What’s the best way to know if you have product market fit?

Sam Altman (President at Y Combinator)
Before Growth – Sam Altman

A startup that prematurely targets a growth goal often ends up making a nebulous product that some users sort of like and papering over this with growth hacking. That sort of works at least, it will fool investors for awhile until they start digging into retention numbers but eventually the music stops.

Sam Altman (President at Y Combinator)
Before Growth – Sam Altman

I think the right initial metric is do any users love our product so much they spontaneously tell other people to use it? Until that’s a yes, founders are generally better off focusing on this instead of a growth target.

David Jackson (Founder, Seeking Alpha)
Why startups shouldn’t scale prematurely | A Founder’s Notebook

Don’t scale before you have product-market fit. You’ll burn money, delay true success, and be miserable. What’s so bad about scaling prematurely? Low ROI, high burn rate: Sales and marketing for a product without product-market fit will suffer from low conversions and low renewals. Frustration: When you don’t have product-market fit, everything seems too hard, and everyone is frustrated. Not building permanent value: When you eventually fix your … (read more)

Charlie O’Donnell (Partner Brooklyn Bridge Ventures)
Growth is a Commodity — This is going to be BIG…

If there’s one thing we’ve basically figured out in the digital world, it’s marketing. It’s table stakes. You spend some dollars to get more dollars out. It’s not complicated. That’s why I care much more about engagement–do people like what you built, versus whether or not more people used it today than they did yesterday. Plus, the startup world is littered with companies that grew exponentially without becoming successful–Fab, Turntable, Dailyb… (read more)

Sean Ellis (CEO at GrowthHackers)
Using Survey.io

Here’s an objective metric that removes emotion from the scaling decision while also giving you other important qualitative information. The key question on the survey is: How would you feel if you could no longer use [product]? Very disappointed, Somewhat disappointed, Not disappointed (it isn’t really that useful), N/A – I no longer use [product]. If you find that over 40% of your users are saying that they would be “very disappointed” without … (read more)

Albert Wenger (Partner at Union Square Ventures, Former President of del.icio.us)
Startup Management » Product/Market Fit is a Continuum

You know you’ve achieved product-market fit when the customers intuitively understand what need the product fills for them, and they have no trouble using it, in fact they enjoy using it… in fact they start telling their friends about it, maybe even telling the world about it on Twitter or other places. That’s how you know if you’ve got product-market fit.

Andy Johns (Current VP of Growth at Wealthfront. Formerly growth at Facebook, Twitter, Quora. Ex-EIR Greylock)
Real Engines Of Growth Have Nothing To Do With Growth Hacking | TechCrunch

When you’ve nailed your product, you’ll know it. Your retention will be great and people will happily engage with your emails or push notifications.

Ben Horowitz (Co-Founder & Partner @ Andreessen Horowitz)
The Revenge of the Fat Guy | Marc Andreessen

Myth #1: Product market fit is always a discrete, big bang event. Myth #2: It’s patently obvious when you have product market fit. Myth #3: Once you achieve product market fit, you can’t lose it. Myth #4: Once you have product-market fit, you don’t have to sweat the competition

David Jackson (Founder, Seeking Alpha)
Product-market fit can be hard to spot | A Founder’s Notebook

Product-market fit is a continuum, not a single point. But if you’re not in “the zone”, you know it. Everything feels too hard.

David Jackson (Founder, Seeking Alpha)
Four myths about product-market fit | A Founder’s Notebook

My personal view is that product-market fit is a continuum; there are degrees of product-market fit. You should only scale when it’s clear that you’re fairly far along the continuum of product-market fit.

Fred Wilson (Co-Founder and Partner at Union Square Ventures)
Burn Rate – AVC

It is dangerous to ramp up headcount and burn until you are certain that you have the right product and the right people and processes in the organization to support the product. And early revenue traction, often driven by a passionate founder, can be a nasty head fake.

Fred Wilson (Co-Founder and Partner at Union Square Ventures)
Product > Strategy > Business Model – AVC

Getting product right means finding product market fit. It does not mean launching the product. It means getting to the point where the market accepts your product and wants more of it.

