About this episode

This episode we are going to discuss the topic of product-market-fit. Using different examples and strategies to understand what would work for your startup.

This is the 120th episode of The Startup Story and in almost every episode our featured founder has had one startup failure in their past and each failure can be attributed to numerous factors. Factors like team makeup, marketing challenges, financial limitations, and sometimes the failure is a result of technical challenges. With all the various reasons a company might fail, the most prevalent reason was their failure to find product-market-fit.
Is product-market-fit so elusive? Is it something that can only be discovered by venture-backed firms? No, those aren’t true at all of product-market-fit.
The greatest thing about product-market-fit is that most of the work in finding product-market-fit can happen cheaply and at a very early stage in the startup lifecycle. The challenge is that we begin to drink our hype kool-aid and don’t try to assess product-market-fit until we hit hurdles much later on, and after thousands…and sometimes, hundreds of thousands of dollars are spent.
Smart startup founders front-load the work to determine product-market-fit. It truly is foundational for any and all startup projects…especially if you want to succeed.
Your sole purpose, when you are in the idea to MVP stage, is to validate your assumptions and to prove that people want what you are making. Everything…and I mean, everything else is secondary.

In this episode, you'll hear:

  • How to find product market fit.
  • How to validate your idea and prove that it will be successful.
  • How to validate your assumptions and prove that your product will work - using platforms like Reddit and Medium.
  • How to find a vast amount of customers that have a want or need for the product- that solves their problem
  • How to keep up with the ever-changing market and keeping your product up to date by looking at the market from a high or low altitude.
  • A basic process to find product fit - choose target market, find the problem in it, define your unique value (especially your unique MVP) and the test for product market fit.
  • Shares the ideology that more people that are excited by the product reflects how successful the product will be.
  • How to not waste money on mockup products.
  • Shares different ways to test your product - using things like pre-sale and A/B testing

Resources from this episode

FREE 3-Day Livestream Event: https://live.grindology.com/

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ExpressVPN: Get 3 Months Free → https://www.expressvpn.com/startupstory

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The Startup Story Inner Circle: https://www.thestartupstory.co/vip
The Startup Story on LinkedIn: https://www.linkedin.com/company/thestartupstory
The Startup Story is now on YouTube: https://www.youtube.com/jamesmckinney
The Startup Story on Instagram: https://www.instagram.com/thestartupstory

BOOK- Eric Ries Lean startup - https://amzn.to/3sdC1yi
Mockup Tool - https://moqups.grsm.io/tss

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EPISODE CREDITS

This episode was made possible due to the support of our sponsor Grindology. Visit https://grindology.com/ to obtain founder-direct tactics and strategies.

Episode transcript

James McKinney: Hi, this is James McKinney, founder of Grindology, creator and host of The Startup Story, and on this episode we will be discussing product market fit.

  • Every wildfire began with a spark. Every superhero has an origin story. And every single startup has a moment that they point to as their beginning. And every founder has a purpose that drove them in the midst of all obstacles. THAT is The Startup Story. *

[00:31]

James McKinney: Hello everyone and welcome to another episode of The Startup Story. Before startup questions directly to three highly successful founders. Later this month, starting on April 21st, we're going to begin a three part livestream series with three incredible founders. Founders like Matt Meeker who cofounded Meetup and BarkBox, and are in two entirely different sectors. One event will feature Renae Bluitt, the creator of She Did that, that has since been picked up by Netflix for distribution. And our third featured founder is David Barnett, the inventor and founder of PopSockets who started as a philosophy professor and has since invented and built a brand that has shipped over 200 million units worldwide. All three of these founders have a tremendous amount of value to share with you, and you'll have the opportunity to bring your startup or business challenges to them directly. Simply visit live.grindology.com to learn more. We'll include a link in the show notes for easy access. This event is free so make sure to visit live.grindology.com.

[01:33]

Now, speaking of founder direct guidance, that is the exact experience and knowledge sharing that is delivered to you each quarter when you become a Grindology member. Grindology is an entrepreneurial subscription box that ships every quarter full of resources to help fuel your grind and your hustle. At the core of every Grindology shipment is the current issue of the Grindology tactical manual. Every single issue of Grindology will be chock full of real tactics from real business builders, not journalists. Within the pages of the Grindology tactical manual, we will be delivering to you tactics and strategies that you can integrate into your business immediately. How great would it be to receive real Facebook ad strategies from those who are doing it? Wouldn't it be helpful if a successful founder laid out specific user acquisition strategies that they use to grow their business? Well, those are the types of tactics that can be found in each issue of Grindology. Like I said, real tactics from real business builders.

