberg stay deeply involved in product development throughout their careers.
• A great product aligns closely with consumer desires and has a high product-market fit, characterized by high sales velocity, glowing reviews, low marketing costs, and rapid, frictionless transactions.
• Assess your product-market fit by evaluating customer feedback, the sales process's ease or difficulty, and whether customers are actively recommending your product.
• To improve your product, understand the unmet needs of your market and the size of the customer base that desires what is missing.
• Utilize Sean Ellis's method by asking customers how disappointed they would be if they could no longer use your product; aiming for more than 40% to say "very disappointed" indicates strong product-market fit.
• Aim for a product that solves significant unmet needs for many buyers, offers recurring, high-margin, and high-price transactions.
• Regularly speak with your customers and have your team document these interactions to unearth insights for product improvements.
• Encourage innovation from all levels within your organization, as those closest to the customer feedback are often well-placed to suggest impactful changes.
• Prioritize product enhancements based on customer feedback frequency and potential impact on sales and customer satisfaction.
• Revisit your product backlog every four weeks to align your priorities with any market changes.
• Adopt a mindset of experimentation with your product, testing and learning from each iteration to determine what resonates best with customers.
• Measure your success by the ease of marketing and sales, high customer satisfaction, and strong financial performance, which are all indicative of excellent product-market fit.
• Following this video, take concrete steps to improve your product by assigning ownership, setting a schedule for customer interactions, creating a product improvement backlog, and conducting regular market fit assessments.

Video

How To Take Action

I would suggest investing your energy in perfecting your product. Here's a simple plan to make your product so good people can't ignore it:

1. Talk to Customers: Spend more time talking to customers directly. Schedule a part of your week to have these conversations. They'll tell you what's great and what's not so you can make the product they really want.

2. Keep Improving: Don't let your product get old. Always look for ways to make it better. Set up a system to check on your product every few weeks and ask, "How can we make this even more awesome for our customers?"

3. Look for What's Missing: Understand what your customers are missing in the market. If you fill that gap with your product, they'll be more likely to buy from you.

4. Listen to Feedback: If your team talks to customers, make sure they write down what they hear. This feedback is like gold—it shows you how to make your product better.

5. Make a List: Write down all the improvements you could make. Order them by what will help most. Put the biggest game-changers at the top.

6. Test and Learn: Don't change everything at once. Pick one improvement, give it a try, and see what happens. This helps you understand what works best.

7. Check Sales and Marketing Ease: If it's easy to sell your product and doesn't need much marketing, that's a sign your product is really good.

Remember, a great product makes everything else easier. If people love what you're selling, they'll tell their friends, and you won't have to spend as much on marketing. So focus on your product, and let it do the hard work for you. It's the smartest move to grow your business and keep your customers happy.

Quotes by Leila Hormozi

"If you have built a sales and marketing machine and you are still not growing fast enough, it is probably because of your product, not your sales and marketing"

– Leila Hormozi

"You are not spending enough time talking to your customers"

– Leila Hormozi

"If you want to make something better, ask people what they want"

– Leila Hormozi

"Learning means that you have a change in behavior"

– Leila Hormozi

"If you focus on the product, everything becomes easy"

