6 ms·

market fit

steve_gh 4y ago
Interesting piece. From my position (running innovation programmes inside a big mature organisation) the idea of channel / offer fit is just as important internally as externally. You need to be able to explain the idea in ways that internal stakeholders understand, and describe it in terms of channels or offers they understand. In the organisation I work in, we are basically consultants - so any new innovation has a much greater chance of success if it can be described in a way that fits with a time and materials sale. Building a product is much harder, and can take years to gain traction - more internally than externally. I'm sure the same applies with VC funding - having a product or service that maps onto your investors' worldview makes the conversations much easier.
peteforde 4y ago
It's possible that the founders of businesses that expect to advertise on Google/socials could put this to work, but it's not a general case best practice since most businesses are not launched through targeted keyword auctions. The problem I have with this essay, after sitting with it for a few minutes, is that it's predicated on the notion that every failed startup is a great idea that deserves to exist, but just hasn't found its paying customers, yet. Sadly, this is simply not true. Lots of founders drink their own Kool-aid and build significant amounts of IP and software and merchandise before actually verifying that real people want to give them real money for it. Telling them that they just haven't found the right Instagram demographic is actively harming them now and in the future. Look, I often tell founders that they need to identify what success looks like, and what failure looks like, and then stick to those definitions to the maximum degree possible. This gives us the opportunity to celebrate our wins (which can otherwise be fuzzy until you ring that IPO bell) but just as importantly, it gives founders the ability to differentiate between "don't listen to the haters" and "it's time to be honest with ourselves about the fact that this isn't going to work". There's an art to knowing when to stop. You really don't want to allow the sunk cost fallacy to damage your ability to move on to the next idea. After all, our time is finite, and the optimal time in your life to start a company is even more so.
- aonsager 4y ago
  This is a good point, and I think it also applies when chasing after product/market fit. "Channel" is a concrete redefinition of the vague term "market" that describes an actual group of people plus the means of reaching them. "Offer" is a redefinition of "product" that includes a strategy for communicating its value. These are pretty important distinctions, and I agree with the author that this framework holds a lot of value. The question remains, how and when do you decide that your product just doesn't have enough value to anyone you might pitch it to? Obviously you start your venture believing that it has value, and at any point your next iteration might reveal the magic combination. Or it might never come. I think there is no good solution, and it is, as you say, an art.
  - mettamage 4y ago
    > The question remains, how and when do you decide that your product just doesn't have enough value to anyone you might pitch it to? I feel investors and traders can answer this to some extent. The framework I'd have as a trader, and to a lesser extent as an investor, is simply an expected value calculation. I put x amount of time in with milestone a, b, c and d. I expect on average to make y amount of money, which means that I need to make p revenue on milestone a, q revenue on b and so on. Obviously this is a super rough outline and one could do without the milestone idea and simply look at it as a 1000 hour investment hoping to make $20000 + growth potential, for example. If you didn't hit you target you quit. I already hear some people say: but what if it took 1001 hours to hit the motherlode? Well, sure, but you can always ask the same with trading as well. What if the price would've gone up even more? Shouldn't you have hold your stocks/options? No you shouldn't. In general, that'll be an unstable psychological basis to operate from and the biggest mistake to make in trading/investing is to not stick to your initial strategy. Anyway, there are probably more perspectives, but I think the trading/investing perspective has a framework of answering this question. For me personally, it answers it in a satisfactory way. My only issue with it is that it's purely from a monetary perspective and it doesn't answer anything related to the emotions of a founder and how it deals with stopping after a 1000 hours when it turns out not enough revenue has been made. So the perspective does need to be augmented with a perspective that has a grasp of the emotional side of entrepreneurship. Moreover, entrepreneurship offers following your own personal mission while solving problems in a way you want to solve them. It's the ultimate sandbox game in the "adult people world" when it comes to "having a job". So some entrepreneurs might even argue that it's not about money at all. In that case the trading/investment perspective offers little value, especially if you can fund your own endeavour.
viksit 4y ago
Brian Balfour wrote about this a few years ago and I find that framing quite useful too (having led both innovation orgs within large mature companies as well as startups). Highly recommend a read. He talks about market - model - channel - product fit. In that order. https://brianbalfour.com/essays/product-market-fit-isnt-enough https://brianbalfour.com/essays/product-market-fit-isnt-enou...
_pdp_ 4y ago
There are a finite number of channels and as a result a finite number of options. And yeah, the market is an abstract place.
marban 4y ago
At first, this reads like the usual method that drop-shippers use.
mettamage 4y ago
This checks out when I look at the coding bootcamp that I worked for. They advertized a lot on Facebook and that was more or less it. SEO was also a thing, but definitely secondary as that was company-wide, but we were the only European location.
jwr 4y ago
As a (solo) founder of a SaaS, I really dislike this take. It sounds like a purely sales&marketing point of view — sell it and forget it. It might work if you are selling physical products, or anything which is not subscription-based. But if you are running a SaaS, you need to optimize long-term retention (minimize churn). In order to do that, you have to deliver a good product that people want to pay for, over the long term. This is what you need to optimize, not "channel/offer fit".
- cestith 4y ago
  I think in the author's phrasing, you'd minimize churn by maximizing the value proposition of your offer for customers looking at renewal or cancellation. I know it's popular to think of customer acquisition and customer retention as entirely separate topics. Tilt your point of view just bit and with a subscription service you're really acquiring not one or even two kinds of customers. It's three. In one instance, you're acquiring fresh customers who aren't familiar yet with the product class and are getting started. In another, you may be luring customers away from other, similar services. Finally, come renewal time you're sort of reacquiring your existing users. The decision the customer makes in any of these scenarios is different from the other two. It's still your job to get as many potential customers to decide on your offer in each of them.
deleted 4y ago
[deleted]
lmeyerov 4y ago
I love this: - 'Distribution' is really the hot button this is about, even if I didn't see the word there. "Build it and they will come" is rare. Such product/market fit thinking sweeps that difficulty under the rug, while channel looks at it straight on. The article's notion of 'order' also gets into repeatable selling motion for after a customer is in the funnel -- customer success etc etc -- which can also be tough. - ex: For us as an enterprise product, we found amazing users who would go as far as spending every evening and weekend to investigate their data. Being a tool investigators love (sec/fraud/social/blockchain... and now commercial analysts like supply chain) means initial product/market were just about there. But..... that didn't mean we just sold and grew. Figuring out the selling process is huge: how prospectives find it, try it, make their decision, purchase it, etc. Especially for 5-7 figure software, getting a predictable (& ultimately scalable) journey can mean figuring out a lot of smart targeted nudges & streamlining between your external channel partners + in internal sales/marketing/success folk.

