Finding (and fighting) your way to product-market fit is one of the most challenging and rewarding stages of any business’s lifecycle.
Fail and you could limp on like a zombie, potentially indefinitely, but without ever really getting that feeling of traction and the excitement of compounding momentum as you scale.
Get to PMF and you can start to strap yourself in for that breathless ride towards world-domination and making a dent in the universe.
Of course, you encounter an entirely different set of problems along the way…but most startup founders who don’t get that far would no doubt exchange a limb for the opportunity to have them.
So the billion-dollar question is…how do you get to PMF?
As it turns out, it’s actually 20 questions, ideally asked in a particular order.
Below I’ll dive into what those questions are (in order) and how you can start to find the answers.
As you go through the process, I’d highly recommend you utilise the platform GTM Works which is designed specifically for helping founders and early stage teams to improve how they go through this critical stage towards PMF.
It’s even free for smaller teams so there’s no friction to getting started!
Market
Everything starts with the market. As Marc Andreeson once wrote in The Only Thing That Matters:
- When a great team meets a lousy market, market wins.
- When a lousy team meets a great market, market wins.
- When a great team meets a great market, something special happens.
One of the most basic mistakes that startups make is to start with a product and then wish there was a market for it…this is often described as being a solution in search of a problem.
It’s a super painful and costly way to try and build a valuable business.
OK, so let’s say you agree – you need to start with understanding your market as the foundation for any great GTM strategy and resulting playbook…
What are the critical questions you need to answer?
They are:
- What’s our Purpose
- What Pain do we solve?
- How does our Solution solve it?
- Who is our Ideal Customer Profile?
- Which Personas within our ICP should we focus on?
Let’s dive into how you find answers to each of these questions.
Purpose
Purpose can be made up of several sub-factors such as overarching purpose, mission, vision, values, brand promise, brand persona and more…
So to keep this simple for a pre-PMF startup, let’s just stick to one core question that helps to elucidate your purpose…
What’s your reason for being?
Other ways to think about asking this question are:
- Why does it matter to you?
- What does it matter to the world?
- What is motivating you to work on it for the next 10 years?
- If you were to succeed, what impact would that have?
To an extent, this is both the hardest and easiest of your foundational GTM questions to answer.
It’s easy because it requires no external validation at all, you just need to ask yourself – and your fellow founders – for the answers.
It’s hard because it’s asking a deep, philosophical question and will require some serious introspection. That said, the key here isn’t to wordsmith it to perfection…you’re not writing your IPO speech, it’s just important you capture the broad sentiment for why you’re creating this business.
Note – this isn’t just important for you, it’s important for your future team, investors and clients to understand too, and can offer a real injection of inspiration to those around you.
Pain
If there’s one question you cannot skip, ignore or half-arse, it’s deeply and properly understanding the market pain you’re trying to solve.
For some founders, the pain they’re solving for is their own. In other words they develop a product or solution to ‘scratch their own itch’ and over time realise that others have the same issues.
Some giant businesses have been created this way, from Shopify (where Tobias Lütke found how hard it was to build an ecommerce store from scratch) to Stripe (where the Collison brothers realised how painful it was to add payments to their ventures).
For others, it was an academic exercise (quite literally) where businesses were spun out of business school projects, including Google and Stickfix.
Whether it’s a pain you’ve experienced, an academic exercise or simply a brainwave you had in the shower, before betting the farm on building a business to solve a particular problem…it’s a good idea to validate the problem.
How?
The simplest solution would be to ask others, ideally folks who aren’t affiliated with you so they don’t feel obligated to validate your thinking.
There’s a whole book on this called ‘The Mom Test’ you can read to ensure you’re creating robust, valide feedback from these interviews.
To get started, I’d recommend you approach people on LinkedIn, summarise what you believe to be the problem, and ask if they’d chat to you about it if it resonates with them. This is a great way to get some early validation of the pain. If it resonates, they’re likely to agree to speak; and if it doesn’t they may well tell you that directly, or ignore you. Either way, you’re getting market signals.
Speaking to people is not the only way. You can also test demand by throwing up a simple landing page, and seeing how many sign-ups you get, with major plus-points if they’re willing to put down a deposit on the solution (think Kickstarter).
Again, I’d go further than looking at the volume of sign-ups and see how many are willing to speak to you. If you have a decent conversion rate, it’s a reasonable indicator they’re interested enough to give up their time, whilst if you can’t even get that small level of commitment there’s a sign it might not be that important to them.