– Leila Hormozi

Full Transcript

in this video today I'm going to show you how to get ahead of 99% of businesses in 2024 and make shitloads of cash sucks and people don't want to buy it enough to keep you in business the first belief that I would like to impose upon you if you have built a sales and marketing machine and you are still not growing fast enough it is probably because of your product not your sales and your Marketing in fact the best and biggest companies spend very minimal time on sales and marketing because they know that a good product propels sales and marketing and it makes them almost non-existent and easy the second belief that I want to impose upon you is that you are not spending enough time talking to your customers most Founders think know I spend a pretty good amount of time talking to my customers but then if you go and ask them let's look at the last month on your calendar how much of that time was allocated to talking to customers and what you'll find is that most of it is very minimal and in fact they don't have any direct contact they only have contact through their team and the third belief that I want to impose upon you is that you are not iterating your product enough to be great product is not stagnant and if it remains stagnant just like marketing it will eventually go St and it will not be cool it will not be in demand it will not be desirable anymore and so the best companies that make the most money and have the most success are constantly iterating their product so you're probably thinking how do I know this I had this company it was called gym launch and it was my first company that I started people are constantly taking our exact marketing funnel our ads and everything because they thought that the secret to the growth that we had had was that we had insane sales and marketing and little did they know 99.9% of our time actually went to the product myself and my co-founder AKA my husband and Alex we had both spent over a decade in the fitness industry we saw a void in the market we said you know what I would really like as the person who would want this product is I would have really liked this thing does that exist anywhere I don't think it does that'd be really cool if we built that and then when we were trying to figure out how to make the product better we were constantly talking to our customers if I want to know what to do to improve my company I ask my team if I want to know what to do to improve my product it makes sense to ask my customers the funny thing is that I didn't think of that as a job or a chore to do I just really liked our customers and got along with them so I talked to them all the time without knowing we unconsciously were constantly iterating the product while it was happening it didn't feel like Oh we must focus on the product it felt like common sense if you want to make something better ask people what they want if you want to find out if their money is where their mouth is try and sell it to them and see if they'll buy it these things when I say them out loud I'm sure to you sound very much like common sense but most companies still don't do it so to put that theory to the test with two of our first portfolio companies we implemented a rigorous system for making sure that the product was constantly iterated they were constantly talking to customers and they were con L putting the focus there so that it could make sales marketing easy I don't think it's a coincidence that those are the two largest companies in our portfolio both over $100 million now in case you haven't been convinced maybe some of these names sound familiar Bill Gates sat in every product review at Microsoft until he retired Larry Ellison still runs product strategy at Oracle Steve Jobs famously weighed in on every product decision at Apple Mark Zuckerberg drives the product Direction at Facebook it turns out that almost all great product oriented CEOs stay involved in the product throughout their entire career so what I want to talk about now is what what constitutes a great product how do you know when you actually have a great product when you look at a purchase decision what it is is essentially a decision based on the match between the offer in the marketplace and the desire of the consumer so it's what do you offer and what do they want and do they overlap enough for a purchase to occur when purchases occur easily with little friction that is when you have product Market fit so if you look at your product and you look at your target market the people that you sell it to they have more reasons to buy than not to buy that could mean that they want it more that there are less options that it is more Innovative than a competitor it could mean that it is a better price it could mean that you come with different features said simply if what you're selling is something people want to buy they will buy it if people are not buying what you have then you don't have product Market fit the best thing to prove product Market fit is just sales philosophy how much are you selling and at what rate how easy is it to sell or how hard is it to sell if you can sell something fast and easy that means is product Market fit if it feels slow and hard you likely don't have product Market fit there's no calculation to determine that you have product Market fit you have product Market fit when feels easy so here's a question if you have sales and you have customers do you have product Market fit there is no yes no to product Market fit if people are buying it you have it to a degree is just to what degree do you have it and how can you sway it more in your favor which brings the next question how do I know if I have product Market fit to a high degree well here's what it looks like when you don't have product Market fit customers are not telling their friends about the product sales people are not happy about how many sales they're making of the product the cost of marketing is very high the reviews are not out of this world and the sales Cycles take too long if all of those things are occurring then it's likely that you have very low product Market fit someone who has very high product Market fit typically what it feels like is a very short sales cycle lots of great reviews tons of referral traffic people are constantly telling their friends a very happy sales team because their job is not very hard