Is There Demand? Essential Questions for Nigerian Product Founders

Hello and welcome to the show. Today, I'd like us to look at product market fit. It's a really important topic or a really important thing because that's the whole point of being in business and that's the whole point of sales. So if you're a newbie listening to this and you're wondering what is product market fit and how can it be that important. Essentially, it's a situation where you have a product or a service and it meets the needs or the desires of a specific market.

It's also what I like to call market validation. And those are the external signs that you receive from the market. Now there's a market demand for your idea. Please note I said external signs. So it's not when you and your brother or you and your business partners or you and your spouse, you know, you sit in your living room or you sit in the boardroom and you think, wow, this is a brilliant idea. We have to go all in.

We have to continue is when you receive external validation, external signs, signs from the market people apart from you and your business partners and the other stakeholders, it shows that there's a market demand for your idea. So essentially that is what product market fit is. So how do you know when you have product market fit, you receive external cues that your product solves a real problem. You're getting signs from the market, from your customers,

from people that you talk to, people who have used your cost your product. You get signs from them that this product is solving a significant pain point or helping people achieve their vision. Also, product market fit, you know when you're achieving packet, product market fit when there's a large enough market for your product or your service. So if the thing that you have created or what it is you're trying to promote solves a problem and it's a killer, you know it solves a killer problem.

But there's not enough of a market for you to turn the profit, to keep the lights on, to pay your children's school fees, to pay for food, Internet, to pay your salary, salary of the staff. If there's not enough large, large enough market for that, if the economics are not there, then in a sense you don't have product, market, feed. Then another sign is when you know you're meeting with other people, remember I'm saying other people external to you.

So it's not you and your business partners talking about how great the product is. So other people telling you that the features that you have, your pricing, your everything, it meets their expectations or it meets their preferences. So bottom line when you have product market feed is when the market, other people outside your customers, your clients, they're giving you signals, they're giving you signs, whether it's from the money that they're paying or for the conversations that you have.

Everybody's giving you signs that what you do delivers a clear value and it delivers a clear benefit to the customers. And so because of that, it justifies the cost. Now why is product market fit important? And the answer is simple. Without product, market feed, without market validation, the product cannot sustain itself. I hope it's obvious to you guys, but just in case there's someone listening and it's not obvious to them.

If the market is not giving a sign that this thing is valuable, if people do not demand it, if people do not think it meets a need, and if people do not think that the price is justified, then the product is not going to sustain itself. Now, I've mentioned before that my old man was a journalist. My mom also started in television production. We actually started in theatre arts through to television production and then later on to marketing communications.

Now back when we were kids there was this thing that hit the market in the 80s and it was there was VHS and there was Beta Max. Now for those of you who are millennial or you grew up in the digital area, you might not know what that is And those are just old technologies basically where people would use to. That's how we used to watch movies basically was a huge cartridge like thing. Should I say cartridge? OK let me say cartridge.

Now if you don't know what the cartridge is, just think, OK let me just stop there. If you don't know what the cartridge is then you know that's if maybe if you were born in you know the 2000s or whatever, you have no idea what the cartridge is just Google and have a look because it's hard for me to describe. So the cartridges, analogue technology that we used to watch Movies. Now there were two rival, 2 rival, what would I say,

standards. At the time there was VHSI, don't know what VHS is and there was Beta Max. Now because I grew up in a media household, I knew that technically speaking the Beta Max was the superior product because my father said it was a superior product. My mother agreed it was a superior product. My family friends engine, I mentioned lots of people. Everybody in that whole space agreed that it was a superior product. But the reason why the Beta Max is not here today, and the reason why VHS dominated for several decades was because VHS

was able to find product market fit. Beta Max was not able to find product market fit. So in other words, you don't have product market fit. The product is going to die. Your business idea is going to die. So that is why product market feed is important and that's the whole point of why we're in business in the 1st place and why sales and marketing is important in the 1st place. It's the goal to help us achieve or rather it's a tool to help us achieve product market feed.

Another reason why product market feed is important is because it helps with customer acquisition, it helps with customer retention. When there is demand for this thing, the product or service or when the IT resonates with people in the market, it builds a sort of momentum that you know builds on itself and gathers in itself and it helps to get other clients on board. So when Steve Jobs started with our whole iPhone 1000 songs in your pocket, if it didn't resonate with anyone, if people didn't like it, selling it would have been hard.

