Finding Product-Market Fit
Time and again we hear from the product companies, more so with Startups, about Product-Market fit. Moreover, many founders and product managers know that they live or die by achieving Product-Market fit. However, many of them go ahead and build their own thing in the hopes something will stick.
What is Product-Market Fit?
In this write-up, Rahul Vohra details their journey of finding Product-Market fit at Superhuman, a product about email experience. It's 15+ months since he published this article, but the core points of the write-up are golden. (Disclaimer: I did not use Superhuman and not connected with that product. I heard good things, though). Read it in full.
Marc Andreesen's description of Product-Market fit quoted by Vohra is useful in this context:
“You can always feel when the product-market fit is not 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 is 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's 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.”
Understanding the Customer Jobs
What's at the heart of this exercise? To explore further, let's cut through the jargon for a moment: it is about understanding the users/customers. In essence, creating a consistent process to gain a clear understanding of what their intentions and motivations are, without applying your filters. As discussed in my earlier JTBD article, the customer may like your brand, but they "hire" your product for solving their problems under the system they are operating in and the constraints they are dealing with.
Key Takeaways to Find the Product-Market Fit
What's a better place to start that process of finding the fit than interviewing the users? Enter the surveys. The Superhuman team surveyed the users with a pointed question -- "how they'd feel if they could no longer use your product." I love the framing of the inquiry. Similarly, a probing technique I use often: "Who would miss it if we don't build it, and what evidence do we have to support our bet?"
Sean Ellis' Product-Market fit survey is a simple yet compelling way to gaze the users' engagement and desirability of hiring your product:
How would you feel if you could no longer use [product]?
Not disappointed (it isn’t really that useful)
N/A – I no longer use [product]
Magic Number: So, if you have 40% or more users in the 'Very Disappointed' category, you have good traction to take the product to the next level. Their website cites empirical data working with several startups to arrive at that 40% threshold. More than the magic number, it's the trend that matters.
Seth Godin said the key to your product's success is finding that first ten people. Not any ten people but the ones -- who trust you/respect you/need you/listen to you. In a similar vein, in this article Julie Supan suggests "think about that customer who will get the most out of your product, so can you can speak directly to them -- and bet on their emotion."
In essence, find that High-Expectation Customer (HXC) to whom others look up to because they see HXC as smart, thorough, and insightful.
Push and Pull
You believe you have a solution for your customer's problem (push), but does the customer have the same perception (pull)? Firstly, you should be aware of the use cases where you don't inject yourself. In other words, user personas and segmentation slicing-and-dicing won't help. The user is not your prospective customer. Move along.
For on-the-fence prospects, you want to invest as much time and learn about their habits and anxieties in using your product. Doing so, you will learn what's holding them back, and that may lead to you providing some low-risk ways of trying your product. That will get their feet wet before taking a dip.
Even more beneficial, learning about what are the bottlenecks for the adoption. In Vohra's case, not having a mobile experience (note: this is a couple of years ago) was a choke point.
Keeping Roadmap Flexible
Multi-year roadmaps or the roadmaps spanning beyond two quarters are not worth much, if at all. Especially, at this stage of finding the PMF, you want to give your product team an opportunity to pivot based on the feedback. Therefore, plan for flexibility in your roadmaps as you do the discovery process.
I'm an optimist, in general, however, approach any strategy with some healthy caution and skepticism: how do you know you are right, and what feedback mechanisms are in place to refine the plan.
Data and Analytics
Data is critical. However, actionable intelligence based on that data is what we need. Whether it is net promoter score, or the PMF threshold we talked about earlier, or daily active users, define them carefully. Also, making it part of the culture in the decision-making process is the way to go.
What about you — what techniques worked well and what did not?