Building a startup can feel like a whole lot of things.
Exciting. Exhilarating. Stressful. Terrifying.
It’s a rollercoaster, to say the least.
But it’s safe to say that most founders who go down the startup path do it because they believe their idea will be successful.
They put their time, energy, money (and often other people’s money) on the line because they believe their business idea will be a hit.
Yet so many startups fail. Worldwide, the statistics are off the charts.
We hear the same reasons over and over again.
“We built a great solution but our timing was bad. The market wasn’t ready for it.”
“We created a fabulous product but it didn’t work the way people wanted it to. They didn’t buy it.”
“We built something super useful but we just couldn’t get the marketing right.”
The truth is, there’s one key reason behind the astronomical failure rate of startups, and it’s this.
So many startups are not even trying to get to Product-Market Fit.
Some founders begin their startup journey without even knowing what it is.
Those who have heard of it often don’t have a disciplined definition of it.
So, what is Product-Market Fit – really?
Here’s how we define it:
- You’ve created a growing group of raving fans and advocates.
- Your fans are the ones who love your product.
- Your advocates are the ones who love your product AND tell other people about it.
- You’re not relying on marketing and advertising to hit your baseline sales targets.
- In fact, you’re struggling to keep up with the demand for your product.
- You’ve created a customer experience that allows people to sing your praises and gladly recommend you to others.
- You’ve achieved a high rate of retention (or repeat customers) and you have low churn.
- You’re seeing leading indicators, like high-quality testimonials, recommendations, and referrals.
- Eventually, you experience lagging indicators like cash piling up in your bank account so fast you can’t manage it.
If you were to say to your current customer base:
“We’re going to shut down the company, how would you feel about that?”
And 40% of them said, “That would be terrible, we don’t know what we’d do without it.”
That’s a good indicator that you’ve built a service they’re dependent on.
When each customer brings you one or two more customers, that’s when the hockey stick style of growth happens.
You’ve moved out of linear growth and into exponential growth.
That’s when you “go viral.”
So, how do you get to this, sometimes elusive, Product-Market Fit?
The best way to get there is to follow what we call the Disruptive Innovation Journey.
Here’s what it looks like.
The first three stages are crucial to get right from the beginning.
STAGE A – Vision-Market Fit: This is where you go through a systematic framework to do the right market research required to know if you have an idea worth pursuing.
STAGE B – Problem-Market Fit: This is where you systematically conduct user research to find out what the big problems are in particular market segments related to the idea you have.
You’re learning to deeply understand the potential user and find out where their biggest pain points are.
You’re looking for a “pants-on-fire” problem worth solving (i.e. a problem that a certain market segment would be very happy to pay to have solved).
STAGE C – Concept-Market Fit: This is where you create low-cost prototypes or solution concepts like videos, storyboards, wireframes, and mockups of the proposed product so you can get feedback from users who are possible early-adopter customers about whether they’d actually use it or not.
Once you’ve established that they would use it if you built it, then you give them a way to sign up to be a paying customer once it’s made, and then you can start the product build.
The name of the game is deploying capital as efficiently as possible while executing an iterative, laser-focused go-to-market strategy that gets you over the initial Product-Market Fit line.
Then you’ll be in a position to scale and, where suitable, expand into other market segments.
If you’re a founder navigating the early stages of your startup and you’re not exactly sure how you’ll get to Product-Market Fit on your own, we can help. Fill out this short questionnaire, and introduce your idea to us.
Whenever you’re ready, here’s how we can help you.
If you’ve got a startup idea, or you’ve already embarked on your journey – you might be facing one or both of these situations.
- You’re struggling while going it alone. Worse, you’re wading in the muddy waters of some not-so-great advice.
- Perhaps you’re trying to raise capital for your startup and you’re hitting a dead end. Raising capital is a notoriously difficult thing to do. Globally, only 0.74% of startups manage to raise capital at Seed stage. Despite this, 16% of startups we’ve worked with were able to raise capital at Seed stage.
If you’re ready to step up and get the help you need, our Startup Builder™ program was created especially for you.
The Startup Builder™ process is specifically designed to take you all the way from idea to global success – in a way that’s simple, sustainable, and scalable.
If you’re ready to grow your revenue, profit, and social impact faster without wasting time and money on the wrong things at the wrong time, click here to request your Startup Builder™ Strategy Session.
Did you find this article valuable?
Go here to sign up to receive future weekly editions in your inbox.
On LinkedIn? Click here and press “follow” to get notified of the startup insights I share.