Saturday 13 April 2024

You will "feel" the PMF when it happens.

During the early phases of building your startup, if there is one thing that really matters, it is Product/Market Fit (PMF). I see early-stage founders spending time talking to investors, participating in events, and hackathons, applying for Forbes 30U30, and whatnot!

That's not how it works. When you haven't achieved PMF, these things don't matter. Most of the time, you don't need too much upfront capital to achieve PMF. Feedback from Hackathon judges doesn't matter. Validation from Forbes is pointless at this stage.

Talk to actual prospects and they will give you the right feedback. Their feedback is all that matters. Here is a structured process to achieve PMF (my experience is focused on B2B SaaS):

1. Fixate on a Market. When evaluating startup ideas/problem statements, avoid hopping markets otherwise all your learnings from the initial conversations will have to be dumped when you decide to pursue a different market.

2. Talk to a minimum of 10 - 15 prospects from that market and ask them for their top 2 - 3 priorities over the next few quarters. Ask them if they've finalized the Service Provider to implement these upcoming projects. This way, you'd be able to understand where the market is heading and what are the gaps.

3. Pick one of the gaps and build an MVP. Creating the MVP should not take you more than a week. If it takes you more than 2 weeks, you probably don't have a Technical co-founder. Or you need a better Technical co-founder.

4. Get feedback from the prospects on your MVP. See if they are interested in learning more and possibly exploring a pilot with you. If a few of them have shown positive interest and want to evaluate further - Congratulations! You just validated the problem statement.

5. Now heads down and iterate. Work with these early prospects to convert them into a paying customer. In cycles of ~1 week, implement the feedback you've collected; show it to the prospects and gather the feedback again.

6. Within 2 or a maximum of 3 cycles, you should be able to get some of your prospects to sign up for a paid plan. If none of them agrees to proceed forward, then it means that the problem statement was not important for them or, you did not do a great job with your MVP.

7. Within 3 months, you should be able to get a sense of whether you should pursue the idea further or not. You will "feel" the PMF when it happens. Prospects will give you time. Some of them will call you and suggest features. A few of them might be interested in investing in your company. Some might refer you to someone else.

8. As a corollary, you should also be able to gauge that you have not achieved PMF. 3 months have passed - not many people have shown interest. Prospects who were earlier interested are no longer picking up your calls - a clear sign that you are building something unimportant to them. Time to work on something else.

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