PMF before GTM
Tempting though it may be to focus on both
There’s a weird moment in the evolution of a product business where the product is built and it feels like it’s now time to just sell it to as many people as possible. You’ve done the hard work, now go and reap the rewards. But if you don’t have Product Market Fit (PMF) yet, it’s like setting off on a bike ride with flat tires (or ‘tyres’ as we spell it outside of the USA). Yes, your bike will move forward, but the amount of effort required to cover the same distance and the time it will take you to get there will be way more than had you spent some time pumping up the tires first.
What’s more, at this stage, the business is probably either being bootstrapped or has taken on a small amount of investment. It’s a really precarious part of the journey. It’s why it’s often said that getting from $0 to $1m in SaaS is ‘impossible’ (as opposed to $1m - $10m which is ‘improbable’ and $10m - $100m which is ‘inevitable’).
What is PMF?
Product Market Fit, as the name suggests, is that zen-like state of having a product that is in perfect tune with what the market needs. And by market, I mean your perfectly defined Ideal Customer Profile (ICP).
Unlike most things in SaaS, for PMF there isn’t a universally specific thing you can point to. It’s not like ‘you must have a gross revenue retention rate >90%’ type number. But there are a number of different ways that people define and attempt to quantify PMF.
Sean Ellis defines Product-Market Fit (PMF) using a survey that asks users how they would feel if they could no longer use the product. The key response is "very disappointed," indicating that users derive significant value from the product and are likely to continue using it. According to Ellis, a score of 40% or more of users responding "very disappointed" suggests a strong product-market fit.
Marc Andreessen says that PMF feels like the product is "flying off the shelves"—customers are adopting it faster than you can handle.
I believe a key element of PMF is how your customers are with you. Do they use the product all the time? Do they tell you that they love it? Do they tell their peers and their friends just how great it is? Think about when you’ve been sat with other entrepreneurs and they’ve shared a recent product that they’ve used or seen that they thought was great. Or maybe a book they’ve read or a podcast they’re following. That to me is illustrative of PMF. What products do you use that you regularly rave about? Has that product got PMF with you as the ICP, in your view?
The danger is when you confuse Product Market Fit with Product Roadmap Fit. Just because the product is now able to do what you had in your original roadmap, doesn’t mean that that’s 100% what the market wants or needs. Have you ever bought a product that you later unsubscribed from? What if the owner of that product believed that you buying it demonstrated PMF and doubled down on a load of sales and marketing as a result?
By the way, Product Roadmap Fit, isn’t a thing. I made it up to illustrate a point!
GTM before PMF - what happens?
What I mean by this is if you decide that the Product part is done, so now it’s time to put all of your efforts into your Go-To-Market plans. That might mean spending a load of money on paid media, attending expensive conferences or hiring senior sales and marketing people.
This is especially tempting if you’re venture-backed and can ‘afford’ to do so. After all, you just want to get cracking. And the idea of replacing your amateur attempts at sales and marketing with a hard-hitting expert to really start to ramp things up is pretty compelling. But here are the problems with that approach:
1. Wasted media spend
Remember my analogy at the start about the flat tires/tyres? We did exactly this, too soon. Spent money we couldn’t really afford with a paid media agency and the ads didn’t convert. Or at least didn’t convert at a financially viable rate. It was because we hadn’t found PMF yet. We had to pause because we were fast running out of cash. Jump forward six months or so, when we had found PMF and it was a different story.
2. Churn
Imagine you’re a vegetarian and a new high-end vegetarian restaurant opens up. It’s a bit pricey but the food is good. The service is good. But they’re still waiting for the furniture to turn up and are just using cheap garden plastic tables and chairs. Are you going to rush back? Maybe. But if you were looking for something special in the future, probably not.
Same goes for product. If it’s not quite doing what the ICP needs it to do and you haven’t quite figured it out, then you’re going to get churn. And churn will waste more of your precious resources and slow your growth.
3. Demoralized Staff
If your plan is to go off and hire some big commercial heavy-hitters it’s unlikely you’ll succeed because, frankly, you’re not attractive enough yet. If you’re really early on in the journey with a low ARR and not much in the way of free cash flow to fund marketing activities, then you need something really special to attract the best senior people.
