Viable product wins when it fits into a great market
The only thing that matters is getting to Product-Market Fit.
Product-Market Fit (PMF), as originally defined by Marc Andreessen, a well-known Silicon Valley investor and co-founder of Andreessen Horowitz, is the stage at which a startup has successfully identified a significant market and developed a product that satisfies that market's needs. Achieving PMF is a crucial milestone signifying that a startup has found a large and lucrative market, devised a robust strategy to address that market and deployed a superb implementation plan to drive growth.
If you ask entrepreneurs or VCs which of team, product, or market is most important, many will say team. On the other hand, if you ask engineers, many will say product. Apple and Google are the best companies in the industry today because they build the best products. Without the product there is no company. However, Andreessen takes the third position—He’ll assert that market is the most important factor in a startup’s success or failure.
Why?
In a great market, customers are eager for a solution, and the market force pulls a product out of the startup. Such a market doesn't require the product to be outstanding. It just needs to be a viable solution to the customer's needs. Likewise, the team's excellence isn't the focus, as long as they can produce a viable product. When a product fits into a great market, customers are literally knocking on the door, and even a team that might lack in certain areas can be upgraded during the process.
On the other hand, even if you have the most incredible product and a top-notch team, if the market isn't there, the startup will struggle. You might spend years trying to find customers for your excellent product, but if the market need doesn't exist, no amount of effort will yield success. A lack of PMF is one of the primary reasons startups fail. A great product alone doesn't ensure success if it doesn't meet a significant market need. Hence, startups need to devote their energy to reaching PMF rather than focusing only on product development.
To achieve PMF, startups can adopt tactics like diligent market research, rapid experimentation, customer development, and a strong focus on user experience. The ultimate goal is not only to build a product that solves a significant problem for customers but to do so better than any existing solution.
Assessing PMF isn’t always straightforward as it’s not a one-size-fits-all concept. However, certain indicators can be used to ascertain it, such as a high customer satisfaction level, low churn rate, and rapid organic growth. Other indicators could include word-of-mouth referrals, expansion within existing accounts, or positive customer reviews.
PMF should not be considered a one-time milestone; rather it's a process of continuous learning, evaluation and adjustment. Achieving PMF requires a deep understanding of the customer and a commitment to meeting their needs. It involves designing and implementing the product based on customers' feedback and changing preferences; this iterative process of adjusting the product according to market demand is what leads to PMF.
To conclude, PMF is a crucial indicator of a successful startup. A product with a strong PMF not only meets the needs of the market but also effectively solves a problem and offers a unique value proposition. Achieving and maintaining PMF hence leads to long-term success and growth by ensuring that the product meets the evolving demands of its target market.