The whole concept of “product/market fit” bothers me tremendously.

It’s a term that has become practically meaningless. Like the word, “innovation” or “MVP,” it’s become a category, and does not define a specific state of circumstances in the startup as it was originally intended.

In my experience, 98% of founders say they have “product/market fit,” when they don’t. And many of the 98% who say they have it, are not even close.

I contend the the difference between having product/market fit and not having product/market fit has to do with the problem that the startup chooses to solve.

Being a former founder myself, I know that the founder receives so many inputs from the customer and the market that all market “problems” seem to blend together with the same magnitude. In this article, I wrote that one of my fatal mistakes in my startup was that I incorrectly scoped the problem.

Furthermore, I’ve observed that founders sometimes don’t have a great sense to distinguish which problem should be solved and which ones should not be solved. I want to help resolve this this dilemma using what I call the "Power Law of Customer Pain.”

The Power Law of Customer Pain

✅ The Power Law of Customer Pain says that customers experience what is unideal in their world in two categories. For any particular customer in any market, there are:

1. One or two “scorched earth” problems, and 

2. A long tail of minor annoyances. ✅ 

“Scorched earth” problems, as they sound, cause devastation for the customer. This leads to the customer pulling in the startup solution with incredible desperation. The customer needs a scorched earth problem resolved immediately.

Something on long tail of minor annoyances may be considered “problems” by the customer, but it’s really not. It is just an inconvenience that is often annoying, occasionally frustrating, but can be dealt with. The customer doesn’t move urgently to act to resolve it.

✅ Customer devastation with the market problem —> [leads to] —> customer desperation to pull in the startup’s solution. ✅ 

Devastation Leads to Desperation

On the startup side, I’ve seen that startups experience their market in two major categories:

1. Startups that are overwhelmed by the urgency of the market’s demand for its product. Customer leads are coming inbound at a rapid rate - on LinkedIn, on the website, to your sales reps. Converting customers doesn’t require much effort. It’s not as much selling as it is showing up with the solution in the right context and customers just pull it into their orbit.

2. Startups that are selling to customers in their market, trying to chase down prospects, rescheduling demos, negotiating over contract terms, occupying so much time for both the startup and the customer.

Now, is this second category of startups due to a poor execution problem? No.

✅ Customer urgency is the main difference between a scorched earth problem and something on the long tail of minor annoyances. ✅

I would argue that based on the market’s reaction, the first startup is solving a scorched earth problem, whereas the second startup is solving something on the long tail of minor annoyances.

The hidden secret is that startups can generate revenue and raise venture capital yet still be solving something on the long tail of minor annoyances.

But, I don’t believe that solving something on the long tail of minor annoyances is sustainable in the long-term.

As an investor, I contend that if a startup is not solving a scorched earth problem, the startup won’t have enough magnetic pull from the market to be tremendously successful.

Customers only move urgently when they are experiencing the scorched earth devastation of the problem. The customer urgency is what allows the startup to be high growth.

If you are going to spend years of your life on a startup, do you really want to solve something on the long tail of minor annoyances?

The Scorched Earth Cash Flow Crunch

Tundra Angels recently closed on its 20th investment, a company called Cylerity. Cylerity is a great example of solving a scorched earth problem. Co-Founder and CEO Ryan Wheeler recently shared this customer testimonial with me and our investors. This particular customer is a non-emergency transport provider. Cylerity ingests their Medicare claims of healthcare providers and is using AI to underwrite the claims and advancing cash to the customer within 36 hours. The customer noted,

“I had the chance to grow my business, but I kept running into problems with cash flow and had to slow down hiring drivers. The last thing I wanted was not be able to pay my team, especially the new hires. With Cylerity, I got paid almost instantly for my claims. This lets me hire more drivers without worrying about having their pay ready by Friday. Because of this, I’ve been able to comfortably triple my weekly revenue in less than two months.“

“I kept on running into problems of….” “The last thing I wanted was…”

The fact that the customer is using this language indicates that problem of the cash crunch literally scorched the earth of this customer.

Beware of the Long Tail of Minor Annoyances

I specifically remember a moment in my FinTech startup where I was confronted with a “problem” on the long tail of minor annoyances.

For context, my FinTech software product helped to give decision support to professional bond traders on which bonds to buy and sell in portfolios.

I remember that I was chatting with a customer prospect about their workflow and use case. The prospect brought up, “One thing that I need help with is when we give PowerPoint presentations to the board on our results, it’s really a pain to get all of the charts and graphs out of our systems and into PowerPoint.”

That was odd.

I didn’t say it to the prospect, but I had never heard anyone else mention this problem before. But the prospect seemed to indicate it was a big problem. So what gives?

This is where the Power Law of Customer Pain comes into play. As founders have a large sample size of the market, they have tremendous power and insight.

Founders can look across the large cross section of customers and observe what the vast majority of customers see as the one or two scorched earth problems, and separate those the long tail of minor annoyances in the market.

Focus on the scorched earth problems.

Why only one or two “scorched earth” problems? Why a long tail of minor annoyances?

A customer only has a limited mental and emotional capacity. Frankly, that’s human behavior. Just think about your own life. There are probably 1-2 major categories of challenges that you are facing in your life right now. If someone gets to 3-5 major challenges that are independent of each other, then most humans collapse mentally or emotionally for a time. But general, we have the capacity to handle 1-2 major challenges and a long tail of minor annoyances in life.

Thus, the Power Law of Customer Pain seems to reflect the way that humans think and feel.

How to Test for Devastation

How can founders know if a given problem the customer states is a one or two of the scorched earth problems or on the long tail of minor annoyances?

By measuring the customer urgency to solve this problem.

How do you test urgency? By making them an offer to buy your product.

By moving customers into sales pitch mode, you’ll find really quickly how serious that problem is to be solved. If they take any reasonable time, then it’s not a hair on fire problem.

If they take the words out your mouth and immediately move into buy mode, then you’re solving the right problem. Measuring urgency is actually not that complicated - just watch people’s behavior when you show up with your solution.

✅ The customer urgency is the main difference between a scorched earth problem and something on the long tail of minor annoyances. ✅

Closing Thoughts

✅ The Power Law of Customer Pain says that customers experience what is unideal in their world in two categories. For any particular customer in any market, there are:

1. One or two “scorched earth” problems, and 

2. A long tail of minor annoyances. ✅ 

Back to product/market fit.

I contend the the difference between having product/market fit and not having product/market fit has to do with the problem that the startup chooses to solve.

Focus on scorched earth problems. Focus on customer urgency.

✅ The customer’s devastation with the market problem —> [leads to] —> customer desperation to pull in the startup’s solution. ✅ 

The Power Law of Customer Pain helps founders distinguish which market problem to solve, and which of the multitudes of items on the long tail of minor annoyances to ignore.

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