Product Market Squint
Ahh, Product Market Fit. That mythical unicorn all startups spend tireless nights and weekends toiling over greasy keyboards and greasier food. If it were easy, everybody would be doing it, right?
Fortunately, defining Product Market Fit must be a little bit easier than achieving it, right?
“Product/market fit means being in a good market with a product that can satisfy that market.” — Mark Andreessen
“Customer Validation proves that you have found a set of customers and a market who react positively to the product: By relieving those customers of some of their money.” — Steve Blank
“The achievement of product/market fit can be measured according to a specific metric: when, in a survey, at least 40% of users say they would be “very disappointed” without your product or service. — Sean Ellis
“Make things people want” — Paul Graham
Considering all of these basically remix the words product, market and fit — how can there be much room for interpretation. Turns out, the gap is wide. I’ve built many products in life and advised dozens of others on the ones they are making and if one thing’s for sure, getting this right is everything short of easy.
Let’s look at the constituent parts.
The Product
Product development has the unique ability to manipulate time. While it never seems like you can move fast enough, suddenly you’ve moved too fast. Balancing quality and quantity becomes a real challenge.
Inside, your team is busy toiling away as quickly as possible, iterating, refactoring, optimizing to deliver the next release. At release, everyone is wiped out, but excited for the waves of raves they’re due. Outside, your customers are anticipating your next release, tempering their anger at the loose threads you’ve left raw, and plotting their next requests. At release, they’re nonplussed whenever they bother to get to it.
Most often in discussions of Product Market Fit, founders are talking about their MVP (minimal viable product). Why would something that “fits” be minimal — exactly. The goal is not to get to the minimum version that checks some magical box, it’s to do your best to deliver a quantum of value to your customer.
“Momentarily Valuable Product” would be a much, much better mindset for everyone to adapt. Value is the measurement of something’s usefulness and, as a result, is a complex concept. We create value through the process, the product and the persona that our product lives to service. As value is an active exchange, it’s equally important to understand that we can only see glimpses of it — not know it fully at any moment in time.
The Market
All great products, much like great presentations, are designed for a specific audience. Audiences are to markets like startups are to markets — both potential representations of potential solutions. Neither one is that easy to understand.
Eric Ries has one of my favorite definitions of a startup:
A startup is a human institution designed to deliver a new product or service under conditions of extreme uncertainty.
Under conditions of extreme uncertainty is the most important part to me. Markets, like startups, are filled with humans and are subject to both rational and irrational thoughts. Maneuvering the ever-changing needs and personalities of a market can prove to be the greatest challenge any startup has to overcome.
Before we have data, we tend to rely on boundary-style data to help us understand markets. We look at the total potential customers and their ability to be engaged/converted aka addressability (TAM). This lets us make preposterous claims like “There are 1MM potential customers and if…”. Stop.
A better approach to market sizing is to see it not from the outside but from the inside. The ability to have true empathy for your customers, to be an insider, helps disruptive solutions gain acceptance. It’s no coincidence that investors like founders with domain expertise — it gives them an unfair advantage over others.
Sometimes you choose the market. Other times the market chooses you. In either situation, it is important that you understand if it both suits your ongoing vision and is large enough to support your business requirements.
The Fit
If there’s one thing you’ll never really be sure of, it’s the fit. Founders are usually natural pattern matchers, meaning they can see ways to solve markets with problems and products to solve them. What they can’t see, however, is what’s in someone’s heart and mind.
Fit has 3 key challenges that every entrepreneur must overcome:
- Measurement
- Breadth
- Depth
Measurement
Fit is not something that can be easily measured. Unlike direct metrics like traffic or engagement, when it comes to fit we have a much less sophisticated set of tools. Instead, we understand fit through approximation and proxies.
Revenue is a fairly good proxy, but never forget how your customer development and sales processes may be impacting your results. Customers may fall in love with your story and the way you tell it far before they derive that value. Their money is a down payment on the future that they expect will pay dividends.
Great salespeople can be fit’s worst enemy.
Breadth
Fit is not one-size-fits-all, no matter how much we would like it to be. It’s a perpetual riddle that leaves us guessing whether or not the person you are currently talking to represents their company, a small group or an entire market. For the record, they likely don’t represent any of those things.
For any customer interview, it is worth know both the processes that a customer utilizes to do their work and where the specific people you’re engaging with fit into that ecosystem. There’s an equally good possibility that the person you’ve attracted has a mission to change the way things are done or a vendetta against any change. These motivations aren’t to be blamed, just our inability to put them in context — they’re just doing their job, make sure you do yours.
