What are some common pitfalls to avoid when seeking product-market fit?

In my previous business we pivoted many times. BUT we always had a die-line to keep us in line with any product and service changes. Here's how it worked in reality: - Have a vision to solve a problem in a market that is sizable. - Speak to stakeholders (users, prospects, supply chain). - Develop solutions, test, reiterate, staying humble and open to feedback at all times. - If you receive an unusual suggestion, circle back to your die-line. If it reflects who and what you are seek ways to embrace the suggestion. It shows you care. Always sense check, stay agile and stay in control of cash.

As an investor, market definition and sizing is an area that both investors and founders under scrutinize. As a 1st principle, you should be building to solve a problem, not the other way around. The next question is whether there's a large enough market. Founders might have legitimately experienced a problem but is it big enough to build a company around? What about a venture scale company? This can be surprisingly difficult to size, or to be objective about it since you would have experienced the pain point acutely.

Ever heard of a tar pit? 🦕 In nature, It's a pool of sticky, black petroleum seeping up from the earth. These pits look shockingly similar to a pond of freshwater. These "ponds" would attract dinosaurs and other animals seeking fresh water - only to get trapped in the tar and die. More creatures would come, and meet the same fate, and the cycle repeats. The startup world is filled with tar pits. Ideas that look compelling from afar, seem like a great opportunity, and for SOME reason, there's nobody else doing this brilliant thing! Well... I hate to break it to you but more likely than not they did, they tried, they died... tar pit. Start with the problem, do customer interviews, and let users influence your development.

"Building a product without a problem" is an overly simple statement 🤔 which causes a lot of false starts for founders. I say that because MOST of the founders that I've advised, judged, & coached over the years DO HAVE a problem they are addressing! That said, all PROBLEMS are not created equal!💯 🚫 Some problems are annoyances 🚫 Some problems occur infrequently 🚫 Solving some problems doesn't create a lot of value 🚫 Some problems only apply to a small audience 🚫 Some problems can't be solved with a viable business model 🚫 Some problems are less annoying than the risk of trying an unproven solution This is why the frameworks I use with startups answer these problem questions early!

While some startups create a product without a problem, that is not the real issue. Almost all of the founders I have ever seen in pitch competitions or in office hours can tell you what problem they are "solving". 😎 The real problem is that instead of telling founders to solve a problem, we should be helping them understand that they should be "addressing a need"🤯 And that the need needs to be strong enough to support a business model💲 Simply solving a problem doesn't require that the problem is: ➡Meaningful. i.e. worth whatever change the solution requires ➡Valuable. i.e. worth whatever you want to charge me for a solution Create value (enable a desire), instead of solving a need.💯

For early stage software companies, we are usually trying to figure out if the product is important in peoples lives. One way to measure is through engagement while weeding out vanity metrics. For example a vanity metric is how many people have signed up for a service. An engagement metric is how many people logged in to use a service this week. Think about the products that are important to your life that you would be upset if they disappeared tomorrow. My guess is that your engagement is pretty high with those products. My example would be LinkedIn, I use it daily and I am a customer who likely is not churning since it is becoming more and more integral to my work.

What can make this confusing is that there is not a "one-size-fits-all" set of PM metrics. That means that you need to pick the right metrics for your venture.📊 Start by thinking about the things that would need to be true if you had PM fit. 🤔 For example: ➡ Your sales conversions ➡ Your retention rate ➡ Your customer satisfaction ratings ➡ Your referral rates ➡ Your engagement & usage ➡ Your CAC ➡ Repeats and renewals (etc, etc) What numbers did you use when calculating your sales forecasts? The variables that show that "what you expected to happen is what is really happening" should be what you track!

Beware of relying on vanity metrics or superficial indicators of success that do not accurately measure progress towards achieving product-market fit. Instead, prioritize meaningful metrics such as user engagement, retention rates, and customer satisfaction to gauge the effectiveness of your solution.

Product-market fit is about knowing who is in your target segment -- a set of common characteristics for firms or individuals who value whatever you uniquely offer. If you're not repeatably winning with a target segment, you don't have PMF.

Another common mistake is focusing on vanity metrics that look good on paper but don't truly indicate the health or success of the product in the market. Startups should concentrate on actionable metrics that reflect real value to the business, such as customer retention rates, user engagement, and conversion rates, rather than just user signups or downloads.

The cleanest signal of PMF is customer willingness to pay. Once a product is built, you should get it into the hands of users, get feedback, improve it till you can monetize. Avoid the temptation to spend aggressively on customer acquisition until those early signals reveal themselves. That risks burning excessive cash. The next level of stickiness is increasing price. Will customers stick with your product even after you've raised prices? They might not like it but if they stick with you, then you're a 'must have' not a 'need to have'

To avoid this, timing is everything. Assess your readiness for scaling by closely monitoring key metrics such as user engagement, customer retention, and feedback. Make sure your product has a strong, loyal customer base before expanding. Then, carefully plan your scaling roadmap—align it with your vision, resources, and market opportunity. Lastly, execute your scaling strategies by targeting the right customer segments, refining your value proposition, and choosing the most effective distribution channels. Balancing these elements will help you grow at the right pace and set the foundation for sustainable success.

Separating signal from noise can be hard- WHY did the first customers come on board? Was it because they wanted to support the founder(s)/team? Do customers actually return after their initial experience? Do they love the product enough to share/advocate to their networks to adopt it? Timing is an art rather than a science, but when strangers share with strangers or the NPS is off the charts, that is usually when it's time to pour fuel onto the fire and start scaling before the competition heats up.

