Half the battle of a start-up is simply getting started, but once you have an idea and a team, there comes another hurdle: finding the right product-market fit.
The quest to product-market fit or ‘PMF’ is often filled with false positives, failed features, and trying to figure out the fastest possible way to generate revenue.
But what does that look like in real life? How do you measure your path to PMF? How do you validate along the way? These are questions that I hear time and time again from entrepreneurs, so I thought it was high time to share the lessons that we learned (the hands-on way) at ConsumerBell on our journey to PMF.
Forged in the Fire: 5 Hard-Won Lessons in PMF
Our quest with ConsumerBell was to solve the inefficiencies around product recalls. At the core of it, we wanted to minimize the risk of class-action lawsuits, which we predict will be a growing space. We faced numerous challenges on our journey to product-market fit, including a lack of a clearly defined ‘market’ and a low burn-rate. This meant a significant amount of time was spent on prototype examination and hypothesis testing, with a heavy reliance on organic learning.
Finally, after three years, 12 products and $370,000 – we arrived at the product we offer today. Here are our top five hard-won lessons on our quest for product-market fit:
1. Start With the Pain
A top sales rep once told me that you need to ‘follow the pain’. This is no secret, but you would be surprised at the number of people who don’t start from a defined pain-point. Before building anything, you need to begin with a clear understanding of problem that needs to be solved.
Often, the problem still needs to actually be acknowledged by those to which your product is designed to ‘help’. Ask yourself: What is the specific problem you are tackling? What are the ways to solve the problem? If you follow the pain you will be able to create a useful solution that responds to the needs of your customers.
2. Understand the Stakeholders (Read: Your Future Users!)
Now that you’ve figured out the problem you are solving, you need to get a handle on whose life you’re going to be improving. This means knowing who would use your product and who would pay for the product. If you are working in an enterprise space, this is almost always two separate people (the user and the payer), but on the consumer side they are one and the same.
Understanding the difference between who is paying and who is using will also give you a leg up when it comes to marketing, pitching, or presenting your tool or product. Be sure to map the needs and intentions of both parties – perhaps the need is different for each party: end users might want something that is ‘easy’ while the payer at a corporation may want ‘protection’.
3. Know the Difference Between MVP and MSP
So now you know why you’re building your prototype, and who you’re building it for. It’s a good start…but it’s certainly not a finish.
While you might even be lucky enough get pre-orders or LOIs with your prototype, you still need to pay close to attention to the difference between the minimal offering needed for selling a product, versus running a product.
For example, many programs in the advertising or service-based space usually can get paying users before any product is built. For enterprise, you often need to polish a product well before replicating and selling to others. This would mean that your minimum sellable product, or MSP can end up being far more costly than your minimum viable product, or MVP. Once you’ve determined the business need behind your product or service, prioritize features and asses the difference between your MVP and your MSP. It can be beneficial at this point to reach out to one ‘champion’ user and get their feedback on what they perceive the difference between your MVP and MSP to be.
4. Test, Test, and Test Again
Once you reach the point of identifying the difference between your MVP and your MSP, it may feel like the need for testing has passed. But nothing could be further from the truth. Keen and frequent observation is essential to reaching PMF. You need to be constantly looking out for signs of activity – both good and bad. No sign is always a bad sign, as it means you are building in a bubble.
The journey to validation is paved with testing. Get out there and talk to your customers – ask them whether or not your offering is something they would pay for. Test your code. Test your business theory. Often, after a few weeks or months into product validation you may find that your original understanding of the business need is wrong or needs updating. Remember: one of the very best ways to test a product is to ask a user to pay money for it. Money is always validation.
5. Money Always Wins
Financial transactions are one of the simplest ways that we express our opinions around value; hence the biggest clue that you are solving a real pain point for your customers is that you are being paid for your product or services.
But beyond paying customers, there are other ways that money can indicate successful product-market fit, including being offered partnerships, revenue sharing, or – on the far end of the spectrum – acquisition offers. Even if your offering is free, you can still use the ‘money trail’ as an indicator of PMF. For example, if you’re ever been served with a cease and desist, you are likely successfully disrupting a space to the point where you are impacting another company’s market share.
For ConsumerBell, our ‘perfect fit’ ended up being recall monitoring. And while the journey to PMF felt long (and expensive) at times, it armed us with valuable knowledge that allowed us to bring a highly-sought after product to market – and taught us some powerful lessons along the way.
So, what comes after product-market fit? You replicate. You scale. And that next chapter is just as fun as the last.
Want a more in-depth look at PMF? Check out The Journey to Product Market Fit.
Have you brought a product to market? What did you learn?
About the author: Ellie Cachette is Founder and CEO of ConsumerBell, helping companies and consumers manage product recalls. Recognized by the California State Senate as an “Outstanding Educator” in AIDS and Public health in 1997, Ellie has been an active supporter in the campaign to cure AIDS and promote healthy living. A Springboard Enterprises alumna, Ellie also contributes to Inc and Huffington Post on topics about Women and Business. Follow her on Twitter at @ecachette or find her here on LinkedIn.Tags: Consumerbell, Ellie Cachette, entrepreneur advice, expert advice, Women 2.0, women founders advice