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A product-market fit happens when you have a definition of your target market and a product that serves them. The pre-requisite to reaching a product-market fit is understanding your target customer, their pain points, how they feel grappling with the problem, and your approach to solving the problem.

It isn’t uncommon for startups to stay on the lookout for a product-market fit two years into their startup journey, as this is the most challenging phase in a startup’s lifecycle.

David Rusenko, Co-founder of Weebly, discusses finding product-market fit in this video, referenced for this piece.

Not having product-market fit isn’t a roadblock but an opportunity to assess your startup and find the sweet spot where users sign up consistently and stay with you. Product-market fit is a key milestone in any startup’s journey and a place where many startups dwindle.

Let’s explore the process of finding product/market.

Product-Market Fit in the Stages of a Startup

Here are the stages a startup goes through-

1. Idea
2. Prototype
3. Launch
4. Traction
5. Monetization
6. Growth 

The first four stages of getting from idea to traction is the search for product-market fit, while the final two stages are the refinement of the product-market fit. 

Related: 5 Ways to Develop Rapid Digital Prototypes for Your Startup

Product-Market Fit: Where is the Need?

All the hard work in finding product-market fit is around learning a primary customer pain and then coming up with the right solution to approach and solve the problem.

Often, the need isn’t apparent but hidden. Users don’t know what they don’t know. Henry Ford said it best- “If I had asked people what they wanted, they would have said faster horses!” The need for cars was hidden. The pain was in being unable to travel faster. But the solution wasn’t faster horses.

All too often, a need exists in the market without the awareness of people around it. For Weebly, it looked like people wanted to design their own websites at a time when you had to know how to code to build a website. 

The need was for the ability to build a website easily. However, the solution didn’t exist yet, and the need was hidden. Weebly unearthed that need and built a service to enable people to build websites without writing code.

It’s also critical to note that the best companies create a market, such as Airbnb and Dropbox. By definition, market research doesn’t help as people don’t know what they don’t know. So, the key is to find the need first, separate from the solution to approach to solve it.

Another frequent phenomenon is startup founders offer something to a select group of customers but get pulled in a different direction by them. When this happens, it begs attention. The idea isn’t to push people to use your product but to find that pull factor so that they automatically come to it.

Once you unearth the deep need that exists within a market, you can iterate inexpensively to reach the product-market fit stage.

Related: Step-by-Step Roadmap to Developing an MVP

Steps to Achieving Product-Market Fit

1. Talk to customers. Develop a market thesis. In this step, you don’t try to find a hole in the market. In today’s competitive market, the hole is also overcrowded if it exists at all. Instead, you find out what the minute lack is. Of course, in the case of Weebly, a solution was available for people wanting to set up their websites- to hire a web developer. However, that solution lacked accessibility and ease. Another perspective is when you study the market enough, you can predict where it’s headed. Something with little utility today might become highly valuable tomorrow. For instance, when Trustpilot was born, not a lot of commerce happened online. However, the market was already headed in that direction. So, when e-commerce boomed, Trustpilot was needed to help buyers sort fraudulent online shops from genuine ones.
2. Listen to customer problems and not solutions. Once you have a market thesis outlining the customer, the approach and the gap, interview customers. However, completely ignore the solutions they propose because they will want a faster horse. What is the underlying job people want to get done?
3. Rapid prototyping and user testing. Building a fully functional product over and over again is the most expensive way to test your hypothesis. Aim to build a functional prototype that you can quickly get to the users. Don’t worry about scaling the code yet. Initially, the product and the experience must work for users. Build a team that can iterate quickly and repeatedly, meaning don’t outsource prototype development, as it can thwart progress.
4. Build the solution to their problems. At this stage, you have had several iterations and landed on one most accepted by customers.
5. Test the solution with customers. Make sure you’re talking to target customers. The most helpful tools to test the solution are customer interviews, UX testing sessions and metrics tracking.
   1. UX testing sessions- Here’s what you need to know about conducting UX tests with users-
      1. Get users to use your product/service in front of you. This way, you can track their body language.
      2. Encourage them to give open and honest feedback.
      3. Ask them to perform a task on your product and refrain from doing or saying anything as they figure it out.
      4. Watch in extreme agony as they struggle to use your product because this tells you how smooth the user experience actually is.

6. Next, you repeat the entire process until you find product-market fit.

Related: 10 Tips to Improve Your e-Commerce Website Accessibility 

Metrics that Prove Product-Market Fit

Three key metrics that point toward product-market fit are-

1. Returning usage (1, 3, 7, 30 days retention)- Out of all the people who sign up, how many come back within a day, three days, a week and a month? When users start returning to your product is when they deem it highly useful.
2. Net Promoter Score (should be > 50)- One question helps determine the NPS primarily- “How likely are you to recommend this product/service to friends and family?” The percentage of users who say they are 9/10 or 10/10 likely are promoters.
3. Paying customer renewal rates– If you’ve already monetized your product, measure how many customers renew their payments month after month to find out if you’ve achieved product-market fit.

