The Myth of the Product-Market Fit (2013)
blog.nishantsoni.com
blog.nishantsoni.com
Product-market fit is not about that. It's not about whether you can find somebody who wants to buy your product. It's not even about whether you have very satisfied customers.
Product-market fit is about having a product that fills such a deep need in the market that you get pulled into an exponential growth trajectory. Instead of growing because of your own marketing efforts you grow because you can't keep the customers/users away. It can be a viral app where every user on average invites more than one other user. It can be an app that every college student wants to be on. It can be anything. But it's always about having some kind of self-reinforcing loop. It's about push versus pull. Peter Thiel referred to Twitter as a clown car that fell into a gold mine. Twitter had such strong PMF that all their operational mistakes just didn't matter.
Users make content. Content makes the platform better. Which results in more users. See step 1.
This is fundamentally different from doubling your signups after you double your adspend. Most businesses don't have product-market fit in this way. Most startups don't. That includes most unicorns. But those that do end up getting huge, and that's why startup investors talk about product-market fit and network effects and viral growth all the time.
- Network effect: does the product get better with more users?
- Viral growth: does each user bring more users?
- PMF: is there a correspondence between the market, problem and solution that results in market pull?
You can have PMF without the other 2, which is not as strong. You can also have PMF for a niche that never grows to a mass market or have decent sales without PMF. Agreed having to buy your traffic and needing to go through the FAANG toll booth every time you want to access your audience is a problem.
And many more who sell crops, chemicals, power, machine parts, cars, concrete...
Many companies have billions of customers and no trace of lock-in or virality at all. You might want to shift your perspective a little and remember that there is a world outside of Silicon Valley.
Outside the US, broadband providers are still huge but differences in regulation mean there are five or six of them in most markets.
Overall, I think my point still stands: claiming that you can't build a giant company without Silicon Valley's growth formula is ridiculously narrow. The vast majority of big companies are built by other methods.
> Most businesses don't have product-market fit in this way.
They'll have it to a lesser extent?
The word "Fit" kind of implies a scalar relationship, and the disagreement over who has "it" and who "doesn't" comes down to size of market and suitability for that market. Why can't you can be perfect for a small market, or crappy for a market so large that you initially succeed but plateau.
PMF does not have a zero point. If you sell (clasically) "zero to one" item you may or may not have PMF. One nuclear reactor / aircraft carrier is a big deal. One newsletter subscription is a small deal.
Whenever I hear arguments for or against something structured like this, I'm immediately skeptical. You see this with people promoting vegan diets. It's better for the environment, and healthier, and meat is gross and gives you ED, and... Sure maybe all those things are true, but what are the odds the author doesn't just have a point of view that he's trying to sell desperately.
Product market fit obviously exists. In my experience, I was at a startup and we had pretty much no sales or usage for about 9 months. Then we pivoted and pretty much overnight we had a few users and 100k ARR within a month or two. Does this mean it would succeed or we couldn't fumble and lose it? Of course not, but that's obvious.
PMF a useful framework to think about your product and question the value proposition you're offering. Take feedback from the market. If no one is using the product, its possible the market has no need for your product.
- At the core of PMF is the idea that you are producing something novel in some business and/or technical aspect, NOT that your are selling a product or service that already exists and PMF is there. For example, if you want to compete with Salesforce you already know there is a PMF, it is a CRM! Your startup will have issues with GTM because PMF is already there.
- PMF is always risky. Not only for startups but also for corporations. GSE is the top search engine and one day OpenAI eats part of their cake. This is the innovation dilemma at play all the time. It is obvious that a startup will have a different financial impact from a moving PMF.
Finally, these discussions are fruitful when you start with more formal definitions [1].
“At the core of PMF is the idea that you are producing something novel in some business and/or technical aspect, NOT that your are selling a product or service that already exists and PMF is there. For example, if you want to compete with Salesforce you already know there is a PMF, it is a CRM!”
PMF is not about building something novel. It is about ensuring your product solves a real and critical problem for your target segment. Only customers are the experts on their problems and priorities. Entrepreneurs are experts on solving problems but we too often solve the wrong problems in elaborate ways.