[02:27]

In fact, if you want to receive a copy of our Q1 issue without having to sign up for a subscription box then visit shop.grindology.com for this limited offering. The Grindology tactical manual is only available within the box, but by visiting shop.grindology.com you can receive your full Q1 issue right now. Everything about Grindology is about helping to fuel your grind and your entrepreneurial journey, so visit shop.grindology.com to learn more. We will include a link to that site within our show notes for easy access. Now let's jump in to this week's episode.

[03:01]

In this episode we're going to discuss the topic of product market fit. You know, this episode is the 120th episode of The Startup Story and within our 120 episodes we've unpacked the entrepreneurial journey of some of the most successful entrepreneurs of our time. Founders like Ben Chestnut of MailChimp, and Christina Stembel of Farmgirl Flowers, Jamie Schmidt of Schmidt's Naturals and Jason McCann of Vari (formerly Varidesk), and so many more. In almost every single episode our featured founder has had one startup failure in their past, and each failure could be attributed to numerous factors. Factors like team makeup and marketing challenges, financial limitations, and sometimes the failure is a result of technical challenges. But with all the various reasons a company might fail the most prevalent reason was their failure to find product market fit.

[03:49]

Is product market fit so elusive? Is it something that can only be discovered by venture backed firms? No, those aren't true at all of product market fit. The greatest thing about product market fit is that most of the work in finding product market fit can happen cheaply and at a very early stage in the startup life cycle. The challenge is that we begin to drink our own hype Kool- Aid and don't try to assess product market fit until we hit hurdles much later on, and after thousands and sometimes hundreds of thousands of dollars are spent. Team or marketing problems can arise at any stage, even after the business is successful. But product market fit problems are usually the very first ones you face.

[04:28]

As a founder or investor you can easily invest a lot of time and money into something that lacks product market fit so it makes sense to validate your idea as early and as cheaply as possible. I personally have lost hundreds of thousands of dollars in building something that nobody wanted to pay for. It's for that reason that smart startup founders frontload the work to determine product market fit. It truly is foundational for any and all startup projects, especially if you want to succeed. With that in mind, your sole purpose when you are in the idea to MVP stage is to validate your assumptions and to prove that people want what you are making. Let me repeat that for those in the back. Your sole purpose when you're in the idea to MVP stage is to validate your assumptions and to prove that people want what you are making. Everything, and I mean everything else is secondary. Do not write a single line of code before you've validated your idea. Now, let's unpack product market fit a bit more.

[05:30]

We as humans have an unending list of needs and wants that we're willing to pay for. Not only is that list long, but it's ever changing. Companies and brands create products and services that they're willing to sell and a transaction takes place when a connection between our list of wants and needs, and a company or brands product or service take place, commonly referred to as a sale. Finding product market fit means finding a link between your offering and the wants and needs of the customers you're trying to sell to, also known as your target market. That is what product market fit is all about: finding the vast populace of customers who have a want or need that your product can solve. Now here's three quick examples of product market fit.

[06:11]

First is a bad product market fit example. You know the Segway PT, for those who may not remember the product it's a two wheeled self balancing battery electric vehicle that was invented by Dean Kamen. It was launched in 2001 with a lot of expectations and a blizzard of publicity. Yet the market acceptance was not there. With a brilliant product, savvy company, tremendous funding and resources, the company did commit numerous errors that never let the product take off. Errors like they pitched it as a product and not a solution. The product worked well but it lacked the support context and left the user with a thousand questions. Where can they park? How can they charge it? Will one use it on roads or sidewalks? The current day cities are designed for pedestrians or speedy vehicles, and this was neither so it had no proper infrastructure to support it. They didn't answer the question of where was the target market.

[07:03]

With the product in place it failed to answer who was the target market and which segment really needed this. It was an appealing novelty but there was no compelling need for anyone to buy it, and it was super expensive. They also had no market research and testing. According to what's available in the open sources online now, the Segway was patented and kept under wraps until its launch. The founders did not market test it at all and there was no user feedback or iteration in the process. After its official launch the investors were pretty surprised when people criticized or ridiculed the design for being dorky rather than cool. This could have been easily eliminated if markets were tested. All these reasons contributed to very dismal Segway sales. Instead of selling 10,000 machines a week as Kamen had predicted the Segway sold about 24,000 in its first five years. Now, while the product is still available, now it sells for far less to police forces, urban tour guides, and warehouse companies, not the general public.

