Building Market Fit.
I think the most important variable in determining if a product will be successful and make a meaningful impact in the lives of people all comes down to “Product Market Fit”, is there a place for your product in the market? And are people willing to be customers of your product? Without a market for your product, without building a product that people actually need, then there is no market for your product and it really is as simple as that.
It is very important and crucial that early on you iterate and if need be pivot based on your research from your initial market fit.
When we first started Rift Pay, I was building a product that I thought was helpful to me, I thought to myself if I could enjoy the convenience of using a single app to split my Pizza and my flight tickets, I would want to use the app so I thought I had my market fit, but as I learned there is a whole lot more that goes into a market fit that just your lone opinion.
There are three things that go into your market fit.
- Your customer.
- Does your customer need this?
- How scalable are your customers?
The first thing to determine is who your customer is. When I first worked on Rift Pay initially, I thought my customer was myself, I was so fixated on building a product I needed that I did not step back to think if there was anyone who might need the product I was building.
If I could go back, I would say circle out who you’re building your product for first, it should be the first step taken no questions asked you need to find out who you’re building the product for which could be a very beneficial helper in deciding to build the product or not at all.
By defining your customer, you find out if people actually even need the product you’re building, when building Rift Pay first, if I had decided on customers I would have iterated the idea a little bit more, how can I build this platform for this customer? how can I improve the lives of college kids who I would like to sell this product to? These were questions I failed to ask myself because I did not know who I was building the product for.
Is there a need?
This is another question that could help you decide if you should build your product or not. Knowing and defining your customer is just the first step in finding product-market fit, know that you have an idea on who may use your platform, you know have to ask yourself if they would actually use the platform. Is there already another solution that exists on the market? Is your product so much better than they would be willing to migrate to your platform?
I think this question that when answered led us to raise our first capital with Rift Pay. When we identified our initial customers (“People looking to split payments”) We had to ask if there was a need, if there was something already solving the problem, and if the customers were desperate enough to use our product.
While creating a product for the first time, one of the more difficult questions to ask is if there is a need for your product, answering this question is no easy task as most people rely on friends and family to answer that question for them, “Hey would you use this product if it existed” is the most common question when building a product for the first time, but there is a little more that goes into this question than people realize, and to explain this I will use us an example when we first built Rift Pay.
While making this Rift Pay, this question was a little different for us because to ourselves, we were building a product that did not exist yet at all. There were various payment platforms (Venmo, Zelle, Cash App) neo-banking (Chime, Revolut, Dave) but none particularly did what we were doing, we had created our own niche.
To answer this question here's what we did. We knew that although our product was going to be new to the market, we were still improving on products that already existed, for payments we were making it possible for you to do that with others, and for banking, we were making it possible for people to share their experiences together.
Here’s how you can answer this question for yourself while building a product, chances are you would be using this product and you likely built it because you weren’t satisfied with the current option.
Ask yourself if the product you are building is switching from existing solutions. For payments this is how we solved this, we found who our “Competitors” would be in this market, and please note that you probably always have a competitor and if you don't dig deeper because although they might be indirect, chances are that your future customers are already using a product to get ahead with the problem you are looking to solve. For us, it was a Venmo, Cash App, and Zelle. The first problem we were solving was reimbursements, IOU’s, group spending and the problems associated with this. We knew for a fact that we had something here because these platforms were processing $100B+ in payments each year, but using those products ourselves did not satisfy us, so we thought if we removed the need for people to use these products, we would have a market fit.
So while creating the product, we decided to double down on creating a product that would make me delete either of those platforms from my phone, we understood the shortcomings of the solutions that currently existed, we knew that people hated paying for others and especially those they did not know very well, we knew people hated asking to be Venmo’d and we knew people didn’t pay back and these were sources of frustration, but these platforms offered a solution that eased these problems, but could we take away the problem entirely? For us, we used at the usefulness of payment platforms like Venmo and Cash App, by usefulness I mean we looked at how many people were using them, and it was just about everyone around us, to figure out the need we simply noticed that there could be a better product, and I first noticed it when people would intentionally lie about having the product when it came to them making a payment when someone in a group was offered the chance to pay for everyone and be reimbursed using the payment platforms, they would often deny the fact that they had the app on their phone so they wouldn’t pay for everyone, so I mean we could see that it was a fairly helpful and useful product, but due to this fact and the fact that instances like this would go viral on social media, we did think to ourselves, maybe there is some market here with our product.
How many people can your platform reach? How scalable are your customers?
This is a huge point to consider before eventually settling down on your market fit and potential, can my customer's scale? and to what extent?
You want to know this for a few reasons, first, you want to know the ceiling of your business.
For example if your product is primarily geared towards teachers then you may be dealing with a high floor low ceiling project, but if your product can scale to teachers and education organizations as well you may be looking at a high ceiling project.
To know this, simply think of how many people your product can impact, and at the start, if the number is on the low end begin to think if your product can eventually grow to reach a higher audience.