Notes on Product Market Fit

A Summary of key insights on how to achieve a product market fit for a new business idea

• The market comes first, as you can’t change it, but you can change the people. When you have a big market and solve a real problem, you will sell a lot.

• A value hypothesis articulates the key assumptions why a customer will be interested in using your product. Identifying the compelling value hypothesis is important for product-market fit. You need to identify the needed features, the audience that will likely care, and the business model to entice purchases from customers. First, market, then your team.

• First, test your hypothesis, prove it, move on, and further iterate. Start with the product, find the market, and then the business model. You need to explore until you can find the fit.

• You can see if there is a fit when sales explode, and experience huge demand and growth. If there is none, then nothing is moving.

• The moment when a startup finally finds a widespread set of customers that resonate with its product, you can see people voting for the product with their money.

• You need to see a good organic pull for your product.

• The first to product-market fit is a long-term winner. Once you achieve it, it’s hard to dislodge even with a better or less expensive product.

• Myths on Product-Market Fit:

  • Product-market fit is a discrete big-bang event.
  • It is obvious when you have the fit.
  • Once you have the fit, you can’t lose it.
  • Once you have the fit, you don’t need to worry about competition.

• Getting the right product means finding the fit. It’s not about the product launch, but reaching the point when your product is accepted, and customers are willing to pay for it. Don’t scale before achieving market fit.

  

• Until you can find a fit, don’t focus on the robustness of the product. Find the fit and then improve upon the product. You need to find a sustainable growth model and moat against competitors.

• Start hiring only after achieving the fit. Until then:

  • Live as long as possible with the least expenses.
  • Iterate as quickly as possible.
  • Create something people want. Nothing else matters.

• You need to choose a market long before you have any idea whether you will reach product-market fit.

Questions

• Why are we doing this

  • Why are you working on this,
  • for whom,
  • who benefits and motivation 

• What is the problem that you are solving

  • Are customers confused, are you confused?
  • Is something not clear?
  • Is something possible now that wasn’t prior

• Is this helpful

  • Is it something really useful or just making something out of an idea you like

• Are we adding value

  • Are customers getting 10X benefits compared to the current solution?
  • If not, what else needs to be included

• Will this require a change in user behaviour

• Any easier way around this

  • Is there some easy way which is good enough to get around this problem

• What could you be doing instead

  • If not doing A, I will be doing B. Is B less important than A

• Is it worth it to you and your customers

  • Abandoning what you are working on right move despite best efforts. It is Sunk Cost and is not reversible

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Refer to my blog post on validating new business ideas for a more detailed process based on my experience