How we stopped listening to customers, started hearing them and got to product/market fit

“You can always feel when product/market fit isn’t happening. The customers aren’t quite getting value out of the product, word of mouth isn’t spreading, usage isn’t growing that fast, press reviews are kind of “blah”, the sales cycle takes too long, and lots of deals never close”

Pmacra Blog The only thing that matters, Marc Andresseen

“As she understood it, it meant that your intel might not be great, your plan iffy, your hardware not the best, but you made up for it by just going for it, every time, that hard and that fast.”

The Peripheral (The Jackpot Trilogy Book 1), William Gibson

A Familiar Story

For anyone working at an early stage startup our story is going to sound familiar: you’ve got an idea, you’ve got a “months remaining” cash equation running in the background and you shoot your shot. Then you shoot your shot again. And again.

Like lots of things in emerging markets, what you read doesn’t apply. Jaza drank the Y Combinator Kool-Aid and embraced the mantra of talking to customers and building a product based on feedback but no matter how many cycles we ran something still didn’t feel right. Sales were a lot of work, and it felt like we were pushing the boulder up the mountain. Until we made one change: we stopped building what people were asking us to build.

I know that sounds crazy, so I’m going to walk you through the typical start-up approach, what we did differently and how we landed in the product/market fit promise land.

How you’re supposed to build a great product

Although there are multiple variations on the same theme, the typical start-up route to product/market fit is as follows:

1. Identify a problem that people will pay to solve
2. Build a solution with a minimum set of features
3. Sell your solution to some early customers
4. Collect feedback from your users
5. Use feedback to iterate on your product
6. Repeat

This is sound advice for most companies in developed markets, where the “market” part of the product-market fit equation is a function of niche problems and disposable incomes. In emerging markets, with a nascent middle class, the product-market fit equation is different.

We were working in a great market because of the high volume of potential customers, but a hard market given that our customers had no cash to spend on the next new thing. Given that a typical household we serve earns between $1 — $2 per day, we knew we had to take a different approach.

The Context

For background, we launched a business in Tanzanian called Jaza with the mission to power the 600,000,000 people living without electricity in Sub-Saharan Africa.

Jaza builds solar powered shops that charge batteries that our customers rent to power lights, TVs, stereos and mobile phones.

Think of Jaza’s product as a mini Tesla Powerwall for a large untapped market.

Prior to starting Jaza, I worked in Tanzania for a decade planting trees in rural communities. Most of the people I worked with used kerosene to light their homes, and one day a community asked how they could get electricity. Based on some market research we learned that Sub-Saharan Africans spend $13B a year on Kerosene for lighting — this was a big problem that people were willing to pay to solve.

We had an early idea, the basics of a potential solution, so we launched our “minimum viable product” by charging motorcycle batteries, which were cheap and locally available. Early customers would take these batteries home and light up a single bulb. Subsequent iterations allowed that motorcycle battery to charge a mobile phone.

Reid Hoffman of Linkedin/Paypal fame says “If you are not embarrassed by the first version of your product, you’ve launched too late.” This was the epitome of a product that we were embarrassed by, but we did prove that people were willing to carry energy home, and pay us a fee for the service.

Over the next year, we spoke to over 1000 early customers. Each customer would ask us for more features — bigger batteries that could power bigger appliances. Although our penetration was fairly high, with 30% of customers around a Hub using our service, we were working way too hard to get customers. So we did what any early stage startup would do, and we listened to our customers. We designed bigger batteries, and switched to lithium-ion cells. We recruited and trained a bunch of door-to-door sales agents to sell our product.

I asked a potential customer once why he was still using kerosene for light, and why he hadn’t made the switch to Jaza. His answer? “I’m waiting for Jaza to power a TV”.

The list of features continued. Need a battery to last a week? We got you. Need to power TVs and stereos? We can do that too. Don’t like the TVs you can buy in your village? We’ll stock some at the Hub.

As we hardened our product our customer acquisition cost and hardware cost continued to grow. By adding more to our product we were building ourselves further away from the hundreds of thousands of low income customers living around our Hubs.

Features went up, market penetration went down

As we responded to customer needs and feature requests, we were slowly pricing our product out of our market.

The Big Reveal

I was listening to what our customers were saying, but I wasn’t hearing what they were telling me. Our customers were actually saying that they couldn’t afford the product.

I’d be no different if a product manager from Tesla pulled up beside me on the street and asked if I wanted to buy a car. Short on the cash, I’d say no. If the product manager was really persistent with what I’d need to see to buy the car, I’d probably come up with a few things that would motivate me. That still doesn’t mean my economic situation would change if the things I asked for were built.

At Jaza we just needed to make the product cheaper, and this would require taking things away.

More Unilever, less Apple

Unilever uses single use packaging to make products affordable for lower-income consumers. In Sub-Saharan Africa, most rural consumers shop daily for necessities, and household expenditures need to be paired with income:daily wages or proceeds from small-scale farming.

In the early 1990’s Unilever was one of the first companies to realize that local shops in emerging markets were often breaking up their products and selling them in smaller increments to meet customers’ daily needs.

When Unilever started marketing goods such as washing detergent, cooking oil and toothpaste in branded single use packages good things started to happen. In the Philippines, where only a small percentage of the population was purchasing deodorant, a $0.35 cent mini deodorant stick boosted sales. Pushing things even further, Unilever introduced a $0.10 “cream” version of deodorant in single use packaging and the nationwide penetration of deodorant consumption doubled to 60%.

In Tanzania, shops everywhere sell single use packages. Meanwhile at Jaza we were listening to our customers and making our battery packs bigger and bigger.

Here’s what we did

Back to the drawing board, but this time to take away features instead of adding them. Our engineering team had built a flexible product, so we were able to make a lot of changes to the product without a new manufacturing run.

Using over the air firmware updates, we made the available battery capacity smaller, and we added a timer for how long it would last (one to three days, depending on what a customer paid per transaction). We stopped focusing on sales of our “accessory kit” which included an assortment of lights and cables required to power appliances and moved to a single light as our default option. Our upfront deposit fee for registration was swapped out for a $1 registration fee and an application process that required a guarantor to ensure the battery came back to the Hub if the customer decided to stop using our service.

We made our service as small and cheap as we could, and we sold electricity in bite size slices, with just enough electricity to get you through the day. The option to buy more is still there, but the core offering is now focused on daily consumption, like the single use pack of washing powder or coffee our customers can buy from the local shop.

The results speak for themselves. Previously we were adding around 10 customers a month at each location, and now we are adding over 100 customers in the first month of this new service. An order of batteries that we received in the ports of Dar es Salaam, intended to last 2–3 months sold out in under two weeks.

Listen to your customers, but hear what they are saying

Our customers are now pulling the product out of the company. We no longer use sales agents to sell our products, and walk-in customers drive our Hubs to maximum capacity. We’ve switched the equation and have moved from the 20% of our market that can afford us to the 80% of the market that no one else is able to serve. Average revenue per customer is up threefold, and we’re no longer pushing the boulder up the hill, but are running down the other side of the mountain, trying to keep up.

We listened to our customers and we built everything they asked us for, and that is not how we got to product-market fit.

Jaza heard what our customers weren’t willing to tell us and built the opposite of what they asked for.

I am not saying you shouldn’t collect customer feedback, as we would never have gotten here if we hadn’t had such a deep and intricate understanding of our customer needs. Just know that if you’re building for the mass market, never discount the value of low cost, and the basic set of requirements to meet your customers daily needs.

If you like this type of thing, blog here or Substack here. More on Jaza here.