Launching a startup is like “jumping off a cliff and building a plane on the way down” (Reid Hoffman). How on earth do you know when you’ve got enough lift to pull up?
I vividly remember asking myself this question while, I was part of the Winter 2014 batch at Y Combinator, listening to countless prolific founders tell their stories about the path they took and the struggles to achieve product/market fit.
With statistics that show the vast majority of startups fail to even raise a seed round, let alone a Series A or greater, the race to achieve product/market fit has to be run like a sprint. It is also to be expected that the race is laced with hurdles.
Not only are you working with limited runway to build your product, but you’re also, probably, building a company in an emerging space. This presents the added challenge of finding market acceptance and scaling in a market that’s in constant flux.
“Make things people want.”
This slogan, coined by Paul Graham and Y Combinator, is a phrase that’s seemingly so simple that it becomes difficult to harness. At its core, it calls for turning the entire existence of your startup into a never-ending continuum of optimizations that are intended to make your customers’ lives better.
“Each optimization should focus around a single key metric, such as user retention. The metric should be a guiding light, if you will, that puts everything else around you into perspective and keeps you pointed in the right direction.”
Each optimization should focus around a single key metric, such as user retention. The metric should be a guiding light, if you will, that puts everything else around you into perspective and keeps you pointed in the right direction.
In practice, this may entail carefully evaluating your retention cohorts against a set of A/B tests or modifications made to your product or positioning. Increases or decreases in retention can be correlated to specific changes that you’ve made, and help you discover the “why,” so you can tweak your product to better satisfy customer demand.
Ultimately, there isn’t a key indicator that’s going to say you’ve made it, just a line that keeps trending in the right direction.
When looked at independently, this exercise of constantly optimizing to a singular key metric opens up a perpetual feedback loop that reveals the refinements required to get you closer to a scalable and repeatable business model. That metric will undoubtedly (and should) change as your company evolves, particularly as it gets closer to the sky or the ground.
Will they buy it?
Will they (aside from friends and family) buy it? While the dream of creating a product so great that people just throw money at you is ripe with ambition, it’s not reality. Convincing your mom or best friend to sign up for your deluxe package will also not reveal anything about true market demand.
“To really get a sense of whether you’ve hit product/market fit, you need to go beyond your inner circle of believers and get random users to sign up, use and pay for your product.”
To really get a sense of whether you’ve hit product/market fit, you need to go beyond your inner circle of believers and get random users to sign up, use and pay for your product. Or, if you’re offering a product or service that doesn’t need to be purchased, such as a social app, you can measure product/market fit by the number of people who organically start using your product and sharing it with others in their ecosystem.
Most startups are guilty of aiming for perfection and keeping their product in alpha mode for far too long as they test and troubleshoot among a safe group of supporters. Yet, the only way to get true market feedback is to open it up for public consumption and start aggressively marketing it to outsiders.
By moving beyond the people that “believe in you, no matter what,” you’ll have the opportunity to rapidly learn, iterate and find your market fit. As tough as it may be, eliminate the feedback data from this group when testing and validating your product. It will only skew your numbers. Though not always pleasing, the hard truth will help you successfully iterate faster.
Product/market fit is the necessary precursor of every company moving from startup to growth mode. The other prerequisite is an obsessive mindset to get there. Optimizing, measuring and establishing some early traffic composed of bona fide users can help you reach your goal with a burn rate that’s as low as possible. Only once you achieve product/market fit will you be in a position to scale.
Are you ready to fly?
This article has been edited and condensed.
Aaron Glazer is the co-founder and CEO of Taplytics, a dynamic A/B testing platform for native mobile apps. A graduate of the MBA program at the Rotman School of Management, Aaron majored in Corporate Strategy. Most recently, he was a strategy consultant at ZS Associates. Connect with @taplytics on Twitter.
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