Tips for Validating your Product Market Fit: Key takeaways from MEST Presents with Twilio

This post was written by MEST’s Head of Community Relations, Lundie Strom, for MEST.

On Wednesday, April 29, MEST was joined by Frank Yaw-Owusu, Ecosystem Developer for EMEA at Twilio, for a #MESTPresents webinar focused on how to effectively and successfully validate your Product Market Fit (PMF).

Twilio is a cloud-communications platform that helps companies build and scale communications experiences using APIs. It provides a suite of customer-engagement tools that developers can easily plug and utilize within their applications or websites to enhance their communications, thereby being a valuable way of helping founders at an early stage to prove their PMF more easily.

Like many companies trying to scale successfully, Twilio founder Jeff and team had to perfect their PMF. “Every time you ship a product, it’s a bet that the customers need the thing you’re building,” Jeff says. “If you don’t get it right the first time, with iteration, you can still find something is there. It all comes down to listening to your customers, and being agile enough to adapt until that PMF is solidified.”

Keep reading for our top takeaways for what it means to validate your PMF, and tips for how to find yours.

What is Product Market Fit?

“Product Market Fit can be seen as a value hypothesis that identifies the features you need to build, the audience that’s likely to care about the product that you’re building, and the business model required to entice a customer to buy your product.”
- Andy Rachleff, co-founder and Executive Chairman of Wealthfront (FastCompany).

Frank began by explaining that achieving PMF is not just understanding your business model, but also identifying the pull and push factors that entice customers to buy your product.

Regardless of how good your team is, how seamlessly your product works, or how great your development is — if people do not want your product, your company will not succeed.

Conversely, if you build an average product, but people really want what you’re building, then your customers can enable you to achieve PMF, with the perfection of the product coming second.

Ask yourself whether the market needs the product that you’re building at this point in time. If the answer is yes, what do you need to do to validate it?

Validating your Product Market Fit

Frank then introduced a case study of Rahul Vohra, who founded and sold Rapportive to LinkedIn and then founded Superhuman, the ‘fastest email experience ever made,’ in 2015.

Together with Sean Ellis, “who ran early growth in the days of Dropbox, LogMeIn, Eventbrite, and later coined the term ‘Growth Hacker,’” the two discovered that there was a science to achieving PMF, based on measuring and systematically increasing it for optimization through the following five steps.

SuperHuman’s five steps for PMF validation:

1. Survey your customers.

Ask your users questions that can help give you direct insight into whether you’ve achieved PMF, like

How would you feel if you could no longer use [product]?

• A: Very disappointed (these are your ‘high expectation’ customers that you will zero in on).
• B: Somewhat disappointed (these customers might be ambivalent toward what you’re building at this point in time, but their feedback will be valuable in future once you can convert them from being ‘on the fence’ to ‘high expectation’ customers);
• C: Not disappointed (these customers are telling you the product does not work for them, or they are not your target customer).

What type of people do you think would most benefit from [product]?

What is the main benefit you receive from [product]?

How can we improve [product] for you?

In order to successfully survey customers, ensure you’re using the most optimal communication channels.

“60% of millennials prefer to be reached by SMS, messaging, or social media applications,” Frank said, but the answer to this question is highly dependent on where your users are. Need help determining how to best reach your customers? Check out Twilio.

2. Segment your customers.

Through surveying and segmentation, find out who your high expectation customers are — ie. the customer group that responded they would be “very disappointed” without your product.

The magic number you’re looking to hit? Sean Ellis says 40%.

“Businesses that have been able to highlight or validate that 40% of their customers would be very disappointed if they could no longer use their product, are in turn able to demonstrate PMF through them,” Frank explained. Superhuman was able to grow this metric from 22%, to 33%, to 58% in just three quarters, proving that PMF is a science that can be achieved.

“Customers that struggle to find growth typically have less than 40% there, whereas companies with strong traction almost always exceed that threshold.”

In addition to helping inform your product development and business strategy, this metric is also a great one to display as a KPI or evidence of traction to potential investors.

3. Analyze the data.

Use the feedback you receive from user surveys to convert on-the-fence customers (those who answered “somewhat disappointed” or “not disappointed”), if possible.

Ask yourself questions such as:

What makes people love the product?

What prevents people from loving the product?

What prevents people from relying on or having a dependency on the product?

4. Use the feedback to build a roadmap.

Double down on what your ‘high expectation’ customers want. Frank recommends spending 50% of your effort on optimizing what they already love, and 50% of it on improving what’s holding others back.

5. Repeat.

Repeat this process for any new product feature or business line you’re looking to implement.

And once you hit that 40%? Don’t get comfortable! You are never done.

“Twilio has successfully scaled and IPO’d,” Frank said, “but we’re constantly iterating, looking for feedback from customers, taking that feedback into consideration, and applying it. You could have raised your Series F like Pinterest, and still be looking to improve the product for a ‘not disappointed’ customer, who you hope will in turn become your ‘high expectation’ customer!”

But, why might you have to validate your PMF more than once?

Product/Market Zeitgeist

Darcy Coolican expressed the Product/Market Zeitgeist (PMZ) as “the unfair advantage that can separate the winners from the also-rans,” Frank explained.

“PMZ can help inform why some products resonate with users, not necessarily always because it is better, but because it is culturally relevant at that particular moment in time for a particular group of people.” — Darcy Coolican (VC Investor, A16Z).

The zeitgeist is constantly changing. You could have established PMF and hit your 40% milestone, but if customer behavior changes and people’s cultural attitudes toward your product or the problem you’re solving changes, so does the validity behind your product/services.

Frank closed by encouraging participants to look at the COVID-19 as being the current zeitgeist, and how it has already had a hugely catalyzing effect on how startups and humans behave/operate. It will certainly be interesting to see which of today’s startups manage to optimize their PMF based on current circumstances and become immensely successful because of it.

Thank you for joining us, Frank!

Check out what’s next up on the MEST Presents webinar series and other MEST online programs here. See you next week!

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Learn more about how Twilio can help you reach and engage with your customers here.