How to Find the Holy Grail of Product-Market Fit
How Cameo Survived a Public Relations Nightmare
Steven Galanis was in his office one day last November when he got a text from a guy who works for NFL legend Brett Favre. “This is bad,” the text said. “What do we do?” And that’s how Galanis learned of the crisis about to consume his company -- and threaten its very existence.
Galanis is the cofounder and CEO of Cameo, a platform that allows fans to pay celebrities for quick, personalized videos -- wishing someone a happy birthday, congratulating them on an accomplishment, and so on. The talent includes actors, athletes, YouTube stars, and more, and each sets their own price, from a few dollars to a few hundred dollars. The company has facilitated 200,000 videos and until then hadn’t experienced any major problems. (Full disclosure: I, the author of this piece, am also on the platform; I joined after this incident, and have earned $97 making 14 videos.)
But on that November day, things changed. A white supremacist group had duped Favre into filming a video filled with coded hate speech. Favre thought he was giving a shout-out to military veterans, but now his error was all over the internet and had become a fast-spreading news story.
“This was almost like an existential crisis,” Galanis says. “The number one risk for Cameo would be for something to happen that would cause talent to lose trust in the platform.” If celebrities don’t trust Cameo, they won’t use it -- and then that’s the end of the business. So to save his company, Galanis came up with a three-step plan: Be open about the problem, limit the damage and create a solution for the future.
In addressing the situation, he wanted Cameo to be as transparent as possible. “If Cameo said nothing, it would have been like a deafening silence,” he says. The company employs a team of talent managers, who coordinate with each individual celebrity. Galanis instructed the managers to immediately reach out to everyone they work with, explaining that Cameo takes the problem seriously and is working on a solution. The company shared the same message on its social platforms, and Galanis himself responded to every media interview request he could.
Then Cameo moved to take down the Favre video. Copies of it were all over YouTube, Instagram, and elsewhere. Cameo went into each platform and reported the video as hate speech, but the platforms didn’t respond. Then the startup realized it had a better play: It technically owned the video, so it could report each posting as a copyright violation. That worked. Copies of the video began disappearing.
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Meanwhile, Galanis wanted a way to stop this kind of abuse in the future. But how? Cameo couldn’t monitor and research every request for every celebrity, he says. That would be too expensive and take too long. Instead, within 24 hours, his team had built what it calls a “Nazi bot” -- a filter that utilizes the Southern Poverty Law Center’s database of hate language and then looks for any signs of it in customers’ video requests. If anything suspicious is identified, it’s flagged so a celebrity can proceed with caution.
But Galanis felt that he still needed to add a personal touch. His is a business based on trust, after all -- and trust is built on an intimate level. He discovered that, just days after the crisis, Favre was going to be signing autographs in Milwaukee, about 90 miles from Cameo’s Chicago office. So Galanis and a colleague drove up, apologized to Favre in person, and told him about their response. “He really appreciated that we came, and we looked him in the eye and shook his hand,” Galanis says.
The result of all this: Cameo sales went up 100 percent week over week after the scandal broke. (Bad news, after all, can still drive brand awareness.) Only one celebrity left Cameo. And Favre is still actively using the platform -- charging $500 a video, and, Galanis says, getting plenty of business.
SimpliSafe Chased the Wrong Customer. This Pivot Saved The Business.
Chad Laurans was convinced he’d made the perfect product for the perfect customer. He’d done his research, refined his marketing, launched a home security company called SimpliSafe with high expectations -- and then was promptly disappointed. “Things were going pretty slowly,” he says. “It felt like we were headed toward this middling outcome where we could spend years and maybe decades and not have much to show for it.”
To save his business, Laurans began asking himself a difficult question: Did I build the wrong product, or target the wrong customer? It’s a puzzle many entrepreneurs face as their businesses evolve, and as they seek what investor Marc Andreessen famously calls “product-market fit” -- that is, the right product for a good market. Entrepreneurs may think they know the answer, but until they launch, they really don’t.
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Laurans would come to discover just how important a true product-market fit is. After lots of investigating and hard work, he had an answer -- and eventually, a newly thriving business that serves more than two million people.
His path began back in 2006, after three friends’ homes were burglarized. The experience left all three feeling vulnerable and scared. They were living in apartments, which don’t often have alarm systems. But when they called home security companies to install an alarm, they ran into aggressive sales tactics, long-term contracts, and a system that wasn’t designed for renters.
This set off Laurans’ entrepreneurial radar. He researched the home security market and found that it was dominated by a few big players and a business model of installing complicated wired systems. But he also discovered an opportunity to disrupt: Security systems could be designed and set up far cheaper using wireless tech, making them available to the renter market. So along with some cofounders, he built a wireless system tailored to renters, down to having a not-too-loud alarm siren (so as to not blare into a small apartment). When SimpliSafe launched in 2008, its marketing hammered home its target audience: The tagline was “Home security for city living.”
But after a year of disappointing sales, Laurans knew something needed to change. He dove into SimpliSafe’s customer data and began surveying his client base. That’s when he discovered a key piece of information. Half of his customers were actually homeowners. They liked his simple-to-install system, had learned about it by word of mouth, and didn’t care that it was purpose-built for apartments. That seemed to explain the problem: Renters weren’t buying security systems in the way SimpliSafe had expected, and homeowners were trying to embrace a product that wasn’t really made for them.
SimpliSafe had a choice to make. Should it abandon renters and pivot to owners? “This is not a small change,” Laurans says. “It’s rearchitecting our entire platform, requiring years of development work.” Ultimately, the company decided that this hard decision was the only right one.
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SimpliSafe began rebranding in 2010, releasing new versions over years that added the features homeowners wanted, like smoke and carbon monoxide detectors, ability to connect hundreds of sensors, multiple bases, and a louder siren for a larger space. “It took us a long time to figure out,” Laurans says. Now growth is strong, and nearly 70 percent of SimpliSafe customers are new to home security, meaning the company is achieving its original goal of serving people who had never owned alarm systems before.
Can apartment renters still buy a SimpliSafe system? Sure, Laurans says -- he wouldn’t discourage them. But now he’s found his product-market fit, and he’s focused on making
the most of it.
Why This CEO Fired Himself
When Matt Bodnar became CEO of Fresh Technologies, he took over a failing company and saved it from disaster. That felt great. Then he hit a wall: He couldn’t seem to get this company to grow, or to fix its internal culture. He began suffering from self-doubt. He’d always wanted to be a CEO, and he initially seemed good at it, but now here he was… failing! After a lot of soul-searching, Matt came to an important realization: He needed to identify what he was good at, and then use those strengths. And that meant no longer being a CEO.
In this episode, we explore how Bodnar came to that conclusion -- and why it supercharged his career.
How to Find the Holy Grail of Product-Market Fit
Every entrepreneur believes they have the product that is going to revolutionalize the world, worthy of venture capitalists bathing them in piles of cash to achieve their dream. But, venture capitalists don’t back products; they back winning business models. And, winning business models are anchored by companies that have the potential to generate lots of revenue with easily scalable, repeatable and profitable sales and marketing strategies. And none of that will be truly determined until you successfully test and optimize your product-market fit with potential customers. This post will help you learn exactly how to do that.
What is product-market fit?
Product-market fit is the point at which you have identified the best target industries, buyers and use cases for your product. Sales become repeatable and scalable, and your product is flying off the shelves. It is the holy grail for most startups -- one that dictates whether they are on the path to being the next 1-in-10 “10x” investment return companies for their investors or the next 3-in-10 flameout that crashes and burns out of business.
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