The Myth of the Product-Market Fit (2013)

I think this article misunderstands the concept of product-market fit. Many mediocre products sell and with enough sales effort you can create a big business that only sells mediocre products. This shouldn&#x27;t surprise anybody because most products aren&#x27;t that great and most businesses make plenty of money regardless.<p>Product-market fit is not about that. It&#x27;s not about whether you can find somebody who wants to buy your product. It&#x27;s not even about whether you have very satisfied customers.<p>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&#x27;t keep the customers&#x2F;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&#x27;s always about having some kind of self-reinforcing loop. It&#x27;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&#x27;t matter.<p>Users make content. Content makes the platform better. Which results in more users. See step 1.<p>This is fundamentally different from doubling your signups after you double your adspend. Most businesses don&#x27;t have product-market fit in this way. Most startups don&#x27;t. That includes most unicorns. But those that do end up getting huge, and that&#x27;s why startup investors talk about product-market fit and network effects and viral growth all the time.

This article argues that PMF doesn&#x27;t exist. Oh and if it does exist, it&#x27;s not clear when it is achieved. And if you have it, you can lose it. Oh and even if you don&#x27;t lose it, it doesn&#x27;t guarantee success.<p>Whenever I hear arguments for or against something structured like this, I&#x27;m immediately skeptical. You see this with people promoting vegan diets. It&#x27;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&#x27;t just have a point of view that he&#x27;s trying to sell desperately.<p>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&#x27;t fumble and lose it? Of course not, but that&#x27;s obvious.<p>PMF a useful framework to think about your product and question the value proposition you&#x27;re offering. Take feedback from the market. If no one is using the product, its possible the market has no need for your product.

<i>Another PMF-inspired practice in vogue is using Google Adwords to channel keyword searches to a dummy product site listing various features. The idea is to establish PMF before even beginning work on the product. A certain click-through rate establishes a clear need and a ready market to consume the product.</i><p>I&#x27;ve always disliked this strategy. It doesn&#x27;t feel good to start off your relationship with a customer with deception.

Maybe it is me, but product market fit sounds like a term people would use that are far away from any particular market. Like adults who lost touch with their inner child trying to come up with games that would sell to kids.<p>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&#x27;t <i>care</i> if it just makes them the bucks.

The author apparently does not fully understand the concept of PMF. I mean, I understand that we don’t necessarily have discrete events, but the pursuit is very clear. The article starts off wrong when it says that Marc created the concept. Steve Blank talked about PMF a bit earlier in The Four Steps to the Epiphany.

Periodically I read articles or listen to podcasts where people assert that Product Market Fit isn&#x27;t real, or is wrong, or is somehow broken.<p>I wonder why? Maybe its part of establishing your own cleverness, &quot;debunking&quot; some popular concept.<p>For my money, PMF is alive and well. Marc Andreessen is often quoted as saying that product-market fit is when &quot;the market pulls the product out of your hands.&quot; and that make sense to me and I don&#x27;t see its wrong or out of date. It&#x27;s just very very hard to attain.

&quot;That product doesn&#x27;t fit this market&quot; seems originally just a polite way of saying &quot;we don&#x27;t believe you will ever succeed&quot; without explicitly criticising the product or the people.<p>From an investor&#x27;s perspective, it might be a condition for investing.<p>As a model, it&#x27;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&#x27;s tautological.

This article misses the mark on what product market fit is supposed to represent. It’s one factor among many. It also seems to misunderstand how to identify.<p>Just like becoming an Olympic athlete, inate skill is helpful but not enough, you need drive, environment etc.<p>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?

Product-market fit is a spectrum, as opposed to something you definitely have or don’t<p>- 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<p>- 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.<p><i>B2B</i><p>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:<p>“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.”<p>“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.”<p>“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.&#x27;”<p><i>B2C</i><p>“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)<p>Benchmark: Users scream for the product so you can screw everything up and still win (for a period of time).

There is no market fit for ICBM-Warhead controllers- that whole fairchild smart sand idea is a total state-driven bust.<p>The problematic part is to think about finished products, instead of &quot;developed capabilities&quot; which might end up in a whole tree of products, in total different fields, after a slight pivot.<p>Companies can starve to death, next to a grain storage, with a wall made out of concepts.

I think there is some merit behind the idea of Product-Market Fit but my main critique of it is that it neglects the importance of social connections in achieving business success.<p>It makes it sound like entrepreneurship is some kind of science whereby the entrepreneur interfaces directly with &#x27;the markets&#x27; 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.<p>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 &#x27;strategy&#x27; instead of acknowledging that, underneath the surface, the game is far more primal.

It seems strange to talk about PMF like it is a measurable, binary attribute. As a metaphor, I like the word &quot;traction&quot;. It makes me think of a car tire or a shoe that is slipping around and then grips. Also, traction can be lost and on its own it doesn&#x27;t do anything for you, but you can use it move forward.

As a PM I am constantly discussing this topic with our founder. And I agree that it is not a magical on time event.<p>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.<p>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&#x2F;product has PMF and another to expand (we can’t go to kore customers as specific market)?

