The Easiest Way to Know You’ve Found Startup Success
By: Andrew Filev
Tags: Success, Entrepreneurship, Product Market Fit, Entrepreneur, Startup

The Easiest Way to Know You’ve Found Startup Success

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The Entrepreneur Insiders network is an online community where the most thoughtful and influential people in America’s startup scene contribute answers to timely questions about entrepreneurship and careers. Today’s answer to the question “How can entrepreneurs find the right market to sell their products?” is written by Andrew Filev, founder and CEO of Wrike.

I recently became a dog owner for the first time, and through that experience, was exposed to the fascinating world of insane products for pets. There’s a doggy high chair that lets your pooch join your family for dinner (a terrible idea for my always-hungry Lab), and my personal favorite, a device that sends your dog’s activity to the web as tweets. As a product guy who thinks constantly about the utility of what we develop, I can’t help but wonder: Who buys this stuff? And more importantly: Has it solved a big problem in their lives?

It’s in that second question that entrepreneurs can find the meaning of product-market fit: Does the product solve a pain for a group of people so well that it seems hard to imagine not having it? While I’m a non-dog related entrepreneur in the software world, I know firsthand that product-market fit is difficult to measure. Technology consumers are highly fragmented, so even just defining a market can be a challenge.

The dating apps eHarmony and Tinder are an example of what I mean. Both serve the basic function of helping people find romantic matches. But can such drastically different products both have market fit?

To answer that question, you have to further break down the online matchmaking market by demographics, relationship goals (short term vs. long term), and platform preference (mobile or desktop). When you do that, you see that the world of online dating is really many sub-markets that allow different types of apps to thrive in each. Now, imagine doing this exercise with business users in a business-to-business software platform, and you can see that there’s a lot of room to miss the mark when trying to build a valuable product.

The good news for software startups like mine is that unlike other industries, you can iterate rapidly in the pursuit of market fit. Finding out that consumers are rejecting a new SUV would cost a carmaker a billion dollars. Learning that users aren’t adopting a new feature we just pushed into production, for example, isn’t nearly as damaging. It gives us the flexibility to rapidly prototype and A/B test to measure user response.

When we want to build a brand new capability, we start with customer conversations to better understand their needs, continue by rapidly creating prototypes and answering crucial questions, and push on with a simple version, or minimum viable product (MVP). We’ll release it to different groups of users and measure data about how much they try to use it, how much effort it takes to use it, and also explicitly ask for feedback. That way, as we flesh out the feature and enhance its functionality, we can guide it toward bringing real value. We know we’ve found market fit when we have something that’s used frequently with little effort (not a lot of clicking around) and that users tell us has made a big impact in their workday.

The real test of product-market fit for any company, though, is simple: Do your customers buy more? When customers re-invest in your product, they show you that you’re making a positive impact on their lives, and that the solution you’re offering is one they’ve decided they don’t want to live without.

All of this makes me wonder about those dog gadgets I saw in the pet store. If your dog’s tweeting collar broke, would you buy a second one? Is it something you really can’t live without?

I speculate that every garage or basement in America is filled with items that didn’t really have market fit, whether it’s a kitchen tool like the onion bloomer or an exercise machine that didn’t quite live up to its promise. Remember: Market fit isn’t just about whether or not people buy. It’s about solving a real pain in their lives.

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