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Emprendimiento digital, startups, Big Data Analytics y nuevos modelos de negocio

The concept of "Product-Market Fit" for startups

The "Product-Market Fit" is mentioned as a fundamental idea in the main modern methodologies dealing with startup creation. To understand it better, I will bring Marc Andreeseen's Guide to Startups back from 2007. The concept of Product-Market Fit is better explained by what it isn't, i.e. by the features of a startup that hasn't reached that point (the ratio of cases where this happens over the total of startups explains that most of us understand better this definition "in negative").

In the words of Marc Andreessen:
"You can always feel when product/market fit isn't happening. The customers aren't quite getting value out of the product, word of mouth isn't spreading, usage isn't growing that fast, press reviews are kind of "blah", the sales cycle takes too long, and lots of deals never close."
Turning the concept into a definition "in positive", the Product-Market Fit is the moment when, after worrying more and more about those two key pieces in the puzzle trying to make them fit, in the end you hear that "click" between product and market. Then, depending on the features of your business, your startup's momentum changes to a state where, ideally, your sales volume is determined by how fast you can sell to your demanding customers or how fast you can scale your servers' capacity.

This idea is mentioned in Steve Blank's Customer Development methodology. In this case, after a first stage of Customer Discovery, the following stage of Customer Validation must aim at reaching that point where product and market fit. This goal is also described by Steve Blank as "finding a repeatable and scalable business model". He also explains it using the Business Model Canvas as a supporting tool, explaining the Product-Market Fit as the point when, after succesive revisions of the hypotheses written on the canvas, the "value proposition" (materialized in a product) and the "customer segments" (market) finally fit.


Other approaches such as Brian Balfour's also mention this concept. In this case, Balfour proposes a first step of "Traction" in a startup's growth stages, whose goal must be to find that Product-Market Fit in one of the segments of your targeted market,  and to estimate your business' potential according to that segment's size. Brian Balfour's proposal also includes a series of tests to control whether the Product-Market Fit has been reached and, as a result of it, your startup is ready for the following stages.

These stages are summarized in the pyramid-shaped diagram created by Sean Ellis which illustrates this blog entry:


[Haz clic aquí para la versión en español de esta entrada]

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