Is your venture product-market fit?
If not, nothing else matters.
Gone are the days when businesses would hide their ideas before implementation with the fear that they might get stolen. Back in the era of the “dot com boom”, too many companies were chasing to join the bandwagon of pouring money into tech and internet companies. Some businesses were able to survive but many crashed down because of poor business strategy.
Large-scale IT projects are often overrun by cost and time. The 1993 project of the London Stock Exchange’s automated-settlement system, Taurus, was abandoned because after years of effort and millions of dollars invested — it was realized that the system will never work as planned. The project failed to align with the interest of different stakeholders. Its complexity was not estimated properly and the project did not meet its requirements.
One recent example is Electroloom. The startup claimed to be the world’s first 3D fabric printer. The company was successful to raise funds through venture capitalists and government grants. Apparently, it appeared a solid technology but failed. Their product lacked MVP and targeted the wrong audience.
This brings us to the realization of why it is so essential to measure product-market fit. As an early-stage company or even a small or medium-sized enterprise, understanding your position on the product-market fit continuum is extremely beneficial. The approach helps to think about how much money you really need to raise to meet the consumer needs and create a company that produces massive value for the world, your employees, your investors, your customers, and you.
The article, “How Superhuman Built an Engine to Find Product-Market Fit”, reveals the founder’s Rahul Vohra questionnaire technique gauging the user experience and satisfaction with the product. For this, he recommends a four-step process to optimize product-market fit.
The Vohra Model
1. Segment — thoroughly analyze your market segment users who can become your potential consumers.
2. Analyze — understand what you need to build for your potential or target customers.
3. Build — prioritize the core features, must be high-impact but involve less cost.
4. Repeat (Steps 1 to 3) — send the survey to your users on daily basis to collect their feedback that can help you to deliver new value to those and new customers.
The founder and CEO of Reforge, Brian Balfour, believes there are four checkpoints for knowing where you are with product-market fit.
The Balfour Model
1. The Leading Indicator Survey — to understand that the customers like the product.
2. Leading Indicator Engagement Data — to analyze the consumer’s mindset and keep a close check on their user’s activities, what they do and how often they do. To narrow down that they like the product and they are likely to use.
3. The Retention Curve — to gauge your product’s traction among users over the length of time, it represents you’ve found product-market fit.
4. The Trifecta — helps to identify the significant growth, retention, and meaningful usage. If you accomplish converting prospects into leads and the consumers are consistently enjoying the product, you can conclude you’ve reached product-market fit.
These techniques can guide you to comprehend where your venture lies in the product-market fit spectrum. A project management software company, Notion, took years to find product-market fit. So, the Vohra and Balfour models can enable you to keep on iterating and building new features until you reach the right market and produce a perfect product.
Disciplined Entrepreneurship by Bill Aulet, is a great read to refine your business strategy. It can help you to build an innovative product, explore the market and product, and provide you with the tools you need to improve your odds of producing a product exactly that the people want.
So if your venture needs help to reach product-market fit. Get a free consultation with Psmorfia, they can help you incorporate the right models and the right strategy for your business plan to reach product-market fit.
