Finding product-market fit goes beyond just solving a problem — your product needs to resonate with the right customers in the right market. But how do you know when you’ve found this fit? And once you have, how do you sustain it? If the market demands a shift, should you consider pivoting or doubling down on your strategy?
In our latest Sifted Talks, we uncovered all you need to know about finding — and developing — your product-market fit, as well as strategies for scaling and deciding when to pivot.
Our speakers were:
- Alex Weber, scout investor at Sequoia Capital; formerly head of growth at German Neobank N26.
- Rhiannon White, the chief executive officer at Clue, a period and pregnancy tracking app.
- Paulo Rodriguez, vice president of product at Vanta, a startup focusing on automating compliance.
Here are the key takeaways from the panel:
1/ Make sure you have understood a problem worth solving
Weber opened the panel and described a phase before product-market fit that he calls “problem-solution fit”. This is the stage where you ensure that you have truly understood the nature of your problem, including that it can support a sustainable business.
To achieve this, Weber asks three key questions: is the product desirable? Will customers pre-commit or pre-pay before it is available? Have you identified a minimum viable product that you can build within three months based on that research?
“Create a mock-up or product brochure that explains a feature or the product…something that you then put in front of the user to provoke a reaction. This is not yet a product that you will sell, but something to have in mind to better understand your problem.” — Alex Weber, Sequoia Capital
2/ Maintain a feedback loop between sales and product teams
Rodriquez said that product development must be in constant evolution, shaped by a strong feedback loop between sales and product teams. This feedback loop, he continued, is essential for identifying repeatable patterns that resonate with customers.
“You need to keep tension between sales and your product teams, where sales oversell the product, and it pushes product to go further. Or product builds something sales don’t want to sell, and this forces sales out of their comfort zone. Do this, and you’ll be in a good place.” — Paulo Rodriguez, Vanta
3/ Constantly communicate with customers
“Product-market fit is a never-ending story,” Rodriguez explained, “and you can easily lose it. As you scale up, it’s not hard to get disintermediated from the customer. Frankly, customers always move faster than you. That’s the joy of it.”
For example, when White joined Clue, she said some customers expressed a desire for more tracking options. The team redesigned, tested and released a new version of the app, only to discover that a less vocal group — users who favoured quick interactions — were highly dissatisfied with the changes. This prompted a deeper exploration of user preferences.
“You just must talk to people over and over again. You have to get on the phone, get on Zoom, go down the road — whatever it takes — to get in front of them, hear them, listen to them and see what they’re wrestling with.” — Rhiannon White, Clue
4/ Don’t forget about distribution
Rodriguez noted that startups inevitably hit a plateau at some stage and need to adapt as customer needs evolve. He shared an example from Vanta, where a successful pitch to founders proved ineffective with security professionals. By splitting the sales cycle to cater to these two groups separately, the company resolved the challenges.
When asked what to look for from an investor standpoint, Webber added that the best founders are those who are determined to solve a problem that they’ve experienced personally. Even if their first idea isn’t perfect, they’ll figure it out. That’s why, in early-stage investments, the team and their motivation are everything.
“From 100 customers, how do you get to 1,000? How do you find them? Where are they? What is your mechanic for reaching them? You must figure that out at the same time as you’re figuring out product-market fit. Otherwise, you can’t scale.” — White
5/ Always keep an eye on retention
Webber stressed that retention and engagement are key to growth, suggesting that startups benchmark their numbers against the rest of the industry. Why is retention so important? It extends customer lifetime and increases referral opportunities. If those metrics are strong, you have a solid case for investing in marketing.
White warned that retention is not a fast lever. Rather, it is slow to build and can be lost quickly. This makes it the lifeblood of the business: it can drive growth on the way up but also accelerate decline on the way down. “Never take your eye off the ball”, White cautions.
“Consumers are ruthless. They change their mind, and they’ll move on, whereas in the B2B space, you have a lot more control, but on the consumer side it is way more difficult.” — Rodriguez
6/ Pivot when you see demand
Weber shared an example from his earlier career in 2014, when his team tested a prepaid card connected to an app aimed at teenagers. Impressed with the product, the teens’ parents ended up keeping the cards. “We realised we were onto something,” he said, and then evolved the product to involve safer transfers.
This example proves just how critical the discovery phase is, Weber added.
When asked about how to pivot, Rodriguez explained that there are two options. The first is the evolutionary approach, which involves assessing whether the correct markets are being targeted. The second — and more difficult approach — is the “revolutionary pivot,” which involves shifting to a new product. This is very risky, he warned, and best undertaken by a small team.
“You need a humming engine that enables you to take risks. If your original model performs well, you’ll have a scalable business model. This allows you to allocate 10% of your resources to take calculated risks, while the remaining 90% reliably powers your existing operation.” — Rodriguez
Like this and want more? Watch the full Sifted Talks here:
Read the orginal article: https://sifted.eu/articles/product-market-fit-sifted-talks/