But it resonated with a bunch of folks for different reasons. And the more that people like it, the more product market fit that you get, the more people pile on and now is just one of those iconic products. So the more product market fit that you have, the easier it's going to be to sell to other people and to keep the customers that you currently have. And then of course product market fit makes your business more profitable because when people find value in the product or the service that you have,

they're most likely they're going to pay the price that you tag on it. You know, even it's a premium price. And that's how it helps profitability, if you're able to charge premium prices, increases your profitability. If you can't charge premium prices, but you have momentum in gathering lots of clients, then you're still getting more profitable because you're getting more people to come in through the door to buy what it is that you have.

And then you might be making more profit based on turnover. And then also it helps attract investors to support the business when you have product market fit. So if you have the product market fit people are buying, then of course investors might not mind throwing money behind it. Of course, product market fit isn't always measured in terms of Naira and Kobo for those of you who are starting fintechs, because it looks like every single Nigerian young man or girl is doing a fintech now,

yeah, running around for investors. So if you if you're coming up with a tech idea or a Fintech, then product market field is going to be determined at least in the early days anyway by how much traction or adoption you're getting. How many people look at it, of the people that look at it, how many people sign up for the people that sign up, how many people keep coming back for the people that keep coming back. How many people use you for two months, three months, five months, six months.

You know you get the whole picture. That is what gets investors all aroused so that they can throw more money behind your enterprise. So All in all product market fit really, really important. Now this is an ongoing process because needs and preferences and trends and things like that change over time. Remember what I said about Betamax and VHS? Today it's 2023 and Betamax and VHS are no more. They are not in the market now.

People who like to collect old stuff, I mean they've become collectors items essentially, but they're not in the market anymore because needs and preferences have changed and everything has gone digital and people don't use, people don't use cartridges anymore. In fact, even in the gaming space, because folks still used to use cartridges for games back when I was in like uni, you know all these game heads, you know gamers, they would still play Mortal Kombat and things like that.

You take the cartridge and jam it into the console and then play. But nowadays looks like everything is done online because I was over in my video Guy Shagun, I was over in his office sometime last year. They had just got AI, can't remember what is a PlayStation on some some fancy thing. I didn't play games, so I don't know the difference in the PlayStation and the Sega and whatever. And I was like, oh, cool, nice. How many games do you have?

And I was saying, we have this, we have that. And I was like, where are the cartridges? And you know, they laughed at me. It's like, no, no, no cartridges. Everything is over on the cloud these days. And yeah, so that's how gamers roll these days. Everything is over on on the cloud and people don't need cartridges anymore. So because needs, preferences, tastes, trends, things like that change, we're always continually trying to find product market fit.

So in the early days, 80s Nintendo, Super Nintendo, Sega, whatever, there's product market fit. When cartridges are around, the times change. Everything is now cloud based and you still have to keep trying to find product market fit with a younger crowd and then things like that. Now let me use an example of a business that has achieved product market fit. I know I've spoken about a couple, but for those of you who've been listening to the podcast for a while, you know that I like taking cracks at Yoruba people.

So let me just use this to take another crack at my my Yoruba folks, my Yoruba family. Now the company that I'm going to use to show that has a cheap product market fit is a company called Peloton or like Yoruba people call it Willita. And that's because Yoruba people can't pronounce the P Ali Juba people from certain part of the country. What they have is AKP instead of a. So instead of saying peloton, they would say Willita.

And yes, that is me trying to slight Yoruba people. Don't worry, my brother is married to a Yoruba lady. She's actually from she's from Badon, from Magbu, you know, Magbu baby. That's what I like to call her. So yeah, Lola, not you. It's me abusing you and all the Magbu people out there. So Peloton, all right. So the problem that peloton solves so going to the gym can be inconvenient, can be expensive and intimidating for some people.

And when I of course it's a it's a Western company. It's an American company. So the solution that that they came up with was to offer high quality interactive home fitness equipment, you know, like bikes and things like that. The whole idea was the bike has a screen. I'm just giving a rough summary. Well, as I understand it anyway, because I don't use peloton, but you know I see and hear about folks who do. So you're going to be able to get the equipment kind of has a screen on it.

Just think of like a bike that has an iPad on it and then you have live on on demand classes. People are able to build a sense of a community and it's kind of priced not bad when you compare to to traditional gyms. Now can this idea work in Nigeria? Well, possibly if there are enough people that have disposable income. And also because I've noticed that not just me but I've seen some other folks who already use YouTube in this way.

So you have the YouTube video up there. So excuse me and then the so excuse me. Then the fellow is showing you how to do the push ups or the burpees or whatever and you're just doing exactly what it is that they do. So just think if you're one of those people who already uses YouTube for their workouts, so just think YouTube fixed to your exercise equipment and then that is peloton. So in the West anyway, looks like there are lots of people who desired desired for being convenient and being effective instead of having to go to the gym because you can do workouts from your home.

