Building Product-GoToMarket Fit
Behind all successful companies is not only a unique product idea, but one that fits to a unique wedge user.
We almost always think of businesses as their product.
Airbnb lets you easily rent someone’s apartment for a night. Stripe is an API to embed payments into your app. Brex provides corporate credit cards.
This way of describing companies make us think that companies succeed because of original and innovative products.
Yet in the early days of our startup, we’re learning this isn’t necessarily true.
For new companies, customer acquisition is really hard. Why? Because no one knows about your product, your product probably doesn’t work that well, and you have no reputation yet.
It takes a long time, lot’s of money, and lots of people to create complete products. And if it doesn’t, then likely it’s easy to be copied or disrupted. So founders have to get comfortable with making product tradeoffs.
Becoming an expert on your customer becomes crucial. Companies with great founder-market fit leverage this from day one. They often have expertise that helps them know what problems their customers care about and also an existing channel and reputation to find initial users.
It’s not obvious that finding your initial users is different than finding any user. But it is. To do this, it’s important to find a segment of people that is extra passionate about the pain point you’re solving. There are some common traits of these segments:
An existing call to action
Potential users may be going through some specific time where they especially need this solution. For example, Brex initially targeted brand new companies who had no current credit card solution but definitely wanted and were searching for a credit card. Or in an example of our own, I wanted to set up a company blog and was looking for blogging solutions. I use Notion and stumbled upon feather.so which uniquely fit my needs because it uses notion as the backend database. Their smaller reputation and niche product which only supports one integration are not a concern for me, because I was searching for a solution and they perfectly fit my niche use case.
A situation that makes this pain extra difficult
In the early days of Airbnb, it would be a lot to ask someone to book a random apartment from a random person in a random location.
Instead, they started by focusing on a conference in a nearby town. Why? Because there was a uniquely pressing problem, which was that for a single weekend, a lot of visitors would be coming to attend this conference and hotels would be swamped (because they would not normally need to support this kind of traffic).
Airbnb could capitalize on this. Because the problem was so exaggerated and attendees were desperate for a solution, they could overcome the other flaws in their product (booking from a random stranger on a site with no reputation).
By leveraging this strategy, you can convert early users and start a flywheel that over time builds the company’s reputation while you fix the product’s flaws. Since users are pleased that you solved a critical problem at a critical time, they will be more likely to use the product again and more likely to spread it to their friends. This helps start an initial PLG (product-led growth) motion.
A unique and personally relevant opportunity
When Substack started, they found existing writers and gave them a unique proposition. What if instead of writing for your current publisher, you could be your own publication and get all the upside from having a wide readership? They found existing successful writers like Bill Bishop and Casey Newton (and a lot more). These authors already had a reputation with a large reader base and so an opportunity like this offered them a very unique proposition to better monetize their fan base while simultaneously gaining autonomy over their content.
Circling back to where we started, understanding our customer and the channels to reach them leads us to the key insight.
Key Insight
Design the product for the early users not for your average user. This is the essence of Product-Customer Fit
What does this mean in practice?
Brex didn’t even have a landing page or onboarding flow to get the initial credit cards. They were targeting brand new startups - people who could sympathize with these flaws and also didn’t care about advanced features. Brex onboarded them via email. No busy founder would mind setting up their credit card by just sending an email.
Substack didn’t design any discovery features. It wasn’t at first designed to help new authors, only authors that they knew would come with existing readership. They just managed payments and triggering emails for new posts. Only recently have they opened up the ecosystem by creating a feed and content recommendations for finding new authors.
Robinhood focused their initial offering to serve millennials who didn’t have an existing way to buy and sell stocks. Because of this niche audience, they didn’t have to build out any complex trading analysis features because their audience didn’t care about that functionality.
Doing this is easier said than done, but keeping it in mind is helpful when making crucial decisions around product tradeoffs. The hardest part is creating an ultra specific definition for your initial wedge user, and figuring out what will resonate with them. The best thing to do is to start with a few targeted definitions (should roughly equal ~2.5% of your total market) and reach out to start conversations. Mention the specific thing you can offer and use the conversation to figure out what to prioritize in the product.
We all know that companies start with very limited initial products, but we often miss that the reason it works is because they focus on a complementary narrow customer segment. Behind all successful companies is not only a unique product idea, but one paired with a unique wedge user.
If you like this content, please consider subscribing to this newsletter and/or following me on Twitter!
Love these posts! Feels hard to find articles with original and useful founders advice. Your substack has been a total gold mine. Looking forward to more!