Marc Andreessen famously defined the life of any startup as being divided into two distinct eras: Before Product-Market Fit (BPMF) and After Product-Market Fit (APMF). Before you have it, nothing matters except getting it. After you have it, almost nothing can stop you.
Product-Market Fit is the degree to which a product satisfies a strong market demand. It is the moment when the market pulls the product out of your hands faster than you can make it.
Founders often delusionally believe they have it. They get a few press mentions or sign a couple of friends as customers and think they have won. This is false positive fit. True fit is visceral. It feels like the brakes have been cut on the car.
The Feeling of Fit
#How do you know if you have it? You do not have to ask.
If you have to ask “do we have product-market fit?” the answer is no. When you have it, the servers are crashing because of load. Support tickets are piling up faster than you can answer them. Customers are angry when the site goes down because they need it to do their jobs.
Before fit, you are pushing a boulder up a hill. You have to beg people to try your product. After fit, you are chasing the boulder down the hill. You are hiring as fast as you can just to keep the site running.
Retention is the Truth Teller
#The most reliable metric for Product-Market Fit is not downloads or signups. It is retention.
You can buy downloads with ads. You cannot buy retention. If people download your app and never open it again, you do not have fit. If they use it every day for six months, you have fit.
Look for the “flattening of the curve.” If you graph your user retention over time, does the line eventually go flat (meaning a percentage of users stay forever)? Or does it go to zero? If it goes to zero, you have a leaky bucket, and pouring more marketing dollars into it will not solve the problem.
The Sean Ellis Test
#There is a simple survey you can run to quantify this. Ask your users: “How would you feel if you could no longer use this product?”
- Very disappointed
- Somewhat disappointed
- Not disappointed
If 40 percent or more of your users say they would be “very disappointed,” you likely have Product-Market Fit. This number, validated across hundreds of startups, suggests you have built something essential.
The Pivot Zone
#If you do not have fit, your only job is to find it. Do not scale. Do not hire a VP of Sales. Do not buy a Super Bowl ad.
Scaling before fit is the most common cause of startup death. You burn through your cash trying to force a market that does not exist. Instead, you must remain in the “search” phase. Talk to users. Change the product. Change the market. Pivot until the retention line flattens out.