The two foundational models

A synthesis of everything I've written on Product-Market Fit

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I’ve had a lifelong obsession with one question: “How do you create something that’s new, different, and works?”

Before college, this took the shape of composing music. Heavy metal, obviously.

In college, this took the shape of starting a nonprofit.

Since then, it’s morphed into building companies.

While doing these things, I’ve been very confused: None of the advice out there on how to build something new & different has been helpful. Much of it sounds right and smart, but none of it actually works… or even makes sense when you think about it for a while.

I’m left with one conclusion: We, as a business world, simply don’t understand this very important topic.

It’s a mystery.

And I hate mysteries.

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I am trying to solve this mystery. My methods:

• I was a founder - spent 2 years getting the shit kicked out of me, then spent 2 years getting the shit kicked out of me with traction ($0-$4M ARR)

• I helped 10 startups from $0-$1M+ ARR in the past 15 months

• I’ve written 8 versions of a book about this (not kidding, 8 versions from scratch)

• I’ve written a newsletter every week on this topic for the past ~4 years

• I’m starting another B2B software company, because why not

• And, I’ve talked with ~1,000 founders, execs, etc. about this

I don’t think I’ve solved it yet, but here’s the current state of my thinking:

The problem

Product-market fit is an abstract, ambiguous, quasi-religious concept.

We don’t have a way to think about product-market fit other than “make something people want” and “you’ll know it when you have it.”

This causes the worst possible outcome: We can’t assess whether any particular direction or piece of advice is good or bad. Without a concrete way to think about product-market fit, we’re lost.

This is why founders are always overloaded, overwhelmed, and stuck.

To escape this stupid and awful state of affairs, we need answers to two foundational questions:

1. How does product-market fit work? In other words, what is the essence of it? How does it work, as a system, at its very core?

2. How do you find product-market fit? In other words, what is the process by which startups go from not working → working?

Everything else that matters emerges from these two answers. When we understand these two things, we generally know what matters in any given moment… which means we can confidently put our souls into our work.

As I’ve poured my soul into these questions, I’ve developed two mental models that largely answer them.

1. How does product-market fit work? This is answered by the “Case Study Replication” model.

2. How do you find product-market fit? This is answered by the “Unfolding” model.

These names are accurate, but very unsexy. Please help.

Model #1: The Case Study Replication Model

How does product-market fit work, at its very core?

Here there be monsters. We think the answer has something to do with personas, niches, value propositions, 10x products, lots of people buying our product, etc. These things sound right, but are generally counterproductive. Here are a few reasons why:

• Neither a persona nor a niche has ever bought anything in the history of the universe

• “Lots of people” have never bought anything, acting as “lots of people”

• Nobody has ever said, “YES! Today’s the day I get to buy new enterprise software!”

• Nobody has ever said, “WOW! Your value prop is so compelling, I’m going to drop all my projects and goals and buy your product!”

The only way to get past these dead-ends is to focus on why one single person buys (& renews/keeps buying). No personas, no niches, no theory, no magic.

This is why the foundational model for product-market fit is a single customer case study… and you simply repeat that case study. The case study is a journey from prospective customer → actual customer → successful customer:

Feel free to try to answer these quiz questions - reply back to me with your answers!

But we need to click into this model a step further. It’s not just about repeating any old case study. It’s about repeating a case study where the customer PULLS. Where they say “hell yes” pre- and post-purchase. We don’t feel like we’re twisting arms, pushing a big rock uphill for every deal.

Enter the double-clicked view:

But this brings up a very important question… why does a customer pull?

Here, conventional wisdom is excellent… at steering us into the iceberg. We think about pain points, problems, value propositions, adding urgency, and reducing friction. This is a mistake.

Customers pull because they have to accomplish something… and they’d need to accomplish that thing whether or not we existed. We have no control over this.

Let’s make this clearer by introducing two concepts: Demand & supply. Demand is what we don’t control; it’s why someone needs to change. Supply is everything we control: Our product, marketing, messaging, value prop, etc.

Demand is upstream of supply. It makes supply relevant (or not). Demand generates pull that supply responds to.

ALL OF THIS MEANS: We need to redesign this case study model, from the customer’s viewpoint, around this all-important “demand” concept.

I give to you, the case study model:

This is the foundational model for product-market fit. It is replicating a single case study where the customer pulls (and says “hell yes” pre- and post-sale). The only way to think about this is to look from the customer’s perspective… because we have to start from their demand to put our supply into context.

Model #2: The Unfolding Model

By understanding the mechanics of product-market fit, you’ve fought half the battle.

The other half is where things get weird: What’s the path to product-market fit? How do you get from “not working at all” to “kinda sorta working” to “really working”? How do you go from small to big?

You might be at zero customers. You might be at $100M revenue. You still need to understand this, because it helps you figure out in every moment, what matters?

You have, undoubtedly, heard a bunch of bullshit. Experimentation, validation, customer discovery, pivots, MVPs, visions, etc. These ideas are startup murderers.

The path to product-market fit is actually deeply simple. It’s a process that happens while you sell and serve. In other words, while you try to repeat a case study. It cannot happen any other way.

Here’s what happens. You try to repeat a case study, let’s call it “Case Study A.”

But as you try to repeat case study A, you find that one part of Case Study A is wrong. It doesn’t represent reality, customers get confused and don’t pull. So you change that piece of the case study from A → B:

But look! This case study isn’t coherent anymore! We need to make the whole case study coherent, which leads to a NEW case study where the customer (hopefully) pulls:

This is the “unfolding” process. While trying to repeat the case study, you find that it’s not quite right, in ways you can only uncover while selling & delivering. Usually through pain, always through surprise.

Quiz yourself: How is unfolding different from pivoting?

Now, as you think about approaching product-market fit with the case study model… and starting the unfolding process… you’re going to ask this question:

“How do I go about trying to repeat a case study? Surely startup sales best practices can help me, right?”

If only!

There are two different skillsets:

1. Using sales to find product-market fit

2. Being good at selling

Most advice falls into the latter category. Still important, but not the thing.

I have developed an approach to “sales to find product-market fit” that is dumb but elegant: Use the case study to repeat the case study.

In other words, show prospective customers your “hell yes” case study and say, “how are you different?”

This makes the case study the focal point. It doesn’t feel like you’re pitching hard, so it isn’t uncomfortable for you or awkward for your prospect.

You can just show one slide for each part of the case study, like this:

And, like the slide says, questions and objections from prospects tell you what parts of the case study need to be debugged… so you can unfold your way to product-market fit.

Implications

With these two mental models, you just need to:

1. Create a case study, centered around one “hell yes” customer’s demand

2. Try to repeat the case study

3. Pay attention to questions and objections, which give hints at where to debug the case study

4. As you debug the case study, you need to make the whole thing coherent again (which will probably change your product roadmap, target market, etc.)

5. Repeat steps 2-4, forever.

You do not have to worry about things like market size, a long-term vision, or a 10-year plan. You’re living in the realm of emergent strategy; focusing on these other things is not just pointless, it prevents you from finding the answers that lead to your business unfolding.

Using founder-led sales to navigate towards product-market fit is simple… but NOT easy. I would love to help you navigate it. Consider applying to my bootcamp - or sharing with a founder who’d benefit.