Should it be Market-Product fit?

Product/market fit has been identified as a first step to building a successful product in which the company meets early adopters, gathers feedback and gauges interest in its product(s).

Don Valentine of Sequoia Capital coined the term Product/Market fit. Andy Rachleff, the  co-founder of Benchmark capital was the person credited with coining the term product-market fit. 

When new(or old) product manager look at product-market fit, they always look at product first but in reality it always helps to look at market first. 

Why do products fail ? 

 

According to Startup Genome, failure rate of startups is a staggering 70% by end of 10th year. 

Why is this ? Well, 

One of the top reasons for product/startup failure is Product-Market fit. Is it because we're product first and not market first? 

Looking at product vs market first: 

When you're making an MVP, you're essentially making effort to validate your assumption that your product is going to be worthy to the user or solve a problem. And When you imagine a product first, you first think of: 

  1. Features
  2. UX
  3. UI, Design, Typography
  4. Programming langues, cloud providers 
  5. CI/CD 

.....and the list goes on. 

We don't know if any of these adds any value to the user . Remember: an MVP is neither a technology nor a cheaper product, its about smart learning

But when you start looking at market first, you think of: 

  1. User
  2. User segmentation 
  3. Personas
  4. User pain points
  5. Current user journey & friction points
  6. Value add (time, effort or money saving) 
  7. How is the user currently solving the problem you're addressing?

Value hypothesis & Growth Hypothesis

Too often, founders, product managers, stake holders start with conclusions, not assumptions. The former is a set of beliefs, while the latter are fundamental questions to be answered. On the surface, that sounds like a nuanced difference, but in practice, it is a huge change in mindset and action. 

The value hypothesis tests whether your product or service provides customers with enough value and most importantly, whether they are prepared to pay for this value.

Example:

Lets say you're developing a payment analytics product

  • This product helps e-commerce firms to aggregate payment sources(payment gateways + PSPs + Paypal etc)
  • Provides actionable KPIs to increase top and bottom lines

It's easy to fall into the trap of thinking first about:

  1. SDKs & APIs
  2. Dashboard
  3. Metrics & Features
  4. Notifications etc 

But lets look at market first: 

  1. Segment e-commerce market by firmographics (Location, size of the firm, revenue, performance) 
  2. Target users within the firm (may be payments team or a revenue team reporting to a CRO) 
  3. What are their needs related to payment analytics? Do they feel they have enough insights about payments? (Example: authorisation/decline rates by each payment method and channel) 
  4. What more actionable insights can they use to increase their top line and bottom line? 

With these questions you consider making an MVP with least effort and handful of features and test with your target users whether it adds value and if they are willing to pay for such a product. 

The growth hypothesis tests how your customers will find your product or service and shows how your potential product could grow over the years.

You assume next 5 customers who signup to your payment analytics products are because of your first client. After you speak to your next customers you may find out it can be due to a particular process, metric, or pricing strategy. Its not necessarily bad you're proven wrong, but it helps to record this growth hypothesis and use it for next 5-8 customers. 

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Looking at market first can make big difference at all stages of the product for continued success with your MVP, growth, pivot and more.