In this episode of UX Leadership by Design, Mark Baldino sits down with David Hirschfeld, founder and CEO of Tekyz, about the Launch First methodology—a metrics-driven approach to de-risking product development and achieving product-market fit before building software. David shares insights from working with over 90 startups, highlighting the common pitfalls that lead to failure, particularly the mistake of waiting too long to validate revenue. He breaks down how to identify the right niche, perform root cause analysis, and use high-fidelity prototypes to pre-sell software before investing in an MVP. Whether you’re a startup founder, a product leader, or iterating on a new SaaS offering, this episode offers actionable strategies to validate demand, avoid wasted development, and accelerate success.
Key Takeaways
- The Biggest Mistake Startups Make – Most startups fail due to lack of product-market fit, not running out of money. Waiting too long to validate revenue leads to wasted resources and increased risk.
- Flipping the MVP Approach – Instead of using an MVP to test product-market fit, use it to validate product-solution fit—ensuring real customers will use it, not just buy it.
- Pre-Selling Before Building – High-fidelity prototypes that feel like real software can be used to sell the vision and secure early customers before writing a single line of code.
- The Power of Niche Analysis – Startups should identify a niche where pain points have both a high cost and a high perceived impact, ensuring customers are both willing and able to pay.
- The Scientist vs. The Believer – Founders often wear the “black robe” of belief in their vision, but success comes from adopting the “white coat” of data-driven decision-making.
- Speed Matters: Fail Fast, Fail Cheap – Instead of spending years and millions developing a product that may not sell, Launch First helps founders validate demand in 3-5 months.
- Lifetime Licenses Aren’t Crazy – For some SaaS models, offering lifetime licenses in pre-sales can be a smarter way to fund development than raising capital and losing equity.
About Our Guest
David Hirschfeld, a 35-year software veteran and UCLA physics alum, has led projects at tech giants like Intel and Motorola before founding startups, including one sold in 2000. Since 2007, as Tekyz Inc.’s founder, he’s advised 90+ startups, specializing in AI-driven workflow transformation and his Launch 1st Method.
Resources & Links
Chapters
- 00:00 Introduction to David Hirschfeld’s Journey
- 03:01 Why Most Startups Fail: The Real Reason
- 09:31 Understanding Product-Market Fit vs. Product-Solution Fit
- 14:46 Sell Before You Build: The Power of Pre-Sales
- 19:31 Finding the Right Niche with Data-Driven Decisions
- 24:31 From Founder to Scientist: The Mindset Shift
- 28:46 Building a Sales Funnel for Early Traction
- 34:11 When to Start Building Your MVP
Tags
#ProductMarketFit, #StartupSuccess, #UXLeadership, #SaaSUX, #GoToMarketStrategy, #ProductManagement, #UXPodcast, #UXLeadership, #UXDesign
Transcript
Mark Baldino (00:06.222) Hello and welcome to UX Leadership by Design. I'm Mark Baldino, your host. I'm also a co-founder of Fuzzy Math. Fuzzy Math is the user experience design consultancy that brings consumer-grade UX to business applications for B2B and enterprise tools. Today, I speak with David Hirschfeld, who is the founder and CEO at Tekyz, which is a custom software development company. But prior to that, David started two software companies and has advised over 90 along the way. And during that time, he's developed a very specific methodology. And we break down this methodology during our conversation, but it's all about product market fit. And David has seen enough folks fail because they don't validate the revenue potential of their product. They focus on ICP and pitch decks, then they actually build out their full MVP, then they try to sell it. And this process is really around de-risking, getting to failure faster and cheaper, but following a metric-driven approach that helps clarify the root problem that your software or your organization is solving and paints kind of a realistic picture through high fidelity prototypes and then gets people to sign up as customers early on. It sort of flips the script a bit. And so it's kind of a really fascinating conversation whether you're a founder, you're working on a product team, you're a startup, or maybe you're launching the next version of your SaaS product. I think the methodology could kind of assist all of you. So please enjoy the episode. If you have any comments or questions, feel free to send them my way. And then as always, please like and share as you see fit. And thanks as always for listening. Mark Baldino (00:00.942) David, welcome to the podcast. Yeah, excited and looking forward to our conversation here. Would love for you to just start by giving a bit of a background on yourself. I know you have kind of interesting background and kind of what led you to your sort of current engagement and leadership at Tekyz. David Hirschfeld (00:04.133) Thanks, Mark. Really happy to be here, yeah. David Hirschfeld (00:29.086) I started out in the software industry and enterprise. They're almost not quite 40 years ago. and with working for computer associates and Texas instruments, and then I became a consultant and work, ran projects and Intel, Motorola, allied signal, Arizona public service. So I had a lot of enterprise experience in my early days. then I started a, software company in the early nineties and logistics route distribution inventory management. Mark Baldino (00:32.374) So, thank you. with the right, so it's good. Mark Baldino (00:46.454) Thank you. Mark Baldino (00:56.654) just to explain. David Hirschfeld (00:59.122) you know, sort of pre ERP and became, uh, uh, and grew that company to 800 customers in 22 countries and sold it in 2000. So now I think I know what I'm doing as far as startup scale, right? I was VP of products for the acquiring company for several years and then left and went and tried to start my own company and did not follow the same, uh, Mark Baldino (01:11.374) That's for several years. David Hirschfeld (01:23.452) playbook that I had and that I did with the first company, just because it was a kind of a different product, different company and not realizing