This blog article is based on the 3 Things This Week’s edition dated 23rd August 2018. The theme of this edition is “product-market fit”.
Product/market fit has always been a fairly abstract concept making it difficult to know when you have actually achieved it. Here are some definitions or interpretations of this term by some people:
Paul Graham: The mantra at Paul’s successful startup incubator YCombinator is “make things people want.”
Steve Blank: In Steve’s book Four Steps to the Epiphany he writes: “Customer Validation proves that you have found a set of customers and a market who react positively to the product: By relieving those customers of some of their money.”
Marc Andreessen: A couple years ago Marc wrote the following on his blog: “…the life of any startup can be divided into two parts – before product/market fit and after product/market fit.” He goes on to write: “When you are BPMF, focus obsessively on getting to product/market fit. Do whatever is required to get to product/market fit. Including changing out people, rewriting your product, moving into a different market, telling customers no when you don’t want to, telling customers yes when you don’t want to, raising that fourth round of highly dilutive venture capital — whatever is required.”
Here are this week’s 3 things:
Thing # 1: Zero to traction
Traction is everything, but it’s a reflection of getting product/market fit. You can’t get growth and traction without nailing fit first. P/M fit is when people who know they want your product are happy with what you’re offering. Then you’re ready to shift your focus from product to distribution and win the market. Read this interesting presentation that covers everything about PMF.
When has a consumer startup hit product/market fit? This article looks at this question through the lens of consumer internet to add some additional thoughts. To begin with, what is a market anyway? And how do you validate it’s real? A market consists of all the consumers who can search for and compare products for a use case they already have in mind. The article prescribes a simple set of questions to test PMF. When user testing, do people group your product in with the “right” competitive products? Do they understand the differentiation of your product versus your competitors? Will some segment of users in the overall market switch to your product? Are some users who’ve “rejected” the products in the market willing to try your product? How do your underlying metrics (DAU/MAU, +1 week retention, etc.) compare to your competitors? All of the above are signals towards a product/market fit.
Thing #3: 12 Things about Product-Market Fit
This is a longish article which is more like an encyclopedia of PMF. Some of the takeaways from this article – Serendipity plays a role in finding product/market fit but the process to get to serendipity is incredibly consistent. PMF emerges from experiments conducted by the entrepreneurs, through a series of build-measure-learn iterations. Net Promoter Score (NPS) is a great tool to predict the magnitude of customer love for one’s product/service — ideally a score of 40 or higher “to know you’re on the right track.” Getting product right means finding product/market fit. It does not mean launching the product. It means getting to the point where the market accepts your product and wants more of it. Finally, it advises, in the early days of a product; don’t focus on making it robust. Find product-market fit first, then harden.
How is your startup moving to a product-market fit? Share your stories.