When it doesn’t:
Product/market fit is binary. Either you have it or you don’t. Some clear signs you don’t have it:
- Stagnant MOM’s or WOW’s:
Whether you’re measuring revenue monthly or (much smarter) weekly, if it isnt’ increasing by at least ~15% a quarter, there’s no traction. No traction, no fit.
- Flat or Increasing CAQ’s:
If every new deal is the result of unsustainable customer acquisition costs or heroic sales to friends, cousins or others, finding and closing its customers is not getting easier, as it should. Big danger sign.
- Pipeline Innacuracy:
Estimates of revenue and other key metrics suffer from continuous hyperoptimism. Perhaps the most dangerous sign of all
- Key people departing earlier or dressing better:
The troops often have a keener sense of a stalled-out company than its leaders do, in part because they have less reason or less need to believe in the company. When they head home, or out for interviews, it can be a bellwether of product/market mistfit.
BECOME YOUR CUSTOMER
At a recent incubator feedback session, I was totally shocked by a young founder’s status update presentation about four weeks into his ten-week program. He reported a seemingly total lack of customer enthusiasm for his networking app and then moved right ahead to discuss other elements of the business model such as channels and “get customers” plans as if all were proceeding apace.
Signs of product/market fit:
- You’re making the numbers before month's end: Revenue numbers and other key performance metrics are running 4-7 days ahead of schedule, with the company over-delivering on cash, traffic, and other indicators of Shortened sales cycle times:
- Increased customer referrals:
- More unsolicited customer/employee inquiries
Too Many Programs, Not Enough Brilliance. Garbage in garbage out..
About the author
Bob Dorf is among the world’s leading Lean Startup and Customer Development experts, who trains and coaches startups throughout the world, with a particular focus on Latin America. Bob co-authored the Startup Owner’s Manual, a global bestseller, with startup legend Steve Blank. Now in 18 languages, the Manual details every step in transforming an idea into a repeatable, scalable, profitable business. Bob focuses particularly on training programs for the startup educators, coaches, and investors, and has done so repeatedly in Mexico, Colombia, Brazil and many more. Hes also an Entrepreneur-in-Residence at Columbia Business School. Earlier, Bob founded seven startups--“two homeruns, two base hits, and three tax losses.” His 30+ angel investments delivered 7 IPO’s and six disasters. Learn more at www.bobdorf.nyc or contact bob via email@example.comWebsite