How to Engineer the Perfect Product Market Fit

0:00The way I think about extending what you do as your core offering for a consumer is through a little framework of weirdness. If you go one degree of weird and you test that out cautiously, but you test it out and you extend your brand a little bit, the consumer will often go for it. If you go two degrees of weird, it's likely too weird. In the footwear industry, a good way to think about it very tactically is like you got a bottom and you got a top. And you could change the bottom and keep the top or you can change the top and keep the bottom. But if you change the top and you change the bottom, you've gotten two degrees of weird and it is way too weird.

0:34And people will be like, why are you making that product? Running a business means solving problems. I tell you how the smartest entrepreneurs do it. Hi, I'm Jason Pfeiffer, Editor-in-Chief of Entrepreneur Magazine, and this is Problem Solvers.

0:54Is there any more potent but also haunting phrase than product market fit? Let me make the argument for both sides. Important, obviously, because if you do not have product market fit, if you do not have something that the market wants, then what are you doing? You're not going to sell a single thing. But it's haunting because so often we take something to market and then cannot figure out what's wrong. And then it turns out that we built the right thing for the wrong people, or we were targeting the right people, but we had the wrong thing. And that is why this phrase I feel can be so haunting.

1:29Well, today I've got someone who has done it and done it. Joey Zwillinger is the co-founder of Allbirds. He served as its CEO until 2024 after leading its IPO in 2021. And he is currently the CEO and co-founder of Biologica, a company focused on addressing underserved areas of women's health, which he can fill in on, which means that this is a guy who understands pretty well how to find product market fit. He has done it to great acclaim before and will do it again. Joey, thank you so much for joining me on Problem Solvers. Amazing to be here. I love the show. Love your tactical advice. I think it's amazingly helpful for people who tune in.

2:04Well, thank you. Thanks for coming here to be really helpful. So Joey, before we got recording, you were telling me that you have seen and executed a lot of different approaches to finding product market fit. So maybe we start high level with how you think about this topic for your companies. I've got it really right and really wrong too. at grave consequences and some very fortuitous consequences. So yeah, hopefully I can share some battle wounds and some things I've tried. I tend to do the best here when I'm giving examples of what I've done. So hopefully we can just dive into specifics. Please, please.

2:42I love examples. Interpret what we do. Without examples, everything sounds abstract and - Hand wavy. Yeah, exactly. So yeah, I mean, I think finding product market fit is the most essential thing you can do, whether it's a software product, a deep tech or new AI product, or a physical product that you're trying to sell to people for them to purchase and consume and hopefully buy more of. It's the most essential thing you can possibly do, and it's extraordinarily high leverage when you get it. So it's worth taking the time to try to get that right. And I think there's a variety of different ways to understand it.

3:23But I'd say most simply, what you got to do is identify a need in the market. And usually that is an insight that is born out of your customers. And you have to go find that insight. And it should be very obvious in hindsight and unobvious and usually pretty simple when you find it in the first place. But you got to go out and get it. When you find it, you then need to innovate and create something that really meets that need. That sounds incredibly simple, and that's why I think I say specifics are going to be pretty important. I've done it very anecdotally and qualitatively with a lot of subjective opinion put into it, and it's been successful.

4:06I've done that as well, and it's been unsuccessful. I've also done it in a way where it's extraordinarily analytical and quantitatively driven. As an example, you mentioned in my bio, after leaving the helm of Allbirds, I started a company called Biologica with my wife. In that example, we have gone through five focus groups, two hours each across the country, demographically split. We then did a thousand-person study to identify all of the specific health needs that are most acute for women based on a variety of different factors. and then we led innovation directly against the findings of those.

4:45And we knew we were going to be successful in that because we knew how prevalent these needs were and how the dearth of companies that were addressing them in the way that we thought most obvious. Yeah, well, so what you said sounds, of course, like you said, very simple. It's about understanding the consumer, right? You find the insight and then you innovate to meet the need. And you say that and everyone should think, well, yeah, obviously, isn't that what we do? We go and we like figure out what people want. Although a lot of people don't do that. A lot of people come up with an idea and are just convinced of its value and then take it to market without actually first figuring out if it's something that people want or building for what people want.

