4 early signs of product-market fit
Everyone searches for it, but few find it. Some thoughts on how to identify early signs of product-market fit
What does product-market fit look like? The typical answer is that you build a product that solves a key problem for an attractive market. But again, what does product-market fit look like?
Having been the first product person at 3 startups now, 2 of which are much further on the product-market fit journey than the third. When I compare all three experiences, there are early signs of product-market fit that carry through all of them.
These signs are more gut-led than the obvious ones people talk about like top of funnel, or conversion, or referrals. The problem with these indicators is that many of these metrics come later in the lifecycle of a company, so what do you do if you only have a small handful of customers or design partners?
So here are four early signs to keep an eye on:
Sign 1: You’re helping people achieve something they worry about every day
Lots of people talk about problem discovery, but I find that an interesting twist on that kind of thinking is to focus on the inverse - what new world you’re creating.
The reason I like thinking about the inverse is that helping someone achieve something is in some ways always tied to an underlying problem, but it opens up the solution space. Think about Slack - sure, they solve the async collaboration problem, but were people out in search of a solution to that problem explicitly? Perhaps some where, but many were just trying out a new communication tool.
That’s why thinking about what you help people achieve can open up the solution space beyond what directly solves a problem.
The other important thing is that people need to want to achieve what you allow them to achieve often, and it needs to be a top priority. If you’re solving a secondary problem, you’ll also get secondary interest.
Sign 2: Emotional reactions to the solution you’re providing
It’s so hard to figure out how important your solution is to people. People like to be nice and say yes. Also, there are a lot of ways to explain away slow adoption: maybe onboarding is too hard, maybe the feature doesn’t look quite right, maybe you need more features, and that all may be true! But fundamentally what you’re looking for is for someone to say: wow, that really solves my problem or helps me do something amazing. I’m going to start using it. They don’t worry about onboarding, they aren’t fixated on features (at least to start). The new world you’re trying to help them achieve is that obvious.
Sign 3: Die-hard fanatics who share your tool with others
At both startups that are further along in their product-market fit journey, they had initial adopters who knew the product better than some of the employees! The value you’re providing is so above and beyond that they become natural advocates, getting you those next customers. People say this all the time, but getting these initial adopters to success is a great first step towards product-market fit.
Sign 4: Early signs of scalability
So of course, what’s the point of product-market fit if the market is 5 people? That’s where I think conversion rates are really interesting - not at the high level that usually show up on company dashboards, but rather at a more granular level.
What does this look like? Let’s say your 5 initial fanatical customers have XYZ characteristics alike. Find another 5 XYZ customers and track the conversion rate there. If 50% of them have all three signs above, you’re onto something (roughly). This doesn’t mean they have to buy - there are lots of reasons why people don’t buy things, but at least you’re getting a gut feel for how many people in your target market are interested.
If not that many people bite, perhaps your XYZ definition is wrong. Or worse, you need to adjust the solution you’re building.
Product-market fit is hard! I don’t have all the answers. But through my lessons learned at several startups at different stages, I’m a fan of these four early signs.