and tons of good word of mouth so word on the the street is always good so if you're listening to this and you're thinking gosh I think I have product Market fit but it's definitely not to the degree I want it to be like I've definitely got a slow sales cycle or my sales team is complaining or like the marketing cost is pretty high then I want you to ask yourself a series of questions first identify the people that you sell to who's your Market what is the desire of that market it has nothing to do with your product but what do the people want the second is what of their desires are already being met so they want this right list out all the things they want of all the things they want what things are already taken care of the third question is what desires are not met so if you remember when I talked about gym launch when we started it what did we identify accidentally with no knowledge at all it's just a hole in the market hey you know what doesn't exist that would be really cool is this thing let's we should build that and the last question to that is how big is the collection of buyers that want the thing that doesn't exist so what a great product does is it solves an important set of unmet needs for a large pool of buyers so half of you probably don't know this there used to be this thing called blackberry and blackberry came out around the same time as apple and blackberry and apple essentially competed for the market who won obviously Apple won now why did Apple win well they had a better user experience they had a better price point they had more of the features that people wanted in a phone at 700 a.m. just fought this thing and we are calling it iPhone and so some people people did buy the Blackberry but it made it much harder for Blackberry to succeed because Apple existed which was a better alternative and it was more of a desired match than Blackberry it had more of the things people wanted and less of the things they didn't want how can you create a product that has more of what people want and less of what they don't want so let's take an example I'm going to take one from the beauty industry which is hair extensions what used to be is that people had hair extensions that they just put in and they would have to take out at the end of the day and I happen to be one of those people that use those hair extensions and what I hated was at the end of the night every night I felt like a freaking naked mole rrap because I had to take out my hair in front of my husband and I was like H hold on I got to take out my extensions it was a pain in the ass it took a lot of time and I was annoyed because I was like man I want my hair to look good all of the time I don't want it to just look good some of the time and so what was the desire I had the desire I had was to have long thick Luscious Hair during most of the day I had long luscious hair now what desire was not being met was that I didn't have the hair all the time and most importantly people knew I had extensions and so the desire that I had to be unseen for people to not know the hair was fake was not being met insert permanent extensions the reason for those is because there was a huge pool of women who didn't want people to know they had fake hair so the question was how many women don't want people to know they had fake a buck ton of them didn't want people to know they had fake hair if you look at the market for fake hair there's a larger market for permanent extensions rather than clippin and that is how those were born is because there's an unmet need from the clippin extensions themselves now the next piece is let's put it through what we call the Ellis test Sean Ellis was the co-founder of the growth hacking movement and he coined this term the test is to ask the buyers how would you feel if you could no longer use this product then what you do from that test is you're going to measure the amount of people who say very disappointed and that makes it clear that this product is a must to them let's use the same example we just had of hair extensions if somebody said you can never have permanent hair extensions again I would be very disappointed I would be pissed I would be like are you kidding me what what you want is you want over 40% of people to say that they would be very disappointed and if over 40% of people say that they would be very disappointed if your product no longer existed and you have very high product Market set the question is have you built a product that would truly disappoint customers if they didn't have it or did you just copy somebody else's product which means like there's virtually no way that you'll have product Market fit because you just copied somebody else which means the demand is already met you're just another one of the people in the market that's why I like to walk people through this exercise because business is hard if your product sucks and a lot of people don't know their product sucks because they get enough money and enough sales to have a business you can get a business to 10 million a year 15 million a year and not have product Market fit but I can tell you what it feels like inside those businesses and it's hard day after day and I know that because I look at hundreds of businesses every week who don't have it and if you can take the energy that you're putting on hard mode to every function of your business and take all that energy back and put it just into the product you will have a much higher return on your when you are able to build a company around a product that doesn't have strong product Market fit what I say when I see these companies and what our team says is they have made it there through true root Force effort they have 10 out of 10 marketing they have 10 out of 10 sales they have 10 out of 10 HR customer success Finance meaning they are doing all the right things in every Department they're following the right playbooks they have watch our content to a tea and for some reason it feels hard there's still losing customers way more than they could ever expect they're still not getting customers at the cost they would expect and they're still losing employees on a consistent basis despite putting a ton of effort into getting the right Talent these are local issues that tie back to a global issue which is that your product sucks and people don't want to buy it enough to keep you in business and so