Dear Reader - Being able to dissect why you're not achieving Product Market Fit is critical skill for any entrepreneur. We want to deliver valuable insights to entrepreneurs looking to accelerate revenue.
To help us better understand this, Justin Kistner and I worked on this essay. Justin is the Founder and CEO of Upfocus: Product Management Automation for Startups. Upfocus has codified the proven product processes from Big Tech into a product market fit engine for startups.
I hope you enjoy this piece.
Most of the time when a leader gets referred to one of our consultants, revenue acceleration is quickly connected to a terrible go to market strategy. At RevPipes, we live for the opportunities where a compelling offering is paired with a terrible go to market - think of it as a wrong we feel compelled to right. But there are times when expending most of the efforts developing a predictable, repeatable go-to-market operation will simply be a waste of resources.
Yes - the full-service revenue acceleration and growth people are telling you that sometimes, expending efforts on go-to-market is a not the best use of resources. But, if not go-to-market then what?
Sometimes, we find that energy should be redirected into another equally challenging problem: finding, growing or maintaining product market fit. We often find CEOs (yes, even product oriented visionaries) not wanting to spend 90% of their resources on product when it is identified as the right thing to do.
Product/Market Fit was first described in 2007 by Marc Andressen as “being in a good market with a product that can satisfy that market”. Reid Hoffman notes, “Product/market fit requires you to figure out the earliest tells.” When looking at it through a go-to-market lens we bucket this under Customer Success (aka Delivery of Value Proposition) and we are typically looking for 90%+ customer (logo) retention and 120%+ revenue retention. But when these metrics aren’t being achieved it’s time to shift the focus to product and the market.
But how do you dissect what’s happening? In achieving product market fit we’ve observed a number of challenges that get in the way. We decided to put together six ingredients that make up the product market sh(f)it storm (maybe cyclone is the better metaphor?).
The purpose of this essay is to help you identify the problem(s) you might be facing.
Six Ingredients of a Product/Market Sh(f)it Storm
1. Gut Navigation
Some companies rely intensively on the founder’s gut/intuition. In the calm before the storm, this method may have produced better results. Before competing priorities (and personalities) emerged, it may have been less costly to go on instinct and adjust if things didn’t go as planned. However, once a business ossifies around a solution, the numerous dependencies from customer success to sales to marketing to operations can make gut navigation much riskier.
The Highest Paid Person’s Opinion. Individual-Driven Development, where features are built based on what an individual in the business, or connected to the business believes are right. This could be an executive, the top sales person, an investor, and so on.
3. Squeaky Wheel
Some companies with good intentions implement what seems like customer feedback. Listening to customers is an ideal strategy for improving product/market fit, but there are some approaches that are less successful than others. Common scenarios I see include:
- Vocal customer facing employee says “Customers are always asking me for X”
- Asking customers to vote on features
- Always responding to product requests from the largest customers
4. Thin Decision
Resources burn while making slow to no progress from spreading development resources too thin across a lot of “good” ideas. The idea of concentrating resources feels scary due to lack of data/confidence. While the current motion feels “safer” it doesn’t get you and the business any closer to the desired result.
5. Shiny Object Syndrome
Shiny object syndrome easily creeps up at this point because if one thing doesn’t work, the latest idea that sounds good, or feels better. This inevitably creates disruptive starts and lack of finishing. Unfinished projects rarely generate revenue.
6. Competitor Copy Catch up
When revenue performance is not where it needs to be, confidence in internal ideas falls. When confidence falls consistently prioritizing capabilities that a competitor has instead of finding your own innovative path seems like the best and last hope you have. It is hard to win deals when you’re always playing catch up; it’s harder to win deals when your customers don’t want those features. Now you’ve subtly trained the organization to NOT know how to come up with ideas that they can feel confident the market will want.
So which one, or ones did you identify your organization is facing? Identifying the problem is oftentimes the biggest challenge in a business. Visionary Founders & CEOs are frequently referred to me by clients and investors. The purpose of this essay is to help Founders, CEOs, and investors think honestly about which challenges their teams may be facing.