#086 Product Market Fit As a Journey, Not a Destination

Show Notes

There is a point for all startups when it becomes necessary to ask for outside help. Sometimes that means hiring a fractional CMO to help get the go-to-market machine working. For startups in that position, there are consultants like Grwth.co available to help. Led by experienced founder Mosheh Poltorak, Grwth.co can provide fractional CMO services for startups while also having a plan to hand the reins to an in-house hire when the startup is ready.

Mosheh recently joined startup coach Roland Siebelink on the Midstage Startup Momentum Podcast to discuss Grwth.co and share insight from his vast experience as a founder.

• What does product-market-fit actually look like for startups?

• Why product-market-fit is an ongoing journey rather than a destination.

• How product-market-fit is different for B2B and B2C.

• Why product marketing is a critical part of early startup success.

• The importance of founders understanding their organic growth.

• The ideal timeline and situation for startups to work with a fractional CMO.

Transcript

Roland Siebelink: Hello and welcome to the Midstage Startup Momentum podcast. My name is Roland Siebelink and today I have with me a very special guest - it's Mosheh Poltorak. Mosheh, hi, you are representing Grwth.co right? 

Mosheh Poltorak: That's correct. Hi, Roland. Great to see you again.

Roland Siebelink: Great to see you. I was also a guest on your podcast. Of course, I'm happy to return the favor. Mosheh, just the same question as I ask every startup founder that comes here, what do you do?What is your impact in the world? 

Mosheh Poltorak: Grwth.co is a hybrid fractional CMO consulting practice and digital marketing agency. I say that with a little bit of grit in my teeth because I told myself I wasn't going to build an agency when I started out the firm. I wanted it to be exclusively fractional CMO services. However, working with early stage startups realized that many of them did not have the execution resources internally to execute. And strategy without execution is worthless. That's where we added in the execution part of the business, which is that agency side. 

We work with early stage companies, typically around seed or Series A, when they've just found product-market-fit or signals of product-market-fit early on and they then need to take that and build a go-to-market motion. That's where we come in and help. 

Roland Siebelink: Let's delve into some of the things you said there. First of all, seed, pre-seed, sometimes Series A, how do you define that in terms of either revenues or number of employees? Of course, those series terms can be vastly different in people's interpretation. 

Mosheh Poltorak: The nominal fundraising rounds for how people differentiate the stages of startups, it's somewhat arbitrary, as you mentioned. That's not as important for us. What is important is - do they have product-market-fit is the first question. What I've found is that pre-product-market-fit, it is very difficult for an outsider - as much as we'd love to come in and help the company or help you in your startup to find product-market-fit - it's very difficult for an outsider to contribute at that stage because the cycles have to be so fast, you're constantly iterating. That stuff has to be held close to the chest. I won't say that we never will work pre-product-market-fit, but very often that is going to be a qualifier for us. You had to have found that signal. 

Another challenge that startups often have at this stage - when they're starting out, they're seeing some success - oftentimes, they will immediately hire an agency, a digital marketing agency or a junior marketer, a generalist who will do a little bit of email, a little bit of paid ads, a little bit of social, and all of that.

And like I mentioned at the onset, that strategy without execution is worthless. Execution without strategy often leads to a lot of wasted efforts, the proverbial chicken without a head. That's where we provide the most value is our CMOs, myself included, are experienced marketing executives and growth executives who've been there, done that in house for startups. We will build the strategy and build the team and put the pieces in place to build that machine for growth, which you can then take over. Our goal is to work ourselves out of a job. We're not looking to be long-term partners. We are there to do a job to build a machine for you and hand the keys to that machine over to you. That's our goal. 

Roland Siebelink: Okay, very cool. Let's also delve into some of the terms you said there. Of course, the famous one is product-market-fit. And you said sometimes they have signals of product-market-fit. Let's hear your definition or what are the signals that you actually buy into of product-market-fit? And I'm only asking because I know from experience that many, many founders feel or state they have product-market-fit where I would have my doubts. 