Interesting piece. From my position (running innovation programmes inside a big mature organisation) the idea of channel / offer fit is just as important internally as externally. You need to be able to explain the idea in ways that internal stakeholders understand, and describe it in terms of channels or offers they understand. In the organisation I work in, we are basically consultants - so any new innovation has a much greater chance of success if it can be described in a way that fits with a time and materials sale. Building a product is much harder, and can take years to gain traction - more internally than externally. I'm sure the same applies with VC funding - having a product or service that maps onto your investors' worldview makes the conversations much easier.

peteforde 4y ago

It's possible that the founders of businesses that expect to advertise on Google/socials could put this to work, but it's not a general case best practice since most businesses are not launched through targeted keyword auctions. The problem I have with this essay, after sitting with it for a few minutes, is that it's predicated on the notion that every failed startup is a great idea that deserves to exist, but just hasn't found its paying customers, yet. Sadly, this is simply not true. Lots of founders drink their own Kool-aid and build significant amounts of IP and software and merchandise before actually verifying that real people want to give them real money for it. Telling them that they just haven't found the right Instagram demographic is actively harming them now and in the future. Look, I often tell founders that they need to identify what success looks like, and what failure looks like, and then stick to those definitions to the maximum degree possible. This gives us the opportunity to celebrate our wins (which can otherwise be fuzzy until you ring that IPO bell) but just as importantly, it gives founders the ability to differentiate between "don't listen to the haters" and "it's time to be honest with ourselves about the fact that this isn't going to work". There's an art to knowing when to stop. You really don't want to allow the sunk cost fallacy to damage your ability to move on to the next idea. After all, our time is finite, and the optimal time in your life to start a company is even more so.

