Failing to find the product-market fit (PMF) is often the first domino that sets off startup failure, which is why it is a core element of a company's growth.
What Is Product-Market Fit?
When a startup finds a good market and creates a product that satisfies it, it attains product-market fit. Developing a product with the best technology or a product that is necessary (but not adequate) for the market doesn’t automatically signal PMF.
Genuine product-market fit is a repeatable engine that drives growth. Often, it takes a lot of time, and founders must be comfortable failing at it for a while. This implies that you have to be passionate about the problem you’re solving and believe in the people you’re working with.
Product-Market Fit Myths
A product-market fit is a big-bang event. When you have product-market fit, it is obvious. Once found, startups can’t lose it – Misconceptions like these are abundant. So, let’s bust some.
1. Believing You Have Product-Market Fit
The most common myth is that startups think they have a product-market fit when they don’t. As a result, founders start optimising the product, hiring more, and burning through their pockets. The number of employees or another funding round does not signal product-market fit. When customers look at your product as a must-have and are willing to pay for it, only then do you achieve some measure of success.
2. The Product Team Will Find the Fit
Achieving product-market fit is a collective effort. It is everyone’s job, but members of the product management and customer-facing teams play a crucial role in finding it. The latter gathers customer intelligence, and the former converts it into actions.
3. First to Market Makes You the Winner
First-mover advantage is not linked to achieving product-market fit. Nor does it assure you domination over the competition. There are enough startups that arrive later but achieve long-term success. Facebook, by no means the first social network to arrive on the scene, is a quintessential example.
4. Achieving Product-Market Fit Means It Stays, Always
It doesn’t. It’s not a fixed goal but a moving goalpost because user behaviour keeps changing. So, keep adding new features and capabilities to your product. Users churn and find other products that do the job when yours doesn't. It also means you must prioritise building features to retain product-market fit.
5. Product-Market Fit Is a Magic Elixir
Startup success does not come hand-in-hand with product-market fit. Yes, it’s a landmark moment, but after finding a product-market fit, the startup must build a moat against competitors and have a sustainable growth model.
Achieve Product-Market Fit
When a startup hasn’t achieved product-market fit, the sales cycle is long, there is low usage and no word of mouth, deals fall through, and customers don’t see any value in the product.
If that is the case, here are some established processes to follow. Do remember that building a successful product-market fit is not a single-variable problem. And it may look slightly different for each startup.
1. Find the Target Customer
Customers who help you reach product-market fit are willing to pay, offer constructive feedback, and bring in new customers, making the acquisition cost low. How do you find such customers? By focusing on the market first.
Identify the underserved needs of a market and what customers are dissatisfied with. Then build a product that solves those use cases because they will be more willing to try your minimal viable product (MVP).
2. Create the MVP and Test It
The product's first version is never perfect. PMF occurs after you’ve shipped version 1, received initial customer feedback, and built more versions. So, work towards creating a bare-bones product with all the minimum viable features instead of a perfect version. Roll it out and test it with your customers.
3. Build-Measure-Learn Iterations
The key to achieving product-market fit is iterating the product with features customers want. Yet, that doesn’t mean blindly accepting customer feedback and saying yes to every feature. Experimenting is good but prioritise what to build by asking:
1. Does the feature enhance the current product?
2. How many customers have requested it?
3. Is your ideal customer demanding it?
Remember that customers rarely use 80% of the features on a product. So, if you build just the top 20%, you’re on the path to achieving a product-market fit.
4. Pull On Every Lever
The final approach to reaching product-market fit is to do whatever is necessary. Adapt your product to a new market, work with new talent, repurpose old ideas, and rewrite the entire product. Say no to customers or say yes to them, even when your roadmap doesn’t allow it.
Achieving product-market fit is about choosing a market with a real problem, launching a simple, doable product, and then listening to customers.
There is never a “Eureka!” moment. It is gradual and requires constant adaptation even after a startup has found PMF. Post achieving product-market fit, you must optimise, increase efficiency, and strategise to stay ahead of competitors.
Contact us if you’re a new startup struggling at the "before product-market fit" stage. At Scalix, we help founders get easy access to community, capital, customers, and convenience to build sustainable and scalable businesses.