Product-Market Fit Is Crucial But Don’t Forget About What Should Come First
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Marc Andreessen, the founder of Andreessen Horowitz, famously stated that a business went through two stages, before product-market fit and after. (https://growth.eladgil.com/book/introduction/where-to-go-after-product-market-fit-an-interview-with-marc-andreessen ) This is very true, and getting to product-market fit as a business is critical to the long-term growth potential of that business. Without reaching this milestone, the company has no chance of any long-term success.
But what is Product market fit?
Marc Andreessen defined this as “Product/market fit means being in a good market with a product that can satisfy that market” (https://a16z.com/2017/02/18/12-things-about-product-market-fit/#:~:text=Marc%20Andreessen,(in%20a%20good%20market). The keys to product-market fit in my view, is adding value for your customer that means that they become a long-term customer of the business. This retention drives the growth potential in the business. For example, say you have developed an app, and you have launched it on the app store. In month one, you bring in 100 customers, you retain 50, and in the next month, you bring in another 100, leading to your customer base growing to 250 customers. This forms a stable base of customers, which allows the foundations of the business to be developed, and the acquisition of new customers can be built on top of this.
But how can you test if you have reached product-market fit?
Sean Ellis, the author of the bestselling book Hacking Growth (https://www.amazon.co.uk/Hacking-Growth-Fastest-Growing-Companies-Breakout/dp/0753545373/ref=sr_1_1?crid=7HQO2BQWTGLC&dchild=1&keywords=sean+ellis+book&qid=1619198985&sprefix=sean+ellis%2Caps%2C166&sr=8-1 ) developed the Product market fit survey (https://pmfsurvey.com) which allows you to test with customers to understand if you have achieved product-market fit. This is a straightforward test, which contains the below question.
How would you feel if you could no longer use [product]?
- Very disappointed
- Somewhat disappointed
- Not disappointed
- I no longer use this product
