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Getting to Product-Market Fit (1)

Updated: Jul 18, 2024

If you have to ask if you got it, you likely don't. Here's how to get there.



Skii-er going down a frost white mountain
Imagine zig-zagging down a glorious mountain. Magical, isn't it?
Product-Market-Fit is mostly like skiing downhill. Exhilarating, demanding, and with 'gravity' doing most of the work. Understanding the section of the terrain you're working with helps you pull out the best tools and skills so you land safely.

Consider me Exhibit A of a product person who once erreneously claimed PMF. Earlier in my career as a founder, once we got to 20-30 paying users within a week or so, I made the mistake of thinking we had gotten to the promised land. Newsflash: we had not. And so we optimised too soon. Spent a bunch of bootstrapped funds in campaigns and features that were premature and disconnected us from what the market needed from us at that time. Yep. We landed on our faces (my bad); but not before we put in effort equivalent to skiing uphill- doable but unsustainable.

Today, we'll talk about the 4 stages of Product-Market-Fit and what the first stage requires from you as a PM of a new-to-the-market product.


First things first, let's break down the PMF spectrum. According to our friends at First Round Capital, there are four general stages of PMF:



progression diagram of PMF from Nascent (left-most) to extreme (right-most)
The different stages to PMF


1. Nascent: You've got a handful of somewhat engaged and happy initial customers, but things still feel early and messy. (Spoiler alert: This is our focus today!)

2. Developing: You're making progress, but not quite there yet. Lots of iteration still needed in your product or marketing efforts. Most acquisiton is by intentional outbound efforts from the team than natural attraction to your product. Also likely navigating lots of complaints from users.

3. Strong: You're onto something big! Users are beginning to come through the door based on what folks are saying about your product. You can handle the demand but you're beginning to feel stretched out.

4. Extreme: Skiing downhill. The momentum of demand has an energy of its own. In some ways, things feel out of control. Your product may not be perfect (is it ever?), but people want a piece of what you're selling faster than you can service them. Scary but exhilarating.


Now, the speed with which you can get from Nascent to Extreme PMF largely depends on how big of a problem you're solving, and how fast you can get your users to decide that its a problem they want solved.

If you're ChatGPT, then it's taking you 5 days post-launch to get to 1 million users (must be nice!). If you're not, then you're likely going to go through the regular 4 stages of PMF like the rest of us mere mortals.


Note: Products can go from 'Extreme' PMF to any of the earlier stages when market forces change, and there's need to restrategize on how to adapt to that change. eg. Clubhouse after Twitter created Spaces.


Nascent PMF: Early Romance

So, what exactly does Nascent PMF look like? Picture this: You've got 3-5 customers in B2B who are actually paying you money. I know, it doesn't sound like much, but trust me, it's enough to get those early signals of Product-Market Fit. It's like the first spark in a relationship - small, but potentially explosive.


What's Your Product at This Stage?


Here's a fun fact: Your "product" at the Nascent PMF stage doesn't have to be a fully-fledged app or platform. It could also be:


- A humble spreadsheet

- A rough prototype you've put together in Figma or similar

- A snazzy presentation on Miro/Canva

- Or even just a service you're providing


Remember, we're in the early days here. It's all about proving the concept and getting that initial validation.


Finding Your First Customers: The Hunt Begins


Now, you're probably wondering, "Cool, but how do I find these elusive first customers?" There's a couple of ways:


1. Dust off that phonebook (yes, cold call- literally)

2. Dive into social media and online groups (try not to be spammy)

3. Leverage warm intros (time to call in those favors)

4. Tap into VCs, advisors, and mentors (you can access them through local accelarator programs or from LinkedIn)


Pro tip: Get yourself a Market-Problem Map. It's like a treasure map, but instead of gold, you're finding your way to product-market fit. Here's a Miro template you can use.


The Sweet Spot of Nascent PMF

Alright, so you've got a few customers. But what does success in Nascent PMF actually look like? Here's the breakdown:


1. Mission Critical: They pay you. Yes, it's that simple. If they're willing to part with their hard-earned cash for your product, you're onto something.

2. The Optimization Stage: Focus on increasing satisfaction with your product. Happy customers lead to more customers.

3. The Venn Diagram of Success: You want to hit that sweet spot where Willingness to Pay (WTP), Minimum Viable Product (MVP), and Minimum Viable Segment (MVS) all overlap. It's like the holy trinity of product development.


Venn diagram showing Willingness to pay, minimum viable product and minimum viable experiment
The 'holy trinity' of success at the nascent stage


Yellow Flags: When Trouble's Brewing

Paying customers are great!! However, while you're on the right track, there's still a risk of being run over. Here are some yellow flags to keep an eye out for in the next 9-12 months:


- Nobody would be really sad if your product disappeared (ouch!)

- Your customers can't fully articulate what they love most (or dislike) about your product

- It's incredibly hard to find new customers (like pushing a boulder uphill)

- Usage is lower than a snake's belly (red alert)


If you spot these warning signs, don't panic! It's time to change at least one of the 4Ps of Product-Market Fit: Persona, Problem, Promise, or Product. Think of it like a product remix - sometimes you need to change the beat to get people dancing.



So, how do we then navigate the testy nascent stage? Go-To-Market Strategy Options

1. Understand where you are currently positioned with relation to 'The Chasm'.

A visualisation of an upside down 'U' graph with the different stages of  market penetration
Your work is to figure out how to not succumb to the chasm: Read Crossing the Chasm

Nascent stage by default means you're either still at the early adopters stage or in the chasm figuring out how to cross it. The chasm has been a Bermuda Triangle for many startups or products that have struggled with how to get to the other side. For this, check out 'Crossing the Chasm' book by Geoffrey Moore. A key strategy for product folks on how to cross this chasm is to focus on one key user profile before going to the next. Leveraging product-led growth can also give you extra insight into what kind of users are most drawn to your product and optimizing for this target group should you see sustained interest.


2. Clarify your Early Customer Profile (ECP) vs your Ideal Customer Profile (ICP).


Know the difference. Your early customers might not be your ideal long-term customers, and that's okay! However, when you're able to gain clarity on who your ICP is, then you can build a product with those user stories in mind. Skipping this step, in the long run, will likley result in having dissatisfied customers or being stuck servicing a group that doesn't fit the vision of the product or company.

For instance if you were a B2B SaaS and you want to position yourself for the high-end client base, you could slowly start introducing credit card requirements for free trial signups for users who may not meet your ICP checklist. This self-selects the ideal group that will take you from Nascent towards Extreme.

Remember, finding Product-Market Fit is like solving a complex puzzle. It takes time, patience, and a whole lot of trial and error. But with these insights in your PM toolkit, you're well on your way to cracking the code.


Until next time, keep innovating, keep iterating, and most importantly, keep having fun with your product journey!


 

© Product Queen 2024

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