![magic star](/img/share-magic.png?1753566981)
Marc Andreessen’s Guide to Finding Product-Market Fit (PMF) !
![](https://miro.medium.com/v2/resize:fit:1200/0*C13hTA1usEEraQHn.png)
🌈 Abstract
The article discusses the concept of product-market fit (PMF) and provides a comprehensive guide on how to identify and achieve it. It covers both qualitative and quantitative aspects of PMF, including definitions, metrics, and real-world examples.
🙋 Q&A
[01] Defining Product-Market Fit
1. How is product-market fit defined?
- Product-market fit is defined as being in a good market with a product that can satisfy that market, as per Marc Andreessen's definition.
- It is about making something that people want, as per Paul Graham's definition.
- It is when customers sell for you through strong word-of-mouth, as per Josh Porter's definition.
2. Why is product-market fit important?
- Product-market fit is the only thing that matters, according to Marc Andreessen.
- Achieving product-market fit should be the sole focus for early-stage startups, rather than fundraising.
- Scaling a startup before achieving product-market fit is a sure-shot way to kill the business.
3. How long does it take to find product-market fit?
- It typically takes 1-5+ years for a startup to find product-market fit, according to the author's experience.
- It is much easier to achieve with a small team, low burn, and extreme focus, as per Michael Siebel's advice.
- However, the harsh truth is that 3 out of 5 startups will never find their product-market fit and will fail.
[02] Qualitative Signs of Product-Market Fit
1. What are the qualitative signs that indicate a lack of product-market fit?
- Customers are not getting much value from the product/service.
- Word-of-mouth is not spreading.
- Usage is not growing fast (except for spikes during advertising).
- Press reviews are mediocre.
- The sales cycle is too long, and most deals never close.
2. What are the qualitative signs that indicate the presence of product-market fit?
- Customers are buying the product as fast as the company can make it.
- Usage is growing as fast as the company can add more servers.
- Money from customers is piling up in the company's account.
- The company is hiring sales and customer support staff as fast as possible.
- Reporters are calling to cover the "hot new thing."
[03] Quantitative Metrics for Assessing Product-Market Fit
1. What are the key quantitative metrics recommended by David Rusenko to evaluate product-market fit for SaaS startups?
- Customer Acquisition Cost (CAC)
- Customer Lifetime Value (LTV)
- Monthly Recurring Revenue (MRR)
- Churn Rate
- Net Promoter Score (NPS)
- Viral Coefficient
2. How can the "very disappointed" survey question be used to assess product-market fit?
- If more than 40% of users respond that they would be "very disappointed" if they could no longer use the product/service, it indicates strong product-market fit.
- Companies struggling to achieve product-market fit typically have less than 40% of users responding as "very disappointed."
- As an example, 51% of Slack users responded that they would be very disappointed without Slack, indicating that Slack had achieved product-market fit.
3. What are the different types of retention curves, and how do they indicate product-market fit?
- Declining Curve: Indicates a lack of product-market fit, as users churn quickly.
- Flattening Curve: Can be good, with retention rates between 20-40%.
- Smiling Retention Curve: The best indicator of product-market fit, as the company is able to reactivate users over time.
4. How can Net Promoter Score (NPS) be used to assess product-market fit?
- An NPS of 70% or more indicates an amazing product-market fit.
- An NPS of 40% or below indicates a lack of product-market fit.