Finding Product Market Fit
Once you have launched your Minimum Viable Product (MVP), the next big goal for your business is to find Product Market Fit (PMF). PMF is an elusive concept, I have heard others describe it like pornography, you will know it when you see it. Basically, PMF means that you have built a product or solution that people will use and likely be willing to pay for, either with cash or with their time. You might achieve PMF with your first product launch, or more likely you will have to iterate a bit once your product is live. Once you have something people love and are using frequently, you will be ready to graduate to the next stage and begin to scale.
Lots of companies I talk to think they have achieved Product Market Fit, but it is not always so obvious. Just having a product live and getting some users doesn’t really qualify. Your first customers are likely to be people you know personally and who might be using your product as a favor more than out of a real desire to use it. To really say you have PMF, you need to be well past your inner circle of users and at least have broken out one or two levels to people acquired organically or through paid advertising. Ask yourself “why people are using your product and what utility are they getting from it?” When you have a good handle on this, you are probably close to achieving PMF.
The next big area to consider when evaluating Product Market Fit is your relationship with your customers. Are you charging a market rate yet for your product, or is it still free or heavily subsidized? If your customers are not willing to pay for your product, then you definitely don’t have PMF. Do you think they are ready to pay? Then it’s time to turn on the pricing and find out. The one big exception to this is media or social products where the customer is the product, typically through ads or data sales. If you are in that type of business, then PMF is more dependent on whether brands are willing to pay to access your viewers or users. Either way, to really have Product Market Fit, someone needs to be paying.
If you are still working to expand your customer base beyond a limited circle or you still haven’t gotten anyone to pay yet, you may need to do more work to tweak your product to truly achieve PMF. That is fine, just get back to work and figure out what features you need to add to grow the customer base or turn on the revenue spigot. Most startups need to make some pivots or changes in the early days to get it right, there is nothing to be ashamed of if your first attempt does not immediately grow like crazy. Take the time to talk to your first users and get detailed feedback. You can then launch a better version and see how that lands.
Once you have a product that everyone loves and you are sure you have Product Market Fit, it will be time to start thinking about how to scale your business. Our Founder Coach series will address that next. Thanks for reading today’s post, I hope this helps you take stock of your current product offering and get your business to the next level.