How to Find Product Market Fit? A Summary.

Finding product-market fit is probably the most difficult thing in doing a startup. We all have great ideas but we need to make something that a lot of people want.

Recently, I have watched some sharings on how to find product-market fit, and I came across a YouTube video uploaded by Y Combinator. I summarized the points in this blog post.

What is product market fit?

Simply put, product-market fit is to find and make something that a lot of people want. There are different stages of a company: I have an idea, prototype, launch, traction, monetisation, and growth. Product-market fit generally refers to the stages from idea to traction. But even after getting traction, we still need to fine-tune product-market fit from monetisation to the growth stage.

How to build a remarkable product?

• Talk to customers and develop a market thesis

• Listen to their problems not their solutions

  • I really like the quote, “If I had asked people what they wanted, they would have said faster horses.”

• rapid prototyping

  • Build a fully functional product is very expensive

  • Focus on getting a functional prototype as quicky as possible

  • Don’t worry about scaling at this stage

  • Keey the money burn low

  • Build a team that can do this quickly. Outsourcing usually does not work since a lot of iterations is needed.

• Build the solution to their problems

• Test the solution to their problesms

  • Make sure you are talking to your target customers but be open to changing who they are.

  • Tools

    • Customer interviews

    • UX testing sesions: get someone to use the service in front of you and do not say or do anyting

• Did it work? If not, go back to the first point

By the time you have reached product-market fit, you have likely looped ~27 times.

What should we do next?

We need to focus on the thing that will get you to the next stage which is product-market fit in this case. We also need to prioritise by optimizing for learning instead of optimizing for cost and benefit at the early stage of a startup.

How do I know when I have achieved product market fit?

I think the metrics mentioned by the speaker does not apply to all business models. Imagine your business is to sell services to enterprises, the metrics below may not apply.

• Returning usage (Day 1, 3, 7, 30 retention)

• NPS (Net promoter score) > 50

• Paying customer renewal rates by cohort

Beyong product market fit

The speaker also mentioned that not only product-market fit is important, channel and business model are also very important.

He also gave the following advice:

• Don’t scale team past 20 before product-market fit. At this stage, you should involve in everyting important and know everything about your customers/ product/ market/ channel.

• Once you found product-market fit, scale aggresively.