Product Market fit is one of these terms that is thrown around in technology and startups.
But what does it really mean?
You reach product market fit when you have built something that customers want.
It sounds so simple, but oftentimes we approach starting a business by creating a product or service that we think customers want. In reality, we are not solving the end customers’ problem and therefore, we lack product market fit.
“The most common mistakes startups have is to solve problems that no-one has” – Paul Graham
Marc Andreessen talks about how you know if you are hitting the right product market fit.
“You can always feel when product/market fit isn’t happening. The customers aren’t quite getting value out of the product, word of mouth isn’t spreading, usage isn’t growing that fast, press reviews are kind of ‘blah’, the sales cycle takes too long, and lots of deals never close. And you can always feel product/market fit when it’s happening. The customers are buying the product just as fast as you can make it — or usage is growing just as fast as you can add more servers. Money from customers is piling up in your company checking account. You’re hiring sales and customer support staff as fast as you can. Reporters are calling because they’ve heard about your hot new thing and they want to talk to you about it. You start getting entrepreneur of the year awards from Harvard Business School. Investment bankers are staking out your house. You could eat free for a year at Buck’s.”
When we look at it from this perspective, product market fit can almost seem daunting. But there are so many profitable companies that would argue they are still not at product market fit.
So I think it is better to frame product market fit as an ideal to continuously work toward.
How can we focus on moving the needle towards product market fit? The clue is in the name. Focusing on the ‘market’ allows us to put energy towards figuring out exactly what customers want. The problem the customer is experiencing is the real opportunity. If we can refine our product or service to get as close as possible to solving this problem, we can inch closer and closer towards product market fit.
This happens by speaking with customers. Initial customers and community are a gold mine for feedback and helping you understand the problem from their perspective. Reverse engineering the problem they are having to meet with your product and service offering is what we want to get at.
Conduct lots of customer interviews. Speak with as many of them as possible. Ask them questions about their life in relation to the problem area you are solving for.
Building an MVP will allow you to start generating feedback as soon as possible, but it’s not worth spending large amounts of time and resources building a robust solution that ultimately, customers do not have a use for.
“The Minimum Viable Product is that version of a new product which allows a team to collect the maximum amount of validated learning about customers with the least effort.”
Note how the MVP and validated learning about customers goes hand in hand. Continuously iterating and refining your offering based on validated learning is what to strive for.
It’s also important to give yourself the freedom to change and adapt your products and services as you learn from customer feedback. As you grow, so will your understanding of the problem you are solving. With this understanding, your customer profile might also evolve.
Ultimately, product market fit is a two way street. There is no point in building something customers don’t want; and at the same time, you should not say yes to building every little feature that customers suggest. There is a fine line between understanding exactly what the customer’s problem is and then having the awareness and aptitude to adapt your solution to fit their needs.
I think product market fit lies somewhere on this fine line and it is a continuous quest to get closer and closer to it.
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