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False Positives and Product / Market Fit by @TriKro


Stashed in: Product Inspiration, Lean, Marketing, Valuation, Mathy

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So here is my more specific and overly wordy definition:

Product/Market Fit is sufficient demand in a clearly defined marketplace for a product delivering a clearly defined value proposition to allow efficient (human or financial) capital expenditure to scale value creation.

That's a lot of words but I see where you're getting at.

Would you say there was never a point at which Twitter could claim product/market fit?

I suppose they could claim it whenever they wanted. When did they know that the market was big enough?

When they were able to measure their viral coefficient and see it was heading towards >1 then they certainly knew they were on to something and VCs were valuing them accordingly.

That's funny, I never thought of Twitter as viral.

It did grow, but not as a result of virality. More as a result of word of mouth.

I'm still struggling to say definitively what "market" Twitter is in.

The market of serving mobile advertisements to smartphones?

That's funny. I always think of word of mouth as viral.

I recall the first time I heard the word viral was when talking about Blackberry. It was those little "Sent from my Blackberry" snipits at the bottom of each email. (Am I misremembering an article describing it this way?)

It's the same as seeing those snazzy white headphones all over the place when the iPod came out.

I guess I consider viral, if I have 1 customer will I soon have 2 without doing any advertising? If so, viral. If not, better start advertising.

I know many people use viral to mean that the product distribution is inherent in it's usage, such as inviting people to share files. As opposed to word of mouth.

Pretty sure Twitter is in the digital postcard business.

I didn't realize digital postcards IS a business!

Viral to me means that by using something, I've set into motion someone else using it, too.

Like your Blackberry example -- which was totally taken from Hotmail!

Word of Mouth is that I talk about it to you and eventually get you to try it because you want to know what I'm talking about. But not everything that spreads Word of Mouth is viral. Viral has to have the spreading mechanism built-in:

http://sethgodin.typepad.com/seths_blog/2007/10/is-viral-market.html

Sounds like a very fine line. I think by that definition, then no meme or gif ever goes viral. It's all just people telling their friends (via FB, TW, LI, email, etc). Just not with their mouths. There's nothing about the awesome gifs of cats that inherently has a spreading mechanism.

Which of these is viral:

Product 1) I sign up, have an awesome experience, tell my friend on the phone, then they sign up.

Product 2) I sign up, have an awesome experience, tell my friend via email, then they sign up.

Product 3) I sign up, have an awesome experience, click share via facebook button, then they sign up.

Product 4) I sign up, import my address book, invite my friends, then they sign up.

I see your point but technically only #4 is viral, since the inviting mechanism is part of the flow.

In the other three cases you're telling someone about it AFTER the experience.

Viral marketing triggers invites as part of the experience.

Mind you, if we get the signups we're happy, so this may be a spurious distinction.

I understand your distinction now. It's a pretty specialized. I think the common usage is more broad. Here's wikipedia:

Viral phenomena are objects or patterns able to replicate themselves or convert other objects into copies of themselves when these objects are exposed to them. They get their name from the way that viruses propagate. This has become a common way to describe how thoughts, information, and trends move into and through a human population. Memes are possibly the best-known example of informational viral patterns.

Seems like there are two types of...I'll say user multiplication for now:

  1. Products/services where the user experiences triggers referral to new users without creating additional functionality for the sharing user. e.g. TV shows, memes, Eric's blog
  2. Products/services where using the service necessarily requires referral to new users in order to use key functionality of the product/service. e.g. document sharing apps, the telephone, facebook

In the first case, I share because it's awesome. In the second, I am sharing because the product doesn't work unless you also have a telephone.

Facebook would be in that second camp because the networking effect creates more value to me the more of my friends sign up. Blackberry is in the first because I don't unlock more features by including the Blackberry footer.

I suppose you could say the first is word of mouth and the second is viral, but they both behave virally, so I wish there was a better word. They both seem like subsets of viral growth which of course is exponential growth. Both can be modeled the same way by looking at the viral coefficient.

Some viral growth is linear: I tell you, you tell Chris, Chris tells Mary, and so on.

Some viral growth is exponential: I tell two friends, and they each tell two friends, and so on.

Perhaps what we're getting at is that word of mouth tends to be linear whereas products that spread by using them have better chance at being exponential.

Something can still grow huge linearly; an example is Wikipedia.

Good point

Some viral growth is linear: I tell you, you tell Chris, Chris tells Mary, and so on.

It seems theoretically possible but to actually happen seems very unlikely.

That would be for one time events like you only ever share once in the app such as import on your address book and never again. I haven't seen many apps go for that except possibly with referral codes. "Invite three users and get a free lifetime membership!"

To get linear growth you'd have to have a one time invite event for the lifetime of the user with no other invites. Plus you'd have to have a 100% retention rate,

Are there any documented cases of this? Even for literal word of mouth, I usually don't tell a fixed number of people about something exciting and then stop.

I'm not sure Wikipedia's user growth over time, but I would imagine must of it is organic, not referral based.I can't search anything without getting a wiki link.

In practice most growth turns out to be linear.

Take Facebook as an example:

CHART: The Mindblowing Rise Of Facebook's Mobile Revenue - PandaWhale

Never do the chart's curves become exponential, and yet, they still experience fine growth.

That chart doesn't show only growth from invites. It would include many other factors including organic. 

I think to see the effect of the viral factors you are talking about we would need to look at individual product iterations at the small scale. Over the grand scale here we're seeing all factors combined and the product changing.

I would suggest looking at an early growth chart.

Instagram grew faster than Facebook and its early growth is also linear:

Instagram Growth Far Outpaces Facebook or Twitter â ReadWrite

Facebook was also relatively flat linear growth the first few years:

CHART OF THE DAY: Google+ Is Growing Much Faster Than Facebook Did In The Early Days - Business Insider

Faster than linear growth happened much later.

If linear is the norm it implies to me that the current methods of modeling are fairly wrong or virality tends to simply cancel out retention losses leaving other growth.

Is there any model of virality you've seen which makes sense of this?

(Also I just noticed the graphs we're looking at aren't apples to apples. Some are # of users, some are active users.)

Active Users matters more than Users but the point is that exponential growth (when/if it happens) is short lived.

Most exponential growth curves that are sustainable are "S" shaped: linear at the beginning, then a short steep rise, then linear again as a product reaches saturation.

Which is good. Linear growth is steady but exponential growth often leads to exponential decay.

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