What is product-market fit?
A quick reminder
The holy grail for early-stage startups, product-market fit, is often vaguely defined. Let’s improve our understanding.
The original definition
Product-market fit, coined by Marc Andreessen, is ‘the only thing that matters’. His definition:
The customers are buying the product just as fast as you can make it—or usage is growing just as fast as you can add more servers. Money from customers is piling up in your company checking account. You’re hiring sales and customer support staff as fast as you can. Reporters are calling because they’ve heard about your hot new thing and they want to talk to you about it. You start getting entrepreneur of the year awards from Harvard Business School. Investment bankers are staking out your house. You could eat free for a year at Buck’s.
Simply put, all is going very well.
Lenny’s True product-market fit
Lenny from Lenny’s Newsletter has summarised this into three components of true product-market fit:
Lenny identifies these three pillars, one of which is actually product-market fit:
Product-Market fit
Emphasis on ‘Do people want it?’
You require customer-problem fit and problem-solution fit
You need clear signals of people wanting and using your product
Read more: How to measure desirability pre-product
Product-Growth Engine fit
Emphasis on ‘Decent market and effective marketing’
Are there enough potential customers for you?
Can you reach, convert, (and if applicable keep) them?
Can you repeat and scale your sales process?
Read more: Lenny’s Growth Engines
Product-Business model fit
Emphasis on ‘Profitability and scalability of the business’
Does your product match your business model?
Does this business model scale?
Can you turn a profit?
Watch more: Profitability & Viability 101 (12 min)
🔥 My two cents
This is just one of many models. Use as it helps. I might write a more critical review of the PMF-idea in the future.
Perhaps a piece on how it relates to other ideas, such as the desirability, feasibility and viability circles from IDEO. Sounds fun? Let me know in the comments.