How to tell when you've hit product market fit?
We released a product last week that costs $27 per month. We sell primarily to other founders / small startups. How many signups or MRR would you say we need until we have product market fit? What should our growth goals be?
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I really like this quote from Marc Andreessen:
"You can always feel when product/market fit isn’t happening. The customers aren’t quite getting value out of the product, word of mouth isn’t spreading, usage isn’t growing that fast, press reviews are kind of ‘blah’, the sales cycle takes too long, and lots of deals never close. And you can always feel product/market fit when it’s happening. The customers are buying the product just as fast as you can make it — or usage is growing just as fast as you can add more servers. Money from customers is piling up in your company checking account. You’re hiring sales and customer support staff as fast as you can. Reporters are calling because they’ve heard about your hot new thing and they want to talk to you about it. You start getting entrepreneur of the year awards from Harvard Business School. Investment bankers are staking out your house. You could eat free for a year at Buck’s."
That being said, this is obviously for high growth startups. As an indie hacker, it's probably best to temper your expectations a little bit. I don't think anyone can give an absolute number of signups or MRR for product-market fit, as it depends on the actual product. The better questions to ask are: are you solving a true burning need for your users? How dissatisfied would they be if they couldn't use your product anymore? And are your users doing word-of-mouth marketing for you, or is it a struggle to get more users?
A quote from Eric Ries: "If you have to ask whether you have product/market fit, the answer is simple: you don't."
If you'd like to read more about a way to try to quantify whether you have product/market fit, this article is a good read: https://firstround.com/review/how-superhuman-built-an-engine-to-find-product-market-fit/
Yeah, I think by this criteria we certainly aren't there yet!
I've heard it best described that you know when you have product/market fit when the volume of customers coming in is exceeding your ability to keep up. So, overwhelming numbers.
That said, I have strong suspicions that most of the definitions of product market fit were derived from examples of hypergrowth companies funded by incubators and VCs. The presumption is a billion dollar exit. If you are selling something for $27 and slowly gaining customers that tend to stick around, then there's a lot to be happy about. A few thousand customers like that and you have an ARR in excess of $1m. That, frankly, puts you in a revenue category enjoyed by very, very few companies.
This is really helpful! Appreciate the guidance.
When you stop asking this question.
https://open.buffer.com/measure-productmarket-fit-product-feature/
https://www.cobloom.com/blog/product-market-fit
https://www.surveymonkey.com/r/CFXJH7M
https://www.slideshare.net/hiten1/measuring-understanding-productmarket-fit-qualitatively
A YC podcast brought this up and answered it well. I’ll see if I can find it, but wanted to mention in comments in case someone else knows or if you went searching. If I remember correctly, it’s dependent on a few things and not tied as much to MRR. Not the answer I’m sure you wanted - I’ll keep looking.
Iirc the guy basically says if you are almost solely worried about keeping the app up and running, that's when you've hit product market fit. Aka scaling like crazy.
Yeah we are nowhere close to this!
Do you remember the episode? I think you’re right because it was a more qualitative answer than metric or quantitative drive. The one I was thinking of had a woman speaking to it, but I could be wrong.
Maybe episode 1? I remember it was near the end of the episode. So many people I am sure have answered that question we could easily be thinking of different episodes/answers.