What is 'Product-Market Fit' (PMF)?

 

"What is 'Product-Market Fit' (#PMF)?

Foremost, we must not confuse PMF with Problem-Market Fit (aka Problem-Solution Fit).
Problem-Market Fit is "achieved when you had identified the critical pain points suffered by your target #customer segment and solved them by your product/#solution offering, through deliberate process of #experimentation and #validation."

PMF is when

“a #product being so attractive to a significant number of customers in a large #market that they recognise the problem it was intended to solve and feel compelled to purchase the product"

, as coined by Andy Rachleff of Wealthfront.


Once you have PMF, you can start to focus on hiring, getting more customers, finding customer #acquisition channels, optimizing #pricing, and so on.
In reality, there’s usually not a sharp line of demarcation that separates the "before" from the "after". Rather, companies typically increase their level of PMF gradually.
Read article (part 1): https://bit.ly/3ju7pnR


Now, how do we measure PMF?



1) Sean Ellis of www.gopractice.io
- PMF requires at least 40% of users saying they would be "very disappointed" without your product
- those that struggle for traction are always under 40%, while most that gain strong #traction exceed 40%
2) Andrew Chen of a16z.com indicated that for #SaaS (Software-as-a-Service) companies:
- 5% conversion rate from free to paid
- less than 2% monthly #churn
- clear path to $100k #MRR (Monthly Recurring Revenue)
3) Brad Feld of foundrygroup.com said that "you don’t have PMF until you 'blast through the $500k MRR mark and march to $1M MRR'"
Read article (part 2): https://bit.ly/3jxNi8z




*note: Christoph Janz is Managing Partner of Point Nine Capital (www.pointnine.com), an early-stage venture capital firm investing in B2B SaaS and B2B marketplace startups.



Zero to Product/Market Fit by Andrew Chen: https://bit.ly/2JafuSp

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