The scariest point in time for any company is when they realize their product isn't working for the market. The next scariest thing is fixing it, before time runs out.
Getting product-market fit right is critical to the success of any small business. As business owners, we know this. That's why it's especially terrifying when you realize you've got it wrong.
So what is product-market fit exactly? It's the intersection where the products or services that a company offers meet the needs of consumers by either solving a problem or adding value to their lives. And they are willing to pay for it. And their lives would be materially worse if they couldn't have your product. There are all kinds of measures, but when you have it, you just know it. All of a sudden the gears of your business are no longer grinding, they are flying.
How do we know if we're getting it right? There is no perfect answer. No formula that says you have achieved the ideal market fit for your product or service. But the market gives us signals to help us identify what is working well. Signals like highly engaged customers, shorter sales cycles, growing referrals and word of mouth, journalists calling to look for the story and cheques pouring in.
When we started League, we had a vision of a consumer platform that would connect consumers with thousands of health professionals. The search, booking and payment aspects would be seamless and 100 per cent digital. We wanted to Uber-ize healthcare, empowering people to be healthy every day.
That didn't go quite as planned.
Consumer interest was there. Health provider interest was there. But the economics of making a two-sided marketplace – cost of acquisition, revenue, lifetime value – just didn't make sense. And they never would make sense. So, we made the bet to abandon that business model and went back to the mission. We started leveraging the platform we had built to offer services to companies, to empower their employees with their health. That lead us to the complex, confusing and archaic model of health benefits.
One year ago, we went all-in. Which is scary, but sometimes you have to do it to survive.
Our business shifted as we re-imagined the health insurance industry, offering an experience that was Uber-ized and gives businesses more health benefits for their dollar. We started with lifestyle and healthcare spending accounts, and health services at work.
We got traction. Our members had the means to prioritize their health in the way that suited them best. Quickly, we learned that, although our customers loved the idea, in practice, they still weren't able to leverage our product in the most efficient way because their benefit plans were linked to traditional insurance and most were unable to decouple these. So, we decided to build a "whole product" that included insurance products, integrated with our experience.
Were we building a next-generation health insurance company? It started to feel that way.
Our business really started to accelerate when we explained our company differently. I talked about us as a better type of insurance provider that focused on empowering people to take control of their health through personalized spending accounts, but provided the shelter and stability of insurance needs in a way employers can maximize.
That's when the pieces came together and the company started to take off.
While this turning point was realized early in our company's lifetime, many companies again face this battle long after they've launched their first product.
When Starbucks first launched in 1971, their focus was selling coffee beans and coffee makers with moderate success. It wasn't until the organization shifted its focus to delivering an experience around coffee that it found the product-market fit that drove explosive growth and dominance around the world.
I hate the term pivot.
I like evolution, and the relentless pursuit of viability that starts every single day with a fanatical attention to what we can do to become indispensable to our members.
What's interesting is that many long-standing companies are just starting to realize product-market fit is an ongoing process. I recently heard Cisco's John Chambers share his message of "disrupt or be disrupted." It is an ongoing process, not just a temporal challenge that tech companies talk about – not all of the companies on the first Fortune 500 list are still around. The rest were disrupted.
Ultimately, if you're not moving forward at the same speed as your customer, you're at risk. You need to have a vision, and attempt to skate to where the puck is going. Be prepared to abandon business models and plans. Go all-in. Listen to your customers. Test how you talk about your product to make it blatantly obvious. Continually improve your value proposition. Be relentless in your pursuit of viability. Business is a competitive sport.
If you don't get to the podium, someone else will.
Michael Serbinis is founder and CEO of League, a digital alternative to health insurance for businesses. He'll be a keynote speaker at The 2017 Globe and Mail Small Business Summit, a one-day conference of insightful sessions, proven business growth strategies and innovative ideas from the country's brightest business leaders.