Use this Definition of Product-Market Fit if You’re a Pre-Seed Startup

Last week I held an initial networking call with a startup marketing expert out in Silicon Valley. He focuses primarily on Seed and Series A startups; those startups that have figured out their product and much of their marketing, and are now focused on rapid growth.

Whenever the buzzword “product-market fit (PMF)” arises, I like to ask, “What’s your definition?”

He answered that the Net Promoter Score (NPS) (likeliness to refer) was the best objective metric for product-market fit. Other articles will add in other specific metrics like retention and organic growth.

A few days later I discussed PMF during open office hours with NYU’s Education Technology Accelerator Started.

Could these pre-seed startups without a product on the market use the NPS as a clear measure for PMF?

No, they do not have an established customer base of a significant size to measure NPS.

So then, either:

• Product-Market Fit is only a thing pursued, rated and achieved by startups in a specific stage with a significant number of customers, or
• Based on a startup’s specific stage, different product-market fit benchmarks can be pursued

Product-Market Fit CANNOT be a single inflection point

Popular PMF definitions include charts that show it as a very specific point a startup achieves between Seed and Series A. It’s often talked about as something completed after a startup develops the product.

But PMF is not something you can afford to pursue after the product is built. It should be something you are striving for every step of your startup journey.

Why?

“Don’t find customers for your products, find products for your customers.” — Seth Godin

You do not want to launch a product and then find customers. You want to find customers and then launch products to them.

To reinforce this concept: the #1 reason startups fail is because they launch to no market need. [Ref]

Why is there no market?

Because they built a product without much consideration for the exact customer segment they could serve.

If you treat PMF as a single inflection point after you launch, you open yourself up to launching to no market need. To avoid this massive failure, PMF has to be something that startups can target at every stage of development, and, importantly, from the very beginning.

Lady Engineer’s Definition of Product-Market Fit

If every John and Jane out there can make up their own definition of product-market fit, then I want one, too!

Product: Your solution to a problem.

Market: A segment of customers willing to give up something for your product to solve their problem.

Product-Market Fit: Sufficient proof (engagement, revenue, data) that there is a Market for your Product.

Can you see how my definition is loose enough that we can define Product-Market Fit benchmarks for every stage of a startup?

Product-Market Fit Benchmarks Early On

Early on you may have paper sketches, high fidelity designs/prototypes or a janky alpha/beta of your product that you’re still developing with code.

Generally Speaking: You have spent a significant amount of time doing all kinds of research & testing (quantitative, qualitative, primary & secondary) with customers. Their ideas of the problem may be slightly different than your original assumptions and you have updated your product accordingly.

Who is Your Market: Early-Vangelists [ref]. You have triaged your market numbers so many times that you know the exact types of people that will willingly use your product even though it’s not perfect.

Product Market Fit Benchmark Activities:

• You have drilled down to and beyond the Total, Addressable & Target Markets
• You have a clearly defined, very niche-y Early-vangelist group identified
• You established a Customer Advisory Board made up of these Early-vangelists
• You’ve gone through multiple iterations of your designs, tested & updated by these very Early-vangelists
• You know exactly what they will and will not pay for
• You have completed a pricing analysis survey to gauge interest and pinpoint the pricing model
• You know what they do not like about their existing solution and how your product is going to be incrementally better
• You have a waiting list or community of potential customers (…that you have surveyed to the point you may feel you’ve exhausted them)

Early on, all of your marketing activities are research activities, and you should be actively designing your product with your customers so you know you have something they will value. These are the keys to product-market fit early on.

Did you screw the pooch…?

An entrepreneur last week asked me, “How can I monetize testing my beta?”

My question back was, “Well, what are your customers willing to pay for?”

He didn’t have an answer. Indeed, he didn’t have a very niche-y early-evangelist specified.

So I answered, “You can’t test your beta features, find your target market and test their pricing tolerance all in one pilot.” For to me to explain this would be another article.

But since this situation where a founder builds out the whole product before addressing the market happens ALL OF THE TIME, let me jump ahead of you.

“Did you screw the pooch by building out your entire product before identifying your early-vangelist, that niche-y market and what they value?”

No, you just have to proceed with customer discovery and validation very carefully. Do not jump to invest any more into product development and do not invest any money into paid ads. Go through the benchmarks listed above to come up with that early-vangelist market first before you run out of cash.

Choose Your Own Adventure

Want more on Product-Market Fit at an early stage? Download my free e-book on my homepage, “Start Before the Product’s Ready: The Unavoidable Market Part of Product-Market Fit.”

Unclear on where you stand and your next steps? I made a handy scorecard that helps you measure yourself along 8 important pillars so you can decide how to proceed.