On finding Product Market - A first principles perspective
On finding Product Market - A first principles perspective
Market Curve Episode XXXIX
Hey friends,
Welcome to Episode XXXVIII of Market Curve - a newsletter exploring the intersection of marketing, writing, and persuasion.
First off, apologies for the radio silence on my end. I needed some time off to get some thinking done and take care of my mental health.
That said, let’s dive into today’s issue.
Today’s theme: Finding Product-Market-Fit for your startup.
Ah the elusive product-market fit. If you’re a Twitter regular, you know that PMF is often dubbed as the holy grail of startups. And for good reason.
After all, it’s right at the intersection of your product and the market.
Common business wisdom states that a good product is only as good as the market it exists in. If Einstein were here, he would probably agree and say -that a product is only perceived as good relative to the environment its in.
A lot has been said about what constitutes a good product-market fit. I don’t want to rehash that. Rather, I wish to offer a different perspective on how we can begin to think about products and the markets they exist in. A perspective that is based on first principles.
What is a product: The Scope.
A product is nothing but “help” being offered in exchange for money. This product can be dependent on time or stay independent of it. It does not really matter. At least not for now.
If we break this sentence down, we begin to see a few words that might need to be defined.
Back in my law school days, we were taught that you never take a word at face value. If you want to truly understand and interpret what a sentence means, you have to first agree on a common definition for each and every word present in that sentence.
So in a true lawyer spirit, let’s break this sentence down.
A product is nothing but “help” being offered in exchange for money.
What is the definition of the word help in this sentence? What is its scope?
Well for starters, we can safely discard any altruistic kind of help. Any help that is offered out of the goodness of one’s heart is safely out of the scope of product-market fit.
So what is included in the scope of help?
Here’s the scope of help:
Help of any kind includes spending time on creating an asset that incentivizes both the creator and the buyer.
Right away, we can see that the word “time” is closely tied to that of offering “help”. Which does make logical sense, doesn't it?
After all, we spend time when we do any activity. It is the OG currency of labor of any kind. This is why hourly rates are so common.
So any form of work essentially has to be a function of time. Some amount of time must have gone into building that. There are 2 factors here that should be addressed.
(1) The allotted time for creation could be delegated to another.
(2) The time required to create an asset may not necessarily be the same as maintaining the asset.
The allotted time could be delegated to another. As a founder, I can choose to exchange my hours with someone else while building the same output.
Also, once I build the product using a certain quantity of time, does not mean I will spend the same amount of time maintaining the product.
The important thing here is to note that time is one of the inputs that is creating the output. (The other inputs being (a) your energy and (b) your consciousness.)
The output once produced using a certain quantity of time is for all intents and purposes a product.
But it’s not quite there yet.
Because a product is only a product if it is a help. And help can never be offered in isolation.
The Markets.
I like markets because it’s human emotions at their finest. It’s a stewy broth of greed, fear, insecurities, ambition, desire, and everything in between. And hidden within that dense shrubbery is your diamond in the rough.
In that cacophony of noise, you have to find a sliver that is just yours. Where the insecure person in Berlin is just glad to get his custom made Havana suit from you. Or a Lombardy-based wine connoisseur driving around happy that he bought his black Lamborghini thanks to you.
This sliver of people is your market.
And it must possess something important: A common trait
A common trait is something - an idea or a belief or a shared problem that holds the group together.
This is important because having a common theme across a diverse set of people is a key factor in scalability.
A good example of having a common theme is language. The problem it is trying to solve? Communication at scale.
Another good example is Julius Caesar.
Caesar had to marshal his forces in his attempt to win back Rome. Men across different battalions and different legions were united by Ceasar’s vision as he crossed the Rubicon to win back Rome. That vision was the leading light that drove those men into battle with Caesar.
A few centuries later, Lenin and Stalin did something similar too. The theme of a united Russian front was the guiding light to glue the Entire Soviet Bloc together.
These “common themes” in common parlance is known as “propaganda”. Marketers do this all the time. Politicians do it all the time.
Having a common propaganda is an important factor if you want to dominate a market. And the funny thing about it is that propaganda is not concerned with the truth.
Because it follows what is called Cultural Parasitism.
Any propaganda is only created so that it can transfer faster. The goal is for the idea to be easily transmitted and easily believed. That is its entire modus operandi - the spread of that idea.
Fast-growing startups also have the same modus operandi - the spread of an idea. This idea is central to this entire concept that we call “propagation”.
David Ogilvy was big on ideas. And Ogilvy saying that is a big deal. Ogilvy started his own ad agency in NYC called Ogilvy and Mather back in 1964.
