How to achieve seamless product/market fit & sustain accelerated growth for your startup?
Product-market fit means that you’ve found a product and a market that wants it . But if that market is small, cheap, or shrinking, you still won’t have much of a company. Don’t just find a market , find a great market.
How to Get Product/market Fit?
Do Everything that is Possible.
“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.” - Eric Jorgenson
Changing teams, markets, products, names, and visions are all reasonable in pursuit of product-market fit. That’s the story of many companies: Instagram, Soylent, Anyperk, Twitter, all radically changed course from their original plan to find Product/market fit.
Engage with Your Customers. Have productive customer conversations regularly.
Customer acquisition, engagement, development and retention are core skills to developing product-market fit, as you’ve come to know so far.
PMF is Everyone’s Job.
Product/Market Fit is not some mythical status that happens accidentally. Companies work for it; they crawl towards it.
“They’re ready to throw out weeks or months of work because the evidence supports that decision. The services as their customers know them now are fundamentally different from what they were at launch — before they had Product Market Fit.”
Every member of the team has a role to play in finding it, from those who are building products to those that make strategic decisions or interact with customers.
Target a Great Market.
“Product-market fit means that you’ve found a product and a market that wants it . But if that market is small, cheap, or shrinking, you still won’t have much of a company. Don’t just find a market , find a great market.” - Eric Jorgenson
Measuring Product/market fit -
a)The degree to which your customers recommend you to their friends - Word of mouth is always a good way for you to get that early recognition. Delighted and SurveyMonkey are two proven services for calculating & analysing the customer feedback.
“Product market fit is a funny term, but here’s a concrete way to think about it. When people understand and use your product enough to recognise it’s value that’s a huge win. But when they begin to share their positive experience with others, when you can replicate the experience with every new user who your existing users tell, then you have product/market fit on your hands. And when this occurs something magical happens. All of a sudden your customers become your salespeople.” - Josh Porter
b) The degree to which current customers & users would be upset if tomorrow your company somehow happened to close down. Its an amazing way to measure your company’s value to the users.
“It's not the product that should be insanely great, but the experience of being your user. The product is just one component of that. For a big company it's necessarily the dominant one. But you can and should give users an insanely great experience with an early, incomplete, buggy product, if you make up the difference with attentiveness.” - Paul Graham
From a scale of ‘very disappointed’ to ‘not disappointed’ & finally ‘I no longer use the product’, can help you build a sustainable & scalable product. 40% or more users saying they’d be very disappointed means your product is quite the ‘must have’ in that market & customers couldn’t do without it.
Maintaining Product/market Fit -
“Sometimes the right unscalable trick is to focus on a deliberately narrow market. It's like keeping a fire contained at first to get it really hot before adding more logs. Any startup that could be described as a marketplace usually has to start in a subset of the market, but this can work for other startups as well. It's always worth asking if there's a subset of the market in which you can get a critical mass of users quickly.” - Paul Graham
Startup Founders always have the wrong notion of treating their venture like a rocket ship which requires an insane launch to propel itself into the chosen market. They have inane superstitions about launching it simultaneously in different publications and would choose like a Tuesday in most cases as a launch date, for they’d have heard it to be the optimum day of the week to do such things.
It’s totally pointless. How many successful startup launches do you actually remember?
How you are faring as a company depends entirely on how happy you’ve made those initial launch day users rather than how many attended the event on that ‘opportune’ day.
Broadcasting your product might seem like the most practical & feasible option to you as a founder, but people over the world, especially potential customers, wouldn’t be just sitting there all day waiting to tune into your launch event, because clearly everyone has different things to do.
“It's not enough just to do something extraordinary initially. You have to make an extraordinary effort initially. Any strategy that omits the effort—whether it's expecting a big launch to get you users, or a big partner—is ipso facto suspect.”
It’s necessary that we should try thinking of startups as pairs of what you're going to build, plus the unscalable things (manual recruitment, freebies) you're going to do initially to get the company going.
“It could be interesting to start viewing startup ideas this way, because now that there are two components you can try to be imaginative about the second as well as the first. But in most cases the second component will be what it usually is—recruit users manually and give them an overwhelmingly good experience—and the main benefit of treating startups as vectors will be to remind founders they need to work hard in two dimensions.”
Paul Graham’s description of treating startups as vectors makes sense because he puts things into perspective so easily -
The unscalable things you have to do to get started are not merely a necessary evil, but change the company permanently for the better.
If you have to be aggressive about user acquisition when you're small, you'll probably still be aggressive when you're big.
If you have to manufacture your own hardware, or use your software on users's behalf, you'll learn things you couldn't have learned otherwise.
And most importantly, if you have to work hard to delight users when you only have a handful of them, you'll keep doing it when you have a lot.
A Product that Resonates
Once you have achieved product/market fit, it’s time to accelerate through the next steps as shown in the pyramid and then begin scaling your business. Here’s a brief description of what to do at each of the steps before scaling, as spoken by Sean Ellis -
Promise: Highlight the benefits described by your “must have” users (those that say they would be very disappointed without your product).
Economics: Implement the business model that allows you to profitably acquire the most users.
Optimise: Streamline a repeatable, scalable customer acquisition process by testing multiple approaches and tracking to improve the right metrics.
Doing so improves your company’s stature in the market, and boosts the effectiveness of any future marketing procedure you may initiate. And once you’ve achieved product/market fit, everything else will simply fall into tandem.
“It's not the product that should be insanely great, but the experience of being your user. The product is just one component of that. For a big company it's necessarily the dominant one. But you can and should give users an insanely great experience with an early, incomplete, buggy product, if you make up the difference with attentiveness.” - Paul Graham
