What’s the difference between Product-Market Fit and the Scaling Point?

by | Jan 12, 2018

In the startup-to-scale-up growth game, achieving “product-market fit” has become a common indicator of a startup’s potential to grow into a successful company. This term was created and popularized by startup tech founders, investors and advisors in Silicon Valley.

Product-market fit offers a solution to a common problem: More startups are building products and getting a few early customers, but fewer startups are growing up and getting big, even with lots of venture capital investment.

When should a startup scale up with employees and investment? Which startups will grow up? Product-market fit helps with both of those questions.

Here’s how Silicon Valley leaders describe product-market fit:

  • Marc Andreeson: “Product/market fit means being in a good market with a product that can satisfy that market.”
  • Eric Reis: “Product-market fit is the moment when a startup finally finds a widespread set of customers that resonate with its product’.”
  • Sean Ellis: “Product Market Fit requires at least 40% of users saying they would be ‘very disappointed’ without your product.”
  • Steve Blank: “Customer Validation that proves you have found a set of customers and a market who react positively to the product by relieving those customers of some of their money.”
  • Paul Graham: “Make things people want.”
  • Fred Wilson: “Getting the product right means finding product/market fit. It does not mean launching the product. It means getting to the point where the market accepts your product and wants more of it.”

Sounds simple: Make things people can’t live without. I wrote about this in 2010 and called it making a Great Freaking Product. You need to make something great for somebody so they will pay for it, keep using it and tell their friends.

If your product isn’t great for somebody–really remarkable–no amount of marketing effort or price reductions or sales flogging will help you get really big and bring new buyers to your door without effort.

Product-market fit is an important idea because it is a specific and useful measure of scale-up readiness.

Your product has to truly “Wow” some customers AND there have to be many more potential customers that can be Wowed. That’s a really high bar, but it’s a requirement for long-term growth and success.

The important lesson is “Don’t add people, investments and more customers until you have proven you have something great for real customers in a large market.”

Product-market fit is an important early milestone for a startup journey, but it isn’t the whole picture to get you through the startup-to-scale-up journey.

Just like product-market fit, discovering your Scaling Point provides a useful answer to a very complex set of variables that are often difficult to simplify.

Your Scaling Point defines you as the best in your market at something important for someone specific. Easy to say, hard to do. But it’s always a requirement of scaling up.

The Scaling Point process includes important questions that go beyond product-market fit:

  • What is your competitive space and how do you compare with alternatives?
  • Are you creating a new product or service category that must be explained and evangelized to your market?
  • What do your different types of customers each want most from your product or service?
  • What’s the difference between your best customers and your worst customers?
  • Where is the market going and what trends will affect your business?
  • What is your current situation in the business?
  • Where does your business need to be in one year and three years for you to consider it successful?
  • What larger problems do the founders want to solve in the world beyond making money?
  • What are the strengths and weaknesses of the CEO, leadership team and key employees?
  • What credibility does your founder or company have to make your voice heard and move perceptions of the market?
  • What resources can you marshal to advance your message in the market or improve your product experience?
  • What parts of your business model are working and not working?

I created the Scaling Point process to reveal and integrate the complexities that need to be simplified and multiplied to create a successful, scalable company.

Finding and leveraging your Scaling Point is hard to do when you are running a growing company. Getting to this level of simplicity is hard work. And sticking to your Scaling Point can be hard, too.

The Scaling Point process always works to diagnose your challenge, prescribe viable strategies and align your team with your market.

The Scaling Point more than product market fit, and a requirement to scale a successful business.