the things I did that made me successful the first time. And the second one failed. So I have the experience on both sides, right? Failure and success. Well, after, from the ashes of that, I started Tekyz, my current company in 2007, 18 years ago. Tekyz is a custom software development company. Mark Baldino (01:35.022) So, thank you. Mark Baldino (01:45.262) And I'll see you guys next time. Bye. Mark Baldino (01:50.323) We'll you next time. David Hirschfeld (01:52.046) And we have worked with over 90 startups during that time. A couple of them very successful, but the vast majority failed, which is what led me to create the launch first methodology. Mark Baldino (02:02.318) Got it. Was the launch, we'll get into that in a second, the launch first methodology, was that built on the ashes of the failure? mean, did you, if you don't mind talking about that, the differences in approach, was that like lessons learned that you then applied in this methodology? David Hirschfeld (02:09.351) Mm. David Hirschfeld (02:17.266) Not at all. David Hirschfeld (02:24.21) I knew some of the things that I did wrong in the second startup. I didn't know all of them and I didn't understand the key things that I did wrong in terms of how I approached it until I had worked with probably 60 or 70 startups that I watched fail and succeed. The few that succeeded had very consistent similarities, but the vast majority that failed all failed. Mark Baldino (02:27.576) you. Mark Baldino (02:49.166) the hospital. David Hirschfeld (02:51.868) from my perspective for the same reason. And then I started to realize why I failed the first time. And that's waiting way too long to prove revenue, prove product market fit. So, yeah, so it wasn't because of my failure as much as it was just seeing the synchronicity between all these other failures and the differences between the few successes. Mark Baldino (02:52.234) the Mark Baldino (02:58.404) Thank you. Interesting. Mark Baldino (03:16.63) As a professional services owner myself, what made you want to join R-Ranks after running startups? What made you want to get into the consulting side of the world and actually helping other people with their businesses? David Hirschfeld (03:31.77) Well, we were really good at building software. This is something that I knew I had a particular interest and skill set at. Understanding not only how to assemble systems, but also how to create products that would get engagement. Because even though I failed the second time, we did get really good engagement on the product. I just didn't start charging for it. I went the route of trying to raise money. Mark Baldino (03:33.742) Thanks Mark Baldino (03:43.928) I'm really glad to serve this institute so proud to serve this community. I feel the same way. It's for a way to life. David Hirschfeld (03:59.73) and I spent way too long trying to do that instead of generating revenue for my customers. anyway, so that was something I knew I could do and do really well. And there was a real need and demand for it at the time. So it was just sort of like low friction brought me into becoming a service provider and building a software development company. Mark Baldino (04:09.582) Thank you. Mark Baldino (04:23.758) Did you still have the itch of getting back in and owning and running a company that's a software company or you feel like consulting is where you want to go? David Hirschfeld (04:32.282) I didn't. It's a really good question. I didn't at first. I was like, you know, like a lot of founders that fail. was like, God, I'm not doing that again. But, but that didn't last for very long. And then it wasn't long before I took a partnership with one of my clients in the healthcare industry, a company called Anzu. And then I continued to think about products. In fact, right now, this year, we're going to be releasing a couple products, not Anzoo, but Tekyz well, SaaS products, because of the AI revolution and the ability to identify and automate certain discrete workflows that have huge value. So we're going to be creating some SaaS products that we're going to be releasing this year. So I want to get back into the software world because I really like owning a product. Mark Baldino (05:06.062) So it's the automated distributed disk report. Mark Baldino (05:29.518) That's awesome. I want to dig in on this because it's like, in the back of my mind, there's always been products. No, we don't do development, right? We're just design. So it's like, there's that whole other side of the world that's scary to get involved in. do you to make changes in the structure of your consulting business? Maybe two in the weeds for some folks. But have you had to make changes in the structure of your business to actually transition it from a consulting business to David Hirschfeld (05:41.2) Right exactly, yeah, yeah. Mark Baldino (05:59.317) to business. David Hirschfeld (06:00.722) Ultimately, there'll be some changes, especially as the products start to take off. But no, not really. Because we have a development team and our development team does a lot of support for existing customers. It's not just building a startup product, but it's also being the outsource technology group for that company. So that won't be very different other than they'll be our own products internally. And then of course, Mark Baldino (06:19.086) being that's received. Mark Baldino (06:30.166) Thank David Hirschfeld (06:30.534) the marketing, the sales, right, that will be different than what we do for the service side. Mark Baldino (06:41.354) and your clients are the same, right? David Hirschfeld (06:42.034) and your clients are the same, right? In what respect? Mark Baldino (06:47.182) The people that you're building product, the things that you're going to automate, those discrete services that are, assume humans are doing now, your clients need, I'm thinking you're doing it as part of what Tekyz is offering in your service offering, and you're going to take some of those and automate them. And therefore, like the people you're selling your consulting services might be the same people that you sell the SaaS service, but I made a leap there without actually asking. David Hirschfeld (06:54.481) Mm-hmm. David Hirschfeld (07:12.474) Actually, a little bit different. little bit different. The