North star: Product-Market fit ✨

My name is Max. I’m the co-founder of Stories, a software that gathers everything that happens regarding a user on a timeline.

Founders, please make yourself a favor: re-read this article again and again until you reach Product-Market fit (I would suggest once a week).

Looking for product-market fit is intellectually and emotionally hard. You will do many unconventional kinds of stuff. Things might become foggy. Even if you work like crazy and execute like a semi-god, don’t forget to take the appropriate time to take a break and think about where you are heading.

Part 1 — Why Product-Market fit should be your sole obsession?

Because if you don't reach Product-Market fit (PMF), your company will die.

I learned it the hard way. One year ago, I closed down my first company. Among many things we got right, we got wrong what mattered the most: product-market fit.

I remember phrasing it this way: “It’s like we were on a boat, paddling. Every time we were paddling, we were moving forward. Every time we added a paddler, we were moving faster. But all that time, we were paddling upstream”, and we were thinking “if only we could put the boat on the downstream direction”, but eventually, we ran out of cash before succeeding.

Our three and half years journey is well summarized by Paul Graham lines below:

Here’s a common way startups die. They make something moderately appealing and have decent initial growth. They raise their first round fairly easily, because the founders seem smart and the idea sounds plausible. But because the product is only moderately appealing, growth is ok but not great. The founders convince themselves that hiring a bunch of people is the way to boost growth. Their investors agree. But (because the product is only moderately appealing) the growth never comes. Now they’re rapidly running out of runway. They hope further investment will save them. But because they have high expenses and slow growth, they’re now unappealing to investors. They’re unable to raise more, and the company dies

or by Dalton Caldwell’s tweet below:

Now, it is obviously clear to me that there is no need to put money, time and energy on anything else except reaching Product-Market fit. Nothing else matters.

Andreessen argues that the life of any startup can be divided in two parts: before product/market fit (BPMF) and after product/market fit (APMF):

When you are BPMF, focus obsessively on getting to product/market fit. Do whatever is required to get to product/market fit. Including changing out people, rewriting your product, moving into a different market, telling customers no when you don’t want to, telling customers yes when you don’t want to, raising that fourth round of highly dilutive venture capital — whatever is required. When you get right down to it, you can ignore almost everything else.

Andy Rachleff states the same thing differently:

If you address a market that really wants your product — if the dogs are eating the dog food — then you can screw up almost everything in the company and you will succeed. Conversely, if you’re really good at execution but the dogs don’t want to eat the dog food, you have no chance of winning.

Part 2 — The quest to Product-Market fit

I find Product-Market fit very tricky. PMF as a concept is a binary matter: you either have it or you don’t. Pretty straightforward. However, the process to reach PMF is far from being as simple. It is more an art than it is a science.

Get lucky

To reach Product-Market fit, you’ll need to get lucky. Many never succeed.

In other words, founders who get lucky, are actually founders that move as fast as possible to give themselves as much surface area to get super lucky.

A good reason to pivot is you get another roll of the dice. It’s much easier to be lucky when you get half a dozen shots on achieving a goal than a single one, right? So, if we’re just guessing the statistics of how do I get PMF, taking several high-quality shots, I would argue you are creating luck for yourself and the odds that you actually hit something that works are much higher than someone that only takes one shot.

How to create luck? Talk to customers to understand their needs, change the idea as fast as you can and code day and night, as fast as you can.

Everything gets way easier if you move as fast as possible.

Learn

Everything you do, everything you ask, needs to serve one thing: learning.
The first goal here is not to sell your product, it’s to learn.

You need to optimize everything for learning. For example, don’t prioritize by creating a list “cost X benefits”. Instead, ask yourself ‘what is our biggest unknown that would rewrite our priorities’.

You need to contradict your vision and have a genuine interest in seeking the truth.

When a surprise happens — either an upside surprise or a downside surprise — that’s the market speaking to you trying to tell you something you don’t yet know. And so, you need to listen

What is the process?

“Discovery beats planning, so plan to discover”, Bill Barnett.

Success is almost never planned. No company is ever executed on every aspect of its original pitch or business plan. But that doesn’t mean success is random. Instead, it’s found through the Discovery Process.

PMF emerges from experiments conducted by the entrepreneurs. Through a series of build-measure-learn iterations, PMF is discovered and developed during a process rather than a single Eureka moment.

I found the best process is described by David Rusenko:

Have an open mind. Develop assumptions. Repeatedly test hypothesis. Launch again and again. Fail fast and cheap.

How to talk to customers?

Interviewing customers is probably the most important task to be performed on a daily basis while looking for Product-Market fit.

Customer interviews surely would deserve a full article. But based on The Mom Test book, the three commons errors are:

1. Talk about their life, not your idea
2. Talk specifics, not hypotheticals
3. Listen, don’t talk

And the five great questions to ask are:

1. What’s the hardest part about (doing this thing)?
2. Tell me about the last time you encountered that problem
3. Why was that hard?
4. What, if anything, have you done to try to solve this problem?
5. What don’t you love about the solutions you’ve tried?

How do you know when you reach PMF ?

You will know when you have achieved PMF when customers start beating a path to your door.

Product-market fit really means finding a group of customers who are desperate for your product. If they aren’t desperate, it means there is likely a good alternative.

Andreessen argues that “The product doesn’t need to be great; it just has to basically work. And, the market doesn’t care how good the team is, as long as the team can produce that viable product. If nearly everyone at the business is focused on trying to fulfill product demand instead of “sitting around” trying to dream up new features to create demand, there is almost certainly PMF — but the reverse is not the case”.

You haven’t reach PMF when growth is not your biggest problem.

When you don’t have it, everything feels hard. When you do have it, everything is easy and most of the moves you make work.

Some metrics can help you know if you have achieved it:

• Returning usage (Day 1, 3, 7, 30 retention).
• Net Promoter Score (should be >50).
• Paying customer renewal rates (cohort-based).
• Ask users “how would you feel if you could no longer use the product?” and measure the percent who answer “very disappointed” (Should be >40%). Rahul Vohra from Superhuman gives more details here.

What if you don’t reach Product-Market fit?

Most people never find PMF.

If you don’t have PMF and you have given the idea your best, then it can be easier to reach PMF by changing ideas, rather than continuing to throw valuable time and money after it.

Here’s the advice when you are looking for an idea to pivot to:

• Try to find something the founders are more excited about, and makes them feel more optimistic to work on it.
• Being more ambitious is often counter-intuitively easier.
• An honest assessment of founders' strengths/weaknesses and attempt to find something with better founder market-fit.
• Best to find something easy to get started and validate market feedback.

Conclusion

Only one thing really matters: reaching Product-Market fit. So every time you do something just ask yourself: does this helps to reach PMF?

There is no value in spending time and effort on something that customers don’t want to buy.

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Thank you for reading! Have a wonderful day.