Building a fantastic product which has no takers is every entrepreneur’s nightmare. According to CB Insights, 42% of startups fail because their product has no market for it, making it the number one reason for failure. This post-mortem statement by the Founder of Treehouse Logic, a custom design tool solution for consumers, which went under, summarises this perfectly: “Startups fail when they are not solving a market problem. We were not solving a large enough problem that we could universally serve with a scalable solution.” Despite having great technology, a lot of behavioural data, and a fantastic team, a business model that does not solve their customers’ pain point in an efficient way is bound to fail.

What is Product-Market Fit?

Product-market fit is the ability to create a solution to fix a problem for your customer at the right value, available at their convenience.  The three important aspects of getting the product-market fit right are –

  1. There is a problem/need faced by the customer
  2. The solution is known, or visible, to the relevant customer 
  3. The solution is worth the value i.e. the price is right, and the solution is both accessible and convenient to use

Finding the right product-market fit in one go is elusive 

Most successful companies have worked very hard to create a high demand for their products. In their early stages, a company makes several assumptions based on which business models. However, these assumptions might not play out as per the plan. Start-ups need to focus on building a ‘minimum viable product’ as made famous by Eric Ries in his book, The Lean Startup. Getting real customer feedback, making changes, and then validating assumptions about the market need are part of a process which might need to be done multiple times before getting it right. Sometimes these changes could be fundamental, such as changing the target market itself, and at other times, they could be minor tweaks that add immense value for the consumer. Here are the stories of some well-known companies that not only learned their lessons well, but they changed their fate by adjusting to get the product-market fit right:


Did you know that the now billion-dollar business, Instagram actually started as “Burbn”, a location-based social network which let customers check-in, plan for future check-ins, and also post pictures of their meetups? Burbn, however, was too complicated to use and wasn’t getting enough customers. The founder, Kevin Systrom, analysed the customer data and found that most customers consistently engaged with the photo posting and photo sharing feature. This realization inspired them to pivot into setting up a purely photo-based app that would let customers upload a photo with a quick 3 clicks. And Instagram as we know it, was born. 

Lesson 1: Listen to the customer. When one part of the business is doing well, build around it. 


Another billion-dollar company, PayPal, started out as “Confinity,” providing customers a platform to exchange money via PalmPilots (the erstwhile smartphone). The founders soon realized that the number of customers who actually owned PalmPilots was very limited. They pivoted into offering customers with an ‘email’ option to exchange money across the web and observed an increase in customer reach. The real pivot happened when eBay partnered with PayPal to make PayPal the payment processor of choice for its ecommerce customers. Based on their pivot, PayPal as we know it today, stands for safe and secure online payments. 

Lesson 2: The end customer can change. Analyse and evolve as you identify new target customers whose problems your product really solves. 


Launched in 2006 as “The Point”, Andrew Mason originally built this service to mobilize online fundraising for social projects. Each project would be listed on the platform and the now famous, “tipping point”, would indicate how many people would contribute towards a certain cause. On hitting the tipping point, these projects would receive the funding from all those donors. But this idea didn’t receive enough traffic and users, taking The Point down to the red. By observing that there was a segment of customers who were willing to take “group” deals, the company pivoted into putting together deals with local vendors for the group who expressed interest within a certain time period. The product gained attention since it was a win-win for customers and local businesses, and Groupon was born in 2008. By 2010, Groupon was offering deals in 150 cities in America, 100 cities in Europe, Asia and South America, and has close to 43.6 million active customers worldwide as the fourth quarter of 2019

Lesson 3: What’s getting the customers? Focus on what works and then move swiftly to expand reach.

There are many more examples like YouTube which was originally an online video-based dating app, Slack, whose founders were actually looking to create an online video game, and Shopify which came about when its founders Tobias Lutke, Daniel Weinand, and Scott Lake wanted to open their own online snowboard equipment store – which failed miserably. 

What we can learn from all these examples is to constantly get feedback from customers, build a value proposition which is hard to ignore, communicate it effectively to your customers, and finally, follow the money. 

Ep #7: Deputy CIO Jeanne Holm Explains How Los Angeles is Using 5G & Tech to Combat the Crisis
Ep #10: How Can Artificial Intelligence Help You Sell More with Rob Kall

About Author

Ashish Jain
Ashish Jain

Sales & marketing enthusiast, entrepreneur, who is passionate about technology to business alignment. Ashish excels at creating simple yet compelling stories out of complex ideas; and is committed to driving organizational growth by aligning sales, product, and marketing around customer needs. He has over 15 years of experience in leading marketing and product strategies of software products in the networking and telecom industry, and training sales teams to outperform the competition. He is an expert in next-generation telecom and networking technologies (VoIP, Unified Communications, Cloud Communications APIs, 4G/ 5G small cells, VoLTE), IoT, and enterprise Wi-Fi), and leveraging inbound sales and marketing technologies tech stack to drive business impact. Ashish holds Masters in Computer Science from University of Texas. He is CEO & Co-Founder of KAIROS Strategic Consulting – a MarTech agency that provides product marketing and sales enablement solutions to startups and Fortune 500 B2B technology companies.

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