Introduction
Naren: Today, we are excited to bring you our product Market Fit Edition, where we help you unveil strategies to refine your product market fit and propel your business to new heights. Today, for our TBR product Market Fit edition, I’m excited to interview Raphael Bernier. Our topic today is Product Market Fit and Early Sale Secrets.
Naren: Hello, everyone. Let me introduce you to Raphael, who I’m going to call Raph because that’s easier to pronounce, and he told me to do so. Raph is an amazing success story. He’s only 25, but he’s a serial entrepreneur doing this all over again. And also, he’s somebody who feels he was forced to become an entrepreneur. So maybe Raph, welcome to the show. You can start by introducing yourself and talking about the amazing story you shared with me.
Raphael: Well, first of all, thank you so much for having me on the show today.
Raphael’s Early Entrepreneurship Journey
Raphael: And absolutely, it will be my pleasure. It’s an unorthodox beginning for me. I always say we have to kind of go way back to my birth. Actually, I was diagnosed with an immune system deficiency. My system doesn’t really protect itself against bacteria. So I grew up being really sick, and unfortunately, at 17, I caught a bacteria, and I couldn’t walk for two years. And that’s what pushed me into entrepreneurship.
I’d say by mistake, I was forced to stay home so that I couldn’t go to school. That was before all the remote working and remote study. So, you kind of had to be in class. And so I couldn’t work, I couldn’t go to school anymore. I was kind of left out of the options of learning by myself online or taking online classes from different mentor coaches and entrepreneurs.
I’ll always remember the moment when I went to a library near my house, wheeling my wheelchair inside to grab my first-ever business book, “The Seven Habits of Highly Effective People.” At the time, the concepts were new to me, and I didn’t grasp everything, but some things just clicked. It taught me about the importance of giving before receiving, discipline, and being proactive, which resonated with me.
A couple of years later, after recovering, I decided to go back to school for a program in Small Business Entrepreneurship and Management. That’s where I met my first business partner, who had a unique idea. He worked part-time delivering garbage bins and noticed that people often complained about the awful smell of their bins. When he suggested we start a business cleaning compost and garbage bins, I initially dismissed it as unexciting and not aligned with my vision of business. However, it turned out to be a valuable lesson in entrepreneurship. It’s about finding a real need in the market and finding a product or a service that matches that need. And that’s really what entrepreneurship is: just solving problems.
We started by going door to door, offering bin cleaning services, and within three years, we had over 30 full-time employees cleaning and distributing bins across Quebec. We became one of the largest contractors for cities, delivering compost bins. I knew this business had a limited lifespan because once everyone had their bin, the market would saturate. So, we capitalized on the opportunity, developed technology, and even designed a specialized bin-cleaning truck.
Unfortunately, due to COVID-19, we had to close half of the company in 2020 and sell our IP and technology to a competitor.
Looking back, it all began when I found that business book during my time at home recovering from my illness.
Finding Opportunity and Product Market Fit
Naren: Thank you so much.
Naren: I also read “The Seven Habits of Highly Effective People” when I was 18, and it had a profound impact on me. It’s unfortunate that in today’s culture, books like that, which focus on character and doing the right thing, don’t get as much appreciation. I’ve noticed that young people today often prioritize different things on social media platforms like Twitter, LinkedIn, Facebook, and Instagram.
I completely agree with you that business is often overcomplicated when, in reality, it’s about meeting needs. Sometimes, the less glamorous needs have less competition, like a blue ocean where you can dive in and make a difference. As a serial entrepreneur involved in various projects, I’ve found this to be true. It’s about identifying a need, finding a unique way to address it, and continuously learning until you succeed. I commend you for being a 25-year-old and doing this, and I guess you make Quebec proud. I’m sure Quebec is very proud of you.
Raphael: I’m not sure about that one, but I’m definitely on my way to building bigger things.
Naren: That’s awesome. Today, we’re going to focus on a crucial aspect known as “Product-Market Fit.” In simple terms, it’s about finding the right match between your product or service and the market you’re targeting. For startups and early-stage companies, this is a pivotal secret to success in sales.
