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You Are Not a Business, Yet
Until you find Product/Market Fit you aren’t a business, you are an experiment.
On a regular basis I meet teams working on extremely interesting ideas. They might have a product, maybe early customers and might even have raised some financing. The problem is that they are acting like they have a business, setting goals like “$1M in ARR” or “100k users”. At such an early stage, this is a massive waste of your time.
Until you reach Product/Market Fit you are not a business, you are an experiment.
Businesses focus on sales, revenue, profit and growth. If you are running a business you want to know how to increase your conversion rates, accelerate your growth rate and beat the competition. However, all of that assumes you have a strong foundation to build upon! If you haven’t found Product/Market Fit (PMF) you are building sandcastles on the beach.
Instead of acting like a business and focusing on revenue or growth, early companies need to focus on the rate of experimentation and learning. You want to find your business, so the most important measurement is how fast and how far you are searching. The faster you run experiments, learn and iterate the more likely you are to find your business and find Product/Market Fit.
If you are an early stage company that is searching for Product/Market Fit here is a list of Do’s and Don’ts:
DO set goals based on the rate of experiments you run and how fast you learn. Try to run more experiments than you did last week, every week. Record your learnings and watch them grow.
DON’T focus on revenue or customers, since you don’t even know who your target customers will be in the future!
DO focus on the problem you are solving instead of the solution. If you fall in love with a solution, you have a hammer and will try to make everything a nail. You should be willing to throw out your solution/product if you learn that there is a better approach.
DON’T feel like you need to support customers forever. If someone starts to use your service but your learnings take you in another direction you should fire that customer. You cannot be agile if you are bearing the cost of maintaining and supporting customers that no longer fit your business.
DO focus on your strengths and creativity! When searching for PMF you have infinite flexibility and that is where innovation comes from. Be innovative
DON’T compare yourself to other companies, the path to PMF is twisting and different for everyone. Some companies find PMF in a few months, but for all of my companies it’s taken 2-3 years.
It is a hard road to experiment constantly, as it often doesn’t feel like you’re making forward progress. This is especially true if you have friends or peers whose companies found PMF and are growing fast. There are no shortcuts even if some people have an easier road, so you need to stay committed to testing and learning until you find your business.
How do you know when you’ve achieved PMF and transformed from an experiment into a business? That’s a good question, read “Do You Have Product/Market Fit?” for answers.