Text by Jan Küster
The Holy Grail of Successful Entrepreneurship: Product Market Fit
The lean startup movement has gained a lot of traction in recent years. This is because it teaches entrepreneurs how to build products that people actually want. One of the most important concepts in lean startup is product market fit. In this post, we will discuss what product market fit is and how you can achieve it for your business.
What is product market fit and why do you need it
The term “product market fit” was first coined by startup guru Marc Andreessen. It’s when a startup finds the perfect overlap between what they’re offering and what the market wants. It’s when your product solves a real problem that people actually have.
Finding a product market fit is essential for any startup. Without it, you’re just flailing around in the dark, hoping to stumble upon something that works. The lean startup method is all about finding product market fit quickly and efficiently. This means rapidly releasing prototypes and testing them with real users to get feedback early and often. It’s a much more efficient way to do business, and it increases your chances of success exponentially.
What that means for innovative concepts:
=> When you experience that lightbulb moment of a great idea. Enjoy the creative fruit of your thoughts, but put it into context with the targeted customer asap. Learn as much as you can about the target market and their needs early on. Don’t be afraid to share your idea with respective people that match your customer-criteria. As renowned Venture Capitalist John Doerr says: “Ideas are easy, execution is everything. “
How to achieve product market fit
The product market fit is the holy grail of successful entrepreneurship. Once accomplished, the product gains enough traction in the targeted market to sustain growth on its own merit.
In the subject-matter expert book on the subject “The Lean Product Playbook”, Dan Olsen describes the product market fit in a pyramid.
The Lean Product Process by Dan Olsen. Credit: slideshare.net
The shape chosen to undermine the importance of each aspect of product market fit. Starting with the basis of the “Target Customer” who is targeted for its “Underserved Needs”.
From there on, the founding team accomplishes a stable “Product Market Fit” may by building a solid “Value Proposition” on top, an offering that develops a “Feature Set” from the learnings derived from interaction with the “Target Customer” and finally a well crafted “User Experience” that is useful and enjoyable to the customer. We’ll touch on each of these vital elements of the product market fit in connected posts.
It’s important to note that there is no one-size-fits-all definition of product market fit; what works for one company may not work for another. However, there are a few general principles that all startups should keep in mind when trying to achieve product market fit.
First, it’s important to define your target market as narrowly as possible. This will help you better understand the needs of your potential customers. Second, make sure that your product solves a real problem for your target market. There’s no use in trying to sell a product that no one wants or needs. Finally, don’t be afraid to experiment. Achieving product market fit is often a matter of trial and error. So go out there and start testing different approaches until you find what works for you.
Examples of companies that achieved product market fit
There are many examples of companies that have achieved product market fit. One well-known example is Apple. Founded in 1976 and known for its personal computers. It was the launch of the iPod in 2001 that really helped to propel the company to success.
The iPod was perfect for its target market of music lovers who wanted a portable way to listen to their tunes. In addition, Apple made it easy for users to purchase and download songs from iTunes, giving them a seamless experience that kept them coming back for more. Because of its focus on product market fit, Apple quickly became one of the most successful companies in the world.
When Tinder first launched, it was a simple dating app that allowed users to swipe left or right on potential matches. However, the app quickly became much more than that. Tinder became a way for people to meet new people and connect with old friends. It also became a way for people to find hookups and casual relationships. As a result, Tinder achieved a level of success that few other dating apps have been able to match. Tinder clearly excelled in the UX design, as the term “swipe” is now associated with the company. It also reduced the experience to the most vital criteria for initial attraction: looks.
Facebook started out as a simple social networking site for college students. However, it quickly grew in popularity and became the go-to app for connecting with friends and family. Facebook also became a powerful platform for businesses and organizations to reach their target audiences. In recent years, Facebook expanded into other areas, such as artificial intelligence and virtual reality. Focussing on connecting people and monetizing by providing targeted information to advertisers.
Uber is a ride-sharing service that has revolutionized the transportation industry. The company has provided reliable and affordable transportation options for people all over the world. It is the largest personal transportation company without owning a single vehicle for that purpose. This shows how focus on solving a customer's need, i.e. enabling effortless affordable transportation by connecting drivers and customers, beats building the actual product to accomplish the transport.
The importance of iterating and pivoting when needed
Success is a marathon, not a sprint. To build a perfect product, iterate and pivot your concept as effective as necessary on your journey from idea to product market fit.
However, there is a difference between iteration, which is the ongoing development of your idea through learning from the market and pivoting. You must pivot if you have made incorrect assumptions about your target customer and their underserved needs.
Building a successful product is an iterative process that requires constant learning and change. As your product develops, you may find that certain aspects of your original concept are no longer viable or relevant to your target market.
Too often, entrepreneurs get too attached to their original idea and refuse to make changes, even when it’s clear that the product is not resonating with the market. This can be a costly mistake, as the longer you stay the course without making adjustments, the more money you will burn through seeing no results. That’s why it’s so important to iterate when needed. Iteration doesn’t mean scrapping your entire business plan and starting from scratch; rather, it’s about changing your product or go-to-market strategy in order to better align with customer needs. By being open to iteration and even pivoting, you increase your chances of finding product-market fit and achieving long-term success.
Idea validation is key to a successful business. Test and learn as much as possible in order to find product market fit. Once you’ve accomplished that, your idea becomes a thriving venture that happily accepts resources such as venture capital, employees who know what they’re working towards and, most importantly distribution channels to a well-defined market who is happy to interact with your venture.
So, get out there and start ideating, building, iterating and pivoting!
Jan Küster coaches lean startup techniques and go-to-market-strategies in established corporations, university programs and various incubators. He co-founded the Founders Fight Club, hosts events and learning formats to promote the visibility of startups and the associated startup scene. Previously, Jan successfully established and subsequently led business development for technology projects in the areas of Chip Design, Software as a Service and Natural User Interface applications for both startups and early stage ventures of established corporations.