Timing your scaling efforts is critical; scaling too early can lead to wasted resources and market misalignment, while scaling too late can mean missing out on growth opportunities. Assess market readiness and demand to scale effectively.

We spun up an MVP fairly quick. At hackathons in my industry you take 36 hrs for a MVP - it works. After this you can start validating with customers, asking for honest feedback. I would never scale a product that has made 0 revenue with a pilot yet. I always aim to make SOME money (even just 1k or sth) before scaling. This is the best validation you can get. After 1 person is paying for your solution, likelihood is high others will too.

Obsessing over competition often leads to a detrimental path—failure. A business fixated on letting competitors dictate the narrative is setting itself up for eventual downfall. Rather than being consumed by competition, why not redirect that energy toward understanding and serving the users or consumers? Consumers hold the key to success, not an abstract notion of competition. They are the ones who decide which businesses thrive and which ones fade away. Consider the role your brand/product plays in the lives of consumers. How does it contribute to their progress? This understanding only materializes when consumers are viewed not merely as cash cows but as human beings with real needs and aspirations.

One competitor that most startups don't think about enough is the status quo vs the investment required to onboard your particular product or solution into an organisation (added to the cost of your solution). It isn't just about the price of your product but the procurement, onboarding and ongoing management of a new solution. Factors in these costs and consider if you still bring a significant emotional and financial ROI. If the answer is no - you need to figure out how you get to that point else you will have a tough up-hill battle selling your product and growing your business.

People obsess about the competition instead of thinking through the real competitive alternatives. Bob Moesta's work with Jobs to Be Done has great insights into understanding the real competition -- it's not just the next well-funded start up in your niche. The bigger issue is focusing on competition instead of customers is why there are so many me-too products.

I laugh & cry when I am listening to a founder at a pitch event say "We don't have any competition!" It's always untrue!🤣 😭 Competition matters because making choices is difficult for people. When you are trying to get people to adopt your product, you're asking them to CHOOSE between your offering & something else.🤔 "Something Else" is your competition.👺 That means that your competition could be "not doing anything new". Humans don't want to change unless the effort to change is worth it. So you need to know if the outcome you offer is worth the change from "something else". The competition is your baseline. What you offer RELATIVE to the baseline is your value. If you don't know the alternatives, you don't know the value!💲

Many people speak highly of "ignoring the competition". I am one of the individuals who finds this irritating. You must always have your eye on the competition, but never become blinded by them. Adaption and evolution is the key to scaling any business. If you are too focused on building your own company that your competitor transforms and skates right by you - that is a problem. The inverse can happen as well, as some companies will focus too heavily on what the competition is doing, and lose track of what they are doing internally.

Neglecting the team during the pursuit of product-market fit is a common startup mistake. Building and nurturing a strong team with the right skills, mindset, and culture is essential to avoid conflicts and foster high performance.

Well stated as to the importance of team building. Part of this is whether or not the founder is open to being challenged and hearing bad news. I have seen the case where the founder shows preference to those who say what they want to hear---marginalizing those who have more talent and greater insight.

Empower your team for product-market fit! Build a team with diverse skills and backgrounds. Encourage open communication to ensure everyone feels heard and valued. Foster a culture of collaboration and feedback iteration. By leveraging your team's collective knowledge and creativity, you'll develop a product that truly resonates with your target market.

Recognize the importance of assembling a talented and cohesive team capable of executing the startup's vision and strategy. Invest in team development, collaboration, and communication to foster a culture of innovation, resilience, and accountability.

The team driving the product to market must also be aligned with the product’s goals and the needs of the market. Neglecting to build a team with the right skills and mindset, or failing to maintain team motivation and focus, can severely impact the product’s development and execution. A dedicated, skilled, and motivated team is essential for navigating the complexities of achieving product-market fit.

5 more repeated pitfalls I've noticed, especially from first time founders 1. An over emphasis on product and not in the core problem or distribution. 2. Failure to iterate based on user feedback and market changes. 3. Disregarding signs of traction or dismissing initial success can be a mistake. 4. Failing to clearly define your target customer can result in a generic product that doesn't meet specific needs. 5. Prioritizing features over solving core user problems can lead to a bloated product.

Turn On the Innovation Lights! Product fit occurs when the venture's product achieves adaptation within the market. Therefore, concentration on the product while ignoring the market is a fatal approach. Yet, so many ventures do this. Rather than beginning with a product concept, start with finding a market that has a problem that you want to solve. Then, create a user-buyer persona. Identify a specific individual. Give him or her a name. Spell out the specific demographics and psychographics that define this user-buyer. Find that actual person in the market. Engage that user-buyer in the process of developing the product that he or she actually needs. Instead of throwing darts in the dark, turn on the lights! Venture With Vision 😎

In pursuit of product-market fit, it’s crucial to remain flexible and receptive to feedback, making iterative changes based on user interactions and data insights. Founders should also ensure they understand their users deeply, maintain clear communication channels within their team, and continuously validate their assumptions about the market. Staying agile and responsive to both internal team dynamics and external market changes can significantly enhance the chances of achieving and maintaining product-market fit.

Continuously prioritize and iterate towards achieving product-market fit by focusing on customer feedback, iterating on the product based on user insights, and adapting strategies as needed to align with evolving market dynamics. Stay agile, responsive, and committed to delivering value to customers to mitigate the risks associated with seeking product-market fit.