Mosheh Poltorak: I should have a better answer for you because I have a podcast called Product Market Fit where we explore this topic. You were one of our illustrious guests among many founders and other experts in the industry. Every week, I talk to founders on this topic. The definitions vary widely. One gave me a threshold of a hundred million in revenue as showing true product-market-fit. Others have quoted the famous lines of you know, when you see it. My definition is - and not to wishy washy in the definition itself - but I believe in signals of product-market-fit more than I believe in an actual moment of product-market-fit.

I think that it's a constant iteration toward a goal. And it's also something that you can lose it once you have it. It's not just you get it and then you've passed that challenge and now you have a different challenge. You're always challenged with product-market-fit. Sometimes the market changes and your product gets left behind. Sometimes you're entering a new customer segment, for example, and you have to find product-market-fit all over again. In my mind, it's a continuous, iterative process of offering something that there is clear demand for, and you feel that in terms of the success of your marketing or sales efforts. When it feels like every single sale is an uphill battle and you have to convince people of your value and you have to fight to get people's attention, you probably don't have a really good product-market-fit. 

Roland Siebelink: Can you give us some examples of when you have talked to clients or prospects in the past and there's this one company that had such a clear product-market-fit - we knew it right away. And there was this other where we knew right away they definitely don't have it yet. And you don't have to mention any names, of course.

Mosheh Poltorak: I can speak to a software provider where they clearly had a very valuable software that was highly specialized SaaS and their challenge was not in the product but in the need for that product. Their challenge was in the perception and the awareness of not just the product but also the problem. They were almost at the bleeding edge of category creation, which is always a challenging place to be. As we know, category creation, you have to do all of the customer education around the problem, not just the product. That was somewhat of a challenge that we faced in building awareness, not just for the company but also for the problem. And once people saw the problem, immediately the product became an obvious choice because it was a fantastic product. 

Roland Siebelink: You mentioned B2C versus B2B. Where do you think it’s easiest to have product market fit? 

Mosheh Poltorak: Oh, that's a tough one. I don't know if product-market-fit is ever easy. B2B and B2C are very different, as you know, but they're also pretty similar in terms of the fundamentals. If you think of a startup as - essentially, you have to find product-market-fit and you have to build a funnel that engages with that segment in a profitable way, and you have to have a lifetime value that exceeds the customer acquisition cost. Those three principles are the core principles of my business philosophy that applies to B2B or B2C, doesn't matter.

Of course. within each of those, the product category and also whether it's B2B or B2C changes a lot. You were asking about product-market-fit for B2B versus B2C - I think that there's pros and cons to each. B2C gives you a lot more opportunity because you have a much bigger playing field to work with. In terms of prospects, you have 7 billion potential customers if you're a generic product that applies to anybody. As opposed to B2B, if you're selling accounting software for service businesses that are between 50 to 200 employees in the US, you've narrowed your scope of potential buyers into that narrow field makes it a little bit more difficult to get to. 

Mosheh Poltorak: On the flip side, by narrowing, you have a much clearer idea of who exactly you're targeting. And that's often one of the downfalls of B2C startups, which is less common with B2B is that they don't fully segment and narrow down their target audience. 

I feel like B2B startups do that a little bit better than B2C startups often. And B2C also, depending on the product category, is very mercurial. If you're dealing with anything that's trendy, whether it's social media, entertainment content, those categories, very hit or miss, very hard to predict whether or not it's going to take off. Whereas B2B, if you have a clearly defined problem and you provide a solution to that problem in a thoughtful way that's driven by customer need and not by founder intuition, usually you can find a market there.

Roland Siebelink: Let's also talk about product marketing. In many of the companies we've worked with, we found that product marketing was almost the first component you had to get right in a marketing strategy. Can you talk a little bit about that and explain to founders who may not be there yet why product marketing is such a critical component? 

Mosheh Poltorak: Yeah, I totally agree with that sentiment. And I think that if you are an early stage startup hiring a marketer, you probably are best off going with a product marketing generalist rather than a performance marketer or social media or any kind of other discipline within marketing. The reason is product marketing is how you want the world to perceive you as a company and as a product. 

You can have the best product in the world, if people don't know what to make of it, you're not going to be successful, unfortunately. It's not about the best product. It's about how people understand what the product is, why it's valuable to me as the target customer, what I can do with it, and how it compares to other solutions that are out there. 