[08:00]

An example of a good product market fit would be like Google Drive or any web based cloud storage. It allows you to access files from different devices and the only thing required is internet connection. It eliminates the need to rely on physical storage devices you have to carry around, something like a USB flash drive or an external hard drive. Right? Good product market fit. It addresses many needs for a very wide audience. A great product market fit example is DropBox. It tackled the same problem as Google Drive but found an even better product market fit because it removed an additional level of friction. Instead of having to download or upload files manually like you did in Google Drive its innovation was in creating a shared folder on your desktop that you could use in the same way as you would any other folder for your local files. That is an example of great product market fit.

[08:47]

Now my question is if it's so simple and intuitive then why is product market fit such a big problem for startups? Well, the economic world is mind bogglingly complex. Believing that your purely theoretical business idea would interact with the world entirely as expected is flawed thinking. Humans are super complex. Companies are equally complex and markets are made out of the interaction between those two complex systems. Like I said, believing that your purely theoretical business idea would interact with these complex systems without friction is flawed thinking. This is why I laugh whenever a business consultant writes some long lengthy business plan with tons of data and forecasts. And then when the rubber meets the road the plan falls to crap because reality has failed to cooperate with the plan or spreadsheet. This is why you hear so many founders speak to the idea of just starting. You can have all the plans in the world, but the world has its own plans and you will never find out how your plans work with the real world until you actually start. The sooner you allow your ideas to clash with reality the better. The more your assumptions are tested with real world feedback, the more confidence you can have in your idea. In other words, the more certain you are that your target market is inclined to buy your offering, the lower the risk of not finding product market fit is.

[10:06]

So let me ask this question: is product market fit a onetime hit or is it an ever moving target? Well, it's both. The difference is in the altitude from which you look at the problem. For example, an example of a low altitude product market fit or a one-time hit would be Blockbuster. People want to watch movies in their homes. They want to avoid lines at theaters, they want to avoid overpriced concessions and sitting in sticky chairs that were previously occupied by some kid with questionable parenting. Blockbuster had great product market fit. But if Blockbuster would have observed their product market fit from a higher altitude, one that assumes the landscape is ever moving, then they would have seen that the environment was shifting and competition was developing. Competition innovates, technology evolves, and Blockbuster found itself gradually losing product market fit until Netflix zipped up the body bag and dumped Blockbuster into the ocean to swim with the fishes. Blockbuster went from having great product market fit to having absolutely zero product market fit.

[11:09]

Product market fit is an ongoing process, and this is true for any and all products, services, or sectors in which you operate in. That said for many businesses the low altitude perspective will allow for a great business to be built. Again, Blockbuster had an amazing run for quite some time. In fact, prior to COVID restaurants and airline travel had a great run as well. COVID should have forced those two industries, and many other industries as a matter of fact, to look at the new landscape to understand the long-term or high altitude implications to their businesses. For restaurants we all became comfortable with takeout or not eating out at all. Do restaurants really need 4,000 sq ft facilities anymore? Should popup kitchens become a new thing within the industry? Like I said, the landscape has changed. How well the businesses continue fitting its offering into the ever-changing landscape of the consumer market will ultimately determine the difference between thriving and dying.

[12:07]

Now, with all that said if you are a founder of a technology startup, the low altitude perspective is critical for you. The reason I say this is because in technology, in most cases, you are the first provider of your exact product or service in the world. Your first order of business is to find out if people want what you're offering. Once you're in the market you will need to observe from a higher altitude as competitors look to gain some of your market share. Now, product market fit and overall growth have a dependency on each other. Without product market fit any and all growth is unsustainable. You can spend a crapton of money having the most creative marketing and copy team, and an unrelenting work ethic to push to get a lot of people to try your product. But if your product or service doesn't solve a real world problem then your customers simply won't stay. That's why validating product market fit needs to come before any growth efforts. This is a mistake that so many founders, including myself, have made.

[13:04]

In fact, does this phrase sound familiar? "Maybe the problem is that we aren't advertising strong enough. Let's increase our Facebook ads budget to increase our funnel inflow." As my pastor says, that either hits as an ouch or an amen, and I suspect that for many of us it's an ouch. Here's the real talk that I'm sure many of you need to hear. If you have a 0% conversion rate or a 100% churn rate it doesn't matter if 100 people or 10,000 people visit your landing page. Both have the same results - a failed business.

