Finding Product/Market Fit
In this talk, delivered at ProductTank, London, Janna Bastow talks about the journey to finding Product/Market Fit. This includes what to look for, how to measure it, and how not to be fooled along the way.
Product/Market Fit is a popular topic among growing startups, but it’s vastly misunderstood. That’s probably because it’s a made up concept that’s open to interpretation, rather than a fixed state, but that doesn’t stop people from taking a stab at trying to pin down what it is.
What is Product/Market Fit?
Marc Andreessen coined the term in 2007, when he said that product/market fit means being in a good market with a product that can satisfy that market. Since then, lots of other takes have been heard. Paul Graham from Y Combinator says that you’ve hit product/market fit when you’ve made something people want, while Sam Altman, also of Y Combinator, says it’s when users spontaneously tell other people to use your product. Another one that’s popular enough to have been heard from multiple sources is simply: you can feel it.
Now, this might be the story for some startups. You hear of startups who hit on something that results in customers begging for more, running low on stock or server capacity and frantically hiring to keep up with demand.
It’s not the story for all companies. Some companies take funding to gain extra time to find their product/market fit. Other companies, like my own journey with ProdPad, found product/market fit over time, through learning and iteration and measured adjustments at each step.
Multiple Definitions of Product/Market Fit
The main problem with a lot of these definitions of product/market fit is that their not measurable. And if they’re not measurable, they’re not actionable. And my inner nerd needs more than that.
Back in the early days of ProdPad, I recall someone telling me that product/market fit is when you’ve got 10 completely unconnected paying customers; people who aren’t your family or other friendlies, but legitimate customers. Yes, it was tough finding our first 10 customers – the first version of ProdPad was built by myself and our co-founder and was a shaky MVP at best, and each sale was a slow, painful process to get a new customer on to a tool that was frankly, no where near done. But we got there!
And then we discovered that this was a lie, probably conjured up to encourage fresh-faced entrepreneurs like myself to set achievable goals and to keep going. But no, in hindsight, getting those first 10 customers was actually a lot easier than I realized, certainly more-so than what was to come.
Product/Market Fit is Way Beyond 10 Customers
What I’ve discovered is that product/market fit is way beyond 10 customers. At 10 customers, you can fairly say we reached problem/solution fit, and could show that we could create a product to solve a problem. But we were a long way off proving there was an actual market for it.
Product/market fit was probably closer to the 1000 customer mark for us. Though as you’ll see, it’s not always a clear defined mark or milestone you’ll reach, but a constant struggle to get closer and closer.
A Moving Target
Product/market fit is a moving target. It’s not a fixed goal, nor is it a singularity. It’s more of a window that moves, usually away from you, as the market matures. Your competitors up the ante, new technologies become available and change expectations, your target market matures and changes, and so what you thought was a goal some years ago will not be a fit by the time you get there.
It’s important to remember that you are not your market. We made this mistake and built the first version of ProdPad to suit our own needs. After all, it was one of those products that was born out of solving our own problem, and we were Product Managers ourselves. Getting it out to our first customers quickly proved us wrong. Which meant we had to throw out a bunch of work.
Equally, your early customers are not your market. Early adopters are a special sort of user. They tend to put up with half-baked beta products, and naturally have different needs and tolerances than ‘regular’ people.
In that same vein, Beta testers and people who sign up from ProductHunt campaigns are not your market. The problem with testing with Beta testers is that Beta testers are good at testing beta products. But not good at acting like real users who get frustrated when things aren’t clear or break, and aren’t an indication of how the wider market would use your product.
Just as the market for your product changes, what defines fit also changes.
For example, just because someone pays for your product, it doesn’t mean it fits their market, or even solves their problem! If you’re charging less than $100 a month for your product, you’ll find that people will buy it and try it for a few months (what’s a few hundred dollars to a company?) and inevitably churn if their extended paid trial doesn’t work out.
And finally, your users change. When we first launched ProdPad, all of our users were from basically the same cohort, and were novice users of the product. However, several years on, we now have users who are experts, having used it for several years now, while we still have to build for all the new users coming in. The old users want more and more advanced functionality. The new users want something simple. Your users’ needs change, and if you don’t change with them, you’ll lose product/market fit.
