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When You Lose Product/Market Fit
Finding PMF is rare, but losing it is common. Here’s what to do if you lose your PMF.
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Finding Product/Market Fit (PMF) is a magical experience. It’s like swimming against the current, and then magically the current shifts and you are swimming with it. Everything you do is easier, and instead of fighting to build the company step by step you are racing to keep up with the business. There is nothing quite like it.
Unfortunately, it’s very rare to find PMF. Sure, some people find it immediately but some people also win the lottery. For most of us, if you do find PMF, it’s the result of a few years of hard, painful searching. Most companies never find it at all.
After you find PMF, it’s tempting to think you’ve made it. That everything will now be easy for the rest of time. PMF is a gateway that unlocks the company you’ve always wanted to build, and it’s the reward for all of that hard work in the early days.
If that’s what you think, I have bad news for you.
Once you’ve found PMF, it’s very likely that you’ll lose it.
PMF is not a destination, it’s a state that comes and goes as your business grows. It doesn’t matter how big or small your company might be, you are still in danger of losing it and having to find it again.
The signs of lost product/market fit are obvious:
High churn rate of existing customers
Decreasing growth of new customers
Difficulty in hiring/retaining key employees
Resistance from investors
So, what do you do if you lose product/market fit? First, you need to decide if you want to find it again. Sometimes, your business has grown big enough on the back of your previous PMF and you might just want to run it as a profitable business. That’s a fine outcome for many companies!
But it’s more common that without PMF your company will wither and die. The growth your company was based on is fundamental to its economics, and the competition might not have lost their PMF. As a result, you need to find a new PMF as quickly as possible, before the damage is too great.
Here’s a simple plan you can use:
Step 1. Understand What Changed
If you lost PMF then something changed, either in your business or your market. You need to identify exactly what changed! Usually it means one of the following parts of the PMF equation shifted:
The Use Case
You need to throw away all of your assumptions about each and explore them from the ground up. Are there new competitors at a lower price that mean you need to change your business model? Have the problems you solved for buyers changed so that you are no longer a necessity? Have the acquisition channels you use shifted and you need to find new ones?
If you look hard, without ego, you’ll find one or more fundamentals of your business changed. You might not have noticed when it did, but at least you notice now. When you’ve identified what they are you can start to design fixes.
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Step 2. Rediscover Experimentation
The hardest part for many companies is going back to a culture of experimentation. In the early days you thrive on experimentation in search of PMF. When you hit PMF you switched to focus on growth and optimization, since you wanted to make the most of the engine that was working. Experimentation gave way to engine building.
Now you need to find a new engine! You might have forgotten what it was like to experiment, and many of your team members might never have worked in the experimentation stage. It can seem scary and unnatural to people who have only worked in the growth/optimization phase.
But you still need to experiment. Take small teams and task them with running experiments and rebuilding the skill. Encourage crazy ideas, and be ruthless about killing experiments that don’t work.
At this stage you don’t measure success by moving metrics, success is measured by your experimentation velocity. Are you running more experiments this week than you did last week? If not, pick up the pace.
Eventually you’ll have run enough experiments to be able to see what might work.
Step 3. Find Signals
Out of all the experiments you run, some will be promising. They might not move metrics yet (there are no easy solutions) but they will address the things that will move those metrics. For example maybe you’ve found a way to better engage with users, and that might eventually reduce churn.
These signals are the building blocks of your new roadmap. All of your prior roadmaps (product, marketing, etc) go out the window and you start over again. You cannot afford to let the momentum of your previous business carry you forward, you need to start fresh and build on any signal you find.
Your team will find this part very shocking, but soon they will realize you are addressing problems instead of avoiding them. The more signals you find, the more your roadmap will be built of things that can make a difference. That will inspire your team to move faster.
Step 4. Relaunch
Once you have faith you are making progress on addressing your problems, it’s time to plan a relaunch. You won’t have solved all your problems, but you have shifted the way you work to make sure you will.
There are many reasons to do a relaunch, but in this case it’s a signal to your team that you are a new company. You need them to leave the old ways behind and get behind the new business & roadmap. Like celebrating a birthday, you can recognize the past but focus on the future.
As a result, the relaunch is like a big party where you celebrate the potential of what you will build. It should inspire your team and energize them for the hard work ahead. Most importantly, it should be the end of the previous chapter of the company.
If you are lucky to find PMF again, you’ll be an entirely different company. That’s a good thing, all companies go through different stages of their development and at each stage the company makes radical changes.
The important thing to remember is that you are likely to find and lose PMF multiple times over the life of your business! It’s not a sign of failure, or mistakes that you made along the way. Okay, maybe there were some mistakes, but you weren’t alone in making them.
So, if you lose Product/Market Fit don’t panic. Don’t waste time. Just find it again.
For more on product/market fit and product strategy, see:
Beware of the Plateau of Death!
Solving The Day Zero Problem is a critical advantage.
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