Do you Really Have Product-Market Fit? Read This Guide and Find Out.
I have been a 2-time CEO and 2-time COO hired to help technical founders realize commercial success. I am lucky to have been a part of some great teams in my career. During that time, those same teams have realized over $5B in successful software company exits. Those successes were the result of two things: great people and solutions with what is known as ‘product-market fit’. When one, or especially both are missing, success is less likely, if even possible at all.
Not achieving true product-market fit is not only something that plagues early-stage companies, but I have also witnessed an absence of product-market fit (PMF) at companies both early and late-stage companies.
Many executive teams and founders have great vision. They understand how to design and create products, develop and sell them, in many cases to visionary early adopters. During the process of developing these products, raising capital and building teams, they assume that they have achieved product-market fit. In short, they believe that the product or service they have created has a strong alignment with the needs of their buyers and users. Unfortunately, this is often not the case. A lack of product/market fit can lead to a company’s inability to grow, raise additional funding and could be the start of a painful and embarrassing demise. One of the goals of this article is to leverage my decades of experience to help steer you and your team in the right direction.
First, how do you know you have achieved product-market fit?
In order to have secured a good PMF, the following elements must ring true:
- Paying customers: Having paying customers is great, but not enough. You should also track metrics related to usage, retention, and expansion of those customers. Paying customers are a great measure, but you will need to be able to demonstrate that you can also retain and grow them if you have achieved PMF.
- Evidence you have impacted your customer’s business and personal lives: What is the impact you are making? Are you a “nice to have” or are you essential to the customer’s everyday life? If your product is used occasionally or isn’t making a material impact on the customer’s success, you have not achieved PMF.