Metrics & Performance
Product-Market Fit
Also Known As
PMFMarket Fit
Product-market fit (PMF) is the degree to which a product satisfies strong market demand, typically evidenced by rapid organic growth, high retention, and customers actively recommending the product.
What is Product-Market Fit?
Product-market fit is the holy grail of early-stage startups. It means you've built something people actually want, and want badly enough to pay for and recommend to others. Marc Andreessen famously said, "Product-market fit means being in a good market with a product that can satisfy that market."
Signs of Product-Market Fit
Qualitative Indicators:
- Customers disappointed when product is unavailable
- Word-of-mouth referrals driving growth
- Customers finding creative uses you didn't anticipate
- Sales cycle shortening over time
Quantitative Indicators:
- 40%+ of users would be "very disappointed" without the product (Sean Ellis test)
- Strong retention curves (flat or improving)
- Low churn rates
- High Net Promoter Score (NPS)
- Organic/viral growth coefficient > 1
Pre-PMF vs Post-PMF
| Pre-PMF | Post-PMF |
|---|---|
| Searching | Scaling |
| Pivoting frequently | Optimizing |
| Small team | Growing team |
| Burn minimized | Accelerating spend |
| User feedback paramount | Metrics-driven |
PMF in Venture Studios
Studios help startups reach PMF faster by:
- Providing validation frameworks
- Sharing learnings from past companies
- Offering rapid iteration capabilities
- Preventing premature scaling
Example Usage
“Once they achieved product-market fit, the startup shifted focus from experimentation to scaling.”