A few weeks ago, R.J. Talyor, High Alpha Operating Partner, unveiled Project Horizon—a resource start-up CEOs can leverage as a benchmark to gauge their progress towards product-market fit (PMF). While its impact has already been significant, we wanted to take it a step further.
In a recent webinar, R.J. was joined by Lindsay Tjepkema, CEO of Casted, and Mike Preuss, CEO of Visible, to analyze, digest, and sometimes challenge the data. Read on for key takeaways that will help shape your PMF journey.
When’s the Perfect Time to Find PMF? It Depends.
R.J. wasted no time diving into the discussion. When asked about the ideal timing for achieving PMF, the speakers unanimously agreed that it varies from company to company. However, it all depends on a company's runway. Here's their advice:
Don't Convince Yourself You Have PMF If You Don't: You must have runway to conduct PMF research. However, R.J. cautioned against prematurely claiming your company has PMF simply because your runway is running out. CEOs must extend their runway and continue researching until customers consistently purchase the product.
Set Your Own Timeline: Even with ample runway, you must set a timeline to keep yourself on track. Lindsay stressed, "Once you reach your set timeline, you have a choice: either you're done, or you take a hard look at what you've learned and pivot."
If You Aren’t Criminally Profiling Your ICP, You’re Doing It Wrong.
To achieve PMF, CEOs and their entire organizations must have a clear understanding of their target audience. Lindsay stated, "To find PMF, you need to know who your product is for and why you are building it. If you and your team don’t know the answers to those questions clearly, then you’re done." R.J. recommended creating a comprehensive Ideal Customer Profile (ICP) that includes not only demographics but also traits and behaviors. Remember, if your product is for everyone, it's for no one. CEOs must take risks.
The Key to Measure PMF? Keep It Simple.
While CEOs track multiple metrics, determining the ones that prove PMF can be challenging. Here's their expert advice:
Repeatability: Lindsay emphasized you have to look at metrics that demonstrate your product's value and illustrate your customers are buying it repeatedly.
Simplicity: R.J. advised focusing on one or a few metrics per month or quarter while relying on your gut. Keeping it simple is key.
Flexibility: As your company evolves, Mike said the metrics used to measure PMF will inevitably change. Stay aware of this dynamic nature.
Nose Goes: Who Owns PMF?
According to the Project Horizon survey results, most respondents believe CEOs and founding teams are responsible for PMF. However, R.J., Lindsay, and Mike disagreed.
Each speaker asserted that the CEO alone holds the primary responsibility, especially in the early stages. R.J. explained, "Start-up CEOs often want to hire salespeople, effectively outsourcing the task of achieving product-market fit. However, we first need to determine what we're selling and at what price."
The Market Can Be Your Best Friend or Your Enemy.
Is the team, product, or market the most important factor in achieving PMF? The survey results indicated a discrepancy between the speakers' experiences. While most respondents believed the product was the most crucial factor in achieving PMF, the speakers unanimously agreed that it's the market.
You can build what you want and your team can do all the work in the world, but none of it matters unless the market responds accordingly. Does the market say you have a fit? If not, nothing else matters.
Lindsay Tjepkema, CEO of Casted
R.J. reinforced this notion, highlighting the impact of external factors like the Covid pandemic. "Look no further than March 2020. Companies that had PMF no longer did because the market changed. In an instance, PMF went away or became true depending on the company."
Should You Abandon Your ICP? Follow the Money.
Ultimately, financial considerations determine the course of action. Mike suggested that if customers are actively using and purchasing your product, you have the correct ICP. If revenues aren't materializing, you face a choice: adapt your product to the audience you're serving or modify the target audience. Regardless, Lindsay emphasized the need to "pay attention to your gut and the data and consider if you can wait out the market."
What's Next?
In conclusion, R.J. provided three action items to advance your PMF journey:
Conduct Weekly Experiments: Select one metric to measure and run experiments regularly.
Seek Repeatability: If you can sell your product once, you can sell it twice and a million times. Strive to sell the same product at the same price to the same ICP.
Benchmark Yourself: Leverage Project Horizon to evaluate your progress and prove your instincts during board meetings. R.J. reminded the audience, "As an entrepreneur and someone who knows the market best, you do know what's right; you just need confidence."
Final Thoughts.
We're excited to continue servicing start-up founders on their PMF journey. If you missed the event, you can watch the full conversation below. Be sure to also explore Project Horizon and subscribe to our newsletter for the latest updates on our product-market fit investigation.