consulting services we're selling to existing companies that need software development, not selling to their software development teams. So some of the products we're developing will be targeting software development teams, other firms like mine. Some of them, one of the products that we're Mark Baldino (07:21.024) So. Mark Baldino (07:27.726) Thank you. Mark Baldino (07:32.92) and I'm going to stay here and be very forward with it. And next week it's just going to be split company, but it's going to be very good. David Hirschfeld (07:35.866) building a workflow around will be for marketing agencies because the company that I use to help me with marketing is the one that identified this workflow that needs to be automated. And there aren't good products out there that do this. So we're just going to automate it and then we're going to jointly market that product. And one of them is related to launch first to help start the niche analysis piece, which is a very fatiguing process. There are several products, but Mark Baldino (08:01.806) on. David Hirschfeld (08:04.69) And then one of them is because I started doing podcasting with the idea that I would start to develop a referral network of other people like me and like the people that interview me or that I interview in my podcast. And there's not a really good low-hanging fruit kind of referral partner network for managing referrals out there. And so we started building that. That one this week we'll have our MVP ready, which we're building an MVP. for ourselves because I need the product, right, for the referral partners as opposed to doing a pure launch first approach. And then I can start to add the people that I'm adding as referral partners to the system and then they get a login so they can see the, give referrals or see what the state of the referrals and how much they've accrued in terms of like referral fees. And then of course they go, know, I could use this for my referral partners and it's sort of a natural growth, right? Mark Baldino (08:46.062) Thank you. We'll you at the end. Mark Baldino (08:57.794) which is bit real-life history. So it's hard to get into it. All right. In the space, I might be a target user. Feel free to meet some alpha, beta folks. Let me know. But I think it's a good transition because you talked a little bit about how you're launching this maybe a little bit slightly differently. You're doing your MVP internally. But I'd love to talk more about sort of the launch first framework and methodology and where I'd like to start is like a little bit of a primer on when you say product market fit, what does that mean? David Hirschfeld (09:31.154) Okay. All right. So product market fit from my perspective is a pretty straightforward equation. You can, it means that whatever it costs me to acquire a customer in terms of sales and marketing costs, that I'm that lifetime value of that customer is at least worth three times what that cost is. So, and that I can do that in a predictable, repeatable way so that I can scale. So right scale, at least in terms of Mark Baldino (09:40.334) Thank David Hirschfeld (10:00.934) then that niche that I'm marketing to that where I've proven product market fit. That's product and market fit. You know you have it because people are paying you money for your product. If you don't have people, can't get people to pay you money for your product in enough numbers, right where you can get to that three to one ratio, then you don't have product market fit yet. So. Mark Baldino (10:18.062) Yeah, so it's more than just, will you pay for this? It's, will you pay for this in a long enough term that I'm going to get 3X back on the cost it takes to acquire you? David Hirschfeld (10:27.418) Right, right, right. And some of that you have to estimate because you don't always know what the lifetime value is, right, early on. But depending on how you do the launch first, you might be able to nail that down even in the initial sale. Because a lot of times, not always, but a lot of times we'll do lifetime licenses as part of the launch first sales approach, which people go, lifetime licenses? I'm never going to do that because then I don't get any more revenue from that client, which is not necessarily the case because once you have a client, a customer using your software, you have the ability for upsells in the future when you have new capabilities to upsell them or new services. But more than that, if you think about what most people do, and that's they create an MVP and a pitch deck and try to raise money. And when they're raising money, maybe 250 to $500,000 are giving anywhere from 10 to 25 % of their equity away in that initial raise. When you give away when you sell lifetime licenses and all the work you do to raise that money, none of that does anything to grow your business or to move you on the path of being able to generate revenue and have product market bid. It seems like it does, but it doesn't. Whereas when you're doing launch first, you're marketing to your customers, right? So you've got a sales and marketing engine that you've developed. You are successfully closing business. So you're generating revenue. And the people that are buying in, whether it's a classic pre-launch or whether there are different models of pre-launch sales, you now have a very committed beta customer because they paid money for your product. And you're generating the same amount of revenue that you would from raising from a seed investor. And usually you're giving away an immeasurable fraction of a percent of your market, not 20 % equity. Mark Baldino (11:59.214) Okay. Thank you. Mark Baldino (12:14.638) So one of your core recommendations for your clients in Launch First is that they do lifetime memberships. David Hirschfeld (12:22.224) No, it's really dependent on the business model. if, right, right. So it depends on the product. If it's like a subscription-based product where they're paying like yearly subscription or monthly subscription, then lifetime licenses are often make a lot of sense. Because you can come out with new features later on that they're paying for and they're paying subscription fees for those at some point in the future. Mark Baldino (12:33.102) I'll take that. Mark Baldino (12:43.906) You can go now, Mr. David Hirschfeld (12:50.214) But