You mentioned the importance of what you offer – essentially, what you provide to your clients. How you package and communicate this offer is incredibly significant. If you don’t nail this aspect, you might find yourself spinning your wheels, struggling to make progress, and facing challenges in growing your company. It’s like trying to push a massive rock uphill, requiring tremendous effort without experiencing the breakthrough growth that tech companies often achieve.
Naren: So, how do you approach crafting the right offer? Perhaps you can share your personal experiences and insights as we continue our discussion.
Raphael: Absolutely, you’ve touched on something fundamental. In today’s world, countless problems are waiting to be solved. You can literally walk down the street, chat with people about their issues, and brainstorm ideas for businesses. The truth is, there’s an abundance of problems in 2023 that need solutions. So, when people tell me they don’t have a business idea, I often think they just haven’t put in the effort. Everyone encounters problems; the key is to shift your perspective and see these problems as opportunities rather than obstacles.
Raphael: It’s about putting on your entrepreneurial lens and looking at problems as potential business ideas. It’s about taking action and persistently moving forward. Entrepreneurs have a knack for seeing problems and envisioning them as future business opportunities. The real focus isn’t solely on finding opportunities but on developing the character and qualities that enable you to spot them in the market.
Raphael: You’ve also highlighted an unfortunate trend where many people are averse to building character and acquiring essential skills. They shy away from hard work and often neglect the boring tasks. Yet, it’s these experiences and failures that ultimately sharpen your ability to identify valuable opportunities, execute effectively, and match the right product with the right market.
So, it’s not just about finding the perfect product or service; it’s about becoming the kind of person who recognizes problems and knows how to solve them. Exposure to relevant information and podcasts and adopting the entrepreneurial mindset is an excellent starting point. Beyond that, engage with people and talk to potential customers, partners, and clients. Build a network around your idea and seek feedback.
Raphael: One common mistake is rushing to charge high prices for products or services without client testimonials, feedback, or reviews. If you want to build something sustainable and user-centric, you need to be able to build a character and the traits to see those opportunities. You need to be able to connect these with future customers, gather feedback, and validate if there’s a genuine need for your offering before developing your offer and pricing strategy.
Pricing and Product Packaging
Naren: Let’s dive deeper into this topic of product-market fit because it’s crucial. Some people don’t give it the attention it deserves, and I’m personally eager to learn more about it. I’ve seen cases where individuals spend months refining their product, and when they finally get it right, it takes off like a rocket. They find the perfect product-market fit, the ideal marketing strategy, and the most effective way to communicate their offering.
Naren: So, my main question is, is there a process to achieve this, or is it more of an art? Could you maybe share a story or example from your current or past businesses that illustrate how you discovered the right offer? It would be helpful if you could provide some context, like who your customers were, what problem you were trying to solve, and how you even stumbled upon this problem in the first place. Then, let’s explore how you tested and validated your approach. Finally, I’d like to understand how you packaged your product—what key components made it compelling and what aspects might not have worked as well. Essentially, I want to unravel the process of getting the right product packaged in the right way.
Raphael: That’s a great question, and I completely agree. The ultimate validation of your idea often comes down to whether people are willing to pay for it. It’s that commitment to invest their hard-earned money that can be a significant indicator of whether your concept is on the right track. You can brainstorm your idea and discuss it with experts or potential clients, but until someone puts down a dollar for it, you may need to re-evaluate.
Raphael: Let me share a concrete example from my current company. I had experience working with startup incubators, especially in the realm of hardware and IT, helping them secure funding and navigating the often-dreaded grant writing process. I’ve done this as a consultant and even worked as a full-time employee for some of these incubators, especially after selling my first business.
Raphael: When the COVID-19 pandemic hit, and physical meetings became challenging, I recognized a need to digitalize our services. So, I started reaching out to our clients and asked a crucial question: “What do you need right now, given the circumstances, that you used to get by physically visiting our office or interacting with other startups?” Grant writing and funding support emerged as a significant demand.
