Math was always simple to me. Well, simple until it merges with the alphabet. But basic math makes sense. 3 is higher than 2, 2 is higher than 1, 0 is a problematic number, especially on the roulette.
But, generally, the entire world agrees. 3 is more than 2, 2 is more than 1. And you know what is an even bigger number? 42. As in 42% of startups fail, because they don’t achieve product-market fit. It’s true. Forbes and Statista analyzed the market and found that almost half of startups fail, because they never get to product-market fit.
I was sure the main reason for startup failure is you run out of money. But no, by far the main reason startups fail is that you never get to product-market fit. Basically, that means that there is an almost 50% chance the market doesn’t need your product. And there is something I have seen a lot of founders doing while working with startups. I have seen founders doing the same mistakes repeatedly, so I dedicated this video to some very basic math and to the fact that if you ignore that math, your startup will fail.
Let’s look at why product-market fit is important.
Product-market fit is the holy grail. You get virgins and all that.
Let’s make one thing clear. Product-market fit is the holy grail of startup success for a reason. Finding product-market fit is crucial for startup success because it is the point at which a company has confirmed that people actually need its product. It’s the point where your customers understand the value of your product, understand its purpose, and start using it regularly.
Product-market fit is proof that you have a business, not a hobby.
But there are two major problems with product-market fit.
1) It’s difficult to measure.
2) It’s illusive, difficult to obtain.
Let’s take a deeper dive into why you can’t get to product-market fit, because I have been on both sides of the coin.
Why you can’t get to PMF?
I have been on both sides of the coin. At my last startup, we were working on a mobile app that helps dyslexic children learn to read. We had a clear product-market fit on our native market with parents, had difficulties establishing product-market fit on the US market with the same audience, but had a stronger product-market fit on the same US market with teachers.
This made me analyze how product-market fit works. Thinking about it, analyzing situations, reading about it, putting things into practice.
And it helped my current brand achieve product-market fit before I even registered a company. How do I know? Because the moment I opened a company, I signed 4 high-ticket clients in the space of a month.
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So what’s the one difference between startups who build their product-market fit and those that don’t?
If your startup can’t get to product-market fit, it’s because you are ignoring half of the equation. Let me explain.
Product-market fit consists of product and market fit.
We all know what a product is. As a founder or a product owner, you spend your days thinking about it, improving it, adding features.
What about market fit?
Market fit is how you are presenting your product to the marketing. It’s your messaging, your value proposition, your pricing. It’s your positioning. It’s the half you are ignoring.
Want to know the difference between startups that make it and those that fail before building their product-market fit?
The ones that don’t make it don’t have a worse product, they just forget to iterate both sides of the equation. They work on their product and they forget about their positioning, their value proposition, their promise to the customer. I have seen it time and time again. Founders who blame poor team performance on the product, using it as an excuse to add another feature, improve the UI a bit more, tweak the design.
It’s rarely the product. It’s almost 100% of the time your message you are giving out. People just don’t see the value in it, because you spent all that time perfecting your designs, but ignoring what really matters. Your value proposition.
How to build your product-market fit?
Now, I am not here to be a downer. I am here to help you out. So let me share a few lines of theory and then a practical tip you can take away from this and start implementing immediately.
One mental shift the startup world needs to do is go from thinking of “achieving product-market fit” to building product-market fit. It’s a subtle difference, but achieving product-market fit makes it sound like product-market fit is a switch. A 1 or a 0.
You can have poor product-market fit. And you can have a strong product-market fit.
Let’s say you could grade your product. Give it a score of 0-5. You have a nice onboarding flow, the screens are functional, but the whole app could be better-designed. Let’s give it a 2. But the users don’t come into the app. And if they do, they don’t stay long.
You improve the design. Your product has now a score of 3. But users still don’t come to the app. And they still churn immediately. Why?
Because your messages suck. Because the score of your market fit component is 0. And 3 multiplied by 0 is 0. Easy math, right?
So the smart choice would actually be to improve your positioning first.
How? Through iterations. Just like you are improving your product. Let’s look at how to iterate your positioning next.
How to iterate your positioning to shorten time to product-market fit?
The goal is to make your positioning dynamic instead of static.
In the beginning, you get a baseline. You probably have a few hypotheses on your market position.
These might look something like this:
“We help [YOUR CUSTOMER] [ACHIEVE A GOAL] with [OUR PRODUCT].”
So for example:
“We help startups scale with our interactive video sales system.”
You assume your customers (startups) are interested in scaling, and believe video sales are the way to do it. You might already have a few clients, but obviously, until you have product-market fit, that’s just an assumption. This statement might be true, but it’s also generic and, frankly, boring. But, it’s a starting point, so you send 100 cold emails or LinkedIn messages to different startups.
At this point, you are not even looking for conversions; you are looking to learn. Who opens your email, who responds, who clicks on the link to the landing page, telling them more about the product?
You notice a few people replying, a few people visiting your page, you conduct a few calls, notice the interest mostly comes from B2B startups, creating digital products.
People from these startups just respond better to your emails, posts, you have more fun talking to them, one of them becomes a client.
Now you can iterate your positioning statement further.
“We help B2B SaaS startups scale with our interactive video sales system.”
You repeat the test, improve the messages, start grabbing attention with your social media posts, you talk to more people, you get more clients, you notice that most of the startups you work with look for Series A investment. So you update your positioning statement further.
“We help B2B SaaS startups scale to Series A with our interactive video sales system.”
With my clients, we iterate the positioning, the messaging, just like the product. You create tests, you test the messages, analyze the results, run more tests. Until you have messaging that works. You growth hack positioning.
Because building product-market fit is difficult, but math is simple. And if you talk to 10 customers, you are going to be able to help them a lot more than if you talk to 0 customers. Because 10 is bigger than 0.
And if you do just 5 positioning iterations, this will bring better results than if you do 0, and you simply write your positioning statement in the beginning and forget all about it.
Because 5 is more than 0.
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Until the next time,
May your customers love you and understand your product.
Interested in how I would growth-hack your path to perfect messaging & strong product-market fit? BOOK a free positioning call.