In startups, there’s this concept of product/market fit.
Marc Andreessen says product/Market fit is the only thing that matters.
Product/market fit is loosely defined as when your product satisfies a strong market demand.
The trouble is, it isn’t always clear when you have or haven’t reached product/market fit.
Marc Andreessen had more to say about it:
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…
There isn’t one single test to prove conclusively you’ve reached product/market fit, but once you have it, things really start to take off. You know it after the fact, but maybe not for a while.
I like to think of it as a campfire.
When you build a campfire, there are a few critical factors: dryness of the wood, ambient temperature, whether you have any starter material like kindling or newspaper, or maybe if you have some kind of accelerant around.
Before product/market fit, a company is like a fire you’re trying to get started. If you’re lucky, you have dry wood on a warm summer evening, some finely sliced kindling and a little lighter fluid. Add a match and whoosh.
Businesses like Slack and Instagram started like this.
But most of us start businesses under more difficult conditions. Our wood is damp, we have a couple of pieces of kindling and no lighter fluid. We only have a couple of matches.
You light a match, and hope your little business fire catches. When it does, you’re at the point before product/market fit. At this stage, adding more of your damp wood will only put the fire out. You have to nurture the fire until it’s strong enough to grow.
When your fire gets to the point where it can handle a big ‘ol chunk of your unseasoned firewood, this is like reaching product/market fit.
Then, start adding logs strategically and eventually you’ll end up with a bonfire.
But don’t do it too soon, or the whole thing might go out.