Great minds think alike, they say. We rely on getting referrals from our passionate advocates to grow our fledgling customer base. Of course, in doing so, we just draw together a naturally biased set of people. Bias isn’t a good or bad thing, but what it represents is important. Is this the vocal minority or the silent majority finally getting a voice?
The great risk with referrals is that it can lead us down rabbit holes or up local maximums. Power users love power tools — and power tools they will design with your willing and able hands. Every group simultaneously believes that their problems are common and, yet, unique. That’s not as crazy as it sounds, since there are systemic problems and organizational ones. Keep hustling to find the system problems first — that’s the gold.
Lastly, even though we may have found a sizable group of customers who find value in our solution — do they represent the market we thought they do? There’s no right or wrong here, but adjustment is required to make sure that we’re building in the direction we think we’re building in.
Depth
Fit is nothing if it is not firm. A true sign that fit has been achieved is that it is unshakable. Customers who derive real value from our business are much harder to sway than those who don’t have it.
For most products, it’s useful to keep an eye on engagement as a proxy measure of depth. Engagement should grow over time, from occasional to always-on. When businesses start to have dedicated employees for the problem you solve, you know you’re moving in the right direction. When companies starting listing your company as a desired skill, you know you’ve made it.
Data, however, is not enough. An equally important tool in your arsenal are customer interviews and relationships. Those same conversations that can lead you astray can be your best enemy in fighting apathy. Customers who suffer through the rough patches trust your ability to deliver solutions and will gladly give you a heads up when it’s time. Don’t give up on this part of the system just because things look like they’re going well.
The Squint
And now, the squint. Everything discussed here is logical, if not obvious, and yet, you’ll likely run right on past it. It’s not that we’re foolish, we’re just human and working in a machine stilted atop uncertainty.
As much as we’d like for our customers to give us permission to go forward, they can’t do that. At best, they can give us more confidence that we’re right, but they can never remove all uncertainty, nor should they. Our next step is simply our next best guess.
Founders squint about product, market and fit.
Product Squints
Early products are over-informed. They are driven equally by customer’s needs, founder’s desires and the team’s capabilities. One side wants to do everything, the other wants to do the minimum possible. The outcome is somewhere in the middle.
Every founder spends their time negotiating both sides of this argument. “We need this” vs “We can do that later” is an all too common argument. Eventually, the arguing wears you down and we compromise on something. We squint.
Product squints let us ignore the inherent problems in our product. We know that one thing is broken, another is fake, another should be retired “but we spent so much time on it”. Keep yourself true to the value, the product will sort itself out (if you have customers).
Product squints are usually innocuous, but watch out. If you’re beholden to the novelty of your solution, you may find yourself in real trouble before you know it.
Here are a few questions to ask yourself:
- If you were never going to ship anything else, would this be the thing
- Your customer will say, this is great because it _______. (know the answer)
- Will what we shipped bring them back to us monthly/weekly/daily
- Who’s going to say “Why didn’t I think of that?” Customer? Competitor?
Market Squints
Markets seem like the obvious part of a startup, after all we exist because we see a problem worth fixing. Problems are experienced by real life people which means naturally there’s a market. And, no.
A group of people who love something does not a market make. Turns out that just because someone likes something, doesn’t mean they’re willing to pay for it — at least not at first. Further, just because they’re willing to pay for it doesn’t mean there’s a large enough ecosystem of customers who share this pain.
Sadly, all our great ideas don’t always have a home. It’s a harsh reality to see and, most unfortunately, it may be that you have to get half way through before you know it. At that point, you’ve got 2 choices: power through or retreat.
How to tell if you’re looking at market:
- Your customers don’t have the same title
- Your customers share responsibility for your product with their other work
- There isn’t an association for your target market
- There isn’t an active community of Meetups for your market
- There isn’t an active thought leadership /conference track
Fit Squints
Fit is about knowing how someone feels about you when they don’t know you’re listening. To your face, everything will be kind and cordial, but how they feel when they think they can be completely honest is what really counts. If they’re already being brutally honest, you’re already in trouble.
There are a number of ways to know if you’re squinting at your product’s fit. Just figure out how valuable you are.
Here are just a few ways to determine if you fit:
- Turn it off and see how many people complain
- Ask for a referral, see if they do it, then find out what they said about you
- Take their money and keep it
- Ask their supervisor, see how they’ve packaged up what you do
I’ve spent 20 years building products in a dozen different industries that I likely had no business being in. I’ve wasted millions of dollars squinting at stars, soaking in the imagined glory of a world blessed by our gifts. I’ve been more wrong that right, but that’s ok.
Founders squint, it’s how we do. Grab some tissues, you’re gonna cry before you’re done.
