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Product/Market Fit


Product/market fit is the degree to which a product or service satisfies a strong market demand. It has been identified as a first step to building a successful venture in which the company meets early adopters, gather feedback and gauges interest.

Many people interpret product/market fit as creating a so called minimum viable product that addresses and solves a problem or need that exists.

Finding the right problem

Entrepreneurs typically start a venture with a solution in mind, which they usually tend to idealise as ‘awesome’. While there’s nothing wrong with having an optimistic mind-set, they are also particularly gifted in only seeing their own reality. A first step in performing a product/market fit, is to get out of the office and get customers to recognise a genuine problem needing to be solved. A company should therefore concentrate its efforts on ‘loving the problem, not the solution’.

A model tells more than a thousand plans

Rather than starting to write a complete business plan, companies should focus on key factors that will eventually drive their business, and implement these factors into a simple one-sheet business model diagram.

Unique value proposition

The importance of having a unique value proposition is obviously to stand out from the crowd and be different in the solution offering to a perceived problem. This forms the core of your business model, and needs to be part of a larger positioning campaign, determining what place a solution should occupy in the consumer’s mind compared to the competition.

The 40%- and 10x- rule

There are some metrics available to determine if a company has created enough value to differentiate itself from the competition. One metric is if at least 40% percent of surveyed test audience indicate that they would be ‘very disappointed’ if they no longer have access to a particular product or service. Another metric is to determine whether a solution is a magnitude better—10 times is often seen as a reference—than the standard.

Identify the compelling event

Companies should focus on a narrow market segment with as little variables as possible, where they feel the solution will most likely see benefit. It is crucially important to understand what the compelling event is for the customer to take action and reach out for a solution. As important is to understand what the transition pains and costs will be for that customer, to move away from his current habits towards using a new solution.

The life of any startup can be divided into two parts – before product/market fit and after product/market fit.

Marc Andreessen
Andreessen Horowitz

Early adopters

New technologies will most likely be picked up by certain ‘types’ of prospects, innovative by nature; the so-called early adopters. In fact, trying to convince the mass of new ideas—prior to the product/market fit—is a waste of time and resources. Companies should focus on gathering feedback from innovators and early adopters first, to get a true sense on how their offer is being perceived.

First value first

Companies will attract those early adopters who only cares about solving their problem, and those who also need to comply to internal regulations and politics, purchase restrictions, etc… Targeting those first early adopters, left of “The Chasm” (cfr. Geoffrey Moore, “Crossing the Chasm”), companies should now narrow their focus in providing value for them first and progress towards product/market fit, before investing in market growth.

Thoughts & Experiences

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