Ask every entrepreneur what they look for and they will answer: Product Market Fit (PMF). It has almost become a buzzword, but what is PMF in practicality?
Eric Ries (The Lean Startup) defines it as, “The moment when a startup finally finds a widespread set of customers that resonate with its product.” And everytime I read it, I’ve found myself wondering: how can one tell for sure that a set of customers “resonate with the product”?
“You can always feel product/market fit when it’s happening. The customers are buying the product just as fast as you can make it — or usage is growing just as fast as you can add more servers. Money from customers is piling up in your company checking account.”
This magical quote by Marc Andreessen describes a very clear status of Product Market Fit, but I would like to offer that signs for this fit can be detected even earlier, or as I like to call them: the seeds of Product Market Fit.
Signs to Look for:
1. When every demo becomes shorter than the previous one
One prominent sign is that you feel like you’re demo-ing to the same people over and over again. You hear the same pain points, take notes about the same feature requests, and can guess their next questions. This indicates that you’ve figured out who your buyers are, and you’ve managed to reach out to the correct people in the organization to pitch to. So if your demos become shorter and after 10 minutes you hear, “OK, got it, I’m in”, you’re on the right path.
2. When you just skip the sales deck
As we saw that our message was very straight forward, we knew we could skip introductions, sophisticated slides, and brilliant marketing slogans —we just had to show potential customers how we solve what they suffer from. At some point, we stopped personalizing the sales deck and found out that a good product sells itself better than any diagram or slide.
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3. When you don’t need to prepare anything before a live demo
In the last months, something amazing happened to me. During my career as a very customer-facing product manager, I delivered hundreds of demos to potential customers. I always dedicated at least 15 minutes (if not hours, on tough days..) to prepare the demo environment, select the nicest data to make the product look good, and try to guess which use case would be most appealing to this specific prospect. At Anecdotes, I must admit, I don’t need to do that anymore. The reason is simple: when your product solves an acute pain and is designed by real market needs, you don’t even have to find a specific “golden” use case or good-looking data. The product itself is attractive enough and anything you show will do the job.
4. Even small numbers don’t lie
For B2B products, it takes time to reach numbers that will be sufficient for statistics. But even your first 100 or 50 interactions with prospects can provide strong indication to PMF seeds:
- 80% of feature requests are the same ones from all customers.
- 9 out of 10 intro calls end with positive feedback and concrete action items like scheduling a follow-up call or proceeding to a commercial process.
- 2 or 3 solid personas fully cover the target audience and give strong validation to the same pain points.
5. When you hear your target users sell your product to their boss
No one can explain why your product meets the market needs better than your users. For me, every time I hear my key persona (compliance managers) explain to their CISO, CIO, or COO why this is the product they’ve been looking for, it makes me smile as I see the PMF seeds growing right in front of me.
Perspective Always Helps
Don’t assume that our journey towards reaching PMF was totally simple or without its complications; it wasn't—and that's okay. The point is that we kept going and iterating, based upon what we were hearing from our ideal target users, as well as our own first-hand experience of the pain points we wanted to solve. Moreover, we keep looking back to benchmark how far we've come on this journey. And as we continue on, the pieces keep falling into the right places.
This experience has helped me identify that we are now on the path to Product Market Fit. The personas are highly validated, and almost don’t change as we meet more and more organizations. The value proposition is accurate according to customer feedback and we hear the same pains and feature requests from nearly all of them. And most important: customers love the product, producing statements like “you put me back in the driver seat” and “you built the perfect product for me.”
There is still a way to go, but every tall tree starts with healthy seeds.
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