Striking product-market fit is one of the most challenging parts of establishing a successful startup. So, make sure you have the right team and mentors by your side. Learn more about KiwiTech’s startup ecosystem and mentorship program here.

What Brings Startups and Corporates Together?

When corporates and startups collaborate, they ideally create a win-win. Corporates create and enter new markets and startups achieve product development and scalability in the partnership. The shared strategic aim of such collaboration remains to secure growth, improve competitive standing and generate revenue.

Corporations even benefit from partnering with potential market disruptors, as disruption in large organizations is hard to come from within. No matter how fruitful it is for startups and corporates to join forces, it’s also extremely challenging given differences in culture, work ethic and appetite for risk.

Successful collaboration requires expectation setting besides being open to understanding each other’s interests, incentives, culture and work ethic.

This detailed guide can serve as a roadmap and informational tool for startups and corporations to plan collaborations so that the sailing is smooth and the outcome a true win-win.

This report by the World Economic Forum and this interview by McKinsey were researched for this piece.

Why Corporate Partnerships Make Sense for Startups

Collaborating with corporates brings a host of benefits to startups-

• Access to investment and resources – Big corporates have the potential to make huge investments in startups and provide them with the right connections, eliminating the need for other investors. Corporates often have long-term interests in helping a startup grow, enabling the latter to achieve success sooner and more sustainably.
• Scalability – Large organizations can put startups in touch with their first customers and support scalability with their abundance of people, budget, resources and opportunities. Access to a diverse and large customer base can open up new markets for a startup and help them refine their product with customer feedback.
• Access to data assets – Partnering with a corporate can help a startup access proprietary data that’s otherwise out of their reach and thus help create new business potential.
• Market knowledge and mentorship – An established corporate player can ease the entry of a startup into new markets and enrich their journey with succinct mentorship from those who have been there and done it.
• Reputation and credibility – Associating a startup with a known market leader can put the former on the map and trigger a networking effect for the future. Startups can use their corporate collaboration as a reference to earn credibility with decision makers down the line.

Related: What to do if Your Startup Launch Didn’t Go as Planned

Why Startup Partnerships Make Sense for Corporates

Here’s what corporates stand to earn from collaborating with startups-

• External disruption – Every industry warrants digital disruption in this stiff competitive environment for a business’ sustenance. Corporates can rarely ignite disruption from the inside. Collaborating with startups enables large organizations to bring disruptive innovations to increase revenues, sharpen their competitive edge and expand into emerging technologies.
• Renewed customer-centricity – Startups often fine-tune their products for the customer, as they aren’t restricted by standard processes, unlike large companies. Startups can even personalize and adapt their products for a specific customer segment, allowing a large organization to leverage it for better customer-centricity.
• Revived entrepreneurial spirit – No business can afford to do what it’s always done and still stay ahead of the curve today. Large organizations benefit from a startup’s entrepreneurial spirit as it creates a culture of openness and agility.
• Fresh revenue and business – Collaborating with startups allows established organizations to offer new and innovative services to their clients, build new revenue streams and leverage new business opportunities.

What are the Risks for Startups in Collaborating with Corporates?

An arrangement between a corporate body and a startup can lead to different risks for startups, including-

• One customer-specific product – Focusing on building a custom solution for one large client can remove a startup from creating a product that’s scalable, accessible and potentially sellable beyond the scope of the corporate.
• Time delays – There often is a tug of war between different departments in a corporate which get challenging and expensive for startups to navigate.
• Resource drain – Startups may receive the short end of the bargain if the corporate doesn’t commit fully to a collaboration and only uses the startup for free consultancy.
• Loss of the entrepreneurial spirit – If a startup depends too much on corporate decision-making and the collaboration is tight-knit, a startup may get entangled in the corporate processes and lose its innovative and disruptive edge.

Related: What a Startup’s Go-to-Market Strategy Looks Like

What are the Risks for Corporates in Collaborating with Startups?

Corporates also put a lot on the line in collaborating with startups, such as-

• Reputation – If a customer or corporate data is involved in the startup’s development process, a failure can hamper the organization’s brand and reputation.
• Investment – The investment risk is high in partnering with startups as failure probability is high when compared to other investment avenues for large organizations.
• Employee sentiment – Corporate employees are habitual of processes and systems. An unfamiliar and often open culture of a startup might threaten them and create resistance to change.
• Outcome – The outcome of a collaboration with a startup can’t be predicted as startup teams often lack experience. Sometimes, startups propose a business model or technology that an organization isn’t ready to experiment with, which blurs the outcome of the collaboration.

