The Repeatable Recipe for Finding Product/Market Fit

There are plenty of great blog posts that describe what it's like to find Product/Market Fit.

Marc Andreessen wrote in 2007 that "Product/market fit means being in a good market with a product that can satisfy that market. 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. You're hiring sales and customer support staff as fast as you can."

Y Combinator CEO Michael Seibel similarly wrote in 2018 that "you have reached product/market fit when you are overwhelmed with usage—usually to the point where you can’t even make major changes to your product because you are swamped just keeping it up and running."

These quotes paint vivid descriptions of the symptoms of already having Product/Market Fit — or at least the point where it takes hold of your startup — but a gaping void exists in the literature describing the steps that lead to Product/Market Fit.

When it comes to finding Product/Market Fit, Marc Andreessen says "Do whatever is required to get to product/market fit." You'll struggle to find anything more prescriptive because it doesn't exist. When people write about Product/Market Fit, they describe the things that happen after you've already found it.

This post is different.

By studying successful startups, best practice frameworks and founders' experiences, we are piecing together a step-by-step recipe to enable product builders to find Product/Market Fit over and over again.

Why over and over again? Not only do the targets for Product/Market Fit shift constantly as you grow; each new feature, use case or customer segment you expand to require the right combination of ingredients to catalyze compounding organic adoption.

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Before exploring that combination of ingredients, we must first clarify what Product/Market Fit is and, more importantly, what it's not.

Growth does not mean Product/Market Fit. Compounding or exponential growth does not even mean Product/Market Fit. As we will later discuss, growth is generally validation that you've reached the "pull point" — your product mix meets an underserved market need, creating organic traction. Reaching this pull point is the essential first step in finding Product/Market Fit, rather than the end destination.

A startup reaches Product/Market Fit once they have created a playbook for repeatable, scalable and profitable growth (to borrow from David Skok's "9 Steps" model). 'Profitable' is commonly the missing piece — the money a startup spends acquiring each new customer must result in triple that amount in lifetime customer value before they can turn the exponential growth engine on (according to Hubspot CEO Brian Halligan).

I suspect most of you reading this post have not reached your pull point yet and therefore shouldn't even be worried about building a playbook for exponential growth. Instead of diving deeper, let's look at the ingredients needed to create organic traction and reach the essential first step in finding Product/Market Fit; aka The Pull Point.

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If I were to generically describe a startup that recently found organic traction, it would like sound something like, "Their product offers the best solution to a big problem felt by that group of people."

This unassuming sentence provides us with the four ingredients needed to reach the pull point. Here it is again with those ingredients listed, "Their product offers the best solution (proposition) to a big problem felt by that group of people (persona)."

Individual words in this sentence tell us a lot about the relationship between these ingredients. For instance, the word big tells us that this problem is only important because of the way this group of people experiences it. The persona defines the importance of the problem.

This logic allows us to place the ingredients in a set order: persona → problem → proposition → product. No ingredient in this recipe can be decided upon before its predecessor. That is why it is a recipe and not just a 'mix' — the order of decisions in a 'mix' is arbitrary, but in a recipe it's essential. You can't put a cake in the oven if you haven't cracked the eggs yet :)

This order of decisions also means that each time we choose an ingredient, the range of options available for our next decision gets smaller. For example, we could decide to tackle the problem of lawn maintenance with our startup, but if we decide to focus on apartment owners as our persona, then lawn maintenance is no longer within our set of problems to choose from.

With these two ideas in mind — that there is a set order to the decisions that go into building a product and that each decision limits the set of future decisions we can make — we can visualize the challenge of building a startup like this:

Product/Market Fit Preparation

Many important ingredients are missing from this diagram. That's because you don't need any of them to find your pull point. You don't need a thorough plan for pricing, distribution or expansion. Making the right decisions on these ingredients will help you leverage initial traction more effectively when you do reach your pull point, but they are qualifiers required upfront.

Your aim as a product builder is to find the minimum set of ingredients that will validate your ability to meet a market need. Reaching the pull point is your initial validation. The other ingredients make up the aforementioned playbook — together they enable you to build a repeatable, scalable, profitable engine for exponential growth (pour money in, get >3x money out). They are Model (revenue model), Medium (product distribution and customer acquisition strategy), and Market (total addressable market and expansion strategy).

The Startup Bowtie

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In the last 18 months, we've made almost every conceivable mistake an early-stage startup can make in search of our pull point. Over the coming weeks, we'll explore every one of those pitfalls along with step-by-step guides to help you avoid making the same mistakes we did.

As those articles are released, we'll update our list below. Until then, subscribe to the OpinionX newsletter to receive each new post as soon as it goes live.

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The Startup Bowtie: The Counterintuitive Guide To Finding Product/Market Fit (Again And Again)

We've mapped out 62 blog posts within The Startup Bowtie framework that we will publish between now and the end of 2021. Most of those posts are based on mistakes that we've made first-hand in the pursuit of Product/Market Fit at our own startup. We've already shared the first 5 — check out the full list here.

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