So you’ve got a startup. You might even have an MVP and a couple of customers, but you can’t really feel the pull from the market. Nobody’s asking for your solution.. not at scale, anyway.
This is the ever-elusive dream of countless entrepreneurs. Many have tried and never achieved it. Even at the top startup accelerator Y Combinator, which we've had the fortune of attending, only a third of startups survive in the long run.
So what is Product Market Fit, and why do so many dreamers chase after this singular goal?
Produt Market Fit is essentially how well your product satisfies market demand.
With PMF, your company stands a chance of success. Without it, there isn’t enough demand and your company will eventually wither and die.
So, how can you, dear dreamer, make sure you reach product-market fit? And most importantly, how can you systematically do it without wasting time building something that will never be wanted - let alone paid for?
To help you with this goal, I am sharing an approach that has worked for us at Fini. I wouldn’t dare claim that our own startup has reached PMF just yet, but these steps would have shortened our exploration by several months.
To follow these steps, you need these things to be true:
Whew, that’s it to begin with. You may feel this list is too narrow, but it will provide a comforting structure to follow if you want to de-risk your beginnings.
So what’s the secret sauce that allows you to iterate faster towards PMF?
You may have heard of a Minimum Viable Product. What you need to create is a Minimum Payable Product. This MPP is the smallest set of features you can get away with, and still get paid for. The MPP solves the customer problem end-to-end. The goal here is to get paying customers for your hacky solution as quickly as possible and validate that the market exists.
The core method is to achieve this with a PMF-hacking sprint, which is 2 weeks long. This sprint results in a screen-recorded GIF that shows the value of your product in 30 seconds. Then you share this GIF across any and all communities that may have your target customers to measure the demand signal. Here is an example:
The end goal is to run through 3-4 PMF-hacking sprints (resulting in 3-4 different GIFs), measure the demand for each and pick the one product that has the highest potential.
These ideas are not new, they build on top of Eric Ries’s popularization of the MVP. The difference is that this is a more structured, specific and time-bound approach.
Since you will be building 4 different products in 2 months, you won’t be getting too attached to any one particular idea. Through this, you learn to see your ideas as hypotheses only, and your launches become controlled experiments. The ONLY reason you are launching, is to measure the demand signal. Which means you are purposefully creating throw-away software with the goal of seeing how much demand you can generate in terms of raw conversion.
You are doing this to avoid building something that risks not being wanted by customers. It is a VERY common failure mode to spend months and months building some perfect software that ends up with no demand from customers. This is how your startup dies.
Instead, use 2 week PMF-hacking sprints with the goal of creating products that purely measure demand signals.
You do not create your product. Your customers create your product.
This is one of my favorite quotes by serial entrepreneur Alex Hormozi that captures the spirit of this method. Launch quickly, get customer feedback and evolve.
By the end of the week you should have a pretty firm grasp of how strong demand is for your product hypothesis, and some feedback from potential early customers. If the software is useful, there will be buzz around your product. If you get as far as paid usage, you can manually send your first customers Stripe links.
In the startup world founders sometimes talk about pivoting. This is a dreaded time in which founders give up a previous idea or product, and decide for a completely new direction. This time is typically filled with pain, anxiety and worries of failure.
With PMF-hacking, you are intentionally micro-pivoting 3-4 times in a short period of time, by running controlled experiments and launching product hypotheses. This removes all anxiety of pivoting since you are doing it on purpose - with the goal of measuring conversions and “pull” from the market.
This method isn't entirely risk free by the way, you still need Sales and Product engineering skills strong enough to generate initial signal. Otherwise you might as well do 10 repetitions of this method and still get nowhere. Fear not however, as each iteration will give you a serious dose of learning and propel you forward.
In reality, it will be pretty obvious when you’ve found a winner from this exercise. Most likely, all of those hypotheses will have 0 paying customers.
However, some of them may have had better conversion numbers. Some may have created ongoing discussions with potential customers who are very excited about what you’re creating. One of the ideas may even have a customer who wants to pay for a more developed version - you know you’re nearing this when there is talk of contracting.
In the end, when we ran through this exercise we launched 3 or so GIFs, with little to no demand. Some of them had demand but we couldn’t build a self-service product in time for the customers to realize the value quickly enough.
However, something magical happened with the 4th and last launch we tried. We were able to create a self-service free trial product which shows product value within seconds. After this, things went on autopilot - signing customers, evolving the software, building features based on demand, and billing. We have now finally earned the privilege of building a production version of our product!
Happy hacking from team Fini.