Jerry Neuman (Venture Capitalist at Neu Venture Capital)
How to kiss your elbow | Reaction Wheel

Marc Andreessen says “you can always feel product/market fit when it’s happening. ” Unfortunately, this is simply not true. In B-to-B startups you can have a lot of buzz and a few amazing clients banging your door down and still have a product that doesn’t really do much. Or you can have a product that is absolutely amazing that great clients are beta-testing but that no one is paying for.

William Mougayar (Chief Evangelist, Advocate Marketing at Influitive, formerly CEO/founder of Engagio)
Startup Management » Product/Market Fit is a Continuum

If there is no market, even a great product and a great team will not get you there. if you can’t realize the business model, there is no Product/Market Fit. If there is no retention and referrals, there is no Product/Market Fit. Instead of building new features, or rebuilding from scratch, try pointing your product at a new market.

Marc Andreesen (Co-Founder & General Partner at Andreessen Horowitz)
How you know when you’ve hit product-market fit | A Founder’s Notebook

You can always feel when product/market fit isn’t happening. The customers aren’t quite getting value out of the product, word of mouth isn’t spreading, usage isn’t growing that fast, press reviews are kind of “blah”, the sales cycle takes too long, and lots of deals never close. And you can always feel product/market fit when it’s happening. The customers are buying the product just as fast as you can make it — or usage is growing just as fast a… (read more)

Paul Buchheit (Partner at Y Combinator)
Default Alive or Default Dead?

A related problem that I see a lot is premature scaling—founders take a small business that isn’t really working (bad unit economics, typically) and then scale it up because they want impressive growth numbers. This is similar to over-hiring in that it makes the business much harder to fix once it’s big, plus they are bleeding cash really fast.

Raju Rishi (General Partner @ RRE Ventures)
When Revenue Isn’t The Answer

Closed deals and sales velocity are not exclusive measures of product/ market fit. Maybe, among your first customers, there are wide variations in the core use cases for the product. Maybe your team is struggling with lengthy sales cycles. Maybe you find yourself significantly altering your pitch for different target customers and creating multiple marketing messages along the way

Eric Ries (Author, The Lean Startup)
The Lean Startup: How Today’s Entrepreneurs Use Continuous Innovation to Create Radically Successful Businesses

Startups occasionally ask me to help them evaluate whether they have achieved product/market fit. It’s easy to answer: if you are asking, you’re not there yet. (p.219)

Naval Ravikant (Founder, CEO & Co – Maintainer at AngelList)
“The Anatomy of a Fundable Startup”, by Naval Ravikant (Founder, AngelList) on Vimeo

How much traction is enough? How much growth in enough? It depends a lot on the startup, but generally an investor will not be impressed if you say we’re growing at 10% a month. That means you’ll double in a year and believe it or not in the startup game that’s not enough for an early stage company.

Naval Ravikant (Founder, CEO & Co – Maintainer at AngelList)
“The Anatomy of a Fundable Startup”, by Naval Ravikant (Founder, AngelList) on Vimeo

Whatever your core metric is you want to grow that by 20% per month.

Fred Wilson (Co-Founder and Partner at Union Square Ventures)
Growth – AVC

Things like gaming Facebook’s open graph can temporarily stimulate growth that is not sustainable long term. Investors can be faked out by things like that. Gaming Google’s search algorithms is another way that has been done in the past. When we look at growth, we look for authentic, organic, and sustainable growth that is not overly dependent on a single source, particularly a source the startup doesn’t control. That takes some experience to det… (read more)

Raju Rishi (General Partner @ RRE Ventures)
When Revenue Isn’t The Answer

Achieving product/ market fit is the transformative moment in the life of a startup. It is the moment of metamorphosis, where a company aligns messaging, marketing, target customers, sales methodology, product roadmap, and operating metrics. This moment cannot be bypassed, faked, overlooked, or ignored. So be disciplined. Don’t get caught up in the expectations of customers, investors, or yourselves. For in the absence of product market fit, more… (read more)

David Jackson (Founder, Seeking Alpha)
Startup strategy: Why you have to demand commitment | A Founder’s Notebook

In Seeking Alpha, we wanted to keep our content free, but wanted to ensure our users valued it. So we forced our users to register. Our thinking was “We’re not interested in a relationship where you don’t value our product enough to register for free”.