Salespeople buy Salesforce today because everyone else buys Salesforce. CRMs come in all shapes and sizes. To find PMF for your CRM you need to niche down to find a segment that is underserved by Salesforce.
You can only do this by doing actual discovery interviews with prospects in an unbiased way where you explore their experience around specific problem areas without ever mentioning your brilliant solution - as proposing a specific solution is likely to bias your subject. This is hard for founders as we tend to fall in love with our ideas and often slip into pitch mode mid-interview. This is a fundamental mistake.
Please forget the "novel" meaning for a while, and let's continue with the CRM example. I am a Hubspot customer now. As most companies we have used spreadsheets, vTiger [1], SugarCRM [2], among other apps. My main point was that if they are not/were succesful by the HN startup definition is because they had issues in the GTM not in PMF and this is a common confusion. There was always PMF for CRMs the problem is marketing/selling them. That market is so huge and known that thinking in PMF is deviating the attention from just selling! That is what my "middle east business side" says.
As you note, lack of PMF can be a reason why there isn’t traction, but it isn’t the only reason.
You can have a good GTM and good PMF and still have poor traction for a number of reasons.
Ultimately failure or success often comes down to traction, which is all of GTM, PMF, and customer retention/expansion working.
[1] https://www.amazon.com/Traction-Startup-Achieve-Explosive-Cu...
Sometimes the entrepreneur needs to expand the possibility space, rather than just addressing an "unmet need". There's the Jobs-ism about figuring out what the customer is going to want before they do. Thiel also talks in Zero to One about some of the biggest innovations not spawning from customer feedback or lean methodology.
I wouldn't say that GPT addressed a problem I had per se. It just created a whole new set of activities I wanted to try.
I would argue that these claims are all accurate, but with the clarification that PMF does exist, but on a spectrum, not as a binary state”
See my comment further downthread where I lay out a framework for determining your degree of PMF ideally BEFORE building anything, so you don’t waste time/money/effort on building the wrong thing because you think you ‘know what the market needs.’
If the only way you can validate PMF is by building something and then realizing no one is using it, you have wasted time and effort that would have been better spent validating PMF before building.
I've always disliked this strategy. It doesn't feel good to start off your relationship with a customer with deception.
The landing page should say: "We are building this product, but it's in the early stages. Leave us your email if you're interested to learn about its progress and availability before your competitors do. Early adopters will get discounts / free plans."
If this page gains any traction, subscriptions, interest expressed via the "Contact us" page, then the product is likely worth building past the feature list and a general idea of the architecture. You better have a prototype that will allow you to quickly demo some of your key promised features.
> It should not be deception.
> The landing page should say: "We are building this product, but it's in the early stages.
But you aren't building that product. You're considering building that product.
IOW, it's still deception.
If you have a proof of concept, have put in some thinking, made UI sketches and flows, etc, you have started building the product, because you can't advance further without that. But you have to find out if it's worth putting more effort and money into it.
Cleverly worded gotcha deception, sure. But deception none the less.
I think that that bar is too low to move from "we're considering building $FOO" to "we're building $FOO".
I mean, with the bar for "we're building $FOO" being "Investigate demand for $FOO", then the phrase "we're building $FOO" loses all meaning.
It's the difference between "we're getting divorced" vs "we're considering divorce".
"we're starting a new job" vs "we're looking for a new job"
"we're building a LEGO deathstar" vs "we're buying a box of LEGO"
I see no reason that "we're determining whether to build $FOO" is the same as "we're building $FOO"
If you include this then you're not even validating to the extent that you think you are. Because you're validating that people will sign up to use it for a discount / free, which doesn't necessarily mean anyone will pay full price for it.
People building AI-powered things are doing this a lot: add AI and clearly the product will now do <thing it's not clear you can actually deliver value on>.
Sure in the end you need some term to explain whether a particular product at a specific price point within its context would do well on a market or not. But it still feels like something people would use who don't care if it just makes them the bucks.
Maybe I'm off-base here but when I read those 3 words "product market fit" I assume that is a concept that has been around since the beginning of any free market.
I don't see how it could have only been recently recognized, that doesn't seem right.
I wonder why? Maybe its part of establishing your own cleverness, "debunking" some popular concept.
