The journey of a startup from idea to product market fit (PMF) goes through three stages.
1/ The first is the selection of the idea, or rather the problem space to pursue. I term this the pick. The best founders spend a lot of time thinking through the pick. Where you play is more important than how you play. And the pick effectively sets the contours and constraints of the startup’s playground. Hence the pick matters.
2/ After the pick comes the first of the two fits that the startup needs to achieve. Product to Problem Fit, or PPF, i.e., solve the problem effectively for a narrow set of customers. Think of this phase as achieving product love.
3/ Then comes Motion to Market Fit, or MMF. Here you are trying to arrive at a scalable, repeatable and unit-economic positive GTM playbook to acquire more and more of the customers who loved your product.
PPF + MMF = PMF. When you have achieved MMF, on the top of PPF, you now have PMF.
Pick, PPF, and MMF constitute the three phases from idea to PMF.
Finally, PMF is not one and done. You can lose PMF too. There is a lot you need to do to keep PMF on. That is the after PMF phase.
We can interpret any startup’s journey through these above phases. Of late, I have started parsing podcasts and startup success (or failure) stories, through the lens of the above PMF framework. I lay out these observations and learnings in a table structure I term as PMF X-Ray. See below for a couple of examples of this PMF X-Ray framework.
First up, is Indian fintech unicorn Razorpay.
(Sorry abt the column sizing on these tables. Just not able to manually adjust them sadly.)
| Razorpay PMF X-Ray | ||
The Pick | Problem Discovery | Prospecting > Pivot; Product Pivot Explored various ideas, including a crowdfunding platform then realised that payment enablement was a hard problem, and eventually pivoted to working on a payment gateway / payment integration product for startup founders (core ICP) How their Pick ranks on the three elements of the Pick Founder-Problem Fit: LowLarge Attackable Problem: The problem was potentially large though nascent in the sense that there was no existing market because startup founders were not being served. High on attackability because the existing payment gateways were focused on enterprise customers and ignoring this segment.Why now: Moderately strong why now. Growing ecommerce + startup story. Growing internet penetration. |
| Solution Validation | Before quitting their jobs, they spent time validating that this was a problem and there was an attack angle, and no regulatory restrictions that would stop them from doing it. – They read RBI discussion papers and notifications. – They started talking to founders to see if there was appetite for a solution, posting in Facebook groups like Bangalore Startups and Pune Startups and heard that, “hey, if you build something like this, where I can use an API, go live quickly and can go live with minimal issues, with minimal amount of time, then I would love to use something like that.” And while we spoke to a lot of young startups, even a lot of larger startups told us… So that gave us a lot of confidence that this is a large enough problem. It is solvable.” (via Razorpay CEO Harshil Mathur talks about deliberate culture, building to a need, and the principles of product development – The Ken) | |
PPF or Product to Problem Fit | Solution Validation to MVP | Know your ‘juggling monkey’ or solve for the hardest feature first Harshil quit his job the day they got the in principle approval from a banker to set up a payment license. It was very clear that they understood what the ‘juggling monkey’ was – a bank approval for the payment gateway. If you are curious about the juggling monkey phrase, well here goes – “Astro Teller of Google XLabs has a framework: ‘Focus on the monkey, not the pedestal’. If you are trying to train a monkey to juggle flaming torches on a pedestal in the town square, then work on the harder thing, that is, training the monkey, first. We have been building pedestals for centuries and we know we can build it. Hell, we can use a wooden block as a pedestal if needed. But the “thing that might be a bottleneck to unlocking the whole system is actually, can you train this monkey to juggle the flaming torches?” TLDR: Break down your assumptions about PPF into modular components and test the hard things first.” (via PMF Playbook: Chapter I – Understanding PMF – Sajith Pai) |
| MVP to PPF | ||
MMF or (GTM) Motion to Market Fit | Early GTM | They used Facebook Groups where startup founders (their early ICP) hang out as a GTM channel.Shashank: “… how do we get customers? And what we cracked was one specific channel, which is going to all the Facebook groups and all the WhatsApp groups, and there’s going to be a startup group in Bangalore, a startup group in Mumbai, Pune, Jaipur. So we go to all those groups and we’ll talk about…Harshil Mathur: That was our GTM strategy … .Both me, him, like all the early folks we got, we will all hang out in all of these groups and…anyone would say they want a payment gateway, we will get them. And we give them really, like high touch, end-to-end experience. So, once they went live with us, they loved us so much that anyone else now posted about payment Gateway, we didn’t have to respond. Somebody else would say try this. Try that.. Shashank Kumar: They’ll recommend. The word of mouth for us was extremely strong. And see, these are the smallest of customers, so the incumbents are not paying attention. And most of the incumbents at that point of time, we are only focused on enterprises. (via S4 E1 | How Two Coders Built a $7.5 Billion Fintech | Destiny Avenged – Blume Ventures) |
| Early GTM to MMF | ||
Next, we have U.S. restaurant tech unicorn Owner.
