Pivot to Nowhere? Was it Fun, or Did it Deliver Results?

Product and market alignment are crucial to small business success.

I’ve shaken hands with too many founders who have sore hands. Why? They’re busy patting themselves on the back for making a pivot, without seeing if it had any impact at all on the business.

“That pivot made business much better,” said one founder recently, but whether it delivered quantifiable, material business improvement is another matter entirely. Entrepreneurs are always in a hurry, and believe that “in a hurry” is a requirement of their job descriptions. So they press onward, usually in a bigass hurry.  “We pivoted,” they say, and they just keep moving, without:

(a) looking for proof that the pivot had dramatic, curative impact, or

(b) seeing the pivot bring repeatable, scalable profitable change.

Making the pivot is not important—its sustainable impact is what matters.

Product/market fit can’t just be “declared,” no matter how many pivots a team has made. Startups can’t simply “move on” or move forward to work on other elements of their business.  Why not??

Without product/market fit, founders simply don’t have a business.  Too few founders “get it,” and don’t understand the centricity and importance of “fit,” and the need to go back, retrench, rethink and—quite often—rebuild much if not all of the business model to make it work.

When it works:

I had the truly sensual pleasure of attaining sustainable, scalable(and highly lucrative) product/market fit in startup #7, where after about three years we finally got it right:

• we knew our target customer segment precisely (and also knew who it wasn’t)
• when we found someone in our segment, he or she bought—big
• and we developed a method for finding these customers and getting the to self-identify, making the sales process far easier and more cost-efficient than it was the month before.

Where was the evidence? 

It was on the telephone—where our “perfect” customers were calling almost nonstop, and practically throwing money at us, begging us to come and pitch them or send them a proposal without any romance or pre-sell. It got so bad that we actually started charging to make out-of-town sales calls (agreeing to credit the per diem and travel costs if the client signed up for a six figure consulting project).

It was magical…it’s the real definition of product/market fit—customers grabbing your value proposition (or product) out of your hands.

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 isn’t 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.

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