Some ideas are objectively good. Wrong. No matter how innovative or inventive your product might be, if no one wants it, it’s pointless.
One of the biggest moments in starting a business is finding product market fit. It’s a phrase tossed around in startupland—except unlike some of the watery jargon you’ll come across as a founder, product market fit is an essential part of your journey. It’s not an absolute marker of success, but it’s a strong indicator that you’re on the right track to building a strong business.
And while teams and vast resources may get you there quicker, finding product market fit is actually something you can do yourself through a number of iterative processes.
What is product market fit?
Let’s break it down into each of its parts. You have a product (the thing you are selling), a market (the people you are selling it to), and fit (suitability). Essentially, product market fit means the degree to which your product satisfies a strong market demand.
This may sound obvious, but is all too easily missed. Founders can so easily get caught up in their own excitement about their product—particularly if it’s novel or a breakthrough—that they forget to figure out if it’s something people really want, or more importantly, are willing to pay for.
Airbnb is a great example of this. Their origin story is famous by now—they rented out air mattresses on their apartment floor to people attending a conference in San Francisco who hadn’t been able to book hotels. They quickly hatched the thesis—would people be willing to pay to stay at people’s homes if hotels were sold out—and built an MVP around it.
The thesis was wrong. It transpired that there wasn’t a strong enough conviction to offer people’s homes as a last alternative: there simply wasn’t a big enough market to build a business off. The real opportunity, they realised, was in convincing people that staying at someone’s home was actually better than staying in a hotel. Their product has gradually built on this overtime, adding new features (high quality photos, introduction to your hosts, Airbnb experiences, etc) to find product market fit.
How do you measure product market fit?
Product market fit isn’t black-and-white—it’s part of a gradual process, and can be tracked through a number of things.
First of all, market demand. In short, you need to measure if the product meets a real, significant need in the market. Is there a big enough group of people who find real value in your product, who are willing to disrupt their current behaviours to use your product, and most importantly, to pay for it? There are numerous examples of technology failing to do this—solar panels or electric vehicles, for instance, which provide clear value but at a cost that many are not willing to meet.
Linked to this is customer satisfaction. Convincing people to buy your product once isn’t enough. Your customers should fall in love with your product, be thrilled by its performance, and even better, extol its value to their friends, families, colleagues, and basically anyone they meet on the street.
There’s two key aspects to this. One, do you have a strong competitive advantage? Does your product do something that your competitors can’t, or does it do it in a way that is more compelling and engaging? This can be measured by doing broad market research, including speaking to customers and finding out what they’re using already and where their particular pain points are.
Secondly, are you showing strong intent for your users? Are you investing in creating a delightful, memorable product experience for them? For consumer businesses, this means considering every touch point—not just the quality of the actual product, but the way you are speaking to them before, during, and after their interaction with your product that shows you really understand their interests and pain points. Moreover, it means taking on feedback and iterating.
Reaching product market fit will help you find much more sustainable growth. If your product is meeting the demands of users, and they’re in turn organically promoting it to their own network, you’ll start to see much more consistent growth. This will bring your customer acquisition costs (CAC) down much lower, and may mean you can start to rely on revenue as your primary source of funding.
Finding product market fit: hiring vs doing-it-yourself?
So who do you need to help you find product market fit?
If you are conducting extensive market research, it will certainly help to have a marketing specialist—a CMO, or a product marketing specialist, at this stage will be critical. This person will be adept at identifying market opportunities, defining customer segments, and providing strong insights into your customers.
Then there’s a whole process of iterating and fine tuning your product. Physical products may need product designers, digital products will need developers and product managers.
BUT: as with anything in a startup—it’s made far easier with unlimited financial and human resources. That said, it’s certainly not impossible to do things alone.
The simple goal is this—build enough to prove enough. To find these proof points to understand what constitutes product market fit, you may only need an MVP (the simplest version of your product that can prove market demand). Take OLIO, the popular sharing platform, which started just as a Whatsapp group to prove their hypothesis around sharing.
So use this mindset of building something simple that you can get in the hands of users just to get feedback. If your product is something physical (consumer goods, food, etc), focus on getting it into the hands of as many users as possible, before you start losing sleep over brand, and so on. For software, don’t waste your time coding something sophisticated—use simple, often free tools that can stand up as an early iteration of your product.
There are also a host of free or open source tools that you can use in order to get your product out there at a low cost. Shopify has a range of tools and resources to help you quickly set up an online store, while you can start using Google’s suite of tools (like Analytics and Trends) to help you strengthen your online strategy and identify potential opportunities. Be sure to make the most of AI and the vast suite of tools now available to help you build anything from a website to a pitch deck to market research reports.
Start to build a community online and think of ways to engage them before you even have a product. Take Heights, the brain health supplements brand, who started nurturing an online community long before they could put their product into people’s hands. This can quickly help you understand the pain points of your customers, what they want from your product, as well as converting them into brand ambassadors from the off.
Finding product-market fit doesn’t happen overnight—it’s a journey, which requires persistence, adaptability, and a deep understanding of both your product and your target market. The end point, if you reach it successfully, is endlessly rewarding, for both you and your customers.
