CEO Insights: Unlock Success with Product-Market Fit

Product-market fit is the foundation of any startup journey. Investors need to see it, and customers want to feel it. But you might be surprised how many startups overlook its importance in their growth.

May 2, 2024
CEO Insights: Unlock Success with Product-Market Fit

Product-market fit is the foundation of any startup journey. Investors need to see it, and customers want to feel it. But you might be surprised how many startups overlook its importance in their growth.

We’ve helped over 400 ambitious start-ups get funded from governments and investors alike, so we understand how crucial it is to get right.

Learn from our experience, and get unique insights from Grantify CEO, Mat Westergreen-Thorne.

Defining Product-Market Fit

Product-market fit refers to the alignment between your product or service, and the needs of the people you want to reach. It sounds obvious, but it can be tricky to articulate.

Simply put, if you are offering a solution to a genuine pain point, and you understand your customer, you have achieved product-market fit.

Marc Andresson quote on orange background

Why does it matter?

  • Product-market fit is a strong indicator of feasibility and validity.

Without it, you could find yourself building something that nobody wants or needs, making it incredibly challenging to sustain and grow the business.

  • Product-market fit and investment.

Product-market fit is crucial for investors. Investors are naturally drawn to startups that have demonstrated strong traction and demand for their product or service.

  • Roadmapping success.

Product-market fit provides valuable insights into customer preferences and behaviors, allowing startups to make informed decisions about their future strategy and direction.

Achieving Product-Market Fit

There’s no one framework to deliver product-market fit but you should be prepared to seek insight in the following areas:

  • Customer Analysis

If you want to know that you are creating something that solves a problem in a new way, then you should start with your customer, through customer research and analysis through surveys, questionnaires and even focus groups.

Take inspiration from entrepreneur and investor Sean Ellis, father of the growth hacking movement and a leading marketer at Dropbox, Eventbrite, LogMeIn, and Lookout, who came up with the Product-Market Fit Survey during his tenure at DropBox, asking customers simply:

Sean Ellis quote in white text on purple background

He gave respondents four choices: very disappointed, somewhat disappointed, not disappointed (it really isn’t that useful) or N/A (I no longer use the product). His benchmark for product-market fit was if 40% or more respondents chose ‘very disappointed if they could no longer use the product’ option.

You may wish to be more nuanced in your research, but the clarity of Sean’s approach is undeniable. Who wants to spend time building a product that no one would miss?

  • Competitive Landscape

You’ll need to conduct a thorough sweep of the competitive landscape to make sure that a) you are working in a market with potential, and b) you are creating something truly unique and needed.

It’s also crucial to have an eagle view, not just on your competitors but also the changing nature of technology in your chosen field. You’ll need to understand what changes in the tech world might affect your product-market fit, and be prepared to respond to them.

  • MVP

One of the best ways to know if you have product-market fit is to get your product into the hands of real customers. Work out what a Minimum Viable Product (MVP) looks like for you, and develop a simple prototype, using accessible tools like inVision or Figma.

Set up in-person tests with small numbers of potential users and carefully observe how they interact with your prototype. These sessions can unlock invaluable insights that inform your product-market fit with real-world intelligence, not your own guesswork.

Product-Market Fit and Funding

Product-market fit is also a crucial criteria when applying for government grants.

Government bodies need to know that they are spending taxpayers money properly by supporting products or services that are truly solving existing issues in the market.

This fit is a key indicator that the offering will be commercially viable.

For some government funders, being able to demonstrate broader or social impacts is also a key consideration. Without a tight PMF, it can be incredibly difficult to address these problems with the envisioned broader impacts.

We always advise our clients to focus on creating a strong narrative between the problem, the solution and the market, making a strong product-market fit the heart of all successful grant funding applications.

CEO Insight: Develop a Curious Culture

Grantify CEO Mat Westergreen-Thorne knows a thing or two about product-market fit, having established Grantify in response to the difficulties he experienced seeking funding for an earlier startup. It’s a process he has led many iterations of in the years since.

“Achieving product-market fit isn’t a linear process that moves from A to B, which you can tick off on your rise to greatness. It’s a series of explorations that ask challenging questions about why your company or product exists.

“Startups must continually iterate and improve their product based on customer feedback and market dynamics.”

“At a recent tech event, I was inspired by the words of Amir Orad, a 2X $100m revenue CEO, who impressed upon me that it’s a common misconception that a business only needs to find market traction once, and then it’s straightforward from there.

“The truth is that product-market fit is something a scaling business needs to find many times.”

Commit to Improvements for a Successful Future

Customer behaviors evolve, new technologies develop, competitors come and go, but your commitment to serving a real need among your customers will pay dividends when it comes to growth, customer acquisition and even funding.

At Grantify, we embody this commitment to curiosity, constantly experimenting with new products and geographies, while staying close to the changing needs of our own customers so we can keep pushing to excel.

Is Your Product-Market Fit Already on Point?

You could be ready to explore your funding options.

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