For my money, PMF is alive and well. Marc Andreessen is often quoted as saying that product-market fit is when "the market pulls the product out of your hands." and that make sense to me and I don't see its wrong or out of date. It's just very very hard to attain.
From an investor's perspective, it might be a condition for investing.
As a model, it's not particularly useful in that it only predicts possible success if a condition for success (PMF) has been demonstrated. And PMF itself is defined in terms of success ... so it's tautological.
When you don't have PMF, you either change the P or the M.
Just like becoming an Olympic athlete, inate skill is helpful but not enough, you need drive, environment etc.
On a more meta note, I’m starting to see more substacks that that publish content that generally do not ‘add value’. That don’t either address an actual reality or meaningfully subvert a common idea. Maybe it’s just me?
- Every business is unique, and metrics frameworks apply differently. Focus on the metrics that matter for your product, and make sure they’re clearly defined
- Product Market Fit (PMF) can rise and fall as the product and market change and grow. It’s not this static thing that once you get it, you always have it.
B2B
Every enterprise company should run a 30-day proof of concept trial. To make these trials productive, company usually requires the customer to agree to buy the product after 30 days if it meets expectations. But… pull the trial after 30 days (no matter what). Then:
“If the customer doesn’t scream, you don’t have product-market fit because if they’re not going to buy it at the end of 30 days, they’re not desperate, and if they’re not desperate, you don’t have product-market fit.”
“The second biggest mistake I see entrepreneurs make, especially in enterprise, is when they pitch a potential customer on an idea, and when the customer doesn’t like the idea, they try to iterate on the product to build something the customer would want.”
“That’s the absolutely wrong thing to do, even though it feels right. You want to find people who love what you’re doing, not try to convince the ‘no’s’ and turn them into ‘yes’s.'”
B2C
“The only way you know if you have product-market fit is if you get word of mouth” (and the best test of word of mouth is exponential, organic growth)
Benchmark: Users scream for the product so you can screw everything up and still win (for a period of time).
The problematic part is to think about finished products, instead of "developed capabilities" which might end up in a whole tree of products, in total different fields, after a slight pivot.
Companies can starve to death, next to a grain storage, with a wall made out of concepts.
It makes it sound like entrepreneurship is some kind of science whereby the entrepreneur interfaces directly with 'the markets' in search of optimum efficiency... It masks the reality that, in fact, entrepreneurship is a far more primal pursuit. Success in it has little to do with efficiency.
Entrepreneurs will often claim that success in business is achieved via clear logical thinking that is free of emotions. But in reality, entrepreneurship is all about emotions and relationships. Entrepreneurs are often highly emotional and think emotionally, not rationally - Yet they think of themselves as rational; they call their social games 'strategy' instead of acknowledging that, underneath the surface, the game is far more primal.
In our startup we have 3 or 4 large areas - on being data acquisition from legacy devices which gets us most of our B2B contracts. Yes there is a problem to solve as most of our customers don’t want to do it and we have now building blocks.
The problem: All our other areas like data analytics and other more fancy and higher margin areas we fail to achieve PMF and therefore since years we struggle to grow. What is it when only a small part of your company/product has PMF and another to expand (we can’t go to kore customers as specific market)?
I'll give a concrete example. I spent two years running Triplebyte's product near the end of its life. For the first year, working on it was like pulling teeth. It was one of the most frustrating and demoralizing experiences of my life, trying dozens of experiments and having every single one fall flat. Triplebyte had hundreds of company clients, hundreds of jobs, designers, salespeople, an established not-terrible brand, you name it. But none of those things could solve the fact that people did not want what we had.
About a year in, we tried something different. It wasn't particularly polished. It was actually really ugly. It had plenty of problems. But when we showed it to users, they immediately went yes, this is a thing I want. People who were about to leave came back. Sales process close rates jumped by an order of magnitude. We actually had more candidates getting attention in October 2022 than we did in January 2022, despite October being well into the most severe tech crash anyone's seen in a generation. We felt better in the midst of our entire market falling apart than we had when it was riding high, because we at least felt like we had a product that did something.
It wasn't ultimately enough to save us (and I'm not at all sure it would have been even if circumstances had been better; the product wasn't around long enough for many of its problems to play themselves out). But you could feel the difference in every meeting.
