Casey’s Guide to Finding Product/Market Fit: Notes on newsletters — Benedict Evans

Casey’s Guide to Finding Product/Market Fit: Notes on newsletters — Benedict Evans

Finding product/market fit is a crucial step for any product person. It involves connecting people to the value of a product once it has been confirmed that the product is delivering value. Product/market fit is defined as satisfaction that allows for sustained growth. However, it's important to note that customers are divinely discontent. Their expectations are never static - they always go up. This constant desire for a better way drives innovation and improvement. Therefore, product/market fit is not achieved when customers stop complaining and are fully satisfied. It is when they stop leaving, indicating that the product is meeting their needs.

Measuring retention is the best signal of product/market fit. Retention refers to the rate at which customers continue to engage with a product or service over time. However, it's not just about retaining customers, but also about creating sustainable growth. This means that the rate of retention matters. A flattened retention curve of the key action at the designated frequency, along with month-over-month growth in new customers, is the best way to measure true product/market fit.

There are two main schools of thought on how long to stay in the first phase of finding product/market fit. The Eric Ries model emphasizes talking to customers early and often to understand their pain points and build something valuable. On the other hand, the Keith Rabois model starts with a strong vision of both the problem and the solution and works to build that from the start. Both approaches have their merits and depend on the product being built.

A combination of a strong vision and market feedback is often the most effective approach. It's important to have a clear vision of what problem the product is solving and how it will provide value to customers. At the same time, gathering feedback from the target customer segment is crucial to ensure that the product is meeting their needs and solving their pain points.

In the world of newsletters, email has proven to be a more effective and tangible medium compared to web pages. Paid newsletters, in particular, have gained popularity as they provide tangible value to subscribers. Substack, a platform that simplifies the process of publishing and charging for newsletters, has made it easier for writers to monetize their content. By handling the technical aspects of website management, membership, email delivery, and payments, Substack has made it more accessible for writers to focus on creating valuable content.

Substack's success lies in its ability to create a network effect. It offers not only a tool for publishing newsletters but also a user-facing brand that drives recommendations and discovery. In an era where attention is fragmented and platforms are filled with content, the challenge lies in standing out and attracting an audience. Substack's ability to provide both a platform and a network for writers is what sets it apart.

However, as Substack continues to grow, it faces the challenge of balancing the influx of content with user experience. The question of "what happens when there is more stuff on your platform than anyone can look at?" becomes essential. Substack needs to determine whether it wants to be a network or a tool and how it can ensure that its own reader remains valuable in a saturated market.

In conclusion, finding product/market fit and building a successful newsletter platform require a combination of vision, market feedback, and creating a valuable network. To achieve product/market fit, it's important to focus on measuring retention and sustaining growth. For newsletter platforms like Substack, providing a user-friendly tool and fostering a strong network of writers are key to attracting and retaining subscribers.

Actionable advice:

1. Continuously gather feedback from your target customers to ensure that your product is meeting their needs and solving their pain points.
2. Measure retention and focus on sustaining growth to determine if you have achieved product/market fit.
3. Find the right balance between being a tool and a network to create a valuable platform that attracts and retains users.