What is Product-Market fit and how do you know you have it?
So what exactly is product-market fit? How do we find product-market fit, and how do we measure it?
Everything you need to know about finding true PMF
I meet with a lot of entrepreneurs who talk about product-market fit (PMF). Some claim they have it, others are past it, still others are looking to find it. So how do you define it and more importantly what do you do about it?
What PMF is not
Just because people tell you your idea is interesting (read The Mom Test) doesn’t mean you have PMF. A MVP, beta users or free users also does not mean PMF. Even early paying customers does not necessarily mean you have found PMF. This is especially true if your first customers are friendlies vs. people you had no prior relationship with. I recently had an entrepreneur with seven figures in ARR say they did not yet have PMF because if you brought in all their customers, they would be vastly different with no consistency in profile and use case. While authentic demand is a great indicator of a strong market and problem to solve, it alone is not yet to PMF.
What PMF is
For PMF you generally need to prove you have started to deliver on customers from end-to-end. That means having a defined problem, ideal customer profile, are able to find them, sell to them, deliver a solution to them, have them get ROI and love the solution. While each of those steps may not be perfect, you are starting to develop a process and flywheel to repeat what is working in each of those dimensions. There is consistency in the customer problem, profile, use case, and value proposition.
How do you know
If you are analytical, I really love the approach here by Superhuman founder Rahul Vohra around how disappointed your customers would be if your solution went away. Per above, it also speaks to you starting to develop a repeatable go-to-market process and seeing signs of high customer loyalty. Your team can feel the excitement from passionate, unaffiliated, paying customers. Another example I like is when existing customers give you passionate feedback to improve the product, yet do not churn. They care enough to spend the time to share their views, yet also believe in the solution and problem enough to stay with you and support you getting there.
Finding true PMF is an important part of the startup journey, but don’t celebrate too much.
Remember PMF is an ever evolving thing (it is not static). As customers, problems, markets, and competitors change, so does the need to keep refining your value proposition. You can’t just sit still once you’ve “found PMF.”