you have to compensate by trying to make every other function 10 out of 10 because your product is a one out of 10 and the thing is that you can only compensate so long it's like living on hard mode and the easier thing to do which i' would say it's harder in the short term easier in the long term is to refocus on the product and rethink is this the best way for me to deliver value to a customer is this the most valuable thing I can deliver to a customer and then ask yourself am I serving the right customers if this is the most valuable thing you can deliver and they do not want to buy it then maybe you have the wrong customer if it's not the most valuable thing you can deliver then maybe you have the wrong product for some people that are watching this video the reason that your product sucks is that you do not understand your customer base for other people you understand your customer base but you have not put enough time into the product it's typically one or the other either way it creates this business that's just run on hard mode and I've seen it many times where I walk into a business I look at it and I'm like oh they don't have product Market fit but with a few configurations we can get them there and the cool thing is that if you are playing on hard mode and you've maxed out every other function in your business and then you change the product then you're set up for Success so if you're still sitting here and you're thinking that's all well and good but I'm still confused as to do I have a great product or not I I want to walk you through some metrics that you can apply to your business so you can analyze if you actually have a great product the first frame that I will give you to analyze if you have a good product or not is the model itself which is the purchasing model of your product there's four types of purchases the first one is a onetime purchase meaning the customer buys the product one time and never again the second would be multiple purchases which might mean the customer buys the product and then a year or two years or three years later buys a product again the third would be that you have repeat customers buying three four five six times but it is at an irregular interval they buy it but you cannot predict when they're going to buy it again and the last one would be recurring recurring is when the customer consistently buys your product over and over and over again at a predictable rate what you want is recurring so an example of this one would be Netflix people pay the subscription every month another one would be hair extensions I'm definitely not taking those out I buy them every 6 months all of us have recurring products in our life that we feel like it's almost unconscious that we're even paying for them that is the best kind of product to have is one that has recurring purchases everything else is less predictable so if a customer is buying your product on a regular basis or on a recurring basis that likely indicates that you have higher product Market fit whereas if a customer is buying your product one time and then never interacting with your company again you likely have low product Market fit and the other two would say that you're in the middle the second way to measure product Market fit is through price what this means is through gross margins so like for example acquisition. comom when we look at the gross margins of the business that tells me if they have high product Market fit or not because of this it is a measure of how much of your product cost you can pass on to your customer the more desire somebody has for a product the more they will pay therefore the more cost you can pass on meaning that if you have higher product Market fit then you will have better gross margins or said a different way how much of a premium can you charge for your product or service how high of a price point can you demand for how much of a premium do you have on your product for service what are your gross margins how much of the cost can you pass on to the customer because their willingness to pay is so high if you look at a premium leader in a space let's look at hot sauce who came in and is now a premium leader and I would bet you their gross margins are insane truff most hot sauce costs anywhere around like $4.99 to $5.99 maybe at the higher end like $9.99 truff came in and they charge anywhere from $15 to $35 for a bottle of hot sauce hot sauce which means the willingness to to pay of the customer is incredibly high and why because I think anyone that's tried truck would say they have a hot sauce like no other I can't live with that it I eat it on everything I happen to be one of those people I love Tru I buy it religiously I think it tastes better than all the other hot sauces therefore I am willing to pay more to have the product and then the last one is just price which is how much is your customer willing to pay for your product in comparison with your competitors if somebody is willing to pay more for your product in comparison to everybody else on the market then that means that you have high product Market fit when we start our company gym launch a company that you could say would be even in the same Stratosphere because I did feel it was very different compared to most companies they would charge probably anywhere around $500 a month for their product on the highend our product cost in the first month $4,000 and for the first year it was $38,000 so what is that tell me right it tells me that we had high product Market fit people were willing to pay more for our product or service than they were any other company because the reality is if somebody can get the same product or service from a different company that charges less they will do it but if you offer something that those companies do not offer and you meet the need that they have not met then they will pay more for it let's look at the eyelash industry so we had glue on eyelashes then what came in was eyelash extensions which is you go into a place they put eyelash extensions on your eyes they last for about 2 weeks and then you go back and you have to get them done again unmet need in the marketplace was that going into the eyelash place it would take about 2 hours where you just lie there with your eyes closed and you can't do the other piece to it was that they would fall off quite frequently and in order to fix them you