Measuring Product-Market Fit

"One of the biggest pieces of advice I'm giving to people that are like, "How should we adjust our marketing with the economic changes and things like that?" I was like, "Start by assuming you no longer have product market fit, because you had product market fit in a different market." It's a different market now, so you have to start over."

"It's probably the biggest flag that I see with a lot of companies that claim to have product market fit, which is your TAM and your product market fit are not using the same definition."

"Starting with that narrow focus and building around community engagement... was important because of this kind of depth verse breadth approach and that depth-first approach that Snyk took was important to be able to effectively validate the solution on the path to product market fit."

"If you don't have product market fit, and if you don't have a good enough growth strategy for at least one side of your marketplace, just forget about all this marketplace stuff. Focus on this core exchange of value, go deep with one side of the marketplace and see if you can rely on some crutch, some hack for the other side for time being."

"The metric that I like the most is a predictor of liquidity. So your liquidity might be, it's typically a measure of demand utilization... how many of those searches with intent actually turn into a transaction. So, it's your field rate of your intentful demand typically, and that's really indicative of the net output of your marketplace."

"It's what I call a market health metric, and this is basically think of your proxy that is the best predictor of your liquidity... For Lyft and for Uber, it was ETAs. So, we knew that if the closest driver was at least two minutes away from you or closer, then we had hit a ceiling, you were more than X person likely to convert and book a ride."

"I like the classic if we were to take this product away, what percentage of users would be significantly disappointed or have no other solution? ... consider that you have two product market fits essentially. You want to make sure that you have a compelling enough value proposition on both sides of the marketplace."

"The data that Deedy published clearly show that both the retention curves... level off at significant portions higher than all the other platforms... They have the very elusive smile curve... It's an early indicator that that platform is on a trajectory to hit escape velocity."

"Protecting what you've built actually is increasingly important once you build scale... if you're not continually pushing to make your product better... you're eventually not necessarily tomorrow, but maybe in a year, maybe in five years, you might find yourself fall out of product market fit entirely."

"Founders are starting to intuit what I've written about a bit as well as you, which is that scalable acquisition or what we call an acquisition loop is a requirement for product market fit. Like if you got a product that retains well and you can't find more users for it, I don't think that's product market fit."

"The holy grail of product walk is really a reference customer. This is somebody that has used your solution or your product, loves it enough to tell people about it... I want six to eight references, for B2C, I want maybe 15 to 25 references as an indication that we've achieved product market fit."

"Product market fit is when you iterate it in this discovery, you've discovered and delivered something so meaningful that these customers that are your target customers, are willing to put their reputation on the line and be a reference."

"Andy, he's legendary. If anyone listening to this, wants to learn about product market fit, Andy is your guy. I believe he coined the term, he teaches the class at Stanford. And the lesson was really find something people are reaching over the table want, and make sure you have that validation."

"What product market fit has come to mean is... 'achieved product market fit.' ... categories make products not the other way around. What you want is you want to design a market category for your product, not fit your product into a market category."

"You can't optimize your way to product market fit. I don't care at the early stages if something's optimized by 5% from an email. That doesn't fundamentally tell me if something's working or not, so I think metrics are really hard and signal is actually way more important."

"Even if you have a very few customers, if your cohorts look really good, they're retaining or even kind of like the classic smiling curve where you see more in engagement later in the life cycle than you do earlier, that's the thing that gives the company conviction to invest resources against it."

"I think you build conviction and you have this network effect virtual cycle where you get work conviction. The more customers reflect back to you and data reflects back to you that you're on the right track."

"product market fit as a concept is no longer what it used to be, and how every company basically has to recapture product market fit every three months."

"The interesting piece here of how I relate to it, we still have the core users. And by the way, those core users are mostly pioneers right now that are excited by the capabilities. Then there's latent majority that is filled with adjacent users. And the issue right now... is that we're constantly focusing on recapturing the pioneers. We don't have time to go after adjacent users."

"We launched on Product Hunt, and felt really good. We had what we felt like was a great launch, ended up winning product of the day, product of the week, product of the month. And it was like, wow, I think we have something here. And then we'd look at signups, and you'd get that initial spike in signups, and then they sort of flatten out. We were still getting new users every day, but it was clear we didn't have strong word of mouth. There wasn't strong organic virality."

"If I drill down what makes companies fail, it's quite simple. It's just like they don't talk to users, which means they don't find product market fit. And if they don't find product market fit, nothing else really matters."

"We have to remind everyone on the first day in YC, 'None of you have product market fit because you probably don't,' right? Almost nobody has. Because people confuse this external validation with the thing that matters the most, which is talking to customers and learning what matters."

