Why You Should Go for Market Fit as a Startup Instead of Profitability
I have read a lot of definitions of what a startup is. However, one of the few that stuck with me is Eric Reis’: “a startup is a human institution designed to deliver a new product/service under conditions of extreme uncertainty.” It reminds me of something Big Chief Victor Asemota said about startups being experimental.
Oftentimes, founders forget that what makes a startup successful is not the idea(s), but the market. The market determines if your idea will succeed or fail. Basically, the market gives a startup its purpose.
The uncertain conditions of the startup niche have made it almost mandatory for every startup that wants to survive to be flexible — constantly evolving. Very few startups achieve market fit from the beginning. Iteration is key.
Evolution, in this case, might mean deciding on a different approach, or it might mean killing a part of (or the entire) idea, and pivoting (somewhat like a phoenix from its ashes) into something entirely different based on feedbacks gotten from the failed “experiment.” The objective is to be flexible enough to adapt to changes and market needs. Again, iteration
Finally, it is better to build with market fit in mind than profitability.
When discussing project ideas with my team, the question “how will this make money?” usually pops up. I always quell it, and instead encourage them to ask “how will this be of value to the market?”
Two distinct paradigms towards achieving the same goal. While the former focuses on the startup and what it offers, the latter focuses on the market and what it needs.
Value proposition and “market fit” is EVERYTHING when a market is looking for a way to solve a problem. The market doesn’t seek perfection first; it seeks “value.”
- Victor Asemota
One of the reasons I choose to ask the value question instead of the profit question is found in Reis’ startup definition, “Uncertainty.”
In carrying out an experiment, we usually have an end goal in mind but more often than not, the result we get is not always what we originally had in mind, and we have to iterate. It is the same with startups. Asking the question “how will this offer value?” makes you flexible in your approach, thus enabling you to adjust as quickly as possible to the ever-changing needs of the market.
Of course, this is difficult to do, especially in an economic environment where positive cashflow seems like the Holy Grail. However, it is easier to ask people to part with their money when your product solves their needs.
Make your value proposition clear from the get-go. Kill ideas (or part of ideas) that offers no value to the market (Quitting, in this case, is not a weakness) — this should however be based on data and feedbacks gotten. Focus on meeting the customers’ needs and achieving market- fit, and profitability will take care of itself.