So bottom line, Peloton product market fit, at least in the West anyway, solves the real problem because people don't want to go to the gym. Also, there's some flexibility. You can go whenever you want. You know gyms are open from 8:00 and close. You know, roughly 10. Well, while I was in Scotland, I only knew of one gym that was 24 hours. Let's see what else. OK, Accessibility. You know, you don't have to drive anywhere.

You just come home, take off your clothes and then do your workout. Except if you're flabby like I am and you don't want your wife to see huge amounts of fat, you know, flopping all over the place, then you only do your workouts when wifey and kids in our home, then let's see what else. Well, yeah, more importantly in large enough market because there are lots of health conscious individuals in the West with disposable income and who have the time.

And so it works. Now if you were to try to do this in Nigeria, would it work? I have no idea. So if you're an A Nigerian and you use Peloton for your workouts, please connect with me, let me know. Perhaps it's already a success in Nigeria, but maybe it's analysis thing or an underground thing or both. So just let me know if it's working out here. So you can also see how product market fit also kind of is a relative thing.

So product market fit one way in the West, but in Africa or Asia, you know, might work out. It depends. So yeah, so that's what product market fit is. That's what it is essentially. Let me see, let me see, let me see. OK. All the examples I was talking about so far have been foreign companies. So let me try and bring it home, especially with some of the stuff that we've been seeing in the press a couple of for a number of years now, Conga and Jumia, do we think that they have achieved product market fit, Conga and Jumia, they're in the online retail space.

Do they solve a real problem or is online shopping a problem? Does online shopping solve a problem for Nigerians? Is there a large enough market for people who are interested in shopping online? And do Nigerians think that online shopping delivers value? So those are the questions that one has to address when we're trying to figure out if Conga and Jumia and other Nigerian companies that are in the online retail space, whether they have achieved product market fit.

So, yes, still an ongoing question because of course these companies are behemoths. You know, they're here. But then there's talk from time to time about whether Conga is profitable or not. Was it Jumia that floated? OK, no. Whether Jumia is profitable or not, then those talk over, I think Conga when they floated on the was it New York Stock Exchange and problems that they've been having and you know, blah, blah, blah, blah,

blah. So you can see that these sorts of questions are not theoretical questions and they don't only apply to Western American and European companies. So Nigerian companies have to grapple with this question as well. And you should have to grapple with it too. Because back to the older example that I used on I think was maybe four or five podcast episodes ago, where we're talking about someone who wants to be a Baker and she wants to sell banana bread.

You know, those are the questions that you have to ask. Are you solving a problem, You know, if you're talking to your friends? I think an example I came up with was let's say she has 20 friends, ten of them have kids and 10 don't. So you're talking to the 10 and have kids and the angle you're coming from is buy this banana bread. It's lovely, children will like it and it'll be easy to pack for the children as snacks for school.

So for your banana bread business, are you solving the real problem and are people willing to pay for it? We all have to ask ourselves this question. So the product to the journey to achieving product market fit is this. Pretty much we have to see how we can validate our assumptions and we see how we can identify the right target market. And then we should also be open to iterating on the product. So based on the feedback that we get concerning the product or the service we should be opening, we should be sorry,

open to changing this or changing that. So how we're going to achieve that, at least from a traditional sales and business development point of view, is we have to engage in discovery and qualifications exercises. So for those of you who've been listening to the podcast for a while, you really know what that is. If you're a newbie, qualification and discovery just means series of conversations where you're trying to engage with people.

You're just trying to figure out essentially, are you talking to the right person and what's the problem here? Is your product or service solving this problem adequately? Is it a big enough problem that people are willing to pay money for? So if you're not having discovery and qualification questions, you could easily run into trouble. So how that works is you would start off by the prospecting stage of traditional traditional sales motions.

The prospecting stage is where you're trying to figure out who is interested. You're trying to figure out people according to demographics, so age, location, occupation. You can also try and figure out psychographics. What are they interested in, what are their hobbies? Things like that. So back to the banana bread example. The lady has 20 friends, ten of them have kids, 10 don't. Those are the demographic things. So am I going to am I going to meet or rather the entrepreneur who's doing the banana bread?

Is she going to meet women between the ages of 20 to 35 with children of primary school age, or is she going to be looking at ladies between the age of, I don't know, 16 to 23 and who are in university or whatever? But it's a real question that we have to grapple the prospecting stage. Who is interested? Where do they hang out? Where do they live? Where do they hang out online or offline? And how can we start conversations with them around our product or our service?

