This post is the fourth in a series of ten posts about the 10 key reasons your consumer startup will succeed.
I speak with hundreds of aspiring consumer entrepreneurs and review thousands of executive summaries and pitches each year. From all this activity, certain patterns emerge that remain consistent with successful consumer startups. In this series of 10 blog posts, I will list the top 10 reasons consumer startups succeed. Note that all seem necessary, but none on their own are sufficient.
#4 Product/Market Fit
You’ve started a company, launched a product, and are trying to find that magical product/market fit. To start, you should read Marc Andreessen’s article: “the only thing that matters is getting to product/market fit
.” In our last few posts, we talked about the importance of your startup’s vision, team, and culture. Once those are locked in place, the team should be laser-focused on building a great product that delights their customers. The biggest recurring obstacles to product/market fit are that the product doesn’t solve a real need
, that it’s not hitting the right audience
, or that it’s just not ready for prime time
. In this post, we’ll help you identify the challenges and learn how to address them.
One of the first steps is setting the right metrics. Early metrics for the consumer startups we tend to invest in generally fall into two broad categories: growth and engagement. You should be continually checking your metrics to see if you have found a solid group of people (that’s growth) who are using your core features (that’s engagement). We care about both. A great consumer product drives high viral adoption and deep daily usage (Facebook, Snapchat, and many more). You know you’re on to something special when you’ve created a new daily habit for consumers, which is very hard to do.
We’re often asked what the right metrics are to show product/market fit. It really depends on your specific product. If we were to generalize, you should be striving for thousands of initial customers with 25-35% coming back daily (or at least weekly). There’s a time to employ viral marketing techniques to achieve hyper growth, and that time is after you’ve achieved product/market fit. If used too soon, you’ll see massive churn from the high number of initial downloads or registrations.
If you’re struggling with product/market fit or seeing massive churn, here are a few top reasons to consider:
Not solving a real need: this is one of the most common reasons. There are already solutions in the market that solve the problem you are trying to solve. Solution
: back to the drawing board. Revisit our post on “a vision worth fighting for
” for more on this topic.
Not targeting the right audience: perhaps there was an outside factor such as press, a celebrity mention, an App Store promotion, or even an unexpected ProductHunt post that shared your product with the world. Lots of people saw it, and that initial user bump feels great, but those early adopters didn’t have an ongoing need for it so they stopped using the product quickly. Solution
: closely examine the early adopters that did stick around, even if it’s small. What do those people have in common? Learn as much as possible, and then find creative ways to target more people like them.
Product wasn’t ready for prime-time: this is the most frequent reason we hear startup founders articulate to explain failed growth and engagement, but it is often a thinly-veiled cover for one of the other reasons above. Solution
: using MVP strategies, beta test early and aggressively. If you identify bugs and improvements to your onboarding or invite process, prioritize and fix those issues immediately. There are a lot of great resources on launching a minimum viable product and quick iteration, like Eric Ries’ The Lean Startup
and The Lean Product Playbook
It all comes back to setting the right metrics, and paying close attention. If you’re tracking your growth and usage metrics, you will have a strong sense of when you’ve hit product/market fit with your core audience. You’ll know it when you see it. Implement these strategies, hit that product/market fit, and you’re ready for some serious growth hacking. Stay tuned, because we’ll cover that on our next blog.