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Product-market fit obsession will kill your business 💀

Product-market fit obsession will kill your business 💀

Sweta Govani
November 17, 2023

90% of tech startups fail, most before achieving product-market fit. Founders run out of time, money or energy chasing this illusive goal.

Here’s why using ‘product-market fit’ (PMF) as a goal post is the problem:

Are we there yet? 🤷‍♀️

Average time to product-market fit is 1.5 years. Most examples in this study are well-funded startups. You may not have the luxury to wait for that long.
PMF is a ‘feeling’ i.e. you don't know if you are going in the right direction until you’ve got it.

↳ It is hard to operationalize and measure progress towards PMF.

Is this a real business? 📈

“1st time founders focus on product, 2nd time focus on distribution.” In this well-known and sound saying, distribution refers to marketing and sales activities to get your product in the hands of customers.
PMF is really about validating if you’ve got a real business (vs. just an idea / product). I’ve heard this countless times founders who are chasing this goal so they can decide to dedicate more time and energy to the startup. Investors similarly seek it as a signal for investment.

↳ The term is misleading and incomplete measure for what we truly seek. Others who agree suggest frameworks with 4 fits or 5 fits.

A simple and logical fix is to focus on BUSINESS-market fit because:

If we are trying to validate if this is a real business, why not call it that?
As founders, you likely set out to build a business, not just a product.
Business-market fit is a more holistic validation of your idea.

Successful business-market fit means your tech startup can:

Acquire the right customers
Retain them for a long time
Monetize them (ideally profitably)

To measure success, measure happy paying customers.

Customers: ties to acquisition
Happy: to retention
Paying: monetization

The specific metrics you use may vary based on your startup’s business model, pricing strategy, and timing.

In order to retain customers, you need a product they will love. That’s obvious. But you also need to define, find, and acquire the right customers. If you acquire the wrong ones, you won’t be able to retain them even if your product is flawless.

If your goal for your tech startup is to build a thriving business, then shift your focus to business-market fit.

Thoughts on business-market vs. product-market fit? Weigh in here.

What is the secret to achieving business-market fit?

There are no secrets. Think of it like solving a rubik’s cube. As you try to solve one side, the other sides will be impacted. You have to think holistically as you acquire, retain, and monetize customers across product, marketing and the entire business.

There is ‘right’ order of operations that can help you develop a go-to-market blueprint for your tech startup to achieve business-market fit:

🎯 Pick a super specific early customer segment that you can capture now. Prioritize the segment that is facing an urgent and important problem that is unmet by existing alternatives. Also consider the marketing ease in capturing this segment.
🙋 Understand this segment’s problems, alternatives, and journey to discovering solutions like yours. If you struggle to map their journeys, you either aren’t specific enough, or you need to do customer/market research.
📊 Clarify why you’re an obvious choice for this segment over their status quo. This requires knowing alternatives they are using (e.g. general purpose tools like Excel, or direct competitors).
📈 Build a 1-page go-to-market plan to capture this segment. Ship it, test, learn, and iterate. Refer to it as your blueprint when things get chaotic.

This isn't easy. No one said tech startups were. But, following these steps and developing a flexible go-to-market plan will help get you on the right path to achieve business-market fit and avoid running out of business.

You in?

Join me for an interactive go-to-market workshop for busy founders:

Agenda: Key components of a go-to-market plan, Figma example, and exercises to apply it to your startup.
Outcome: 1-page flexible go-to-market plan you can consult when things feel senseless throughout 2024.
Designed for: busy founders DIY-ing marketing to find 1+ predictable channel for your tech startup.

On the fence? A founder shared:

“I LOVED the workshop. Every minute felt worth it!”
“It was so helpful to hear you break down marketing from this huge unknown into a strategy for 0-1 founders.”
“I'm using the template now too!”

Have questions about business-market fit, the workshop, or other marketing topics top-of-mind for you? Reply to this email. I respond to every email, and I might do a deep-dive on the topic in the next issue!