Market-Product fit means that your product is succeeding in solving a specific need for a specific target group.
What Is Easy to Get Wrong?
Confusing Product-Market with Market-Product Fit
Note that it's more common to see people talking about "product-market fit" which actually describes the Four Fits in general:
“You can always feel when product/market fit isn’t happening. The customers aren’t quite getting value out of the product, word of mouth isn’t spreading, usage isn’t growing that fast, press reviews are kind of ‘blah’, the sales cycle takes too long, and lots of deals never close. And you can always feel product/market fit when it’s happening. 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. Reporters are calling because they’ve heard about your hot new thing and they want to talk to you about it. You start getting entrepreneur of the year awards from Harvard Business School. Investment bankers are staking out your house. You could eat free for a year at Buck’s.” — Marc Andreessen ("The Only Thing That Matters")
So, Andreessen here talks about the market, product, pricing, and distribution, not just about market-product fit as defined part of the Four Fits.
Not Defining A Small Niche Market
So many startups make that mistake. They define the market they are in very generically and then build to a generic potential customer. But as generic customers have an infinite number of needs, it's hard to choose the right messaging, the right features, the right growth loops etc.
Instead, start with a niche market, then revisit.
Building the product becomes much easier as soon as you've decided on the target group. Even distribution and pricing become more clear.
- Revolut started by targeting digital nomads who needed to use local currency (not everyone who needs a credit card).
- Facebook started by targeting college campuses (not every single person on earth).
- Airbnb started by targeting a single conference in San Francisco where visitors didn't find a hotel room (not every single person who visited San Francisco or the US).
Choosing the right audience is really the key in building a startup but it might not be a linear process.
How To Identify A Need?
No product starts without having a market first. In other words - first come the needs and only then the solution.
This is the essence of Jobs To Be Done.
In other words, products are not the goal of any purchase. A new, better self ("be goal") is the actual job. Products just enable customers to get a job done (e.g. to reach a better self). The job is about the customer, features and benefits are about the product.
By doing JBTD interviews, you'll end up with:
- Be goal
- Push (problems with existing solution)
- Pull (benefits to new solutions)
- Anxieties (worries about new solution)
- Inertia (existing habits and switching costs)
- Customer profile
This information is pure gold for marketing, support (content), sales, and product teams. Both in terms of new products and existing ones.
JBTD interviews (essentially they are win-loss interviews) should be done continuously.
You probably want to choose to work on problems that are both big and frequent and don't require much manual onboarding.
How To Test Solving For A Need?
Design Sprints get you from an idea to a testable prototype in 5 days (shorter versions of Design Sprints exist as well).
- Monday - problem definition and target
- Tuesday - sketching of ideas, customer recruitment for Friday's tests
- Wednesday - pick an idea, create a step-by-step plan for prototyping
- Thursday - create a realistic enough prototype
- Friday - test the prototype with customers, learn
So, in a week you get from picking a target to getting feedback on a possible solution.
How Is Market-Product Fit Measured?
- Sean Ellis' P/M fit scoring (re-popularized by Rahul Vohra)
- NPS (recommendations are a good indicator early on)
The key here is to think of ways to get responses from the right target group (the right persona).