Intro to Product Market Fit
Arguably, the most important step in a startup’s life is achieving product-market fit (PMF). VC Marc Andreessen defines product-market fit as targeting a sizable market while having a product that satisfies that market1. Simply, you have PMF when your product is good enough that enough people want to pay for it. Former president of Y Combinator, Sam Altman, takes it further with this litmus test: “do users love your product so much they spontaneously tell other people to use it?
Even if you start by targeting a small segment of the total addressable market, product-market fit is the catalyst for significant growth. Without providing a well-fit solution, a startup will not grow. Building something people want seems simple enough, but oftentimes founders can be distracted from getting the necessary market feedback. Since PMF is impossible without knowing what your customers want, customer discovery is critical.
Seasoned founders can feel whether or not they’re working toward PMF, but if you’re like us at Innovation Portal, we like something we can measure. Notable founder Sean Ellis, found a leading indicator: just ask users “how would you feel if you could no longer use the product?” The group that answers ‘very disappointed’ will unlock product/market fit. Founder, Rahul Vohra measures and analyzes the percent who answer “very disappointed” to double down on what users love and those who answer “somewhat disappointed” to address those things that would add enough value to the next customer segment.
So, what do you do if you don’t have the right fit? First, don’t panic! Lots of startups realize they aren’t capturing the consumers as they intended. You can solve that problem by reexamining your market assumptions. It may be that you’ve created a product for one market but your product better satisfies another market or maybe it’s a simple tweak that adds tremendous value to the market you’re currently targeting. Getting to PMF takes trial and error… make, test, get feedback, tweak, repeat. Scientific method anyone?
Overall, product market fit is about knowing your market and how your product is going to satisfy the needs and wants of that market. Getting the most information during customer discovery will help in creating a better product for the market you’re targeting. It is worth noting that every potential customer you talk to during the product discovery stage won’t be a member of your target market – and that’s okay. Remember, the purpose of customer discovery is to get information from them, not to sell them your product. All of that information will be used to achieve product market fit and lead to huge growth!
The resources available at Innovation Portal are designed to help startups navigate through PMF. Whether that be one on one consulting or getting in touch with a subject matter expert – Innovation Portal has the goods
Follow this link to download a Product Market Canvas worksheet to help you visualize how to achieve PMF.
Follow this link to download a minibook on Product Market Fit
1 Pande, Marc Andreessen and Vijay, Marc Andreessen and Jorge Conde, Marc Andreessen, and Marc Andreessen and Dylan Field. “Marc Andreessen.” Andreessen Horowitz. Accessed January 5, 2021. https://a16z.com/author/marc-andreessen/.