5:24You laid out this interesting juxtaposition where with Biologica, you're doing this really data-driven research to find the need and with Allbirds, not as much. So maybe take me into the process or how you decide which process to follow based on what your company does that gets you to the insight that you need. Yeah, let me give you a couple vignettes, one from Allbirds, one from Biologica, because I think it'll give you a good rounding out of things that I think can be successful. Um, so, you know, early on my, my co-founder, Tim Brown at Allbirds, he actually, uh, ran a Kickstarter with an early prototype of what would later become Allbirds.

6:06Um, so he, in that he shot a video, he did that, you know, the standard Kickstarter thing. This was back in 2014. Yeah. 2014. Um, and he expressed a set of brand attributes that I thought were beautiful, really resonated with me and that he identified certain things. the hook there was no socks, no smell. And he was using this new fiber that had never been used in shoes before, ultra fine merino wool. It's an incredible fiber that can be knit or woven into a really beautiful fabric, which is what we eventually did with an Italian factory. And I remember we were sitting around the dinner table, Tim, myself, and another friend and all of our spouses.

6:52and we were sitting there having a good time. It was at my dining room table. My wife's an amazing cook. And this guy, Tom, pretty big dude. Like I'd say 250, 275 pounds, at least that. And he's like, guys, I freaking love your shoes. And he had one of the prototypes. He's like, I love them. but you know i just i just um i just smelled them the other day and they stink oh no and and we're like well what did you do what did you do to like make them stink that bad he's like well i took him on like a seven mile hike with no socks when you realize what are what is the insight that you like a couple things that we took from that one is consumers will do what you tell them to do and And you need to be extraordinarily clear in your messaging with a product.

7:43And your fit in a market is only so good as the message that you actually express and the value proposition that you suggest to them. The second thing is that the claims that you make when you make a product are absolute. They're not relative. No one's saying, oh, this Nike shoe smells worse than my Allbirds shoe when I compare and do the exact same activity. So we're like, all right, that is a fairly significant set of understandings that we need to bake into this. We can express a little bit of these attributes, but we need to actually – why do people really love it? So then what we did is we went into people's homes.

8:20We did kind of an ethnographic research where we really went in there, and I often was the cameraman. We would ask questions. How do they shop? How do they use it? Why do they like it? All these really deep, interesting questions. And we would pull out and tease out these really interesting insights that we had. And so what we realized when we started the business was this is a very big trend. Athleisure had taken over what was in apparel, and it hadn't happened in shoes. And we had this really interesting long-term tailwind in that sense. But it needed to be very versatile, both in its aesthetic as well as its comfort.

8:56And the comfort was the performance because you're using it versately throughout your day. Before you go to Biologica, I just want to pull out something that I heard in there and just have you react to it. So the first concept of no socks, no smell sounds really smart and also is eye-catching. Oh, really? You can do that? It's a good hook. But it's a good hook. But, you know, I got to say, the more I thought about it in contrast to where you landed, which was this insight about not just that there is a trend of athleisure that you could extend deeper into this part of the category, but rather what that really represented was that people wanted flexibility.

9:40They wanted things that could work in different environments. It could work professionally. It could also work socially, et cetera. When I put those two next to each other, I think the market for people who don't want to wear socks with their shoes and that is their primary pain point feels actually much smaller than the market for people who want more flexible footwear. That feels like a larger market and a more interesting and common problem to solve. And I like to approach this thing. Yeah. You're right. But what we realized was that when we were expressing no socks, what we were trying to express was it's so comfortable you don't need socks.