Raphael: We took action and started building our service around this newfound need. Eventually, I parted ways with that incubator, and the following year, I launched Panna Ventures with confidence in my expertise and ability to deliver results. Confidence is vital; you should never offer something you can’t reasonably deliver. While it may not always be perfect, you should be capable of delivering some tangible value. Initially, we kept it simple and affordable, charging a nominal fee of around $3,000 for an entire year. We maintained flexibility with payments. We understood that we were charging a fraction of the value we could provide but believed it was proportionate to the results we could deliver with our early team.
Now, our approach has evolved, and we offer even more sophisticated services, yielding better outcomes for our clients. This evolution should always be proportionate to the market and the value you bring. So, when we talk about achieving market fit, it’s not just about having the right offer; it’s also about ensuring that the pricing and value are aligned with what your target audience expects and needs
Raphael: Absolutely, you’ve hit the nail on the head. It’s not just about creating an offer; it’s about delivering the results your customers expect, meeting their perceived value. Anyone can craft an offer, but the real challenge is ensuring your operations can fulfill it. This balance between understanding customer needs, crafting a compelling offer, and having the operational capacity to deliver is crucial.
I’ll be frank: it’s one thing to create an enticing offer, but the real test is whether you can deliver on it effectively. Operations matter, and they can be a significant challenge. It’s about aligning the perceived value with the risks your customers take. If you can go above and beyond in delivering perceived value, that’s how you’ll earn great testimonials and referrals.
In our case, we initially charged the bare minimum, just enough to cover our costs. Our goal was to gain traction, collect testimonials, and gather valuable feedback. I personally engaged with our clients, having open conversations about what they liked, what they didn’t like, and what features or improvements they’d like to see.
Entrepreneurs often underestimate the power of client feedback and brainstorming sessions.
The key lesson is simple: don’t create something people don’t want. The best way to avoid that is by talking to your clients.
Our approach involved starting small, covering costs, getting into the game, acquiring clients, and learning through trial and error. With a user base and valuable feedback in hand, we progressed to the next step: refining and developing our real offer. This iterative process is essential for finding the right product-market fit.
Attracting the Right Customers
Naren: Absolutely, you’re spot on. There are many elements to consider when crafting a product offering, and it goes beyond just having a flashy website. For instance, in the marketing business, having a beautiful website doesn’t guarantee that your phone will start ringing with clients the next day. It’s a common challenge.
Naren: Let me illustrate with an example from our experience. If we told potential clients to pay us $10,000 to build a website, not many would sign up immediately. So, we took a different approach. We asked for a monthly fee and committed to providing two months of work for free upfront. Why did we do this? We had a strong hunch that if we could deliver results, we could retain these clients for the long term, ensuring a high retention rate, possibly around 95%. We made a calculated decision to absorb the initial costs because we believed that in the long run, everyone would be happy clients, and it would be a win-win situation.
This example highlights that a product offering encompasses various elements like pricing, payment structures (monthly fees, upfront costs), the scope of work, and even how much involvement clients have in the process. Different markets and clients have unique preferences and needs. These nuances are essential to consider when fine-tuning your product offering.
Naren: Tell us about some of those nuances and how you kind of start tweaking them using your business as an example.
Raphael: You’ve made a great point, and pricing is indeed a critical aspect of our offers. In our industry, especially in grant writing, the common model is to charge based on a success fee. In other words, you only get paid when you win a grant. While this model works for many in the industry, I realized it might not be the most scalable approach, especially for someone like me who values speed and efficiency.
Raphael: I needed upfront funds to move things along within the company quickly. So, to charge our clients $10,000, $15,000, or even $20,000 upfront to onboard them, we had to absorb some of the costs, just as you mentioned. We needed to generate success stories and results that would make it a no-brainer for the next wave of clients to come on board and pay the full price for our services.
Raphael: Our strategy was very similar to what you’ve described, and it required several adjustments along the way. We began with an initial service fee of $3,000 in the early days, but we have since increased it to a range between $10,000 and $20,000. This change allowed us to grow our business significantly, almost 50 times over the past year. Importantly, it helped us attract the right customers who could afford our services and were more likely to achieve successful outcomes.
