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Product/market fit

Product/market fit is the degree to which a product satisfies a strong market demand.

Product/market fit has been identified as a first step to building a successful venture in which the company meets early adopters, gathers feedback and gauges interest in its product(s).

Contents

HistoryEdit

Marc Andreessen defined the term as follows: “Product/market fit means being in a good market with a product that can satisfy that market.”.[1][2][3] Many people interpret product/market fit as creating a so called minimum viable product that addresses and solves a problem or need that exists.

Sean Ellis is often associated with popularizing the term. He placed product/market fit as a precondition for effectively scaling marketing for a company in his startup marketing pyramid.[4]

Steve Blank referred to the concept of product/market fit as a step in between customer validation (step #2 in his book The Four Steps to the Epiphany) and customer creation (step #3).[5][6][7][8][9]

InterpretationsEdit

In Alexander Osterwalder's Business Model Canvas paradigm, product/market fit could be interpreted as a business model's value proposition, customer segment, relationship, and channel are fixed without requiring additional pivots.

Popular metricsEdit

The 40% ruleEdit

One metric for product/market fit is if at least 40% percent of surveyed customers indicate that they would be "very disappointed" if they no longer have access to a particular product or service. Alternatively, it could be measured by having at least 40% of surveyed customers considering the product or service as "must have." Sean Ellis is noted for popularizing this heuristic after examining many startups.[10]

Common mistakesEdit

It is important to differentiate between product/market fit and problem/solution fit when measuring a company's customer base. More specifically, when gauging a customer's desire, companies need to be sure they are measuring desire for the product or service—not just for a solution. Misinterpreting customers' desire for a solution as desire for a company's product or service will end up being a false positive for product/market fit.[11]

See alsoEdit

ReferencesEdit

  1. ^ Marc Andreessen. "Product/Market Fit - EE204". 
  2. ^ Quora. "How do you define Product-Market Fit?". 
  3. ^ Marc Andreessen. "The Pmarca Guide to Startups, part 4: The only thing that matters". Archived from the original on July 1, 2007. 
  4. ^ Sean Ellis. "Startup Marketing". 
  5. ^ Steve Blank. "The Four Step to the Epiphany - 2006" (PDF). 
  6. ^ Blank, Steve and Dorf, Bob (2012). The Startup Owner's Manual, K&S Ranch (publishers), ISBN 978-0984999309
  7. ^ Blank, Steve (2008-2015). Blog on entrepreneurship
  8. ^ Blank, Steve (2013). What I Wish I Knew About Startups - Steve Blank, Consulting Associate Professor at Stanford University (video, 30-min). The audience is composed of the CEOs of the portfolio companies of Khosla Ventures. Talk given in May 2013, posted on the official You Tube channel of Khosla Ventures in May 2014
  9. ^ Blank, Steve (May 2013). Why the Lean Start-Up Changes Everything, in Harvard Business Review
  10. ^ Venture Hacks. "How to bring a product to market / A very rare interview with Sean Ellis". 
  11. ^ Tristan Kromer. "False Positives & Product/Market Fit".