I definitely recommend you always start with positioning. In fact, in our practice at Grwth, we will always start with positioning. That's mandatory now. I've made that mistake a couple of times where we skipped positioning, went straight to lead gen. Every founder, immediately, they want lead gen, they want pipeline, they want sales. And what happens is when you skip the positioning exercise, you end up spending two, three months driving lead, spending money, and then realizing that those are not the right leads. They're not converting well or they're converting and they're churning. They're not the right customer. There's a mismatch of customer to product or customer to expectations or product expectations. 

Doing that first, you have to sometimes slow down to speed up. Now it's mandatory for all of our engagements. We start with the product marketing, understanding what is the positioning? Who is the customer? How do you want the customer perceiving your product as compared to the alternatives that are out there? And then we can craft messaging around that and go back to the market and say, "This is who we are. This is why you should care." 

Roland Siebelink: Do you feel that any startup with product-markets-fit or signals of product-markets-fit is already clear on who that customer is, on who their ideal customer profile is? 

Mosheh Poltorak: Not necessarily. Sometimes they are seeing a lot of organic growth and they don't fully understand why. It's a good problem to have. It's better than most other startup problems. But it's a problem nonetheless and founders should really tap into understanding why are customers so excited about the product. 

I can speak to an experience of a startup that was in the financial services space that was showing signals of product-market-fit - I'm doing air quotes for those listening - signals of product-market-fit. It turned out that those early adopters were actually - I don't want to say scamming because that probably has like a legal connotation to it - but they were leveraging the product not in the way that it was intended, in a way that circumvented the financial system that existed.

If you just looked at it from a top-line numbers perspective, it looked like they were seeing signals of product-market-fit. But until they understood the segment that was actually using the product and why they were using it and how they were using it, it wasn't what they wanted. Sometimes you gotta look a gift horse in the mouth. Even if you have some adoption, that doesn't mean necessarily that you know who your customer is and why they're using your product. You need to scratch the surface and find out why.

And then to the point earlier, what we said about product-market-fit not being a destination but a journey, you always have to be questioning that. Even if you have it, you may not have it in the next market that you try to enter. You may not have it with the next product that you roll out. Or you may not have it next year because a competitor rolled out something else and now the market landscape has changed. It's something that needs to be continuously updated. 

Roland Siebelink: Very good. Agree with that. You mentioned that you work with several fractional CMOs. What is typically the profile of those folks and how long would they typically stay with one particular startup?

Mosheh Poltorak: Our engagements are on average 12 months, but I would say six to 18 months is the range that I give folks that are interested in learning more. The engagement is usually one day a week, sometimes two days a week. Think of it as an embedded consultant. They're part of the team. They're in your weekly standups. Sometimes they're managing internal resources or dotted line managing internal resources. The purpose is - and this is advice to anybody that's considering working with fractional folks - is to leverage them for what they're best at. You don't want to hire somebody very senior to CMO level position and then have them spending a ton of time pulling levers in meta ads. Everybody in the team is capable of doing that. But that's not the highest and best use of their time. You're overpaying for that kind of service. 

Roland Siebelink: And what's the typical order in which you recommend startups proceed? They might start with a fractional CMO before they even have a team in place? Or do you recommend they hire juniors or even senior people before they get a fractional CMO?

Mosheh Poltorak: I'm assuming you're referring specifically to marketing in house. I think that it can go either way. Oftentimes, we're supporting hiring. Sometimes we are helping founders understand that the people that are on the team maybe are not in the right roles. If you already have a team in place, you may engage us to say, "Hey, we're not sure whether or not we have the right people in the right seats."

Sometimes they're great people, they're not in the right seat or the role isn't defined. I mentioned earlier about early stage, pre-product-market-fit, it's really hard to outsource. Also, there are some parts of marketing that are harder to outsource than others. For example, content and social media to an extent as well. There's so many ways to do that wrong with outsourcing. Not saying that you can't. But social media is about authenticity and it's very hard to outsource authenticity. Same thing with thought leadership; you can't outsource thought leadership. If that's part of your content strategy, then you should have someone internally that can support that. 

Typically, I think the first hire for most startups should be that product marketing first generalist. Someone who can write well, understands customer psychology, can do research, and is numerate. They can do basic analysis. They understand performance data. They don't have to be a data scientists per se, but they have to be able to work a spreadsheet and understand the meaning behind the numbers. That's typically a good place to start. 

