Chandini Ammineni on Before and After Product-Market Fit
This is the first in a series of posts where I’m sharing my notes from the 500 Startups’ Marketing Hell Week series of talks. My company, Crema.co, was part of batch 19 in Mountain View, and I recently blogged about the experience.
Chandini Ammineni, Distribution Partner at 500 Startups, debunks the myth that every startup should be focused on growth, drawing a sharp distinction between the stages of pre and post product-market fit.
Pre Product-Market Fit
Chandini encouraged us to focus on finding product-market-fit through qualitative, learning-oriented, non-scalable hustling first, and only shifting to growth mode once we’ve found our first 1,000 fans. She defined product-market fit as:
You’ve achieved product-market fit when your product solves a problem “well enough” for a “big enough” market.
During this exploratory phase, it’s crucial to learn about your customers — who they are, where they hangout, what their problem is. Ask them open-ended questions and keep an ear out not just for their pain points and aspirations, but the specific language they use, which can help you articulate your service.
At this phase, engagement and retention are your key metrics. Once your retention curve flattens out over time — which could be 40%-50% of your customers sticking around after several months, for instance, you’re ready for growth.
Post Product-Market Fit
Once you’ve achieved product-market fit, the goal shifts to achieving scalable, repeatable growth. “Growth of what?” you may ask; growth of your OMTM — the One Metric That Matters. Your OMTM could be users, customers, revenue, gross margin, etc., but you should be strategic with the metric you choose to rally your team around and align it with your fundraising plan.
Chandini encouraged rapidly running experiments and then doubling down on what works, a bit like playing battleship. This should occur at all levels of the funnel — from lead generation, to conversion, to retention. It’s important, however, to have a high level goal in place and focus on what will have the highest impact towards that goal so you don’t “die of indigestion,” as Chandini put it.
Focus on achieving product-market fit with qualitative methods first, then shift into a process of rapid experimentation to figure out what does and doesn’t work, and double down on what does.