Thinking About Product-Market Fit? Make Sure You Have This First
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Written by Humaira Ahmed, Founder & CEO of Locelle
I am Humaira Ahmed, the founder and CEO of Locelle – the networking platform for women in workplaces to easily connect with like-minded women for connections, support and mentorship. We are growing fast amongst women working in tech as well as companies looking to offer our platform to their women staff members as part of retention strategy.
The startup world loves to talk about Product-Market Fit, which is important, don’t get me wrong. But before you get there, you need something else first.
The Problem-Market Fit
As a working mom of two, I was having a really hard time finding ambitious women around me who I could share my challenges with as well as my ambitions and accomplishments. I was lacking that “tribe” that would support me and champion me to push forward as I struggled to navigate the workforce successfully after becoming a mom. I was becoming lonely and as a result, depressed. I knew there was a problem.
The best thing I did was to explore if this was just my problem or a big problem that affected many women – (we are talking millions). This was really important, as the key was to learn whether this was going to be a passion project or a real business.
What is problem-market fit? Problem-market fit is when a BIG problem is identified that clearly needs a solution and affects mass-market.
Here is what I did to validate the problem-market fit:
Set up a Landing Page: I set up a landing page and used my network to gauge interest and not shockingly, but surprisingly, I had over 100 sign ups within two months. The signups were for a newsletter that never existed.
Primary and Secondary Research: I looked into all other ways that women were using to connect with other women – in person networking events, Facebook, LinkedIn, Bumble, Hey Vina, Slack, and even Instagram. I had to find out what was it that was missing from these platforms and why these massive platforms are not always successful with creating meaningful connections. How could we make it easier for women to connect?
Real-Life Customer Discovery: I interviewed over 100 women – as many diverse women in my network and their networks – from stay at home moms to entrepreneurs to women working in companies in various positions and stages of career.
Here is what I learned:
The Big Problem: Social Isolation and Loneliness are worse than heart diseases and are increasingly affected our society. In fact, it was a much bigger problem than I had anticipated. This meant – it was not going to be a passion project but it had potential to be a real business. The best part – the social impact kind!
Reality vs Assumptions: Talking to real people is always 100% better than Dr. Google. You will find anything and everything on Google if you search. Try to connect with as many non-friends and family members so you can get more of a real data-set which is unbiased. Always validate your assumptions – you don’t want to build based on what you think you need and people may need. You need to build a solution that addresses the problem for many.
There is always Competition: Competition does not meant direct competitors – competition also means ways that people currently try to solve their problems in an event of lack of a clear direct solution. (E.g. – Before Uber launched, they didnt have a direct competitor but they were competing against cabs, car pooling services, transit, etc. Now, Uber competes with Lyft as their direct competitor. People find ways to address their problems). As a company, you just have to make it easier, better and faster.
The above discovery reinforced the reality that as a society, we are becoming very isolated and there needed to be a better way to easily connect with other like-minded people in person. In terms of segment, women rely heavily on their networks for a better life – especially as they transition into various stages of life. (e.g. new to the city, new to a career, post-grad, stepping into entrepreneurship, travel, illness, having a baby and the list goes on...)
It became pretty clear that there was a BIG problem that needed to be solved – social isolation and lack of women advancing into leadership roles and successfully navigating the traditionally male-dominated industries. And, that’s when we began building.
The Product-Market Fit
Now that we had established a clear Problem-Market Fit, it was time to have a Product-Market Fit. This is the most crucial step because the success of the Product-Market Fit determines the success of your company. I was surprised to learn that 42% of the companies never find Product-Market Fit. Ouch! That’s a much higher number than I had expected.
What is Product-Market fit? It’s when you have identified paying customers/clients who not only use your offering, but are happy to pay for it.
We released the alpha version of our product to early adopters – about 10 women, followed by a private beta with 50 users. With their feedback, we released our public beta version and opened it up to women outside of our networks.
We now have about 850+ members on the platform in our public beta and here’s what we learned with each release about our target audience:
You can’t be for everyone from the start. Locelle wasn’t for everyone – it is for ambitious women who truly want to advance in their careers and meet other successful or aspiring women entrepreneurs. We did not want to target stay at home moms post-customer discovery, as they would be unlikely to pay for a social network. Thanks to Facebook and Instagram.
Focus on paying customers: As a company, we needed to focus on who is it that was not only going to use Locelle but pay for it. That’s a real product-market fit and makes for a real business. Women working in male-dominated industries were all over Locelle – these women needed to connect with other women who had been in their shoes – e.g. tech , construction, finance, etc. They also have the means to pay for something they value.
Be prepared to pivot: When I started Locelle, I thought we would have the advertising model like Facebook, instagram and LinkedIn have but quickly learnt that we didn’t have the capital to acquire massive userbase nor the connections to help us get there so we needed to be creative and find paying segment. This is when we pivoted our business model and moved toward corporate offering as well as focusing on who was able and willing to pay for it from the start.
We also identified who was likely to pay for our platform as an early adopter:
Tech companies: Big tech companies looking to attract top female talent as part of their retention strategy – data reveals that women in tech quit their jobs mid-career due to isolation, frustration and loneliness. Companies are not only our primary economic buyers but help grow the user-base! Genius!
Women entrepreneurs who are happy to invest in their careers and value meaningful connections and intentional networking.
Groups and Events: looking to attract women as part of diversity initiatives.
Now, I am happy to say that we have found Product-Market fit with our first paying customers. By identifying paying customers, we have been able to successfully bootstrap so far!
I want to reiterate that the most important thing to remember in all of this is – that customer discovery never ends – whether it is to identify a problem or a product solution or a revenue model….. it’s a process and a journey that never ends… so, keep learning!
I hope you enjoyed reading this as much as you enjoy my interview with RajNATION on Startup Hypeman: The Podcast!