Opinion
Bansal: Product-market fit is misleading and should be called product-market sales fit
“It's a little bit misleading to just call it product market fit. We should call it product market sales fit.”
Insight
Bansal: Allocate two-thirds of engineering to current TAM, one-third to expanding TAM
“Two-thirds of our engineering investment should go with our existing TAM. And the one-third of our engineering investment, we should keep putting on expanding our TAM always.”
Insight
Bansal: Startups reach product-market sales fit between $1M and $10M ARR
“I would roughly think getting to your zero to the first million ARR You are in the phase one of product market fit. Annual recurring revenue, which is like, you know, do you have a product someone will buy and it's solving some pain. Then you're like, you know…”
Insight
Bansal: Spending 10–15% on Services Optimizes Enterprise Software Adoption
“We found the right balance was about 10 to 15%. So like if we, if in our products, if like, you know, people are buying, let's say they're spending a million dollars with us on the software and they spend like, you know, a 100,000 dollars or 10 to 15% on it, o…”
Insight
Bansal: New enterprise products have three sales phases based on customer count milestones
“The sales learning covers three phases. One is the, my first 25 customers for the product. 25 to, that's like phase one, which is very, very, almost the founders are selling. Yes, there's the 25 to a hundred customers, and then there's a hundred, after a hundr…”
Disclosure
Bansal: AppDynamics used product managers to sell the first 25 customers of new products
“The first 25 customers for the new products, we actually got the product management team to really sell it the way your founders will sell in the, in a brand new startup, instead of hiring a new sales force for that.”
Assertion Not checkable as stated
Bansal: AppDynamics needed 40% revenue from adjacent products for $1B target
“When we did that math and this is again a rough math, like you never know that if we want to get to a billion dollars of revenue from a hundred million in like seven years, let's say, or six years, our plan was, we need to have like at least 40% of our revenue…”
Assertion Supported
Bansal: AppDynamics always priced higher than its cheaper competitor
“Yes, because we can't, like, if our product is superior, we are, the customer is getting superior value. Either we are lying about it, or we are misguided about it, or whatever, that we believe it is, but it's not. Or we are not articulating the superior value…”
Insight
Bansal: Multi-product expansion should wait until reaching $75M ARR
“Then, seventy-five million plus is when this, how do you build our product number two and product number three and product number four starts.”
Insight
Bansal: Startup challenges pivot entirely to sales after product-market fit
“Now the challenges completely change after you have your initial product market fit. They become all about sales and learning sales and scaling sales and, you know, it's almost like the companies go through the journey, right?”
Insight
Bansal: Freemium business models fail when software products are overly complex
“If your product is too complex, freemium doesn't work.”
Insight
Bansal: Land-and-expand strategy requires inside sales for lands and field sales for expansions
“Depends on like, you know, if the model is only top down, you probably need only field sales. And you're selling into large enterprises, but if your model is this kind of a land and expand, you want to do the land through inside sales, and you want to do the l…”
Insight
Bansal: Enterprise pricing models must be explainable in half a sentence
“The rule that I've used for pricing is, can your salespeople describe it simply? Like if a customer is going, going to ask you a simple question, so how, how do you price your product? And if you can't describe it in half a sentence, That's a, you have too com…”
Insight
Bansal: Enterprise founders should price products higher than they initially think
“I argue to most Founders is that they should price more than you think you should.”
Insight
Bansal: PMF requires understanding the customer's exact business case
“Unless you know, understand the business case, you don't really have a product market fit, you know, it's a, because that's what you have to engineer your product around.”
Disclosure
Bansal: All product managers at AppDynamics had engineering backgrounds
“So at AppDynamics, the product was technical. Our users were engineers in, in many ways. So our, all our product managers had an engineering background.”
Insight
Bansal: Ask enterprise customers how they will justify purchases internally
“One of the questions that we always ask, like, you know, my favorite question to ask to any customer was, how would you make the business case to your boss to buy this?”
Disclosure
Bansal: AppDynamics offered zero professional services for its first four years
“Actually for the first four years, we had zero services.”
Jyoti Bansal