“The term product/market fit describes ‘the moment when a startup finally finds a widespread set of customers that resonate with its product’.”
What does it feel like when you’ve hit Product Market Fit?
“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 as you can add more servers. Money from customers is piling up in your company checking account. You’re hiring sales and customer support staff as fast as you can. Reporters are calling because they’ve heard about your hot new thing and they want to talk to you about it. You start getting entrepreneur of the year awards from Harvard Business School. Investment bankers are staking out your house. You could eat free for a year at Buck’s.”
— Marc Andreessen
“gimme gimme gimme!!”
What it feels like when you have not hit Product Market Fit :(
“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.
— Marc Andreessen
“It’s like trying to fit a square peg in a round hole.”
Generally the market pulls product out of the startup
“In a great market — a market with lots of real potential customers — the market pulls product out of the startup.”
— Marc Andreessen
Pulling the product out of a startup.
For example, the gigantic messaging company Slack got it’s start when the company was a video game called Glitch. The game wasn’t all that popular, but it’s messaging functionality between users was actually getting popular. They clearly saw this random “messaging” feature taking off, and then focused on that.
Ideally in the earliest stages of product development, the pull is happening organically (without any advertising spending).
You have to find the right wave to surf:
“When I operated an investment fund from 1995-1998, the technology leaders were Microsoft, IBM, AOL, and soon to be Yahoo. Google was just being formed (1998), Apple was still a PC company with single-digit market share, and Mark Zuckerberg was 13 years old. The point of this look back is that with historical context, one can see there is forever another wave. AOL was replaced by Yahoo, which was replaced by Google, who now splits time with Facebook, who is under pressure from SnapChat.”
— Chris Heivly
A pro surfer in a place with small waves will NEVER be able to surf big:
The best surfer ever….but no big waves.
…but a doofus holding onto a piece of styrofoam can catch HUGE surf by catching the right wave!
Horrible surfer….but he caught a big wave!
There’s a bit of Serendipity, Luck, and “Just Keep Trying” involved
Serendipity: “The occurrence and development of events by chance in a happy or beneficial way.”
“You often stumble into your product/market fit. Serendipity plays a role in finding product/market fit but the process to get to serendipity is incredibly consistent. What we do is teach that incredibly consistent process.”
— Andy Rachleff
Hire slow before Product Market Fit.
Hire fast after Product Market Fit.
“In general, hiring before you get product/market fit slows you down, and hiring after you get product market fit speeds you up. Until you get product/market fit, you want to a) live as long as possible and b) iterate as quickly as possible.”
— Sam Altman
If you get too enthusiastic about your product before you reach Product Market Fit, you risk having a ton of people to manage….and if you on a whim want to try something new, it’s difficult:
Getting a large group of people to change what they’re doing is hard.
However if you stay super lean before reaching Product Market Fit, you can change directions quickly since you only have a few people to manage:
Getting a small group of people to change direction is easy.
Your product must be supported by a Three Legged Stool:
“Build a stool with three legs: People, Markets, and Innovative products.”
— Tren Griffin
“It’s so stable!”
Product Market Fit is totally obvious…..in retrospect
“The grand slam financial success of a new business like Google will seem obvious to some people as they recall the path of the business to success. The unfortunate reality is that financial return from investing is generated from understanding the hidden value before it is discovered, not afterward. No points are awarded in investing or business for storytelling after the fact.”
This guy in 1998 for instance dismissed Google because there were already a ton of other search engines, and none of them made money. In fact until Google AdWords was released in 2000, no one thought Google could make any money:
“Ummmm there’s already 35 search engines out there you dorks. How are you even gonna make money!?”
But nowadays it’s TOTALLY OBVIOUS to see how Google could make loads of money from a search engine. But it’s easy to see all this in retrospect:
“I mean it was TOTALLY OBVIOUS how Google could make money.”
References for this article:
- 12 Things About Product Market Fit – A16Z
- Business lessons about growth by Trent and Andrew Chen
- The Revenge of the Fat Guy
P.S. Tell me your story or sequence of events that led to your first product market fit.
(I’ll start off the comments with my own story)……
P.P.S. I will be sending two of my favorite commenters free t-shirts to anywhere in the world for their stories!