Rodrigo Madanes has got 25 years of experience designing and developing successful web and mobile products at companies such as Skype and eBay. Rodrigo will talk about exploring product/market Fit, sharing his lessons learned about first focusing on the needs of a specific user segment. Rodrigo dives into what it means to find product/market fit, some techniques for finding it, and how long it can take. By way of example: At Skype, in their early-adopter phase, they still had 40-50 million registered users. The wave can take 10-15 years, and it’s not about size of user base.
How Do You Recognise Product/Market Fit?
If you’re sensible, after launching your product you’ll spend some time searching for product/market Fit before you try and aggressively take what you believe your market to be. But working out when you have product/market fit is a tricky thing. Having a growing user base doesn’t necessarily mean that you’re solving a real problem for a defined market, or that you’ve built something that people actually want – it might just mean that you have great marketing.
Size of user-base isn’t actually that helpful, so you need to try and look for other behaviours and, more importantly, more specific segments of your audience. Do you get a lot of return visitors? Do you have good Net Promoter Scores? Are your users giving you money? Do you have stable cohort retention curves? These are the signs that indicate a potential product/market fit!
Once you’ve found that fit, then you should go out and find all the people who make up that audience, and finally take the market. As observed by Marc Andreessen, a startup really has two very different phases of existence – Before Fit and After Fit – and thus two different sets of goals and behaviours. Don’t get those two mixed up.
Taking this a step further, you need to find the specific set of features that matters to a specific, defined market, then work out exactly how to reach that market (i.e. which channels to use) and invest just in those! However, you’ll likely find, as most startups do, that although you’ll get a ramp-up in users when you hit product/market fit, your growth will gradually plateau. It’s important to remember that growth is bumpy, and as your first product/market fit growth spurt starts to slow, you should already be looking into the next set of features that will trigger another round of fit-based growth.
Next, it’s important to focus on the intensity of NPS (or some other measure of user love for your product). Put simply, if you try and build something for everyone, you’ll build something that’s great for nobody. Focus on the users who really love your product, and build for them, as they’re more likely to be a defined market, and they’re more likely to help you grow.
And finally, on the topic of defined markets, focus on specific segments of your potential audience. Realistically, your audience is a complex and multi-faceted mess of different types of people, so you need to investigate (using things like cohort analysis and segmentation) to work out exactly what defines your market (e.g. what mobile platform they’re using, location, wealth, life stages…), and then work out how to reach them.