1.5. Product/Market Fit. Problem/Solution Fit

There is a saying that learning from failure is often the key to success. Fortunately, in the 21st century, with the availability of the Internet, we can analyse failures in more details, learn much faster, and become better, and do all of that on the basis of not our own failures, but those of other people or companies. All it takes is to google “business failures” and there are millions of results with apt examples. In addition to those examples, one can easily notice that there are a number of reasons why startups fail: because of the cash flow management, weak leadership, bad partnerships, but most importantly because startups did not investigate the market and find the market fit.

Start From Problem/Solution Fit

Startups fail, because they did not investigate the market. The market is a slippery notion, it’s like a spoiled child that might not be happy with the time of the appearance of the product (bad timing) or the place of the appearance of the product (wrong location), or a person might have just created a product that no one likes or needs. Therefore, the first thing that a businessperson has to do is make sure to find a problem/solution fit, i.e. identify whether there is a problem that one’s product will be able to solve. Do not forget that a product is a combination of a problem and a solution: if there is only one of these, the product does not exist.

What Is Product/Market Fit?

You have realised your idea and created the product. Not A product, but THE product that is right, appropriate, and above all, necessary. Your product can perfectly address and solve the customers’ problems, there is a strong demand for your product in the market; your product can grow, flourish, develop, and earn you a lot of money. Everything taken together is market fit. Market fit is when your product matches the large market expectations.

Do You Have a Product/Market Fit? Ask Your Customers!

In the previous articles it was more than once emphasised that in order to get a full picture of the necessity of your business or product in the market, whether the product is the solution to the customer’s problem, you need to ask your customers, because they know better. The same rule applies to the product/market fit. Approach your (potential) customers and ask them how they would feel if your product or business disappear. Would no one notice? Would they feel happy? Then I’ve got bad news for you. On the other hand, if, let’s say, 40% of people would feel confused and dazed, feel highly disappointed or even begin to cry, then, my friend, you’re on the right market. Ask your clients — they know better!

If the Retention Curve Smiles Things Will Work Out

In order to understand how your things are going on, whether you are doing well in the market, it is important to monitor your achievements and progress. A retention curve works as a visual representation of the number of customers, sales, or orders placed over a certain period of time.

When you start your own business, you may at once become super-duper successful with 100% of sales and high revenue, but just after 10-20-30 weeks, for example, your sales and accordingly your retention curve may decline, eventually reaching very few or even zero clients. A “smiling” curve, on the other hand, means that at first your sales might have been high, but with time began to decline. You, as a smart entrepreneur, introduced some changes to your product or took advantage of the network effects, and was able to resume the growth of your sales and/or made them grow even more. Accordingly, the main point here is not growing quickly, but to stay on the market and be in-demand. The long run is what matters most.

Summing Up

Don’t be afraid to embrace failure, as each and every person has experienced failures in one’s life. There is also something good about failures: they provide a valuable lesson of what to and not to do, they help grow, and most importantly force people not to stop, but to keep pushing forward. Nevertheless, if there is an opportunity to avoid it, then why not? Why not to learn from someone else’s failures and become successful from the first try.