10:19Totally. But the literalness. But the way we express it, yeah. But people say – like they interpret what you literally say. So when we realized that, it was like, oh, okay. We just need to – like we need to reframe what we're trying to say with a different kind of a hook. And we also realized I was a material scientist, and I've been doing that for quite a long time prior at a biotech company, but engineering background as well. So I had this landscape of – and the reason we started Albers was we knew there was all these materials out there that we could do, we could use, that the rest of the industry was not using that would consistently and systematically make more comfortable, better products for consumers.

11:00They happen to be a sustainable route. That was my background. That was my itch that I had that I wanted to use in business was to make an impact on climate change through entrepreneurship. But the way we thought we could do that was systematically get these materials to market, make the product more comfortable and aesthetically different and more beautiful, and hence deliver that value. But yeah, no socks, pretty small need state. Not that many people need that. So there's more with our guest coming in a moment. But first, it is time to play tax trivia brought to you by TurboTax. So ready? Let's see how much you know about your taxes.

11:39True or false. You do not need to report side hustle 1099 income in your taxes. Is that true or false? Tune in later in the episode for the answer and learn more about filing your taxes with Intuit TurboTax. Visit turbotax.intuit.com.

12:25Appotaker app. Interesting to hear. And I'm glad that I pushed you on that so that people could hear what you were really thinking, that the no socks thing was meant to represent something broader. But the way that a consumer and even me, as I was hearing that anecdote, takes things is so literal. And so you have to be really careful about every word that you use and make sure that all your language is in some way or another your target consumer's language so that they instantly understand what you're talking about so okay take me into the more data driven version of this yeah and and by the way i want to caveat by saying whether it's data driven or subjective and analytical neither of those lack um logic deliberateness and an analytical lens to it so i don't want to give the i don't want to give the sense that like go with your gut that's like that's the way to do it and that works like that it can work you can get lucky but that's not what i would want to bank my career on.

13:23So I think some deliberateness in this is pretty important. After I handed over the reins at Allbirds to a great guy named Joe Vernaccio, the opportunity to reset and look at another sector was really interesting. My wife and I had talked about women's health for a long time, similar to sustainability in footwear, very, very little leadership in the space, lack of funding, lack of focus, lack of attention. Typically, that leads to an interesting opportunity to build a brand. Now, that doesn't mean you can make money. It means that maybe you can make a cool brand, but a cool brand doesn't really work.

13:57And it's not actually that cool or good for the world, unless it gets some scale. We had a very broad lens at first, we started to narrow down when we realized there was a really interesting opportunity in vitamins and supplements. And the opportunity being that there was a big white space in the market. I'll tell you how we found that. So first, when we got interested in the space, We started just talking. My wife has a very strong lived experience to give us a launching point. But we started assembling groups of 10 women. We did this five times, as I mentioned earlier. Everybody wanted simplicity.

14:32Everybody wanted a more credible source of truth with a really rigorous scientific background. That was pretty universal. And everybody wanted to do something about this. So then we launched pretty expensive and extensive study on a thousand women where we looked at, we asked them their different health conditions, top of mind concerns, what plagues them on a weekly basis. And not only did we confirm that insight, but we got very sharp on exactly what was happening across. So we were able to then take that data and focus our product development muscle exactly on solving that problem. And then we launched one product per hormonal stage at the when we eventually launched the company in December of 25.

15:15And so we have three products. It basically felt like, okay, now we have something that feels very tailored and personalized to the woman who's taking the product, but pretty high leverage because we have three products that we have to manage. And we can do a lot. We can do a good business model in that. So now we have a brand opportunity plus a business model opportunity with a product that we think can be really sensational and that gets us excited to say, okay, we feel like we have a hunch on product market fit that has a pretty high leverage model around it. Let's go after that. Yeah. And so first of all, let's just state, I had said we break this down into the find the insight and then develop the innovation to meet the need.