There is such a thing as taking product-market fit too far (and I agree with the thesis here that PMF is not a thing you achieve just once and then have forever). But when you actually work on a product, you <i>will</i> feel PMF when it&#x27;s present, and you <i>will</i> miss it when it&#x27;s gone.<p>I&#x27;ll give a concrete example. I spent two years running Triplebyte&#x27;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 <i>people did not want what we had</i>.<p>About a year in, we tried something different. It wasn&#x27;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 <i>order of magnitude</i>. We actually had <i>more</i> candidates getting attention in October 2022 than we did in January 2022, despite October being well into the most severe tech crash anyone&#x27;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.<p>It wasn&#x27;t ultimately enough to save us (and I&#x27;m not at all sure it would have been even if circumstances had been better; the product wasn&#x27;t around long enough for many of its problems to play themselves out). But you could feel the difference in every meeting.<p>Y&#x27;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&#x27;t that different from the pre-self-destruct campaign. It&#x27;s maybe a point or two more in their favor than it was before. But the energy, the &quot;vibes&quot;, are night and day. There&#x27;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.<p>Finding product-market fit is like that. It&#x27;s palpable in the air when you have it. It greases over tensions because people aren&#x27;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&#x27;re not trying to polish a turd. It shows up in your metrics, yes, but startups live or die on <i>people</i> getting really excited about something.

This is misunderstanding basic elements of marketing. Early microwaves were a failure because they were huge and expensive machines promoted for institutional use. It was only after much study that smaller, cheaper, and easier to use models were offered which resulted in an explosion of demand. Marketing is what enables understanding not only of customer needs, but also their desires and the language they use and so on.

I would add that PMF is an investor signal more than a founder one. Basically it says the product is good enough and the company is executing well enough to show extremely strong traction. It’s easy to spot this because the traction is too big to ignore, so any investor paying attention would be immediately interested.<p>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.

I agree when the author says that PMF can change over time.<p>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.<p><a href="https:&#x2F;&#x2F;www.youtube.com&#x2F;watch?v=SNEF1ujd2Mc" rel="nofollow">https:&#x2F;&#x2F;www.youtube.com&#x2F;watch?v=SNEF1ujd2Mc</a>

Some but not all of what the author says is true. PMF is a continuum, but also a threshold phenomenon below which it is better called wishful thinking. PMF is dynamic and can be lost, but that is more a question of the M in which it occurs, and the competitive forces there. PMF and defensibility are two quite different things.<p>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.<p>The idea of PMF is explored much more helpfully here:<p><a href="https:&#x2F;&#x2F;pmf.firstround.com&#x2F;" rel="nofollow">https:&#x2F;&#x2F;pmf.firstround.com&#x2F;</a><p>I wrote about it here:<p><a href="https:&#x2F;&#x2F;vonnik.substack.com&#x2F;p&#x2F;how-to-be-lost" rel="nofollow">https:&#x2F;&#x2F;vonnik.substack.com&#x2F;p&#x2F;how-to-be-lost</a>

Going back to the original post, it sounds like the central argument is that as a VC investor, you care about the size of the market, which I read as the opportunity to massively scale. Then getting the right product into that market.<p>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.<p>Lots of great businesses find some demand for their product and do just fine, or great.

I tend to agree with the autho’s point of view. PMF should be viewed as a point on a spectrum, not a binary state. You don’t achieve PMF so much as you progress from no PMF to extreme PMF with respect to progressively larger and larger target market segments.<p>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.<p>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.<p>Clues you have product-market fit with a specific customer include:<p>1&#x2F; the prospect has the problem you think they have<p>2&#x2F; the problem is of critical importance for the prospect<p>3&#x2F; they know they have THAT problem, and not some adjacent problem or symptom<p>4&#x2F; they articulate the problem using the same language you use to describe it<p>5&#x2F; they have tried to solve the problem themselves and have allocated budget and time to solving it, but failed<p>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.

&gt;Even if you are able to categorically claim PMF, it doesn&#x27;t guarantee business success. There are a fair number of startups that are able to build out their product, raise investor funding, and gain early traction, only to peter out and never reach growth stages.<p>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&#x2F;or did not conduct an adequate segment analysis.

I&#x27;m not sure if it&#x27;s a myth. Just because we don&#x27;t know how doesn&#x27;t mean it&#x27;s not possible.<p>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.<p>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&#x27;t started with that in mind.

“If you’re going to quantify product-market fit I vote for: ‘how much time are sales people spending apologizing for downtime to evermore hungry customers?’”<p><a href="https:&#x2F;&#x2F;forstarters.substack.com&#x2F;p&#x2F;for-starters-15-when-can-we-expect" rel="nofollow">https:&#x2F;&#x2F;forstarters.substack.com&#x2F;p&#x2F;for-starters-15-when-can-...</a>

&gt; The fundamental premise of Marc&#x27;s original post is that PMF is a discrete event and the journey of a company can be thought of as pre-PMF and post-PMF.<p>I&#x27;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.

The product through its utility, asthetics, pricing etc shapes its market and market factors like consumer demography, competition, macro economy etc shape the product. So PMF can only be an incremental process.

I had no idea the concept of product market fit was so new

This is why companies have product managers for different markets or solutions. Different contexts require different features.

He points out a problem but no better solution