Product Market Fit

15 claims7 moments2 on the cutting room floor

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Lenny's Written Position

The single goal of an early-stage pre-PMF startup should be to make 10 customers very happy, and everything prioritized should serve this goal.

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3 supports

A wedge is most essential when going after a market that is entrenched or crowded; companies like Zoom, Slack, and Notion won large markets straight-on without a wedge by having an amazing product.

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1 support

Marketplaces are roughly 2x as hard as non-marketplace businesses because you must find product-market fit for both supply and demand.

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2 supports

About half of iconic companies found product-market fit immediately after launch while the other half spent months or years iterating, including Netflix (18 months), Airbnb (2 years), and Superhuman (3 years).

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The intensity of PMF pull is a factor of both fit (how good your product solves the problem) and initial market size -- broad markets create sudden pull while niche markets create steady compounding pull.

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True product-market fit requires three things: making a product people want, making a profit delivering it at scale, and finding and keeping those people sustainably.

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Retention is the best indicator of product-market fit, the most important factor in lifetime value, and drives all the best acquisition strategies.

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Hiring before product-market fit slows you down, while hiring after product-market fit speeds you up, so startups should raise meaningful money only after finding PMF.

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2 supports

If you plot the percentage of active users over time for various cohorts and the retention curve flattens off at some point, you have probably found product-market fit.

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2 extends

If you survey users asking how they would feel if they could no longer use the product and over 40% say 'very disappointed,' you have product-market fit.

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1 support1 extend

If your product is broken and people are still using it, that is a clear sign of product-market fit.

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1 support

Product-market fit is not a one-time discrete event; competitors arrive, markets evolve, and what felt like PMF can fade as patterns change.

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2 supports1 contradict

TaskRabbit scaled before achieving product-market fit by focusing on top-line growth instead of fill rate, and people who didn't get matched never came back.

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2 supports

The primary reason most of these marketplace companies became successful was great product-market fit, not amazing growth insights; the growth levers helped accelerate and control growth but were secondary.

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1 support

When validating a startup idea pre-product, the three things to look for are visible passion in potential customers, willingness to pay now, and a clear articulation of why this problem matters to them.

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Podcast Moments

Kunal Shah00:07:05

“Every time you see that the product efficiency delta is greater than or equal to four, three things happen. It is irreversible. Second is that you have a very high tolerance for it to fail. And the third thing is what I call the UBP, 'Unique Brag-worthy Proposition.' Every time humans unlock a Delta 4 product or service, they cannot stop talking or sharing about it.”

Kunal Shah on winning in India, second-order thinking, the philosophy of startups, and more · Kunal Shah

Karri Saarinen00:00:00

“The more it matters, the more the design matters. Whenever there's a new paradigm, the first iterations of those products don't have to be super well designed. Then, as you build the 100,000 different email clients, any email client now has to be pretty good to be even considered.”

Inside Linear: Building with taste, craft, and focus | Karri Saarinen (co-founder, designer, CEO) · Karri Saarinen

Gustaf Alstromer00:00:00

“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. YC's headline is make things people want, and it's still true and it's always going to be true.”

Gustaf Alstromer · Gustaf Alstromer

Adam Grenier00:00:00

“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.”

When and how to invest in new acquisition channels | Adam Grenier (Uber, MasterClass) · Adam Grenier

Adam Grenier00:00:00

“And hopefully you do, or it's pretty close to it and you just have to adjust a couple things, and you could be right back on track.”

When and how to invest in new acquisition channels | Adam Grenier (Uber, MasterClass) · Adam Grenier

Manik Gupta00:20:00

“Company market fit is just as important as product market fit. The company you join, the people you work with, the culture, the stage of the company, all of that matters just as much as whether the product has found its market.”

Manik Gupta (ex-CPO Uber, Google Maps) on how to build consumer apps, why it’s useful to be optimistic about technology, creating inflections in your PM career, the changing CPO role, and more · Manik Gupta

Elena Verna00:00:26

“There is a huge misconception in the field that in order to get growth going, you need a growth team. To figure out your product market fit and how to distribute it, it's not something that you can outsource to somebody.”

Elena Verna on how B2B growth is changing, product-led growth, product-led sales, why you should go freemium not trial, what features to make free, and much more · Elena Verna 3.0

Cutting Room Floor

Guest insights on this topic that Lenny hasn't (yet) written about in his newsletters. Potential material for future posts.

Adam GrenierUnsynthesized

“And hopefully you do, or it's pretty close to it and you just have to adjust a couple things, and you could be right back on track.”

When and how to invest in new acquisition channels | Adam Grenier (Uber, MasterClass) · Adam Grenier

Manik GuptaUnsynthesized

“Company market fit is just as important as product market fit. The company you join, the people you work with, the culture, the stage of the company, all of that matters just as much as whether the product has found its market.”