Failory - How to Achieve Product-Market Fit

Hey — It's Nico.

In August, I'm publishing content related to Product-Market Fit. This week, a guide on How to Achieve PMF.

🙌 Welcome to the 406 founders who joined this week.

This issue is brought to you by The Postlight Podcast:

Looking for answers to tough leadership questions? The Postlight Podcast has you covered with weekly conversations on tech, business, ethics, leadership, and culture. Hosted by Postlight CEO Gina Trapani and President Chris LoSacco alongside members of senior leadership. New episodes every Tuesday.

PMF should begin before the process of building your product.

Gigi Levy-Weiss defined the term “product-promise-market fit” – even if you don’t have a product, you can ​test the promise ​of your product against the target market.

In other words, before you start building, you need to validate that:

#1: The problem you're solving exists.

#2: The people who have the problem are willing to use and pay for your theoretical solution.

There are 3 main strategies you can use to validate #1:

1. Publish online content: Create posts asking for people’s opinions about the problem you want to solve to gauge how serious the problem is and what people are currently doing to solve it.
2. Run interviews with potential customers: Reach out to people who were most engaged with the content you posted online and try to get more in-depth validation by interviewing them.
3. Create a mailing list: Collect the emails from the people you talk with to stay in touch. The opportunity to consult these people while you’re building the MVP is very valuable.

And 3 tools to validate #2:

1. Landing page & mockups: Create mockups that show how the product will work. Put these on a landing page and share it with your mailing list or in online communities.
2. A/B tests: Make two landing pages providing two different solutions, and see which one attracts more interest by sharing each of them to half of your newsletter audience or on different online communities.
3. Pre-sales: Validate that people are willing to pay for your solution.

Only after you’ve validated #1 and #2, you can start building your MVP.

Hopefully, during your idea validation experiments you were able to gather a list of interested people. Once the MVP is out, it shouldn't be too difficult to convert them to early adopters

Once you have some users trying your product out, measure PMF with surveys and customer interviews.

The closer you move to good PMF, the less you’ll have to push your product, and the more pull you’ll start to feel from the market.

B2B customer data platform Segment shows how various product iterations might be needed before finding PMF.

They were initially called ClassMetric and were an app that let students press a button when they felt confused during lectures. In 2011, they raised $600k from Y Combinator.

Despite the idea being good enough to raise funds, when they tested the product, they found that students weren't using it. The problem ClassMetric aimed to solve was not really a problem for students.

That's when they decided to pivot to building an analytics tool, called Segment.io. However, after 12 months of working on the product, the startup had yet no customers.

With only $100k left in the bank, they decided to pivot once again.

During the development of ClassMetric and Segment.io, they built an open-source data library that collected user data and sent it to various analytics tools.

Part of the team was optimistic about this internal tool, so they decided to build on top of it. But first, they create a landing page with an email signup form and posted it on Hacker News. +300 people upvoted it and +60 provided them with feedback.

This showed that this time, they were working on a great solution for a real problem. Many years later, Segment exited for $3.2B.

If you're interested in reading the PMF journeys of Superhuman and Airbnb, check our latest article: How to Achieve Product-Market Fit.​

And if you're looking to accelerate your path to PMF, check our book: Product-Market Fit: How 7 Startups Achieved It.​

As every week, here are 3 recommended resources:

• ​Making The Leap: It's hard to transition from a full-time job to building your business. In this article, Corey Haines shares his journey and his way of thinking about entrepreneurship.
• ​How People Discover New Products: Lenny Rachitsky claims there only are seven ways users find new products. In this article, he examines each and advises which one is right for each business.
• ​Buying Companies, with Ryan Kulp: Ryan Kulp is the founder of Fork Equity, which owns a portfolio of technology companies. In this podcast, he shares his views on micro-private equity and buying companies with little money down.

Hope you enjoyed this week's article and curated resources ;)

Cheers,

Nico