Achieving product market fit (aka PMF) is an important milestone in the journey of all important startups. Why? Well, when PMF is achieved it means the startup has produced a product that is well received in a suitable size market. Many different people of course have their precise definitions but I believe this most succinctly covers it.
While a general definition of PMF is understood, it is often less clear how to precisely measure when it is achieved. After all, it would be subjective to determine the moment when a product is successful in a test market.
Why does PMF matter?
Product/Market fit is an important consideration for any founder as it should influence the strategy that is being implemented within the startup.
Before PMF is achieved, a startup is still trying to find its place. That is they are trying to create a product with the right features and benefits to sell to a sufficiently sized market. What this means is the startup is still probing to find the sweet spot.
After PMF is achieved, is a very different story. Once a startup has achieved PMF it switches to a scaling model. That is deploying capital and resources as quickly as possible to grow into the market and capture market share as quickly as possible. This way of working is drastically different to the before PMF. Nevertheless, Reaching PMF is the catalyst for this change which is why it needs to be clearly defined and measured.
Unfortunately, most investors and entrepreneurs rely on gut feeling to determine if PMF has been reached or not. Most entrepreneurs believe that they have reached PMF way before they actually have… and most investors want to see consistent traction data that “proves” PMF and de-risks startups which obviously can only come a sales cycle or two after it has been achieved. This in itself sets-up structural arguments on whether it has been achieved
Product/Market fit is a tipping point for most startups. It defines a milestone that transforms a business from the seed stage to the scaling stage. Understanding its importance and determining when it has occurred is the role of every founder. Then all you have to do is convince your board and future investors…