Today’s topic: How do I find product market fit?
Let’s start with what NOT to do.
First, let’s say you’ve got an idea for a venture. No product, no customers, no sales. That’s good. That’s absolutely where you should start.
(By the way, I’m going to use customers as a catch-all term for ‘people who need what you have’ and sales or buy as a word for ‘people deciding to get what you have’. There are plenty of business models where customers don’t have to pay or buy things directly – sometimes money never even changes hands. But there really aren’t any useful words to include all these options so I’m going with those for now. English is weird that way.)
Okay so you’ve got an idea. Now what? According to my business school professors, you’re supposed to write a business plan, seek funding, build your product, and then “go-to-market.” In other words, 1. Plan 2. Build 3. Sell
Don’t do that.
For my professors – mostly boomers transcribing research they did in the eighties, by the way – this approach made sense. The world was full of well-understood markets and product categories.
New ventures are risky, so the goal in starting one is to reduce the risks involved as quickly and cheaply as you can. If what you’re doing is launching a new kind of breakfast cereal, research and planning is nice and cheap, building your product is more expensive, and selling is the most expensive thing of all.
In today’s world, the opposite is true. Selling – at least preliminary selling to test a product in a market – is easy and cheap. The internet and digital media are incredibly inexpensive, easy to access, universal, and super easy to change. The cost of building a website or a promotional video is pennies.
Building your product is also cheaper than it ever was. Digital products can be built iteratively, with outsourced resources, renting frameworks and platforms for small money; physical products can be made in small batches or with outsourced manufacturing. But the highest cost comes from building something you can’t sell.
And finally, planning is not the cheapest way to reduce risk for innovative products, because planning looks to the past. What you know or can research about things like your idea may only be minimally relevant for your idea. This world is changing so fast that research goes out of date shockingly quickly. Are you really going to rely on pre-pandemic real-estate market data in a post-pandemic world? How about social media patterns from three years ago before TikTok arrived on the scene? Planning may cheap, but it’s easy to get lured down the wrong path. Too much planning is a waste of time unless it’s based on real-time information.
If you go with Plan-Build-Sell, by the time you’ve reached the market, you’re locked in. What if you’re wrong? What if you need to change to deal with reality? That’s an expensive failed experiment.
So here’s what works today: sell first, THEN build, THEN worry about planning. 1. SELL 2. BUILD 3. PLAN. Do the selling part lots of times, quickly, and learn from your failures. Eric Ries’ revolutionary Lean Startup book talks about this idea. If you don’t have a copy on your shelf, get it. It’s a bible.
Next time we’ll talk more about Lean and how we can even improve on it.