Finding product-market fit, How do software start-ups approach product-market fit?

Abstract: Title: Finding product-market fit. Background and problem: Software start-ups have a significant positive impact on the global economy, but most of the ventures fail within two years of being founded. The predominant cause of failure for start-ups is that they do not find product-market fit. Despite this, methodologies designed to facilitate new product development are struggling to get adopted, as they are found to be difficult to implement in practice. Prior findings indicate that software start-ups prefer using more lightweight methodologies, or none at all. Purpose: To extend the knowledge-base of how software start-ups approach product-market fit with their innovations. Furthermore, it is also to discover their rationale behind their choices. The goal is to contribute insights that can be used to create or customise methodologies that can help software start-ups when approaching product-market fit. Method: The study is a qualitative and inductive multiple-case study, that is comparative and cross-sectional. The empirical material has been collected from 19 software start-ups, using semi-structured interviews. A conceptual model was constructed from the theoretical framework, and provided the foundation for a matrix that was used to thematically analyse the empirical material – emergent findings were added to the matrix. Conclusions: Four conclusions were drawn in this study. Firstly, four archetype approaches for finding product-market fit were identified: The ‘Scientific’, ‘Testing’, ‘Market Research’, and ‘Ad Hoc’. Secondly, the study support previous research which shows that software start-ups prefer lightweight methodologies to agile and traditional methodologies. Thirdly, there is a preference to engage in activities that have a direct and visible impact on the offering and the venture. Supporting activities to prepare and evaluate tests was regarded as cumbersome and counterproductive. Finally, certain portrayed tools for gathering customer feedback are shown to not always be applicable. The study provides evidence that such tools can be ineffective when used on professionals, and not consumers.