Product Market Fit. The Holy Grail for startups.
Grate if you have it. Not so good if you don’t.
In 2007, Marc Andreessen defined Product/Market fit as follows:
“Product/Market Fit means being in a good market with a product that can satisfy that market.”
And gave us the following description to detect whether we have achieved it or not:
“You can always feel when product/market fit isn’t happening. The customers aren’t quite getting value out of the product, word of mouth isn’t spreading, usage isn’t growing that fast, press reviews are kind of “blah”, the sales cycle takes too long, and lots of deals never close.
And you can always feel product/market fit when it’s happening. The customers are buying the product just as fast as you can make it — or usage is growing just as fast as you can add more servers. Money from customers is piling up in your company checking account. You’re hiring sales and customer support staff as fast as you can. Reporters are calling because they’ve heard about your hot new thing and they want to talk to you about it. You start getting entrepreneur of the year awards from Harvard Business School. Investment bankers are staking out your house. You could eat free for a year at Buck’s.”
The problem with this definition and description is that usually you can’t tell where you’ll reach the holly land until you launch your product or service.
Most startups have enough runway for one-go. This means that if they don’t hit the product-market-fit mark on first take off, they’ll have very little space to maneuver.
This means that you need to find a way to try to increase your chances of hitting your target before you take off.
For the last few years I’ve been thinking about a process/method to help increase chances of achieving product-market-fit, and the following is what I’ve arrive to so far (please help me evolve this model by commenting inline or the comment section below).
At a basic level, your product or service needs to fit at the intersection of: problem + solution + business model market-fit.
- If you don’t have a problem/market-fit, the it doesn’t matter how great your product or service is. You built a beautiful solution for a non existing problem.
- If you don’t have solution/market-fit then there’s no compelling (i.e. value) reason for users to adopt your solution.
- If you don’t have business-model/market-fit you are running out of runway and we all know how that ends.
Additionally, I think the next three points are very important:
- Message/market-fit: how you describe the problem, solution and compelling value of your product or service needs to resonate with your target market or they may not be able to appreciate the value of your solution to solve their problems.
- Technology/market-fit: this is more about making sure that whatever technological advancements you need to build your solution already exist than what particular tech stack you use (at the end of the day, most customers don’t care about what technology you use. Just if it solves their problem effectively and the exchange of money for solution is a good ROI — or like Arthur C. Clarke said: “Any sufficiently advanced technology is indistinguishable from magic.”
- Timing/market-fit: this, sometimes and for some type of companies, can make or break the venture and be even more crucial to get right than some of the point above. Even if all the X/market-fit variables above fall into place but the timing to bring the solution to market is not right you’ll run into turbulences. Would you sell tanning beds to bedouins in the middle of the Sahara summer?
That’s it: problem, solution, business model, message, technology and timing/market-fit.
Note 1: from a Product Manager perspective, you can use this model to help you work on your product roadmap and prioritization as most features are in essence “mini-products” trying to solve a problem for your already existing users.
I have another, more detailed, article that I’ve been working on about this model, but every time I try to finish it it just keeps getting longer and longer where I know most readers won’t read it in full. I think this article strikes a good balance. If you want to engage in a longer conversation about this model (the good, the bad, the ugly, etc.), you know where to find me.
Happy and safe takeoffs and landings!