Why most businesses fail before they find product market fit

There is a tendency to assume that good ideas lead to good businesses. That if the concept is strong enough, growth will follow. Martyn Dawes’ experience suggests the opposite. The idea, in his case, came early. The business did not.

“The business model came first, not the product,” he says. That distinction shaped everything that followed. Dawes had identified a model he believed could scale — small amounts of revenue from many locations, built on a revenue share with retailers. What he did not yet have was something worth selling.

That gap is where most of the work sat.

The eventual idea came almost by accident. A trip to the US, driven more by curiosity than process, exposed two contrasting realities. On one street corner, Starbucks. On the other, a convenience store selling large volumes of low-quality coffee.

The insight was not about copying either. It was about combining them.

“I figured I’m going to put takeaway coffee into British newsagents,” he says. It was early. The UK had no real coffee culture. Cappuccinos were still associated with holidays. The concept, in theory, was sound. In practice, it failed.

Early sites sold almost nothing. Forty or fifty cups a week at best. The locations were wrong. The product was undifferentiated. The demand simply did not exist. At that point, the temptation is to persist. To push harder on what is already in place. Dawes took a different approach. He stepped back.

“I was literally at the point of starting to look at winding up the business,” he says. The turning point came not from data or planning, but from a single conversation. A customer, walking away from one of his machines, explained the problem directly.

“You’ve got to make the product the hero. You’ve got to wow me with your product,” he was told. It was a simple observation. It changed everything.

Up until that point, the focus had been on cost. Cheap machines. Low prices. The assumption was that accessibility would drive demand. The reality was the opposite. Without a compelling product, there was nothing to buy.

The response was immediate. Dawes replaced instant coffee machines with bean-to-cup espresso machines, increased prices and removed existing partnerships. It looked bold. It was, in his words, necessity.

“I had literally nothing to lose,” he says. The result was not incremental. It was decisive. Sales moved from dozens of cups a week to hundreds a month. The concept finally worked. That moment, product market fit, is often described as the beginning of growth. Dawes frames it differently. It is the point at which the business becomes real.

“Now I’d actually got evidence, as opposed to hope,” he says. Everything before that had been assumption. Everything after could be built.

This is where the narrative around growth tends to simplify. In reality, the process is longer and more uneven. It took four years to reach that point. Only then did the business raise meaningful capital. Only then did it scale.

“Don’t try and grow a company until you’ve proved the concept,” he says. The distinction is subtle, but critical. Growth is not something to pursue. It is something that follows.

There is a second layer to this, which is about what is being built. Not all products scale in the same way. Dawes points to one defining characteristic.

“You’ve got to find something that people are going to buy day in, day out,” he says. Coffee, in that sense, was not just a product. It was a habit. That made the model work. It created repeat demand. It embedded the business into daily routines.

Without that, scale becomes harder. Not impossible, but more dependent on constant acquisition rather than repetition. Looking back, the success of Coffee Nation, later Costa Express, appears inevitable. It was not. It was a series of adjustments, missteps and corrections, sustained over time.

The final lesson is less about strategy and more about behaviour.

“You’ve got to be in it to win it,” Dawes says. Which, in practice, means staying long enough to find out what actually works. Being willing to change direction when it does not. And recognising that most of the work happens before anything looks like success.