Finding PMF

The number of times I have brought up product market fit in conversations with clients and friends has made it a dreaded phrase. We should normalize making it a phrase that is feared as it's the very thing that leads to the failure of most start-ups, that and a lack of sufficient effort from the founder's side. 

Product market fit - better known by its acronym PMF, is the center of the foundation on which every start-up is built. Without PMF a start-up will be like a boat without a rudder. It will float and possibly even go places, but eventually, it will crash. PMF means that your product has a fit (need/desire) in the market (market being people because a market is nothing but a large group of consumers and suppliers). Founding a start-up, getting it registered, the legalities, hiring a team, and developing the product can cost 10s, if not hundreds, of thousands of Dollars. Yes, I know, it’s true. Cost and barrier to entry are becoming less as the world is more digitalized and democratized, but it still requires significant resources. Finding PMF early on, or not finding it, can save you a lot of resources. 

I have personally worked with several early-stage start-ups that didn’t have PMF. If ever there was a comparable analogy in the modern world to fighting a losing battle back in the Stone Age, it would be trying to build a start-up without PMF. You cannot generate demand around the product, you can’t test a go-to-market (GTM) strategy, and you sure as hell can’t sell it repeatedly. Testing multiple GTM strategies and generating demand is essential in a start-up's quest to get in front of as many potential clients as possible. Without it, you cannot hope to build a repeatable sales process. If you don't find PMF, you will never scale sustainably. Another phrase you’ll hear thrown around is ideal-client-profile (ICP), this is when you know the persona of your typical and desired client. ICP is not different from PMF, it also needs to be validated. However, without PMF, you cannot hope to identify your ICP and validate it. Guess what happens when a business doesn’t have a sustainable amount of recurring and new clients? Correct, it fails or doesn’t scale. 

By now it should be obvious why PMF is essential. Let’s talk about the best way I have seen that PMF can be found and how this process can also be used to create a kick-ass GTM strategy. Everything starts with research and conversations. Unless you plan on pioneering an entirely new industry, then most of what you need to know is on the internet about your space. Delve in and read as much as possible. I know that many people don’t like having conversations, but it's the easiest way to sense the overall outlook of the industry/space you want to service, its needs, and if there could be room for your product. Note that you can only do so much with research and conversations, but it's a great way to feel things out and start writing up a business plan and working on a minimum viable product (MVP). An MVP is a mock-up version of your product that does the bare minimum needed to be able to show your prospects what your tool does. A slightly more sophisticated MVP will need to be developed if you plan on signing on free (non-paying) clients from day one. However, the strategy we will talk about won’t need a high level of development at first. 

After sufficient research and conversations with relevant people, you should have enough of an idea of whether your start-up could have space in the marketplace. Of course, you won’t know for certain until you have PMF but for now, this will do. You want to use this newfound knowledge to build your MVP. Here is a bit of secret sauce that can help fast-track your start-up growth. Document your journey from day one; “But David, won’t people steal our idea?” The amount of times I have heard this is not even funny. The chances that you have a truly unique idea are very low and even if by chance you do, ideas are valueless until they are brought into fruition. If I remember correctly, something like 6% of people who have ideas act on them, that doesn’t even factor in those who don’t have ideas. Instead of worrying about someone “stealing your idea” focus on ensuring you act on it. So, document your journey, and create content around it. The type of content you create doesn’t matter, what matters is that there is a story behind it that can be relatable to the marketplace you are going after. I have found writing and video content to perform best. 

Once you have built the MVP you want to start approaching your network of founders in the space whom you had the conversations with previously. Get their feedback on it and see if they’d be willing to try out the product for free to see if it could become a part of their company’s daily operations. Please, don’t try to charge for a product that hasn’t been fully built let alone doesn’t have PMF. Yes, I have worked with founders who charged at the MVP level. Recipe for failure.

Track everything and consider both individual and collective feedback from your frequent users for the further development of your product. Tracking the usage is also important because you’ll be able to see who in a given organization is most likely to use your product. The moment you see that your first users are starting to use it more frequently is the moment you know you’re on the right track with finding PMF. Remember to always collect feedback and share it with the public, not only use it for further development. There is no set time on how long full development should take but make sure you build an extremely high-quality product that solves the very specific issues of your free users. The more free users you can get who start to use the product frequently is the biggest telltale on the level of your PMF. 

During the period of development from MVP to full product you want to consider planning a GTM strategy but that is a post for another time. Once you have finished developing the MVP into a fully operational product, your next objective should be to convert some of your free users to paid users. The level of ease or difficulty that you face when trying to convert free users to paid users is a good indicator of the quality of your product and the level of your PMF.

There is of course a chance that after all this you still may not have sufficient PMF. The best thing to do if this is the case, is to go back to your first users and talk with them to understand why they feel like it's not worth upgrading. Alongside this, I would broaden my outreach to new spaces to see if there could be a better fit elsewhere. Keep offering a free trial of your product. The best indicator of PMF is when people upgrade after the free trial period. Remember, keep documenting your process and tell the story.

To summarize. The priorities of an early-stage start-up should be as follows;

• Research and market discover

• Build the MVP

• Sign first users (as many as possible)

• Develop MVP into a fully operational product

• Validate PMF and ICP

• Build a GTM strategy - which I will address in a follow-up article.

Feel free to take a look at our outbound demand generation engine flow chart. Until next time!