Achieve Minimum Viable Product-Market Fit (PMF)
Note: This article is part of my resource newsletters↗️ where I share insights on building things in tech. Join me :)
If you work in a startup, you’re probably familiar with minimum viable product (MVP) and Product/Market Fit (PMF). If PMF and MVP had a baby, it will be today’s concept: Minimum Viable Product/Market Fit — a concept that I created for myself to help me internalize how to build something people want. LFG! 🤓
1. What is considered as PMF?
In the tech world, everyone talks about Product/Market Fit (PMF). Startup founders hustle their way to achieving it. VCs and investors use PMF to assess startup investments. Product managers use PMF to measure the success of new products being adopted in a market.
PMF consists of three things:
- Product: A product that solves a real problem
- Market: Being in a market that is adequate to support the entry, growth, and scalability of your product
- Customer: An audience who want to fix that problem and willing to pay for your product
Signs of Product/Market Fit:
How do you know if you have found Product/Market Fit? Here are some signs to help you identify PMF:
- people are using and paying for your products
- people love using it (and want their friends to use it)
- people rave about your products on social
- your product sells itself without you trying to sell it
- people keep coming back to your app
- you’re gaining traction (e.g. app download, usage, retention)
- you’re growing user base, MRR, revenue, profits — rapidly
- you’re hiring more people to support the growing customer base
2. The path to product/market fit
First of all, a startup is a series of experimentation, validation, and iteration. Therefore, PMF is not a linear event.
It’s a long process of — often going back-and-forth (1) testing ideas and hypotheses; (2) tweaking your product based on user feedback; (3) pivoting if it doesn’t work — until you can achieve growth, profitability, and scalability.
The whole PMF process involves working through these elements:
- The Market: You research the industry to find out the market demand. 📕 Here’s my lean research on consumer tech opportunities.
- The Customer: You research your target customers and understand their needs. 🔮 Here’s my user-driven framework.
- The Problem: You talk to users, run user research to see if your target customer is facing valid problems you want to solve. 🤓 Here’s a list of curated questions to ask your potential users.
- The Solution: You create a prototype or minimum viable product (MVP), test with users to find out if it solves the problem, and validate/disprove your MVP 🚀 My step-by-step MVP breakdown
- Go-to-Market (GTM): You launch your product, acquire users, test different marketing channels to find the most effective ones.
3. Start from a Minimum Viable Market
Minimum Viable Product/Market Fit is made up of two components: Minimum Viable Market + Minimum Viable Product.
Here’s what most founders overlook:
Product/Market Fit starts from the Market — not the Product.
Let that sink in… 🎯 But first, let me explain why:
Start from the Market, not the Product:
- The market is where you will find customers who will adopt the product — where problems and opportunities arise. I internalized this concept in my latest work.
- If you search for a market, you will find a problem where your product (or solution) can exist. But if you find a product/solution to fit a problem or market that doesn’t even exist — you will create something with no market needs.
- If your technology or app doesn’t solve a problem in a market — your product doesn’t exist.
- And if you create a product in a market that can’t find enough paying customers — your business doesn’t exist.
Got it, the Market is everything.
So, how to start from a Minimum Viable Market? Marketing genius Seth Godin called this Minimum Viable Audience. He wrote:
Stake out the smallest market you can imagine. The smallest market that can sustain you, the smallest market you can adequately serve.
When you have your eyes firmly focused on the minimum viable audience, you will double down on all the changes you seek to make.
When you’re starting a startup, your product is in the early stage, you don’t immediately access a large market — big TAM (total addressable market) or global expansion.
Instead, you start small: by looking into a niche. As you expand the product features, you increase the market size by tapping into adjacent industries, countries, and widening use cases.
For example, Amazon started off by selling books online. Today, Amazon sells everything from A to Z.
How to find a minimum viable market?
- Find a problem worth solving facing an adequate amount of people. In other words, the smallest market size that can sustain you.
- Look into a specific type of audience or unique set of users.
- Build a persona for this group of people. What are their needs? What goals do they want to accomplish?
- Build a solution to solve a primary pain point. Then, expand the product by solving more pain points.
4. Create a Minimum Viable Product (MVP)
Now, you’ve worked through the Market (problem) and the Customer (audience). Next, you want to deliver the Product (solution) to your Minimum Viable Market. You need to find a way to serve your users.
What makes a minimum viable product (MVP)?
- A product with just enough features to solve the primary pain point facing your minimum viable market.
- Allows you to gain traction (Beta users, pre-order, download, or pay).
- Helps users accomplish their goals.
- Deliver values to users.
How to build an MVP?
- Brainstorm a list of possible solutions to the problem you want to solve.
- Define value proposition. How do you differentiate?
- Identify feature set and key functionality.
- Map out the user journey — the steps involved in interacting with your app.
- Use the right tools and technology to build the MVP features. Remember, users don’t care about your tech; they only care about if you can fix their problems.
- For inspiration, you can go through all my MVP guides: sneaker app, meal kit app, virtual event app, SaaS tracker, food delivery, content app
Next, find your minimum viable market (audience) and get them to use your MVP. Locate them — which channels can you reach them? It could be Twitter, Discord, Facebook groups, LinkedIn, Reddit, etc.
5. Measure Minimum PMF
Once you’ve launched your MVP, you want to see whether your solution is Helpful-Valuable-Useful to your target audience.
Here’s how to evaluate Minimum PMF
- Monthly Recurring Revenue (MRR). Do they pay for it? Are there any signs of increasing revenue? Are you Ramen profitable? Use Stripe to monitor billing analytics.
- Net Promoter Score (NPS). Do they recommend your product to their friends? To measure NPS: take the % of Promoters (those who rated 9, 10) minus % of Detractors (those who rated 0, 1, 2, 3, 4, 5, 6). Here’s an NPS survey template by Typeform.
- “Very Disappointed” test. Coined by Sean Ellis, who led early growth at Dropbox. He suggests asking users — “how would you feel if you could no longer use the product?” The higher the % of “very disappointed”, the better. See how Superhuman find product/market fit.
- Retention. Are your daily, weekly, monthly active users increasing? Use Amplitude, Heap, Mixpanel to measure retention.
6. From Minimum PMF to true PMF
Minimum PMF gets you started. But your job as a founder isn’t done yet. You need to search for true PMF.
Michael Siebel, Managing Director at Y Combinator explains why:
I often talk to founders who believe they’ve found product/market fit when they haven’t. This is a huge problem because they start hiring people, increasing burn, and optimizing their product before they’ve actually discovered what needs to be built.
A step-by-step to true PMF:
- Minimum PMF: Enter a minimum viable market, solve a pain point, make rents or become Ramen profitable. Looks a lot more like a business than a startup since it involves serving customers manually and doing things that don’t scale. E.g. Airbnb started off by renting air mattresses in their apartment 💡 using this MVP, skip to Point (1)
- Growth PMF: Discover and move towards solving an extremely painful problem that has big enough demand. The solution must be better, faster & cheaper. Leverage go-to-market strategies to grow the user base and sales.
- Scalability PMF: Expand the market size, countries, widen use cases across customer segments. E.g. Airbnb became a $31 billion company and went public in 2020.
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