would have to go into the studio again you couldn't fix it on your own introduce lashify FAL Scara what did they find in the market they found the unmet need which was that women wanted an option to have a more natural looking eyelash that didn't take 2 hours every 2 weeks and that they could fix themselves if it fell off that's why they're blowing up the interesting thing is that when I look at my purchases for a product like lash Fire Fall Scara I'm okay paying more because I like the fact that I get my time back and the fact that I have flexibility the fact that I can fix it on my own and it means I feel like I have more control over the outcome if you create a product that fulfills the unmet need of the customer even if there's competitors in the market they will pay more for yours the best products they are going to be recurring high margin and high price I want you to think where does your product fall within this most people end up falling somewhere in the middle in which case the question is what would it take to get it to the other end and I'm just going to show on SC for you a couple different Industries with examples to show you where you can figure out where you fall what we want to talk about now is just how to improve your product the first one sounds simple but most people are watching this video won't do it is talk to your customers so the way I did that when we were growing gym launch is that one time a month we had a group and we called it our Inner Circle and these were people who basically we gave them a very small discount on a recurring basis to meet with us once a month to share with us what was working best with the product what was not working and what they would want to see improve it'd be anywhere from from 2 to 3 hours one time a month and what we got was all the information we needed to know what was going on with our customers now the second way that we did this is we did have a lot of Customer Events and this is a huge upside to people that have you know software products they've got products that they don't get to see and talk with the customers frequently you could also use it as an upsell opportunity if you want to capitalize on that but I think one of the most beneficial things about us having a semiannual event is that we got to talk to people we got to hear their stories and we got to hear what they liked and what they didn't like now the third thing that you can do is you can ensure that your team is constantly talking to your customers and documenting the conversations most people have some sort of customer success or customer service team whatever it is whoever's talking with the customers what I used to do in giman once a month I would survey everybody who's in a customer facing role and I would ask them the questions what do you think if we added to the product would make it a product that people would never want to leave the second question I would ask is that what if we took away from the product do you think would cause everyone to leave those were the two questions I would ask what would make more people stay what would make more people go now you could also ask this directly to your customers but I also liked getting it from a team perspective and the thing is I think often times we think gosh there's no way that my team who has none of the same knowledge or information all this Insight on business that I do at the top of my Ivory Tower would know how to improve my product you know who invented the Frappuccino was a barista at Starbucks she invented it she made it for a customer out of thin air most of the Innovations actually at Starbucks come from the front line or Baristas the people talking to the customers all day they're the on that receive the feedback whoever's closest to the feedback has the most information or knowledge on the product and on the customers so it makes sense they would understand what are the unmet desires that if we could meet those desires we could have a better product we could improve our product and we could charge more so what that means for you is you as the CEO or founder of the business who has all this information all this tacit business knowledge imagine if you talk to more customers what kind of ideas would you come up with if the Barista can come up with the Frappuccino imagine what Howard Schultz could to come up with the next thing you want to do is that you want to take all the information from the survey you give to your team the information you collect with your customers and you want to write all of it down in a list and then what you want to do with that list is you want to prioritize it what things did you most frequently hear from your customers features that they mentioned you know products that they mentioned whatever it might be extra add-ons to your service whatever it was the highest frequency things that were mentioned from all the interactions those go at the top of the list because essentially what you want to do is create a product backlog this is something that's done in software people don't often do in other businesses at least other small businesses big businesses always have a product road map and that's essentially what this is if you're watching this and you're like ah this is a product yes it's a product road map this is like base level very Scrappy product road map which is just let's write down in a list in order of importance the things that we're going to do to the product now does that mean we do them all at once no it means that we're going to try to do the highest return things on the product sooner which one of these things on this list of 30 if done tomorrow would provide the company and the customer with the highest return return means it would improve product Market fit the most that's the first thing you want to start with and then everything should go within that order down you always want to be putting your effort into the constraint that's going to provide you with the highest return on your effort and then what you want to do with that list is I want you to revisit it every four weeks and I want you to say does this order and do these things still make sense given the knowledge I have now because here's the thing what can happen is that you have this list you're like I'm amazing I'm set for like a 2 years do you think things in the market are going to change in 2 years think about how many