16:01And what story you just told there is essentially flowing through both of those. And yet when I zoom out and think about that in contrast to the Allbirds example, Something else that really jumps to mind, which I'd love to hear you speak to, is in the Allbirds example, you had an idea. You saw an opportunity in the market. You knew who you were targeting. But you also developed the product, at least to the point where there were beta testers like that big guy who sweats too much. Whereas here with Biologica, it sounds like you did the research before developing the product, that you were looking very specifically for understanding the consumer and the need before you went out and did the innovation.

16:39What's your feeling on whether to do the research first or start with a product? I mean, totally different by category. The reason we felt so confident in the case of Biologica is that we would only follow the most rigorous scientific research that was available. So like this idea, and I'll forget who to attribute this to, certainly not myself. I think it might have been Andy Jassy actually, but minimum lovable product versus a minimum viable product. I'm very much in the minimum lovable product when you are in a physical product environment because it is so hard to move things around in a supply chain.

17:23When you're building a supply chain for scale, when you make little changes, it can be very, very difficult, much more than you would give it credit. And so, you know, trying to get it to a place that was really good to start is essential in my mind. That doesn't mean that you don't then have a, you know, we're talking about product market fit that you take your eye off the ball. Like at Allbirds, I'll tell you, we did 30 changes to the wool runner in the first two years of manufacturing and development with the wool runner, just one product, the wool runner. We did 30 changes. They were always running changes.

18:00We never told the consumer they were happening, but you know, we, we would have these issues. We would come in, we, we had enough scale that we would get, um, you know, we did a million dollars in the first month. So we had like, you know, close to 10 ,000 customers, let's call it in the first month that tried the product. And then, you know, a lot of them had issues. Like we didn't, we didn't get it perfect. That's for sure. So we look at that and we say, okay, what do we need to change? What's cost effective to change? How do we do this in the best way? And, and then lo and behold, you start to like sharpen that product market fit and make your product much better.

18:29And, you know, you move from minimum lovable to something that you're extremely proud of. And that's the path that you have to get on pretty quick. Yeah, that's a really helpful breakdown. I also want to unpack marketing. And here's why. Because as I was listening to you talk about the research that you did in Biologica and this really core insight about the different segments of women that you're targeting and how they all, once you segment them properly by hormonal stage, they all have the same consistent need. I imagine that that also really helps you understand how to target that specific consumer and the language that you're going to use to appeal to them.

19:13Because now you know exactly who you're speaking to and what their top concerns are. And I'd love to hear you speak to how this research into product market fit also helps fuel the marketing. Yeah. I mean, you're spot on there. I mean, there's two levels of marketing. There's kind of your aspirational upper funnel brand marketing. That's one kind of aspect that you need to address. And the second one is a point of sale marketing and point of sale is like that lower funnel stuff. And typically the things that work the most and work the most efficiently at that point of sale is the things that are the most prominent need states.

19:59You know, we've, we've talked about that before, like the need state of people who really, really want to wear a sneaker without socks, probably pretty small. Same is true for the people who buy a sneaker because it's sustainable. That's very small, five, 7 % of the population. People who buy a shoe because it looks good and is incredibly comfortable, is that a good price? 95%. So you really have to sharpen that message and at the point of sale, deliver the benefits to the consumer through smart, concise communication and do that over and over and over again that really hit at the core insights that you've uncovered during that research phase and that constant iterative testing phase.

20:42So that's absolutely right. All right. A little earlier in the episode, we were playing tax trivia brought to you by TurboTax. I asked a question. I said the answer would be coming later. So here it is. The question was, true or false, you don't need to report side hustle 1099 income in your taxes. The answer is, of course, absolutely false. All income must be reported on your tax return, even if you don't get a 1099 NEC or 1099 K. Learn more about filing your taxes with Intuit TurboTax. Visit turbotax.intuit.com. Joey, for a show called Problem Solvers, I cannot let pass that you said at the very beginning that you have done this incredibly wrong in the past too.

