Product-market fit is a prerequisite for sustainable growth. There’s no point in pushing a product which brings no real sustainable value to customers.
Founders are often misled by good acquisition numbers into thinking they’ve found product-market fit (PMF). But just because people are signing up for your product or downloading your app at a low acquisition price doesn’t mean you’ve found PMF.
Engagement and retention numbers will tell the real story. If your product doesn’t have real value for customers, you’re going to see horrible engagement numbers and even worse retention metrics. Real PMF shows up both in user acquisition and in user retention. Top-of-funnel growth means nothing if the users all churn.
If you think about why startups fail, in a way it’s very simple: startups fail because they run out of money before achieving PMF. Like a fighter jet taking off from an aircraft carrier, it’s a simple race between how much runway you have left and how fast you can achieve liftoff.
But once you’ve achieved PMF, failure isn’t as pressing. 99% of the time, once you have real PMF, your startup will have no problem fundraising (at least in the short term) — at which point it becomes more about getting to a faster pace of growth than just survival. It becomes an execution play.
So PMF is the key focus as an early-stage startup. But how do you get there?