The Illusion of Product-Market Fit

Brad Feld published a very thought-provoking post about product-market fit (PMF) a few weeks ago:

The Illusion of Product-Market Fit for SaaS Companies

The piece that really resonated with me was the list of the 4 key myths about product-market fit:

  • Myth #1: Product market fit is always a discrete, big bang event
  • Myth #2: It’s patently obvious when you have product market fit
  • Myth #3: Once you achieve product market fit, you can’t lose it
  • Myth #4: Once you have product-market fit, you don’t have to sweat the competition

I believe we’re both in agreement on one other thing: companies tend to “claim victory” on finding product-market fit prematurely, but this is when Brad’s view and mine start to diverge.

Brad lays out a monthly-recurring-revenue(MRR)-based milestones, outlining when you only *think* you’ve found PMF, when you’ve actually found it, and when myths #3 and #4 start to kick-in.

Reflecting on the market the company I currently work for is in, automatically caused some red flags to pop up in my head.  In our industry, a single, “small” transaction may yield $50K in MRR. So 3-4 clients can easily get us to Brad’s “PMF sweet-spot” but I doubt it would have made sense to claim PMF victory then.  Granted our case is extreme, but it may shed some light on more industry-agnostic milestones. Looking at # of users, clearly takes us in the wrong direction, in ways far beyond the different-users-pay-for-different-product-plans argument that was discussed in the comments to Brad’s post. Perhaps a more generic way to define these milestones is as a percentage of the total-addressable-market (TAM) for that product. Without going into a lengthy debate about how to go about assessing it, I suspect this is what was implicitly set Brad’s MRR thresholds.

The part of the blog that really irked me was the discussion on valuations through a hyper-growth-centric lens. But I’ll leave opening the “growth obsession” pandora box for a different post and share some parting thoughts about PMF instead:

A good analogy for finding PMF comes from Physics: finding resonance with your customers and getting on the same wavelength as them. Note that this can be accomplished both by changing your product and by changing your customers (market pivot). Changing your wavelength is a gradual, continuous process (anti-myth #1), you know when you’re close to being on the same wavelength but it’s hard to tell if you’re exactly there (anti-myth #2). Since both your product and your customers constantly change (wavelength), it’s easy to get out of sync again (anti-myth #3) and it’s clear that your actions don’t prevent others from getting on the same wavelength (anti-myth #4).

Perhaps another good analogy from the same discipline is thinking about PMF as an unstable equilibrium often illustrated as a ball at the top of a hill (as opposed to a stable equilibrium illustrated as a ball at the bottom of a valley). You first need to roll the ball up the hill (find PMF), but then every little nudge can get easily get it rolling down the hill again.

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The Illusion of Product-Market Fit

Building Badass Users

This is one of the better talks on product management, user experience and behavior science that I’ve seen recently. It was given by Kathy Sierra in the last Mind The Product conference:

Building Badass Users

It’s always hard to summarize content delivered by a great speaker. So much gets lost in translation. But my best attempt to do so, in this case, is below:

Kathy’s initial premise is that the key attributes of a successful product don’t live in the product – they live in its users.  People want to be amazing in what the tool enables them to do, not at using the tool. For example: people want to be amazing photographers, not amazing at using your camera.  So what really matters is the “post-ux ux”, what happens in the real world, after people have used your tool.

Furthermore, the things that prevent users from completing the user journey (becoming really good at the context they’re using the tool for) are derailers that live outside of your tool. Therefore, the solution, is not adding more motivation for using the tool, but reducing/minimizing the derailers. Those, in turn, tend to have a common root cause – a reduction in ability and/or willpower caused by cognitive leaks.

She then suggests six ways to reduce cognitive leaks:

  1. Delegating usability from your head to the real world. Often times the opposite happens as a result of trying to create “simple” or “streamlined” UIs.
  2. Creating defaults and smart filters. Making choices is cognitively expensive.
  3. Reducing the need for willpower. Turning actions into habits.
  4. Making it easier to focus. Using the brain’s “natural” attention grabbers: scary things, faces with strong emotional content, innocent/cute things, things that change (visually). And making sure that you’re not unintentionally using these things to draw attention in the wrong direction.
  5. Helping the brain let it go. Giving clear, clean feedback that the user can trust, on actions that the user have taken.
  6. Giving them faith that you know what it’s really like. We often act as if the actions we expect the users to take are simple and easy, when we should acknowledge that some things are hard. Examples: Wasabi’s “I’m freaking out” button, Kindle Fire’s “Mayday” button.
Building Badass Users

Saying “No” Systematically

“The essence of strategy is choosing what NOT to do” – Michael Porter

And this is a good article on this topic by Vijay Balanchandran:

Say ‘No’ to product ideas systematically

Vijay argues that there are three main scenarios where saying “No” to customers will create friction: when expectations are set incorrectly by sales and marketing; when a customer moves out of your target market; and when customers make niche requests that don’t represent the overall market need.

He postulates that the latter two are “ok” but the former is something that you should fix. I’d argue that whether the latter two are “ok” or not really depends on the market you’re in:  in markets where the customer has significant leverage (massive accounts, limited total number of customers, intense competition, etc.) saying “Yes” to some of the requests that fall into the latter two bucket is actually the right thing to do. Product integrity doesn’t automatically trump all other business concerns.

But what I really like in Vijay’s article is the tool that he proposes for dealing with the first issue, which I’ll term “Expanded-MoSCoW“. In MoSCoW prioritization, features are classified into four buckets: Must-have, Should-have, Can-have and Won’t-have. Vijay focuses on the last bucket and suggests expanding it to: “Never-have”, “Not-soon-enough” and “May-not-have”.

This additional clarity on what the product is NOT intended to do (not even in the future), and our level of certainty around those statements, helps set clearer expectations with both internal and external stakeholders and drives better alignment. Furthermore, it can be expanded beyond the product realm into broader conversations about corporate strategy.

What other frameworks have you used effectively for saying “No” systematically?

Saying “No” Systematically

Clarity: Good PM, Bad PM

I decided to kick off this blog with a timeless piece rather than a more current piece of content:

Ben Horowitz‘s legendary Good Product Manager, Bad Product Manager article.

Amazingly, though written 18(!) years ago, it still holds true and a must read for any Product Manager.

Patrick Lencioni makes a very strong case in The Advantage (which probably merits its own blog post) for overcommunicating and reinforcing clarity in the organization. In my mind, one of things that makes this piece timeless is that it focuses exactly on that – driving clarity, specifically role clarity in this case, and specifically through focusing on good vs. bad behaviors.  Values and other more abstract concepts are important, but in the end of the day, if they’re not broken down into a concrete set of behaviors, they lost a lot of their power.

What is your favorite clarity reinforcing piece?

Clarity: Good PM, Bad PM