This morning, before I headed over to Atlanta Techstars for a mentoring session, I had the honor of reviewing applications for the LaunchTN Tenn Program.
(The Tenn is the Tennessee statewide master accelerator. It’s only a couple of years old, but just in that short time, its 24 lifetime startups have raised over $14M, with 25% female founders. Tennessee is a regional leader in how a state creates a stronger entrepreneurial ecosystem.)
Observations on the Product/Market Fit Question
Reviewing those applications, while also reviewing final scores from the finalists at Valor’s Startup Runway Fall 2016, allowed me to see over 50 answers to product/market fit questions in just a few short hours. My main take away was that how the entrepreneur answers the product/market fit question reveals even more about entrepreneurial vision than it does about product market fit.
1. Half answered yes to product/market fit
Most also believe they are hypergrowth companies. Over 90% had less than a million in revenue. Given the trajectories painted, on average this isn’t logical. Interestingly, the more revenue companies had earned, the less confident they were about answering “yes” to the question because product/market fit was becoming an evolution and a chase, not a one-and-done. These answers were by far the more thoughtful (and interesting).
2. Product/market fit is a great revealer of founding team vision
If you envision your technology changing its industry and possibly the world, you might be inherently dissatisfied with the market as it now stands. The product is a symptom of that and so fit is not exactly possible in the early stages. Measuring the conversion of customers to the new reality revealed by your solution, is. How sticky is the solution, how many daily active users, how much are they willing to pay?
Founders who are market changers have a different type of answer to the product/market fit question–and it’s often not “yes” but “here’s the journey we’re on and how we know this is the path.” Even in its best case, it’s not a simple yes even though most applications I looked at today said just that.
For this reason, how an entrepreneur answers the product/market fit questions reveals more about their vision and its scale than perhaps any other question in the standard toolkit. What do you notice about the evolution of product/market fit, and how to communicate it?