Headline: The Math Behind Product/Market Fit
What is a best-practice, repeatable process for validating product market fit? This is one of the most common questions I am asked. As an Alchemist start-up mentor, I help founders build a sales process to close their first 10 paying lighthouse customers. During my office hours, I am lucky enough to coach technical founders who are brilliant when it comes to math and process, but still sometimes need guidance when it comes to fine-tuning strategy.
The most impactful way to determine product-market fit is a strategy I call the “1x3 Discovery Process Strategy”. For every 1 hour you code, you should spend 3 hours on discovery calls to understand, validate, and be able to apply your understanding of the market.
The “1x3 Discover Process Strategy” will reduce cycles and increase the speed at which you can prove you are on your way to market validation and traction objectives. Here’s how:
1)Discovery calls gather actionable data to make sure that you build what people will pay for
Discovery calls are about data. The better and more effective the questions you ask, the better the data. If you have bad data, your product market fit hypotheses will be flawed. Your code also has a high probability of being worthless, meaning no one is using what you are building. Since, by definition, product/market fit equates to being in a good market with a product that can satisfy that market, solid data is all about confirming and ensuring the best path.
2) Open-ended questions are crucial. Here’s where founders get it wrong
1x3 questions lead to great product data. Product market fit discovery questions need to be open-ended. There is no data value in “Do you have x problem (yes or no)?” More impactful questions are:
- Tell me about your current situation.
- Why is this a problem now?
- What have you tried in the past to solve it?
- Why is this a priority now?
These questions are gold when it comes to understanding product/market fit. Because they are open-ended, they give the buyer/champion or influencer you are speaking with the opportunity to be thoughtful in their response. Your buyer is able to reflect about their current day and tell you, in their words, stories and examples about the problem from their point of view. Rather than asking a question that implies you know the answer or that direct the answer, an open-ended question creates the opportunity to hear answers around topics you may not have anticipated. Great founders understand how their customers think about their problems, the impacts and value of a solution to their problem, and how your solution fits within their workflow.
3) Finding market fit
Finding market fit means that people you don’t know will pay for your solution and renew it when you increase the price. An ineffective question like “Did you like what I showed you? yes/no” doesn’t add much value or drive any understanding. Better questions are:
- Tell me about your ideal solution.
- What do you like/dislike about your current solution?
- How does what we want to do compare with your current tools?
Remember these questions are designed to ensure you validate that the prospect will PAY for your solution to their problem.
4) Charting the path for coding what customers will pay for
As tech-cofounder, coding is your superpower. Your kryptonite is your enterprise sales experience. With the right discovery questions, you can code in half the amount of time and ensure you incorporate the right features your target wants and will buy.
The 1x3 Discovery Process Strategy is a process to ensure you manage your time. Better data will always set you apart from your competitors. By asking the right questions, and adding to your knowledge and insights, you will come to understand the customer better than they understand themselves. Coding, from this vantage point, becomes the easy part.
About Darren Kaplan
Darren Kaplan is the Managing Director of The Last 90 http://www.thelastninety.com an early-stage venture fund that invests and operates companies that focus on the future of work. Prior to that Mr. Kaplan was the co-founder of hiQ Labs (www.hiqlabs.com), a data science company, informed by public data sources, applied to human capital to make work better. Mr. Kaplan is an Alchemist Accelerator (https://alchemistaccelerator.com)
About the Alchemist Accelerator
Alchemist is a venture-backed initiative focused on accelerating the development of seed-stage ventures that monetize from enterprises (not consumers). The accelerator’s primary screening criteria is on teams, with primacy placed on having distinctive technical co-founders. We give companies around $36K, and run them through a structured 6-month program heavily focused on sales, customer development, and fundraising. Our backers include many of the top corporate and VC funds in the Valley — including Khosla Ventures, DFJ, Cisco, and Salesforce, among others. CB Insights has rated Alchemist the top program based on median funding rates of its grads (YC was #2), and Alchemist is perennially in the top of various Accelerator rankings. The accelerator seeds around 75 enterprise-monetizing ventures / year. Learn more about applying today.