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Product-Market Fit: Understanding a Well-Known yet Hard-to-find Key to Success
Product-market fit, often termed PMF, is a crucial concept in the startup world. It's the sweet spot where your product perfectly meets your target market's needs. Marc Andreessen, founder of a16z, explained the concept as shown below in 2007:
Product/market fit means being in a good market with a product that can satisfy that market. - The Pmarchive Guide to Startups, Part 4, 2007.
Identifying product-market fit is more challenging than ever. In today's world, where generational AIs rapidly evolve, anyone can conceptualize and create a product within days. This means that startups now have to compete with ‘individual business creators.’ as well.
In the age of infinite products, finding which market suits you is (almost) everything for your success. However, the definition of the norm is quite elusive, and it is hard to determine whether you have discovered the perfect fit. In this article, we will debunk the definition of PMF, understand critical signals that you found the market fit, and how to achieve them.
When You Find the Fit, You Will Know
Lenny Rachitsky, a business content creator with over 600,000 subscribers, underlines three notable signs when a company finds the product-market fit. The newsletter writer also mentions every prominent startup has experienced this ‘moment of discovery.’
Netflix experienced an unexpected, notable ‘pull’ from the market. After 18 months of struggling, the platform witnessed an overwhelming traffic spike that the company needed more staff. Tinder’s app store ranking skyrocketed after the dating service added the ‘swipe’ feature.
The CSO mentioned the user pool was “spreading like wildfire.”
The signs of hitting the right market also come in relatively quiet but steady growth. Chris Best, CEO and co-founder of mailing solution Substack, had difficulty figuring out whether his service was appropriately developed. The founder realized that a steady upward retention graph of paying readers was the indicator.
Achieving certain milestones is solid proof that your idea is compelling. This ‘milestone’ doesn’t have to be in numbers. Airbnb’s co-founder Joe Gebbia realized the business’s success when his mother booked her first trip. Product Hunt’s CEO witnessed a small group of people mentioning Product Hunt and how to launch their service. The founder said that was when he realized the product was working.
(Refer to : How LinkedIn succeeded in early customer acquisition and monetization without relying on an ad business)
Identify. Define. Build. Iterate. Repeat.
So, how can you find the right product-market fit for your business? Many articles about this topic exist, but they share some characteristics: precisely defining customers, building a prototype, and enhancing the initial product by measuring necessary metrics.
1. Identify Your Problem & Customers
Every product and service exists for one reason: to solve customer’s problems. This is why accurately defining your customer is critical. Creating a detailed persona is very helpful for finding the right target. You can also hypothesize your customer’s needs, problems, and lifestyle and test the theory with your product.
2. Define Your Difference Clearly
Now that you know your customers and their problems, the next step is to differentiate. This is also called value proposition, a necessary process for persuading customers that your creation is exceptional in solving their problems. Focusing on core factors that make your product noteworthy is important.
As Steve Jobs once said, “innovation is saying no to 1,000 things.”
3. Build Your MVP
Once you know your market and target customer, it’s time to do some test runs. minimum viable product, or MVP, is helpful in testing your theories about customers or the market. You can simply use no-code tools or generational AIs for this step. What’s important is that people focus on core functions, rather than design.
(Refer to : An solo entrepreneur in Canada explains why you need to develop not MVP, but MVT instead)
4. Feedback, Iterate and Repeat
Everything is set. Now is the time to operate your product on the field and gather helpful feedbacks. During this step, make sure that the customers using the MVP is within your target pool. It’s also highly recommended to ask open-ended questions, such as “what do you think of this feature?”. Non-leading inquiries will encourage customers to express their honest opinions and will provide new insights for future development.
Still elusive? Check out these resources for a deeper understanding.
PMF Concepts & Guides
- A Playbook for Achieving Product-Market Fit the Lean Way
- Uncovering Product-Market Fit with the Right Data – FutureSight
Real PMF Cases
- How to get to Product Market Fit: what it is, step by step guide and success cases like Notion, Canva and Stripe
- From Side Hustle to Main Gig: The Story of Angus Cheng's $12K/Month SaaS Venture
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Written by Jinsoo Choi
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