Why Searching for "Product-Market Fit" Kills Startups
"Wait, you're telling me Startup Twitter isn't real life?"
This is a newsletter for founders hunting for Product-Market Fit (PMF).
I am in the middle of building a venture-backed software company and write about the nuances, challenges, and process of getting closer to Product-Market Fit.
Last week, I explored the three components of Product-Market Fit: (1) Customers, (2) Product, and (3) Distribution. Click here to read that post.
This week, I’m writing about the #1 misconception about Product-Market Fit which causes founders to make really, really, really bad decisions. Next week I’ll probably write about the second misconception -> “product before market.”
Where am I wrong? Reply and let me know.
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You never really arrive at Product-Market Fit
The word “fit” implies a destination you can reach. It’s binary: You’ve achieved “fit” or you haven’t. There seems to be a clear delineation in time like BC and AD: Before Product-Market Fit and After Product-Market Fit.
This misconception is fueled by the “crushing it culture” and revisionist historicism you see from Founder Social Media, startup communities, VCs, and tech journalism. Worst of all, the idea that you can arrive at product-market fit is a myth that earns a lot of money for bullshit vendors who prey on founders like you and I.
It is dangerous to think about product-market fit as binary. Because when you do, you make a bunch of unforced errors. Two main errors are below, and yes, I’ve made them both.
Not adding customers early enough: “We don’t have Product-Market Fit yet” is an excuse for being way too conservative about adding customers. Unless you know exactly what to build (hint: you probably don’t), the best way to get closer to product-market fit is to have sales conversations, convert customers, delight some and disappoint others.
There is a ton of nuance here - you don’t want to disappoint customers for the wrong reasons (e.g., security lapses) and there are some markets in which you CAN’T disappoint customers (e.g., medical devices). But my general fear of disappointing customers or looking like an idiot in a sales call because I haven’t yet “figured it out” has held me back from the crucial learnings that only come from real sales calls and actual deployments.
Yes, it is really painful when customers churn. You lose sleep worrying about disappointing customers. If you haven’t experienced this fear and pain yet, I hope you will: The fear and pain cause you to focus on what matters. This is better in all ways than losing sleep because you have no clue if anyone will care about the product you’ve been working on for months/years.Trying to find scalable distribution systems too early: On the checklist for Product-Market Fit is having scalable and profitable channels to get to customers, like LinkedIn ads, SEO, or cold outreach. And this leads founders to focus on building those scalable channels early for customers, obsessing over customer acquisition costs and channel experimentation. This is deadly. You have to earn the right to focus on scalability, usually through hand-to-hand combat for Customers 1-10. How you find customers 1-10 is USUALLY very different than how you find customers 11-20, 21-50, 51+. Crucially, what you learn by finding, selling to, and delighting/disappointing customers 1-10 will DETERMINE which slightly-more-scalable systems you should pursue for the next batch.
We sell to fast food franchisees and get a lot of customers from referrals. We learned from using cold emails to get Customers 1-10 that referrals were feasible and got quite a few for customers 11-20. We learned from 11-20 about the infrastructure within franchise organizations that makes referrals more (or less) effective, and are experimenting with ways to leverage this infrastructure for customers 21-40. If we’d obsessed with channel scalability on Day 1 we’d still be tinkering LinkedIn ads and struggling to get our first customer.
This is a recipe for founders spending too much time building in isolation - overinvesting in product vs. distribution, and when investing in distribution focusing too much on scalable distribution vs. “just getting customers”.
Also, after you’ve “found” Product-Market Fit, the misconception that you’ve “figured it all out” is surely harmful too. I will report back once I’m fortunate enough to be in a position to make that mistake :)
Rethinking Product-Market Fit: Iterating and evolving towards coherence and differentiation
You never truly arrive at Product-Market Fit.
You head in the right direction by iterating and evolving. It’s messy. Your product, market, and distribution will radically change based on what you learn from customers 1-10. It’s practical wisdom: “Here’s is our overall mission, but we embrace the messy process of iterating and evolving based on what we learn along the way of achieving our overall mission.”
Don’t look for “fit”. Search for coherence (all the individual parts of what you’re doing - pricing, positioning, product, customer segment, etc. etc. etc. make sense together) and differentiation (what you do is clearly different in a valuable way in the minds of your customers).
There is no finish line, and believing there is one is a path to unnecessary injury.
— Rob