Product Market Fit is one of the hardest things for an early-stage startup to achieve and it’s a critical step for companies looking to scale and be successful.
Product/market fit means being in a good market with a product that can satisfy that marketMarc Andreesen – Andreessen Horowitz
So the first thing you need to do is to understand your target market. Are you building a product for the automotive market, the food & beverage market, the software or technology market or something else? To find product-market fit, you really need to narrow your market and niche down. Don’t try to make your product solve the problems of multiple markets early on. Identify a core initial target market.
Once you know your target market, make sure you really understand and research it. You can’t possibly expect to satisfy your customers let alone a target market unless you really understand their problems.
In researching a market and the problems within that market many entrepreneurs will start to identify problems. Once you have a couple conversations you’ll see patterns emerge in terms of problems that people are experiencing.
In the early stages of a startup it’s typical to build early solutions to those problems. And when these solutions solve those specific problems you have product-problem fit. You’ve identified a problem and you’ve provided a solution… many entrepreneurs think that they are set and they stop there but finding product-market fit is more complex. You need to ensure that your product doesn’t just solve a specific problem, but rather it solves a problem that is repeatable and consistent across a large market segment.
To do this you need two core things:
- First: You need a good cross-section of customers across your market. Not just your friends’ circle, but knowing that a good portion of any customers in your target market have a similar problem you can address.
- Secondly: Your product has to be sticky enough that people are upset if you were to take the product away.
Finding and solving a problem is a great start but to really find product market fit you need to make sure that the problem you’re solving is widespread and impacts a large enough market in a scalable way and that the solution doesn’t feel like a NICE-to-Have but rather a NEED- To-Have.
It’s better to make a few users love you than have a lot that are ambivalent.Paul Graham – YCombinator
You need people to care and the best way to find out if they do is to ask them. Ask your users how they’d feel if they could no longer use your product. The group that answers ‘very disappointed’ will unlock the product/market fit.
Sean Ellis, who ran early early growth in the early days of Dropbox, LogMeIn, and Eventbrite and adviced that if 40% of your customers would be “Very Disappointed” then you’ve found product market fit.
When thinking about product market fit, it’s worth also considering founder-market fit. Some founders have deep experience with a particular market. Maybe they spent a decade at a large company within the target market so they know the right people and they know the problems that are un-solved. Sometimes having a good founder-market fit can be a huge advantage and investors will consider how well a founder is aligned to a market. On the flip-side sometimes founder-market fit can be road-block. Consider how sometimes only an outsider to a market can realize just how broken a market is. If Uber had deep market experience in the Taxi market they may never have build as disruptive a company.
Finding product-market fit is both one of the most misunderstood and difficult steps for any growing startup. Keeping yourself focused on the customer and how that relates to the larger market will keep your company on track.