"It never hit us as a binary state. Just like, 'Oh, good. We have people who care about this thing we make now.'... It's a very gradual ramp. Maybe that's why early days when it's really the lost eras, it doesn't feel too low because it just... Even for Notion today, it feels like it's so small in terms of where it could be."

"For over a decade, John and I have been, in quotes, designing time as part of our work with startups, helping them find or expand product market fit. So, we developed a design sprint at Google Ventures, which the Sprint book is about. And now, we run this venture fund of our own called Character. And we run these highly-structured sprints with companies."

"We help teams find and expand product market fit with Sprint. It's a tool for doing that and it uses a lot of these principles we talked about with Make Time to change the defaults, but not just the defaults of the way an individual works, but the ways teams work, the way people make decisions, the way we evaluate what's a good idea, a good strategy and worth pursuing based not on just a hunch or a guest, but based on something we can actually see with customer reactions."

"I missed a huge moment that I should have pounced on, which is that during those 20 minutes, our customers weren't furious. They weren't emailing us like crazy... I didn't realize at the time that was the signal that we did not have product market fit."

"I just set a rule, which is, 'We discount all of that feedback from our friends to zero.' That is not of interest to us... We are only interested in Sarah, our target customer, and can we get her to solve whatever the problem is as quickly as possible."

"I think product market fit when you start with the market first, it's accelerated. ... Starting with a product is a hell of a lot riskier."

"Product market fit. If you know that your business sells into audiences. Let's say you are a social media influencer or you had a really strong email marketing game, or organically your content surfaces within Google search results... If other things work, it is highly likely that paid acquisition will work."

"It's can they not stop talking about it and that's the chatter about a product, they want to share it with their teammates or to other people at different companies. That just top of mind love and wanting to share what they've found with others is really a great sign that you're onto something."

"For us, the way we think about is, 'Do we have the fit in the specific segments?' And how strong that fit is. In the company's journey, the first year, we just focused on, 'Can we get the fit...' In the first two years, we focused on, 'Can we get the fit in the early stage startup segment?'"

"Generally speaking, I would say you don't want to focus too much on growth until you have product market fit. So make sure you have a product that users love that's either showing strong signs of retention or has some good loop that you can see that you can start thinking about growth."

"Building consumer products is very hard. I think people think it's easy, because each of us is a consumer... But man, it's hard. It takes a long time to get things right. Because you're essentially trying to get so many things right when you're building a successful consumer product. You have to be able to reach out to a vast, heterogeneous set of users who have different needs, who have different perspectives. The go to market is always very interesting, because you can't force people to use your product. People have to choose you, you don't choose them."

"A lot of the CEOs and CFOs I talk to, they resonate best when I frame it as it's about time to money more than time to market. We know how to do time to market. If you insist on time to market, we know how to do that. The techniques are well-known. The harder part is time to money and I know that's what they care about and that's what a product team really does."

"Product market fit is a sort of thing where you absolutely know it when you see it, and therefore if you don't absolutely know it, you don't have it."

"The market's either going to latch onto your product and run with it or it's not. Do not ship the product, find a lack of success, and then try to market your way through that, because the binding receptors likely don't exist."

"We had this feeling... that it just wasn't ever going to be big enough. And so we had this really interesting moment where the users were all telling us, there's no problem. We love this product. They were using it every day, they were coming back... and we were just like, this just isn't going to get us to where we need to be, our original goal had been we wanted to democratize audio."

"We had a activation metric that we got to through some initial regression analysis, and then we tested the hypotheses that we developed from that regression analysis and made it into the product. And so for us it was three people, real human beings, not bots, and 50 messages, real messages."

"In the early days of product market fit, I like to say we want to answer a very simple but profound question. What can we uniquely offer that people are desperate for?"

"When you take something to a customer, ask them to pay you a lot of money and if they don't, then find a new problem. Don't wait three weeks, which is what every founding team typically does because you don't have that kind of time."

"For me, it's always around this pull that sort of how much work do you have to do to basically generate pull?... I think that this sucking pull kind of concept feels like the most appropriate way to define it as opposed to the sort of unit economics of acquisition and time to pay back."

"If your product's working, you'll know. And if there's any uncertainty, it's not working. And it really is a binary when it comes to consumer products."

"When we overlay the referral data over the NPS survey data, we saw something really interesting. There's very low invite rates at one to six, and not just invite, conversion rates of users that joined for invites. But when we've got people from sixes to this seven and eight group, they doubled the number of people they told. Eight to nine, they doubled again, and nine to 10, they doubled again."