The Challenges Startups Face in Corporate Collaborations

Here are some organizational challenges startups must deal with as part of a corporate collaboration-

• Navigating the org maze – Startups often feel out of the loop as business units are shielded by managers who refuse to include them. Startups must learn to navigate the organizational maze and find the right people to execute a collaborative effort. There is also the challenging middle management that feels threatened by a startup’s disruption.
• Insufficient resources – A startup might hit its limits in several ways when trying to collaborate with a corporate. For instance, a corporation has access to a legal department, while a startup relies on a relatively costly lawyer or handles the legalities internally.
• Balancing specificity and standardization – Startups find it challenging to balance creating a custom product for a corporate client and building a standard product they can sell multiple times.
• Gaining trust – Key corporate departments often resist working with startups with no previous corporate collaborations, which leads to a classic chicken-and-egg issue.
• Equality in reputation – Startups often feel like a subsidiary of a large corporation instead of standing at eye level. They struggle to be perceived as an equally serious business by corporates.

Related: How to Know if it’s Funding O’Clock When Investors Approach

The Challenges Corporates Face in Startup Collaborations

Here are a few challenges corporations brush up against continually in collaborating with startups-

• Competition with internal innovation departments – Large organizations can often spark internal competition between their own innovation department and a startup partner. Corporates may also face internal resistance to adopting products the startup developed.
• Shareholder & managerial support – Corporates must manage shareholder expectations and juxtapose the short-term interests with the long-term investment strategy of collaborating with a startup. Gaining support from senior management can be challenging.
• Conflicting requirements – Corporates may face conflicting requirements for a product from different business units, which can create delays and confusion regarding the outcome of the collaboration.
• Cultural change – Partnering with a startup not only means innovation, but also change. Senior managers in a corporate must ready their teams to change the status quo and part with the tested ways of thinking to make way for innovation.
• Fear of failure – The fear of failure is real in corporate culture, which needs to be massaged away by C-suite executives by encouraging teams to support projects and collaborative efforts.

Top Issues that Derail Corporate-Startup Partnerships

The results of corporate-startup collaborations are mixed at best. Here are the top reasons why these partnerships get derailed-

• Lack of internal buy-in – The success of startup-corporate partnerships depends on internal sponsorship and strategic buy-in from the organization. Often, a part of the C-suite kickstarts the collaboration, which fails to get support across the board and is treated as a pet project. Lack of support and resourcing is challenging for startups and sets up the arrangement for failure.
• Lack of strategic clarity – Often, large organizations recognize the importance of innovation and emerging technologies. However, they lack clarity on what steps they want to take and how they want to utilize the external ecosystem. This confusion hampers unified progress toward a mutual goal.
• Slow corporate processes – Corporations have slow processes and require startups to think ahead of time, for instance, about resources they might need so that they can be signed off in time. Startups don’t think and work that way, which creates a rift between the two sides.
• Lack of impact tracking – Corporations are often unclear on the outcome they want from the collaboration or haven’t translated it into trackable metrics. Startups want to achieve quick growth with the availability of resources from the corporate. This creates a lack of impact tracking, which could help bring a strayed collaboration back on track.
• Getting stuck in pilots – As a result of the first four hindrances, companies get stuck in the pilot phase with no plans to scale. Corporates stick to their patterns, and startups get frustrated.

To achieve success from a collaborative effort, both corporates and startups must be mindful of the challenges and take proactive steps toward eliminating friction.

Related: Early Startup? Don’t Make These Mistakes Navigating Your First Recession

When are Startups Ready to Collaborate with Corporates?

To identify if your startup is ready to enter a corporate partnership, identify your strategic objectives for doing so. Here are a few factors to consider-

• Budget – Does the startup have enough resources to successfully and professionally deliver the expected product to the corporate?
• Buyer – Who signs the deal and protects the collaboration against pitfalls of the corporate environment? Is the pain of the corporate intense enough to get their holistic buy-in?
• Success metrics – What would signal a successful collaboration? Can you, as the startup, promise and commit to those KPIs?
• Corporate intention – What is the intention of the corporate in working with you? What are they looking for?

If startups can answer all of the above questions and have a clear strategic goal backed by KPIs, they might be ready to enter a corporate relationship.

Best Practices to Approach Startup-Corporate Collaboration

Several moving pieces need to fit to create a successful partnership between a startup and a corporation. One of those is fully committing to the deal. Satisfaction and the potential for success can rise drastically once both parties are fully committed and invested in the collaboration.

