As Hadley noted in a recent tweet, one big danger facing startup founders is the premature belief that you’ve found product-market fit.
Understanding that idea is critical for startup success, so it’s worth revisiting Marc Andreessen’s 15-year-old post, in which he defined PMF as “being in a good market with a product that can satisfy that market” and claimed that founders “can always feel when product/market fit isn’t happening.”
So how can someone be wrong about finding product-market fit? Shouldn’t it be obvious? Well, look at the examples he used: “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.”
In other words, being pre-PMF doesn’t mean you have zero customers and aren’t growing at all. Indeed, startups with a handful of paying customers are often in the greatest danger of fooling themselves into thinking that they’ve achieved true PMF: Yes, you may have customers who tell you that they’re happy with the product. But are they actually recommending it to everyone they know, or do you have to work for every single sale?
The true test is whether you’re getting “pull” from the market, or if you still have to “push” your solution onto the world. When we meet with founders who’ve found true PMF, they’re usually incredibly stressed — not because they’re hustling for the next sale, but because there’s so much positive word-of-mouth that they’re struggling to on-board all the new customers, and to scale the infrastructure needed to support them.
The real danger comes when it’s not just founders but also investors who confuse premature PMF for the real deal. Then you’ve got startups raising big rounds and moving away from the mode of constant product experimentation and iteration. Essentially, they’ve made a big bet on their current product vision — but then, no matter how much they invest in marketing and sales, they can’t grow enough to justify the next big round.
Plus, when the company is still just a few founders and product people, it’s straightforward for them to communicate directly with customers. Once you start scaling the team, there are more and more salespeople, customer success people, and so on, creating a game of telephone between customers and the founders who drive the product.
The ideal solution is to stay small and nimble until you’re really feeling that pull from customers. But if you’re “lucky” enough to have raised a big A round before finding true PMF, there’s still hope — just don’t fall into the trap of immediately expanding your team with a bunch of sales and marketing hires. Instead, try to spend as little of the money as possible as you continue experimenting.
And if you’re interested in reading about how some of Eniac’s portfolio companies found PMF themselves, check out our conversations with the founders of Alloy, Fuzzy Pet Health, MedCrypt, and Attentive.