In building Khosla Impact, we have become proponents of "Build, Test, Measure", the lean methodology of company creation made popular by Eric Ries in The Lean Startup, and previously described by Steve Blank in Four Steps to Epiphany.

We push our entrepreneurs to use this problem-solving approach and we use it ourselves. Over the next few months, we will share insights we have developed as we invest in, advise and help build companies that drive development in the bottom half of the world's economic pyramid.

Topics will range from finding product-market fit to recruiting and fundraising.  We will highlight what has worked well and what hasn’t.  Our hope is that others in frontier markets -- from investors to entrepreneurs -- can learn alongside us. If you would like to share your own experiences through this newsletter, please reach out to us.

To kick off the series, here’s a story from our investee Kopo Kopo.

Kopo Kopo, a merchant acquirer for mobile money platforms in Africa, began testing product-market fit by turning its three-person salesforce into a customer research group.

While Kopo Kopo’s software team pushed out code in two-week "sprint cycles" (the agile development method), its young sales officers had two-week “sales cycles”. The sales team would dedicate two weeks to new merchants from a single market segment (either clinics, or microfinance organizations, or restaurants) and complemented the efforts by analyzing their approach midway and assessing customers’ responses.  At the end of each sprint, they would move on to a new segment, and repeat the cycle.

Last year, after churning through nearly a dozen potential market segments Kopo Kopo finally found its early adopters -- businesses which operate at night.  These merchants had customers who wanted to avoid carrying cash on the streets of Nairobi after dark.

Instead of wads of cash, Kopo Kopo enabled the customers of these merchants to pay with their MPESA accounts.

This realization allowed the company to gain its first cohort of hardcore users, which drove product and service improvements and gave the company credibility with larger merchants and business partners, including Safaricom.   

Spending lots of time with early and potential users of the product, and running disciplined market tests was the best way to get to the "right answer" as fast as possible.

Kopo Kopo now services thousands of merchants across Kenya and is pursuing international expansion.  They continue to use the “Build, Test, Measure” approach when evaluating new products or segments.

If you have a story on how you have used "Build, Test, Measure" or similar approaches to find product-market fit, please e-mail our communications co-ordinator at aparna@khoslaimpact.com.