In a post titled, "On product/market fit for startups," Marc Andreessen writes, "This post is all about the only that matters for new startups." But what exactly does that mean and how can this information help you and your business?
First and foremost, product/market fit refers to the degree to which a product satisfies a strong market demand. To put it another, maybe simpler, way: "The best team with the best product will fail if the market is not there."
Providing value is critical for the market you aim to serve. That value needs to be instantly understood and the quicker your customer understands the value, the more the business owner has achieved product-market fit.
How well are you demonstrating this important concept to investors?
Because make no mistake, they want to see that you "get it." Failing to show them you've mastered product/market fit could kill a potential funding deal.
Here's how investors recognize a successful start-up--and how you can increase your chances of being that success story!
Show that you understand the current needs of your customers and can project future needs.
Is there market opportunity? Will many people buy this product? This step takes time and experience, trial and error.
Spend time learning about your target market whether that means writing for industry blogs, attending tradeshows or finding a mentor within the same market. If you have a fundamental understanding of the problems facing your customers, it will enable you to better relate to them and therefore supply them with a solution to their problem.
Show that you understand minimum viable product (MVP.)
This refers to the most pared down version of a product that can be released with the intent of gauging interest. Narrowing your scope down to one core feature is difficult, but necessary. To determine which feature you should focus on, study your customers, analyze trends in the industry and examine why your competitors have failed.
The most effective way to build credibility is to relate to your customers. Why and how will your product or service help them? Most products and services are born of necessity by the creator, share your story. Investors want to know that you're credible, as their investment is a reflection on them, as well.