[13:36]

All right, so at this point you're probably asking yourself how do we find product market fit in the real world? We will definitely jump into that, but before we do it's important to mention that there are two opposite directions of connecting products and markets which is what we need to find in order to find product market fit, and both directions are viable. The first is to connect from product idea to market problem, and the second is from market problem to product idea. Let's unpack the product idea to market problem method first.

[14:01]

When you start with an innovative idea or a product or service, you need to find the people that need it in their lives. On this path, the prudent thing to do is to try to validate your idea. Find proof that it solves an existing problem. Now before you spend any time building an actual product, define the promise of your product idea. Do some marketing, run some presales among different groups of potential clients, and only start developing when you've found proof of interest in your promise from the market you're targeting. Now, from market problem to product idea, now the usual startup path is the market problem to product idea method. This is where the founder notices a problem in the market and tries to solve it. A great example of this is Airbnb who just went public this last year. The Airbnb founders noticed that all local hotel rooms were being booked during the industrial design conference so they bought some air beds for the apartment, created a landing page, and were successful at finding their first paying customers: three people that paid to sleep on their floor for a couple of nights. Now, they still needed to build, refine, and scale their solution but the basic problem was validated quite fast from the experiment.

[15:11]

The market problem to product idea path is generally speaking less risky than the before mentioned product idea to market problem path. The reason for this is that by focusing on an existing problem from the very beginning you reduce the risk of building something that doesn't solve a problem. Now that we have those two methods out of the way, let's discuss the problem of finding product market fit. Now before I go on, let me be very transparent in that this framework comes from arguably the most important startup book in the world, and it's Eric Reese's Lean Startup. We'll include a link to this book in the show notes for you to access it if you haven't read it already. In his book, Eric lays out the basic framework for finding product market fit, and it goes like this. First step is you choose your target market. You then find their underserved needs and wants, the problem. You're going to define your value proposition, what is your unique value proposition. You're going to specify and build your MVP, and you're going to test it with customers and iterate fast until you find product market fit. With this model in mind, if you have customers already you can test a new product or service concept with them, in essence, testing your value proposition with customers even before you build your MVP.

[16:21]

That said, testing for product market fit is even more important if your project is more ambitious. Again, I've said it before, you can waste hundreds of thousands of dollars on software developers to make a platform for nobody. So now that we've figured out the direction of the search and the theory behind the process, what are the actual tools and steps and tactics that can help you find product market fit? Since product market fit should be looked at from a low altitude perspective, and once you've launched you need to switch to a high altitude perspective, we will spend the rest of this podcast episode addressing how to find product market fit in the idea to MVP stage. We're not going to talk about the MVP to scaling. So again, we're going to talk about product market fit from the idea to MVP stage. The whole purpose of The Startup Story is to help equip you to start, and this process will deliver just that.

[17:17]

So again, back to this stage that we're talking about, idea to MVP. We already mentioned previously the process of finding product market fit should begin even before the process of building your product. Even if you don't have a product, you can test the promise of your product against the target market. The more people are excited by the product, the higher the likelihood you found the seeds of product market fit. And that excitement is usually quantified in visitors or email subscribers or presale customers. You can measure this in various ways based upon your proposed business. For example, again website visitors, ad responses, email subscribers, presale customers, all of these point to some level of validation. You will need to determine the test and the metric that suits your testing best. In other words, before you start building you need to validate that the problem exists and that the people who have the problem are willing to use it, sign up for it, or pay for your potential solution.

[18:14]

So let's continue to play off the Blockbuster example. If today in 2021 you wanted to start a movie rental business today you would need to test two assumptions. The first assumption is that a large portion of movie viewers would want to watch movies at home. The second assumption is that they would prefer to physically rent than leverage current streaming services. Obviously, validating the first assumption would be pretty easy but you wouldn't find anybody to validate the second assumption, and that is why we don't see Blockbuster stores anymore. The technology has evolved. The user expectations evolved and Blockbuster never changed. Now, in the idea to MVP stage of the process you're not necessarily looking for revenue, although presales are the best way to validate an idea. But rather you're looking for validated learning. The more you are certain in your assumptions, the lower your product market fit risk is.

