When Product-Market Fit Is Hiding in Another Market

When you're building a startup, it's natural to become focused on the market you started with. You developed the product for a particular customer, built the prototype around a particular application, and probably created your business plan, presentations, and fundraising story around that opportunity. After a while, the product and the market become so closely connected that it's difficult to imagine one without the other. Then the market doesn't respond the way you expected. Sales take longer, customers aren't as interested as you thought they would be, the economics don't work, regulatory requirements create unexpected obstacles, or you simply can't generate enough traction to justify continuing to invest at the same pace.

When that happens, most founders start looking for ways to fix the product or improve the marketing. Maybe another feature is needed. Maybe the pricing is wrong. Maybe the sales strategy needs to change. Those are reasonable questions, but there's another one I think you should ask before putting more money into the same strategy: What if you have the right technology, but you're pursuing the wrong market?

I've seen variations of this throughout my career. Sometimes the commercial opportunity isn't where the inventor or startup originally expected it to be. That doesn't necessarily mean the technology failed or that the startup made a bad decision. It may simply mean everyone has been looking at the technology through the lens of the original product instead of stepping back and looking at the broader commercial value of the intellectual property.

Your Product and Your Intellectual Property Aren't Necessarily the Same Thing

This is an important distinction because a product is only one way of using intellectual property. The underlying patent, technology, software, process, data, know-how, or other proprietary capability may be capable of doing much more than the product you originally developed around it. That's often difficult to see when you're inside the startup because you've spent months or years developing something, explaining it to investors and customers, building relationships around it, and organizing the company to bring that particular product to market.

When I'm looking at a commercialization opportunity, I try to separate two questions: What product did you build, and what problems can your intellectual property solve? Those questions sound similar, but they can produce very different answers. The first keeps you focused on what already exists. The second makes you look at what the technology actually does, where else that capability might be useful, what other industries experience the same problem, and whether the value of solving that problem is greater somewhere else.

That doesn't mean you should start chasing every possible application for your technology. Startups need focus, and trying to pursue five markets at the same time is usually a good way to burn through money without gaining meaningful traction in any of them. The objective is to understand what you actually own before deciding where its greatest commercial value lies.

Sometimes Pushing Harder Isn't the Answer

Persistence is essential in a startup, but it can also work against you. Once you've invested significant time and money in a market, it's difficult to reconsider the original assumption. You've developed the product, gathered research, established relationships, created marketing materials, and perhaps raised money based on that opportunity. There is a natural tendency to keep pushing because you've already invested so much in getting there.

Sometimes that's exactly what you should do. Commercialization takes time, and a slow start doesn't automatically mean you're in the wrong market. But there comes a point when you need to distinguish between a market that requires persistence and one that simply isn't responding strongly enough to justify continued investment. That's when I would step back and look at the intellectual property itself rather than continuing to make incremental changes to the same commercialization strategy.

Ask where else the technology could create value. Who else has the problem it solves? Is that problem more expensive or more urgent in another industry? Are there applications you didn't consider when the technology was originally developed? Are there companies already serving those customers that could commercialize your technology more efficiently than you can? You may discover that the original market remains your strongest opportunity, but now you've actually tested that assumption instead of continuing to rely on it.

One Technology Can Create Several Commercial Opportunities

I worked with a company that illustrates this point particularly well. The company had developed patented gas-sorption technology along with a sophisticated testing system capable of evaluating large numbers of materials and measuring how those materials interacted with gases under controlled conditions. The system had significant technical capabilities, including the ability to test thousands of materials annually.  

What interested me from a commercialization standpoint wasn't simply the testing equipment. It was what the underlying technology could enable. The company's materials identified applications that included gas separation, gas storage, and catalysis.   That meant we weren't necessarily looking at one product serving one market. We were looking at an underlying technical capability that could potentially create value in several different commercial environments.

Nothing about the technology had to change for those opportunities to exist. What had to change was the way we looked at it. Instead of asking only, “What's the market for this product?” the better question became, “Where does this capability create the greatest commercial value?” Once you ask that question, you begin looking at different applications, different industries, different types of customers, and different potential partners.

That also means the commercialization strategy doesn't have to be the same for every application. One market might make sense for the startup to pursue directly because it has the expertise and resources to serve those customers. Another could be better suited to an established company with manufacturing capacity, technical resources, distribution, and customer relationships already in place. A third application might make sense as a joint development or strategic partnership opportunity. The intellectual property remains the same, but the best way to commercialize it can change depending on the market.

Don't Automatically Chase the Biggest Market

Once startups begin looking at alternative applications, another mistake can creep in: automatically choosing the largest market. A market research report says one industry is worth $500 million and another is worth $5 billion, so naturally the $5 billion opportunity looks more attractive. I wouldn't make the decision that way.

Market size matters, but the value your technology creates within that market matters much more. I would rather see a startup pursue a smaller market where its technology solves an expensive, urgent problem than enter an enormous market where it offers only a modest improvement over existing solutions. A company operating in that smaller market may have a much stronger reason to adopt the technology, invest in development, or enter into a licensing relationship because the economic benefit is easier to identify.

