The phase founder skip

Announcement:

Tomorrow at 12:00 PM I'm starting a series of webinars about Customer Interviews -> https://www.dhirubhai.net/events/webinar-customerinterview-findi7250525415130210306/comments/

I often hear people on LinkedIn, at events, and in 1-on-1 discussions ask:

“How do I get to product-market fit?”

Hold on a second…

Before product-market fit, there’s problem-solution fit.?Before problem-solution fit, there’s founder-market fit.?And before founder-market fit, there’s an important question.

I’ll come back to that question later, but first, let’s talk about some symptoms I’ve observed in the market.

Here’s a common pattern in the tech startup world:?“I have a struggle” or “I’ve noticed a struggle” leads to “I’ll build a solution” with the assumption, “Other people must have the same problem and need my solution.”

Then, you put the solution into the market and try to sell it. But for various reasons, people don’t need the progress you’ve created:

1 They struggle, but they’ve become accustomed to the pain, and the switching cost isn’t worth it.

2 They struggle, but they’re unwilling to pay because the value-for-money equation doesn’t work in your favor.

3 They don’t struggle enough, or they have more urgent priorities, so this problem isn’t a top concern.

In these scenarios, you could have saved significant resources in marketing and product development simply by asking yourself some tough questions:

Do I have the money to build a business for this customer segment?

Let’s break this question down, starting from the end:

Customer Segment:

* Do I actually want to work with these people?

* At SOLO, for example, we decided early on that we didn’t want to serve PFAs (sole proprietors) with stock portfolios because it was too much of a hassle.

* Are they struggling enough? Is their struggle functional, emotional, or social? How much are they willing to pay?

Building a Business:

* This requires maturity. It took me a long, painful while to understand that the product we build is just a vehicle that drives the business strategy, and the business strategy is shaped by the demand of the customer segment.

* Based on market demand, we position the business in the market.

I have the money to build:

* How much will it cost to build the product?

* How much will it cost to sustain the business? Consider capabilities like customer support, account management, or maintaining stock.

* How much will it cost to acquire a customer?

* Given the customer’s willingness to pay, how many months will it take to break even on customer acquisition costs?

* Do I have enough funds to sustain the business until we break even, even if that takes three years?

?The curse of the tech industry is that it’s easy to write code and build something. But before you write a single line of code:

Answer these questions and do the math.

Determine whether you can fund a business in this market, and only then go and build a solution.