Second, addressing and acknowledging cultural gaps can go a long way in making everyone feel included and understood. Even if culture gaps can’t be resolved, aiming to work through differences in methodologies, philosophies and working styles can improve satisfaction.

Finally, knowing where you want to reach can prevent gaps in expectations. Setting metrics of success can help bring both parties to the same page and work toward a shared goal.

Related: How Startups Can Manoeuvre The Current Funding Slowdown

What Should Startups Track to Measure Partnership Success?

The success of collaborating with a corporate partner means different things to different startups. Broadly, it provides a positive impact on both sides. The measurement of success can vary depending on the scope of a partnership. However, milestones and expectations ensure a streamlined process to evaluate effort on both ends.

A startup-corporate collaboration can be measured against-

• How technically feasible the project is.
• Whether its successful completion creates a profitable business model for the corporate and the startup.
• Whether it creates a competitive advantage on both sides.
• Does the collaboration have partnership potential for the long term? This also requires mutual commitment and trust on both sides to be true.
• How does the collaboration benefit both parties financially?
• Corporations often look at revenue and EBITDA and strategic metrics tied to value creation.
• For R&D collaboration, parties can look at the number of projects in the pipeline and the addressable market.
• For a pilot project, the customer base and success rate can signal success.

Tracking and measuring these quantitative and qualitative measures can help define the success of a collaborative effort.

Every startup-corporate collaboration is unique and cannot be seen from a generic lens. However, this piece lays down the foundational components required to create a successful partnership.

To consult an expert about a specific collaboration opportunity for your startup, write to us at info@kiwitech.com.

A startup is an idea that aims to solve a problem for a specific section of people. Sighting a problem and thriving to look for its solution is not bound by the fact of whether you can provide the technical infrastructure to that idea or not. So whether you are someone from the technical side or not, you can still contribute to your startup as much as anyone else. 

It can help to have technical background for tech-based startups any day, but this is no hard and fast rule to beginning a startup.

In this blog, KiwiTech highlights how a non-tech person can add value to its business without investing years in learning to code.

Deep Dive into the Industry and Users

It is worth noting that technology is developed according to humans instead of the other way around. So before dwelling on any other issue, it is imperative to have a strong sense of user understanding and knowledge about the market. It is something that your team will rely on you for, so you have to understand the industry and its users deeply. 

User experience will determine how to develop the technology to its best use. It will ultimately minimize and ease the task of the developer.

Learning Non-Tech Tools

It always helps to master whatever you can. You can not learn coding in days or weeks, so you can always take up the non-tech side under your wing. Additionally, the knowledge and understanding of various tools for project management, scheduling tasks, communication etc., can come to the rescue.

Learning the Very Basics

It is essential to understand that coding is one of many tasks in a startup. In addition to that, multiple other areas need a startup owner’s attention.

While finding your expertise is essential, a Jack of all trades does not only work fine but is a necessity for a successful startup. Therefore, knowledge about every work in your startup is exceptionally crucial. 

It is imperative to learn about the Software Development Lifecycle, which can guide the team and keeping track of the working basics of the tech side is essential. 

Know Enough to Question

Ultimately you are not the task do-er; it is the developer for the technical side. So you should at least have a good grip on the jargon of the technical side and be comfortable with their respective meanings. 

Google and books should be your best friend; asking questions can be the way out too, but knowledge is essential. It would be best if you were well versed to be in a position to solve an engineer’s problem and brainstorm later on. 

Creating the Basic Infrastructure (MVP)

Even in the early stage, it is good to have a basic landing page so everyone from investors to team members can have some visual representation of your vision. 

Of course, one can also outsource the tech services if there is no other option, but it can be self-created in other cases.

Seek Advice and Inspiration

It is always good to listen to someone who has already been through your stage; you can learn from their mistakes and implement their positive points in the workings of your startups. Reading books and choosing a mentor can help tremendously, even by alleviating the mental pressure once in a while.

From Alibaba to Pinterest, all are tech-based startups that non-tech people own. Learn from them and seek inspiration from them.

Hiring a Tech Consultant or CTO

A tech consultant or CTO can simplify the life of a non-tech startup person like no other. At one time, you would seek the help of such a professional. 

They become the bridge between you and the developers. In addition to this, they are the mastermind behind the application’s architecture and undertake crucial technical decisions which require experience.  

However, this does not suggest that it would take away some of your duties. Before anything else, a startup is a vision-driven organization; it is vital to ensure that every operation should work towards a single goal with a shared vision and that vision should come from a founder. 

If you’re a startup looking for a solution not just to build a technical infrastructure but other services to accelerate your business, you can trust us with it. If you have any queries or want to seek professional guidance, don’t hesitate to contact us. We would be glad to help you grow!