Ads, Product-Market Fit, and consumer brand
Is it a before and after? And how does it work with brands rather than startups?
The conventional wisdom on product market fit comes from Marc Andreesen in his 2007 article1.
When you are [before product market fit], focus obsessively on getting to product/market fit.
Do whatever is required to get to product/market fit. Including changing out people, rewriting your product, moving into a different market, telling customers no when you don’t want to, telling customers yes when you don’t want to, raising that fourth round of highly dilutive venture capital—whatever is required.
When you get right down to it, you can ignore almost everything else.
I’m not suggesting that you do ignore everything else—just that judging from what I’ve seen in successful startups, you can.
The summary is clear: before you have product-market fit, you have to focus solely on finding it. And most startups that die do so because they never found it.
If you don’t have product market fit, therefore, you should stop trying to scale your company.
As a result of this logic, I often here the case that companies won’t focus on any customer acquisition until they find it.
But if you’re a consumer company, then getting the market engaged is part of having product market fit.
Finding an ads journey that works is essential in finding product-market fit
“If you can’t sell your product on Facebook, you’re not going to be able to scale your business” – Charles Instone, founder at Wild Dose
Facebook Ads is the best opportunity your consumer startup has. There are odd exceptions (social networks, or very high AOV consumer products that might be in the thousands of pounds), but for 99% of consumer businesses, ads will be your scale.
Finding out if you can get ads to work therefore is core to the product-market fit journey.
Think of these two scenarios.
Scenario A – raises loads of money before product launch
You’ve got a great idea. You’ve researched the market a lot and know how problematic it is. You’ve also found a brilliant solution for it. Brilliant.
Maybe it needs developing before you can sell it. Maybe you’re an excellent fundraiser and therefore would rather raise and hire a bigger team to attack the problem faster.
Now there’s lots of upside here. You’ve got far more safety net. You’ll have a team around you to help share the problems. And it’s a slightly easier life. I know this, I essentially did this with Wine List. We weren’t quite pre-launch, but we’d not found a scalable ads journey that would work.
Scenario B – bootstrap your way to finding how to sell via Facebook
This is expensive personally. You’re either going to fund this yourself. That means either (A) doing this around other work or (B) using your own money.
It’s also much more stressful. It may not feel as psychologically real as if you’d done the money raise. And you’re probably going to be doing it on your own. That’s lonely.
The upside is that you’re going to find out quickly if you can sell via Facebook.
At Wine List, I ended up doing a hybrid of the two. I bootstrapped alongside my day job as I didn’t have the personal capital to support a fulltime jump off. But I also didn’t bother touching Facebook until I’d raised.
Scenario B, if it works you’ve got a business that will:
(A) be able to raise money far easier,
(B) raise debt far easier,
(C) have a higher chance of survival, and
(D) already be making money.
Scenario A, you could spend millions of pounds and still not have a business that actually works.
Why is Facebook so important?
Meta is essentially the entire market.
It’s got better coverage than any individual TV station or other media provider.
It’s orders of magnitude cheaper than those as well.
The tech behind it is exceptionally good at finding people who want to buy today.
There’s a learning curve, but aside from that, no barrier to entry.
If you can get Facebook working, it shows you that your product is wanted by a huge number of people.
If Facebook doesn’t work for you, it’s a sign that the market isn’t there for your business in its current setup.
“I’m launching a consumer crisps company, what’s this product market fit stuff about?”
Product market fit stems from tech.
It stems form a world where companies could ‘pivot’ quite substantially.
Burbn was a location and photo sharing app that pivoted into Instagram.
Twitch came from a livestream of the company’s founder.
Slack used to be a gaming company.
Pinterest used to be a company to aid e-commerce shopping called Tote (maybe less pivot here).
When people launch most consumer goods its usually with a desire to make a certain thing. If you’re making a protein shake or a chewing gum alternative or an alcohol-free drink, the chances are that’s what you want your business to be.
If you approached it like a tech company, and you found our that no-one wanted to buy your chewing gum – or maybe they do, but it’s just not affordable acquisition costs wise – then you could pivot to something entirely different.
Sometimes with pivots, this can be within a similar space. But looking at the big tech ones, gaming to Slack is an entirely different industry.
My own startup died because it didn’t have a profitable ads route
Once covid was over, my old startup Wine List had unaffordable Facebook CPA. Or at least it was unaffordable if I needed pay back in less than six months. Covid delayed that learning because during covid, when the market was behaving differently, we had cheap acquisition.
We tried pivoting. But they were mini pivots. We tried to reduce price/barrier to entry. We tried to change the format of the delivery.
Our final punt was a pivot towards a learning app, a bridge between Duolingo and Masterclass. We tried raising money to go build it, but couldn’t manage it.
“What if I don’t want to build a unicorn?”
PMF is a reflection of an industry obsessed with becoming a billion dollar company. And so a lot of this advice is based on if you have a goal to become really big.
Wine List could probably have netted £750k/year turnover indefinitely and with much more streamlined operations, maybe have just about turned a small profit. For someone who that was their core dream and life’s work, then maybe that would have been fine.
But I wanted to build a big business – even if not a unicorn, one that was going to net tens of millions per year in turnover.
Why are you a founder?
Is it because you really care about your single product idea. Maybe you’ve experienced a certain type of disease or condition all your life and you’ve found a supplement that improves it. You feel personally motivated to run that company. Then that’s great.
But most founders I meet talk about independence. They talk about the idea that they’ve always wanted to be an entrepreneur. Maybe they used to sell stuff in the school playground.
And so for most founders, harder, faster, stronger pivots should be more normal than they are.
Whether people love your product or not, that’s another story. That’s the “product” side of product-market fit – and that definitely needs the work too. But before you get there, you need to test the market side – and using Facebook Ads is the most certain way you’ve got of doing that.
https://pmarchive.com/guide_to_startups_part4.html