Finding Product Market Fit
The hardest thing about building a business: how we are finding Product Market Fit at Kosmo
Every founder starts with an idea in mind. You think a lot in terms of solutions, not so much in terms of problems. But solutions only exist if they solve a problem, else it is just mental excitement.
In the tech startup scene, the term that is used to validate that your solution solves a real problem is called Product Market Fit (PMF). Validating PMF is hard. It is a constant battle between emotions, pride, ambition, patience, pressure, knowledge and skills.
On the one hand, if you start a business you are someone who tends to be optimistic and with over confidence bias. You think you know it better than the rest. It takes you 3 months to become humble all of a sudden. You know of any cocky person and want him to become humble? Ask him to start a business.
You think you know the problem upside down. But when you start to sell you realize that the problem is a bit different than you expected. Or that the solution you built is not the one they need. This is hard for someone with over confidence.
Your ambition makes you want to sell $1M in year one. Reality is that very few people achieve that. This can only happen in “unfair” markets, where you start with PMF and a few very big customers.
Both you and the investors are in this to build something fast. Every month adds a bit of pressure. Pressure makes you take wrong decisions. You think that hiring a sales rep will help you sell more. Or hiring a marketing person will make you top of mind over night.
Kosmo has burned $50k in sales/marketing that brought $0 sales. Is it their fault? No. It is mine for expecting that someone would sell something that I still did not know how to sell. It was too early to have sales after only 1 month of launching the product.
You think that adding a feature a week will help you sign that customer that rejected you for “lack of features.” But that’s not true. If a client asks you for a feature to join most likely he will not join. You are targeting the wrong client, or the wrong problem-solution.
These are the things that you feel as a founder when you are searching for PMF. If you let emotions decide you’ll end up making the wrong decisions I’m sharing above. And that’s game over. It’s key to be able to keep a cold mind and focus on understanding the problem of the client.
If you manage well your capital and you have enough time to iterate in your problem-solution you’ll maximize your PMF validation probabilities. It is quite straight forward if you think about it. Keep the team as small as possible and manage internal/external pressure to not rush. Don’t try to grow with vanity metrics without having PMF.
The hardest of all is accepting that instead of 1 year it takes you 2 years to achieve PMF. But if you understand that you are into a 10 year game it really does not matter if it takes a few more months in your early years. Running fast in the wrong direction is sure death.
At Kosmo we still have long runway thanks to having kept the team small. At the same time, some people are recommending me to go raise now. I still prefer to wait. We have thousands of orders flowing through the platform and signs of PMF. But to me it is not confirmed yet. I think we’ll be able to confirm it in the next few months. That’s when we’ll go raise our next round.
I prefer to focus my next 3 months fully on sales/product that on trying to raise a round based on signs and postponing the PMF confirmation to the future.
This is how early stage works. Focus on the problem. Find the solution. Find clients who want to pay you for it. Once you confirm it find ways to scale it. Until then, just iterate and talk to customers.
These are the thoughts I had over the last year. Currently Kosmo is in a great place after all those learnings. Hope this can help some people in the early stages.