Or you could analyse social media and forums to identify where people are complaining and asking for help with things…the same approach can be applied to attending industry events (what’s everyone’s challenge) or review sites like G2 and Capterra (what are the common gripes across vendors).
Solution
The next question you need to answer is: how do we actually help?
You’ll be able to go a lot deeper on the specifics of your product features and benefits in the next main segment of your GTM playbook under ‘Product’, so this is more about articulating a high level view of how you’ve solving the pain you’ve uncovered.
For example the pain you may have uncovered is how complicated it is for small businesses to file their end-of-year accounts.
So in your solution, you may say:
“Accounting for small, independent business owners is broken and we’re here to fix it. Our solution takes the hours of manual, error prone work done by these entrepreneurs and automates it through automated workflows and our artificial intelligence. In all, we reduce the time by 75% and error rate by 95%”
This is a great solution statement, because it also includes some specific, measurable benefits. Of course, if you’re at a very early stage and don’t have that kind of evidence yet, you can always work towards it, via a series of experiments, until you’ve nailed down a similarly powerful solution.
It’s worth noting that, if you’re still at the conceptual, pre-launch stage you should try to validate your solution is one that actually resonates with your target market.
For example you may well provide the fastest or cheapest solution, but if your prospects much prefer a slower and more comprehensive or premium experience then you won’t be solving their pain in a way they’re willing to pay for.
A great way to do this early-on is to invite initial alpha testers to try your product or service for free (for a limited period), and then track how many convert to paying customers.
Ideal Customer Profile
Your Ideal Customer Profile (or ICP as it’s typically known) is the type of company (not person) that is most likely to buy and gain value from your product.
It’s really important that your ICP doesn’t just buy initially and then churn, so over time you’ll need to adjust your ICP based partly on metrics such as their engagement, usage, gross and net retention.
However at this stage, you’re creating a hypothesis that a particular type of company is going to be more likely than others to buy your product.
The best way to set your initial ICP is to consider what type of company is most likely to feel the pain you’re trying to solve the deepest.
Let’s take the small independent business owner as an example again. Is a retailer of international homeware products more or less likely to need automated accounting software than a local cafe?
Given the more complicated supply, inventory control, purchase volume and possibly some international shipping, it’s more likely the former.
Your initial ICP may be focussed on retailers with international shipping who sell more than £1m a year but less than £5m. If they’re smaller, they may not have a need to simplify their account; if they’re larger they may have a dedicated accounting team.
And so you develop your initial ICP considering things like sector/vertical, geography, type of business (e.g. B2B v B2C, online v offline) and size (in revenue or headcount).
Over time, you’ll refine this and hopefully get even more detailed in your understanding of who’s your best fit customer, but for now this is a good starting point that provides you with focus.
If, as you try to sell to them, you realise that you’re not getting much of a response, or can’t close deals, then you can continue to test and iterate with different ICPs until you find one where you build some momentum. These will become your beachhead market.
Persona
Last but not least in your initial core set of ‘Market’ questions to answer, you need to start figuring out who within your ICP is most likely to want to buy and use your solution.
The process is very similar to defining your ICP. Hypothesise which type of person or role feels the pain you’re trying to solve most acutely, and would benefit from your solution the most.
In our example of independent retailers it would be quite easy here – almost definitely the owner.
But if you were selling to a more complex ICP, such as a large international retailer there could be many potential buyers, from CFO level to leaders of more specific functions like accounts, taxation, compliance etc.
It’ll be your responsibility to have conversations with all of them and work out who’s most likely to want to utilise your solution in their organisation, even if they don’t have final sign-off authority (these will become your Champion) and who does ultimately sign the contract and approve the budget (your Economic buyer).
These are the two most important personas for you to understand.
Once you’ve got an idea of who they are, you should start to systematically build a profile of them so you can identify them in future deals and also begin building messaging and campaigns that will resonate with them.
This means understanding things like what they’re responsible for and what their job entails on a day-to-day basis; where they sit in the organisation; how they learn and develop in their role; what motivates them; how they’re measured and even how long they’ve typically been in their position for.
Conclusion
So far we’ve covered off the 5 critical ‘Market’ questions you need to answer in your journey towards finding Product Market Fit.
In future posts we’ll cover off the core questions related to Product, Commercials and Channel.
If you’d like to get going with building your playbook, running experiments and gathering team feedback…you can get started for free with the GTM Works platform today!