For the first half of 2015, I spent most of the time on the product market fit (PMF) process, trying to (in)validate a business idea. This week at Founders Coffee I was asked to summarize what I gleaned from the process. I've summarized it here:
Are you passion focused, success focused, or trying to find a happy medium?
You can focus on the product, or you can focus on the market, when finding product market fit.
Establish your solution hypothesis and your target market.
In tech startups, many entrepreneurs are excited about their tech product or service, so they race to create a minimal viable product (MVP) without validating through PMF. If your goal is simply building something, that's fine, but this this increases your chance in failure. This leans towards passion over success.
The other end of the spectrum is you can simply identify a target market (customer), and talk to them, without any product or service in mind, and after the PMF process you will identify a pain you can hopefully solve. That's right, you don't even need to have an idea to start a successful business. In fact, the less attached you are to a product or service, and the more you're attached to the product market fit, the more aligned you'll be with the customer's values, which will likely lead to more business success.
It's best to have an initial hypothesis on a pain you will solve with your target market, otherwise PMF becomes a longer process, as it's so broad. The more narrow your focus, the better, from an optimization perspective.
Just like your hypothesis on a potential product or service, you also need a hypothesis on who your target market is. Most people want to default to "everyone", but the more narrow, the better.
Is your product or service for a specific age? gender? geography? Do they have a shared interest or business? Give your target customer a name, and try to describe them in detail.
The ideal is to find a balance of a product or service hypothesis to (in)validate, with a desire to match that with customer values.
Reach out to interview
This is often the hardest step, but reaching out to interview people is critical. Start with getting referrals to your target market. You can use tools like LinkedIn, or ask your friends if they know anyone, for an information interview. There's an automatic extra level of trust if you get an interview from a referral which you can't beat with a cold call. It needs to be clear to your target market you're on the market research side, not the sales side. At no time during this entire process should you be trying to sell something, and that needs to be clear to your potential interviewees. In fact, you should never even mention your product or service during the entire product/market fit process, if you're doing it right.
If you've run out of referrals, it is time to cold call/email for an interview. This is challenging, but remember this interview information improves your chance of success, so you won't let anything slow you down. You want to have optimized your cold call pitch to friends and family before live calling.
Every question and statement should be written down and rehearsed. You're asking for a short period of time from this busy person, maybe 20 minutes, where you can ask some questions for market research or an informational meeting on topic x. Topic x should be the category your product or solution falls under. You want to establish yourself as much of an expert as possible, and allude to the value. In my case, I offered to share the results of my research with all interviewees. If they declined, they know they would miss out on the results.
I would often ask for time "over the next week" leaving the window open for busy schedules, but limiting my time on the process as well.
Draft your interview questions
I'll write more on this later, but you want to spend a lot of time here. Again, this process doesn't work if you lead the witness, so there is no such thing as too much time spent on drafting out bias from your interview questions.
You want to start by asking a light personal question about the role of the interviewee in the scenario. If you have a business product for example, you would ask the interviewee what a day in their job looks like, or what their role is. If your idea is an innovative new straw, you would ask them how many times a day they drink something, and ask them to describe their drinking process to you. Ask them what's the worst thing that's happened to them while drinking something, how many times it's happened, and what they did to resolve it. Ask what solutions exist to resolve this, and then when they answer, why they use those solutions, or don't.
The most important thing to remember, is you're just as eager to invalidate your idea as validate it. At no point during the interview, should you fully disclose your product or service. Your questions should be in the general category or topic area, but not directly asking.
When you ask the potential customer about their pain points in the general topic area, you're listening for them to identify, or not, your potential space. This process is all about listening. Ask more questions, and drill down. You want to get to the root of the pain point. I'll write later on how to formulate these questions in advance, but essentially you want something like the 5 whys. The more the customer explains the issue, and you understand the value of what they're trying to solve, without offering a direct solution. You're working towards letting the potential customer identify their values, and ideal solution. By the end of a couple of my interviews, I had major potential customers interested in buying my product/service, even though at no time did I even mention one! They instead identified solutions to me, and I asked them questions to optimize outcomes for them.
Ideally you should ask to record the interview. Once asking to record, there was less openness to discussing pain points, so if you're a great note taker, maybe you can avoid recording. I transcribed my interviews to help recall them, and then listened to them a second time later to find which tidbits I missed.
You want to note not just the words, but tone and inflection. If someone gets excited, or raises their voice for certain words or phrases, note this passion down.
As you get more experienced, you can stray off-script, but for the first 5 interviews, I wouldn't. This way your data matches your questions exactly.
The most important exercise is determining values. What are the values of the customer? The feeling is very important in decision making. Do you share the same values? What are the values of their job position or where they work? What are their values around using the products or services in your proposed industry? What are their desired outcomes and objectives? What feeling do they want, or get currently?
Determining the values of the potential customer will allow you to reshape your product or service to align with those values.
Hopefully after interviewing as few as 5 people, you can review your interview questions for the next 5 interviews. You're ideally finding a common pain point or two, and can reshape the questions in that general directions, but not direct.
In my case, after my first 10 interviews I ended up with 8 overlapping pain points in my industry, instead of just one or two big ones. From there, I can pick one, and start the process over for the next 5 interviews. You want to continue this process until when you start to ask the high level questions, you're getting very similar responses to validate you've found a genuine pain point.
In 10 interviews, you'll have identified several pain points. By 20 interviews, you'll have drilled down into at least a couple pain points, to determine if they resonate across interviewees and if so -- you now get to decide if that's what you want to spent the next 5-10 years of your life resolving.