June 21st, 2022
How finding Product-Market Fit changes everything for your early-stage startup
It’s a founder’s worst nightmare to create a product that no one wants. A deep understanding of the problem your users face, is essential in creating a solution they’ll love to use. For a chance to succeed, your product must solve real pain points.
Product-Market Fit is the holy grail for early-stage tech startups. Once you reach this point, your whole strategy will shift. You’ll move from a state of exploration to optimisation and ultimately, completely change the way you operate.
PMF is the tipping point of viral growth. It is the perfect alignment of supply and demand; the moment your product starts getting so many users that it’s hard to keep up.
But what causes Product-Market Fit? How to achieve it? Here of course the stories vary. Having a “good product” (whatever that means) or having product evangelists, might be good indicators, but the framework shared below is by far our favourite.
Buy: your customers value your solution so much, that they’re happy to part with their hard-earned cash.
Use: users are coming back regularly. High levels of engagement show they’re more than just casual users.
Tell: new customers are coming through referrals from existing users, which means they’re telling others about it.
You should aim to see good results in all three of these areas.
The path to Product-Market Fit can be extremely dynamic, and your findings might be different from the idea you started with – be ready for that! Never lock yourself into a potentially flawed product or belief. When feedback is demanding change, adapt.
Slack, for example, started as a gaming company called Glitch. Its founders were spread across three timezones and simply couldn’t find a productive way to communicate using the communication tools that existed at the time. So they decided to build their own just for internal use.
Glitch raised Series A and Series B investments but ultimately failed to attract “an audience large enough to sustain itself”. However, soon they realised that there was a whole market having the same communication issues they had experienced and began improving their communication tool to become what we now know as Slack.
A market is made up of individuals. For early-stage startups, our favourite method to identify the most effective audience is the HXC framework. The High Expectation Customer is a 3-in-1 customer who is at the same time a Benefiter (someone who will benefit the most from your product), a Hacker (someone who is already using multiple hacks to solve the problem) and also an Expert (someone people aspire to emulate).
Without a tangible product to be tested, the customer discovery phase is only capable of creating hypotheses. In order to actively test these, the Minimum Viable Product will allow the business to gain traction while founders learn about user needs before fully committing to a big idea.
Your HXC customer will be excited that you are trying to solve a recurrent problem they experience and will happily trial an imperfect MVP, provide valuable feedback, tell their friends about it, and stay loyal to your business.
Some founders assume they’ve achieved Product-Market Fit after reaching a certain number of users or closing a round of funding – but short term growth indicators alone can be misleading.
When in doubt, go back to basics: if your customers are buying, coming back regularly, and referring your product to others, things are about to get very exciting.
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