Roland Siebelink: And let me flip that question. Someone with that product marketer background who would be interested in being the first hire at a startup. How would you recommend they - assuming they get the job - how would you recommend they tackle that job, working with very opinionated founders? 

Mosheh Poltorak: It's got to be one of the most difficult jobs. There's a meme already about the job description of that, which is three pages long. I feel for the people that step into that role. I, personally, have been in that role a couple of times in house. I think that prioritization - and it's probably true for most roles, especially early-stage roles - prioritization is key there because it's so easy to get bogged down in execution without having a strategy first. Everybody wants to show progress and momentum and results. And oftentimes, we mistake busyness for results. 

A bunch of social media posts are busy. It justifies your paycheck. I did stuff. But did you drive meaningful results to the business? Maybe, maybe not. What's the purpose of that? I think that that's probably the easiest trap door to fall into; just to immediately try to be busy to show that you're busy, to show that you're valuable. Some of that busy work can be great if you're running experiments and you're tracking your learnings and building off of that. That can be fantastic. That's the ideal case. But sometimes it could just be: we started a blog and now we're on five social media channels just because we have to be, and now we're building awareness. Maybe that's good for the business. Maybe that's not good for the business. Maybe it's important. Maybe it's not. Oftentimes, it's just busy work. 

Roland Siebelink: Since you're a founder yourself, Mosheh, what is some advice you would give to other founders that are coming a bit behind you? What are some of the key learnings that you have adopted?

Mosheh Poltorak: Behind me and ahead of me because I'm actually going back into the arena from that. That's true. 

Roland Siebelink: That's true. You're a successful founder of a consulting firm and a brand new founder of tech startup, 

Yes, exactly. And also, I've co founded a venture-backed startup early in my career as well. People joke that startup advice or founder advice is people showing their winning lottery numbers and saying, "These are the numbers I chose." I'm always wary of startup advice. What I would say - partly that's why I do the podcast. It's not something that makes me money. It's an opportunity to learn from other founders. I enjoy talking to them and learning from them. I think that number one is a practical lesson to look for disconfirming information.

Startups are so hard. They're so freaking hard. Every day, you're hearing "no" from people you want to hire, from investors, from customers. You're always hearing "no," it's always hard. When you see that little light in the tunnel, you want to latch onto it and you want to get excited about it and you should get excited and you should celebrate the wins, even the small ones. But look for disconfirming information. Don't get convinced, don't buy your Kool Aid. Don't get convinced that you have product-market-fit just because you had a line around the booth at a trade show or you got a bunch of followers on Instagram. 

Mosheh Poltorak: People showed excitement. Excitement is not revenue. Can't take that to the bank. Look for that disconfirming information. And I think that just generally the thing that comes back over and over again is that resilience is the number one attribute that differentiates the winners from the losers. There are so many brilliant founders that were well-funded with great products that- you don't know about them today. You don't know about the companies that they built. Of course, there's survivorship bias. But usually it's those that persevere, that can roll with the punches, that will live to fight another day and continue battling, those are the ones that find the product-market-fit, find success, and scale up.

Roland Siebelink: Excellent. That's a great answer too. Thank you so much, Mosheh. If people want to hear more about Grwth.co or about Mosheh personally, where should they go? Who should they get in touch with? Where can they find you? 

Mosheh Poltorak: Absolutely. Grwth.co it's growth without the o - g, r, w, t, h, dot co. That's our website. There's some great content on there and you can reach out to us via the forms on that website. You can always email me at [email protected]. And you can find me on LinkedIn as well, where I share content and learnings and my journey as a founder, and that's on LinkedIn. And if you are interested in a podcast specifically focused on product-market-fit in early-stage startups, I'd love for you to check out my pod, it's called Product Market Fit and you can find it anywhere that podcasts are published and YouTube.

Roland Siebelink: Absolutely. Thank you so much, Mosheh, for joining the Midstage Startup Momentum Podcast. It's been an honor to have you. 

Mosheh Poltorak: Thank you, Roland. I really enjoyed this. Appreciate it. And talk to you soon. 

Roland Siebelink: Talk to you soon.