[19:07]

So step one is to validate the problem actually exists, and here are some resources and methods to accomplish this. Leverage online content. In 2021 we have so many resources for quick feedback from a broad audience, especially due to the influence of social media or online communities like Reddit. You can ascertain general interest by simply evaluating a social content post that you make in reviewing the action of commentary. You could also post longer form content on platforms like Medium and assess the response. To run this thought completely out, you can find applicable subreddits and contribute accordingly to obtain feedback. The main idea is to gauge the extent of the problem and how your potential customers are solving it.

[19:49]

Another tactic to use outside of just online content is to interview potential customers. The previous tactic of leveraging online and using social content will give you broad reach, but it won't give you too much depth to it. That is where the value of customer interviews comes in. Customer interviews allow you to gain exponentially more insight with a significantly smaller audience size. There are numerous ways to obtain customer interviews. Again, you are just trying to discern if there really is a problem that you assume that they have. And if they do, how are they currently solving it? The analog way to accomplish this would be to simply go door to door. Walk around a mall and ask people for some feedback. Or even go to a coworking space and ask those who are there. A coworking space is full of business minded people who like you are trying to solve how to bring their product or service to their prospects. They will understand and respect the hustle you're putting forth, and I suspect your acceptance rate for getting that survey completed, that interview completed, is going to be pretty high.

[20:52]

That said, most people won't go with the analog or in person method because it does require that you put yourself out there, and that means you might even encounter rejection. That topic is an entirely different episode about mindset and rejection and resilience. But we're going to stick with product market fit for this episode. So that was the analog way of customer interviews. The digital way is to conduct customer interviews would be a simple online survey or a type form. This method does require you to figure out how to put your survey in front of lots of people. Some methods to accomplish that might be place that online survey link in the above mentioned social posts or subreddits that are asking for feedback. Twitter can be powerful for distribution. If you have any type of contact or email list at all you can send it to them asking for help and feedback. You can also ask your closest community to send the list out to their community and network. And lastly, if you have an ideal brand partner in mind swing for the fences and ask if they might send the survey to their customers, or maybe to their internal team. Either way, the goal is to get a more detailed response and that requires that you talk to people to get their honest opinion.

[22:04]

Now one more note on that idea. While you're conducting this outreach make sure to start collecting emails so that you can stay in touch with these interesting people. If they fill the survey out, they're obviously interested right? And you would be surprised at how giving people are with their emails after they've contributed to the project because they're just simply curious. Your survey has sparked their curiosity and they would be very interested to see how this plays out. This list will be super helpful to you as you continue to work through validation and the building of your MVP. And this email list also begins to build your list of potential early adopters.

[22:41]

All right, after you've employed the steps above and have proven that there is in fact a problem to be solved, it's time to test for potential solutions. That brings us to our second step where we validate our proposed solution. But let me remind you this doesn't happen by building the solution. It happens by building out the promise of the solution and here are some tools and resources to accomplish this step.

[23:04]

The first one is landing pages and design mockups. In fact, I would probably lean towards creating a simple one page scrolling landing page as the real first step in validating our proposed solution. This will force you to really think through your solution promise and start crafting the selling propositions. After all, if you aren't able to sell the promises then nothing else truly matters. When you do develop the landing page, make sure to include signups for "stay connected" or "be notified of our progress." Again, this will help build your early adopter list as well as validate that there are people that are actually interested.

[23:41]

Now, a word of caution on this step: do not overhype it. You know we talked about Segway before. Well, when the brand Segway was coming out with its very first product, their initial landing page had some bold claim like, "Human travel will never be the same." And after a year of hyping it up, the response for the first product was abysmal. Like I said, they were projecting 10,000 units a week to be sold and it took them five years to sell 20,000 units. The hype was just way overpromised, so don't overpromise just so you can get positive feedback. All that does is stroke your ego and set you up for future failure.

[24:19]

Once you've fleshed out your solution promises, then it's time to build the mockup. Now, for the sake of this discussion we'll talk about a technology mockup versus a physical product. But with the advances of 3D printing the opportunity to establish mockups and prototypes is incredibly affordable for physical products. But with regards to technology mockups, I love the tool Moqups.com, and we'll include a link in the show notes for easy access as the spelling of this is a bit confusing. But on the topic of mockups, I am an expert at how to overspend on a mockup. You know a few years back I had this idea for a mobile app that would allow you to use your phone like a television remote. You simply point at a restaurant and see what their current specials were in order to draw you in to their location. Now let me be clear, the idea was not to use the camera to do so. I hated that user experience. I just want to simply point and tap a button. I kind of pictured like a Pokemon Go type game but for retail and restaurants. And I had convinced myself that the only way I could truly test the public response was to take a very popular street in southern California, one that had numerous restaurants, and build out a mobile app of just that street. That would be my mockup to take to the public and get their feedback.

