Quick Summary
Product-Market Fit occurs when a product satisfies a strong market need, evidenced by organic growth, high retention, and customer enthusiasm. It is the foundation for sustainable business growth.
Product-Market Fit (PMF) is the alignment between a product and its target market needs. Marc Andreessen defined it as being in a good market with a product that can satisfy that market. When achieved, customers are buying the product as fast as you can make it, and usage is growing organically.
Signs of Product-Market Fit
- Organic Growth: Customers finding you without heavy marketing
- Word of Mouth: Users recommending the product to others
- High Retention: Users keep coming back (low churn)
- Usage Growth: Increasing engagement over time
- Customer Love: Users would be disappointed if product disappeared
- Pricing Power: Customers willing to pay
Measuring Product-Market Fit
| Metric | Benchmark | What it indicates |
|---|---|---|
| Sean Ellis Test | > 40% would be "very disappointed" | Product necessity |
| Net Promoter Score (NPS) | > 40 | Willingness to recommend |
| Retention Rate | Flat or growing cohort curves | Sustained engagement |
| Organic Signups | > 30% of new users | Word of mouth growth |
The Sean Ellis Test
Ask users: "How would you feel if you could no longer use [product]?"
- Very disappointed
- Somewhat disappointed
- Not disappointed
- N/A - I no longer use it
If > 40% say "very disappointed," you likely have product-market fit.
Stages Before and After PMF
- Before PMF: Focus on problem validation, iteration, finding early adopters
- At PMF: Signs of traction, organic growth, positive unit economics
- After PMF: Scale aggressively, optimize for growth, expand market
Mistakes Around PMF
- Scaling too early: Burning cash before PMF is achieved
- Ignoring churn: High churn indicates lack of PMF
- Feature bloat: Adding features instead of solving core problem
- Wrong metrics: Focusing on vanity metrics instead of retention
Key Points
- Product satisfies market demand
- Sean Ellis: > 40% would be very disappointed
- Signs: organic growth, low churn, word of mouth
- Must achieve before scaling aggressively
- Iterate based on customer feedback
- Not a binary state - degrees of fit exist