the thing about getting these customers aside from it helps you generate revenue and offset development costs from customers is that now you get people using your product and you're working on product solution fit, not product market fit. The MVP should not be for product market fit to validate it, which is what most people use an MVP for. It should be for product solution fit or validating that. for people that don't know what that is, the difference, product market fit means people are buying your product. Product solution fit means now people are using your product. Mark Baldino (12:55.768) Yep. Mark Baldino (13:08.874) Thank you Mark Baldino (13:17.294) I'm sure if that's you can say. David Hirschfeld (13:21.168) Right. That's the difference. I just realized my battery's not plugged in. Give me one second. Mark Baldino (13:24.698) No worries. David Hirschfeld (13:32.41) Now it's now it's plugged in. didn't want to this interview to like tank. Yeah, right. Mark Baldino (13:32.75) All of sudden you're gone. No, that's great. Okay, so what you were saying was that people use their MVPs to do product market fit and instead they should use their MVPs to get product, sorry, what was the second component of that? Product solution fit. David Hirschfeld (13:51.516) Solution, product solution fit. Did you build the right solution that they need? Whether that's something they would buy or not, are they now using it to get the value out of the product in a way that keeps them as a customer, right? Engages them so they stay a customer and that it's not falling short in significant ways that opens up the opportunity for competitors to take them away. Mark Baldino (13:57.581) Right. Mark Baldino (14:18.466) Is your recommendation that they do product market fit to get to the NVP to do solution fit? David Hirschfeld (14:23.366) Yeah. Yes. no product market fit to prove they've got sale. They've got a saleable product, right. And that there is actually a business there. Cause a lot of people build a product where there really is no business. They don't realize it until they've made a huge investment in the product. Only to find out nobody wants to buy it. Mark Baldino (14:35.918) There's no. Mark Baldino (14:41.358) of merge these two things and think of them as the same and maybe even do the MVP first. As you said, I got this great deck or I have this prototype. Now I want to go see if I can either raise funds, which is a little different, but can I grow revenue out of this? as you alluded to earlier, directly stated, people are going too far without confirming that there's a revenue potential here. And that's David Hirschfeld (15:04.526) Exactly. Exactly. Mark Baldino (15:05.422) Is it safe to that's the single biggest mistake you saw in the first 60 startups and maybe your experience? So what is the process to avoid that issue look like? David Hirschfeld (15:09.649) Yes. By far. By far. David Hirschfeld (15:18.192) you go out and you start getting people to buy your product before you build it. And the way we do that is we build what I call a high fidelity prototype, which is a very animated set of mockups. It's much more features and function than you see in an MVP, but there's no software there. But when you demo it, it looks like real software. And that's a critical success factor in doing prelaunch sales. Mark Baldino (15:34.638) Okay. David Hirschfeld (15:46.834) Because when you're doing a demo to somebody, they think this is, if they see something that just looks like click through mockups, their first question is, how do I know you can build this? You know, that's, and if you get that question, they're not going to buy it. So if you build a realistic enough demo out of the mockups so that when you demo it, they cannot tell the difference between that and real software, then that question never happens. Even though you don't lie to them, you tell them it's a prototype and that the, that what they're seeing, the first version of the software won't be out for three to four months and won't have all these features. They don't hear that, you know, their brain makes up a story that, well, this month they must be in development have just finished testing and, but the software looks great. And, know, you never, I never suggest anybody ever lie to anybody. but but you want them to see something. You want them to see exactly how this offer is gonna operate and behave when they get it, because that's what they're buying. Mark Baldino (16:49.902) So step one is this very realistic, high fidelity, clickable, interactive at some level, concept car prototype. And then how do you go from that to, hey, person A, person B, would you actually pay for this or will you give me money for it? Like what's the... David Hirschfeld (16:57.969) Mm-hmm. David Hirschfeld (17:08.262) Well, I want to go step one is actually doing the niche analysis. And often we'll do that in parallel with, doing the design and development of this prototype. but it's really important. So all founders have one job when they're starting a new product or business. It's the number one job and none of them understand this. Neither did I for a long time. and that is if you think about where you're starting from, you've got this product that you believe will solve the problem. Mark Baldino (17:17.942) Okay. Mark Baldino (17:26.488) Thank you. David Hirschfeld (17:37.262) in some industry or for people in, you know, for whatever that is, you're solving a problem. And there's a lot of different niches that you can market this product to because you usually, the problem has some kind of broad base of people struggling with it, but in different ways from different niches, right? And then when you think about the problem or problems you're solving and you think about it from the perspective of each of these niches, it boils, you can get deeper into what the real root level problem is. from the perspective of these stakeholders. And that's a critical success factor is knowing the root level problem. And you know, you're at the root level problem when somebody is, when you can say to somebody or when somebody says to you, I hate this problem, or I'm afraid if I don't solve this problem that, and you know, that this will happen and that will cause me some kind of personal, you know, negative