Going from nothing to product/market fit...the missing piece of the puzzle.

​Why is getting to Product/Market fit so damn hard? If you’re like me and have at some point in your life spent an obscene amount of time working on a product that went nowhere and wondered why, or if you’re someone who’s facing that challenge right now, this article’s for you. I’m going to go over why getting to Product/Market fit is hard, the common pitfalls to avoid and some action points to help you get there faster.

What is PMF and why is it so hard?

So first things first, what is Product/Market Fit (PMF)? The term and concept was introduced by famed Valley investor Marc Andreessen in a classic post titled ‘The only thing that matters’. The short summary of it is this: Product/Market fit is defined as "being in a good market with a product that satisfies the market" and this milestone is the only thing that really matters in an early stage startup. Achieve this fit and everything becomes a bit easier. If you don’t, everything is harder, until you one day run out of money.

As an action-oriented entrepreneur, you’re probably thinking that sounds like a lot of fluff. What does a ‘good market’ mean? Or what does it mean to ‘satisfy’ a market? While there’s no universally agreed upon way to vet if a business has hit PMF, there are a few proxies out there that are meant to be good signals: For example, if you’re building a SAAS company, seeing < 2% monthly churn is a good sign you’ve hit PMF. If you’re building a consumer product, you can try Sean Ellis’ method of surveying your customers to see if 40% would be very unhappy if the product went away — if so, that’s also meant to be a good sign you’ve hit PMF.

So why is it really hard to get to PMF? In most cases the reason teams get stuck in endless iterations (i.e. product spin) is because they’ve lost focus of what really matters when you’re a Pre-PMF business. Your only goal, as a Pre-PMF business, should be to discover and validate a healthy market that loves your product. And you should be ready to pivot on your product idea, market or both until you achieve this fit. Post-PMF companies get to focus on all the other fun stuff that’s required to scale and grow the business. Here’s a great diagram from Steve Blank that captures the essence of what Pre & Post PMF companies should focus on.

The missing piece of the puzzle

So you’ve launched a product and find that you’re not getting the traction you’d hoped for. What do you do now? To answer this question, we need to revisit the two variables in this equation, the product and the market. What I’ve observed is that many entrepreneurs don’t give enough consideration to the market side of the equation. I.e. they’ve made one of the following mistakes: 

1. They’ve built a technology and are now searching for the problem/market.
2. Their target market is too broad. They haven’t identified their early adopters.
3. They haven’t spent enough time speaking to customers in their market.

In all three cases, you will find that there is a lack of understanding of the market that the product is serving.

Here is a methodology that I use to discover the right market for your product. This is a pretty broad topic and there’s already a ton of great content on the web that touches on various elements of this journey, so instead of repeating what’s out there, I have condensed my list to highlight the top resources I’ve found for each topic. I recommend that you read the list first and then dive into each section for further guidance & help.

• List out the top three pain-points, problems that your product resolves.
• Brainstorm a list of customer segments that have these pain-points and would benefit from your solution. It’s important to keep your segment as small as possible. i.e. a segment that you can win or dominate in. The many benefits of identifying a minimum viable segment are detailed here.
• Then, you will want to do some quick analysis on the size of the segment, demographics and lifestyle. The team at HubSpot has a great list of tools that can help you understand your market segment at a broad level.
• You should now have some high level market research which may uncover competitors that are doing something similar. You can use SEMrush & SimilarWeb to get a better understanding of these competitors and also to help validate whether your target segment is engaged with these competitors.
• After completing your market research, you should pick out your top three segments and start customer interviews. Sean Murphy has put up a great guide to doing customer interviews here. It’s meant for B2B startups, but I’ve found the framework applicable to any type of customer interview.
• By now, you should have a gut feel of what segment will truly appreciate your product and what segment you may want to pass on. It’s important now to systemize all the information that you’ve gathered and put in story form to paint the larger picture of what your customer really thinks and wants you to solve. I’ve found that Customer empathy maps really help you get into the mindset of your customer and are also great at deciphering what a customer really wants vs what they tell you they want. And that can be the difference between breakthrough innovation vs joining the competitive herd of solutions already available.
• If you’ve completed the above steps, you should have a hypothesis on a problem worth solving for your target segment. If not, you need to iterate on your market and start over. i.e. pick the next customer segment from your list above and start over.

If you have NOT done this yet, even if you are already well into your product development, stop doing everything and refocus on finding your market.

Don't forget to spend time validating your market

So you  have a good hypothesis on a problem worth solving in your market.  It's time to validate this hypothesis - I recommend the following steps:

• Your first step should be to build out a product positioning strategy. This is just a fancy way of saying you should express your value proposition with the right tone and language that appeals to your target market. If you find this challenging, you’ll want to pick up Positioning by Al Ries, it’s a must read.
• Your next step is to do some quick testing of your value proposition statement. If you’re building a B2C company, I’ve found Google Consumer Surveys to be a cost-effective way of getting some quick validation from the market. You can survey 500 people in your market for $50! If you’re building a B2B company, use Google Forms (it’s free) to create a quick survey highlighting your value proposition and send it out to the customers you had spoken to in your customer interviews.Caveat: Make sure you document your hypothesis and target threshold that would invalidate the hypothesis before running any survey/test. This keeps you honest.
• Set up a Facebook campaign to test out your value proposition on your target segment. The great thing about Facebook’s Ad platform is it gives you unparalleled control over who will see your ad. For example, I can decide I want to target people who live in Seattle, have completed a University degree, are recently engaged, commute to work and like to travel! Your target threshold CTR on your FB Ad should be 1%. Generally anything between 1–3% is seen as a good signal.
• Create a landing page and direct your Ad traffic to it. I’ve used unbounce,weebly and launchrock to create effective landing pages within hours. The key test here is to see whether you can convince your target audience to sign up for your product. Conversion rates vary quite a bit depending on industry, Generally speaking anything over 2.5% is a good signal that the market likes your value proposition.

​If your value proposition hypothesis has passed the above tests, then you have the signals necessary to proceed with updating your product! This methodology also works in evaluating any idea to see if it makes sense and is worth pursuing. It’s a fair bit of work at the beginning, but ends up saving you time over the long run and gives you the deep understanding of your market that’s needed to succeed.

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