And his approach to advertising is effective because the era he worked in is very significant - the time of the Cold War. The fight between capitalism and communism.
The onus was on the USA to show off its capitalistic prowess. Especially because Russia was breathing down its neck and posing a threat to its existence and the idea of what it stood for. (See here again there’s an idea at play here - capitalism v communism)
So America pushed down hard on the capitalistic agenda. And so brands and companies were expected to sell more of their products and induce desire in the minds of the public. Desire wasn't as commonplace as it is now. A vast majority of people were often content with what they had.
But that notion had to be changed. Advertising was to change that. Advertising is salesmanship at scale said Claude Hopkins. And it was just that - salesmanship at scale.
The market for desire was opened and wants were now slowly replacing the needs. This market opening meant that the companies were in business. They could potentially invoke a desire for any of their products. The desire is always there. You just have to invoke the right one.
Desire: The bridge between product and markets.
And so advertising began. Catering to the desires market. Through Hopkins to Ogilvy to Mad men. We have come full circle and now the desire market is at its absolute peak.
This makes it a bit harder to sell actually because people are now desensitized to invoking desire.
So now the desire has to be incredibly primal and somewhat recent. This is because desire is almost always a product of recency bias. So if something is being flung around (an idea) then the human mind will associate that idea to a desire. And the desire has to be a strong desire - one that is rooted in Biology.
There are 3 main desires: Wealth, Health and Sex.
Wealth is a desire for dominance, success, freedom.
Health is a desire for staying as physically immortal as possible.
No need to explain why sex is powerful lol.
Anyways, so now we have these 3 desires. And these are the main desires from which smaller sub-desires emanate. Your job is to find such a sub desire.
Example time.
Main desire: Wealth
Sub-desire: To own a home
Sub-sub-desire: To impress his girlfriend
Sub-sub-sub-desire: That he thinks is out of his league.
And you go deeper and deeper.
Once you chose a sub-desire, you gotta go all in. (Just stay till the 1st subdesire level).
Now you tap into that sub-desire, in our case - owning a home.
Now lets create a new sub-desire from here. Owning a home so he can rent it out.
There so now the desire is somewhat crystallized - I want to own a home that I can rent out.
Now lets create a sub-desire from here.
I want to own a home so I can rent it out to fund my travels across the world.
Now this is where you gotta stop going deeper. Because this part “To fund my travels across the world” is a variable and will vary from person to person making it harder to scale. So you need to either (a) stop at this stage or (b) stop at the earlier stage aka (I want to own a home so I can rent it out).
Now lets assume that we choose to go with the desire of X person, whose desire goes something like this:
“I want to own a home so I can rent it out”
This is a nice dream to have but it sure wont be easy to execute it in the real life, now will it? Owning a home is some tough work. You’re gonna need help.
That’s where our “help” enters the equation in PMF.
X here would need help to fulfill this particular desire of his. Now he would make a list of all the problems that would prevent him from reaching his desire.
Your job is to make a list of those problems and find the one that is most pressing (apply the 80-20/Pareto rule here) and the one that is most easy to transfer via propagation.
You are now solving a big problem that a segment of people think is a big deal because other people around them believe it to be a big deal and is a big deal because it is rooted in biology which means they are dying to solve that problem because they want to own a home and be wealthy.
So now all you have to do is solve that problem.
The other pieces are already in place.
As you can see here, human desire is tied to help. You can only offer non-altruistic help to someone when the other person desires it. And it is your job in a capitalistic sense to find that desire of him/her and take him/her there.
Once you have found that tiny sliver of people who share a common problem and are unified by a single idea with your product solving it, I think you have found Product-Market fit.
Final Thoughts:
It is worth noting here that finding PMF is not a linear process. There are a lot of assumptions that need to be constantly tested and iterated upon. Due to the nature of business and the complexity of markets, it can take a long time to find product-market fit.
But understanding how it actually works on a deeper level can help you understand how to build your PMF strategy and execute it.
My goal is to try and write more consistently on this newsletter and write mindful content that stands out from the noise. So I’m considering making this a monthly newsletter. I love being a startup founder and I love writing on this stuff, so thanks for joining along for the ride.
As always, you can follow me on Twitter where I build my startup in public with complete transparency and share my lessons on business, learning, sales, and everything in between.
And if you need another set of eyes on your website copy, just reply to this email and I’ll help you out.
See you soon :)
Shounak.
PS: If you liked this issue, consider subscribing or sharing this issue.