things have changed for your phone think about how many things have changed with the software you use think about how many things have changed with the clothing you buy in the last two years that is the same rate of change that your product will most likely experience if you want to have high product Market fit there is all of this list that you have and then there is what is happening in the marketplace and you have to be able to look at the two and say are these things still relevant and is this order still the best order and that's what you want to be looking at every 4 weeks to make sure that you are on TR TR and then the third step to fixing your product is to constantly iterate and commit to testing and learning does that mean that everything we try is something that sticks no so a lot of people get really intimidated they're like well I don't know about changing this because we're not changing it we're just going to try this we're going to try one thing at a time see the result and then decide if we're going to move forward or not do we need to change it do we need to improve it what do we need to do differently so I want you to approach your product with an experimental mindset because the best companies are always doing that they're just throwing stuff out there and saying like I think this is what they want let's try and see let's pitch to a few customers let's make an MVP and let's get it out there let's make a limited Supply and let's sell it there's a lot of ways that you can try to crank down on the list that you have and you can do it in a safe environment where you're not committing to a long-term like one to twoe product change there's two ways that people go wrong here one is that they think that this list is now the Bible that they must go by and that every change must occur and is permanent that's not the case this list will probably change things will get thrown out out things will change and lots of it will be temporary the second place that people go wrong is that they test too much at once but the thing is when you do all of it at once how do you know what causes the success so when you really dramatically increase product Market fit how do you know which thing it was that you did and not knowing what causes success is just as dangerous as knowing and doing nothing isolate the variables and we only test one thing at a time let's say that hypothetically you take this video and you actually act on it and you do something to your product what are the things that would have to happen to prove that you now have better product Market fit so let's take what we talked about in the beginning what it feels like when it's really hard and you don't have it and let's reverse engineer that if you have a really good product that's really compelling and then fills the need for an unmet desire you probably have an easy time marketing it so you probably actually don't need as skilled of a team to even Market it because the product basically markets itself because there's nothing else out there that does what it does that would also mean that sales would probably be fairly easy because if there's nothing else out there that does what it does means that it' probably be an easy time selling customers in fact it wouldn't really be a sale it would be more of like like I don't know uh taking orders so you probably wouldn't need as big of a sales team you probably wouldn't have to pay as much commission you probably wouldn't need some huge customer success or customer service team because I doubt that people would be inquiring saying they were complaining about the product much because there's nothing else like it why would they complain when there's no alternatives on the other side you're probably not worrying about how much money you're making because you're probably making money hand over fist and so you see how there's this trickle effect that if you have a fantastic product it goes into every other area of the business and that's how you make shitloads of money it's not from cranking the marketing and cranking the sales yes you can have high Revenue I know lots of companies that have their sales and marketing machines and they have like this big of a margin and complaints everywhere and they'll probably be shut down the next year or two from the FTC if you focus on the product everything becomes easy it starts to feel like you can't build the company fast enough because there's so much demand for what you have the constraint is no longer the product the constraint is how fast you can build the mous Trap behind it and that is is when you really know you've got product Market fit if you watch this video and you implement nothing you actually did not learn learning means that you have a change in Behavior so I want to give you four things you can do to change your behavior AKA get smarter after watching this video the first thing is determine who owns the product it is probably you if you have a very small company if you have a larger company I would say that typically somebody in customer success or sales tends to be apt with product it doesn't need to be someone's full-time job right now you need someone that can help own this process right this very light process at the moment the second is you want to set up with that person whether it's you or somebody else a regular Cadence for talking to customers what group of customers are you going to meet with on a regular basis set up the recurring meeting and then give them an incentive to do this with you third is create your backlog create your list in order of what you're going to do to make the product better and then make sure that you or the person who owns the product is checking it once a month to decide is this still relevant do I need to change anything has anything changed in the market and the last one is determine what you're going to start off with what's your first test what's the first thing that you're going to do after doing all those things and watching this video to make your product better so if you've watched this video and you're like I know what it is what I want you to do is I want you to let me know in the comments what are you going to do to make your product better what are you going to do to increase product Market fit and what are you going to do to blow this out of the water what one of these things can you commit to over the next 30 days