21:33Can you unpack a moment in which you got product market fit really wrong or approached it really wrong? I'd just love to hear what the opposite of these two great strategies looks like. A good example, which is it tortures me, is when COVID happened. In April of 2020, we were trying to push the boundaries of where we were selling products, what needs we were meeting for the consumer into a slightly more athletic posture. Now we don't want to go like we're going to build cleats, but we wanted to do be able to support people and like light cross training where it right to the office. Maybe it's like, you know, even golf would be the furthest we would go play a little golf, go like people like to play golf and then wear the same shoes to whatever they're doing next.

22:18We launched a shoe called the Dasher and the Dasher crushed it. Absolutely crushed it. And it did something like I think it was like 50 million dollars in sales in the first year. and we were only four years old for one product. It was like, it was a good, good launch, really good launch. What we took from that was that the consumer was like, okay, we love your comfort and we would love you to support us in a little bit of light activity. Maybe it's hiking, maybe it's running. You know, we could pick our poison there and we needed to do a lot of research on that. But it was clear to us based on that signal, like, yeah, they're down.

22:52Turns out when COVID happened, people who hadn't run in 15 years started running again And they would literally buy from whatever brand they liked. They would try whatever. And I think we were getting this extreme false positive. And our sales were really buoyed by a very short-term change in consumer behavior. But we didn't have the muscle and the merchandising muscle and the data to understand long-term data, to understand what was actually happening. This was kind of a blip. And we got to stay closer to our knitting. And I think at that point, we looked at that quantitative data. We looked at a lot of subjective data that we had internally and subjective decisions that we thought would be interesting for the brand versus what the consumer thought.

23:39And I think we went pretty hard at that for a bit. We've now fully unwound that. And we are distinctly and unique and only a lifestyle footwear brand in that category of, you know, versatile comfort and aesthetic that meets those different needs. But that was one of those where, you know, we got we got it wrong. What could you have done differently looking back on it? I mean, this was not a mistake that just Allbirds made. Back then, consumer behavior was shifting really fast. People were throwing tons of money at what seemed like new discoveries of what people wanted. I mean, I think that the classic case here wasn't the Allbirds Dasher.

24:19It was Clubhouse, that audio first conversation app, which was the hot thing for like one second. dollar business for like one second, man, they should have sold that thing. And, uh, but everyone thought, Oh my God, this is what everyone wants to do now, but it wasn't, it was what everyone wanted to do during that very brief moment. So you weren't the only one fooled by that, but I'm curious looking back on it, what you could have done to really understand the signal. I would say, you know, that I alluded to this, but the way I think about, um, extending what you do as your core offering for a consumer is through a little framework of weirdness.

24:58If you go one degree of weird for a consumer and you test that out cautiously, but you test it out and you extend your brand a little bit, the consumer will often go for it. If you go two degrees of weird, it's likely too weird. And in the footwear industry, a good way to think about it very tactically is like you got a bottom and you got a top of the shoe. and you could change the bottom and keep the top or you can change the top and keep the bottom. But if you change the top and you change the bottom, you've gotten two degrees of weird and it is way too weird. And people will be like, why are you making that product?

25:34And, you know, I think we, we, um, we did a good job of cautiously expanding with the dasher. And then we did a bad job by going two degrees of weird right after that. I was going to now wrap it up and ask you to tell us just a little bit more about Biologica. But before I do, I just have to double click on one thing about the two degrees of weird because it's such a great way of thinking. Can you tell me what successful one degree of weird thinking looks like? Like, is it you take a thing that people like and you change one element of it, but make sure that there's enough anchoring that isn't changed so that you don't get to the two degree of weird?

26:14Like, how would you apply that to something other than the shoe example where there's a top and a bottom is really nice and clear. And I'm just trying to make sure that I understand how to apply it to any other category. It's true. You know, I was talking with a woman who has a really successful, um, underwear company for a women's underwear company. And, you know, she was talking to me about whether she should extend into, um, jackets, outerwear, uh, all these different things because they have something like interesting in the fabric. And it was like, uh, I don't know that that's what people think about your brand.