aonsager 4y ago
This is a good point, and I think it also applies when chasing after product/market fit. "Channel" is a concrete redefinition of the vague term "market" that describes an actual group of people plus the means of reaching them. "Offer" is a redefinition of "product" that includes a strategy for communicating its value. These are pretty important distinctions, and I agree with the author that this framework holds a lot of value. The question remains, how and when do you decide that your product just doesn't have enough value to anyone you might pitch it to? Obviously you start your venture believing that it has value, and at any point your next iteration might reveal the magic combination. Or it might never come. I think there is no good solution, and it is, as you say, an art.
- mettamage 4y ago
  > The question remains, how and when do you decide that your product just doesn't have enough value to anyone you might pitch it to? I feel investors and traders can answer this to some extent. The framework I'd have as a trader, and to a lesser extent as an investor, is simply an expected value calculation. I put x amount of time in with milestone a, b, c and d. I expect on average to make y amount of money, which means that I need to make p revenue on milestone a, q revenue on b and so on. Obviously this is a super rough outline and one could do without the milestone idea and simply look at it as a 1000 hour investment hoping to make $20000 + growth potential, for example. If you didn't hit you target you quit. I already hear some people say: but what if it took 1001 hours to hit the motherlode? Well, sure, but you can always ask the same with trading as well. What if the price would've gone up even more? Shouldn't you have hold your stocks/options? No you shouldn't. In general, that'll be an unstable psychological basis to operate from and the biggest mistake to make in trading/investing is to not stick to your initial strategy. Anyway, there are probably more perspectives, but I think the trading/investing perspective has a framework of answering this question. For me personally, it answers it in a satisfactory way. My only issue with it is that it's purely from a monetary perspective and it doesn't answer anything related to the emotions of a founder and how it deals with stopping after a 1000 hours when it turns out not enough revenue has been made. So the perspective does need to be augmented with a perspective that has a grasp of the emotional side of entrepreneurship. Moreover, entrepreneurship offers following your own personal mission while solving problems in a way you want to solve them. It's the ultimate sandbox game in the "adult people world" when it comes to "having a job". So some entrepreneurs might even argue that it's not about money at all. In that case the trading/investment perspective offers little value, especially if you can fund your own endeavour.

viksit 4y ago

Brian Balfour wrote about this a few years ago and I find that framing quite useful too (having led both innovation orgs within large mature companies as well as startups). Highly recommend a read. He talks about market - model - channel - product fit. In that order. https://brianbalfour.com/essays/product-market-fit-isnt-enough https://brianbalfour.com/essays/product-market-fit-isnt-enou...

_pdp_ 4y ago

There are a finite number of channels and as a result a finite number of options. And yeah, the market is an abstract place.

marban 4y ago

At first, this reads like the usual method that drop-shippers use.

mettamage 4y ago

This checks out when I look at the coding bootcamp that I worked for. They advertized a lot on Facebook and that was more or less it. SEO was also a thing, but definitely secondary as that was company-wide, but we were the only European location.

jwr 4y ago

As a (solo) founder of a SaaS, I really dislike this take. It sounds like a purely sales&marketing point of view — sell it and forget it. It might work if you are selling physical products, or anything which is not subscription-based. But if you are running a SaaS, you need to optimize long-term retention (minimize churn). In order to do that, you have to deliver a good product that people want to pay for, over the long term. This is what you need to optimize, not "channel/offer fit".

cestith 4y ago
I think in the author's phrasing, you'd minimize churn by maximizing the value proposition of your offer for customers looking at renewal or cancellation. I know it's popular to think of customer acquisition and customer retention as entirely separate topics. Tilt your point of view just bit and with a subscription service you're really acquiring not one or even two kinds of customers. It's three. In one instance, you're acquiring fresh customers who aren't familiar yet with the product class and are getting started. In another, you may be luring customers away from other, similar services. Finally, come renewal time you're sort of reacquiring your existing users. The decision the customer makes in any of these scenarios is different from the other two. It's still your job to get as many potential customers to decide on your offer in each of them.

deleted 4y ago

[deleted]

lmeyerov 4y ago

I love this: - 'Distribution' is really the hot button this is about, even if I didn't see the word there. "Build it and they will come" is rare. Such product/market fit thinking sweeps that difficulty under the rug, while channel looks at it straight on. The article's notion of 'order' also gets into repeatable selling motion for after a customer is in the funnel -- customer success etc etc -- which can also be tough. - ex: For us as an enterprise product, we found amazing users who would go as far as spending every evening and weekend to investigate their data. Being a tool investigators love (sec/fraud/social/blockchain... and now commercial analysts like supply chain) means initial product/market were just about there. But..... that didn't mean we just sold and grew. Figuring out the selling process is huge: how prospectives find it, try it, make their decision, purchase it, etc. Especially for 5-7 figure software, getting a predictable (& ultimately scalable) journey can mean figuring out a lot of smart targeted nudges & streamlining between your external channel partners + in internal sales/marketing/success folk.