thing like. Mark Baldino (18:14.6) Thank you. Mark Baldino (18:28.438) Thank Mark Baldino (18:32.862) Thank David Hirschfeld (18:35.502) My career will never advance. I'm going to lose competitive position in the market. You know, I'm going to lose all my restaurateurs, my patrons, it's going to, my advertising costs are going to double because to try to overcome those bad ratings. Whatever the thing is, it has to boil down to my life is work will be worse because I don't solve this problem for this reason. That's a root level problem. And usually you've got about 10 or anywhere from eight to 15 different root level problems. when you start to really distill it out from the standpoint of the stakeholder. So as a founder, you have one job when you're starting a company and that is only one of those niches can you market to. So which one of those niches do you pick out of the 10 or 15 or 20 niches that you've identified and which is the top one or two or at most three root level problems that you're going to address initially. Right. And so what we do is we have a metrics driven methodology for figuring this out. that, yeah. Now, because that also informs, once you know who that is and what those root level problems are, that informs how you're going to do the outreach to speak to those people, how you're going to demo the product in terms of the language and where you're gonna focus. Even if the thing you're demoing has the two-year roadmap and all the features, where you're going to make that demo very focused on their problems, the ones they need solved. Mark Baldino (19:35.278) So we're going from, sorry, going. Mark Baldino (20:04.598) So a founder or organization, have a lot of niches. You help them select one and then you do niche analysis. do this sort of deep dive into what's the root cause, what's cause of this problem until you get to the bottom, which is a root cause. I understand that that's an acute pain that somebody can clarify and they can not only say this is a problem, they can talk about where it's. where it's bubbling up in their lives and what it's going to cost them, either dollars or emotionally, whatever it is, they can quantify that pain to you. And then you feel like, okay, I have a root cause or maybe I have two or three. Am I understanding that? Did reframe it? David Hirschfeld (20:47.644) Sort of, sort of. So you, got the gist of it, but the, the difference is, is you're not picking the niche. The niche picks itself from the metrics that you gather in doing this analysis because you don't want to pick a ditch. You want the numbers to say this is an ideal niche for early adopter and doing sales. And you know, they're the ideal niche because whichever problems are the most significant to them. Mark Baldino (20:51.469) I can't. Mark Baldino (21:00.331) Okay. Mark Baldino (21:10.958) Okay. David Hirschfeld (21:16.934) There's two things we measure. One is cost. How much does each of those root problems cost each stakeholder in each of these different niches? And the second number we grab is what is the perceived impact? That's that fear, right? What is that perception? How much this problem impacts them personally? And both numbers have to be high. And the reason for that is you might have a really high cost with one of these Mark Baldino (21:27.298) And that's the end of Mark Baldino (21:39.118) Yeah. David Hirschfeld (21:44.882) one of these intersections. So think of this as a spreadsheet with each intersection of the spreadsheet problem on the left and niches on the top. Each one is a measure. And you might have a really high cost, but you're talking to a stakeholder who's the decision maker, who's in an industry where this problem is endemic in the industry and everybody deals with it. And I'm not going to get, you know, this is just not important to me to fix it right now. Mark Baldino (22:06.624) Thank you. David Hirschfeld (22:13.424) because my life isn't gonna change if we do. Yeah, we're gonna save a lot of money, that's not my big motivation today, right? My motivation is competitive pressures or this or that, or I won't get management support to make that change, because nobody cares, right? Everybody's like, they want their focus on something else. That's low perceived impact. So that's not a good one, because you can't get their attention when you start marketing. They're going, who cares about that, right? Mark Baldino (22:34.99) See you David Hirschfeld (22:41.81) Well, you flip it the other way around, you got a high perceived impact. I hate that. That drives me nuts, that problem. But then you measure the cost and it's really low. So you can't charge them very much for it, even though you can get their attention and they're going to want to buy it, but there's not enough of them. And the amount you're getting for it isn't enough. So that's not a good target for early adopter. So you're looking for where both those numbers are really high for their top two problems, three at the most, right? And then you... Mark Baldino (22:43.611) the 100 % of the 15,000 lives that we have. But the commercial policy is really... David Hirschfeld (23:10.022) then there's other things we do that then validate that really is the right early adopter niche. Yeah. Mark Baldino (23:14.156) Okay, so it's that high cost, high fear, high impact. And when you find that alignment across the niches, a niche is gonna come to the top and say, this is the one you should focus on. Do you feel, and you've done this for 90 plus startups. David Hirschfeld (23:18.405) Right. Right. David Hirschfeld (23:25.947) Exactly. David Hirschfeld (23:31.32) no, no, I figured out this after having watched, you know, most of those startups fail. Yeah, I've done this probably for about like five startups at this point, of which three of them were successful. Yeah, doing getting sales and getting to product market fit before we started developing their software. Yeah. Mark Baldino (23:39.267) Okay. Mark Baldino (23:48.29) Okay. So founders are peculiar folks. You and I both founded companies. You founded a few of different types. I'll speak for myself at times. I like to have all the answers. I feel like I know where the direction of my company is and I kind of drive from that perspective. I set the vision and... David Hirschfeld (24:01.838) yeah. Mark