[25:32]

This mockup, and again let's just be clear my plan was for the whole world at some point so to say one street seemed like a reasonable mockup. Just taking one street in the southern California basin, but this mockup probably cost me about $80,000. But I'm not here to talk about how to blow capital on mobile development. I share this with you because Moqups.com will allow you to wire frame and build out a functional mockup for something like $16 a month. Now of course, the mockup is simply a mockup so in the case of my mobile app the mockup would have been built with a very specific user script. I would have had to tell the user, "Now, I want you to point at this restaurant and see what happens." I'm telling them what to do versus the one I spent $80,000 was a little more open. Maybe I would have had to build inside the real mockup, the $16 a month mockup, a very specific restaurant or two for them to point at. But instead of spending $80K on a mockup to test the promise of my solution, I've spent $16 or $32. Again, a much better spend for the stage I was in. And depending upon how fast I could have mocked it up, it could have been even cheaper. But again, we'll include a link to Moqups.com in the show notes for easy access. It's a super powerful tool. But please, remember, this is the main point for this. Avoid spending money to build your landing page or your mockups. It is completely possible to do this on the cheap if not free.

[26:46]

And one last thing about mockups in general. When I took my mobile app to the streets on a southern California street to get user feedback, again I'm wanting people to use the app like a television remote. That was my premise. I did not want people using it like a camera. But every single time, 100% of the time, I would give the phone to the user and they would immediately hold it up as if there was going to be a camera interface to identify the location. 100% of the time. I'm not even exaggerating. There wasn't one person that initially took the TV remote concept that I had in play and went straight to the camera. It was foolish of me to see people expecting to use it a certain way and then think that I'm going to change consumer behavior. That is why we do this. That is why we test these, so that we can understand how our users going to engage.

[27:51]

I'm reminded of an episode that we just recently launched with Bill Glaser, cofounder of Outstanding Foods. We talked about of all the food SKUs out there why did he come out with Pork Rinds, something on the snack aisle. One of the things he said is that when it comes to plant-based products in grocery stores, plant-based meats are not included with the meats. They're included in a plant-based section. And so if he's wanting to get his product in front of those who are looking for meat, because he believes he has a really great alternative to meat, he needs to be next to that alterative. He needs to establish the brand. If plant-based foods are being positioned in an area completely separate of where real meat is he's never going to get that opportunity. He isn't going to reprogram a meat eater to look in plant-based areas, so until that change he had to be places where the general population was shopping, and he said the snack aisle.

[28:46]

The snack aisle is one of the most profitable aisles outside of cereal in the grocery store, and he wanted to position Outstanding Foods brand there. So he brought Outstanding Foods to the snack aisle and their Pigless Pork Rinds. So automatically you're in the snack aisle, you're a meat eater, if you're looking for Pork Rinds you're going to see Pork Rinds and you're going to see Pigless Pork Rinds. You may give it a shot. But now the meat eater is seeing a plant-based product next to the meat based product, and that is, what I was getting at is you can't assume you're going to change consumer behavior out the get go. You need to be listening. The idea of this entire step - landing pages and mockups - is to test your value proposition against the market. So listen intently and without internal bias.

[29:32]

The next step is AB testing. You hear this a lot, and the great thing about testing promises rather than a real product is that you can easily change them. You can make two landing pages or two mockups that provide two different solutions and interactions, and see which one attracts more interest. I failed miserably at this one. This was basically what my testing group was telling me when they tried to use my app a certain way, like the camera way, but I wasn't listening. Since we're attempting to solve a problem that the market has with a solution that doesn't necessarily exist, we need to remember that the whole objective of the idea to MVP stage is to listen to the market problems so that we can build a product to address that problem. We have to remain open minded. I keep pounding this because it's so critical, because we drink our own Kool- Aids all the time. We have to remain open minded and ready to make the necessary changes. Being pigheaded about what you have conjured up in your mind as the ultimate solution will almost for certain lead to a failed startup attempt.