| Owner.com PMF X-Ray | ||
The Pick | Problem Discovery | Pick via Personal ExperienceIn the process of helping his mom’s dog grooming salon business, Adam Guild cobbled together the first prototype of Owner. He then dropped out of 10th grade at 17 to startup full time. In his words the initial product (at that time called ProfitBoss) “was a super opinionated, forked version of WordPress — a website builder with little room for modification that handled all the technical SEO best practices.“ (His cold outbound mass mailing) “yielded a few meaningful conversations within one large group of small businesses: restaurant owners. He walked away with a key insight — driving reservations and dining in is the only thing restaurant owners care about. So he narrowed his efforts to restaurant owners.” Pivot to enabling online ordering during the pandemic(During the early days of COVID) Owner’s progress ground to a halt. The whole product had been optimized around dining in. “We lost product-market fit overnight,” says Guild. They lost all their customers, were down to Adam and and one other person. They had four months of cash left. “So he got on the phone with customers. And they practically screamed into the phone telling him that Online ordering was killing them. GrubHub and the others take 30% of every order. Profit margins were just 5%. So if that continued, they’d lose everything,” he says. Guild knew he had to quickly pivot. By the last week of March, he committed to redesigning the website builder to optimize for online ordering. The V2 product was ready to launch by May.”https://review.firstround.com/owners-path-to-product-market-fit How this ranks on the three elements of the Pick Founder-Problem Fit: LowLarge Attackable Problem: The problem was potentially large though it wasn’t clear how big it was in the beginning. Why now: No major urgency for the initial version, but the COVID pivot product saw a strong why now. |
| Solution Validation | Given he started building for his mom, and saw resonance there, we could say that the problem and solution was validated by that. | |
PPF or Product to Problem Fit | Solution Validation to MVP | This wasn’t a formal process. He started building for his mom’s dog grooming salon business and this became the MVP and product. |
| MVP to PPF | Not too much here, but interesting insights into pricing. Initially Adam charged 20x the price of competing website builders like Wix for Profitboss. A high price was a great forcing function to develop a high ROI product. But it was a grind, and initial customer acquisition was tough. When he pivoted during COVID, he decided to charge a $1.50 for every online order. This meant they were incentivized to drive as many orders as possible, and aligned their interests with their customers. Key mantra: align your pricing with the value delivered to customers. | |
MMF or (GTM) Motion to Market Fit | Early GTM | Cold emailing and calling gave way to a content-led approach“I sent hundreds, if not thousands, of cold emails” Adam says. “Even with a few happy customers as proof points, it was still a slog. Eventually, Guild had hit his breaking point with his cold selling. “I didn’t want to scale a business through outbound because it was so brutally hard. So I wanted to develop a model where they would instead come to me,” he says. He began to think about what a content marketing strategy might look like for Owner. Leaning on his cold outreach approach once again, Guild emailed editors of all the top restaurant trade magazines. The editor of Modern Restaurant Magazine offered him a guest post opportunity. Guild researched extensively to draft an article about online marketing best practices for restaurants, which made it into both the print and online edition. The online version went viral, becoming the magazine’s number one story of that year.Guild’s viral guest post helped him secure recurring contributor positions at several other publications, in addition to writing for his blog, which created a content flywheel. He says this process of content creation had a knock-on benefit: He’d become even more knowledgeable about his industry. “The work I was doing to research these articles improved my ability to communicate with the restaurant community, and gave me a much deeper understanding of the broader landscape,” he says.https://review.firstround.com/owners-path-to-product-market-fit |
| Early GTM to MMF, and PMF | ||
After PMF | Going multiproduct post PMF on online ordering Soon after, Guild started to feel pressure to deliver even more value for Owner’s customers. “At this point, I started hearing, ‘Adam, this online ordering thing is awesome, but it’s so expensive and time-consuming to use 15 other tools to power every other piece of our restaurant online. Can you do those things for us too?’ So we said, ‘Yes, we can,’” he says. So one by one over the next year, Guild and the expanded team began building out different point solutions into the platform to consolidate customers’ tech stacks. “Going multi-product earlier ended up being one of the best decisions we ever made because it improved everything. It improved the customer’s results. It improved our retention rates. It created a higher perceived value and willingness to pay.”https://review.firstround.com/owners-path-to-product-market-fit | |
Broadly, these conform to the following framework as laid below:
| PMF X-Ray | ||
The Pick | Problem Discovery | How the pick (or problem the startup is after) was arrived at. There are broadly the following routes – Pick via (personal) pain, e.g., Zomato, Uber, LaunchDarkly etc. – Pick via personal experience, e.g., Coinbase, Front, Freshworks etc. – Pick via prospecting, e.g., Vanta, MakeMyTrip, ThumbTack etc. – Pick via opportunism, where you see a potential opportunity to replicate what exists in another market / geography, e.g., Flipkart, Ola, Dealshare etc. Another way to arrive at your present idea or problem space is through a pivot, e.g., Slack, Meesho etc. To know if the pick is great, rank it on the below. Make sure you meet at least two of these 1/ Founder-Problem Fit, i.e., Team or Why you? 2/ Large Attackable Problem, i.e., TAM or Why this? 3/ Tailwinds, i.e., Timing or Why now? |
| Problem and Solution Validation | Have you spoken to enough folks to validate the problem and solution? How did you do this? | |
PPF or Product to Problem Fit | Solution Validation to MVP | What went into the process of MVP building? What tradeoffs were made? |
| MVP to PPF | ICP refinement etc. Problem + Persona coupling. PPF metrics to select and track. Strategies to get to the first 1000 B2C customers, or 5-10 design partners in B2B. Iterating product basis customer feedback so as to arrive at PPF. | |
MMF or (GTM) Motion to Market Fit | Early GTM | What channels worked for you? What became the hero channel? What was the initial messaging like? How did the proposition come about? What was the initial GTM strategy? What pricing strategy did you go for? |
| Early GTM to MMF, and thus PMF | MMF metrics to select and track. Ramping up hero channels, iterating on GTM basis learnings, so as to arrive at a repeatable, scalable, unit-economic positive playbook. Building a sales org, and building a multi-channel strategy | |
After PMF | Overcoming Post-PMF Challenges. Going multiproduct. Scaling org. Handling channel saturation. Losing PMF. | |
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You can find links to these and more PMF X-Rays (will keep adding them gradually) at this link. Do let me know your feedback at sp@sajithpai.com.