Raphael: Additionally, by analyzing our data, we identified that scale-up companies were the ones achieving the best results with our system. So, we decided to raise our prices strategically to attract more of these customers. Pricing is just one of the factors we played with to optimize our product offering, and it proved to be a successful strategy.
Naren: Absolutely, and I want to emphasize the point you made. Many SaaS companies offer their products for free as a trial, but often, these free users never convert into meaningful paying clients. They can consume a lot of your resources, including time and money, and this business model becomes unsustainable because you still have costs to cover, such as your sales, development, and marketing teams. While there are a few exceptions of businesses succeeding with a freemium model, they are different.
Naren: What’s fascinating about your strategy is how you adjusted your pricing from $5,000 to $10,000 to $20,000. This change attracted a different type of clientele—scale-up companies rather than individuals in a garage with just an idea. These early-stage entrepreneurs often lack a track record and experience, making it less likely that their grant applications will be approved. When grant reviewers see a million-dollar company with achievements seeking support to grow further, it’s a much more attractive proposition than providing free money to someone without a proven track record.
Naren: So, your ability to filter and attract specific types of customers or develop a product that naturally turns away those who may not be the right fit is a crucial aspect of this conversation. Keep going with your insights.
Balancing Startup Assistance and Focusing on Core Business
Raphael: Absolutely, and I want to highlight a crucial point you’ve made. As a startup, you have limited resources, so attracting thousands of customers when you can only effectively serve a hundred can lead to significant trouble. Not only can it strain your resources, but it can also harm your reputation. Therefore, it’s essential to focus on acquiring the best customers who will provide referrals, success stories, and significant revenue.
Many entrepreneurs make the mistake of selling to anyone willing to buy their product, but this approach isn’t always in your best interest. We made the same mistake initially by onboarding very early-stage startups with shorter agreement terms. This put immense pressure on us and didn’t lead to success. We realized that these clients weren’t the right fit for our service, and keeping them would harm our reputation in the long term.
Raphael: In a bold move, we decided to refund these clients, shake hands, and even recommend some to our competitors if we felt they would be better served elsewhere. This allowed us to refocus our efforts on scale-up companies, which were a better fit for our services. This reset was a blessing because it enabled us to attract the clients we truly wanted to work with.
Raphael: Additionally, one significant enhancement to our offer was introducing a guarantee, which is rare in an industry where outcomes aren’t guaranteed. Offering this guarantee made us highly trustworthy because we were willing to take on the risk in an uncontrollable environment. It created a no-risk proposition for our customers. With the guarantee in place, we raised our prices, and scale-up companies, who didn’t mind paying more, became our target market.
This strategic shift led to exponential growth. In just 14 months, we reached close to $200,000 in monthly revenue, and we’re on track to hit half a million by the end of our 16th month in business. So, it’s crucial to focus on quality customers, adapt your offering, and create trust-building elements like guarantees to achieve sustainable growth.
Naren: That’s an excellent point, and I completely resonate with your experience. When I first started as an entrepreneur about 15 years ago, I had this idealistic notion that being an entrepreneur meant doing good, and I kind of equated doing good with helping people, especially those without much money.
Naren: However, I soon realized that the effort required to sell a $20,000 solution with recurring annual payments was the same as selling a $200 solution with a one-time payment. Given the limited time entrepreneurs have, it makes much more sense to target customers who can write significant checks and ideally do so repeatedly, just as you’ve experienced in your business.
Indeed, I had to face the challenge of saying no to many startups and early-stage businesses that I genuinely wanted to help. It’s a common struggle for entrepreneurs, particularly those who may not come from a wealthy background. There’s often a narrative that helping people with money isn’t as virtuous as assisting those without.
Naren: Eventually, I learned a valuable lesson: focusing on clients who can pay for your services not only sustains your business but also allows you to provide more substantial help to others in the long run. It’s about finding a balance between your mission to do good and building a sustainable business that can continue making a positive impact. This shift in perspective was transformative for me, and I believe many entrepreneurs face and can benefit from this realization.
