You can’t get huge growth without a product that people want to use. Product-market fit is essential to getting there.
I’ve always liked both the term ‘growth hacking’ and the concept behind it. I find the creative process behind growth hacking to be very fulfilling — as long as I’m successful! I read at least an article a week, sometimes one per day, on growth hacking techniques. I rarely come across articles that talk about when it makes sense to growth hack and when it doesn’t. Some people seem to say “if you aren’t growth hacking you’re way behind!” I disagree.
When growth hacking doesn’t make sense
Not long ago a friend of mine called me up. He was super excited about his upcoming series A round of financing, and he was finally making some decent money. That wasn’t always the case. I remember another conversation with this friend a year earlier after he had just been forced to make a significant pivot after finding out that his original product idea was practically impossible to build, especially with how much money he had raised. He’d gone back to the drawing board and found a different idea that he felt was worth pursuing. Now they’re back where they started with a bit of a twist and things are working quite well for him. So, what’s the point?
Throughout the pivots my friends company went through there were a number of warning signs that he shouldn’t be pursuing growth hacking methods yet. His product-market fit just wasn’t there yet. Of course it’s always good to brainstorm, and even build some of the basics right into your core product, but premature scaling has killed many companies. Think you’re the exception? Have a read. Growth hacking is, in my mind, a scaling strategy once you have something worth selling or using. Finding ways to get your product installed by tons of people before it’s good enough can damage your brand and squash opportunities for the future.
Not only that, your likelihood of hacking growth increases dramatically when you have a product worth using. Getting people to share a product that isn’t worth sharing is a tough pitch. Yeah, maybe some of you that can successfully sell ice to eskimos can pull this off, but that’s the extreme exception. Expending effort to scale when you should be spending your time nailing your product hurts your company instead of helping it. With the limited resources in a startup you must focus on a few high impact aspects of your business, one of those is your product-market fit. Does your product really solve the problems you know exist in a usable way?
I dont care about your product...I care about your product-market fit ...— Namek Zu'bi (@namekz) July 8, 2014
If you’re struggling to find your product-market fit here are a few ways to help you get there:
- Develop and refine your KPI’s (key performance indicators) — your KPI’s are the basis for measuring whether or not you have achieved product-market fit. Keep these as simple as possible — I try not to have more than 5. They should be based on those metrics that are essential to your success. Some examples of KPI’s include app installs, visits, signups, purchases, cost per acquisition, etc.
- Measure and analyze how your product is performing agains those KPI’s — there are lots of tools to help with this. I personally like Mixpanel (Disclosure: I LOVE Mixpanel and have been known to spend hours pouring over data — I can’t help it though, I majored in Statistics and haven’t lost my love for data). The important thing is that you measure your successes with your KPI’s.
- Don’t scale if you’re failing with your KPI’s — getting things wrong is not what kills startups. Every startup gets things wrong. Not learning from your mistakes is what kills startups. Don’t try scaling when your KPI’s aren’t being met. That’s like trying to win a modern day war with bows and arrows. You’ll get eaten alive.
- Experiment, experiment, experiment — if you don’t know the very basic theories about experimentation then you had better familiarize yourself with them or you may wind up having run what you thought was a perfectly sound experiment but be way off course because of confounding variables, bias, or lack of replication (if you don’t know what any of these words mean, or only one of them, you may want to do some googling). Experimentation will get your business to the right spot as long as you survive long enough.
I keep track of questions that have helped me better understand our product at Comfy and how we can continue the long journey for the product-market fit — yes, it is a long journey but don’t hold everything until that moment of nirvana because it will likely never come. You must find out when your product is “good enough” to start scaling. Here’s an article for more on finding out if your product is “good enough.” How does this process align with your investment dollars? See the tweet below.
2014: 1st seed round = product market fit, 2nd seed round = scale, series A = profitability— Danielle Morrill (@DanielleMorrill) June 20, 2014
- What is the most valuable service we offer to our customers? What are our customers really saying after using our product or service? You have to get out of the building for this one.
- If I could touch our product with a magic wand, what would I change? Don’t get too carried away with this one, but I find that this questions really helps my vision. Sure, maybe your idea sounds impossible, but I’ve found that impossible is usually doable once you get the right resources behind a problem.
- Are transactions happening on our website? If so, what percentage of users successfully transact on our website? If not, what is inhibiting our customers from transacting on our website?
- If we as founders were to fire ourselves and we were hired on brand new tomorrow, what direction would we take our business? This helps me disengage emotionally and see the problems and company strategic vision more clearly.
About me: I’m an entrepreneur. I love writing about what I am learning.