APS Newsletter #21: To product-market fit or not

💬 In this issue:

• The journey to product-market fit: A practical guide to finding product-market fit.
• Lessons from Braid: A dispatch from the wild, vicious world of consumer payments.
• African Pre-seed Community Survey: We want to hear from you.

In April, one of the biggest stories out of Nigeria was the closure of a fintech startup that decided to return money to investors after it failed to find product-market fit (PMF). Some of the reactions were centred around the age-old question of what it takes to find product-market fit. 

While we’ve written about PMF previously, it’s never a topic that’s quite exhausted. Because it’s especially key to startup survival, I spoke to the cofounder of a profitable remittance venture who has scaled his product to over 10 countries and knows a thing or two about PMF. I also spoke to an experienced operator whose company had just been canceled acquired. Unsurprisingly, their ideas mirrored each other and were complimentary. 

They both asked not to be named so they could speak freely. 

Before I share some of the most interesting bits from our conversations, let’s bring back that timeless quote about PMF:

“There are two types of product-market fit for a fintech company: fake PMF and real PMF. Many fintechs, including us, dupe themselves into thinking their PMF is real when it’s not.”

- Olumuyiwa (Writer & Contributor, African Pre-seed Podcast).  

🔍 Finding PMF comes down to understanding the market

Giving practical advice on how to get to PMF is difficult, but the first thing that’s required is an in-depth understanding of the market. You need to know the key metrics to measure or identify fit for user interests. 

If you don’t know what to look at or look for, you’ll probably never find product-market fit. 

Beyond knowing what to measure for, understanding what’s behind product or adoption bottlenecks is crucial. This is the part where experience is very important; without experience, it may be unclear what to look for. 

You should understand the people you’re building for and the space you’re building in. Sometimes you have an idea and there’s no real business there. As prolific investor Otunba Soyombo asked, “There might be a gap in the market, but is there a business in the gap?”

Your experiments must also answer whether your product is needed right now.  Getting to the market too early or too late can lead to failure. 

🧪 When the results of your experiments come in, believe them 

Don’t get so married to an idea that you remain tied to it even when your experiments show they will not work. Holding on too tight to how the product should be in your head makes you inflexible when the data shows there’s a different way.

The only thing you should be inflexible about is the problem you want to solve. The “how” is something you need to be flexible about. 

Be stubborn about solving the problem, don’t be dogmatic about the how!

🏎️ Iterate fast! 

You’ve probably heard this one a million times, but it’s as true as anything you’ll ever hear. You need to iterate extremely fast, especially when you examine the data or other related metrics you use for decision-making. There’s a lot of value in knowing when to throw stuff away and move in a different direction.

To be clear, not everything that gets paused or canceled is straight-up nonsense. Sometimes, you bring back a product or feature that didn’t previously work because new information may arise, and you may also have a different or clearer view of the market.

🦾 Grit and having the right people at the table

You need grit, especially with early team members and, more importantly, with the senior members of your team. The reality is that startups are hard, and only grit gets you through.

As one prolific investor shared in an earlier edition of this newsletter, grit is a trait many investors look for in founders. When asked why he invested in a founder’s second company, he said, “There were several times it looked like the (first) company was going to die, but the founder kept it running for much longer than I thought possible.” 

Building a great product goes beyond writing the code. You need product management or marketing experts. You may not always need to hire them full-time. You need a team that can design experiments to determine if the product will work. 

You’re also part of the team, so self-awareness helps. The fact that you own the idea doesn’t always mean you should be the CEO. If you feel like your idea or business could benefit from having a cofounder who may be better suited to holding certain roles, always be open to hiring them or convincing them to join the team.

In the end, that advice is easier said than done, but remember that the goal is to build a successful business that solves a problem! 

📚 What I’ve been reading:

AI is all the rage, so here’s an article on how they can become even more useful

Bringing back this timeless post-mortem of Braide that talks about PMF.

An interesting way to think about debt  

African Pre-seed Podcast Survey: We would love to hear your thoughts.

💡 Spare a few minutes to fill out our survey. Your insights will guide us in improving and tailoring our content to provide more value, practical knowledge, and actionable insights.

💥  Parting shot

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That's it for now. See you next month! 😉