When starting out a project we know how important it is to get out of the building, talk to prospects and figure out whether our idea holds any merit. That’s the basis of Customer Development. And the goal is to get to Product-Market Fit, where the product is validated and built for a specific market, and there’s a specific (validated) business model.
After all, you don’t just start building the product, launch it and then hope to heck that it works, right? But this happens a lot. We don’t always get to start at Step 1. In some cases there’s a functioning product, a bit of traction, but no clear direction and no scalable opportunities (at least not plainly in sight). So when this happens, what can you do?
Steve Blank talks about this in Four Steps to the Epiphany. Instinctually you may think it makes sense to keep building more features or radically change the product. But if the Product-Market Fit isn’t right, more features isn’t likely to solve the problem. And investing in rebuilding the technology is going to take a long time, cost a lot of money and not necessarily guarantee any additional success. Instead, Steve recommends finding a market for the product you have. Take the product, point it at a different market and see what happens. Rinse and repeat.
In my mind that’s Market-Product Fit — finding a market to fit an existing product (vs. building a product to fit an existing market).
For many startups this is what they need to do because they’ve got a product but no market. Find a market. In some respects this is a slight handcuff – you’re not starting from scratch and the product can feel like “baggage” – but before throwing your product in the garbage and starting anew, it’s worth looking for a market where there is a fit. Incidentally, the same holds true for a business model. You may have a product but the wrong business model. You don’t scrap the product, you change the model. That’s very much Market-Product Fit.
So how can we find a market and business model for our product?
This is far from a rigorous step-by-step process, but here are some thoughts nonetheless:
- Review your existing assumptions. Start with the existing assumptions you had when you first built the product. If you didn’t have any, now’s the time to look at that. This is a combination of hindsight / post-mortem and looking to the future. What market were you going after? Why didn’t it work? What pain point are you solving (or trying to?) What ancillary markets have those pains? Etc. Write all of this down.
- Process of elimination. It’s quite easy to eliminate markets and business models. For a freemium model, for example, you need a huge base of prospective customers (great presentation from Lincoln Murphy). In the millions. Without that, freemium math just doesn’t work. So you can start triangulating on markets (based on size) and the most appropriate business models. In reviewing your assumptions, talking to existing customers/prospects (yes, we’re still getting out of the office!), brainstorming and talking to others (potential partners, colleagues, etc.) it’s likely you’ll discover other prospective markets worth investigating.
- Deep dive. When you’ve identified potential new markets (and the prospective business models) it’s worth doing a deep dive. Identify 50-100 targets in each market and get in touch with them. You’re essentially taking a sledgehammer and pounding through the opportunities as aggressively and quickly as you can to identify potential (or eliminate it.)
- Find similarities. When looking at a market at this stage, I think it’s important to get very specific. Size of company isn’t good enough. You need to look for similarities across companies to help define a market. Industry is obvious. But here are some other ideas:
- How they typically purchase products (like yours)
- What they’ve bought recently
- Their budgets
- Whether the industry is trending successfully or not
- The decision-makers within the organizations
All of these factors can help define the market.
- Pitch the product you have, but… don’t feel obligated to pitch it exactly as it exists today. Simultaneous to your efforts in finding the right market and business model, you need to be envisioning what I would call “product+”. This isn’t a complete rebuild of your existing product that will take huge development time, but there’s no reason you can’t pitch a modified/extended version of your existing product as you’re discovering the appropriate market, business model and that market’s product requirements. As you’re collecting feedback, and plowing through prospective prospects, you should gain significant clarity on what product+ will look like. That will help you iterate quickly on the product development front. But sell what you have now.
It’s not easy to find a market for an existing product. And the reality is that there may not be a market for the product you have and it will require significant changes or a complete overhaul. (Or it’s time to get into a new business.) But before you get to that stage, stop, pull back and look for a customer base that will pay for what you’re selling. It’s still about following a rigorous Customer Development process, but starting partway through and trying to go back, without going completely back. Think of it as Market-Product Fit.