Baldino (24:15.598) We're going to march towards it, right? And I think a lot of founders share that. that's, think what some people perceive is make founders very successful. It can be hard to change founders' minds. Do you find in, as you've started to implement the Launch First sort of methodology, that that's been easier? Are you helping founders get out of their way? Is it helping like shift founder's mindsets? David Hirschfeld (24:18.77) Mm-hmm. David Hirschfeld (24:37.296) It helps, yes, but you can't fix somebody that's got a personality flaw. And I'm not suggesting that my founders have personality flaws, but you know what I'm saying, right? It's very hard. The problem is most founders believe in, they have a vision, they believe in themselves, they believe in their vision and those, which is fine as a starting point. But those are, if you don't get out of, if you don't abandon that concept then, Mark Baldino (24:45.089) I know what you're saying. David Hirschfeld (25:05.67) Those are code words for I'm gonna fail. So founders that are consistently successful understand that their beliefs are nothing more than that. their assumptions, they have to measure them, they have to validate them. And if they can't validate them, then they need to adjust to something that is provable and validatable. So what I always say as a founder, most founders come in wearing the black robe. They have black robe syndrome, right? They believe in their vision, Mark Baldino (25:26.926) So. David Hirschfeld (25:35.44) They're sure if they just work hard enough and stay focused and true to their path, they'll be successful. And I gently peel that black robe off of some of them and then try to wrap them in a white coat and turn them into clinicians where they are setting up tests and measuring the results of the things and understanding what's an assumption and what's proven. Mark Baldino (25:42.968) you Mark Baldino (25:57.518) great metaphor, shifting them from the black rogue magician to the white rogue scientist and very clear in my mind. David Hirschfeld (26:05.078) The black robe monk. Yeah, not magician monk. right. Religious leader, right? They believe. Mark Baldino (26:07.842) Monk, okay. Yeah, Wackro Monk to the white coat scientist is a very powerful, very powerful image. I asked this question earlier, then you backed into the niche analysis and kind of said you could develop the prototype. And so it sounds like those two are gonna work in concert. And then what's like the next, what are the next few steps or maybe step along the way in the? David Hirschfeld (26:20.55) Yeah, right. David Hirschfeld (26:31.59) Yeah, they do. Mark Baldino (26:37.304) the framework. David Hirschfeld (26:38.78) So once we're sure we've got the right niche and there's more steps involved to validate that, you know, there are assumptions that are made during that process, but there's a constant outreach whenever the assumption, whenever you're making an assumption that's based on really unknowns. So then you do outreach to niche stakeholders in that niche to verify what they're struggling with. And then at the end of that niche analysis process, we do an interview process, not discovery interview, but a validation interview because now we've built a model for who we're marketing to, why we're marketing, how much we should charge, what their value proposition, all that stuff, the language we should use. And then we go and do a 15 to 20 interviews to stakeholders in that niche to validate this process. They validate that our assumptions were correct. We're building the prototype usually in this process, because usually we don't make an entire change of the product. It would be a rare case where the product completely changes because of these interviews. It'll have subtle changes. in other areas, what we're focusing on emphasizing and de-emphasizing other things that we realize nobody cares about. But for the most part, it's still the same product, right? So we're building the prototype and we're not building just for those stakeholders, we're building out the big vision. Because basically when you do the demo to somebody, you're saying, you know, talk about their problems and how this addresses their problems and, look what else you're getting. Because you can see the big vision of the product. And then create a marketing funnel and an automated outreach program to get people to come to either your one-on-one demos or to webinars and then put together presentations for demoing the product with some high value offer to them. If they buy in early, they're gonna get this. So, right, then they're gonna spend this kind of money to buy in early, but then they're gonna get all this for it. And if it's a product, Mark Baldino (28:14.094) it. David Hirschfeld (28:34.968) If you're solving a big enough problem that has a big enough cost and a big enough perceived impact and you give them a big enough value upfront, then you can sell in enough numbers and this is clear proof that you got product market bet. Mark Baldino (28:47.758) How are you helping them determine the cost? Like to me, one of the key components of product market fit is like how much, so yes, I'm willing, there's a big enough problem, someone's gonna be willing to pay for it. We have a product in front of us, this prototype that we think solves for those issues. We've walked you, kind of walked you through it, but how do you help them determine like the actual price somebody might be willing to pay for this? David Hirschfeld (28:57.724) Right. David Hirschfeld (29:08.626) Well, in that validation interview, ask them, like we come up with this is how much it costs. if we were, know, for this product, this problem is costing you this much. So if we charge this portion of that much, you know, whatever that is, factored over whatever period of time, you know, was that, do you think this is what, so you say, okay, so you come up with that factor, you say, this is what we're planning on charging for the product, the different kinds of licensing. How does that, do you think that people would pay for that? Right. Mark Baldino (29:11.95) Okay. David Hirschfeld (29:38.232) or you ask them, how much would you pay for this product? It depends on who the client is and what the situation is. and they'll. Right. And