These are important to make sure you don’t fail. In my experience of trying to build a SaaS company I failed twice on all 3 aspects. I didn’t iterate on these enough to discover product market fit (PMF). I am currently in my 3rd attempt to built a SaaS company and this time I am focused to get it right. Product market fit is when you know who to sell, what to sell and how to sell.

  • Customer definition and understanding
  • State what are you solving
  • Differentiation

Let me elaborate on both my experiences and explain why these are the 3 main points which you want to get right.

Customer definition and understanding

This is your company’s understanding of your target customer. You have to personally know your initial customers. To grow you should know the deepest troubles and needs of your customers. Your customer understanding can make a huge difference in the success of your company. Some example of what kind of understanding I talking about:

  • How does your customer make money and what is their margin
  • How many saas software your customer already uses
  • What problems they have which are critical
  • How much they are willing to pay to solve those problems
  • What is the future for your customers
  • What are the challenges for their growth
  • What are the threats for your customers
  • Who is the decision maker and on what basis does the customer make his decision
  • What will be the customer onboarding process

State what are you solving

This sounds so straight forward but it is very tricky to get right. It is commonly preached that you have to describe your idea in one sentence and your entire business idea should be explainable as an elevator pitch. I consider this advice to be spot on. This forces you to cut the crap and choose the most important part of the problem. The bottleneck of the system. Doing this makes it easy to understand for everyone, specially the customer.

Stating what you solve needs you to understand the problem from the customer’s own mouth. Our description of the problem is a hypothesis only. It needs to be recreated and verified by at least 10 customers before it can be accepted.

So this leads us to doing market research and verify with the customers if they agree with the problem statement and consider it to be important enough. Talking to customers can help verify if it needs to be solved.

An important side note of defining the problem is to figure out how to solve it. Product market fit can only be achieved if you have the product obviously. Giving a good thought about the solution is part of the problem statement. If the problem is too difficult to solve even if you have customers getting PMF will be tough.


This can be best described as what is different in your approach which no one else has. Differentiation doesn’t always have to be in the product. I can give many examples of areas where you can differentiate your company:

  • Product/solution innovation - new features, new approach to solve the same problem.
  • A new problem to solve - it is possible that you invented the problem itself. This is mostly in the realm of hi tech innovation.
  • Customer segment/ market - new market or target customer who are either not being targeted or are being targeted with the wrong approach.
  • Sales and marketing - find new ways to distribute your product. A unique marketing message.
  • Operational efficiency - innovation in operations of the business rather than the end product itself. For example mass production, cheaper production of the same product
  • Pricing - drastically cheaper than the competition
  • Strategic advantage - leverage from enterprise partnerships, government support, investor support through capital

Businesses need to keep evolving. So answers to these 3 points are not fixed, you have to keep iterating and trying out new things to grow. I used to resist change in my business which proved to be very lethal for growth. You have to keep an open mind. Nothing is fixed, change is rapid now. It is best to do weekly or biweekly analysis of your strategy. And keep in touch with your customers to get feedback.