Testing Product Fit Without a Product

You can do a great deal to test market fit without building an actual product. However, until you’ve shipped something real, you can’t be certain you will have success. You could find yourself at a dead end.

To elaborate, I’d like to parse what “product/market fit” means. PMF requires a product that’s technically feasible to develop, loved by users, and meets the revenue growth expectations of its business stakeholders. An abstract representation of a fitted product looks something like this (where the “+” at each vertex indicates fit):

Screen Shot 2014-09-19 at 1.58.17 PM
The opposite of fit is misfit. A misfitted product is too expensive (or impossible) to develop, not valuable for a sufficiently large customer base, or lacks sufficient revenue growth. A completely misfitted product looks like this (where the “-” at each vertex indicates misfit):

Screen Shot 2014-09-19 at 1.57.57 PM
Product builders start with nothing, misfit at all three vertices (Level 0). They succeed when they discover fit at each vertex (Level 3). There is not a formula for advancing from Level 0 to Level 3. But the below map, at least, can show you where you are and the possible roads to victory.

fitroads_bare
I’ve circled in red above the farthest point a product builder can get without building an actual product. This is the “vaporware” scenario. You can sell a product without building it. This entails communicating the intended capabilities of your product to potential customers and convincing them to actually buy it before the tangible product exists. It can be hard to persuade people to buy something they can’t touch, but with sufficient sales technique, it’s doable.

This product building approach has its advantages. Building something with validated demand can be safer than investing in a technology that possibly nobody will use and/or pay for.

However, the success of this approach rests squarely on the assumption that the product builder can find a road from level 3 to level 4 in the above diagram. This requires that

(A) it will be economically feasible to deliver the product, and

(B) people will successfully interact with the product when it’s real.

Both requirements can break down leaving the product builder at a dead end.

An extreme example of requirement A breaking down would occur if you were selling time travel. Validating that there is a market for time travel is relatively worthless, assuming you can’t deliver on the proposition. A less extreme example would be an airline business. It’s on thing to prove that there is a big market for air travel, but another to prove that you can deliver profitably. You won’t know if you have a winning equation until you actually execute the service.

Requirement B breaks down when your customers are subject to an attitude-behavior gap; that is, when users may think of themselves as wanting a service that they won’t actually use in their real life. YC’s notion of “sitcom startup ideas” (see How to Get Startup Ideas) can fall in this category. To borrow one of Paul Graham’s examples, many people who care about their pets would say they would use a social network for pet owners, but few actually would in reality.

That said, sometimes discovering what people want and will pay for is the hard part of product building while developing the actual product can come relatively easy when the technical components are predictable. After, you’ve sold your vaporware, sometimes you can deliver on the value proposition and enjoy a thriving business.

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