If your startup isn’t solving a clear problem that customers are willing to pay for, the effort can be a waste of precious time and resources.
We recently held a Fireside Chat with Drew Orvieto and the YV Community, focusing on validation and finding product-market fit. This is what we learnt.
Ask the right questions
It’s a story that many have experienced: a founder comes up with a cool idea and works hard to develop it. The technology is great and the team thinks it will be a hit. However, it turns out that although potential customers liked the idea, they aren’t willing to pay for it post-launch. The core problem is in the customer discovery.
Validation all starts with asking good questions. Ask open-ended questions about what problems potential customers have and what problems they have previously looked for solutions to and/or spent money trying to solve. A customer may say that something is a problem they’d love you to solve, but if they’ve never looked into any other solutions and have no budget allocated to address it, how big of a problem really is it?
Examples of bad (closed) questions:
Isn’t this really cool?
Wouldn’t this be great?
Could you see yourself buying something like this?
Examples of better (open-ended) questions:
Tell me about your day to day - what problems have you encountered?
What other solutions have you explored to solve these problems?
Do you have the budget to address these problems?
Validation is an ongoing process. Keep asking questions and keep listening to your customers. Don’t be afraid to challenge your own assumptions about how they use your product and what value they derive from it. Often these insights will guide you to future features as you scale.
Indicators of product-market fit
Beware of false indicators that you've achieved product-market fit. Examples of such indicators include public praise, PR, invitations to speak at events, and signing non-binding agreements (e.g. LOIs or MOUs). Whilst these can all be flattering and can certainly help build your brand, they are not the same as really achieving product-market fit.
Sales, market traction and growth are all much better indicators. It's human nature to be flattered and encouraged by false indicators, but they can lead you down the wrong path because you'll be inclined to believe you've made it and your product is exactly what it needs to be.
There's nothing worse than being burning hot but not achieving financial success. This is a classic issue for many startups - pumping money into acquisition channels without first ensuring you have product-market fit. The yachting industry is so tight knit, so companies in the space should use this to their advantage whenever possible.
If you’re delivering value, your customers will become your best marketers through word of mouth. No amount of social or print ads will be able to match the marketing cache you can get from customers using and loving your products, because they will absolutely spread the word.