Mariya Yao (Founder at Xanadu)
Lessons Learned: Rapid Iteration for Mobile App Design

the question Sean Ellis popularized, where you ask your users, “How disappointed would you be if you could no longer use our product?” and have them answer with either, “Very Disappointed,” “Somewhat Disappointed,” “Not Disappointed,” or “I no longer use the product. ” Sean did research across hundreds of startups and discovered that companies that had fewer than 40% of their users answer “Very Disappointed” tended to struggle with building a suc… (read more)

Mariya Yao (Founder at Xanadu)
Lessons Learned: Rapid Iteration for Mobile App Design

On a scale from 0-10, how likely are you to recommend us to your friends?” You mark those who answer 0-6 as Detractors, 9-10 as Promoters, and 7-8 as Neutral. Your Net Promoter score is the percent of Promoters minus your percentage of Detractors, which should be a number between -100 and +100. The world’s most successful companies typically score around +50, and top performing tech companies like Apple, Google, and Amazon regularly score over +7… (read more)

Slava Akhmechet (Founder at RethinkDB)
57 startup lessons

Product comes first. If people love your product, the tiniest announcements will get attention. If people don’t love your product, no amount of marketing effort will help.

Kissmetrics (Built to optimize marketing. Track, analyze and optimize your digital marketing.)
13 Critically Important Lessons from Over 50 Growth Hackers

Leaky buckets don’t need more water, they need their holes fixed.

Should I hire a growth hacker/growth engineer?

Does anyone like your product so much that they spontaneously recommend it to other people?

 

BrainQuilt
  • “A startup that prematurely targets a growth goal often ends up making a nebulous product that some users sort of like and papering over this with ‘growth hacking’.  That sort of works—at least, it will fool investors for awhile until they start digging into retention numbers—but eventually the music stops.” — Sam Altman, Y Combinator
  • “There’s an initial period of slow or no growth while the startup tries to figure out what it’s doing. As the startup figures out how to make something lots of people want and how to reach those people, there’s a period of rapid growth.” — Paul Graham, Y Combinator
  • “Leaky buckets don’t need more water, they need their holes fixed. It’s a rookie mistake to focus on customer acquisition instead of customer retention, especially early in a startup’s life.  Talk to people instead of banging on a keyboard.” — Kissmetrics
  • “I think the right initial metric is “do any users love our product so much they spontaneously tell other people to use it?”  Until that’s a “yes”, founders are generally better off focusing on this instead of a growth target.” — Sam Altman, Y Combinator
  • “Are users using your product more than once? Are your users fanatical about your product? Would your users be truly bummed if your company went away? If you’re a B2B company, do you have at least 10 paying customers? If not, we tell companies to make their product better.” — Sam Altman, Y Combinator
  • “At some point, there was a very noticeable change in how Stripe felt. It tipped from being this boulder we had to push to being a train car that in fact had its own momentum.” — Patrick Collison, Stripe

 

More information

Growth is just a function of [# visitors] * [% that convert to users] * [% that stay users].

The secret is that although you need all three of these variables to grow to drive your business, if you don’t fix the [% that stay users] part, the other two don’t matter at all. See David Jackson’s How low retention of customers and suppliers bankrupted Homejoy for a detailed anecdote.

If you haven’t hit the “spontaneous recommendation” threshold, you may be tempted to spend some money to acquire users to “learn”, but most likely your time would be better spent going out and physically installing users and getting their feedback. (See Paul Graham’s Do Things that Don’t Scale).  >> How can I interview customers to create a better product or service?

If you have, then digging into what type of users recommend your product and making it easier for them is the next step.  >> Who are my power users and how can I get more of them?