Then that's where qualification and discovery comes in. Want to be sure that we're talking to the right people and that there's a significant problem here, because your banana bread can be nice and the banana bread might be nice and sweet, Real delicious. But The thing is, maybe Nigerian mums prepare to pack prefer to pack other things for their children, Not banana bread. Maybe banana bread is not filling. Or maybe when you put banana bread in the primaries and the the sacks, the bags for primary school, maybe they get crushed by the weight of the books or something like that.

You know, there could be problems. Yeah, So you can start off talking to mums or kids and then maybe end up finding out that it's actually young woman in university who want a chic looking snack who might end up being the ideal customer or ideal client that you're looking for. So that's essentially a world qualification and discovery. It's about, well then of course people need to pay for the product or service. Then after we have all these conversations around the product, the people, the problem, we also have to get the savior or make a proposal or a presentation or a pitch or an offer of some sort.

This is where you give people something that they can either say yes to or they can say no to. Because a lot of people come and they say, hey, you know what, I'm going to be in business. I want to start selling cars or I want to start selling cement blocks. I want to start doing this. I want to start doing that. And people just show up and have the conversation and then they leave. And you know, the other person that they're talking to say, oh,

I like you. You've always been a very entrepreneurial, you know, God bless you, may your business succeed and then you leave. But that's not what you're looking for. They're trying to see if the person is interested in said cars or cement blocks or if the person can refer you to someone else who does. You always have to put a proposal, a presentation or pitch before the person. Let the person say yes or no to what it is that you have on ground because lots of people will say no, that's just normal.

But for the people that say yes, that gives you traction and takes you one step further to building a viable business. And then of course the next stage after that is the close. That's where you get them to take the next step, you know, payment, deposit, delivery, things like that. And then of course like I said, product market feed is not a one time event, it's always happening. So we have to gather feedback during the whole process and we have to repeat and that's the reason why the gamers, the gaming companies, that's the reason why they're still alive today, because they're constantly doing the whole thing.

So right now it's consoles and cloud based. Who knows how technology is going to change in the future and how they will have to adapt. But they're constantly getting feedback because like I heard on the podcast that even though consoles are big in the in the West, that's in in Europe and in America, it turns out that it looks like in Africa and in Asia most of the is the gaming community. That is what's it called, mobile gaming community because I guess the gear is expensive.

Buying all the stuff you need is expensive. So people already have expensive phones with super processors that can cope anyway. So that's a conversation that is going on right now with the gaming space now, yeah, you're making money from the Super Nintendo and all the other stuff in America and in Europe, but for Africa, for Nigeria, for Ghana, for South Africa, for Asian countries, might it make sense to have alternatives that are available over the mobile phone and see where they can grow that market.

So it's a, it's an ongoing conversation, so get feedback and repeat. So you keep doing this and through this process you're going to get a sense of whether you have product market fit or not. OK, well this is 23 minutes and it basically I guess what I was going to say next was that you don't have to do this thing face to face. Like I recommend for those of you who are keyboard warriors, you like doing everything over the keyboard.

You can still go through the same process by sending out surveys, by sending out interviews, you know, doing your AB testing, especially if it's software related. Release one version like this, change this feature, change this the way something looks, change that. And then you see how that affects people by or people using it. Things like that. You you have your metrics that you're tracking, you know, engagement, that's if it's web-based, you know how many people are using, how many people are running away,

retention, how many people are staying behind, you know, blah blah blah, all that stuff. So yeah, I'm old school, I'm not tech savvy. So yeah, I prefer the old school methods when you're talking to someone. But don't worry if you don't want to talk to people, you don't like people. You just want to make money. You want to collect money without talking to people? No problem. There are online ways of going about these things as well.

So what I would welcome you guys to do is I suspect that if you're listening to the show, you already have a business idea or you're thinking of a couple of ideas that you want to launch in this year and beyond. So reflect on your product, reflect on your idea, adopt the framework that we've laid out here so far. And as you're going forward, you're always trying to think do I have product market fit or not. When you get clear signals from the market, you know that you have a a winning product or winning service, whether it's banana bread or selling cement blocks or being a misuse or whatever.

So yeah, that's all for today basically. So please connect with me on WhatsApp. The number is 08064662140. The country code is +234 for those of you hit me up outside the shores of Nigeria and then also connect with me on LinkedIn. My name is Tavishima Aide. You can confirm the spelling of my name and my e-mail address from the link. We're currently listening to this episode. Thanks for your time and attention. I'll catch you guys at the next episode.