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Is Product Market Fit a feeling or a number?
How do you know whether or not you have Product Market Fit (PMF)? Is it something where you wake up one day having achieved it, or does it creep up on your slowly?
I was in a discussion with some SaaS founders recently where the subject of PMF came up in passing. There was a sense that just by having a ‘good product’ it naturally followed that they also had PMF, but is that really the case?
The problem is, there are multiple definitions
Some try to put it down to more of a feeling, such as Peter Reinhardt (formerly CEO of Segment) who described PMF as feeling ‘as if a landmine had gone off’. While others, such as Sean Ellis (author of Hacking Growth), looked to quantify it by asking customers the question “what would you feel if you could no longer use this product?”. Over 40% saying they would be ‘disappointed’ indicated PMF.
Jason Lemkin has said a few times that consistent growth (even if it’s not yet stratospheric), is a sure sign that you are on the edge of PMF.
Sounds obvious but PMF has two critical elements: Product and Market. You can have a mediocre product that is totally awesome for one market, then spend a load of money improving the product with the intention of selling it to a different and more lucrative market and end up falling flat on your face.
And the problem is that of you don’t have PMF you’ll always struggle. It’s like running a marathon without being told where the start-line is. You could be an elite runner, but not knowing where the race is being run makes it unlikely you’ll be winning it anytime soon.
You kind of have to experience it yourself
My take is that it is both a feeling and something that is backed up by the data. I’ve felt what it’s like to have PMF and then what it feels like to not have it even though the product is actually better.
I think the first time I felt it was during my time at my agency when we launched a series of simple phrase books on the App Store. But it was more profound with ScreenCloud. Some early indicators looking back:
We’d launched other products before and when we told people about them they were like “yeah cool” (read Ron Fritzpatrick’s The Mom Test for what that kind of response probably means). Whereas when we first floated the idea of ScreenCloud the reaction was more “OMG we need that now. Let me know when it’s ready and I’ll definitely buy it.”
Every month felt like a pleasant surprise as numbers and revenues grew.
People were using it and asking for more functionality (as opposed to using the lack of functionality as an excuse not to buy).
Data-wise, again, with hindsight there were also some really strong indicators:
High conversion of website visitors to trial, and then from trial to paid.
Pretty much all leads were organic inbound from people we had no previous connection to.
Net negative revenue churn as more people expanded their accounts than contracted or churned.
What to do if you suspect you don’t yet have Product Market Fit
“Yeah, yeah, well done for finding PMF but how does that help me?” Believe me, I’ve also experienced the opposite, where you feel like you’re running as hard as you can and you’re just getting nowhere fast. It’s frustrating, exhausting and terrifying. So if you suspect that you are struggling with PMF, what can you do?
I come back to the Product and Market part again. Is it a problem with the product or is it a problem with the market (obviously it could be both)? If you are getting plenty of interest but no conversions then maybe it’s more an issue with the product. But if you are struggling to get enough people interested (even though the ones you do connect with convert well) then it’s more likely the market.
In other words, you could be looking to solve a genuine problem but your solution doesn’t fully do it. Or you could be brilliantly solving a problem that your market doesn’t care about.
The solution (and I accept this isn’t instantly fixable) is to spend more time talking to customers and being brave enough to change route even if that does mean ditching something that has had a load of time and money spent on it.
Here’s two books I recommend to get you pointing in the right direction:
The Mom Test by Rob Fitzpatrick (as mentioned before). This is a great book for really understanding how to get genuine insight from customers and prospects about your product.
Obviously Awesome by April Dunford. This will help you figure out how you can position your product in a way that ensures your customers get what it does for them.