that's sort of at the end of this, this validation interview, where you're, because you said, here's a problem that we understand people like you have. they say, yes, yeah, that problem's really big. And here's how I've calculated cost of that problem. go, yeah, this it's that much or more. Mark Baldino (29:44.078) And then you're up the marketing funnel around those filters. Yeah. David Hirschfeld (30:06.138) And then you say, okay, this is what we were thinking would solve that problem. Would that solve that problem for you? Yes, that would be fantastic. I need that right away. This is what we were thinking of charging for that. people will pay for that. problem. You can probably charge more. We're looking for about 30 % of the people we interview to give us that kind of strong affinity. And if you're getting that, then those will probably be your first customers. Mark Baldino (30:06.894) going to turn it off. Mark Baldino (30:34.232) Yeah, right. Right. You're starting to build that funnel and get your early adopters right away. When do you, because so two things, one is sometimes product and engineering design, sometimes fear this, like we're going to go out and demo something that's not real and then we have to deliver on it. I mean, it sounds like you give it little bit of a runway, but like, how do you, let's say you are, you're getting positive feedback. Like when do you advise your clients like, Hey, you should actually start putting the MVP together. And this is David Hirschfeld (30:39.802) Exactly. Right. Mark Baldino (31:04.098) like your delivery. David Hirschfeld (31:04.686) as soon as, as soon as we've proven you got product market fit, right. Which is you've sold it so that you've got to, you can sell, continue to sell this pre-launch at a predictable closing rate. Right. You might need three sales. might need 10 or 15 sales, depending on the product and the cost and all that. And then, you know, at that point, it's time to start working on the MVP and you can continue to sell, do the pre-launch sale while you're building the MVT to, to, you know, basically acquire more funds. Mark Baldino (31:07.96) Then you're right. David Hirschfeld (31:34.47) from customers and a larger pool of beta customers. So, yeah. But. Mark Baldino (31:39.704) So it's, it sounds, mentioned this before, sounds metrics driven throughout, right? From the niche analysis. David Hirschfeld (31:43.94) Right, metrics, yes, it's all metrics driven, yes. Yeah, if you're not proving it, if you're not measuring and proving, then there's no point in doing it. Mark Baldino (31:55.374) If they get through halfway through the process and it's not vetting out in the validation interviews, do you recommend people go back to the niche analysis and find a new niche? is it like sometimes it's okay to say, this is not a good idea? I don't know how else to say it nicely. David Hirschfeld (32:07.409) Yes. David Hirschfeld (32:12.196) no, that's possible too. usually, I mean, usually what we bubble chart those two numbers, the cost and the perceived impact, we bubble chart them. There's usually two or three niches that float up into the upper right. One usually looks like it's the clear winner and sometimes it is and other times there's other factors that drop that niche out of a good early adopter niche. for example, maybe the stakeholder or CEOs of Fortune 1000 companies Mark Baldino (32:19.008) So thank you very much. Mark Baldino (32:35.982) of the people who see the light. So, that's the point that I'm going to share with this video. So, I'm going wrap up here. Thanks for listening. David Hirschfeld (32:40.562) in a particular industry and it's a small market, they're very expensive to reach and the sales cycle is really long. That would drop those all factors that might drop that niche lower than another niche where the sales cycle is much shorter, much easier to reach those people, cost to reach them is much less expensive, things like that. willingness to make a quick decision, other things like that. So, yeah. Mark Baldino (33:04.846) No, go on. David Hirschfeld (33:07.834) Yeah, so if we get to the validation interviews, one seemed like the clear winner, but it turns out we're not getting that affinity from those people, then we drop that niche and we go to the next one, which we've already done that deep dive on to understand where they sit in the niche. And one of those top three, usually in the top two or three, one of those is going to give you that high affinity. If nobody is, you're not even close, then or... Mark Baldino (33:20.59) you. David Hirschfeld (33:34.064) let's say you do get that affinity, but then you go to launch first and nobody's buying it, you can't seem to get any sales, then you might want to ask yourself, maybe this is, I should fail fast and cheap. Think of it like, this is the wrong time for this product in this market. There's other factors at play that I did not consider or I wasn't honest with myself in this process. Mark Baldino (33:53.228) Yeah. No, I just, I appreciate you saying that last part about failure and fail fast and cheap, because I think sometimes people hear metrics driven and you can convince yourself that the metrics are saying one thing, but there should be points along the way. And I'm sure there are, it sounds like there are, where the metrics might be telling you to reevaluate and go back two steps and rethink, or maybe let's, you know, we, we have, this is a failure and that's okay. And there's a, there's a learning in it. Cause I think sometimes when people... I don't know if it's natural inclination. Like you start down a path and it's like, we're going through this till we burn through our life savings or all of our runway and all of the capital. I think part of the idea here is you're actually helping them make smarter financial decisions and figure those out earlier in advance. David Hirschfeld (34:39.578) And hopefully if they do are going down the wrong road, it'll be obvious and they can pivot early, you know, make really big pivots early because there's no software they have to rewrite. Right. And redoing the prototype design is like a fraction of the effort that it takes to do the same thing to the software that you've completed. So, you know, it's, you know, so I'm really encouraging when