Focused solutions for large markets lead to the best outcomes
The ideal state for product-market fit is to have an extremely narrow and focused product that satisfies a very broad market. Products like this can satisfy a huge market with less investment and less distraction. The ability to satisfy a large market with less investment directly translates to potential profitability because market size influences potential revenue. The ability to satisfy a large market while staying narrowly concentrated in your product development efforts directly translates to your ability to continue to satisfy your market in the long term because by focusing on your target customer, you can be constantly improving the product for them without unnecessary distractions. The long-term viability of a product is dictated by these factors of how big the market is, and how focused the product can be. These factors are decided by the problem you are solving, and who you are solving it for. The art of keeping a sufficiently narrow solution requires you to pick the right problem for the right market, and practice discipline when building your product in order to avoid any unnecessary distractions.
Most companies stumble across a market with a problem and spend most of their early-stage investment on finding the solution. So, while you can be strategic about choosing the right market and problem (mostly by pivoting to different problems that your target market is facing, or solving the same problem for a different target market), most companies leave this up to luck. What should never be left to luck is the discovery of a solution for your market. This is where great product management principles and operations can make or break a startup, and much of the time this means prioritising the right solutions and finding the best way to tackle them. Stay narrow. Be excellent.
Rabbit hole features are one of the most common pitfalls for product companies. These come in all sorts of shapes and sizes, though most often they emerge as feature requests that will expand the scope of your ideal customer profile. For example, when building a product for physical retailers, you might get a lot of feedback from your sales team that if you only had one or two extra features, the entire solution would be sellable not only to retailers but to hospitality businesses as well. The idea of being able to sell your product into an entirely new market with very little effort can be a really attractive opportunity, so these features often get built without much hesitation (hospitality is a huge industry!).
The problem is, these requests are usually rabbit hole features. A rabbit hole feature is a feature that always leads to additional essential feature requests. The fact that you don’t have the most important features for a specific market is stopping you from getting enough feedback from potential customers in that market, so as soon as you start to onboard customers from a new market, feature requests start to pour in. The outcome of building rabbit hole features is usually a very modest expansion to your addressable market, at the cost of a loss of focus and worse economies of scale in your support team, because customers in this new market need a lot more attention than what you’ve planned on giving them.
The worst part about this situation is that these things are usually fleeting opportunities, so businesses quickly forget about all the times they’ve failed to quickly add a new industry vertical or use case to their repertoire. This means many companies make this mistake many times.
The lesson here is to only ever enter a new market segment if you plan on resourcing it for long term continuous improvement. Stay focused on the broader market you are targeting, not specific deals that come through the door on any given day. The best indication that you’ve discovered product-market fit, is that you are turning away deals that you don’t need because you know they don’t fit your ideal customer profile.
7 March, 2022
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