MYTH #1: THERE’S A MAGIC METRIC FOR DETERMINING PRODUCT/MARKET FIT

We can’t calculate Product/Market Fit (PMF) in the same way we can Customer Churn or CLTV. 

Magic-Icon.pngYour revenue generation plays a part in determining PMF, and so does activation, customer churn, customer success, and a whole host of other crucial SaaS metrics. Even more importantly, these metrics only make sense in the context of your wider business. 

For example, it doesn’t matter if 40% of your customers would be devastated by the loss of your service (one of the oft-quoted hallmarks of PMF), if your entire customer-base is no more than 10 customers.

The same applies even if you have 100 customers, and they’re generating £50,000 in revenue – you still don’t have a large enough sample size to represent an entire market and draw a significant conclusion.

MYTH #2: WHEN YOU HIT PRODUCT/MARKET FIT, YOU’LL KNOW IT

It’s essential to look for indicators of Product/Market Fit, but you’ll rarely (if ever) negate the uncertainty associated with your calculations.

As Marc Andreesen said, Product/Market Fit isn’t a “discrete, big bang event”: few SaaS startups will achieve the insane levels of growth required for a definite Product/Market Fit realisation.

Instead, it’s more common to see businesses jump closer to PMF in fits and starts: finding traction in small sub-markets, and heading closer to their “good market” bit by bit.

For a real-world example of this in action, check out Marc’s commentary on Joel Spolsky’s Stack Overflow:

Product Market Fit - Marc Andreesen

He has achieved product market fit in the collaboratively edited Q&A market for audiences such as software engineers and mathematicians.

Is this the primary product market fit? Neither of those markets seem that big.

Will he need significant new features to find the big product market fit?

Probably. Should he invest or stay lean? Good question, and there’s no formulaic answer.Marc Andreesen, Andreesen Horowitz

MYTH #3: PRODUCT/MARKET FIT IS A ONE-OFF EVENT

It’s important to remember that markets change over time. Technology improves, problems change and the needs of buyers evolve.

Icon-Explosion.pngEven if you’ve achieved PMF in the current market for your product, there’s no guarantee you’ll fit the same market a year’s time, or two, or ten.

Instead of being a one-off, high-five moment, PMF offers an instantaneous snapshot into the performance and fit of your product at a single moment in time. 

To continue growing into the future, your product needs to change alongside your market – and that means looking for PMF a whole bunch of times.

MYTH #4: PRODUCT/MARKET FIT MEANS YOU’VE WON

Achieving Product/Market Fit doesn’t make a product invincible.

A “good market” means a market ripe with opportunity, and in the vast majority of cases, that means competition. Even if your solution achieves PMF, you can still be out-competed by other good-fit businesses.

Icon-Winner.pngWhen you hit Product/Market Fit, it’s time to hit the accelerator. Instead of resting on your laurels, you need to ramp-up your sales, marketing and customer success, and beat all of the other good-fit businesses to the punch.

Even if you manage to capture the lion’s share of the market, changes in technology can quickly render your solution obsolete.

It’s the classic Innovator’s Dilemma: your once disruptive solution gets unseated by a newer, more disruptive upstart.

The only way to survive is to hit Product/Market Fit, and accelerate; to watch for changes in the market, hit Product/Market Fit again, and accelerate; over and over again.