"Take 50 at-bats, take 100 at-bats, and now that you know that you reliably, for every cohort of ten first meetings, what's known in sales land as opportunities, for every cohort of 10 that you engage, are you closing 1, are you closing 1.5, are you closing 2, or are you closing 2.5, if you're in there?"

"We really felt the type of questions change, right? Silly. The call sounded like, again, "How are you pricing this, or when can we start doing a POV?" I think naturally, as human beings, you have a bias to look for affirmation, versus a bias for what you don't want to hear."

"It's almost like you need to see them pushing for the next step is what I'm hearing is, "Let's do a POV, what's the next step to do this? I want to connect you to this person, to talk further about this," versus just, "Oh yeah, this is awesome. Thank you.""

"The trick here is not to act too much on the feedback that the very disappointed people are giving you, because they already love your product... But to focus on the segment of the somewhat disappointed people, they kind of love your product, but something, and I would wager something small, is holding them back."

"You might look at something like a J-curve. This is the retention, the percentage of people still using the product day seven, day 30, day 90, and does it flatten or do people just drip out of there?"

"I don't like NPS for this... I like Sean Ellis's question of how disappointed would you be if this product disappeared? And I think it's if you have at least 40% of people respond that they'd be very disappointed, then you're on the right track."

"Customers don't care how big you are, they don't care how many transactions you've accumulated. What they care about is when they have a transaction with you, how happy do you make them? How much better is the experience that you provide than any other substitute that they could use? ... I call it happy GMV."

"The question is, how would you feel if you could no longer use this product? And I give them the choice, very disappointed, somewhat disappointed, or even not disappointed or not applicable, I've already stopped using the product. And what I'm trying to find are those people who say, 'I would be very disappointed if I could no longer use this product,' then that's a really powerful vein to dig into"

"I would say it's a leading indicator of product market fit. The lightning indicator is, do they actually keep using it? So probably retention cohorts are more accurate, but the problem is... how long do you have to look at a retention cohort before you know that you've actually long-term retained someone?"

"Just ignore the people who say they'd be somewhat disappointed. They're telling you it's a nice to have. If you start paying attention to what your somewhat disappointed users are telling you and then you start tweaking onboarding and product based on their feedback, maybe you're going to dilute it for your must have users."

"We're tracking the commercial metrics in terms of the trips per week, the daily or weekly active users and all the funnel metrics that you can think of. Also, the operational metrics, the cost, right? Well, how much is the thing costing us to operate?"

"Before we brought a single line of code, put an ad inside a Jira newsletter going, 'Hey, we've got this thing for product managers coming up.' And then we had a website that before we had any line of code written that said, 'Hey, product managers, your job is hard. We want to help, put your name here if you want to join us on the journey,' that kind of thing. And that's when we saw, I think it was in two weeks, we got more than 3000 signups to that waitlist."

"There's essentially four levels of product-market fit: nascent, developing, strong, extreme."

"Extreme product-market fit is a state of widespread demand for a product that satisfies a critical need and crucially can be delivered repeatably and efficiently to each customer."

"Product market fit have one metric. One metric. That's it. Retention. That's really simple. If you create value, they will come back. If they're not coming back, that means that you are not creating value."

"And we are going back to basic, product market fit is very simple. That means that you create value to your customers, this is what it is. And you never heard of a company that did not figure out product market fit. They simply died, that's it. And by the way, product market fit in general have only one metric, only one metric, retention. Look, it's really simple, if you create value, they will come back, that's it. If they are not coming back, that means that you are not creating value."

"We did a correlation analysis to understand, hey, those are the 10 high value actions we believe we want to look at. If a new user did this action, what's the maybe 30 day conversion rate and... 90 day conversion rate. What's the 30 day retention rate? Because we look at both."

"I joined that team when the product had just launched. So they had done sort of their early thinking, the existential thinking. Had a brand new product in market, and then I joined the team. And so I was the first boots on the ground product manager, and really helped that team figure out how do we get product market fit?"

"The biggest issue wasn't necessarily that users weren't interested in our product and weren't purchasing it, it was because we didn't have a product market fit mainly from an operation standpoint... I wouldn't recommend it [investing in paid pre-PMF]. All you're going to do is really annoy the users."

"What I've seen is when a company isn't well run like IT isn't working, marketing is broken, there are not enough people in HR, there's a lot of turnover. All of these things I've seen that they're not correlated to the company being successful... the numbers are amazing. They're growing like crazy."

"We always talk about product market fit. Nobody really knows what product market fit is. Everybody has a different explanation, but it means people want to use your product. That they're clamoring for it. So you've built something that people value and that people value and that solves a problem for them, but that's also not good enough. You need to build a great product, but you also have to have distribution and you need to have a sales team that works."