How to balance working on growth with searching for product-market fit

Here’s Marc Andreesen’s take in the original article which coined the term “product-market fit”:

The only thing that matters is getting to product/market fit.Product/market fit means being in a good market with a product that can satisfy that market. 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.Lots of startups fail before product/market fit ever happens.My contention, in fact, is that they fail because they never get to product/market fit.

He goes on to say that you can pretty much ignore everything else until you have product market fit, because that’s the only thing that matters to the business.

Market Testing Velocity

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Completing tests quickly will help you run multiple tests in succession

Your success will be a function of the learning cycles you fit into
your runway.
— Tom Hulme, Ideo

The best way to discover what makes your prospects tick is to run
an experiment. If you are pressed for time, the best way to
discover what makes them buy is to run many experiments over a very
short time period.

Assuming these two would cost exactly the same amount, which would
be more valuable to you as a product manager?

  1. 1 test, which runs for one week, which gives you 99% certainty
    on your results
  2. 30 tests, which take one hour each, with 90% certainty each

Clearly the second set of tests is much more valuable. When you
finish the first test, you can form another hypothesis and test
that. One set of results directly feeds into the rest. If you want
to identify surprising results quickly, as this is most likely to
give you outsized results, option B is a much better way to enter a
market.

To some extent, it’s reversing the iterative nature of agile,
and applying it during pre-development when performing product
research. Feedback loops are enormously powerful when dealing with
prospects and customers too.

“Market Testing Velocity” can mean a lot to you in a
high-pressure situation if you want to get something going quickly.
If you complete tests quickly, you can run multiple tests in
succession.

In this case, you are doing marketing research on your
prospects or existing customers, in order to map out what they
need. Your goal is to identify what they need most, a
“bleeding neck”, as quickly as possible. You are trying
to discover a cognitive and emotional map of their needs, in order
to orient your own efforts most effectively.

If this tickled your fancy, and you’d like to read more about
market testing velocity, you’ll find out more in Launch Tomorrow.

Product Customer Fit Only Requires Must-Have Features

When releasing a new product, the first step is to find product customer fit quickly. The minimum viable product  (MVP) encompasses the essence of the Lean Startup ethos. An MVP helps go through one cycle of the Build-Measure-Learn loop. Lean Startup author Eric Reis warns “Customers don’t care how long something takes to build. They only care if it serves their needs.”

<whistling wind>

You also need to choose a specific customer, in order to address a customer’s specific need. The main goal of an MVP is to learn about the customer and the market. You want to validate or reject your hypotheses. Once you know what your market wants, you are in a completely different position.

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In order to do this, you need to:
1. decide on an ideal client
2. get access to such a client through marketing activity
3. identify their most pressing need or problem
4. get paid to solve it

Your riskiest assumptions are probably related to your prospects and customers. Establish empathy quickly with your target prospect, figure out what's valuable, and get your innovation into the market.

At an early stage, you can solve the problem in any number of ways. It’s often easiest to provide a service. That way, you learn more about your clients. You gather useful information about how to deliver a solution, which can then be automated via software or other type of product.

Let’s say you want to build a software company helping people learn foreign languages. Entrepreneur Derek Sivers points out that you can get started by just scheduling a language teaching session. It’s very manual. It’s not automated at all.

At the same time, it’s an extremely high-bandwidth way to learn about your customers’ needs. Most importantly, it’s useful for them. Once you have some experience delivering this type of service, you have a much better chance of successfully prototyping a solution which addresses that customer’s need.

You identify your customer’s primary need. You learn what the customer thinks about it, how they dream they could overcome the problem. You hear them vent about their frustration. You dig deep into specific aspects. You seek out find you can address.

You find out how your customer thinks about the problem. This is direct marketing gold. It helps you identify where to focus your efforts, so that you address what your customer finds the most vexing.

By focusing on the must-have features only, you release a product or a service that addresses that particular need. It’s rudimentary. Yet it works. You might not even require a line of code to prove your concept. Must-have features are essentially all related to specific changes you want to induce. Your target customer will not consider the product valuable otherwise.

About to start a greenfield project?

Have Launch Tomorrow run an in-house "riskiest assumption workshop". Remote delivery options also available. Discover where to prioritize your validation efforts, to get to market fast.

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In order to be successful, you really need to dig deep into one particular problem. You want to know the logical reasons why it’s attractive for your customer. You want to know why would benefits from the product. You even want to find out more about any emotional benefits they might get from the product.

This approach correspond’s to Ken Schwaber’s scrum value burndown charts. Develop the highest value features first. If the product ends up being successful, then in fact, these are the extremely valuable core product features. They are must have features for this particular problem. Without them, you can’t claim you have a workable solution to that specific problem. Each one potentially generates massive incremental value in users’ eyes.

Create an explainer video for your complicated new product. Make sure your audience understands it, without being overwhelmed by technical details.

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Often a few features, if packaged together well, which work reliably, is enough to interest the early adopters in a market. While they realize they may not be getting a complete solution to the problem, they like being first, having access to the inventors, and contributing feedback.

These must have features define the product. Often, just a handful of features suffice for your product type to be attractive, such as copy and paste in word processors, compared to the typewriter alternative. That’s the kind of gap you want to find.

If your minimum viable product is not attractive to your target segment, move on. Next. Another niche. Another need. Another customer type. The faster you discard the unattractive options, the faster you’ll achieve product-customer fit.