fter working with startups (and building a few) for 14+ years now, I can honestly say that this experience is both exhilarating and risky.
One of the main risks is falling in love with your product.
When startups develop a product, they often get carried away with perfecting every technical feature, while forgetting to check if someone actually wants their product and is willing to pay for it, and who that might be. A solid Product-Market Fit (PMF) is either something you invest in plenty in advance or regret not doing so.
We recently hosted a panel as part of our first Quantum SPARK cohort and gave our startups the chance to discuss this issue with amazing mentors. Members of our second cohort will get similar exciting opportunities, so make sure to apply now.
Our speakers included Keren Fanan – CCO at Gett, in charge of building internal startups within Gett, such as Gett Delivery, Avner Cohen – a serial entrepreneur who was part of the founding team at Otonomo and is now the Co-Founder and CEO of Designars, and Aliza Tamir – who has extensive experience having worked at Nice and Microsoft and is now the CMO at OptimalPlus, which was recently acquired by NI.
Poor product-market fit is the number one cause for startup failure. As Keren Fanan put it, “PMF is a critical factor that can make or break a business.”
To make sure you’ll make it, here are more than a dozen tips from our experienced mentors.
The Product-Market-Fit (PMF) do’s and don’ts
1. Tailor your PMF for B2B companies.
The process is different for B2B companies. Instead of a critical mass of clients, you need one client to demonstrate that your product is ready for use, and a design partner who will offer feedback. It’s best if the same company can offer both, but not a must. Even if you’re targeting enterprises, a smaller client that offers excellent feedback is a great starting point.
2. Know which segment to focus on first.
Even if your startup has many potential target audiences, you must prioritize based on your resources and vision. Trying to tackle everything at once might stretch the product in too many directions and leave you with nothing.
3. Do your research and find the best contact to approach.
Ideally, your contact person will serve as an SVPs and up within the organization. If the company has an Innovation team, members can also introduce you to the right people. Avoid working with random connections who might leave the company someday and make your startup’s pilot vanish. Develop multiple meaningful relationships within the organization to improve stability.
4. Know if clients are willing to pay, even during the pilot stage.
Pilot projects test the market’s demand, gain feedback, and open doors. Paid pilot projects also test customers’ willingness to pay. You can offer an initial discount, but if no one wants to pay – it’s a warning sign.
If one wants to pay, how will you know if your product is actually valuable?
5. Ensure that your sales and BizDev teams know your product team.
and the departments have a direct and open communication channel. That’s where the “fit” between the product and the market comes into full play.
6. Hire more than one salesperson.
If sales don’t go as expected, it’ll help you figure out the source of the problem and know if it’s the product or the person selling it.
7. The product doesn’t have to be 100% ready.
During the early stages, a quick MVP or even a mock-up will help you reach the market, start gathering insights, and adjust your product faster.
Ask questions, build honest relationships, and generate trust. One way to both learn and form relationships before you have actual clients is by building a client advisory team to gain ongoing feedback. These “clients” may become paying clients later on, and this prior interaction could pave the way to future collaborations.
9. Don't name-drop unless you can back it up.
Mention your ties with other companies early on to generate buzz within your chosen vertical, but maybe not right after the first phone call.
10. Don’t focus only on ROI.
Proving ROI is great, but solutions that require a long and complicated implementation process can be tricky. You might struggle to deliver a positive ROI initially or scare clients away by detailing the implementation costs early on.
11. Know that it’s up to you.
Entrepreneurs should be able to sell their products. Aliza Tamir told our startups to “work hard, stay motivated, and keep knocking on doors.” You need patience and determination because this process can be daunting.
12. Don’t assume that you know what the future holds.
We all learned this valuable lesson in the past 12 months. Markets change, and your product should be flexible enough to adjust accordingly.
13. Don’t fall in love with your product.
This critical advice was the starting point of this article and is important enough to be the final note as well. One of the best startup tips is “fall in love with the problem, not the solution.” Get to know your audiences and their challenges, and grow your product in a way that will enable it to adapt to the market’s changing needs and scale as you grow your customer base. As Avner Cohen said, “never fall in love with your technology and never become rigid.”
We know how hard it is for startups to achieve PMF, and the best way to learn is by listening to those who already did it. , Thank you to our mentors for offering practical tips to our startups. If you want to learn more about how we help startups achieve Product-Market Fit, check out our opportunities for startups.