Before You Get to Product Market Fit
Before You Get to Product Market Fit
Product Market Fit is not a destination, it is a journey
About a decade ago, I used to host food tours. This wasn’t a business, it was just a hobby that started with a bet with a friend and his food blog. He mistakenly thought he had the definitive list of best NYC Chinatown dumplings, and I had to prove him wrong.
A bit of context, I had lived in Beijing for a year. It was my first exposure to what actual Chinese food was like, and I traveled across many parts of China eating everything I could. This was when I fell in love with dumplings, whether steamed, fried, or filled with soup, and took my fondness for dumplings back home to NYC.
So back to the bet, I challenged my friend to a food throwdown. We would go to ten dumpling places, rate each dumpling, and declare a winner. We each invited some friends to come join and be witnesses. Then on the day of our dumpling challenge, instead of four or five people joining us, we had a crowd of forty, all hungry and excited to eat.
Despite the chaos of that first outing, it was so much fun we did a follow up but with soup dumplings. Then I continued on with a few more tours because other friends missed the previous tours. That was when a startup friend of mine turned me onto a Berlin based startup called Gidsy that offered a site for people to operate their tours.
I figured an automated way of scheduling, ticketing, and handling money was way better than my ad hoc system of email, spreadsheets, and cash. As soon as I posted dates, people started booking tours from all over the world coming to NYC and wanting dumplings. I went from one tour a month to multiple tours in a week.
Then one December, I keep getting email pings, but at an unusually frequent clip. As I scrolled the messages, it was clear that these were all people wanting to sign up for the tour as a holiday gift. I asked one of them how they found out about the tour, and they pointed me to an article in The New Yorker about my tours.
You cannot buy this type of promotion. When it comes and you are a struggling startup founder, getting positive press or a mention by an influencer can be a breakout moment. It reminds me of what Anthony Wilson, Co-Founder & CTO at Supabase, shared recently that when they got on the front page of Hacker News, they went from managing a few dozen databases to 800 for their “open source Firebase”.
Whereas Supabase was elated about the exposure, I was terrified. I now had a waiting list of over 300 people wanting to book dumpling tours in the dead of winter. I promptly deactivated my tours, shuttered the website, and ignored all requests, even those from people that tracked me down on LinkedIn and Twitter.
In startup speak, I had product market fit alright. What I did not have was founder market fit. While the tours were fun, it was quickly becoming apparent even before the hype came that I was going to shutter the tour. It was not something I saw myself wanting to put in the time or effort to scale and build into a profitable business. I simply did not love it enough.
A lot of people in the startup world talk about product market fit. This concept has also worked its way into large enterprises as well to help gauge success of new product launches. The idea has varying definitions, but the one that most resonates is what Marc Andreessen of Netscape and Andreessen Horowitz fame. He defines product market fit as:
“Product/market fit means being in a good market with a product that can satisfy that market.”
Marc was drawing upon the wisdom of Andy Rachleff, the founder of Benchmark Capital. Andy had a concept called the “value hypothesis”. This is essentially what you are going to build for whom is it relevant with a scalable business model. You have product market fit when you can definitely answer the what, who, and how of the business.
When speaking of product market fit, it often feels binary. There is a before and after, and those two phases of startups are very different. However in practice, reaching product market fit is never binary, linear, or exact. From what I have experienced and have learned from other founders, the journey more resembles three fuzzy stages:
Founder Market Fit
Customer Idea Fit
Market Product Fit
I already talked about not having Founder Market Fit with the tours. I often meet founders that also have this same dilemma of not loving what they are building. Every founder experiences rough patches. It comes with the territory. If there is no passion for what you are building however, no amount of grit will get you through the truly awful moments. As Elon Musk said:
“Starting a company is like eating glass and staring into the abyss.”
I often ask founders when I meet them why they care about the market they are in and what was the spark that got them started. The ideas that stick are the ones that scratch an itch and drive you so crazy that it is impossible to ignore. This means diving into a market that you are deeply passionate about. That is when you have Founder Market Fit.
Customer Idea Fit is the stage where most startups exist. In the Lean Startup methodology, this is where you bounce between Customer Discovery and Customer Validation. Most startups never leave this stage and often fold because they never nailed product market fit. According to Andreessen, for early stage startups the marching orders are clear:
The only thing that matters is getting to product/market fit.
The easiest way to reach this product market fit is to find the customer that is hugely excited about the problem you propose to solve. Then you can build the proposed solution and iterate until customers find it immensely valuable. Some see this as a chicken and egg problem though. How do you get potential customers excited if you do not have a product to show?
This is why I emphasize “idea” because there does not have to be anything tangible at this stage. For example, people often associate an MVP (“Minimally Viable Product”) as something you have to build, using code. Many entrepreneurs however started with a much more simple thing. One founder I spoke with recently used their newsletter and a sign up form to test interest, while another used Ad Words and measured click-thru rates to gauge viability.
The danger in the Customer Idea Fit is false positives. Like quicksand however, the wrong customer type can quickly smother the startup as it starts to scale before ever confirming whether they have the right customer. This is why it is important to be open, continue to test and experiment with different customer cohorts, and capture qualitative and quantitative data to confirm whether the customer segment is pointing you to the right market.
This leads us to product market fit. I was listening to a talk with the Co-Founder of Supabse who described when they knew they were onto something. They had been using “real time Postgres” to describe themselves. No one cared. Then they changed it to “open source Firebase” and developers started to notice. Soon after, they hit the front page of Hacker News and went from tens of users to over 800 databases managed overnight.
What is the subtle point is that the product did not change, they reoriented the market with a better targeted message. What they reached is market product fit, because as Andreessen and many founders and investors have confirmed, the market is the only thing that matters. A good market can overcome a poor product and the wrong team and fix both over time.
One startup I worked with several years back thought their market was recruiters. Huge market, but the idea of a CRM to help manage candidates for recruiters did not resonate strongly. It made money, but the data and customer surveys showed little enthusiasm. What the data did show though were sales teams with SDR’s gobbling up the product. That was their market.
You can feel the pull when you hit the right market. You simply cannot move faster enough to fulfill the interest. The product may continue to frustrate and annoy users, the bugs and tech debt will pile up to scary proportions, but the sweet pull of Market Product Fit gives the startup a fighting chance.
Mind you, I have been talking about founders and startups, but many of the same principles share above work for enterprises. The only key differences are that Founder Market Fit becomes Company Market Fit, and internal corporate pressures also exert a force on reaching each stage of the product fit journey.
What is your process today for designing and developing new products? What were the biggest roadblocks to product market fit and how did you overcome those challenges?
Mark Birch, Editor & Founder of DEVBIZOPS
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