How to Get To Product/Market Fit
Getting to product/market fit rarely happens overnight. Start by talking to people. Talk to your customers incessantly. Talk to people who visit your site. And, Talk to people who tried your product but decided they don’t like it. Those can be the most insightful of all! One of my favorite questions to ask is: What frustrates you most about our product? If the person is a fan, they’ll tell you any niggly things that are bugging them that you can fix up. If the person isn’t a fan, they’ll absolutely unload on you, and you’ll have lots of actionable insights to take home.
Talk about your long term vision. There’s no point in building if you don’t have a clear idea of where you’re going. Make sure you and your team have a shared understanding of your product vision (use this product vision template to get started). Create a public version of your roadmap to check your assumptions against.
Remember that your roadmap isn’t meant to be a list of your features and delivery dates. It is a strategic communication document that outlines your assumptions about the problems you need to solve. In that way, it’s more like a prototype for your strategy.
Test and Adjust When Needed
As product people, we’re adept at testing our products. But many of us shy away at testing elements outside of the code and interface. When you’re looking to find product/market fit, you’ve got to spend time testing your value proposition, your pricing, your packaging, and other elements around how your product is perceived in the market. Adjusting these can make as much, if not more, of an impact on your product/market fit.
Since the window for product/market fit is always moving away, you’ve always got to be moving fast as well. This is why having a regular release cycle and an agile cadence is good for business. Keep up with the moving target.
Sometimes with product/market fit, you’ve got to be ready to ask yourself some tough questions (and be ready for some tough answers). Sometimes, product/market fit never quite comes, and you’ve got to set your ego aside. Every once in a while, ask yourself and your team: If our product didn’t exist right now, would we still build it? This question forces you to think about whether you’re building on the back of sunk costs, or whether you truly do have something special and worth fighting for.
How Do I Know If I Have Product/Market Fit?
A well crafted survey format, put together by Sean Ellis in 2009 is one of the best tools I’ve come across for measuring product/market fit. He’s recently made it available as a template at PMFSurvey.com, or you can create your own using Typeform.
It asks questions like: What initially attracted you to [our product]? This helps establish what problem the person was trying to solve when they came across your product.
The magic question is: How would you feel if you could no longer use [our product]?, with multiple choice options of: very disappointed, somewhat disappointed, and not disappointed at all. The theory then goes that if you have 40% or more of respondents saying that they’d be very disappointed then you have product/market fit. That’s not the whole story though, as the survey goes on to ask some more pertinent questions.
It asks: What would you likely use as an alternative, if [our product] were no longer available? The beauty with this question is that it doesn’t ask about competitors… it asks about alternatives. This is when you find out whether people are still going back to whiteboards and sticky notes.
It also teases out what people think you’re best at when it asks: What is the primary benefit that you received from [our product]? And, it helps you understand who your target market should be when it asks: What type of person do you think would benefit most from ProdPad?
One particularly apt question is: Have your recommended [our product] to anyone? Notice that, unlike the Net Promotor Score (NPS) question of ‘how likely are you to recommend this?’, it’s asking about past behaviors not asking the respondent to comment on future expected behavior. People are notably bad at determining how they’ll act in the future. This is one of the failings of the NPS questionnaire.
It then follows up with: Please explain how you described it. Leave plenty of room in this one, as you’ll end up with some long answers. This question is a gold mine and can provide tons of insight into your marketing copy. After all, you should be talking about your product the same way your customers talk about your product. That’s a step closer to product/market fit.
The final set of questions is around segmentation. Ask about their role or other demographics, and use that to segment down your answers. You might find that you have product-market fit for one market group, but not for another.
Finally, with all of this surveying, segmenting, testing, checking, measuring and moving fast, you essentially, are adapting. Companies who reach and maintain product/market fit are the ones who are adaptable and lean.
The journey to product/market fit is likely different for every company. While it’s not a key measurement you can check off and say you’ve completed, it’s something you can measure in a way, and adapt to over time. The key is to understand your own handle on product/market fit. Don’t scale too early and therefore risk burning up resources along the way.
Where are you on your journey? How do you measure product/market fit? We welcome your comments below. Or, get in touch if you would like more information and to discuss product/market further with someone from the ProdPad team.