This past year, I joined in on presentations and discussions on how to find product market fit (PMF) with successful startups and scaleups at a product market fit academy. The ever-elusive “product-market fit” is the key to unlocking rapid growth, and this article walks you through a real and actionable case study.
I’ve summarized the key takeaways for rapid growth that you can start today alongside my perspective from heading growth at prior scaleups and startups. Spoiler alert: These actions are centered around product research as the core pillar for growth.
One particular PMF session I was intrigued by was with an ed-tech scaleup that had three-year revenue growth of 334.6% and an annual bookings rate of $45M+, and I learned firsthand how this happened.
For context, this ed-tech scaleup was founded in 2013 and features self-paced online courses for tech careers like coding, data, design, cybersecurity, etc. They are a project-based course in a flipped classroom model with 1-1 mentorship and a job guarantee.
But first, what is product market fit?
According to Marc Anderseen, the legendary entrepreneur, co-founder of the VC firm Andreessen Horowitz and creator of the once-dominant web browser Netscape:
“Product/market fit means being in a good market with a product that can satisfy that market.”
In my experience, when you have it -- you will know because sales will skyrocket. It will feel like there is an organic pull from the demand versus pushing against resistance to sell a product.
Sean Ellis ran growth in the early days of Dropbox, Eventbrite, and other startups and found a leading indicator: just ask users, “how would you feel if you could no longer use the product?” and measure the percent who answer “very disappointed.”
He benchmarked nearly a hundred startups with his survey and found that companies that struggled to find growth almost always had less than 40% of users respond “very disappointed,” and companies with strong traction almost always exceeded that threshold.**
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So now that we are on the same page, let’s dive into how this scaleup found product market fit (PMF) and, thus, rapid growth:
1️⃣ Start with research, and after launch, make it a “BAU.”
Throughout their journey to PMF and growth, this ed-tech scaleup made sure that research was at the center of what they built. In the beginning, before finding product market fit, this meant using:
- User Research: Interviews and surveys to understand user pain points
- Relevant Stakeholder Research/Feasibility Analysis: With potential employers that would use their platform to better understand their needs. They learned some key questions like: What does their ideal candidate look like? Are they open to hiring from non-degree programs?
- Competitive Research: What they found was that many coding boot camps but no job-guaranteed Data Science boot camps existed in 2016
Many unicorn startups began building their products by talking to their customer first, as did with fast-growing scaleups. They took the learnings from customer needs, pain points, and market gaps and applied it to the product they ultimately built and kept iterating on their product even after launch.
Even after finding PMF, they continued to make product research a business, as usual, “BAU.” Working with many startups and scaleups, I noticed that there is a tendency to wait for a decline in numbers to justify the research. Waiting for retention to decline or sales to plummet before you start is a big risk as the landscape changes quickly, and you leave a lot of money on the table, as it can be the catalyst for growth.
2️⃣ Make research BAU by integrating research into your product
The GM told me that they integrated research at different and critical parts of their customer journey. By integrating feedback inside the actual product, it was easier to address the evolving needs of their customer without much work. They essentially built a system to keep uncovering unmet needs, which is fundamental to driving continuous growth.
In my experience working with startups with research integrated into the product, we need to be mindful to also watch how this may affect conversion numbers. Typically every additional step or interaction will create some drop-off, so it’s finding a balance between conversions and learning to be strategic in the placement of research within the customer journey.
The ed-tech scaleup built proprietary tools to capture customer research through their product. There are existing plug-ins to also do this.
For example, you can deploy quick and short surveys from tools like Hotjar, which also serve to give you valuable insights into how to optimize your website with heatmaps and recordings of actual customer journeys.
3️⃣ It’s not just about asking the right questions but asking the right questions in the RIGHT way
Though they didn’t talk about this explicitly, what I’ve personally found through my own experience is that it isn’t just the research but doing research the right waythat gets the results. It may not sound hard to talk to customers or throw up a survey, but research is both an art and a science.
Identifying the problem space, who to talk to, asking the right questions, AND in the right way all have massive implications on what you will do next, so make sure you’re working with someone who knows how to do this or follow
For example, if you own a gym and ask a research participant if they exercise -- chances are they will say yes. But if you ask them when they last exercised, maybe they might answer 12 months ago, which will radically change your understanding of this person.
Furthermore, asking them to tell you about the last time they exercised or to tell you a moment in which they had challenges while exercising will enable them to tell you a story that can enrich your understanding of the opportunity space. These types of questions are best for user interviews vs. a survey. Knowing which format to leverage and when is also part of the equation for good research.
4️⃣ It’s not just about the data
When I heard the data that came from the ed-tech scaleups’ interviews and surveys, I realized that the interpretation of the insights is what drives the successful outcomes of the data. They had a brilliant product manager who wasn’t just good at data but also had good intuition. These days, the buzz is around a large data set, but the value is largely dependent on the person’s ability to interpret that data. Good intuition is rooted in a deep understanding of your users. It is the blend of both the data and intuition that drives the biggest insights. And that is how startups like this one built and iterated on a product that works and scales.
5️⃣ Even if you’ve reached millions in revenue, product market fit is an ongoing exercise.
The ed-tech scaleup currently helps address the skills gap in the market with tailored educational content but started as a search engine for careers. This immense pivot was based on good user research! Early on, finding product market fit might require significant pivots. Later, it may require big updates to the current product to find your next phase of growth. Growth leaders continuously look for ways to adapt to the ever-changing landscape and their user needs.
Constantly look to the future and how to evolve your product even after you find product market fit.
It will be interesting to see how they evolve their product further to continue their 300+% growth!
Final Thoughts
So now take a quick look at your own company. Does it currently see product research as “BAU’’ or a one-off “when it’s needed”? Are you doing the right research and in the right way? It may be the very defining difference between slow and rapid growth and whether your startup finds the elusive product-market fit.