Raphael: I couldn’t agree more. At our core, most of us are inherently good and want to help others. That’s something that struck me when I first entered the entrepreneurial community at the age of 17. People were welcoming and genuinely eager to assist me in building my business. I’ve always had a strong desire to give back to the community.
Raphael: However, there’s a crucial lesson here: you need to save yourself before you can effectively save others. While offering services and products to various industries, company sizes, and verticals is a noble ambition, it’s simply not feasible. You must focus on one niche. It’s a reality that, to deliver effectively, you need to concentrate your efforts.
So, when you have to choose just one niche, it makes sense to prioritize the one that pays the most. It’s not always the big corporations or Fortune 500 companies; the most profitable segment can vary by industry. Finding the right market fit is crucial, but it requires time and effort.
Raphael: If you’re unwilling to put in the work, such as going on client calls and experimenting with pricing models, guarantees, and terms, you’ll never find the answer. This diligent approach is necessary to gain insight into your market and track data from the outset. Data tracking is essential to ensure you’re on the right path.
Raphael: While you may always feel the desire to help everyone, especially those who can’t afford your services, it’s essential to remember that you have a team, a vision, and a mission to fulfill. Working for free on commission may seem like a no-risk option for startups, but it’s crucial to consider the long-term sustainability of your business and the well-being of your team.
Ultimately, focusing on one thing, as you’ve found your market fit, is a strategic decision. While it doesn’t mean you won’t explore other offers in the future, for now, it’s about committing to your niche and maintaining a clear direction for your business.
Sales Secrets for Early-Stage Companies
Naren: Thank you. Let’s shift our focus to the topic of sales secrets for early-stage companies. To make the most of this discussion, let’s dive right in. I’ll let you kick things off.
Raphael: Let’s simplify this.
Lead generation is crucial, especially for early-stage companies.
You need to bring people in the door, but not just anyone – the right people. It’s essential to focus on quality over quantity. Cold calling has been highly effective for us in the first six months. Building a good script, a list of leads, and dedicating time to call prospects can yield significant results.
Raphael: In the early stages, many are afraid of cold calling, but it can be a game changer. We generated our first half a million dollars through cold calling with a well-prepared script and a cell phone. You can find leads using online tools like LinkedIn, Sales Navigator, or dedicated lead generation software. Once you have your leads, it’s all about creating a structured sequence. For us, this sequence often began with a cold email containing valuable information, such as a roadmap of grants the prospect’s company might be eligible for. If there was no response, we followed up with a phone call a few days later to discuss the roadmap and potential opportunities.
Raphael: The key is to warm up your leads and nurture them through a well-designed sequence. This approach allowed us to stack multiple channels on top of each other over time, ultimately leading to consistent revenue growth. So, it’s about finding the right leads, creating effective sequences, and persistently working on warming up those leads for conversion.
Naren: Absolutely. I’m a marketing guy. So I’m gonna inject something here. I’m sure many of you know BJ Fogg; he was a professor at Stanford. He came up with the BJ Fogg behaviour model, and he said B=MAP. B is the behaviour you want. M is motivation, A is the ability, and P is prompt. So, the example that Raphael said had all of that motivation. He’s telling them, “Hey, here are some grants you might qualify” for who doesn’t like free money. I mean, these are even growth-stage companies. They are probably not making profits. They’re still probably spending more than they make, even though they’re making a decent amount of money. So, yeah, that’s motivation. There are specific grants you could qualify for really simple motivation and then Ability; It’s super easy. There’s no 300-word explanation about who you guys are, what you do, fight paper and all of this stuff people today. I mean, there’s Daniel Kahneman, who won the Nobel Peace Prize in the field of behavioural economics and cognitive psychology., In 2002. He said there is this concept of a fast brain and then a slow brain; 95% of the decisions today are done with the help of our fast brain, meaning this is not thoughtful; let me sit down with a pen and paper and do things brain. This is like at the moment you’re making a decision literally in seconds. So one of the things for the fast brain is to make it easy.
