INSIGHT

Punch-Drunk Love

Why startups need to stop throwing product market fits.

Maybe. Sure. Why not? Empty that 401K. DO IT. An app for the underserved bread toasting audience! We’ll have a social feed to share toast pictures, with inspirational toast stories. There will be comprehensive toast rating scales, and badges to gamify toasting. Our grandchildren will wonder what it was like before we decided to disrupt Big Toast.

Product-market fit is designed as the antidote to startup failure: Iterate rapidly. Fail fast. Keep changing until you find the version of the thing they are willing to pay for.  

For a company or brand, a too-early focus on product-market fit often results in a single-point-of-failure mindset. Organizations are not ready to face iterative change because they don’t have a core understanding of who they are and what they stand for. They haven’t anticipated that the product-market fit process might strip them of their integrity.

As fast failures mount, the fallacy that most often follows is that a big break must be coming and that this success will restore their integrity. This Kool-Aid is deadly. It’s the indulgence that sunk costs (vision, capital, intellectual property, liquidated retirement accounts, some kind of crypto, blood-sweat-tears, etc.) are a currency that can buy success without luck or someone else’s money. They aren’t.

No matter how dear the vision or valiant the iterative effort, neither will create a market for a product/service in any sustainable way. Plus, small gains let young companies fall one foot in front of the other and confuse that with walking confidently. Living another day, only to fight the same fight again tomorrow, often delays the inevitable fall, because the space needed for product-market fit does not exist in the company (or the investors’) coffers. Or, because The Toast App was a shit idea, no matter how you slice it.

The reality is that product-market fit is first an investor-focused approach to ROI, not a foundational strategy for growing a company based on vision, hopes, and dreams.

Investors are typically hedging with many investments in play at once. Boasting a 2/100 success rate (investors) with some amazing returns that make the 98% failure rate a cash-positive position is infinitely better than a 0/1 success rate (you, broke and in search of a job).

Let’s consider that entrepreneurs are also often told by their investors that to be truly innovative, they should follow the roadmap of the successful startups that came before them. I’ll give you a minute to consider the definition of either “innovation” or “irony.” Your choice.  

Instead of jumping right into the product-market fit approach, designing a brand strategy that considers a state of market readiness first is critical. Market readiness is a primed state—not a process—based on the evaluation and (re)design of a brand, product, idea, or system. It is a practice that demands that an organization understand itself and stay true to itself throughout the processes of iteration and growth.  

With a solid foundation grounded in market readiness, an organization can confidently anticipate and plan for change. When it’s time to execute the change (and explore product-market fit), sustainable success and actual growth are much more likely.

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Matthew Thornton
15 March, 2022