The Dos & Don’ts of Product Market Fit
Market Fit Is an Essential Step Every Company Must Work Out
Introduction
After working with hundreds of startup companies over the years, it is very clear that an overwhelming majority of founders tend not to place a high enough value on investing the necessary time and attention to the Product Market Fit (PMF) process. Many founders have their own confirmation bias towards PMF, and as such, this drives the level of PMF due diligence (or lack thereof).
So what exactly is PMF, and why is it such an important step in the growth of a start-up?
The essence of Product Market Fit (a term many attribute to Mark Andressen) is when you know for certain that your product (and/or service) truly satisfies the needs of a significant market. This can be defined when the target market realizes genuine value in the product/service as it solves a real problem or fulfills a serious need. The second most important point is that they are willing to pay for the product/service, proving its worthiness. At this point, what typically follows is an active, regular user engagement and a real connection with the company and its product/service, such that users often will tell others about their positive experience with it and become advocates as they contribute to organic growth via word-of-mouth.
PMF is a step in a startup journey that is essential for longevity, as it is the basis upon which sustainable growth can be built. The other major reason why PMF is important is that, without it, or going about it poorly, will certainly result in significant inefficiencies both in manpower as well as financial resources, and especially time. Without confirming PMF, you are unable to find the sweet spot where your product/service and the market meet just about perfectly, if not perfectly. If a startup tries to scale before or without achieving PMF, the company is existentially pouring water into a leaky bucket.
What does PMF do?
1- Testing Your Core Value Proposition — Connects the hypothesis to the business value, proving significant demand for your product/service.
2- Effective Achievable Scalability — If the target market loves your product you have a solid base to scale your operations by knowing what works, who your customers are, and why they are using it.
3- Resource Allocation Effectiveness — Essentially the company will not waste time, money, or human resources due to the wrong audience, irrelevant features, and fine-tuning a flawed product.
4- Investor Confidence — Investors look for POC (can we build it) as well as PMF (market validation — do people want this, will pay for this as it solves a problem, and is the market large enough?).
5- Sustainability — Natural PMF lends to lower cost of acquisition as well as higher customer lifetime value.
6- Morale — Not to be overlooked, but corporate culture, values, and doing things properly builds confidence in management and founders as trustworthy leaders, Moreover, when a working product produces happy customers, and continuous steady growth, it creates an exciting and motivating team environment where everyone wants to be on a winning team leading to less HR issues on the whole.
7- Competitive Advantage — This may not seem obvious, but a truly perfect PMF is a competitive advantage as it makes it more difficult for the competition to duplicate the deep connection and understanding of the value of the product with its users.
The Dos and Don’ts list to remember:
And finally, I will leave you with a cheat sheet to be successful in achieving Product Market Fit:
Hello, I am Avy-Loren, and I specialize in strategic business consulting and executive advisory services catering to companies worldwide across diverse industries. My expertise lies in collaborating with startups, founders, and public company CEOs, guiding them toward achieving their personal and professional aspirations with a sense of respect and pride. Throughout the past decade, I have actively co-founded three companies and currently serve as a co-founder and COO/CSO of a tech venture. Additionally, I have made investments in early-stage startups as an Angel investor, acted as a consultant and advisor for a prominent US-based VC firm, and mentored countless individuals and startups.
To learn more about my services and accomplishments, please visit www.avylorencohen.com. I also encourage you to follow me on Medium and share this article with anyone you believe would benefit from its valuable insights. Together, we can overcome obstacles and drive success in the ever-evolving business landscape.
FOLLOW ME ON Medium and….
Twitter https://twitter.com/AvyLorenCohen
LinkedIn https://www.linkedin.com/in/avyloren-cohen/
Pinterest: https://www.pinterest.ca/AvyLorenCohen/
Instagram: https://www.instagram.com/avylorencohen/