Naren: So the fact that he’s not doing all the other stuff, the fact that it’s to the point what they want, what’s gonna motivate them. Because a lot of times, what we do as business people is we make things too complex. We add unnecessary words, unnecessary pictures and everything unnecessary. And the problem with that is that it slows them down. We are the worst enemy in our sales process in the way we do things in our emails, even in marketing.
Naren: And then last is the prompt. You have to give them something to bite on. imagine you’re trying to catch a fish, but you never have a hook. Like how can the fish get caught?
Naren: The hook here is straightforward: “Let’s talk about it.” It then provides a link and essentially offers a free gift. People appreciate those who help them. He/she emphasizes his expertise and willingness to share it through a conversation, all without any commitment. He/she clarifies that there’s no payment involved; it’s simply his way of giving something valuable to you.
Raphael: What’s amusing is that people often assume there’s some complex magic behind our success, but it’s actually quite simple. It works when you have a strong offer, and you’ve found the right product-market fit. The results are more about the effectiveness of your product or service than the intricacies of your sales process.
We spent a year working closely with our clients, refining our operations, communication, and problem-solving approach. When you can clearly communicate your value and impact to your target audience, whether on your website, social media, or landing page, and if it resonates with them, you really don’t need an overly complicated sales process.
Raphael: So, if you’re struggling to generate leads, make sales, or attract the right customers, it’s essential to self-reflect. The issue often lies with your offer, fit with the market, and your ability to listen to client feedback and improve. These sales and marketing strategies do work, but the foundation of a strong product-market fit should come first. That’s the key takeaway here.
Naren: Thank you so much. I enjoyed it a lot. I hope our listeners also got a lot out of this conversation.
Raphael: Yeah. I was just gonna say I’m not as near as far as you are right now, and it’s super inspiring to get the opportunity to have a conversation with you. Thanks a lot.
Naren: Thank you. In my case, success has been a journey spanning 20 years, so I wouldn’t call it quick or smart, but it’s been a learning process. If anyone wants to follow me or stay updated on what you’re doing, how can they do that?
Raphael: LinkedIn is the best way to reach out. You can find me by searching for Raphael Bernier. You can also check out Panna Ventures, spelled with an “S,” and our podcast called “Fuel Your Growth,” all on LinkedIn. If you’re a tech scale-up, you can visit our website and click on “Book a Call” to see if you’re eligible for our programs and book a free discovery call with us. Feel free to send me a connection request on LinkedIn if you want to connect, need assistance, or just want to chat.
Naren: Thank you, Rafael. Your insights have been incredibly valuable, and I’ve learned a lot from our conversation today. I also want to express my gratitude to our listeners. We truly appreciate your support, and we couldn’t do what we do without you. Until our next episode of TBR with another fascinating guest, I’m your host, Naren Arulrajah
Naren: Thank you so much. I enjoyed it a lot. I hope our listeners also got a lot out of this conversation.
Raphael: Yeah. I was just gonna say I’m not as near as far as you are right now, and it’s super inspiring to get the opportunity to have a conversation with you. Thanks a lot.
Naren: Thank you. In my case, success has been a journey spanning 20 years, so I wouldn’t call it quick or smart, but it’s been a learning process. If anyone wants to follow me or stay updated on what you’re doing, how can they do that?
Raphael: LinkedIn is the best way to reach out. You can find me by searching for Rafael Bernier. You can also check out Panna Ventures, spelled with an “S,” and our podcast called “Fuel Your Growth,” all on LinkedIn. If you’re a tech scale-up, you can visit our website and click on “Book a Call” to see if you’re eligible for our programs and book a free discovery call with us. Feel free to send me a connection request on LinkedIn if you want to connect, need assistance, or just want to chat.
Naren: Thank you, Raphael. Your insights have been incredibly valuable, and I’ve learned a lot from our conversation today. I also want to express my gratitude to our listeners. We truly appreciate your support, and we couldn’t do what we do without you. Until our next episode of TBR with another fascinating guest, I’m your host, Naren Arulrajah.