core idea: product-market fit (pmf) is a critical milestone for startups, particularly from a venture capital (VC) perspective. it represents a significant reduction in both product and market risk, making the company more appealing for investment and future growth. this blog is inspired by a talk given by sajith pai from blume ventures.

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two components of pmf:

product-problem fit (ppf): this is about creating a product that effectively solves a significant problem for a specific target audience (persona). key indicators include: - high engagement and usage of the product. - positive feedback from early customers (e.g., "severely disappointed" if the product disappeared). - consistent validation that the product addresses the intended problem. - sean ellis test (40% of users would be "very disappointed" if the product went away).

go-to-market (gtm) motion to market fit (mmf): this focuses on finding a scalable and repeatable way to reach and acquire customers. key indicators include: - scalable customer acquisition channels (where the cost of acquiring a customer is less than the value they bring). - repeatable sales motion and customer retention (customers coming back and new cohorts retaining). - positive unit economics (e.g., cm2 positive – contribution margin covers fixed costs). - "stranger mrr/arr" - revenue coming from customers the founders don't have existing relationships with.

key takeaways and concepts: - pmf is a vc construct: it's how vcs assess risk and decide where to invest at different stages of a startup's lifecycle (pre-seed, seed, series a, etc.). - pmf is not a one-time achievement: it can come and go as market dynamics change (e.g., new competitors, technological shifts).

• pmf is linked to growth and retention: strong growth and retention, combined with positive unit economics, are strong indicators of pmf.
• focus on the problem first: start by deeply understanding the customer's pain points before building the product.
• speed of iteration is crucial: quickly building, testing, and iterating based on customer feedback is essential for achieving ppf.
• don't lie to yourself: be honest about whether your product is truly solving a problem and whether there's a real market for it.
• "delta 4": aim to create a product that provides a significantly better experience (a "delta 4" improvement) compared to existing solutions. this creates strong customer loyalty and word-of-mouth referrals.

trade-off between ppf and mmf: depending on the market (e.g., vertical saas vs. broader markets), prioritize either ppf or mmf accordingly.

early stage focus on learning, not earning: the initial goal is to understand the customer, their needs, and the product's use cases, not maximising revenue. avoid premature scaling: don't try to scale before achieving pmf, as this can lead to acquiring the wrong customers and wasting resources. "do things that don't scale" early on: manual customer acquisition and engagement can be valuable for learning and refining the product and gtm strategy.

specific points and examples: - the presenter uses the example of an acne pill (fictional) to illustrate ppf and mmf in a b2c context. - he mentions the importance of a "repeatable sales motion" for b2b companies. - he talks about the "sean ellis test " as a quantitative measure of ppf. - he introduces the concept of "stranger mrr/arr" as an indicator of genuine market demand. - he uses the "delta 4" framework to emphasise the importance of creating a significantly better user experience.

the presentation provides a comprehensive overview of pmf, offering practical advice and frameworks for startup founders to consider. it emphasises the importance of customer focus, iteration, and honest self-assessment in the journey towards achieving pmf.

link of talk : https://www.youtube.com/watch?v=WI9pTXw59DY

𝘗𝘭𝘦𝘢𝘴𝘦 𝘯𝘰𝘵𝘦: 𝘛𝘩𝘪𝘴 𝘪𝘴 𝘢 𝘤𝘢𝘯𝘥𝘪𝘥 𝘢𝘯𝘥 𝘦𝘹𝘱𝘭𝘰𝘳𝘢𝘵𝘰𝘳𝘺 𝙥𝙤𝙨𝙩 𝘸𝘩𝘦𝘳𝘦 𝘐’𝘷𝘦 𝘢𝘵𝘵𝘦𝘮𝘱𝘵𝘦𝘥 𝘵𝘰 𝘴𝘶𝘮𝘮𝘢𝘳𝘪𝘻𝘦 𝘮𝘺 𝘱𝘰𝘪𝘯𝘵 𝘰𝘧 𝘷𝘪𝘦𝘸 𝘢𝘯𝘥 𝘵𝘩𝘦 𝘯𝘰𝘵𝘦𝘴 𝘐 𝘵𝘰𝘰𝘬 𝙬𝙝𝙞𝙡𝙚 𝙡𝙞𝙨𝙩𝙚𝙣𝙞𝙣𝙜 𝙩𝙝𝙚 𝘵𝘩𝘦 𝘗𝘖𝘋. (𝙩𝙝𝙚𝙣 𝙙𝙪𝙢𝙥𝙚𝙙 𝙞𝙩 𝙞𝙣𝙩𝙤 𝙂𝙋𝙏 𝘵𝘰 𝘩𝘦𝘭𝘱 𝘳𝘦𝘱𝘩𝘳𝘢𝘴𝘦.)