In this ProductTank Dubai talk, Harpal Singh, Product Consultant and Interim CPO explains the elusive art and science of finding product/market fit (P/MF). He provides a framework for getting a clear understanding of P/MF and how to go about achieving it.
Watch the video to see his key points in full or read on for an overview of his key points:
- P/MF misconceptions
- The startup lifecycle
- The P/MF flywheel
- How to measure P/MF
P/MF misconceptions
While many people believe that P/MF is a singular state, Harpal explains that it lies on a spectrum. While many, even product managers, believe that product comes first, the reality is that you need to have a market before there is a product. It’s possible to lose P/MF after you have it, and it can take years to find it the first time. He also points out that if you’re a product manager working with a startup, finding P/MF can’t be left up to the founders. It is as much your responsibility to help the business find P/MF.
The startup lifecycle
P/MF is seen as only applicable to startups because many combine P/MF with problem/solution fit. As Harpal explains, at the problem/solution stage, B2C companies have thousands of users, and B2B companies may have a handful of high-paying customers. However, their CAC is high, LTV is unknown, and product usage remains random.
After this stage is when you enter the P/MF spectrum. At this point B2C companies have tens of thousands of users, B2B companies have tens of high-paying customers, the CAC is low, while the LTV and product usage is high. At this point, companies will begin to move around within the spectrum as they work to strengthen P/MF and eventually move towards scaling.
The P/MF flywheel
Harpal provides a framework for startups looking to transition from the problem/solution fit stage to the P/MF stage.
- Define Segmentation: Rather than focusing on all users who have tried your product, begin to narrow your focus to a specific group. For example, go from groups of teachers, friends, and the general public using video conferencing software, to tech teams using video for collaboration.
- Shortlist Lead Customer Segment: Your narrow audience will be a group of users who likely want the same thing and can be found using the same channel.
- Hair-on-Fire Problem and Value Proposition: Through user interviews, you want to find a problem to solve that is important to your end-user. The hair-on-fire problem is determined by the impact of living with those problems in an existing environment. For example, video conferencing software moved from an important problem to an intense problem during the pandemic
- Validate Market Size: Use this stage to validate that you have a market for your product because it might differ from what you think or might be a different market.
- Discover Acquisition Channel: Products are made for channels rather than the other way around. If you think about your channels and distribution simultaneously as you are doing other tasks and collaborate with sales and marketing, you will have a better chance of finding P/MF.
How to measure P/MF
Here Harpal provides a few questions you can ask to measure if you have P/MF, such as, are you solving a hair-on-fire problem? And are you retaining more than half of your existing users? The key takeaway from this talk is that P/MF isn’t a fixed point but a spectrum, and you should always be trying to solidify your position by making sure you’re solving a hair-on-fire problem.
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