It's a simple statement, but not a simple thing to do. Product/market fit is truly the ONLY thing that matters and achieving it before you run out of money is the key to winning. It's why companies raise a whole bunch of money: MORE MONEY = MORE TIME = MORE LIKELY TO WIN
...or not. Sometimes more money equals more waste, too. And we are seeing this a great deal right now. Sometimes more time is not the best thing to give an entrepreneur. Finding that balance of time and money will help us be hungry and creative enough to find the best product/market fit.
Finding that Product/Market Fit
There is no silver bullet here and I've found it incredibly enlightening to be on the product side of this one (not the pundit or consultant side). However, I've come across some really great resources that will help streamline the process of finding product/market fit:
- SOLVE THE RIGHT PROBLEM - If this seems obvious, you are fooling yourself. One of my favourite stories of all time, retold by Aza Raskin, is that of Henry Kremer's search for a human-powered flying machine. Read it. Turns out the problem wasn't that they needed to solve human-powered flight. The problem was that the prototypes took to long to test. Fail fast and iterate often.
- LIMIT YOUR MARKET - finding product/market fit for EVERYONE is like finding a pair of pants that fits everyone. It doesn't exist. Seriously. Narrow your market. And not to 18-35 year old males. Figure out who that ONE person is. Not a profile or a fictional person, either. If you can't find a single living being that is that person, you don't have a market. Hell, solve it for yourself if you have to, but be careful because you are seriously biased.
- EAT YOUR OWN DOGFOOD AND REALLY TASTE IT - do you really think what you've built is amazing? Seriously? I'm the first to admit that though Buyosphere is coming along nicely, it's quite a ways away from being useful to anyone but someone who likes to keep track of the stuff they buy...and even then it is clunky as all heck. I can admit that. And I'll continue to be my biggest critic and breaking my own product until I can honestly say, "This is freakin rad". I won't be happy until that day.
- RESEARCH RESEARCH RESEARCH - Talk to your customers and potential customers. This one is hard because you have to know what information to filter and what to use. But I love the story of AirBnB's early days of flying to New York every weekend and knocking on doors. Not only did they use their own service, figuring out what sucked and what worked, but they talked to potential customers, hosts and travelers to find out more information. This is where limiting your market can also come in very handy!
- LOOK TO OTHER MARKETS FOR CLUES - I love reading outside of my field. Innovation can be found in other markets and examples unrelated to yours. Connect the dots. Hell, much of the innovation of the media industry has come from the porn industry. They solved the distribution of media to viewers before the rest of the industry realized there would be a demand. Who is capturing an audience that you can beg, borrow and steal ideas from?
- UPDATE OLD IDEAS WITH NEW TWISTS - Groupon is just a new way to present coupons. That's it. There is nothing seriously innovative about it. Except that it IS innovative in that it gives HUGE discounts and not just a $0.05 here and there. Oh...and the way it's described as sexy instead of cheap to use a Groupon.
- UNDERSTAND AND USE INTRINSIC MOTIVATORS - a company hitting the market with lots of buzz and activity does not necessarily mean there is a product/market fit. In fact, initial buzz and growth may be coming from extrinsic motivators (the ever-popular 'gamification' of today - as Kathy Sierra calls it "the high fructose corn syrup of engagement"). Motivators like badges and coupons and deals are temporary solutions and actually lead to demotivating your customer base as they diminish in value. Instead, think INTRINSIC motivations such as Challenge, Curiosity, Control and Competition. Motivation has loads of research on it now (I'm currently reading Dan Pink's DRIVE, which summarizes much of the research). The key here is to match the RIGHT intrinsic motivators to your market.
Doing all of the above will not guarantee product/market fit. You still have to experiment and be agile...and be willing to persevere through until you nail it. The issue may be as simple as timing...or technology...or messaging...or being in the right place at the right time. But you increase your chances of hitting the sweet spot by being out there and agile.
The only guarantee of 'winning' is to find that product/market fit before you run out of money...or even after you run out of money to find a way to keep tweaking it. We're still working on it ourselves and I'll let you know the moment we nail it. ;)