Product-Market Fit: A Teenager's View of Starting Up

For 5 weeks in the summer of 2020, we have had the privilege of working with Cindy Liang, a wonderful and brilliant intern from Denver Public School’s CareerConnect program. This is the first of two blog posts in which Cindy shares her insights on Raika’s business and the truth about starting up!

Hey folks, this is Cindy, a high-schooler from East, who’s interning at Raika Technologies! Honestly before going into the internship and knowing the details about what exactly I was planning to work on, I was already interested enough about marketing and the business field, so I was super excited about what I’ll be able to learn during this experience. Since I’ve taken classes on marketing and accounting and had done some work around different campaigns, I went into the internship hoping that the knowledge I gain will build upon what I already know. I didn’t have many chances to experience these business interactions up close in a “real-world” sort of sense, so my main focus during this was to explore different methods marketing was implemented. The payment that came with the internship was just a bonus. 

It has only been 2 weeks into the experience, and I am absolutely invested. With the guidance from the research that I’ve done so far, the meetings I’ve sat and listened in on, and the insight I obtained from Cynthia herself, I already felt my perspective changing when it came to marketing and management. Sure, some of the information I come across overlaps with my past knowledge, but it’s definitely enlightening to have those “aha!” moments when I take the time to research deeper into those concepts. 

From what I’ve explored so far, the whole concept of product-market fit is extremely important to developing a business. The process of achieving it is straightforward yet needs founders to think about several factors such as the basics of market segmentation to the smaller details in planning out investments and revenue models. I think the statement that stands out the most to me is “You start with the market, not the product.” It really does resonate mainly because some of these markets have always been here but some of these businesses aren’t anymore. This also applies to the markets themselves because if you find yourself stuck in a terrible market, you could have the best product and best team, yet still fail. Older markets are still there, and they’re still large. But the companies who stopped innovating and stood still got eaten while the market walked on. Other smaller factors may even include having motivated employees and staff because hiring and training can be expensive. Without motivation, this can have a negative impact on customers since quality can drop the lack of well-trained staff. Overall, the main takeaway from learning about product-market fit is that “you are not selling to people, you are serving people.” 

Now since product-market fit can arguably be applied anywhere, the knowledge I’ve gained has shaped and given me views of a more organized process regarding the development of a startup. This brings us to the thought process behind the constant flow of every market. Again, product-market fit should’ve applied to those various companies who were unfortunately run over because they didn’t change for the market or made efficient efforts to innovate. Notable cases of this would include the path of Blockbuster.

Back in the early 2000s, Blockbuster was the dominating rental video brand that possessed millions of customers, retail locations, and efficient budgeting. However, they eventually filed for bankruptcy in 2010. Their revenue at the time actually mainly relied on charging customers late fees, which meant that the business model they used included profiting off of penalizing its users. On the other hand, Netflix was beginning to grow despite just being a small service at the time. They avoided using retail locations which afforded to offer customers a greater variety of videos, and utilized a subscription model instead of charging for late fees. A crucial factor of Netflix’s domination over Blockbuster was the natural chain of networks and word of mouth developing around the service. This allowed them to know exactly what their next steps were regarding what worked for their customers, and how they were going to rapidly capture the market as they didn’t worry about protecting their existing revenue. 

Blockbuster’s officials attempted to combat the competition, yet focused on the wrong goals: Their profit wasn’t tied to what their customers valued (late fees, of all things!), they continued relying on their physical retail locations (which cost them a lot by minimizing their potential to move onto a streaming platform), and overall were very focused on their traditional business strategies instead of allowing in new information and adapting to the changing market. Their success in the past had altered into a liability, which is the ironic piece of this story. The tight, organized system they developed had become the exact factor slowing them down in the market as well as against the steadily-climbing Netflix. 

Such examples and stories greatly interest me because I know it could’ve been preventable if they chose to break out of their comfort zone and change with the market itself. Blockbuster was already on the path of bankruptcy once their revenue came from something their customers hated, and their issues just became worse when they attempted to ignore the large disruption that was happening in the rental video industry. With Netflix’s innovative, open-minded perspective on taking advantage of that disruption (the concept of online streaming) and the implementation of unlimited streaming with a monthly fee, a well-used model today, they managed to turn customer problems into solutions and lead the charge of the disruption. Again, “you are not selling to people, you are serving people.”

Courtesy of Cindy Liang, Summer Intern at Raika Technologies working on market research and competitive analysis.