Lenny's Podcast: Product | Career | Growth
00:01:03 · Lenny Rachitsky, Sean Ellis
[00:01:03] S0: Today, my guest is Sean Ellis. Sean is one of the earliest and most influential thinkers and operators in the world of growth. He coined the term growth hacking, invented the ICE prioritization framework, was one of the earliest people to use freemium as a growth strategy, and maybe most famously developed the Sean Ellis test to help you understand if you have product market fit, which a large percentage of founders use today and profoundly impacted the way startups are built. Over the course of his career, Sean was head of growth at Dropbox and Eventbrite, helped companies like Microsoft and Nubank refine their growth strategy, was on the founding team of LogMeIn, which eventually sold for over $4,000,000,000, and he's the author of one of the popular growth books of all time called Hacking Growth. In our conversation, we dive deep into two topics: one, how to know if you've got product market fit and what to do if you don't, and two, how to figure out how to grow once you've found product market fit. If you're in the early stages of a new product wrangling with product market fit or trying to figure out how to jump start or further accelerate growth for your product, this episode is for you. If you enjoy this podcast, don't forget to subscribe and follow it in your favorite podcast app or YouTube. It's the best way to avoid missing future episodes, and it helps the podcast tremendously. With that, I bring you Sean Ellis. Sean, thank you so much for being here. Welcome to the podcast. [00:02:26] S1: Thanks, Lenny. I'm I'm super excited to be on with you.
00:02:26 · Sean Ellis, Lenny Rachitsky
[00:02:26] S1: Thanks, Lenny. I'm I'm super excited to be on with you. [00:02:29] S0: There's so much that I wanna talk about. There's so many directions we can go. But to keep it focused, I wanna spend time on two areas. I wanna talk about how to know if you have product market fit [00:02:39] S1: Mhmm. [00:02:39] S0: And what to do once you have product market fit in terms of figuring out how to grow. Yeah. And I know these things are very linked. I know you spend a lot of time on these things. How does this feel? [00:02:49] S1: Sounds perfect. [00:02:50] S0: Yeah. Let's do it. Okay. Okay. Amazing. Let's talk about, first of all, the Sean Ellis test slash something people call sometimes the product market fit test. Such a seemingly simple idea that has had such a profound impact on the startup world. I've never actually seen you talk about the history of this thing, how you came up with these questions, how you came up with 40%, the whole journey of this thing. So let's talk about this. But first of all, can you just tell people what is the Sean Ellis test for folks that aren't exactly familiar with this?
00:02:50 · Lenny Rachitsky, Sean Ellis
[00:02:50] S0: Yeah. Let's do it. Okay. Okay. Amazing. Let's talk about, first of all, the Sean Ellis test slash something people call sometimes the product market fit test. Such a seemingly simple idea that has had such a profound impact on the startup world. I've never actually seen you talk about the history of this thing, how you came up with these questions, how you came up with 40%, the whole journey of this thing. So let's talk about this. But first of all, can you just tell people what is the Sean Ellis test for folks that aren't exactly familiar with this? [00:03:19] S1: It's a simple question that helps you figure out, does anyone consider your product a must have or ideally who and how many people consider it? But ultimately, it's about trying to figure out, is your product a must have, which could be equated to having product market fit. And so the question is, how would you feel if you could no longer use this product? And I give them the choice, very disappointed, somewhat disappointed, or even not disappointed, or not applicable if already stopped using the product. And what I'm trying to find are those people who say I would be very disappointed if I could no longer use this product. And that's that's a really powerful vein to dig into when you when you discover that you actually have some people who would who would give a crap if your product disappeared.
00:04:08 · Lenny Rachitsky
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00:06:30 · Lenny Rachitsky, Sean Ellis
And the idea is that if you... 4040% or more of people say they'd be very disappointed if they can no longer use the product, you essentially have product market fit. [00:06:40] S1: I would say it's a leading indicator of product market fit. The the the lagging indicator is do they actually keep using it? So probably retention cohorts are are more more accurate. But the problem is, like your time at Airbnb, how long do you have to look at a retention cohort before you know that you've actually long term retained someone? And so with this question, can kind of find out day one. You don't actually even need a good analytics system in place to be able to see if product market fit exists. So, yeah, the 40% was not something I originally had in there. Also originally I was trying to have just a filter so that I was not treating all feedback from customers the same, but I was trying to find feedback from customers who actually really cared about the product. And then was over time as I, at the time I was working for a couple of YC backed companies. And so those companies were all pretty connected. And so I would share the question with a lot of other startups in Silicon Valley. So over time, I started to see there was a pattern that once you got a high enough percentage of users saying they'd be very disappointed, most of those very disappointed without the product, most of those products did pretty well. And then if if you felt too low, those products tended to suffer.
00:08:04 · Lenny Rachitsky, Sean Ellis
[00:08:04] S0: Okay, there's two things I want to definitely follow-up on here. The first is such an important point that you made at the beginning when I introduced this test is that you described it as a leading indicator of product market fit and actually retention. People actually using your product. The product actually being used by the market is the actual ultimate test. [00:08:21] S1: Right. [00:08:21] S0: So the idea here is this is a good way to get a sense of before you actually have data, are we headed in a good direction? Can you just speak more about that? Like how to... When to use this and when it's most useful?