Yesterday, all my troubles seemed so far away. Now it looks as though they’re here to stay. Oh, I believe in yesterday. – The Beatles It’s easy to think that Product/Market Fit is a tipping point in time when all your troubles go away, because you reached that magical moment. But that’s in theory, not reality. In practical reality, Product/Market Fit is a continuum*, and it is rarely the result of a single defining event or variable. Reaching Product/Market Fit is always obvious in hindsight, but not so clear in foresight. In a post I wrote last month, Don’t Let Lean Startup Become a Crutch, Ben Horowitz says “achieving product/market fit is a good tactic, but not an operational theory”, because you never know when you’ve exactly hit it. That’s very true. In that same post’s comment space, Jim Hirshfield wondered, “How do you measure product-market fit and know that you’re there?” So, I asked Union Square Ventures partner Albert Wenger to answer that same question in 30 seconds on Ziggeo. Here’s the Ziggeo clip and narrative below: http://youtu.be/GXKTGX3kofI “Product/Market Fit is best measured by observing how customers react to your product, better yet, observe them interact with your product. You know you’ve achieved Product/Market Fit when the customers intuitively understand what need the product fills for them, and they have no trouble using it, in fact they enjoy using it…in fact they start telling their friends about it, maybe even telling the world about it on Twitter. That’s how you know if you’ve got Product/Market Fit.” Albert hit on the behavioral side of user adoption, and that’s key because you can’t fake your way into growth if users are challenged or puzzled each time they interact with your product. But I became obsessed with answering Jim’s question thoroughly, so I went on a research hunt, and after reviewing a lot of what’s been written on Product/Market Fit on the SUM Library, I saw 4 camp themes: 1) Marc Andreessen was the first to come-up with the term Product/Market Fit, and in his seminal post from 2007, The Only Thing That Matters, he emphasized that PMF really includes 3 variables: the product, the market and the team that is executing on it. => Take-away: if there is no market, even a great product and a great team will not get you there. 2) In his book The Startup Owner’s Manual, Steve Blank, argues that Business Model realization is part of the Product/Market Fit, and that includes the Value Proposition, Customer Segments, Channels, Customer Relationships, Cost Structure and Revenue Stream. => Take-away: if you can’t realize the business model, there is no Product/Market Fit. 3) The Lean Startup cheer leading trio of Eric Ries, Ash Maurya and Dave McClure look at Product/Market Fit based on user engagement, by focusing on conversion velocity, from user acquisition to deep engagement. => Take-away: If there is no retention and referrals, there is no Product/Market Fit. 4) Ben Yoskovitz and Alistair Croll, in their book Lean Analytics astutely remind us that maybe we should think in reverse, i.e. Market/Product Fit, not Product/Market Fit. => Take-away: “Instead of building new features, or rebuilding from scratch, try pointing your product at a new market.” Marc, Steve, the trio and the duo are right. We need to look at Product/Market Fit as a holistic continuum that takes into account the team, the business model, user traction metrics and the market. So, I put together this table to capture all these elements at the Before and After stage. [table id=4 /]
This Conundrum was a ContinuumThe Product/Market Fit is a continuum because it’s a series of steps and doors that open progressively, each allowing you to do things that you couldn’t do well before. I love this picture to depict the evolution towards Product/Market Fit.
- The Product/Market Fit is a multi-variable equation, not an event.
- Getting to Product/Market Fit is like a dance where the product and the market are trying to align and synchronize.
- Product/Market Fit is also like an orchestra or a chorus, because the team and the business model have to sing in harmony.