[30:32]

To continue on with this, the tactic of proving our solution, presales. Presales are a great point of validation. In fact, the ultimate validation is whether or not a person will spend their precious money for their solution. I'm reminded, when I talk about validation and the customer spend, I'm reminded of my episode with Ben Chestnut, the cofounder of MailChimp. MailChimp is now a $7 billion company. They had no investment capital. It was amazing. When Constant Contact went public, Constant Contact was getting all the headlines, all of the venture capital was going around to these equivalent email service providers trying to find who was going to be the next Constant Contact to invest in. Ben said he just kept looking around like why is no one coming to me? Where's my validation? Here I have built this amazing business. At the time it was almost a $1 billion valuation when Constant Contact went public, but he's looking for his validation and he had to pause for a second. And he realized wait, I have hundreds of thousands of customers paying me every month to use my product. That is the validation. And that is the ultimate validation. Let's be very clear about this. I don't care what headline you have, I don't care what cover of a magazine you have. You have customers paying for your product, especially in the hundreds of thousands, you have validation. That is the ultimate validation. Again, for the idea to MVP stage, presales would be the ultimate validation. Compliments and applause are easy to distribute. Getting someone to part with their hard-earned dollar is a whole other level of validation. And really, it's the only one that matters.

[32:08]

Now you might be thinking Kickstarter. Kickstarter is a great validation tool. If this was something we were discussing about eight years ago, I might have agreed with you. That said, the platform has kind of shifted a bit to being a marketing platform for existing products and projects. Everything on Kickstarter now is super polished. I remember when it first came out, you'd have like sketch drawings on there, people just trying to pitch something new to get some investment backing from a presale perspective. I love that stage because it's just so raw and gritty. Now everything is so polished. That's not to say that there isn't a use case for Kickstarter, but most campaigns have real life products within videos and we're still trying to determine validity of our product idea.

[32:49]

So if it's possible for you to establish a presale before you start building your product idea or solution, then do so. Again, that is the ultimate validation. And of course, pre MVP sales are not possible for every single kind of business, although they are possible for most. But while not every product or solution will lend itself to a presale you could accomplish the same validation through intent to buy. Again, we're looking for the triggers and the flags. Remember how I mentioned earlier to make sure you have a sign up form on your landing page? Maybe if you tuck it behind an Add to Cart button. While it's not a perfect data point, you could then imply that there was buyer interest. There was buyer intent because they hit that button. Again, while they didn't spend the dollar, they did add to cart. Of course that doesn't talk about what the price point was and all the other things that might come in. I'm just trying to figure out and help you think through how we can measure buyer intent when there is no presale to be had.

[33:45]

you know another good example of something very similar is within the indie game developer community. It's when they ask people to add their nonexistent game to their Stream Wishlist. Now obviously an unknown indie game developer that has not established any track record for themselves or brand trust equity at all, they can't really ask for money for a product before they deliver, especially in the gaming community because of how long it takes to build games. Or at least they can't ask for that before they have a playable demo. But they can show the concept and the developers can evaluate the level of interest by the number of Steam Wishlist signups.

[34:19]

Once you've worked through these two stages of successfully validating your idea, both the problem you're trying to solve and your proposed solution, and make sure that it actually meets the problem then you can build out your MVP. The idea of validation makes it much more likely that your MVP would be close to product market fit, and being close to product market fit in the MVP stage is incredibly important. When you are close to product market fit in the MVP stage you can then make small iterations as necessary so that you can truly find good product market fit. If you have failed at the idea of validation stage and your MVP is far off from product market fit, that means when you make those iterations it's not going to work. You're still way off, which would then require you to fully pivot, which is much more costly and requires a completely new set of assumptions, which in turn requires an all new set of validation tests. Yeah, it basically brings you back to the very beginning.

[35:17]

Product market fit is so important for the success of a startup, and that's why I wanted to bring these thoughts to you, and these tactics to you, and these tools and resources to you to help set you up for success in your new venture. I hope you found this episode helpful. The topic of product market fit is so critical and important for your startup success. Once you've had a few moments to process all the value delivered in this week's episode, please hit me up on LinkedIn, Facebook, or Instagram and share with me your thoughts on that is episode. If you desire more founder direct tactics and strategies for your business, then please visit live.grindology.com to attend our live Q&A event with cofounders of Meetup, BarkBox, and PopSockets. Again, this event is completely free and you can have your questions directly asked to these founders. And you can register at live.grindology.com. Like always, we'll include a link in the show notes. And now for my personal ask.

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April 13 2021
Unpacking Product Market Fit

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