Finding Product/Market Fit

by breeve 25. February 2010 16:49

Behind the sounds of keyboards clanging out lines of code and second hand Aeron chairs brushing against the floor lies the passion of a dedicated few bringing to market a product they believe customers will actually give them money for. Like a bird working feverishly to build its nest, they dig for ideas and scavenge for employees while carefully constructing their business plan. If they execute well and build the product they envision the market will reward them because the path is laid before them and all it takes is enough determination to navigate it.

Unfortunately, the path can fork and the very skills that entrepreneurs must have like self confidence and egotism can make it hard to recognize forks. Many get so emotionally invested in their idea that when sales fail to materialize they rationalize it away by thinking the next feature or sales pitch will make the difference. Their mind can become so clouded that they come to expect the market to care about their shiny new product as much as they do. In reality, the market is not interested in shiny objects but rather in how those shiny things solve their problems. Much to the dismay of the entrepreneur, the market’s needs could be down the dodgy path, the one that nobody likes to walk down because it is covered with mud, weeds, and crabgrass.

Of all the ingredients that make a product a success, none are more vital than matching a product to what the market wants. Few have observed this process with more first hand experience than Eric Ries who was involved with a business which failed badly—blowing through 40 million in five years—and a later one which he started that was very successful. The failed first experience encouraged him to try something new with the second. A process he calls the Lean Startup.

The unintuitive first step of the lean process is to start with the assumption that you don’t know what the market wants but you are willing to learn. In order to learn what the market wants, you start with a small hypothesis of what you think it may want and then create what he calls the minimal viable product. The minimal viable product should be created with as little effort as possible and he goes so far as to suggest that it is commonly overridden with bugs. If that weren’t enough, he mandates you charge for it as well.

When I first heard the concept of a minimal viable product, I felt violated as a software engineer because a software engineer creates well designed low bug products not quick and dirty buggy ones. The thought of releasing something to the public that is buggy and worse expected to be buggy is nothing short of shameful. How could any self respecting engineer even consider shipping a buggy thing that will bring embarrassment to themselves?

What most engineers fail to understand, however, is the more time you put into a product without showing it to the market—what is commonly called stealth mode—the harder it is to change direction. Code that has lots of time, money, and reputation invested in it is hard to throw away and is often the source of emotional attachment which can ultimately drive a product into the depths of failure. This is precisely what happened in Eric’s first startup experience.

The real strength then of the minimal viable product is not just low emotional attachment but the ability to rapidly try different products ideas by releasing, getting feedback, and repeating until the market clearly signals what they want. The ability to change directions quickly and keep the burn rate low before a product/market fit is found is essential to the process of founding a successful business.

But how can one know when a product/market fit is found? No one has a better acid test for this problem than Sean Ellis. His method is shockingly simple. Survey the customers with one simple important question: if the product was discontinued would you be severely disappointed?

According to Sean’s experience with various startups, if 40% or more of the users say they would be severely disappointed if the product went away, the product has a fit and thus a market. So vital is the number that even Sean himself thinks twice about working with a company with a number less than 40% because the fate of the startup is still in question. Marketing a product is hard enough but marketing a product that no one wants is a losing situation anyone with smarts will thankfully leave to others.



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About Me

I am a Principal Engineer with 13 years experience developing and releasing software products. I started developing in C/C++ then moved into .NET and C# and have tech lead multiple projects. I have developed products in Windows Forms, ASP.NET/MVC, Silverlight, and WPF. I currently reside in Austin, Texas.

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