the numbers aren't coming out, right. There should be some kind of evidence. What would be the right target? in terms of product and problem and things like that, and then shift. at some point you'll either realize that there's just no here here, or that you've figured out a formula that's gonna work, and now it gives you an anchor to build a business around. Mark Baldino (35:11.17) Thank Mark Baldino (35:21.454) much of the features of what it is makes this work. Yeah. Ju, this has been absolutely fascinating. And I appreciate that you've laid out a framework. To me, it's very logical and it makes a lot of sense. It's not filled with a lot of buzzwords. So I'm really enjoying it. If you would indulge me as we wrap up a little bit to go a little bit meta, which is to think about like, you probably did niche analysis on your customers and you came up with, this is the group of people that I want to serve. And this is their root cause. This is sort of the root cause. Like what's the root cause that LaunchFirst and that Tekyz is solving for these startups? David Hirschfeld (36:01.84) Okay. The, so it's really simple. I think, that is to, if you can't generate revenue from your product, then don't bother building it. And since you can generate re and by the way, there are lots of examples in the world of people that did prelaunch sales. I'll give you a really, really famous one. Elon Musk with his, with his electric sports car. Do you remember that? His very first version of a Tesla electric sports car, it was a prototype, it didn't exist. And he raised gobs of money on that, right? Before he had a name. So prelaunch sale, just typical prelaunch sale. There are many software examples of this too. So it's not as uncommon as it sounds like. There's also different ways of running a prelaunch. One of them is called a concierge launch. Mark Baldino (36:42.264) So, yeah. David Hirschfeld (36:58.104) Other people call it a Fred Flintstone launch. So if you know who Fred Flintstone is for people that, yeah, right. You know, caveman, but he drives a car, but there's no motor in the car. has to spin his feet under the car, right? Because there's no engine. So we call that a concierge launch. Basically you're selling the vision, but then you start to deliver the service immediately with cobbled together workflows and services and some manual effort because it's a more, it's a blend of technology and service that you're selling. Mark Baldino (37:03.16) Thank you. Mark Baldino (37:12.362) Thank you. Mark Baldino (37:23.534) of technology and some stages. Some things that I can't wait to look at in some future events. That's because they know that's what they're paying for. So, it was useful. David Hirschfeld (37:26.866) And sometimes people can't wait. They're not going to buy something for four months in advance because they need it now. And that's what they're paying for. So we do a concierge launch, which by the way are my favorite because you really learn how to run your business right away. But you might not have been able to sell the service without the software to demo so they can see what they're buying into. That's another one way to launch. Another one is the classic pre-launch where they don't buy. Mark Baldino (37:42.254) Thank David Hirschfeld (37:53.554) they're buying something and nothing will be available for three to four months until the first version of the MVPs up. So back to your question for launch first, any it's SaaS, B2B SaaS startups, it was the target for us because B2B SaaS startups fail in massive numbers and they fail for the same reason. Well, according to studies, there's two reasons why they fail in terms of Mark Baldino (38:11.35) Okay. David Hirschfeld (38:22.674) one's 48, 2 % and one's 38%. And I don't remember which is which. One is they run on money. Two is they lack product market fit. And depending on the study you've seen, it's one or the other, is above or below, right? So that's, you know, 80, 82%, according to the studies. that failed for those reasons. But I suggest that the reason they fail running out of money most of the time is because they lack product market fit. So I think that number for product market fit is much bigger than that. And the reason I say that is you may have run out of money and you are generating revenue, but you're not generating enough revenue and you haven't figured out your market well enough to have enough profit in there that you can reinvest back into your business without, you know, taking loans or, and so you're just, you might have revenue, but you have no profit. So you don't have product market fit if that's the case. Mark Baldino (39:06.86) I'm you'll be able to pass that different assessment without it. Mark Baldino (39:20.686) you're helping them de-risk the process, either if they've started and need to up a few steps or before they get rolling. David Hirschfeld (39:24.444) Right. David Hirschfeld (39:27.794) de-risk and speed it up. If you're gonna fail, you're gonna fail in three, four or five months with this, not in three, four or five years. Assuming that you believe the result. I've had people get through it and still wanna build their MVP, because they're sure if they have the product, now it's gonna sell and it doesn't pan out. right. There are probably rare cases where it would, but 90 % of them, yeah. Mark Baldino (39:55.736) As you said, some of those folks are, maybe they haven't taken off the black robe and been quite the scientists because you do need to listen to the metrics and kind of chart the process. well, like I said, David, I've thoroughly enjoyed the conversation. I've been in the background thinking of like, how can I do this just as a consulting service? How can I do some niche analysis and ensure I'm doing product market fit? And I'm sure the listeners here will be enjoying it as well. So I just want to say thank you very much for your time today. Much appreciated. David Hirschfeld (40:26.14) Well, thanks Mark. I love talking about this and your questions were really spot on. Mark Baldino (40:31.254) Right on. I will include your contact information when we post this. Folks, if you're in need of product market fit and want to try out the Launch First framework and methodology, reach out to David. David Hirschfeld (40:43.804) Thank you. Yeah.