When you're evaluating an application, look at what actually changes for the potential customer or commercialization partner. Does the technology reduce costs, improve performance, shorten development time, eliminate an expensive process, reduce risk, create new revenue, or provide a meaningful competitive advantage? Companies don't adopt technology simply because it's innovative. They adopt it because it helps them accomplish something valuable enough to justify the money, time, and risk required to bring it into their business.

Look at Your Technology From the Other Side of the Table

One of the most useful things you can do is stop looking at the technology as its creator and imagine you're the company being asked to invest in it. You're going to commit money, technical resources, management time, manufacturing capacity, distribution, or perhaps your reputation with customers. What would make you say yes?

The answer probably isn't that the founder worked hard, the engineering is impressive, or there's a patent. Those things can be important, but they're not usually the commercial reason for moving forward. A company becomes interested when the opportunity fits something it is already trying to accomplish. Maybe the technology improves an existing product, reduces manufacturing costs, helps the company enter a new market, accelerates development, gives it a competitive advantage, or solves a problem its internal team hasn't been able to solve efficiently.

That's why the same technology can receive very little interest in one market and attract serious attention in another. The technology hasn't changed. What has changed is its strategic value to the potential partner. When you're looking for product-market fit, that is one of the most important things you're trying to uncover.

Evaluate Broadly, Then Execute Selectively

I'm not suggesting that you turn your startup in five different directions every time you identify another application. That creates a different problem. If every possible market becomes a new business strategy, you'll spread your people, capital, and attention too thin and probably won't execute any of them particularly well.

A better approach is to evaluate broadly and execute selectively. Look beyond the market you originally selected and identify the problems your IP could solve. Determine where those problems are most significant, how much value your solution could create, who already serves those customers, and what resources would be required to commercialize the opportunity. Then compare those opportunities and decide which ones deserve attention.

You may go through that process and conclude that your original market is still the strongest opportunity. That's a good outcome because you've strengthened the rationale for continuing to invest in it. But you may also discover an application where the need is stronger, the economics are better, the competitive environment is more favorable, or established companies already have everything necessary to take the technology to market. That's when your commercialization options begin to expand.

You Don't Have to Commercialize Every Market Yourself

This is where licensing can become particularly valuable for a startup. If you identify another attractive market, you don't necessarily have to build another product line, hire another sales team, create another distribution network, add manufacturing capacity, or raise another round of capital to pursue it.

You may be able to continue building the startup around your primary market while licensing the intellectual property for another application, industry, geography, or field of use. You could retain the market that is strategically important to your company while allowing an established industry partner to commercialize the technology somewhere else. That can give your intellectual property more than one path to market without forcing the startup to become the operating company behind every commercial opportunity.

But I wouldn't begin with the assumption that licensing is the answer. Commercialization comes first. You evaluate the opportunity, understand where the value is, identify what would be required to bring it to market, and then determine whether direct commercialization, licensing, a strategic partnership, joint development, or another approach makes the most sense. The commercialization pathway should follow the opportunity, not the other way around. That principle is central to the commercialization “missing middle”: understanding the opportunity before jumping into execution.  

Before You Put More Money Into the Same Market

If your startup isn't getting the traction you expected, I would go back to the underlying IP before automatically putting more money into the same strategy. Look at what the technology can do beyond the product you originally built. Identify other problems it can solve, where those problems exist, and how valuable solving them would be. Then look at the companies already operating in those markets and ask what your technology could enable them to do that they can't easily do today.

You don't need to uncover ten new markets. In fact, I would rather identify one or two credible opportunities and investigate them properly than create a long list of theoretical applications. One overlooked application with a stronger business case can materially change the commercialization potential of the IP. More importantly, it can give you options at a time when continuing down one path may be consuming more capital without creating enough progress.

Filling the Commercialization Middle

This is part of the commercialization gap I see with many startups. You may have already done a tremendous amount of work. You have the technology, patents, prototypes, testing, technical data, software, and perhaps a functioning company. But there is still a significant difference between owning those assets and understanding all the ways they can create commercial value.

That's where commercialization strategy becomes important. Before you decide that the original market is the only market, or that the startup has to commercialize every opportunity itself, step back and look at the IP as an asset. Determine where it creates the greatest value, what markets make sense, and which commercialization pathways give you the best opportunity to capture that value.

This is also one of the reasons I created the IP Licensing Coach Academy. The Academy's free Launchpad Lite membership is designed to help you build the commercialization and licensing foundation around your intellectual property before you begin executing a licensing campaign. It gives you a structured way to look at what you have, where the gaps are, and what needs to be strengthened before approaching potential licensing partners. When an opportunity is ready to move forward, Launchpad Elite provides access to the Licensing Launchpad™ implementation system for building, launching, and scaling the licensing campaign.

The objective isn't to convince you that licensing is automatically the answer. It's to make sure you've looked at the commercial potential of your intellectual property before deciding what the answer should be. Your startup may have been built around one product and one market, but that doesn't necessarily define the full value of the IP behind it. Sometimes product-market fit isn't missing at all. It's sitting in a market you haven't seriously evaluated yet.

Join Launchpad Lite to start building the commercialization foundation around your intellectual property and evaluate where licensing may fit into your startup's strategy.

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