Startups require a solid foundation of product/market fit before progressing up the pyramid and scaling the business.
Achieving Product/Market Fit
- Paul Graham: The mantra at Paul’s successful startup incubator YCombinator is “make things people want.”
- Steve Blank: In Steve’s book Four Steps to the Epiphany he writes: “Customer Validation proves that you have found a set of customers and a market who react positively to the product: By relieving those customers of some of their money.”
- Marc Andreessen: A couple years ago Marc wrote the following on his blog: “…the life of any startup can be divided into two parts – before product/market fit and after product/market fit.” He goes on to write: “When you are BPMF, focus obsessively on getting to product/market fit. Do whatever is required to get to product/market fit. Including changing out people, rewriting your product, moving into a different market, telling customers no when you don’t want to, telling customers yes when you don’t want to, raising that fourth round of highly dilutive venture capital — whatever is required.”
In my experience, achieving product/market fit requires at least 40% of users saying they would be “very disappointed” without your product.
Race up the Pyramid
Once you have achieved product/market fit, it’s time to accelerate through the next steps of the pyramid and then begin scaling your business. Here’s a brief description of what to do at each of the steps before scaling:
- Promise: Highlight the benefits described by your “must have” users (those that say they would be very disappointed without your product).
- Economics: Implement the business model that allows you to profitably acquire the most users.
- Optimize: Streamline a repeatable, scalable customer acquisition process by testing multiple approaches and tracking to improve the right metrics.