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."

Courtesy of SimpliSafe

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.

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.

RELATED: How to Find the Holy Grail of Product-Market Fit

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.

RELATED: VCs Want to See Product-Market Fit: Here's How to Prove It

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.