Failory - 10 Things to Know About PMF

Hey — It's Nico.

New month, new content topic. In August, I'll be publishing articles related to Product-Market Fit. This week, a guide on What Is, How to Measure & How to Achieve PMF.

🙌 Welcome to the 398 founders who joined this week.

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In 2007, Marc Andreessen published an article titled “​​The only thing that matters,” in which he shares a well-known quote in the startup scene: “The only thing that matters is getting to product/market fit.”

Understanding product-market fit is key if you want to build a startup. Let me share with you the main 10 things that you should know about PMF:

1) You have product-market fit when you are solving a real problem, and the market strongly wants your product.

2) Lack of PMF is the number one reason for failed early-stage startups (our data shows that 34% of closed startups cite this as their failure reason).

3) Finding PMF means finding a valid solution to a substantial problem. In the early stages of your startup, this means finding and exploring a minimum viable segment (MVS), or a group of people with the same problem that you can solve, and creating a minimum viable product (MVP) for them to test to see if there is a good PMF.

4) Before you build an MVP, you must validate the problem's existence and the viability of your theoretical solution (AKA, your product promise). Doing this helps ensure your MVP is relatively close to having PMF at launch. The best ways to check for PMF before building an MVP are:

• Customer interviews.
• Landing pages and product mockups.
• Exploratory content on social media and other online communities.
• A mailing list of potential customers.
• Presales.

5) Once you have an MVP, you need to test your actual product against the market and iterate based on customer feedback. To measure success, you need to use the right metrics; precisely a metric that shows usage and a metric that shows retention. Good ways to measure your PMF at this stage are:

• Engagement data from Google Analytics + internal data.
• Customer surveys (“How disappointed would you be if you could no longer use this product?”).
• Customer interviews.

6) Don’t get fooled by vanity metrics like social media follows, registered users, website visitors, capital raised, and other similar metrics — these are not good indicators of PMF. Instead, you should feel a strong demand and pull from customers for your product.

7) Segmenting your users is the best way to understand your target market, identify new opportunities, and help you interpret feedback and data correctly.

8) Discard ideas that aren’t working, no matter how much effort and money you’ve put into them. Test as many iterations and ideas as possible to increase your chances of finding PMF.

9) If you doubt whether you have PMF, you probably don’t. Most successful startups know when they have PMF. Keep iterating or trying new ideas until you feel an obvious pull from the market.

10) Product-market fit isn’t everything you need to succeed, but it’s the most important thing in the early stages of a startup. Focus most of your efforts on PMF until you have solid proof you’ve found it. Once you do, you can focus on growth and scaling up.

If you want to learn further about what PMF is, how to measure it, and how to achieve it, check our latest guide: Product-Market Fit: Definition, Measurement & 3 Examples.

You may also be interested in my Product-Market Fit eBook, in which I share the exact strategies used by Airbnb, Slack, Intercom, PayPal, Superhuman, Segment, and ClassPass, to achieve PMF.

As every week, here are 3 recommended resources:

• ​Fundraising 101: This is an actionable guide on how to get first calls with VCs and quickly close a round if you're building a pre-seed/seed startup and haven't achieved PMF yet.
• ​What I Learned at Clubhouse: After 2 years working at Clubhouse, Anu Atluru shares 25 lessons related to product, community, GTM, growth, strategy, operations, and building a team.
• ​How to Sell a Business for Under $1M: A new cohort of acquisition marketplaces are helping founders sell their side hustles. This article analyzes a few of them and some recent acquisitions.

I hope you enjoyed this week’s article and curated resources.

Cheers,

Nico