TL;DR: PMF or Product-Market Fit is not a singular fit, but in fact two sequential fits. First, you need to achieve Product to Problem Fit or PPF (where you validate that your solution is able to address problems for a set of customers), and then you need to achieve (Go-to-Market) Motion to Market Fit, or MMF (where you can reliably, affordably, acquire lookalikes of the above customers to build a large business). Both together help you achieve PMF or Product Market Fit.

PMF = PPF + MMF

The biggest error founders make is confusing PPF (product love from a few customers) for PMF, and then pouring on the GTM / customer acquisition fuel in advance of true PMF.

Defining PMF

PMF is often the single most important thing that an early stage founder is after.

Source: X / Twitter

Yet, it is alarming that we still don’t have one clear consistent definition or even approach to achieving it. This is worrying because premature scaling in advance of PMF is the key reason for startup failure (Startup Genome et al). And critically it is a gating mechanism for most Series A VCs, and all Series B VCs.

Founders have been achieving PMF before it was coined by a VC (Andy Rachleff)! Good founders know that PMF is an abstraction layer over ‘growth with high retention’. That is a good shorthand definition. If you understand that much and that is the only takeaway from this post, I will be happy!

I have a more complex but complete definition of PMF.

You achieve PMF when you scalable GTM motion enabling predictable, repeatable, unit-positive acquisition of customers with high retention. Phew, it is a mouthful, I know. More details in the image.

To achieve the above, founders need to work through a 2-step process.

First: achieve Product to Problem Fit, or PPF

Second: work towards (GTM) Motion to Market Fit, or MMF

PPF + MMF = PMF

I have layered on the two stages of PPF and MMF on an image that I ‘stole’ from an article by Nikhyl Singhal (‘Stage of company, not name of company’)

PPF or Product to Problem Fit

Here you confirm that your product consistently solves the customer’s problem. Does the pain that the customer have, a problem that he or she has, go away when they are using your product or solution? If so, you have achieved PPF. That said PPF is not an on/off switch or a zero one thing, it’s a continuum of strength of fit. By iterating on the ICP, and / or enhancing the product, you can improve PPF.

Early in their journey, Urban Company found that the people who experienced their service through a marketplace (where they connected buyers and sellers of services and took a cut) had lower CSAT scores, whereas those they served directly via their full stack service offering saw higher CSAT scores. And they found that specific personas like working women and new mothers needing home beauty care, saw the highest CSAT scores and repeats. And that is when they said, we have to drop the marketplace and we have to focus on owning the experience, and we have to figure out more and more categories like home beauty care where people need it so badly.”

Similarly Superhuman used the Sean Ellis Test to narrow down the ICP to what they saw as their HXC or high expectation customers (as Julie Supan terms it) – founders / managers / executives in business development. The Sean Ellis Test (which is per me a test of PPF more than PMF) says if more than 40% or more reply ‘very disappointed’ to your question on ‘How would you feel if you could no longer use the product?’ then you have hit PMF (which to me is more a test of PPF).

How do you know you have PPF?

Other signals apart from the Sean Ellis Test include

B2C: High engagement, usage: Retention curve flatlines at 10% at D90

B2B: Speed through the funnel

  • 30-45 days for SMB
  • 2-3 months for midmarket
  • 6-9m for enterprise

B2C, B2B: Referrals, Word of mouth. Organic channels constitute majority of leads / lots of inbounds etc.

Important: Don’t overbuild the product at this stage. Time is money. Break down your assumptions about product-problem fit into modular components and test the hard things first.

I am reminded of an @annieduke interview where she describes an @astroteller framework

Focus on the monkey, not the pedestal! Solve for the hardest thing first!

Source: Podcast

MMF or Motion to Market Fit

The second part of PMF is to have a repeatable, scalable GTM or Motion to Market Fit (MMF).

You hit MMF and thereby PMF when you have a scalable affordable go to market motion, i.e., you have predictability and repeatability of customer acquisition and that means a clear input output ratio. In addition, you are not overpaying for the customer, and you are also able to retain the customer.

GTM comprises persona (customer type you wish to serve), channel (to reach the persona) and finally the message or proposition for the customer re your product.

‘Uncomfortably narrow’ personas addressed by one hero channel through a sharp message is how first-time MMF is achieved.

The process of achieving MMF (and eventually PMF) is fiddling with several knobs and dials in order to get to high fidelity. Some key knobs and dials to fiddle with or iterate upon are organic growth, lowering CAC, flatline retention, driving speed through the funnel, etc.

To achieve Motion-to-Market fit, iterate systematically and strategically. If you are not hitting MMF, then start by changing the message, and if it doesn’t work, then the channel, then the persona and only then the product. Messages are easy to change, you can try different things, etc. You can also change channels. For example if email is not working, try Linkedin ads etc. Finally, then you need to change the persona you’re targeting and this is hard. Now you’re getting into pivots. Persona change is tough. And finally you reach into the product.  Product pivots are harder. Effectively you are throwing out everything that you’ve built thus far. Because you have money for 18 months typically (each raise covers 18 months of burn), each pivot is a life. You have at best 1 channel (market pivot) and 1 product pivot in you.

TL;DR: As far as possible, pivot on the market, not the product. It is much harder to change the product to fit the market; vice versa is what you are seeking. Change message, then channel, then product.

What are signs of MMF? Essentially think of it as signals for GRUE: Good Growth with high Retention and strong Unit Economics

Monthly double digit growth

Retention (via SaaS Napkin)

  • Churn <3% for enterprise, <7% for midmarket, and <20% for SMB (mostly mortality churn not logo churn)
  • Churn <10% for B2C paid users
  • Usage (B2C: >50% of customers do a desirable daily action; B2B can be a frequency less than that per the nature of the business)

Sustainable unit economics (CM2 +ve): Cost of acquiring and serving the customer is less than value of the customer – say LTV CAC 3:1 as a thumbrule (OR) S&M costs as 1/3rd of contribution margin (OR) Sales yield > 1

When MMF is achieved, you hit PMF.

Early PMF looks like a half-prepared but highly used bridge like in this tweet.

Source: X / Twitter

Remember: PrePMF startups are a learning machine, not an earning machine. Don’t scale up revenue by pouring on the marketing $ unless you have achieved MMF and PMF.

Additional (incomplete) thoughts on PMF

PMF is not a one-and-done thing. PMF can come and go (ask Paytm’s Wallet team or the Clubhouse guys). At every stage of growth, your quality of PM Fit can change / weaken. You will then need to adjust your messaging, channel, product and persona selection and configuration to adjust for this.

PMF is a grind. Occasional examples of ‘lighting in a bottle’ examples like twitter aside, most PMF achievements are a steady, slow grind. It is a lot of fiddling with the dials till you hit high fidelity, by continuously iterating on the GTM elements. You then need to ensure the product is relevant and updated to every new customer set that you cater to.

Above slides from my PMF Primer. You can access it here https://bit.ly/pmfprimer

If you aren’t a subscriber, feel free to subscribe or follow me at x.com/sajithpai or linkedin.com/in/sajithpai, or check out my substack at sajithpai.substack.com. Product Market Fit is a key topic of obsession and one I write continuously on.