006: Understanding Product-Market-Fit
An engineer’s guide to partnering with product
Thank you for joining us for today’s 5 Minute Tech Challenge! We’re so glad you’re a part our community. I’m back today to share some of my learnings from working as a product engineer. Let’s dive in!
I recently heard an analogy about finding product-market fit that resonated with the math-geek in me. Imagine that two people, Amira and Jordan, are trying to find the highest point on Earth. They employ two different strategies: Amira takes every step in the direction that is sloping higher, while Jordan looks at the horizon, makes his best guess for where might be higher land, and walks in that direction.
Amira will always be moving higher, which seems to help her goal. But there’s a risk that she ends up stuck on a smaller hill (i.e. a local maxima). If she starts somewhere on Mt. Everest, she will be successful — but if she starts somewhere in the middle of America, she’ll never find the highest point. On the other hand, if Jordan starts close enough to Mt. Everest and if the weather is clear enough, he may spot the mountain and find the peak (i.e. the global maxima) — even if there are smaller hills and mountains around him. But he may also start in the middle of the Amazon rainforest and have no view of anything around him.
Jordan is making big bets and following a high-risk high-reward strategy, while Amira is making smaller bets to find some success quicker. Product-market fit is about making a combination of small and big bets to help you find a maxima that is high enough to sustain your business.
As a product engineer, I’ve found it helpful to understand the journey of finding product-market fit (PMF) so that I can be an effective partner to my product counterpart. This post won’t tell you the steps to achieve PMF — rather, it will help you understand where you might be on your journey so that you can play your part as a product engineer.
Being a business with limited funds, let’s start our journey not on land but instead at the bottom of the ocean with a limited supply of oxygen. Our goal is to come up for air in a land with enough resources to build our business before the oxygen (i.e. money) runs out.
Scenario 1: You’re walking on the ocean floor towards higher ground
This follows Amira’s strategy of making small bets and iterating quickly. If you’re confident you’re on a good trajectory, this can be quickly rewarding. You will find that your product metrics are consistently improving, and you’re betting that they will continue to improve until you’re above water.
Scenario 2: You reach the highest point around you, but you’re still underwater
You’ve found a product that potentially can’t sustain a business. You could try to reimagine your situation — maybe higher ground is not one step away but a few steps, and looks like adding automation to reduce costs. Or you may need to pivot and entirely change direction, even if your metrics will initially look worse.
Scenario 3: You emerge from the water onto a tiny island with a single coconut tree
Congratulations, you’ve found a continuous source of air! But there’s not a lot of land to share and few resources to build with. In this scenario, you may have found enough paying customers to sustain your business, and you could stay to enjoy it. Leaving the island and going back into the ocean might feel silly, but if you dream of larger islands, leaving can be the right choice.
Scenario 4: You emerge onto a large island and it’s completely deserted
Have you found paradise?! Maybe. You’ve found a product that people want and nobody else is offering. This scenario is rare, though. It can also be lonely and hard — you have to build everything from scratch because there are no paths created by previous adventurers. And if you’re successful, competitors will soon hear of your island and follow you to it, using the paths you created to find success a little bit quicker.
Scenario 5: You come up to land that is both abundant and packed
This is your Manhattan or Tokyo. There is still opportunity here, but you have to fight to create space for yourself. There are many examples you can learn from of others who have solved similar problems, but that also makes it hard for you to differentiate yourself. If you are good at execution and marketing, this could be promising.
Scenario 6: You come up to a land that is large and sparsely populated
This is a middle ground between scenario 3 and 4. To really scale, you may need to build a lot of foundational infrastructure that you take for granted in a big city. If you have the time and resources to build that infrastructure, though, you may find some interesting monetization options (e.g. allowing other companies to use your infrastructure for a fee).
Scenario 7: You hit a tidal surge that pulls you up or down
This is luck. It could look like Google changing their SEO algorithm and your organic traffic disappearing. It could also look like a pandemic that causes the demand for remote-friendly courses to skyrocket. You can’t control the tides, but you can study their patterns and find ways to take advantage of them. Relying on luck would be a bad idea, but don’t ignore luck either. Figure out what could boost your business and be ready to take advantage of it when the opportunity presents itself.
Scenario 8: You come up to a land with volcanoes / tornadoes / tsunamis / earthquakes / {insert risk}.
Every land has its existential risks. A small earthquake can be a warning sign, a large one can render a city unlivable. Similarly, whether it’s regulations or a PR-disaster or a tech giant turning your product into a free feature, every business has its existential risks. It’s important to understand them, track them, and have emergency plans for them so that you’re not caught flat-footed. It’s also helpful to not dwell on them.
Scenario 9: You’ve found your product-market fit
Congrats! Enjoy where you are, but don’t rest on your laurels. Land shifts, climate changes, and the world adapts. New competitors come along and old ones disappear. The PMF journey never really ends, and you have to constantly evaluate where you are and where you need to go next.
We’ll be taking a break for July and coming back in four weeks instead of two. If you’re interested in contributing for the rest of this year, please sign up and let us know. We’d love to have as many diverse voices as possible to teach us things we didn’t even realize we were curious about!