How the 'market' can change with product market fit

Something I’ve been thinking about recently is the journey I had with product market fit (PMF) at the Wine List.

Here’s some background on that business for some clarity.

• The problem we were trying to solve: helping wine consumers learn about wine

• Our core belief: people wanted to learn about wine, but it was too tricky to do so

• How we went about it: version one was a printed course on everything from winemaking to terroir to climate. You’d get one part of this course delivered each month, along with two wines to test your new skills on, plus some tasting cards to fill in

• How we evolved it: the idea evolved into then adding digital elements, online videos, taste along YouTube lives, and the eventual plan was an app that would act like Duolingo with tests you could take every day.

I launched Wine List in summer 2019 off the back of building a 1,000 strong wine newsletter. The first 100 customers were all newsletter subscribers, all primed for learning and great value wine recommendations.

2020: zero to hero to difficulties

March 2020, the world goes into lockdown. Almost overnight, user acquisition explodes. We secure a handful of brilliant partnerships with the likes of Soho House, and turn on Facebook Ads, which with hindsight, was akin to printing money.

Retention was reasonable. 60% bought again after 30 days, and then 75% of those bought again 30 days after that.

By February 2021, acquisition costs were up. Retention was far harder to keep at the same level. Partnerships did not come by so easily. Facebook was not a money printing machine.

Having product market fit and then it disappearing

Product market fit is like gravity. When it’s there, you can’t ignore it. But before you experience gravity, the moments of low orbit where there’s a slight sense of pull, might trick you.

Much is written in startups on the need to find product market fit. I agree. It’s the very first thing a business should do, and the only thing a business should focus on until it finds it.

Product market fit is not the same as the product market fit question. That’s simply an early indicator of it. True product market fit is incredibly sticky retention, in a sizable market, with an acquisition engine that supports it.

But what isn’t often written about is having product market fit and then it going away.

In mid 2020, we had it. Why?

The market was different.

The market was full of people who were constrained to their homes. Their breadth of experiences was limited. Part of the trend at the time was for experiences where you could learn something. Not only this but people’s alcohol consumption was increasing, and because their expendable income was increasing, their purchase level went up too.

These set of factors meant we were a perfect product for that time and place. The market was looking for a product like ours, and gravity connected the two.

But as the world slowly returned to normal, that sense of gravity shifted and loosened. There was still the diehard group there, but for the most part, this was not a product that solved a problem that a large part of the market felt day-to-day. People want to drink better wine. They want to be able to tell their friends at a dinner party something about the wine. But they don’t actually care to learn about it at the expense of their time.

Always be aware of the changing dynamics of the market

Your consumer is not a fixed thing living in a vacuum. Market wants, dreams, desires, and demands change all the time.

Humans are built to always want more. It’s why AI will never replace all of the jobs, just like automation didn’t, and like the industrial mill didn’t before it.

Sometimes that will be felt very strongly – as it was with Wine List. There was a short period of time when the market felt the need for the product.

But most of the time, it will likely be more subtle than that.

This means you constantly need to be iterating and improving and ensuring that you’re meeting current needs. It means if you stand still, you will eventually fall behind.

The market isn’t static, and so, neither should your product be.

Always be measuring product market fit. Always be learning about your customer.

I was speaking to someone recently who told me that “so far, we’ve essentially been a customer research company,” I’d wager that’s a smart way to always run your business.