This column is by serial entrepreneur, writer and investor, Ilya Pozin
When you launch a startup what should come first: the product or research into market fit? Many people think that the former is the right answer. After all, how can you determine product market fit, without a product? However, that’s the wrong way to approach building a startup.
The Top 20 Reasons Startups Fail report from CBInsights revealed that the number one reason startups go under is because there ends up to be no market need for their product. That doesn’t mean that their ideas were bad, but rather that their approach to make them a reality ignored the one of the most important startup lessons: consider your market each step of the way.
Here are four ways you can ensure a great product market fit for your startup from the very beginning:
1. Understand that timing is everything
There is no such thing as a constant market. The products and solutions consumers are looking for today aren’t the same as a few years ago. So even if the idea behind a startup is fantastic and innovative, it’s worth nothing if there’s no need for it yet or if someone else has already created a great solution that dominates the market, not allowing for others to play.
Before you even begin to put money behind an idea, seriously consider if time is on your side. Ask yourself how prevalent the issue currently is and whether or not it’s likely more or less people will need your product or service in the future. Think about the cost to the consumer and if it’s something that is economically feasible for your target market. And most importantly, look at the competitive field you’re about to dive into. Are there only a few small fish to fry or would you be going up against a Moby Dick sized opponent?
If it seems like the time is ripe for your startup, then and only then, should you move forward.
2. Don’t wait until the product is fully developed to research the market
It’s a huge mistake to wait until your product is ready to go before testing the waters of the market. Unless you take your product market fit into account during development, it’s a million to one odds that your end result will be something people actually want.
Very often entrepreneurs build something that they would use, not realizing that their idea won’t have a big enough market outside of early adopters. Is your idea for very early adopters? Or has the opportunity reached majority? Or are you taking something already mass adopted and making it better? These are important questions to ask.
At my startup studio, Coplex, we work with companies to help them validate their idea in the current market and build out a minimal viable product. This something that we’ve created based on input from the market. And something that has a much higher likelihood of being a success.
The secret is to iterate. You start with the core underlying assumptions of your startup, then you develop an experiment to test those critical assumptions in the market. Based on the results you get from that experiment, you learn what the next steps are that you need to take in development. That leads to a new assumptions which, again you test and learn from.
Each time you repeat the process you learn more about your market, their wants and their behavior. By using that information to guide development, you end up with a product that has a proven market.
3. Look and see what’s already working
Most people think that the secret to startup success is being the most innovative company in the game. But that’s not necessarily true.
In fact many product market fit experts, like Andrew Chen, recommend basing 80 percent of your product on something that has already been proven. The other 20 percent is what makes your company unique and better.
Take, for instance, the flood of social media platforms that arose after the success of Facebook. In many ways, Twitter is very similar to Facebook. That’s the 80 percent that was already proven to have a market fit. The other 20 percent is what set it apart, like hashtags and a smaller character count.
Don’t try to reinvent the wheel. Instead focus on carving out your portion of a market that you already know exists and has mass adoption. It might not be as sexy of an approach, but it’s definitely lower risk.
4. Know when it’s time to focus on growth
Early on in the life of your startup is not the time to think of how you’re going to reach a million users or millions of dollars in sales. It’s time to lay the foundation and win over the customers you need to prove to investors that you’ve got potential.
The game changes as your business grows and you’re graduating out of your seed investment round. At this point you know that your market exists and that they’re interested in your company. That’s the time to start putting more money into your customer acquisition costs, educating people on the problem your company addresses, and trying to convert more people into users or customers.
This is also your chance to expand your market by developing and rolling out new features and improving your product. But you have to be certain that the basics are in place. If you try to get too big too fast, the startup will crumble.
There’s nothing more deadly to a company than discovering that their is no market fit. However, there are steps you can take to ensure that at the end of the road there will someone who wants what you have to offer.
Disclaimer: This is a curated post. The statements, opinions and data contained in this column are solely those of the individual authors and not that of iamwire or its editor(s). The article was originally published by the author here