By Anthony Durante, Program Manager, Bridgeworks Enterprise Center
At least once per week, I have this conversation with a prospective entrepreneur:
Entrepreneur: “I have an awesome idea for a product!”
Me: “What problem are you solving for your potential customers?”
(Entrepreneur responds with a long list of features that he or she is planning to build into the product.)
Me: “But what does the customer actually NEED the product to do?”
(Entrepreneur launches into another excited explanation of how awesome the product is and how everyone will need one.)
Me: “Have you actually spoken to a potential customer about your idea, or maybe gotten one to agree to buy or test the product when it’s built?”
Entrepreneur: “No, why would I have done that? I have been working on this awesome idea. Isn’t it awesome?”
Internet entrepreneur and venture capitalist Marc Andreessen defined product/market fit as such: “Product/market fit means being in a good market with a product that can satisfy that market.”
Dan Olsen, the author of The Lean Product Playbook, further defines product/market fit as the end-game where a startup has built a product that creates significant customer value. “This means that your product meets real customer needs and does so in a way that is better than the alternatives,” Olsen explains.
Put simply, if you have a quality product that solves a painful problem for a lot of people, then you can probably build a company around making that product. Ironically, this seems to be one of the primary stumbling blocks for many of the prospective entrepreneurs that I come across.
Finding Product/Market Fit – Customer Discovery
I recently watched a great video (see below) posted by Philadelphia venture capital firm First Round Capital, where Michael Sippey, a former Twitter executive, says: “If you can’t get 30 meetings, you don’t have a product.” In other words, if you can’t find 30 target customers who are willing to sit down with you to discuss how you are going to solve a very painful problem for them, then you’re probably not solving a real problem that they have.
Steve Blank, Stanford University professor summarizes this process in five words: “Get out of the building.”
The crux of this is simple. As an entrepreneur, you need to validate your assumptions as quickly and inexpensively as possible. This means getting out in front of your customers, asking simple basic questions, and listening carefully to the answers. Sippey says that this process can be covered in a simple one-hour meeting by asking the following:
- We think you have this problem. Do you have this problem?
- How are you solving the problem today?
- How does this problem impact your business?
- How much are you spending to solve the problem?
- Here’s how we think that we can solve that problem.
- Feedback and next steps
What can you learn?
Obviously, some of the key discoveries you can make through this process are:
- The customer really doesn’t have the problem.
- The problem isn’t as big as was originally expected.
- The proposed solution misses the mark in a major way.
Although these discoveries may sound catastrophic, it’s extremely important to learn them very early on in the process. Otherwise, considerable amounts of time and money may be wasted on creating something no one will buy. At the same time, by getting this information you can redirect your efforts to build the ideal product that solves a big problem in the market.
There are other key things that can be discovered during this process. One might be the realization that the person you thought was the customer may not be. For example, there may be a distributor between you and the end user who will be influential in getting your product out into the market. It may turn out that the distributor is really your customer – not the end user.
Another could be that the end user whose problem you are solving may not be the person who makes the buying decision. Although it will be early in the process to make this discovery, it will be something that you want to keep in mind as you get closer to going to market because your messaging will need to be customized for each group in the decision process.
What it’s all about
Mr. Sippey brings goals of this customer interaction process together very succinctly in three questions,“What problem are we solving? Who are we solving it for? How will we measure success?” These are the key questions to be answered through face-to-face interactions with the target customer.
In the end, the key thing an entrepreneur wants to do is expose themselves and their product idea to the market as early as possible. The sooner they can validate their assumptions, the quicker they can craft the right solution for their future customers.