Y'all watch the news lately? Look at how Democrats are covering the Presidential race right now versus how they were covering it three months ago, before the previous campaign self-destructed on live TV. On paper, the race isn't that different from the pre-self-destruct campaign. It's maybe a point or two more in their favor than it was before. But the energy, the "vibes", are night and day. There's hope, interest, energy. People are joking about it, having fun with it, making stupid memes rather than gritting their teeth and waiting for the end.
Finding product-market fit is like that. It's palpable in the air when you have it. It greases over tensions because people aren't constantly arguing over why the product is broken. It makes people get excited about ways they can improve it, experiments they can run to make it better. It makes your sales and accounts teams feel like they're not trying to polish a turd. It shows up in your metrics, yes, but startups live or die on people getting really excited about something.
The challenge, is even with this obviousness, it’s hard to run a company searching for PMF. All you can do is continue improving the product, its positioning, marketing, pricing, and so on, looking for strong interest and traction. This is what you’re probably doing already (what else is there), so PMF usually is phrased as a cautionary tale of people who never talk to customers, or never set a price, or never launch, etc. These all will sink your startup for sure, but all PMF will tell you is investors won’t be interested if you have no customers and no traction.
But I think searching for PMF should theoretically be the bread and butter of startups. You're searching for the right combinations in terms of the interaction between People, Problem, Pitch and Solution. Changing your Pitch and Solution is "iterating", changing People and Problem is "pivoting". Improve accordingly until PMF or die trying.
Microsoft had 34% of the phone market in 2006, a number that dwindled to essentially zero due to changing consumer expectations and their own fumbles.
PMF is the sine qua non of startups. You should obsess over getting there. Once you have it, you hold a ticket to the arena. Then you have to fight to survive.
The idea of PMF is explored much more helpfully here:
I wrote about it here:
Experimentation in these contexts is difficult to make good inferences from. I'd like to have read more about how experiments are designed to work well with uncontrolled environments, how to make inference for short-term prediction, and how to plan multiple small experiments to usefully exhaust a search space.
Still, thank you for writing. I enjoyed it. I'd love recommendations for more procedural knowledge if you have any.
So I think that’s pretty valid from a VC investor perspective. Doesn’t mean that some other approach isn’t better by some other metric. Just that a VC investor is looking for those massive returns on a few investments to make up for the losses on the majority. It’s such a skewed distribution if you don’t believe in the ability to sell a product into a massive market then it’s not a VC deal.
Lots of great businesses find some demand for their product and do just fine, or great.
Many pundits claim of PMF that you’ll know it when you see it because the market will suddenly be clamoring for your product faster than you can make it. This is categorically wrong to the point of being harmful advice.
You need a leading indicator of PMF so that you don’t delude yourself into believing you have achieved PMF prematurely, only to scale and find yourself in the valley of despair where customer response to your value proposition is mediocre or churn is high.
Clues you have product-market fit with a specific customer include:
1/ the prospect has the problem you think they have
2/ the problem is of critical importance for the prospect
3/ they know they have THAT problem, and not some adjacent problem or symptom
4/ they articulate the problem using the same language you use to describe it
5/ they have tried to solve the problem themselves and have allocated budget and time to solving it, but failed
Too many entrepreneurs and product managers trick themselves into believing they have PMF when they do not - because they fall in love with their particular solution and try to sell prospects on their idea instead of actually doing customer discovery interviews - unbiased interviews where the prospect tells you about their experiences in the problem space without you ever mentioning your idea.
To me it seems obvious that these startups achieved PMF only in a small subset of their target market. That is, they misidentified the market in which they had achieved fit and/or did not conduct an adequate segment analysis.
It is not easy, but the more domain experience you have through interactions with problems of customers, the increased likelihood of uncovering pain and demand.
On the other hand, trying to create something, and then try to generate demand for it, or find a fit for it is much harder to find product-market fit, because it wasn't started with that in mind.
https://forstarters.substack.com/p/for-starters-15-when-can-...
I've literally never heard anyone else say this about PMF. Companies change, products change, competition changes and markets change. Your degree of PMF is ever-changing.