Product Market Fit – Useful or Theoretical?

by Shavi Goel

Of course, entrepreneurs want to make product which customers need/want. I would actually stretch the argument and say the deep desire and egoistic satisfaction of entrepreneurs lies in creating solutions to unmet needs/ markets. Then why is it that a large percentage of start-ups fail to create something which serves any market.

Mad rush called entrepreneurship
To my mind, issue at hand is very much ingrained in DNA of entrepreneurship.
Any Entrepreneur has to be wildly passionate (read borderline crazy) to invest himself in the start-up based in garage. On top of it the fact that in most cases he is trying to challenge existing paradigms / business models implies there is no existing market / ready customer segment to test the product concept early on. Hence, he obviously believes strongly in his Product Market Fit (PMF) from the word ‘go’, well, in the future PMF.  

Risk of Cognitive Dissonance
Yes, I appreciate when Steve Blank asks to focus on early customer validation. But I can also imagine how hard it will be to listen to the customer feedback when you are so close to the product. All the objectivity can kiss itself good-bye. The justifications can find home in ‘product is not ready enough’, ‘not enough or right sample size’. Some might just side with Steve Jobs and say ‘customers don’t know enough’.

Despite all the reasons above on why it is not done. Can it be done in the moment?
At times, a new start-up can stir up entire ecosystem of customers, investors etc and feedback comes very much rushing in – usually positive sometimes negative. Those are easy calls, so strong is external validation that you know you have PMF or not.
Issue is for the majority who doesn’t shake things early on. How can PMF test be done for them in the moment? I would argue it can be done. The metrics need to be very unique to every start-up, but can be defined upfront to avoid the risk of listening to customer feedback with happy ears stated above. One of the best ways to quantify PMF can be found in the companies projections. Validating milestones which company set for itself and measuring against those is good way to confirm PMF. Are we getting enough eyeballs, conversion rate, new customers or new partnerships – right question will depend on what’s at the core of start-up. Providing for a lot of ambitious plans being reflected in the projections – I would target for a xx% hit rate on key metrics. Problem is xx% that’s unknown.
Can all this be defined up-front and continue to have inviolable sanctity in the evolving environment?

Things that can help avoid pitfalls
When doing the PMF dipstick, its important to measure right things. Can’t stress enough to steer away from ‘nice to have’ to ‘must have’ for the company. Also important to check ‘willingness to adapt’ and ‘pay’ both. Also, setting time frame ahead in the original road map, essentially like timelines for doing a beta or a prototype test. Keep channels of informal feedback open and developing as many mentors who you can trust for more than fair critique. Right investors can play a big role by asking the right questions and bringing in objective outlook.

Having given the prescription above, I doubt if entrepreneurs need it. I can see many lit-up eyes in a room when someone makes the pitch on PMF and many deeply committed entrepreneurs still repeating in abated voices –‘wonder if everyone who made it, follow this theory ..Should I be here or go back to getting product out’ 


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