In this section, from time to time, I will share my thoughts on what I see are important observations, trends, caution zones and other tit bits. These are personal thoughts that I notice from my travels world-wide or from my other investments and so on. Some of which are important lessons I learned in my journey on the path as an entrepreneur. Some of them may hold for you and some may not. In any case, here you go.
Importance of Product-Market Fit
On a flight from Hong Kong, mid-Sep 2019
- Every product business will face this question at some point or the other – and this is an important thing to answer.
- a) depending on stage of the market (infancy, growth, maturity and decline) a product- market fit may have different manifestations.
- b) Typically, when you hit product – market fit, you will notice the following –
- Sales process becomes easier and faster
- You will almost not need to go to engineering or research team – as the product is now standing on its own legs, with no new changes required
- Very quickly in the discussion with the customer, the pricing and installation, delivery schedule become points to discuss
- Feature capabilities are either already known to customer or is a part of expected check list – any new features client is asking is either already on your development roadmap or already built and is now GA stage
- Installation environment or nature of deployment (SAAS / premise based / private cloud) etc type of discussions are no brainer as any option the client is asking is already ready and available with you
- c) Your next big indicator that you have hit product-market fit may be
- The possibility of repeat sales of the same configuration or with minor changes now becomes a reality, which means
- Your next several customers are all asking similar stuff and the sales process now becomes hugely predictable
- For the given genre of clients, your sales process now approaches a templatization model
- Sales decision time frames also become predictable
- d) If you have hit this situation, then what?
- Now is the time for you to quickly define / update a Sales plan for this segment, fine tune it and invest in sales resources. Do not wait anymore
- Product Market-Fit is a difficult situation to reach and all the signs for monetization are now visible
- Quickly assess Competition offerings
- Stabilize your pricing model – discount structure etc
- Pick a unique positioning and brand out like crazy for the proven genre
- Multiply sales efforts and cover the genre at earliest
- Accelerate and close sales urgently
- f) If done well you could become a segment leader for the product category. But don’t rest on your laurels.
- A new version of Agile could suddenly give your competitor an edge. Product businesses are exciting because they are also fast-moving dart boards. But more on that for another day.