But even if you do manage it, they will quickly get annoyed that despite them employing everything that they know from when they worked at another company that had PMF, nothing is really gaining significant traction.
It’s not your VP of Sales’ job to fix your PMF problem.
4. The Wrong Skills
As an aside, often senior people have got to where they are because they are great leaders (VP Marketing, VP Sales and even VP Engineering), but not necessarily great doers. And in fact might become quite resentful quite quickly if they are having to do work that they think is beneath them. At this stage, founder-led sales is still going to be the best approach,
5. Blow your Chance
All of this adds up to potentially blowing what money you do have on something that isn’t ready yet. And at this vulnerable point in your journey it might actually be your death knell. Number one reason why startups fail is running out of money. And while the temptation is to double down and go for it, especially if you’ve raised some external funding, if you lose the lot without much to show for it, it’s going to be hard to go and get any more.
What to do instead.
If you’re not sure you have PMF yet, what I would do is embark on a strategy of product and marketing validation. I’m not saying you don’t execute any sales and marketing activity. But you use that activity to get you closer to PMF, whilst also honing your GTM strategy so it’s in a really good state when you are ready to double down.
1. Analyse the data you have
If you have a lot of data, great, you will be able to pick out insights. But even a few customers can give you some clues as to what’s happening. What types of customers were easier to close? What types of customer were quicker to close? What was the ‘aha’ moment for them when they really understood how your product could solve a burning problem? Which types of customers say nice things about you? Which gripe and moan? Is there a pattern around churn? Is it based on type of customer? Are there any early-warning signs (such as infrequent usage) that predicts churn? What reasons are they giving for churning? What alternatives are they choosing?
You know the drill. You have to get under the skin of this. We found some things that might seem obvious: the more team members someone added to their account the more likely they were to remain customers; the more they used the full range of functionality during a trial the more likely they were to convert. Yours might be around size of business, seniority of account holder, how highly their industry is regulated, All of this will help you both refine your ICP as well as identify gaps or opportunities in the product itself.
2. Speak to customers
Obvious right? But we just don’t do it enough. Ask for some of their time not because you’re looking to upsell them or get them to renew, but because you are genuinely interested in how they are finding the product so you can improve it (for them).
You can talk about the product a bit, but what you really want to know is what drove them to use you in the first place, what the problem was they hoped you would solve and how well you are solving it. Plus…. anything else in their lives that you didn’t know. Maybe there is something that is a massive deal for them that you could easily solve, but you just didn’t know it. Maybe its unique to their vertical.
3. Test channels to market
It might be that your first marketing hire is someone who can help you test multiple routes. An all rounder who knows how to write content, who can build landing pages, who can try LinkedIn outreach, who can set up a small Google Ads campaign, or video content, or cold outreach, or a test ABM strategy, or creating merchandise for conferences.
You’re not going to massively move the needle doing lots of things, but you will get some insights into what looks like it might work for you. Annoyingly you need this information first. Imagine how gutting it would be to bet a massive chunk of your runway on a six-month campaign with expensive video production and media costs, only to find that you could have achieved more, for a fraction of the cost by just attending one hugely important exhibition.
4. Test a Sales Motion
Your first sales hire shouldn’t be a VP Sales. A VP Sales leads a team and executes against your GTM plan. But you don’t really have one yet. Or at least, not one that you have validated. Your first hire should be someone who can help with the sales processes you’re planning.
If your product is largely self-serve, then the sales person might help with demos or webinars. They might be on hand to talk to people who have questions about pricing. They will be largely reactive.
If you think the Sales Motion will be more high touch, then how do you best get you (or your sales people) in front of customers and what do you show them at that point?
If the product is enterprise only, what bottom-of-the-funnel content do you need? How are you going to deal with procurement? What about legal?
You can see that going off half-cocked here with a senior early hire could be a costly mistake. Your expensive sales people might end up chasing down the wrong kind of customer in the wrong kind of way. You, as the founder, need to be driving it as and when you can be sure what’s working.
Once you’re there, strap in for the ride
I don’t want to come across as a Debbie-Downer here. It’s frustrating to not be able to just go for it, especially when you’re getting good early feedback and results. But if you can spend some time getting the answers you need, when you do come to pour fuel onto the fire, it will be worth it. It took us 18 months to get to $1m in ARR. But it took us another six months to double it.
